Automatic Purchase
You purchase additional shares using the Optional Cash Payment (OCP) provision. Many DRP Plans allow you to automate the purchase of additional shares. You can invest a specified amount by having the transfer agent electronically debit your savings or checking account on a regular basis. You don't need write and mail the check.

Review the "dividend reinvestment prospectus" for the company to determine if they offer that option. Once you are enrolled in the DRP Plan, you will need to authorize the transfer agent to debit your account. Usually they have a simple form that you will complete to get it started.

Automatic Reinvestment
Most DRP Plans give you the option to reinvest dividends to purchase additional shares. Rather than receiving a cash dividend, your dividends are reinvested into shares of stock at the current price. You can invest any portion of the dividends.

Review the "dividend reinvestment prospectus" for the company to determine if they offer this option. Once you are enrolled in the DRP Plan, you authorize the transfer agent to reinvest your dividends. Usually they have a simple form that you complete to get it started.

Backup Withholding
Under federal law, the transfer agent must withhold 31% of dividend payments and sale proceeds from shareowners who fail to comply with certain IRS regulations. If you do not provide a Taxpayer Identification Number, you are subject to Backup Withholding. If you do not complete Form W9, you are subject to Backup Withholding. The withholding occurs at the time of the payment.

Book Entry Ownership
Book Entry is a form of registered ownership. It allows you to own shares without having physical stock certificates in your possession. DRP Programs use Book Entry, you simply get a periodic statement of your account ownership. You can request a stock certificate for your shares if you choose. There may be a charge for this service.

Stock Brokers prefer Book Entry. If you are buying an initial share(s) to qualify for a DRP Program, direct the broker to register the stock in your name and deliver the stock certificate to you. You DO NOT want the stock bought and registered in Book Entry form if you are using it to qualify for a DRP Program.

Book Entry Ownership eliminates the problems associated with paper certificates, such as storage and safety of your stock. Book Entry also eliminates the need for physical movement of stock certificates when you sell or transfer ownership of your stock.

Cash Dividend
Cash payment to a corporation's shareholders. The amount is normally based on profitability and is taxable as income. A cash distribution may include capital gains and return of capital in addition to the dividend. Cash Dividends are distinguished from Stock Dividends, which are payments in the form of stock. With DRP Programs, you can opt to have Cash Dividends paid out as stock.

Custodial Account
Account created for minor to allow minors to own securities. For DRP Program, these accounts are usually administered by a Transfer Agent. They can be administered by a bank or brokerage firm.

Key Points:
1. Minors cannot make securities transactions without the appoval of the account Custodian.
2. Assets are taxed at the rate applicable to the minor, not the parents.
3. Securties cannot be bought on margin for this type account.

Custodian
Bank or other financial institution that maintains custody of stock certificates and other assets for a mutual fund, individual, or corporate client.

Person or institution authorized to direct the investment activities of another party's account. Often done in connection with accounts held for the benefit of minors or persons unable to manage their own investments.

Direct Stock Purchase (DSP)
DSP plans are DRP programs that offer the option to enroll without being a registered shareholder. You can purchase the first share of stock directly through the company and the transfer agent.

Shares purchased through these plans are held in book entry form by the transfer agent. The book entry form of ownership allows you to own shares without having physical stock certificates in your possession. You get a periodic statement of your account that reflects the number of book entry shares registered in your name and held by transfer agent.

Book entry ownership eliminates the problems associated with paper certificates. You get the benefits of of not having to safely store the certificat. Book entry shares also eliminate the need to physically transfer the stock certificates when you decide to sell or transfer ownership of the stock.

You get the typical benefits of any DRP program. It is a convenient and simple way to purchase shares. You will be able to reinvest all or part of your dividends, and you will be able to make additional Optional Cash Purchases (OCP), also called voluntary cash purchases, by check or by automatic withdrawal from your bank account.

The transfer agent can provide you with a "Prospectus" and enrollment form. The prospectus will describe the details of the plan, including the minimum initial investment and/or minimum number of shares to enroll, minimum and maximum Optional Cash Purchases, and the fees associated with buying and selling shares in the plan.

Dividend Payments
When you buy stock through a DRP Plan, you are a shareowner and have all the rights of any shareholder. So you are entitled to any cash dividends paid by the corporation on the shares you hold on a record date. Dividends are normally paid quarterly.

When you enroll in a DRP Plan, you typically have three options regarding cash dividends:

1. Full Dividend Reinvestment. Reinvest all dividends to purchase additional shares of stock.
2. Partial Dividend Reinvestment. Reinvest any dividends on specific number of shares to purchase additional shares of stock. You receive a check for the remaining dividends.
3. Voluntary Cash Payments only. You receive any dividends as cash payment.

The option to purchase additional shares of stock through "Optional Cash Payments" is typically a seperate decision. Regardless of the dividend option you choose, you will still have the option to make OCP investments whenever you choose. They will be invested on the "Investment Date" as specified in the Prospectus.

Dividend Reinvestment Plan (DRP/DRIP)
To enroll in a conventional Dividend Reinvestment Plan (DRP/DRIP), you must be a registered holder of at least one share of the company's stock. If you are not yet a registered owner and you wish to enroll in the company's plan, you would normally purchase the initial share(s) from a stock broker. Have them issue a stock certificate registered in your name and then contact transfer agent for an enrollment form. The additional shares purchased through the plan will be held in book entry form by the transfer agent.

Book entry ownership eliminates the problems associated with paper certificates. You get the benefits of of not having to safely store the certificat. Book entry shares also eliminate the need to physically transfer the stock certificates when you decide to sell or transfer ownership of the stock.

You get the typical benefits of any DRP program. It is a convenient and simple way to purchase shares. You will be able to reinvest all or part of your dividends, and you will be able to make additional Optional Cash Purchases (OCP), also called voluntary cash investments, by check or by automatic withdrawal from your bank account.

The transfer agent can provide you with a "Prospectus" and enrollment form. The prospectus will describe the details of the plan, including the minimum initial investment and/or minimum number of shares to enroll, minimum and maximum Optional Cash Purchases, and the fees associated with buying and selling shares in the plan.

DRIP (Dividend Reinvestment Plan)
See "Dividend Reinvestment Plan (DRP/DRIP)"

DRP (Dividend Reinvestment Plan)
See "Dividend Reinvestment Plan (DRP/DRIP)"

DRP Programs
DRP Programs allow you to buy stock directly from the issuing company. Many companies absorb all the costs associated with administering their programs. That means you eliminate the need for a Stock Broker and do not pay the fees charged by Stock Brokers. You can also invest as little as $10 in some programs. You may encounter some unfamiliar terms. This glossary introduces you to some of the more common terms you should understand as an investor in DRP's (Dividend Reinvestment Programs).

DSP (Direct Stock Purchase)
See "Direct Stock Purchase (DSP)"

Gift Transfers
Many Direct Stock Purchase Plans allow you to give shares to others, some charge a fee for this service. When the transfer of ownership is completed, the recipient is enrolled in the DRP Program. They will get an account statement showing the transfer of those shares. Transfer agents may also provide a non-negotiable gift certificate with the account statement so you can present it to the recipient. You can use this opion to set up a custodial account for a minor.

Individual Retirement Account (IRA)
Private pension account available to individuals for saving and investing on a tax-deferred basis. The taxes are deferred until money is withdrawn. Early withdrawals of tax deferred contributuons are taxed as income, including the capital gains from such accounts.

Can I set up an IRA in my plan? Several DRP Programs allow shareowners to make investments into an IRA. You need to check the specific plan to determine if your plan offers that option. The transfer agent can answer these questions and provide the enrollment forms.

IRA (Individual Retirement Account)
See "Individual Retirement Account (IRA)"

OCP (Optional Cash Purchases)
See "Optional Cash Purchases (OCP)"

Optional Cash Purchases (OCP)
Also called voluntary cash investments, are offered by all DRP Programs. They provide you a convenient method of purchasing additional shares of stock directly through transfer agent. All plans have minimum and maximum investment requirements and there may be fees for processing the investment. Again, get the prospectus --- it details the fees.

Registered Stock Ownership
A beneficial owner of stock becomes a Registered Owner by having the stock "registered" (or recorded) on the corporation records in his/her name. The registered shareowner is considered the "shareowner of record."

Registered owners receive all corporate communications, dividends, annual reports and proxy material directly from the company Ownership comes in two forms, physical certificates or book entry shares.

If you buy an initial share from a broker with the intent of joining a DRP Program, you must have the broker register the share in your name. Stock Brokers typically assume that you want the ownership recorded by "book entry." That won't qualify you to join a DRP Program. Specifically direct the stock broker to deliver the stock certificate to you. This assures that you are the registered owner.

Safekeeping
Many plans offer the option of holding your physical stock certificates in Safekeeping. These shares are deposited into your account and held in your book entry position. With safekeeping, you eliminate the worry of safeguarding physical certificates. The deposited shares have all the benefits of shares bought through the DRP Program. You can be withdraw or sell them at any time and the dividends can be reinvested.

To deposit shares into your plan account, send your unendorsed certificate(s) to the transfer agent. Include the tear-off form from your statement and a brief letter of instruction.

Sell DRP Stock
Most plans allow you to sell part or all of the shares held in your plan account. You can initiate this action by telephone or by sending in the tear off form that comes with your statement. Again, this option differs by company and transfer agent. So check it out first. The sale may occur the day you request the action or it may take several days, depending on the company and the transfer agent. This option and any fees associated with it will be described in the prospectus.

Set Up An Account For A Child
This is the same as a gift transfer. But you need to understand a little about UGMA and UTMA. These are state laws that govern gifts made to minors. The state you live in will determine whether UGMA or UTMA applies to you. These gifts are irrevocable and automatically pass over to the minor when they reach adult age. The account is governed by the named custodian until the minor reaches adult age.

Uniform Gifts to Minors Act (UGMA): A state statute that provides for an irrevocable gift to be made to minors. It enables them to own securities in a beneficial fashion without the need of trust instruments or other legal documents.

Uniform Transfers to Minors Act (UTMA): Newly enacted law that pertains to residents of various states. Under this law, custodianships for the first time, may be set up by wills or trusts. In time, this law will ultimately replace the Uniform Gifts to Minors Act. One of major differences is that the donor does not have to be a living individual.

The transfer agent will require the following:
1. The Custodian's name followed by the title "Custodian"
2. The minor's name followed by UGMA or UTMA
3. The state of the minor's residence
4. The minor's social security number or taxpayer identification number
5. Complete mailing address, and
6. The share amount to be issued.

Stock Certificate
Your stock certificate is evidence that you own the stock. It is not required for ownership, but is required if it is the initial share(s) for joining a DRP Program. It is a valuable document and should be protected. Keep it in a safe place, such as a safe deposit box. Most DRP Programs offer safekeeping, so you can send it to the transfer agent once you join the DRP Program. It can be costly and inconvenient to replace.

Do not sign your certificate until you sell or transfer your shares. If you send the certificate by mail, send it by registered or certified mail. Insure it for 2% of the market value, that should cover the cost to replace the certificate if it is lost.

When you receive a stock certificate, review it carefully for accuracy. It will include shareowner's name and account number, a unique certificate number, the number of shares, date issued and the name of the Transfer Agent.

Taxpayer Identification Number
Normally, it is your social security number. The IRS requires shareowners who have a U.S. taxpayer identification number to provide that number for every company in which they own shares. The IRS may also require you to complete and submit Form W-9, which is certification of your taxpayer identification number.

When you buy stock, the broker or transfer agent will require that you provide your Taxpayer Identification Number. It is used by the IRS to track your tax obligation from dividends and stock appreciation when you sell your stock. You are legally required to include these gains or losses on your tax return.

Transfer Agent
When you enroll in a DRP program, you do it through the company or through the Transfer Agent the company hires to administer their program. Some of the major transfer agents include First Chicago Trust Co., Bank of New York, Boston Equiserve, and ChaseMellon. For our purposes, the basic role of the stock transfer agent is to administer our DRP Program.

They provide a broad range of services including:
1. Transfer and registration of securities
2. Dividend disbursement and tax reporting
3. Direct Stock Purchase (DSP) administration
4. Dividend Reinvestment Plan (DRIP) administration
5. Annual shareholder meeting services
6. Shareholder Relations

UGMA (Uniform Gifts to Minors Act)
See "Uniform Gifts to Minors Act (UGMA)"

Uniform Gifts to Minors Act (UGMA)
A state statute that provides for an irrevocable gift to be made to minors. It enables them to own securities in a beneficial fashion without the need of trust instruments or other legal documents.

For more information, see "Set Up An Account For A Child."

Uniform Transfers to Minors Act (UTMA)
Newly enacted law that pertains to residents of various states. Under this law, custodianships for the first time, may be set up by wills or trusts. In time, this law will ultimately replace the Uniform Gifts to Minors Act. One of major differences is that the donor does not have to be a living individual.

For more information, see "Set Up An Account For A Child."

UTMA (Uniform Transfers to Minors Act)
See "Uniform Transfers to Minors Act (UTMA)"

Withdrawing Stock Certificates
You can have the transfer agent issue you a stock certificate for any or all whole shares that you accumulae in your plan account. Certificates cannot be issued for fractional shares, they will sell fractional shares and issue you a check for the proceeds. You can request a certificate withdrawal by calling or send in the tear off form on your account statement. Transfer agents differ in the requirements, so check with them before taking action.