-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BxOl+EunvtTUcHKCnxC1iMwT8oQIRjjBAjaEYZm6tmOFWO8GzNi6guwx5pDcyBmc ogEcqMPuQ73GWHgEKuOJVA== 0000075129-99-000038.txt : 19991207 0000075129-99-000038.hdr.sgml : 19991207 ACCESSION NUMBER: 0000075129-99-000038 CONFORMED SUBMISSION TYPE: 424B5 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19991206 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OTTER TAIL POWER CO CENTRAL INDEX KEY: 0000075129 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 410462685 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B5 SEC ACT: SEC FILE NUMBER: 333-11145 FILM NUMBER: 99769419 BUSINESS ADDRESS: STREET 1: 215 S CASCADE ST STREET 2: PO BOX 496 CITY: FERGUS FALLS STATE: MN ZIP: 56538-0496 BUSINESS PHONE: 2187398200 424B5 1 PROSPECTUS OTTER TAIL POWER COMPANY AUTOMATIC DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN COMMON SHARES ($5 PAR VALUE) The Automatic Dividend Reinvestment and Share Purchase Plan (the "Plan") of Otter Tail Power Company (the "Company") provides the Company's Common and Preferred Shareholders and customers with a convenient method of purchasing the Company's Common Shares, $5 par value ("Common Shares"), without payment of any brokerage commission or service charge. Participants may purchase additional Common Shares by reinvesting dividends and/or making cash payments. Customers who are not shareholders of the Company may become holders of record of the Company's Common Shares concurrently with enrollment in the Plan by making a minimum initial investment of $100. Individuals who are not shareholders or customers of the Company may participate in the Plan only after becoming a shareholder of record through the purchase of Common or Preferred Shares of the Company through an independent broker. The shares purchased under the Plan may be new issue Common Shares or Common Shares purchased on the open market. New issue Common Shares will be purchased from the Company at the current market price of Common Shares as determined by the Company on the basis of the average of the high and low sales prices of Common Shares on the applicable investment date as reported by NASDAQ. The price of Common Shares purchased on the open market will be the weighted average price per share at which shares are actually purchased on the open market for the relevant period. This Prospectus relates to 1,000,000 new issue Common Shares registered for sale under the Plan. A complete description of the Plan begins on Page 3. Please read this Prospectus carefully before investing and retain it for your future reference. ------------------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------------- The date of this Prospectus is October 31, 1999 1 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission ("Commission"). Reports, proxy statements and other information filed by the Company can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices at Seven World Trade Center, Suite 1300, New York, New York 10048, and Citicorp Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60601. Copies of such materials can be obtained from the Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission maintains a web site (http://www.sec.gov) that contains reports, proxy statements and other information regarding registrants such as the Company that file electronically with the Commission. The Company has filed with the Commission a registration statement on Form S-3 with respect to the new Common Shares issuable under the Plan (herein, together with all amendments and exhibits, referred to as the "Registration Statement") under the Securities Act of 1933, as amended. This Prospectus does not contain all the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. For further information, reference is hereby made to the Registration Statement. INFORMATION INCORPORATED BY REFERENCE The following documents filed with the Commission under the Exchange Act (File No. 0-368) are incorporated herein by reference: 1. The Company's Annual Report on Form 10-K for the year ended December 31, 1998; and 2. The Company's Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 1999. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of this offering shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the respective dates of filing of such documents. Any statement contained herein or in a document all or part of which is incorporated or deemed to be incorporated by reference in this Prospectus shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained in this Prospectus or in any document subsequently filed with the Commission which also is or is deemed to be incorporated by reference in this Prospectus modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company hereby undertakes to provide without charge to each person (including any beneficial owner) to whom this Prospectus has been delivered, on the written or oral request of any such person, a copy of any or all of the documents referred to above which have been or may be incorporated in this Prospectus by reference, other than certain exhibits to such documents. Requests for such copies should be directed to the Corporate Secretary, Otter Tail Power Company, 215 South Cascade Street, P.O. Box 496, Fergus Falls, Minnesota 56538-0496, telephone number: (218) 739-8200. 2 THE COMPANY The Company is an operating public utility engaged in the production, transmission, distribution and sale of electric energy in western Minnesota, eastern North Dakota and northeastern South Dakota. The Company, through its subsidiaries, is also engaged in other businesses which are referred to as Manufacturing Operations, Health Services Operations and Other Business Operations. Manufacturing Operations includes businesses involved in the production of agricultural equipment, plastic pipe, automobile and truck frame straightening equipment and accessories, and fabricated metal parts. Health Services Operations consists of businesses involved in the sale, service, rental, refurbishing, and operation of medical imaging equipment and the sale of related supplies and accessories to various medical institutions. Other Business Operations consists of businesses diversified in such areas as electrical and telephone construction contracting, entertainment, energy services, natural gas marketing, telecommunications, and trucking. The Company was incorporated in 1907 under the laws of the State of Minnesota. Its principal executive office is located at 215 South Cascade Street, Box 496, Fergus Falls, Minnesota 56538-0496, telephone number: (218) 739-8200. USE OF PROCEEDS Unless Common Shares are purchased directly from the Company, the Company will receive no proceeds from the offering of Common Shares through the Plan. To the extent shares are purchased from the Company, the net proceeds from the sale of such shares will be added to the general funds of the Company and used for general corporate purposes, including payment of a portion of the cost of the Company's continuing construction program. The Company has no basis for estimating either the number of Common Shares that ultimately will be sold pursuant to the Plan or the prices at which such shares will be sold. DESCRIPTION OF THE PLAN The purpose of the Plan is to provide the Company's shareholders and customers with a simple and convenient method of purchasing Common Shares of the Company without payment of any brokerage commissions or service charges. The terms and conditions of the Plan are set forth below. 1. HOW TO ENROLL Eligible persons may join the Plan at any time by completing the appropriate authorization form and returning it to the Company. An authorization form may be obtained by sending a written request to Otter Tail Power Company, Shareholder Services Department, 215 South Cascade Street, P.O. Box 496, Fergus Falls, Minnesota 56538-0496, or by calling the Company at (800) 664-1259 or (218) 739-8479 (locally). 3 2. PARTICIPATION Any holder of the Company's Common or Preferred Shares or retail utility customer of the Company is eligible to participate in the Plan. If you are already a participant under the Plan, you are not required to re-enroll. If you are already a holder of record of Company shares, you must complete the appropriate authorization form to become a participant in the Plan. If you are a beneficial owner of Company shares held by a broker or other custodial institution that has established procedures which permit their customers to participate in the Plan, please contact such broker or institution for the appropriate authorization form. Retail utility customers who are not already holders of Common or Preferred Shares may join the Plan by completing the appropriate authorization form and returning it to the Company's Shareholder Services Department along with an initial cash payment of at least $100 and up to a maximum of $5,000. Payments must be made by check or money order (made payable in U.S. dollars drawn on a U.S. bank) payable to "Otter Tail Power Company - D.R. Agent." 3. HOW THE PLAN WORKS Participants can reinvest all dividends paid on full and fractional Common and Preferred Shares to acquire additional Common Shares under the Plan. Participants can elect to receive a cash dividend for shares held in certificate form. All dividends earned on shares held in book-entry form for a participant in the Plan must be reinvested. Once enrolled in the Plan, participants may also make optional cash payments of a minimum of $10 and a maximum of $5,000 per month to purchase Common Shares. Shares purchased with reinvested dividends and optional cash payments are held by the Plan in book-entry form until the participant requests issuance of a stock certificate. A participant may instruct the Company to sell up to, but not more than, 25 Common Shares credited to the participant's Plan account once during any calendar month. No brokerage fees, commissions or service charges will be paid by participants in connection with the Plan. All administrative service fees will be borne by the Company. All dividends earned on shares held in the Plan in book-entry form will be automatically reinvested. Participants can reinvest all or none of the dividends earned on Common or Preferred Shares held in certificate form. Fractions of shares, computed to four decimal places, as well as full shares, are credited to participants' accounts. Regular Statements of Account will provide simplified record keeping. Participants can deposit Common Share certificates for shares acquired through the Plan or otherwise under the Share Deposit feature of the Plan. (See Section 6 - Certificates for Shares.) Please note that Preferred Shares are not eligible for this service. 4 4. HOW INVESTMENTS ARE MADE Shares for the Plan may come either from authorized but unissued Common Shares ("new issue Common Shares") or from purchases of Common Shares of the Company made on any securities exchange where the shares are traded, in the over-the-counter market or in negotiated transactions. The Company will decide when the Plan will purchase new issue Common Shares or when Common Shares will be purchased on the open market. For open market purchases, US Bank (the "Agent") will act as purchasing agent. The Agent may purchase shares on such terms as to price, delivery, and otherwise as the Agent may determine, subject to any restrictions imposed by federal or state securities laws. Below are the various ways you can acquire shares: Dividend Reinvestment Dividends may be reinvested to purchase either new issue Common Shares or Common Shares purchased on the open market, as determined by the Company. Common and/or Preferred Share dividends used to purchase new issue Common Shares will be invested on the dividend payment date (which is typically the tenth or first day, respectively, of each March, June, September and December) or, if that date is not a trading day, the preceding trading day. Common and/or Preferred Share dividends will normally be used by the Agent to purchase Common Shares on the open market within 10 business days of the dividend payment date, depending on market conditions. Participants can authorize full reinvestment of dividends on all shares. Participants can also authorize cash dividends to be paid on all Common and/or Preferred Shares held in certificate form. Dividends on shares held in the Plan in book-entry form will always be automatically reinvested. To change participation to allow receipt of dividends in cash for all shares or just shares held in certificate form, the Company's Shareholder Services Department must receive a written request for such change on or before the record date established for the particular dividend. If the request is received after the record date, the change will begin with the next dividend. Cash Investment Option-Optional Cash Payments for Participants Enrolled in the Plan Participants may, at any time, send checks or money orders only (made payable in U.S. dollars drawn on a U.S. bank) to make cash investments in the Plan. Checks and money orders must be made payable to "Otter Tail Power Company - D.R. Agent" and sent with the authorization form or the form provided as part of the Statements of Account. Once enrolled in the Plan, participants may vary cash investments from a minimum of $10 to a maximum of $5,000 per month. The Company will process all payments on the date they are received. Payments post-dated and received on or before that date will be accepted as of such date. Cash payments are invested monthly on the first day of each month or, if that date is not a trading day, the next succeeding trading day. In order to be invested in a particular month, cash payments must be received on or before the last business day of the preceding month. No interest will be paid on funds being held by the Company or the Agent. 5 Cash payments will be used to purchase either new issue Common Shares or Common Shares purchased on the open market, as determined by the Company. Cash payments used to purchase new issue Common Shares will be invested on the investment date each month. Cash payments used to purchase Common Shares on the open market will normally be purchased by the Agent on the investment date each month. Participants can request a refund of the current month's cash payment by sending a written request to the Company's Shareholder Services Department. The request must be received at least two business days prior to the investment date. Payments that are rejected by the Company will be refunded to participants as promptly as practicable. Price The price per share of new issue Common Shares will be the current market price of Common Shares as determined by the Company on the basis of the average of the high and low sales prices of Common Shares on the applicable investment date as reported by NASDAQ. The price per share of shares purchased for the Plan on the open market will be the weighted average price per share at which Common Shares of the Company are actually purchased on the open market for the relevant period by the Agent on behalf of all participants in the Plan. The Company has no basis for estimating either the number of shares that will be purchased under the Plan or the prices at which shares will be purchased. Participants should be aware that since investment prices are determined as of specified dates, they may lose any advantages otherwise available from being able to select the timing of their investment. Neither the Company nor the Agent shall have any responsibility for the value of the Common Shares acquired for participants' accounts. 6 5. STATEMENTS OF ACCOUNT The Company will maintain an account for each Plan participant and will send Statements of Account to each participant as soon as practicable after each quarterly dividend reinvestment and each monthly cash investment. The Statements include the participant's current share balance and all year-to-date transactions in the participant's account. Statements are a participant's continuing record of the cost of the participant's purchases, and the statements should be retained for tax purposes. Included as a part of the Statements is a form for making optional cash payments, selling shares, requesting certificates, depositing certificates, or withdrawing from the Plan. 6. CERTIFICATES FOR SHARES Normally, certificates for Plan shares are not issued to participants unless requested. Instead, the shares are credited to Plan accounts and are shown on the Statements of Account. This protects against loss, theft or destruction of stock certificates, and reduces the Company's administrative costs. Participants can, however, request stock certificates for any number of full shares credited to their Plan accounts. There is no charge for this service. A written request must be made to the Company's Shareholder Services Department by completing the form provided as part of the Statements of Account or by submitting a written request. A separate request must be made for each certificate requested specifying the number of full shares to be issued. Requests are processed as soon as practicable after receipt. Generally, the certificates are issued within five business days after the Company receives the request. Any remaining full and fractional shares will continue to be credited to participants' accounts. Certificates for fractional shares will not be issued under any conditions. The Company reserves the right to suspend its policy of issuing certificates, other than upon termination or withdrawal from the Plan, at any time. Registration of Share Certificates Certificates can be registered and issued in names other than Participants' names subject to compliance with any applicable laws. To do this participants must complete a stock power form and return it to the Company's Shareholder Services Department. This form must bear the signature of the registered holder(s) with the signature guaranteed by an eligible financial institution which is a member of a signature medallion program. Assignment forms can be obtained from the Company's Shareholder Services Department. If a participant wants shares issued or a transfer to be effective for a particular dividend payment, the appropriate form must be received at least five days before the record date established for that dividend. Shares credited to participants' accounts may not be pledged and may not be assigned, except to another Plan account. To pledge or assign shares participants must make a written request for certificates to be issued. 7 Deposit of Common Share Certificates into the Plan Participants can deposit any certificates for Common Shares of the Company into the Plan, whether such certificates were issued under the Plan or otherwise, at no cost. To take advantage of this feature, participants must send certificates for Common Shares to the Company's Shareholder Services Department together with the appropriate information on the form provided as part of the Statements of Account or with a separate written request. Common Shares represented by such certificates are credited to the appropriate participant account under the Plan. If you are receiving a cash dividend for shares held in certificate form, you must continue to hold a certificate representing those shares. Once shares are deposited into the Plan, dividends on such shares will be automatically reinvested. Certificates for Preferred Shares of the Company are not eligible for deposit. Should participants choose to deposit certificates, the Company recommends that registered or certified mail be used. The method used to submit certificates to the Company is at the option and risk of the participant. Participants should submit their certificates without endorsement. 7. HOW TO TERMINATE PARTICIPATION Participation in the Plan is voluntary, and a participant may terminate participation at any time by submitting the appropriate information on the form provided as part of the Statements of Account or by submitting a separate written request to the Company's Shareholder Services Department. The request for termination will be processed as soon as practicable after receipt. A stock certificate for full shares will normally be mailed within five business days after receipt of the request, unless the request is received between a dividend record date and a dividend payment date. If the request is received during this period, a certificate will generally not be sent out until the dividends paid for the quarter have been credited to your account. The Agent will sell all fractional shares normally on the first trading day of each month. A check for the fractional share will be sent to you promptly. For income tax purposes the amount of the fractional share check is taxable and is reported accordingly. If the request to terminate has been received at least two business days prior to the investment date, any cash payments waiting for investment will be returned, without interest, as soon as practicable. Any subsequent dividends, if applicable, will be paid in cash. Participants wishing to terminate with 25 or less shares credited under the Plan may sell all but not less than all Plan shares through the Company, without the issuance of a certificate and without payment of a brokerage fee. (See Section 8 - Selling Plan Shares.) After termination, previous participants can re-enroll in the Plan by completing the appropriate authorization form. However, the Company reserves the right to reject any enrollment forms from previous participants on the grounds of excessive joining and termination. Such reservation is intended to minimize unnecessary administrative expense and to encourage use of the Plan as a long-term investment service. 8 8. SELLING PLAN SHARES A participant may instruct the Company to sell up to, but not more than, 25 Common Shares credited to the participant's Plan account by completing the information on the form provided as part of the Statements of Account or by submitting a separate written request to the Company's Shareholder Services Department. A participant may submit only one such request during a calendar month. The Agent will sell the shares normally on the first trading day of each month. If a request to sell all shares in the account is received between the record date and payable date, the shares will not be sold until the dividends paid for the quarter have been credited to your account. In the event that shares being sold by terminating participants are needed to meet Plan requirements, those shares will be purchased by the Plan. In either case, the participant will receive the proceeds of the sale, less any backup withholding tax, within 10 days after the sale. The price of the Plan shares sold on the open market will be the actual sale price of such shares. The price of shares purchased by the Plan to meet Plan requirements will be the average of the high and low sales prices of Common Shares on the date of purchase as reported by NASDAQ. 9. OTHER INFORMATION Stock Dividends and Stock Splits Should the Company declare a stock dividend or a stock split, the number of additional shares participants receive will be based on the number of shares in their Plan account as of the record date for such stock dividend or stock split. Additional full and fractional shares that result from a stock dividend or a stock split will be credited to participants' Plan accounts. Stock dividend or stock split shares issued with respect to certificated shares held by participants will be mailed directly to the participants in the same manner as to shareholders who are not participating in the Plan. Rights to Purchase In the event that the Company makes available to its shareholders rights to purchase additional shares or other securities, the Agent will sell such rights accruing to shares participating in the Plan for the participant and will combine the funds from such sale with the next regular dividend or optional cash investment for reinvestment at that time. If a participant desires to exercise these rights, the participant should request that certificates be issued for full shares as provided herein. Voting at the Annual Meeting of Shareholders The Company will vote all shares held in the participant's Plan account in the same way in which the participant votes Common Shares standing in the participant's name by the regular proxy returned by the participant to the Company. If the Company sends to participant a separate proxy covering the shares credited to participant's Plan account, then such shares will be voted as designated in such separate proxy. In the event participant does not direct the voting of the participant's shares by either such regular or separate proxy, the shares credited to the participant's Plan account will not be voted. 9 Company Responsibility in Administering the Plan The Company and the Agent will have no responsibility beyond the exercise of ordinary care for any action taken or omitted pursuant to the Plan nor will they have any duties, responsibilities or liabilities except such as are expressly set forth herein. In administering the Plan, neither the Company nor the Agent will be liable for any act done in good faith or for any good faith omission to act, including, without limitation, any claim of liability (a) arising out of failure to terminate participants' accounts upon death prior to receipt of notice in writing of such death; (b) with respect to the prices at which the shares are purchased or sold, the time such purchases or sales are made or any fluctuation in the market value before or after purchases or sales of shares; or (c) as to the value of the shares acquired for participants. Participants should recognize that neither the Company nor the Agent can assure them of a profit or protect them against a loss on shares purchased or sold by them under the Plan. The Company believes that its serving as administrator, rather than a registered broker-dealer or a federally insured banking institution, poses no material risks to participants. The Company reserves the right to interpret and regulate the Plan as may be necessary or desirable in connection with the operation of the Plan. The terms and conditions of the Plan and any authorization forms shall be governed by Minnesota law. Company's Right to Amend or Terminate the Plan While the Company expects to continue the Plan indefinitely, it reserves the right to amend, modify, suspend or terminate the Plan or participation therein, in whole or in part, at any time. Any such amendment, modification, suspension or termination will be announced to participants in advance. FEDERAL INCOME TAX INFORMATION The information set forth below is only a summary and does not claim to be a complete description of all tax consequences of participation in the Plan. The description may be affected by future legislation, IRS rulings and regulations, or court decisions. Accordingly, participants should consult with their own tax advisors with respect to the federal, state, local and foreign tax consequences of participation in the Plan. What are the federal income tax consequences of participation in the Plan? For tax purposes, participants' reinvested dividends are treated in the same manner they would have been treated had the participants received them in cash on the applicable dividend payment date. Participants will not realize any taxable income when stock certificates for full shares are issued from Plan accounts. However, participants will realize gain or loss when the shares are sold either at their request through the Company or by them after certificates have been issued. The amount of the gain or loss is the difference between the amount the participant receives for the shares and the cost basis of the shares. In addition, terminating participants will realize gain or loss upon receipt of the check covering the value of the fractional share. 10 How will participants be notified of their taxable dividend income? The Company will report the dividend income to participants and to the IRS on Form 1099-Div. When shares are sold through the Company, the Company will report the proceeds from the sale to participants and to the IRS on Form 1099-B. What is the federal tax basis of Plan shares? The tax basis of participants' Plan shares acquired is equal to their purchase price as indicated on the participants' Statements of Account. Please be sure to retain your December Statements, which summarize the entire year's activity for tax purposes. How does the Company invest and report dividends subject to federal backup withholding or foreign tax withholding? The Company will invest an amount equal to the dividends less the amount of tax withheld. The net dividend will purchase shares. The Statements of Account and the Form 1099-Div sent to participants subject to tax withholding will indicate the amount of tax withheld and will show the net dividend reinvested by the Company. For IRS reporting purposes, the amount of the dividend withheld will be included in the dividend income of participants subject to backup withholding or foreign participants subject to foreign withholding. DESCRIPTION OF COMMON SHARES At October 31, 1999 there were outstanding 11,925,272 Common Shares (50,000,000 shares authorized) and 335,000 Cumulative Preferred Shares (1,500,000 shares authorized). There are also authorized 1,000,000 Cumulative Preference Shares, none of which are outstanding. The Board of Directors of the Company is authorized under its Restated Articles of Incorporation to provide for the issue of future series of Cumulative Preferred Shares and Cumulative Preference Shares and, as to each series, to fix the designation, dividend rate, redemption price or prices, voluntary and involuntary liquidation prices, conversion rights and sinking and purchase fund rights. Cumulative dividends and redemption and conversion provisions could have an adverse effect on the availability of earnings for distribution to the holders of Common Shares. The following statements with respect to the Company's Restated Articles of Incorporation, as amended (the "Articles") are brief summaries of certain provisions of the Articles, do not purport to be complete and are subject to the detailed provisions of the Articles, a copy of which is filed with the Commission as an exhibit to the Registration Statement and is incorporated in this section by reference. Terms in italics are defined in the Articles and are used herein as so defined. Dividend Rights Subject to the prior dividend rights of the holders of the Cumulative Preferred Shares and the Cumulative Preference Shares and the limitations set forth in the following two paragraphs, dividends may be declared by the Board of Directors and paid from time to time upon the outstanding Common Shares from any funds legally available therefor. 11 The Company's Indenture of Mortgage securing its First Mortgage Bonds contains restrictions on the payment of dividends and other distributions with respect to the Company's Common Shares, the most restrictive of which provides that the Company may not declare or pay dividends on its Common Shares (other than dividends payable in Common Shares) or make any other distribution in respect of its Common Shares, unless, after giving effect thereto, the sum of all such dividends and distributions subsequent to December 31, 1976 will not exceed $8,000,000 plus the Company's net income available for Common Shares accrued after that date. Such Indenture provides that in computing such net income there shall be deducted, as an additional depreciation charge, for each year after 1976, the amount, if any, by which the Indenture depreciation requirement exceeds the depreciation charges against such net income actually made by the Company on account of its depreciable fundable property. Under these restrictions, $10,008,000 of retained earnings of the Company at December 31, 1998 were not available for dividends or other distributions on the Common Shares. So long as any Cumulative Preferred Shares remain outstanding, the Company shall not, without the consent of the holders of a majority of the voting power of the Cumulative Preferred Shares of all series then outstanding (two-thirds if more than one-fourth vote negatively), declare or pay any dividend on or purchase, redeem or otherwise acquire any Common Shares of the Company unless, after giving effect thereto (a) Common Share Equity shall equal at least 25% of Total Capitalization and (b) the earned surplus of the Company shall not be less than $831,398. Such provisions are less restrictive than the restrictions on the payment of dividends and other distributions with respect to the Common Shares contained in the Company's Indenture of Mortgage. Moreover, no dividend shall be declared or paid on the Common Shares at any time while there is a default or deficiency with respect to a sinking or purchase fund established for the benefit of any series of the Cumulative Preferred Shares or the Cumulative Preference Shares. Certain series of the Company's Cumulative Preferred Shares have sinking funds. Voting Rights Subject to the rights of the holders of the Cumulative Preferred Shares and the Cumulative Preference Shares described below, only the holders of Common Shares have voting rights and are entitled to one vote for each share held. In the event that four full quarterly dividend payments on the Cumulative Preferred Shares of any series shall be in default, the holders of the Cumulative Preferred Shares of all series, voting as a class, shall thereafter elect three members of an eleven member Board of Directors; and, if such default shall increase to twelve full quarterly dividend payments, such holders shall thereafter elect six members of an eleven member Board of Directors. In the event that four full quarterly dividend payments on the Cumulative Preference Shares of any series shall be in default, the holders of the Cumulative Preference Shares of all series, voting as a class, shall thereafter elect two members of an eleven member Board of Directors. Holders of Cumulative Preferred Shares and Cumulative Preference Shares shall be entitled to cumulative voting in the election of Directors. After any such default shall have been cured, the Cumulative Preferred Shares and/or the Cumulative Preference Shares, as the case may be, shall be divested of such voting rights, subject to being revested in the event of subsequent defaults. The consent of the holders of at least two-thirds of the voting power of the Cumulative Preferred Shares is required to (a) authorize or issue any shares ranking prior to the Cumulative Preferred Shares as to dividends or assets or (b) amend the Articles so as to affect adversely any of the preferences or other rights of the holders of the Cumulative Preferred Shares, provided that if less than all series of Cumulative Preferred Shares are so affected, only the consent of the holders of at least two-thirds of the voting power of the affected series shall be required. 12 A majority (two-thirds if more than one-fourth vote negatively) of the voting power of the Cumulative Preferred Shares is required to authorize certain other corporate acts, including (a) an increase in the number of authorized Cumulative Preferred Shares or the authorization of shares on a parity therewith, (b) the issue of additional Cumulative Preferred Shares unless specified financial tests are satisfied and (c) the participation by the Company in any merger or consolidation or the sale of all or substantially all of its assets unless specified conditions are met. The consent of the holders of at least two-thirds of the voting power of the Cumulative Preference Shares is required to (a) authorize any shares of any class (other than the Cumulative Preferred Shares, whether now or hereafter authorized) ranking prior to the Cumulative Preference Shares as to dividends or assets or (b) amend the Articles so as to affect adversely any of the preferences or other rights of the holders of the Cumulative Preference Shares, provided that if less than all series of Cumulative Preference Shares are so affected, only the consent of the holders of at least two-thirds of the voting power of the affected series shall be required. A majority (two-thirds if more than one-fourth vote negatively) of the voting power of the Cumulative Preference Shares is required to authorize (a) an increase in the number of authorized Cumulative Preference Shares or the authorization of shares on a parity therewith or (b) the participation by the Company in any merger or consolidation or the sale of all or substantially all of its assets unless specified conditions are met. Liquidation Rights Upon any liquidation, dissolution or winding up of the Company, the holders of Common Shares shall be entitled to receive pro rata all assets of the Company distributable to shareholders after the payment of the respective liquidation preferences to the holders of the Cumulative Preferred Shares and the Cumulative Preference Shares. Shareholder Rights Plan On January 27, 1997, the Company's Board of Directors declared a dividend of one Preferred Share Purchase Right ("Right") for each outstanding Common Share held of record as of February 7, 1997. One Right was also issued with respect to each Common Share issued after February 7, 1997. Each Right entitles the holder to purchase from the Company one one-hundredth of a share of newly created Series A Junior Participating Preferred Stock at a price of $70, subject to certain adjustments. The Rights are exercisable when, and are not transferable apart from the Company's Common Shares until, a person or group has acquired 15 percent or more, or commenced a tender or exchange offer for 15 percent or more, of the Company's Common Shares. If the specified percentage of the Company's Common Shares is acquired, each Right will entitle the holder (other than the acquiring person or group) to receive, upon exercise, Common Shares of either the Company or the acquiring company having value equal to two times the exercise price of the Right. The Rights are redeemable by the Company's Board of Directors in certain circumstances and expire on January 27, 2007. 13 Certain Provisions of Articles and Bylaws Except at such times when holders of Cumulative Preferred Shares and/or Cumulative Preference Shares have special voting rights for the election of Directors as described above, the Company's Directors are elected for three-year, staggered terms by the holders of the Common Shares. Cumulative voting of the Common Shares in the election of Directors is prohibited. In addition, the Company's Bylaws provide that a vote of 75% of the Common Shares is required to remove Directors who have been elected by the holders of Common Shares. The affirmative vote of 75% of the Common Shares is required to amend provisions of the Articles and Bylaws relating to the staggered terms and the removal of Directors, unless approved by all of the Continuing Directors as specified therein. The Articles contain "fair price" provisions which require the affirmative vote of 75% of the voting power of the Common Shares to approve Business Combinations, including mergers, consolidations and sales of a Substantial Part of the Company's assets, with an Interested Shareholder or its Affiliates or Associates, unless specified price criteria and procedural requirements are met or unless the transaction is approved by the majority of the Continuing Directors. The Articles also contain "anti-greenmail" provisions which preclude the Company from making certain purchases of Common Shares at a price per share in excess of the Fair Market Price from a Substantial Shareholder unless approved by the affirmative vote of 66 2/3% of the voting power of the Common Shares held by the Disinterested Shareholders. The "fair price" and "anti-greenmail" provisions of the Articles may not be amended without the affirmative vote of the holders of at least 75% of the voting power of the Common Shares, unless approved by all of the Continuing Directors as specified therein. The overall effect of the foregoing provisions of the Company's Articles and Bylaws, together with the Rights and the ability of the Board of Directors to issue additional Common Shares, Cumulative Preferred Shares and Cumulative Preference Shares, may be to delay or prevent attempts by other persons or entities to acquire control of the Company without negotiations with the Company's Board of Directors. Miscellaneous The Common Shares are not redeemable. The Common Shares are not entitled to any conversion or preemptive rights. The outstanding Common Shares of the Company are, and the new issue Common Shares when issued will be, fully paid and non-assessable. The Transfer Agents and Registrars for the Common Shares are Norwest Bank Minnesota, N.A. and the Company. 14 EXPERTS The consolidated financial statements incorporated in this Prospectus by reference from the Company's Annual Report on Form 10-K have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report which is incorporated herein by reference, and have been so incorporated in reliance upon such report given upon their authority as experts in accounting and auditing. VALIDITY OF COMMON SHARES The validity of the issuance of the new issue Common Shares has been passed upon for the Company by Dorsey & Whitney LLP, Minneapolis, Minnesota. ADDITIONAL INFORMATION For further information and assistance, please write or call at: Otter Tail Power Company Shareholder Services Department 215 South Cascade Street Box 496 Fergus Falls, Minnesota 56538-0496 Telephone: (218) 739-8479 (locally) (800) 664-1259 (toll free) 15 TABLE OF CONTENTS Page ---- Available Information 2 Information Incorporated by Reference 2 The Company 3 Use of Proceeds 3 Description of the Plan 3 How to Enroll 3 Participation 4 How the Plan Works 4 How Investments are Made 5 Statements of Account 7 Certificates for Shares 7 How to Terminate Participation 8 Selling Plan Shares 9 Other Information 9 Federal Income Tax Information 10 Description of Common Shares 11 Experts 15 Validity of Common Shares 15 Additional Information 15 ----------------------------- Neither the delivery of this Prospectus nor any sales hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Company since the date hereof. No dealer, broker, salesman or any other person has been authorized to give any information or to make any representations, other than those contained in this Prospectus, in connection with the offering contained in this Prospectus, and information or representations not herein contained, if given or made, must not be relied upon as having been authorized by the Company. This Prospectus does not constitute an offering in any state in which such offering may not lawfully be made. ------------------- PROSPECTUS ------------------- (LOGO - OTTER TAIL POWER COMPANY) OTTER TAIL POWER COMPANY AUTOMATIC DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN 16 -----END PRIVACY-ENHANCED MESSAGE-----