<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
RG&E HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
NEW YORK 4931 16-1558410
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
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89 East Avenue
Rochester, New York 14649
(716) 546-2700
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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David C. Heiligman
Secretary
RG&E Holdings, Inc.
89 East Avenue
Rochester, New York 14649
(716) 546-2700
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the effective date of this Registration
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
<PAGE> 2
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
Title of each maximum Proposed
class of offering maximum Amount of
securities to Amount to be price per aggregate registration
be registered registered (1) unit (2) offering price Fee
------------- -------------- -------- -------------- ---
<S> <C> <C> <C> <C>
common stock, 39,750,000 $30.4375 $1,209,890,625 $336,349.60
par value $.01
per share
</TABLE>
(1) The number of shares of common stock of RG&E Holdings, Inc. ("HoldCo") to
be issued in the share exchange described herein cannot be precisely
determined at the time this Registration Statement becomes effective. This
is because shares of common stock of Rochester Gas and Electric
Corporation ("RG&E") may be repurchased pursuant to a share repurchase
plan before the effective time of the share exchange. This Registration
Statement covers a number of shares of common stock of HoldCo which is
estimated to be at least as large as the number of shares of common stock
of RG&E which are expected to be outstanding at the effective time of the
share exchange.
(2) Pursuant to Rules 457(f)(1) and 457(c) of the Securities Act of 1933, the
proposed maximum offering price is based upon the per share market value
of the shares of common stock of RG&E to be exchanged, which is the
average of the high and low sales prices of a share of common stock of
RG&E reported on the New York Stock Exchange, Inc. Composite Tape on
November 13, 1998.
----------------------
RG&E Holdings, Inc. hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until HoldCo shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities Exchange Commission, acting pursuant to
said Section 8(a), may determine.
<PAGE> 3
[R G AND E LOGO]
ROCHESTER GAS AND ELECTRIC CORPORATION
89 East Avenue - Rochester, NY 14649-0001
(716) 546-2700
Dear Shareholder:
On behalf of the Board of Directors, it is my pleasure to invite you to
attend the 1999 annual meeting of shareholders. This year the meeting will be
held at the Hyatt Regency Rochester, 125 East Main Street, Rochester, New York
on Thursday, April 29, 1999 at 11:00 a.m.
At the meeting, we will elect four directors to RG&E's Board of Directors.
We will also consider and vote upon a proposal to reorganize RG&E into a holding
company structure. Your Board of Directors unanimously recommends approval of
the reorganization. The new holding company structure will provide the necessary
organizational and financial flexibility for RG&E to operate effectively in a
deregulated energy marketplace. The name of the new holding company will be RG&E
Holdings, Inc.
Because of the significance of the holding company proposal, it is even
more important than usual that you vote at this year's annual meeting. This
year, therefore, we have introduced some options that we think will make the
voting process quicker and easier for you. As an alternative to returning a
Proxy card in the mail, you may vote electronically by telephone or over the
Internet. To vote electronically, simply call 1-888-xxx-xxxx toll free or visit
our Internet site at http://www.equiserve.com/proxy/. If you prefer to vote by
mail, complete and return the enclosed Proxy card in the envelope provided.
Whichever method you choose, we ask that you vote as soon as possible. You may,
of course, change or withdraw your proxy at any time prior to voting at the
annual meeting.
Sincerely,
Thomas S. Richards
Chairman of the Board, President and
Chief Executive Officer
Dated: March 8, 1999
<PAGE> 4
[R G AND E LOGO]
ROCHESTER GAS AND ELECTRIC CORPORATION
89 East Avenue - Rochester, NY 14649-0001
(716) 546-2700
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD
APRIL 29, 1999
To the shareholders of
ROCHESTER GAS AND ELECTRIC CORPORATION:
The annual meeting of shareholders will be held on April 29, 1999 at
11:00 a.m. at the Hyatt Regency Rochester, 125 East Main Street, Rochester,
New York. At the meeting we will:
(1) consider and vote upon an Agreement and Plan of Share Exchange under
which RG&E will reorganize into a holding company structure. As a
result, RG&E Holdings, Inc., a New York corporation formed by RG&E,
will become the parent company of RG&E;
(2) elect four Class I directors to serve on RG&E's Board of Directors
for a term expiring at the 2002 annual meeting; and
(3) transact such other business as is properly brought before the
shareholders.
Holders of record of RG&E common stock at the close of business on March
1, 1999 are entitled to vote at the annual meeting.
This year, you have three ways to vote your proxy: (a) by mail, (b) by
telephone, and (c) over the Internet. To vote electronically, simply call
1-888-xxx-xxxx toll free or visit our Internet site at
http://www.equiserve.com/proxy/. To vote by mail, complete and return the
enclosed Proxy card in the envelope provided. Whichever method you choose, we
ask that you vote at your earliest convenience. You may, of course, change or
withdraw your proxy at any time prior to voting at the annual meeting.
By Order of the Board of Directors,
David C. Heiligman
Vice President and Corporate Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING
PLEASE VOTE YOUR PROXY PROMPTLY
<PAGE> 5
PROXY STATEMENT
FOR
ROCHESTER GAS AND ELECTRIC CORPORATION
AND
PROSPECTUS
FOR
RG&E HOLDINGS, INC.
COMMON STOCK
This Proxy Statement and Prospectus combines a Proxy Statement for the
1999 annual meeting of shareholders of Rochester Gas and Electric Corporation
("RG&E") with a Prospectus of RG&E Holdings, Inc. ("HoldCo"). The Proxy which
accompanies this Proxy Statement and Prospectus is being solicited on behalf of
the Board of Directors of RG&E.
The Board of Directors proposes to reorganize RG&E into a holding company
structure pursuant to an Agreement and Plan of Share Exchange (the "Plan of
Exchange"). Under the Plan of Exchange, all outstanding shares of RG&E's common
stock will be exchanged on a share-for-share basis for HoldCo common stock.
Thus, each person who owned RG&E common stock immediately prior to the exchange
will own the same number of shares (and percentage) of HoldCo common stock after
the exchange. Likewise, HoldCo will own all of the outstanding shares of RG&E
common stock. For your convenience, we have attached a copy of the Plan of
Exchange to this Proxy Statement and Prospectus as Exhibit A.
In the event the shareholders of RG&E approve the proposed reorganization,
HoldCo will issue up to ________ shares of its common stock, par value $.01 per
share, in exchange for shares of RG&E common stock. HoldCo's stock is not
currently listed on any stock exchange. However, we anticipate that shares of
its common stock will be listed on the New York Stock Exchange following
completion of the proposed reorganization.
If the exchange is implemented, you will not be required to surrender your
RG&E stock certificates. Instead, your RG&E stock certificates will be
automatically deemed to represent shares of HoldCo common stock.
The principal executive offices of both RG&E and HoldCo are located at 89
East Avenue, Rochester, New York 14649, telephone number (716) 546-2700. We
sometimes refer to RG&E and HoldCo collectively as the "Company."
RG&E will mail this Proxy Statement and Prospectus, together with the
accompanying Proxy solicited on behalf of RG&E's Board of Directors, to RG&E's
shareholders on or about March 8, 1999. The date of this Proxy Statement and
Prospectus is March 8, 1999.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROXY STATEMENT AND PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 6
THIS PROXY STATEMENT AND PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT THE COMPANY THAT IS NOT INCLUDED IN OR DELIVERED
WITH THE DOCUMENT. THE COMPANY WILL PROVIDE TO YOU WITHOUT CHARGE, UPON WRITTEN
OR ORAL REQUEST, A COPY OF ANY DOCUMENTS THAT HAVE BEEN OR MAY BE INCORPORATED
BY REFERENCE INTO THIS PROXY STATEMENT AND PROSPECTUS, OTHER THAN CERTAIN
LENGTHY EXHIBITS TO SUCH DOCUMENTS. WRITTEN OR TELEPHONE REQUESTS FOR SUCH
MATERIALS SHOULD BE DIRECTED TO MR. DAVID C. HEILIGMAN, VICE PRESIDENT AND
CORPORATE SECRETARY, ROCHESTER GAS AND ELECTRIC CORPORATION, 89 EAST AVENUE,
ROCHESTER, NEW YORK 14649, TELEPHONE NUMBER (716) 546-2700. PLEASE MAKE YOUR
REQUEST NO LATER THAN APRIL 15, 1999 IN ORDER TO ENSURE TIMELY DELIVERY.
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION........................................................1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................1
FORWARD LOOKING STATEMENTS...................................................2
INFORMATION ABOUT THE ANNUAL MEETING.........................................3
ANNUAL REPORT.......................................................3
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS.....................3
QUESTIONS AND ANSWERS........................................................4
PROPOSAL 1: THE AGREEMENT AND PLAN OF EXCHANGE..............................6
TERMS...............................................................6
RECOMMENDATION OF THE BOARD OF DIRECTORS............................7
PRESENT BUSINESSES..................................................7
REASONS FOR THE REORGANIZATION......................................9
TERMINATION OR AMENDMENT OF THE PLAN OF EXCHANGE...................12
CONDITIONS TO REORGANIZATION.......................................12
RIGHTS OF DISSENTING SHAREHOLDERS..................................12
COMMON STOCK PLANS.................................................13
LISTING OF HOLDCO COMMON STOCK.....................................13
TRANSFER AGENT AND REGISTRAR.......................................13
PRICE OF RG&E COMMON STOCK.........................................13
REGULATORY MATTERS.................................................13
DIVIDEND POLICY....................................................14
DIRECTORS AND EXECUTIVE OFFICERS...................................14
DESCRIPTION OF RG&E CAPITAL STOCK..................................15
DESCRIPTION OF HOLDCO CAPITAL STOCK................................15
COMPARISON OF RG&E COMMON STOCK AND HOLDCO COMMON STOCK............16
<PAGE> 7
POSSIBLE EFFECT OF CERTAIN HOLDCO PROVISIONS AND NEW YORK LAW......18
TREATMENT OF RG&E PREFERRED STOCK..................................19
TREATMENT OF RG&E INDEBTEDNESS.....................................19
ACCOUNTING TREATMENT...............................................19
CERTAIN INCOME TAX CONSEQUENCES....................................19
LEGAL OPINIONS.....................................................20
PROPOSAL 2: ELECTION OF DIRECTORS..........................................20
NOMINEES - CLASS I.................................................21
CONTINUING DIRECTORS - CLASS II....................................22
CONTINUING DIRECTORS - CLASS III...................................22
SECURITY OWNERSHIP OF MANAGEMENT...................................23
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE............24
MEETINGS AND STANDING COMMITTEES OF THE BOARD OF DIRECTORS.........24
REPORT OF THE COMMITTEE ON MANAGEMENT ON EXECUTIVE COMPENSATION....25
EXECUTIVE COMPENSATION.............................................25
EMPLOYMENT AGREEMENTS..............................................30
DIRECTORS' COMPENSATION............................................30
SHAREHOLDER RETURN COMPARISON......................................31
PENSION PLAN TABLE.................................................32
INDEPENDENT ACCOUNTANTS.....................................................33
EXPERTS.....................................................................33
DEADLINE FOR SHAREHOLDER PROPOSALS..........................................33
OTHER MATTERS...............................................................34
COST OF SOLICITATION........................................................34
EXHIBITS
Exhibit A -- Agreement and Plan of Share Exchange
Exhibit B -- Certificate of Incorporation of HoldCo
Exhibit C -- By-laws of HoldCo
(iii)
<PAGE> 8
AVAILABLE INFORMATION
RG&E is subject to the informational requirements of the Securities
Exchange Act of 1934. It files annual and quarterly reports, proxy statements
and other information with the Securities and Exchange Commission (the "SEC") in
accordance with the Securities Exchange Act. You may read and copy any such
reports, proxy statements and other information at the SEC's public reference
facilities in New York and Chicago as well as in the SEC's Public Reference Room
located at 450 Fifth Street, NW, Washington, D.C. 20549. You can obtain
information about the operation of the Public Reference Room by calling
1-800-SEC-0330. The SEC also maintains an Internet web site at www.sec.gov that
contains reports, proxy statements and other information regarding reporting
companies. You may also read and copy any such reports, proxy statements and
other information concerning RG&E at the offices of the New York Stock Exchange
at 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" certain information into
this Proxy Statement and Prospectus. This means that we can disclose important
information by referring you to another document filed separately with the SEC.
The information incorporated by reference is deemed to be part of this Proxy
Statement and Prospectus unless it is superseded by information in this Proxy
Statement and Prospectus. This Proxy Statement and Prospectus incorporates by
reference the documents set forth below that were previously filed with the SEC.
Such documents contain important information about RG&E, its subsidiaries and
their operations and financial condition:
(1) RG&E's Annual Report on Form 10-K for the year ended December 31,
1997.
(2) RG&E's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998, June 30, 1998 and September 30, 1998.
(3) RG&E's Current Report on Form 8-K dated February 12, 1998.
We are also incorporating by reference any additional documents that we
may file with the SEC between the date of this Proxy Statement and Prospectus
and the termination of the offering made by this Proxy Statement and Prospectus.
HoldCo has filed a Registration Statement on Form S-4 with the SEC under
the Securities Act of 1933. The primary purpose of the Registration Statement is
to register the shares of HoldCo common stock that it will issue pursuant to the
proposed exchange. As permitted by the rules and regulations of the SEC, this
Proxy Statement and Prospectus does not contain all of the information set forth
in the Registration Statement.
THE COMPANY WILL PROVIDE TO YOU WITHOUT CHARGE, UPON WRITTEN OR ORAL
REQUEST, A COPY OF ANY DOCUMENTS THAT HAVE BEEN OR MAY BE INCORPORATED BY
REFERENCE INTO THIS PROXY STATEMENT AND PROSPECTUS, OTHER THAN CERTAIN LENGTHY
EXHIBITS TO SUCH DOCUMENTS. WRITTEN OR TELEPHONE REQUESTS FOR SUCH MATERIALS
SHOULD BE DIRECTED TO MR. DAVID C. HEILIGMAN, VICE PRESIDENT AND CORPORATE
SECRETARY, ROCHESTER GAS AND ELECTRIC CORPORATION, 89 EAST
<PAGE> 9
AVENUE, ROCHESTER, NEW YORK 14649, TELEPHONE NUMBER (716) 546-2700. PLEASE MAKE
YOUR REQUEST NO LATER THAN APRIL 15, 1999 IN ORDER TO ENSURE TIMELY DELIVERY.
THE BOARD OF DIRECTORS HAS NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT AND
PROSPECTUS. THIS PROXY STATEMENT AND PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY SHARES OF HOLDCO COMMON STOCK BY ANY
PERSON IN ANY JURISDICTION OR IN ANY CIRCUMSTANCE IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT AND PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF RG&E OR HOLDCO SINCE THE DATE OF THIS PROXY
STATEMENT AND PROSPECTUS.
FORWARD LOOKING STATEMENTS
This Proxy Statement and Prospectus contains statements which are not
historical fact and which can be classified as forward looking. These statements
can be identified by the use of certain words which suggest forward looking
information, such as "believes," "expects," "projects," "estimates" and
"anticipates." They can also be identified by the use of words which relate to
future goals or strategies.
In addition to the assumptions and other factors referred to specifically
in connection with the forward looking statements, some of the factors that
could make a significant difference in whether the forward looking statements
ultimately prove to be accurate include:
(1) any state or federal legislative or regulatory initiatives that
affect the cost or recovery of investments necessary to provide
utility service in the electric and natural gas industries. Such
initiatives could include, for example, changes in the regulation of
rate structures or changes in the speed or degree to which
competition occurs in the electric and natural gas industries;
(2) any changes in the ability of the Company to recover environmental
compliance costs through increased rates;
(3) any changes in the regulatory status of nuclear generating
facilities and their related costs, including recovery of costs
related to spent fuel and decommissioning;
(4) any changes in the rate of industrial, commercial and residential
growth in the Company's service territories;
(5) the development of any new technologies which allow customers to
generate their own energy or produce lower cost energy;
(6) any unusual or extreme weather or other natural phenomena;
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<PAGE> 10
(7) the ability of the Company to manage profitably its new unregulated
operations;
(8) certain unknowable risks involved in operating unregulated
businesses in new territories and new industries;
(9) the timing and extent of changes in commodity prices and interest
rates;
(10) any unanticipated developments associated with identifying,
assessing, fixing and testing the modifications necessary to
mitigate Year 2000 compliance problems, including the possible
indirect impact of customers, suppliers and other business partners
who do not sufficiently mitigate their Year 2000 compliance
problems; and
(11) any other considerations that may be disclosed from time to time in
the Company's publicly disseminated documents and filings.
INFORMATION ABOUT THE ANNUAL MEETING
This Proxy Statement and Prospectus is being furnished in connection with
the solicitation of proxies on behalf of the Board of Directors of RG&E to be
used at RG&E's 1999 annual meeting of shareholders. RG&E will mail this Proxy
Statement and Prospectus and the Proxy card to holders of RG&E common stock on
or about March 8, 1999.
ANNUAL REPORT.
RG&E has mailed a copy of its Annual Report for the year ended December
31, 1998, which includes consolidated financial statements, to all of its
shareholders of record.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS.
GENERAL. The close of business on March 1, 1999 has been fixed as the
record date for determining the holders of RG&E common stock entitled to vote at
the 1999 annual meeting. As of February 1, 1999, RG&E had outstanding ________
shares of common stock. Shareholders of record are entitled to one vote per
share on the proposed Plan of Exchange and in the election of directors.
In voting on the proposed Plan of Exchange (Proposal 1 on your Proxy
card), you may vote in favor of the proposal or against the proposal or you may
abstain from voting. The vote required to approve the proposed Plan of Exchange
is the affirmative vote, in person or by proxy, of two-thirds of the outstanding
shares of RG&E common stock. As a result, in accordance with New York law,
abstentions will have the same legal effect as a vote against the proposed Plan
of Exchange.
In voting in the election of directors (Proposal 2 on your Proxy card),
you may vote for the election of all of the nominees or you may withhold your
votes as to all or specific nominees. The four nominees who receive the highest
number of affirmative votes, in person or by proxy, will be elected to serve as
directors. As a result, in accordance with New York law, abstentions will have
no effect on the election of directors.
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<PAGE> 11
You may revoke your Proxy at any time before its exercise at the annual
meeting. Therefore, voting by proxy now will not affect your right to vote in
person at the meeting.
EMPLOYEE SHAREHOLDERS. The Proxy is for shares of RG&E common stock
registered in your name. The Proxy also includes any shares held for you under
the Automatic Dividend Reinvestment and Stock Purchase Plan, the RG&E Savings
Plus Plan and/or the Employee Stock Ownership Plan.
If you complete and return your proxy by mail, telephone or Internet, the
proxies will vote your shares in accordance with your instructions. You may sign
and return your Proxy card without checking any boxes, in which case the proxies
will vote your shares for the election of all of the nominees and for the
proposed Plan of Exchange.
If you do not return the Proxy card or otherwise vote by telephone or over
the Internet, the trustee of the RG&E Savings Plus Plan may nonetheless instruct
the proxies to vote any Savings Plus Plan shares held by you (but not your other
shares) in the same proportion as shares voted by other participants in the
Plan.
NON-EMPLOYEE SHAREHOLDERS. The Proxy is for shares of RG&E common stock
registered in your name. The Proxy also includes any shares held for you under
the Automatic Dividend Reinvestment and Stock Purchase Plan. If you complete and
return your proxy by mail, telephone or Internet, the proxies will vote your
shares in accordance with your instructions. If you sign and return your Proxy
card without checking any of the boxes, the proxies will vote your shares for
the election of all of the nominees and for the proposed Plan of Exchange.
SHARES HELD IN STREET NAME. Whether or not you are an employee of RG&E, if
you beneficially own shares which your broker holds in street name on your
behalf, you will be provided with a form of Proxy instructing the broker how to
vote for you. If you do not provide voting instructions to your broker, your
broker may, in accordance with the rules of the New York Stock Exchange, vote
such shares in his or her discretion in the election of directors. However, your
broker may not vote such shares in his or her discretion on the proposed Plan of
Exchange. Such "broker non-votes" will have the same legal effect as a vote
against the proposed Plan of Exchange. Therefore, to vote your shares in favor
of the Plan of Exchange, you must so instruct your broker on the form of Proxy.
QUESTIONS AND ANSWERS
The following Questions and Answers highlight selected information
regarding the proposed Plan of Exchange and may not contain all of the
information that is important to you. For a more complete discussion of our
proposed holding company restructuring, including the proposed Plan of Exchange,
you should read carefully this entire document, the attached exhibits and the
documents that are incorporated by reference.
1. WHEN AND WHERE WILL THE ANNUAL MEETING TAKE PLACE? The 1999 annual
meeting of shareholders of RG&E will be held at 11:00 a.m. on April 29, 1999 at
the Hyatt Regency Rochester, 125 East Main Street, Rochester, New York.
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<PAGE> 12
2. WHAT IS THE PLAN OF EXCHANGE? The Plan of Exchange provides that
each share of RG&E common stock will be exchanged for one share of HoldCo common
stock. As a result of the exchange, you will own HoldCo common stock and HoldCo
will own all of the outstanding shares of RG&E common stock. HoldCo will also
own all of the outstanding shares of stock of RG&E's existing subsidiaries.
Although our organizational structure will change, HoldCo will continue to
conduct RG&E's current businesses through RG&E and HoldCo's other subsidiaries.
3. WHY IS THE PLAN OF EXCHANGE BEING PROPOSED? We believe that the Plan
of Exchange will result in greater financial, managerial and organizational
flexibility. As a result, the Company will be in a better position to adapt to
the rapidly changing energy marketplace and to meet and take advantage of future
challenges and opportunities.
4. WILL I HAVE TO EXCHANGE MY RG&E STOCK CERTIFICATES FOR NEW HOLDCO
STOCK CERTIFICATES? No. The Plan of Exchange provides that your RG&E
certificates will be automatically deemed to represent HoldCo common stock
instead of RG&E common stock.
5. WILL MY DIVIDENDS BE AFFECTED? There is no reason to expect that
dividends will be affected by the reorganization. RG&E intends to pay dividends
to HoldCo in amounts which will be sufficient for HoldCo to pay cash dividends
to its shareholders. We anticipate that such dividends paid to HoldCo will be
sufficient to enable HoldCo to pay dividends on its common stock on the same
dates that RG&E currently pays dividends. As in the past, however, the ability
of RG&E to pay dividends will be subject to the availability of retained
earnings and the Company's financial circumstances. In the future, dividends
from subsidiaries other than RG&E may also be a source of funds for dividend
payments by HoldCo.
6. WHEN WILL THE SHARE EXCHANGE OCCUR? We intend to implement the
exchange as soon as practicable after we receive your approval and all of the
required regulatory approvals.
7. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE? You
will not recognize any gain or loss for federal income tax purposes if you
exchange your RG&E common stock for HoldCo common stock.
8. WILL RG&E PREFERRED STOCK BE EXCHANGED? No. Shares of RG&E's
preferred stock will remain securities of RG&E after the exchange. We do not
want to alter, or potentially alter, the nature of the investment represented by
such fixed income securities, namely a direct investment in a regulated utility.
9. WHERE WILL MY HOLDCO COMMON STOCK BE TRADED? We expect the HoldCo
common stock to be listed on the New York Stock Exchange and, after the
exchange, to trade under the stock symbol "_____."
10. WHO WILL MANAGE HOLDCO? The Board of Directors of HoldCo will
consist of the same directors as the Board of Directors of RG&E and the first
election of HoldCo directors will be at its annual meeting of shareholders in
2000. In addition, we anticipate that HoldCo and RG&E will have some common
officers.
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<PAGE> 13
11. WHO IS ENTITLED TO VOTE? Holders of RG&E common stock at the close
of business on March 1, 1999 are entitled to vote on the proposed Plan of
Exchange.
12. WHAT VOTE IS REQUIRED TO APPROVE THE PLAN OF EXCHANGE? Two-thirds of
the outstanding shares of RG&E common stock must vote in favor of the proposed
Plan of Exchange in order for it to be adopted. Votes may be cast in person or
by proxy.
13. WILL I HAVE DISSENTERS' RIGHTS UNDER NEW YORK LAW IF I VOTE AGAINST
THE PLAN OF EXCHANGE? No. New York law does not provide for dissenters' rights
with respect to the adoption of the Plan of Exchange.
THE AGREEMENT AND PLAN OF EXCHANGE
(PROPOSAL 1 ON YOUR PROXY CARD)
TERMS.
RG&E proposes to reorganize its operations by forming a holding company
structure pursuant to the Plan of Exchange. Under the terms of the Plan of
Exchange, all of the outstanding shares of RG&E common stock will be exchanged
on a share-for-share basis for HoldCo common stock. When the exchange is
completed, each person who owned RG&E common stock immediately prior to the
exchange will own a corresponding number of shares (and percentage) of HoldCo
common stock. Similarly, HoldCo will own all of the outstanding shares of RG&E
common stock. If the exchange is implemented, shareholders will not be required
to surrender their existing RG&E stock certificates for stock certificates of
HoldCo.
The Board of Directors of RG&E believes that the Plan of Exchange is in
the best interests of the shareholders. The Plan of Exchange has been approved
by the Boards of Directors of both RG&E and HoldCo and has been executed by
authorized officers of each company. If the shareholders approve the Plan of
Exchange, and if the applicable regulatory approvals are obtained, the exchange
will become effective when the New York Department of State files a Certificate
of Exchange on behalf of RG&E (or at such later time as is specified in the
Certificate of Exchange).
Shareholder approval of the Plan of Exchange will also constitute approval
of certain amendments to RG&E's Common Stock Plans (as defined below under "The
Agreement and Plan of Exchange - Common Stock Plans"). Such amendments provide
for the future use of HoldCo common stock in lieu of RG&E common stock under the
Common Stock Plans. Moreover, after the exchange is completed, HoldCo will
become the sponsor of the Common Stock Plans instead of RG&E.
After the exchange, HoldCo common shareholders will have the right to vote
on corporate action concerning HoldCo (but not RG&E) in accordance with the New
York Business Corporation Law. RG&E preferred stock will remain securities of
RG&E after the exchange. Moreover, the exchange will not result in any change in
the outstanding indebtedness of RG&E, which will continue to be indebtedness of
RG&E after the exchange.
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<PAGE> 14
RECOMMENDATION OF THE BOARD OF DIRECTORS.
The Board of Directors unanimously recommends that shareholders vote FOR
the Plan of Exchange. In making its decision to recommend the Plan of Exchange,
the Board of Directors has considered many factors, the most significant of
which are discussed below.
The energy industry is evolving at an accelerated pace and undergoing a
fundamental transformation into a competitive marketplace. This is primarily a
result of state and federal regulatory developments and escalating competitive
pressures. To respond effectively to the increased competition and restructured
regulatory environment, the Board of Directors has determined that RG&E must
position itself to take advantage of potential business opportunities outside of
its present markets.
In the opinion of the Board of Directors, it is desirable in the long run
for RG&E to pursue its new business opportunities through a holding company
structure. The Plan of Exchange will help RG&E to separate its utility business
from its non-utility businesses. This will increase its operating flexibility,
enhance the Company's ability to take advantage of new business opportunities in
a timely manner, and broaden the range of financing techniques available to the
Company. The separation of RG&E's businesses will also provide a better
structure for regulators to assure that there is no cross-subsidization of costs
or transfer of business risk between its utility and non-utility businesses.
The Board of Directors considered the financial cost to the Company of
implementing the Plan of Exchange. Such costs include (a) expenses associated
with obtaining the required regulatory approvals, (b) expenses associated with
this proxy solicitation, and (c) expenses incurred in connection with
registering the HoldCo common stock with the SEC.
The Board of Directors has determined that the exchange should only
involve the RG&E common stock. The Board's decision not to provide for the
exchange of RG&E preferred stock was based primarily on two factors: (a) its
desire not to alter the nature of the investment decision represented by such
fixed income securities - namely, a direct investment in a regulated utility -
and, (b) its conclusion that the benefits to the preferred shareholders of
maintaining a priority position with respect to dividends and assets on
liquidation outweigh any detriment associated with not having an interest in the
non-utility aspects of the Company's businesses.
PRESENT BUSINESSES.
RG&E. RG&E was organized under the laws of the State of New York in 1904.
It is engaged principally in the businesses of generating, purchasing,
transmitting and distributing electricity, and purchasing, transporting and
distributing natural gas. For the twelve months ended September 30, 1998, 68% of
its operating revenues were derived from electric service, 29% from natural gas
service and 3% from unregulated businesses. RG&E's service area has a population
of approximately one million and is well diversified among residential,
commercial and industrial consumers. In addition to the City of Rochester, which
is the third largest city and a major industrial center in New York State, it
includes a substantial suburban area with a large and prosperous farming area.
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<PAGE> 15
RG&E's current corporate structure is as follows:
RG&E
R
ENERGETIX HOLDCO RGS DEVELOPMENT
UR UR UR
R = REGULATED UR = UNREGULATED
ENERGETIX. It is part of RG&E's financial strategy to seek growth by
entering into unregulated businesses. The Settlement Agreement (discussed below
under "The Agreement and Plan of Exchange - Reasons for the Reorganization - The
Settlement Agreement") allows RG&E to invest up to $100 million in unregulated
businesses. The first step in this direction was the formation and operation of
Energetix, Inc. ("Energetix"). Energetix is an unregulated subsidiary that will
bring energy products and services to the marketplace both within and outside
RG&E's regulated franchise territory. Energetix intends to market electricity,
natural gas, oil and propane fuel energy services in an area extending in a
150-mile radius around Rochester.
In August 1998, Energetix announced the acquisition of Griffith Oil Co.,
Inc. ("Griffith"), the second largest oil and propane distribution company in
New York State. Griffith gives Energetix access to 65,000 new customers, with
60,000 of them residing outside of RG&E's regulated franchise territory. In
addition to its current products, Griffith sells electricity, natural gas and
other services offered by Energetix to its existing customers. Griffith has
approximately 350 employees and operates 16 customer service centers.
RGS. During the second quarter of 1998, RG&E formed a new unregulated
subsidiary, RGS Development Corporation ("RGS"). RGS was formed to pursue
unregulated business opportunities in the energy marketplace.
HOLDCO. HoldCo, a New York corporation, was organized in 1998 for the
purpose of carrying out the reorganization of RG&E into a holding company
structure. HoldCo is currently a direct subsidiary of RG&E. Upon the
consummation of the exchange, HoldCo will become the parent of RG&E. Moreover,
RG&E intends to transfer Energetix and RGS to HoldCo immediately prior to the
exchange so that HoldCo will remain the parent of Energetix, RGS and any other
former subsidiaries of RG&E after the consummation of the exchange. Thus, all
the business and operations conducted by RG&E and its subsidiaries immediately
before the exchange will continue to be conducted by HoldCo and its subsidiaries
(including RG&E) immediately after the exchange. Similarly, the consolidated
assets and liabilities of RG&E and its subsidiaries immediately before the
exchange will be the same as the consolidated assets and liabilities of HoldCo
and its subsidiaries (including RG&E) immediately after the exchange.
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<PAGE> 16
We expect the reorganized corporate structure of the Company immediately
after the exchange to be as follows:
HOLDCO
UR
ENERGETIX RG&E RGS DEVELOPMENT
UR R UR
R = REGULATED UR = UNREGULATED
HoldCo is not expected to be an operating company. After the
reorganization is completed, HoldCo will engage in non-utility business
activities through certain of its subsidiaries, including Energetix and RGS. As
business conditions warrant, additional subsidiaries of HoldCo, or of one or
more of its subsidiaries, may be formed.
REASONS FOR THE REORGANIZATION.
THE REGULATORY FRAMEWORK. The primary purpose of the reorganization is
to establish the optimal corporate structure to respond to increased
competition in the electric and natural gas industries.
Beginning with the passage of the Public Utility Regulatory Policies Act
of 1978 and the National Energy Policy Act of 1992, there has been a significant
increase in the level of competition in the market for the generation and sale
of electricity. More recently, in 1996, the Federal Energy Regulatory Commission
(the "FERC") issued Order No. 888. Among other things, Order 888 requires public
utilities controlling transmission facilities to open the wholesale electricity
market to increased competition by filing non-discriminatory open access
transmission tariffs. In early 1997, RG&E and the other New York State electric
utilities made such a filing with the FERC. The filing included the
establishment of (a) a reliability council, (b) a power exchange that will
establish visible spot market prices for wholesale electricity, and (c) an
independent system operator that will control most electric transmission
facilities in New York State as an integrated system and on a non-discriminatory
basis.
The transition to a more competitive electric industry in New York State
was set in motion in August 1994 when the New York Public Service Commission
(the "PSC") instituted an investigation of issues related to a restructuring of
the electric industry in New York State. The overall objective of the
investigation was to identify regulatory and ratemaking practices that would
assist in the transition to a more competitive electric industry.
The natural gas business has also become increasingly competitive as a
result of federal legislative and regulatory initiatives. As a consequence,
natural gas distribution companies and larger end users can now purchase gas
supply from a wide choice of producers and brokers in an
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<PAGE> 17
essentially unregulated market. The federal regulatory changes in the natural
gas industry culminated in 1992 when the FERC issued Order No. 636. Among other
things, Order 636 mandates the unbundling of interstate pipeline sales service
and establishes certain open access transportation requirements. One consequence
of unbundling services has been the creation of a new environment that mixes
competition and regulation.
At the state level, the PSC issued an Opinion and Order in December 1994
that set forth the policy framework to guide the transition of New York State's
gas distribution industry into a more competitive marketplace. Pursuant to that
and subsequent Orders, RG&E modified its natural gas tariffs to permit all
customers - residential, small business, commercial and industrial - to purchase
natural gas from other sources, provided they use RG&E's transportation network
for a separate fee. Under this program, marketers are allowed to aggregate
smaller loads, thus making smaller customers more attractive to serve.
Under a March 1996 Order, the PSC permitted RG&E and other gas
distribution companies to assign to marketers the pipeline and storage capacity
held by RG&E to serve their customers. In a Policy Statement issued in November
1998, the PSC ordered that the mandatory assignment of capacity, permitted by
the March 1996 Order, be terminated effective April 1, 1999.
In its November 1998 Policy Statement, the PSC announced its conclusion
that the most effective way to establish a competitive gas supply market is for
gas distribution utilities to cease selling gas. The PSC established a
transition process in which it plans to address three groups of issues: (a)
individual gas utility plans to implement the PSC's vision of the market; (b)
key generic issues to be dealt with through collaboration among gas utilities,
marketers, pipelines and other stakeholders, and (c) coordination of issues that
are common to both the gas and the electric industries.
In August 1998, prior to issuance of the PSC's Policy Statement, RG&E had
commenced negotiations with the staff of the PSC and other parties to develop a
comprehensive multi-year settlement of various issues, including rates and the
structure of RG&E's gas business. Because the negotiation of a comprehensive
settlement is not anticipated to conclude until mid 1999, the parties to the
negotiations agreed to an Interim Settlement, effective through June 1999, that
deals with such issues as rates, transportation and storage capacity costs, and
assignment of capacity. Under the Interim Settlement, which was approved by the
PSC in November 1998, base rates for gas service remain frozen at their current
levels (which were fixed pursuant to a 1995 Settlement that expired at the end
of October 1998). Additionally, RG&E must provide a guaranteed level of benefits
to customers from the re-marketing of unneeded transportation and storage
capacity, and RG&E must permit marketers serving up to ten percent of retail and
aggregated customer load to do so without having to take assignment of the
corresponding capacity. With certain exceptions, RG&E is permitted to recover
the costs associated with non-assigned capacity from all customers.
RG&E and the other parties to the settlement negotiations are proceeding
with discussions based on the August 1998 comprehensive settlement proposal and
the PSC's Policy Statement. RG&E's objective is to have a comprehensive
settlement in place prior to July 1, 1999.
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<PAGE> 18
This mixture of competition and regulation creates new opportunities (and
risks) for energy service providers and their customers.
THE SETTLEMENT AGREEMENT. During 1996 and 1997, RG&E, the staff of the PSC
and several other parties negotiated an agreement regarding electric service
which was approved by the PSC in November 1997 (the "Settlement Agreement"). The
Settlement Agreement sets the framework for the introduction and development of
open competition in the electric energy marketplace and lasts through June 30,
2002. Over this time, the way electricity is delivered to customers will
fundamentally change. In phases, RG&E will allow customers to purchase
electricity, and later capacity commitments, from sources other than RG&E
through its Energy Choice Program. These suppliers will compete to package and
sell energy and related services to customers. Competing suppliers will pay RG&E
a fee to use its electric distribution system and RG&E will remain responsible
for maintaining the system and for responding to emergencies.
The Settlement Agreement sets RG&E's electric rates for each year during
its five-year term. Over the five-year period, RG&E's rate decreases will total
approximately $64.6 million. The Settlement Agreement permits RG&E to fund its
unregulated operations with up to $100 million.
The Settlement Agreement requires RG&E to functionally separate its three
regulated operations: distribution, generation and retailing. Additionally,
unregulated energy retailing operations must be structurally separate from the
regulated utility functions. Although the Settlement Agreement provides
incentives for the sale of generating assets, it does not require RG&E to divest
generating or other assets or write off stranded costs. Additionally, RG&E will
be given a reasonable opportunity to recover prudently incurred costs, including
those pertaining to generation and purchased power.
RG&E believes that the Settlement Agreement will not adversely affect its
eligibility to continue to apply certain accounting rules applicable to
regulated industries. In particular, RG&E believes it will continue to be
eligible for the favorable treatment provided by SFAS-71 (Accounting for the
Effects of Certain Types of Regulation) which allows RG&E to include assets on
its balance sheet based on its regulated ability to recoup the cost of those
assets. However, this may not be the case with respect to certain operational
costs associated with non-nuclear generation. If, contrary to RG&E's view, its
eligibility to apply SFAS-71 is adversely affected, the Company could be
required to make a material write-down of assets, the amount of which it cannot
presently determine.
The Energy Choice Program approved by the PSC as part of the Settlement
Agreement went into effect on July 1, 1998. During the first year of the
program, customers whose electric energy represents approximately 10% of RG&E's
total annual retail sales are now eligible to purchase electricity (but not
capacity commitments) from alternative suppliers. RG&E will completely open the
system to competitors by July of 2001.
BENEFITS OF A HOLDING COMPANY STRUCTURE. RG&E could continue to pursue
non-utility business opportunities directly or through Energetix, RGS and its
other subsidiaries. The Board of Directors believes, however, that it is more
desirable in the long run to conduct its business through a holding company
structure.
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<PAGE> 19
The holding company structure is a well-established form of organization
for companies conducting multiple lines of business. It is a common form of
organization for non-utility companies and for those regulated companies, such
as telephone utilities and water utilities, which are not subject to the Public
Utility Holding Company Act of 1935. In addition, it is utilized by many
electric and gas companies which are involved in non-utility activities.
There are many benefits of a holding company structure. Under a holding
company structure, HoldCo would be able to engage in non-utility businesses
without obtaining the prior approval of the PSC, thereby enabling HoldCo to
pursue such business opportunities in a timely manner. The proposed holding
company structure also would permit the use of financing techniques that are
better suited to the particular requirements, characteristics and risks of
non-utility operations without affecting the capital structure or
creditworthiness of RG&E. This would increase the Company's financial
flexibility by allowing the design and implementation of capitalization ratios
appropriate for the capital and business requirements of each of the Company's
individual lines of business.
The proposed holding company structure separates the operations of RG&E's
utility and non-utility businesses. As a result, it provides a better structure
for regulators to assure that there is no cross-subsidization of costs or
transfer of business risk between businesses. The proposed holding company
structure would also make it is easier for investors to analyze and value the
Company's individual lines of business. Moreover, the use of a holding company
structure provides legal protection against the imposition of liability on
regulated utilities for the results of non-utility business activities.
TERMINATION OR AMENDMENT OF THE PLAN OF EXCHANGE.
Even if the shareholders approve the Plan of Exchange, the Board of
Directors of either HoldCo or RG&E may terminate the Plan of Exchange at any
time prior to its effectiveness. In addition, the Board of Directors of RG&E and
HoldCo, acting together, may amend the Plan of Exchange at any time prior to its
effectiveness. However, once the shareholders have approved the Plan of
Exchange, the Boards may not change the number or nature of the shares to be
exchanged or otherwise adversely affect the rights of the shareholders of RG&E.
CONDITIONS TO REORGANIZATION.
The Plan of Exchange must be approved by various regulatory agencies as
well as by the shareholders of RG&E. RG&E received FERC approval on
_____________, PSC approval on ____________, Nuclear Regulatory Commission (the
"NRC") approval on ____________ and SEC approval on __________.
RIGHTS OF DISSENTING SHAREHOLDERS.
Pursuant to Section 910(a)(1)(C) of the New York Business Corporation Law,
holders of RG&E common and preferred stock will not have dissenters' rights in
connection with the Plan of Exchange. This is because the RG&E common stock is
listed on a national securities exchange and because the RG&E preferred stock
will not be exchanged.
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<PAGE> 20
COMMON STOCK PLANS.
RG&E currently maintains the following stock-related employee plans: 1996
Performance Stock Option Plan and RG&E Savings Plus Plan. In addition, RG&E
offers to all of its shareholders an Automatic Dividend Reinvestment and Stock
Purchase Plan (collectively, the "Common Stock Plans").
Once the exchange is completed, HoldCo common stock will be used in lieu
of RG&E common stock whenever stock is required in connection with the Common
Stock Plans. Moreover, HoldCo will become the sponsor of the Common Stock Plans
instead of RG&E. Amendments to the Common Stock Plans to provide for the
foregoing will take effect at the same time as the exchange. Shareholder
approval of the Plan of Exchange also will constitute shareholder approval of
such amendments to the Common Stock Plans.
LISTING OF HOLDCO COMMON STOCK.
We expect the HoldCo common stock to be approved for listing on the New
York Stock Exchange and to trade under the stock symbol "_______." At the time
of the listing of HoldCo common stock, we will de-list the RG&E common stock.
TRANSFER AGENT AND REGISTRAR.
The transfer agent and registrar for HoldCo common stock will be
BankBoston, N.A. The address for the transfer agent and registrar is P.O.
Box 8040, Boston, Massachusetts 02266-8040.
PRICE OF RG&E COMMON STOCK.
RG&E's common stock is currently listed on the New York Stock Exchange.
The high and low sales prices of RG&E's common stock during the twelve months
ended December 31, 1998 were $______ and $______, respectively. The high and low
sales prices on _________, 1999 were $______ and $______, respectively.
REGULATORY MATTERS.
Upon completion of the reorganization, the PSC, the NRC and the FERC will
continue to regulate RG&E. However, the PSC, the NRC and the FERC will not
regulate HoldCo, except to the extent that the rules or orders of such
regulatory agencies impose restrictions on HoldCo's relationships with RG&E.
After the exchange, we anticipate that both HoldCo and RG&E will be subject to
the reporting requirements of the Exchange Act.
The FERC has held that the transfer of common stock of a public utility
company from its existing shareholders to a holding company in a transaction
such as the proposed exchange constitutes a transfer of the "ownership and
control" of the facilities of such utility. Such an exchange is thus subject to
FERC review and approval under Section 203 of the Federal Power Act. RG&E
received FERC approval for the exchange on _______________.
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<PAGE> 21
A provision in the Atomic Energy Act requires NRC consent for the transfer
of control of NRC licenses. The NRC staff has in the past asserted that this
provision applies to the creation of a holding company over an NRC-licensed
utility company in a transaction such as the proposed reorganization. RG&E owns
one nuclear generating facility and a portion of one other nuclear generating
facility and therefore holds an NRC owner's license. RG&E has therefore applied
for NRC approval for the transfer of control of its license to HoldCo.
DIVIDEND POLICY.
We expect that HoldCo will pay quarterly dividends on its common stock on
the same dates that RG&E currently pays dividends. The most recent quarterly
dividend paid on RG&E common stock was $.45 per share payable on October 24,
1998. The ability of HoldCo to pay common stock dividends will be governed by
the ability of HoldCo's subsidiaries to pay dividends to HoldCo. Because RG&E
will be by far the largest of the subsidiaries, we expect that for the
foreseeable future the funds required by HoldCo to enable it to pay dividends
will be derived predominantly from the dividends paid to HoldCo by RG&E. In the
future, dividends from subsidiaries other than RG&E may also be a source of
funds for dividend payments by HoldCo.
RG&E's ability to make dividend payments to HoldCo will be subject to the
availability of retained earnings and the needs of its utility business. RG&E
intends to pay dividends to HoldCo, if available, in amounts which will be
sufficient for HoldCo to pay cash dividends and to pay its operating expenses.
However, because RG&E will remain subject to regulation by the PSC, the amount
of its earnings and dividends will be affected by the manner in which the PSC
regulates RG&E. Furthermore, the ability of RG&E to pay dividends to HoldCo will
continue to be subject to the preferential dividend rights of the holders of the
RG&E preferred stock. In addition, although it has no present intention to do
so, it is possible that RG&E may need to issue additional preferred stock in the
future. Such additional preferred stock would also have preferential dividend
rights.
DIRECTORS AND EXECUTIVE OFFICERS.
Until the year 2000 annual meeting, the Board of Directors of HoldCo will
consist of the same directors as the Board of Directors of RG&E. If the
shareholders approve the Plan of Exchange, they will be considered also to have
ratified the election of such persons as directors of HoldCo. In addition, we
anticipate that HoldCo and RG&E will have some common officers. HoldCo and RG&E
may also have directors and executive officers who are not directors or
executive officers of the other.
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<PAGE> 22
DESCRIPTION OF RG&E CAPITAL STOCK.
RG&E is authorized to issue:
- - 50,000,000 shares of common stock having a par value of $5.00 per
share, of which __________ shares were issued and outstanding as of
December 31, 1998;
- - 2,000,000 shares of preferred stock having a par value of $100.00 per
share, of which __________ shares were issued and outstanding as of
December 31, 1998;
- - 4,000,000 shares of preferred stock having a par value of $25.00 per
share, of which none were issued and outstanding as of December 31,
1998; and
- - 5,000,000 shares of preference stock having a par value of $1.00 per
share, of which none were issued and outstanding as of December 31,
1998.
The outstanding preferred stock has preference over the common stock, and
would have preference over shares of preference stock if any such shares were
outstanding, as to dividends and assets on liquidation. If shares of preference
stock were issued and outstanding, such shares would have preference over the
common stock as to dividends and assets on liquidation.
DESCRIPTION OF HOLDCO CAPITAL STOCK.
GENERAL. HoldCo is authorized to issue:
- - 100 million shares of common stock having a par value of $.01 per
share, of which 1,000 shares were issued and outstanding as of
December 31, 1998; and
- - 10 million shares of preferred stock having a par value $.01 per
share, of which none were issued and outstanding as of December 31,
1998.
PREFERRED STOCK. Like the RG&E charter, the HoldCo charter provides that,
to the extent permitted by the New York Business Corporation Law, the Board of
Directors is authorized, at any time or from time to time, to establish and
designate one or more series of preferred stock and to fix the number of shares
and the relative rights, preferences and limitations of each such series.
DIVIDENDS. Subject to any prior rights of HoldCo preferred stock, if any
should become outstanding, HoldCo will pay dividends on its common stock if,
when and as determined by its Board of Directors from time to time out of funds
legally available therefor.
VOTING RIGHTS. Generally, the holders of HoldCo common stock are entitled
to one vote for each share held by them on all matters submitted to the
shareholders of HoldCo. Holders of HoldCo common stock do not have cumulative
voting rights in the election of directors. The HoldCo charter and by-laws
generally require the affirmative vote of a majority of the outstanding shares
for shareholder action. However, the HoldCo charter and by-laws require the
affirmative vote of the holders of 75% of the outstanding shares in order for
shareholders to
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<PAGE> 23
amend or adopt any provision inconsistent with certain specified provisions of
the HoldCo charter and by-laws.
LIQUIDATION. In the event HoldCo is liquidated or dissolved, either
voluntarily or involuntarily, the holders of any HoldCo preferred stock
established by the Board of Directors would have priority (after HoldCo's
creditors) with respect to the distribution of HoldCo's assets. After the
holders of any such preferred stock are paid, the holders of HoldCo common stock
would be entitled, to the exclusion of the holders of any such preferred stock,
to share ratably (according to the number of shares held by them) in all
remaining assets of HoldCo available for distribution.
PREEMPTIVE AND OTHER RIGHTS. The holders of HoldCo capital stock do not
have any preemptive rights to subscribe for or purchase shares of HoldCo common
or preferred stock (or their equivalents). The HoldCo common stock is not
subject to redemption or to any further calls or assessments and is not entitled
to the benefit of any sinking fund provisions. The shares of HoldCo common stock
to be issued in connection with the exchange will be fully paid and
non-assessable once the exchange is completed.
COMPARISON OF RG&E COMMON STOCK AND HOLDCO COMMON STOCK.
As New York corporations, both RG&E and HoldCo are governed by the New
York Business Corporation Law. As a result of the exchange, holders of RG&E
common stock, whose rights as shareholders are currently governed by RG&E's
charter and by-laws, will become holders of HoldCo common stock, whose rights as
shareholders will be governed by the HoldCo charter and by-laws.
The following table summarizes and compares the principal rights of HoldCo
shareholders and the rights of RG&E shareholders. It is qualified in its
entirety, however, by reference to the full texts of the HoldCo charter and
by-laws and the RG&E charter and by-laws. We have attached the HoldCo charter
and by-laws as Exhibits B and C for your convenience. The RG&E charter and
by-laws are included as exhibits to RG&E's Annual Report on Form 10-K for the
year ended December 31, 1997.
<TABLE>
<CAPTION>
RG&E COMMON HOLDCO COMMON
SHAREHOLDERS SHAREHOLDERS
<S> <C> <C>
AUTHORIZED SHARES 50 million shares of common 100 million shares of
stock, 6 million shares common stock and 10 of preferred
stock and 5 million shares of stock. preferred stock.
million shares of preference
PREEMPTIVE RIGHTS Limited preemptive rights to None.
purchase newly issued common stock
which is not offered pursuant to a
public offering or to or through
underwriters or investment bankers.
</TABLE>
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<PAGE> 24
<TABLE>
<CAPTION>
RG&E COMMON HOLDCO COMMON
SHAREHOLDERS SHAREHOLDERS
<S> <C> <C>
NUMBER OF DIRECTORS Minimum of 9 and maximum of 18. No minimum or maximum
Actual number to be set by the number. Actual number
Board. to be set by the Board.
CHANGE IN NUMBER OF Shareholders can change the Same.
DIRECTORS maximum and minimum limits by
amending the by-laws.
CLASSIFIED BOARD Three classes of directors, each Same.
serving staggered three-year terms.
NOMINATIONS OF By the Board, or by a shareholder Same.
DIRECTORS upon 90 days' notice in advance of
an annual meeting.
CUMULATIVE VOTING None. Same.
FOR DIRECTORS
REMOVAL OF DIRECTORS Only for cause. Same.
ELECTION OF By a majority of the existing Same.
TEMPORARY DIRECTORS directors.
SPECIAL MEETINGS OF May only be called by the Chairman Same.
SHAREHOLDERS or President, or by the Secretary
at the written request of a
majority of the directors.
SETTING OF BUSINESS By the Board, or by a shareholder Same.
TO BE TRANSACTED AT upon 90 days' notice in advance of
AN ANNUAL MEETING an annual meeting.
SHAREHOLDER ACTION Only if unanimous. Same.
BY WRITTEN CONSENT
SUPERMAJORITY 75% vote to amend or repeal Same.
VOTING REQUIREMENTS certain provisions of the charter
and by-laws.
</TABLE>
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<PAGE> 25
POSSIBLE EFFECT OF CERTAIN HOLDCO PROVISIONS AND NEW YORK LAW.
HOLDCO CHARTER AND BY-LAWS. Certain provisions of the HoldCo charter and
by-laws could have the effect of delaying, discouraging or preventing tender
offers or other unsolicited attempts to take over and acquire the business of
HoldCo. These provisions, all of which were the same under the RG&E charter and
by-laws, include:
(1) the existence of authorized but unissued common and preferred
stock;
(2) the ability of the directors to increase the number of directors and
to elect, by majority vote, the additional directors;
(3) the division of the board into three classes of directors;
(4) the requirement that shareholders give advance notice of nominations
of directors and proposals to transact business at an annual or
special meeting;
(5) the absence of cumulative voting for directors;
(6) the inability of shareholders to remove directors other than for
cause;
(7) the inability of shareholders to call a special meeting;
(8) the inability of shareholders to act by written consent unless the
consent is unanimous; and
(9) the requirement of supermajority voting in order to amend or adopt
certain by-law and charter provisions.
By discouraging potential takeover bids, these provisions might diminish
the opportunity for HoldCo's shareholders to sell their shares at a premium over
then prevailing market prices. The Board of Directors decided to include such
provisions in order to ensure that it would have the ability to evaluate any
proposed acquisition or change in control in light of the interests of the
Company and all of its constituencies without being subject to undue pressure.
BCL SECTION 912. Section 912 of the New York Business Corporation Law
prohibits a resident domestic corporation like HoldCo from engaging in certain
business combinations with an interested shareholder (generally, the beneficial
owner of 20% or more of a corporation's voting stock) for five years following
the time such shareholder became an interested shareholder. However, if the
corporation's Board of Directors approved the business combination or the
transaction which resulted in the shareholder becoming an interested
shareholder, such prohibition does not apply. After the expiration of the
five-year period, such business combinations may occur only if approved by a
majority vote of disinterested shareholders, or if specific requirements as to
consideration paid to holders of common and preferred stock are met.
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<PAGE> 26
REGULATORY APPROVAL OF A MERGER OR TAKEOVER INVOLVING HOLDCO. Under
Section 70 of the New York Public Service Law, no gas or electric corporation
may acquire the stock or bonds of any other corporation incorporated for, or
engaged in, the same or a similar business unless authorized by the PSC. That
statute also provides that, in general, no stock corporation of any description,
other than a gas or electric corporation, may purchase or acquire more than 10%
of the voting stock of any New York gas or electric corporation unless with the
consent of, and subject to the terms and conditions set by, the PSC.
TREATMENT OF RG&E PREFERRED STOCK.
The shares of RG&E preferred stock issued and outstanding immediately
prior to the exchange will not be converted or otherwise affected by the
exchange. They will continue as equity securities of RG&E with the same
preferences, designations, relative rights, privileges and powers, and subject
to the same restrictions, limitations and qualifications, as were applicable to
such securities prior to the exchange. The Board of Directors based its decision
to have the RG&E preferred stock continue as securities of RG&E on its desire
not to alter the nature of the investment represented by such fixed income
securities, namely a direct investment in a regulated utility.
TREATMENT OF RG&E INDEBTEDNESS.
The exchange will not result in any change in the outstanding indebtedness
of RG&E, which will continue to be indebtedness of RG&E after the exchange. Such
indebtedness will be neither assumed nor guaranteed by HoldCo in connection with
the exchange. The Board of Directors based its decision to have such
indebtedness of RG&E continue as indebtedness of RG&E on its desire not to alter
the nature of the investment represented by such fixed income obligations,
namely a direct investment in a regulated utility.
ACCOUNTING TREATMENT.
The consolidated assets and liabilities of HoldCo and its subsidiaries
(including RG&E) immediately after the exchange will be the same as the
consolidated assets and liabilities of RG&E and its subsidiaries (including
HoldCo) immediately before the exchange. HoldCo, on an unconsolidated basis,
will record its investment in RG&E and in the subsidiaries transferred by RG&E
to HoldCo at their net book value. The exchange will result in HoldCo becoming
the owner of all of the outstanding shares of RG&E common stock. This change in
ownership will have no accounting effect on RG&E. The transfers of subsidiaries
by RG&E to HoldCo and its subsidiaries will reduce RG&E's retained earnings by
an amount equal to the net book value of such subsidiaries.
CERTAIN INCOME TAX CONSEQUENCES.
GENERAL. The following general discussion summarizes certain federal
income tax considerations relating to the exchange. This discussion is included
for general information only. It does not discuss all aspects of income taxation
that may be relevant to a particular shareholder in light of the personal tax
circumstances of the shareholder, or to certain types of shareholders subject to
special treatment under the income tax laws. Accordingly, each shareholder
should
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<PAGE> 27
consult his or her own tax advisor as to the specific tax consequences to
him or her, including the application and effect of state or local income and
other tax laws.
For federal income tax purposes, the exchange is intended to qualify as a
tax-free exchange pursuant to Section 351 of the Internal Revenue Code of 1986.
TAX IMPLICATIONS TO THE SHAREHOLDERS. For federal income tax purposes, no
gain or loss will be recognized by the shareholders from the exchange. The
aggregate tax basis of the HoldCo common stock received by each shareholder will
be the same as the shareholder's present aggregate basis in his or her RG&E
common stock. The holding period of the HoldCo common stock held by each
shareholder for determining long-term capital gains for federal income tax
purposes will include the period during which such shareholder held the RG&E
common stock, provided that the RG&E common stock was held as a capital asset on
the date of the exchange.
TAX IMPLICATIONS TO THE COMPANY. Neither RG&E nor HoldCo will recognize
any gain or loss for federal income tax purposes upon the exchange of the RG&E
and HoldCo common stock. For federal income tax purposes, the basis of the RG&E
common stock received by HoldCo will be the same as RG&E's net asset basis
immediately prior to the exchange, subject to certain adjustments under Treasury
regulations relating to consolidated groups. HoldCo's holding period in the RG&E
common stock received in the exchange will include the periods during which such
stock was held by the RG&E shareholders.
OTHER TAX ASPECTS. Apart from U.S. federal income tax aspects, we have
made no attempt to determine any tax that may be imposed on shareholders by
the country, state or jurisdiction in which such shareholders reside or are
citizens.
The federal income tax discussion pertaining to shareholders set forth
above is intended to provide only a general summary and does not address tax
consequences which may vary with, or are contingent upon, individual
circumstances. Moreover, this discussion does not address any foreign, federal,
state or local tax consequences of a disposition of stock in RG&E or HoldCo
either before or after the share exchange. Accordingly, each shareholder is
strongly urged to consult with his or her tax advisor to determine the
particular tax consequences to him or her of the share exchange or a disposition
of the stock.
LEGAL OPINIONS.
Nixon, Hargrave, Devans & Doyle LLP, RG&E's principal outside counsel,
will pass upon the validity of the HoldCo common stock for the RG&E.
ELECTION OF DIRECTORS
(PROPOSAL 2 ON YOUR PROXY CARD)
The Board of Directors of RG&E currently consists of twelve directors
divided into three classes. One class of directors is elected at each annual
meeting of shareholders for a term expiring at the third succeeding annual
meeting.
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<PAGE> 28
The following individuals have been nominated for election at the 1999
annual meeting to serve as directors for a term expiring at the 2002 annual
meeting and thereafter until their successors are elected and qualify:
- - Samuel T. Hubbard, Jr.,
- - Cleve L. Killingsworth, Jr., and
- - Roger W. Kober.
Mrs. Constance M. Mitchell, a member of the class of 1999, will be
retiring from the Board at the annual meeting on April 29, 1999. Mrs.
Mitchell has been a director since 1981 and the Board is appreciative of her
contributions to RG&E over the years. Upon her retirement, the board will
consist of eleven directors.
Unless you specify otherwise on your Proxy, the proxies will vote shares
represented by Proxies for the election of the nominees listed above. While it
is anticipated that the nominees will be able to qualify or accept office, if
one or more should be unable to do so, the proxies reserve the right to vote for
any substitute nominee or nominees designated by the Board of Directors.
The following paragraphs identify the nominees standing for election and
the continuing directors, including their principal occupations and business
experience for the past five years.
NOMINEES - CLASS I
SAMUEL T. HUBBARD, JR. (age 49) Mr. Hubbard has served as President
and Chief Executive Officer of the Alling and Cory Company, a wholesale
distributor of fine printing paper, industrial and business products, since
1986. Prior to joining Alling and Cory, Mr. Hubbard held various management
positions with Chase Lincoln First Bank, a former subsidiary of The Chase
Manhattan Corporation. He is a director of First Empire Corporation and the
Genesee Corporation. Mr. Hubbard has been a director of RG&E since 1996.
CLEVE L. KILLINGSWORTH, JR. (age 46) Mr. Killingsworth has served as
President and Chief Executive Officer of Health Alliance Plan, a corporate
affiliate of the Henry Ford Health System, since January 1998. He served as
President of several Kaiser Foundation Health Plans from 1994 to 1997 and in
senior executive positions at Blue Cross/Blue Shield of the Rochester Area
from 1986 to 1994. Mr. Killingsworth has been a director of RG&E since July
1998.
ROGER W. KOBER. (age 65) Mr. Kober served as Chairman of the Board
and Chief Executive Officer of RG&E from March 1996 until his retirement in
January 1998. Mr. Kober served as Chairman of the Board, President and Chief
Executive Officer from January 1992 to March 1996. Mr. Kober is a director
of Home Properties of New York, Inc. He has been a director of RG&E since
1988.
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<PAGE> 29
CONTINUING DIRECTORS - CLASS II
ALLAN E. DUGAN. (age 58) Mr. Dugan has served as Senior Vice
President, Corporate Strategic Services of Xerox Corporation since February
1992. Prior to assuming his current position, Mr. Dugan was Senior Vice
President and General Manager, Manufacturing Operations Worldwide. Mr. Dugan
has been a director of RG&E since 1991.
SUSAN R. HOLLIDAY. (age 43) Ms. Holliday has been President and
Publisher of the Rochester Business Journal since 1988. She is Chairman of
the Rochester Regional Advisory Board, Key Bank, N.A. Ms. Holliday has been
a director of RG&E since 1997.
CHARLES I. PLOSSER. (age 50) Dean Plosser has served since 1991 as
the John M. Olin Distinguished Professor of Economics and Public Policy, and
Dean since July 1993, of the William E. Simon Graduate School of Business
Administration, University of Rochester. He has been a director of RG&E
since 1996.
THOMAS S. RICHARDS. (age 55) Mr. Richards has been Chairman of the
Board, President and Chief Executive Officer of RG&E since January 1998. Mr.
Richards was President and Chief Operating Officer from March 1996 to January
1998, and has served in numerous senior executive capacities since joining
RG&E as General Counsel in October 1991. Prior to joining RG&E, Mr. Richards
was an attorney with the law firm of Nixon, Hargrave, Devans & Doyle LLP. He
has been a director of RG&E since 1996.
CONTINUING DIRECTORS - CLASS III
ANGELO J. CHIARELLA. (age 65) Mr. Chiarella has been Vice President,
Rochester Midtown L.L.C., a real estate development and leasing company,
since November 1997. Prior to assuming his current responsibilities, Mr.
Chiarella was President and Chief Executive Officer of Midtown Holdings
Corp. He is a director of Transmation, Inc. Mr. Chiarella has been a
director of RG&E since 1992.
MARK B. GRIER. (age 46) Mr. Grier has been Executive Vice President,
Financial Management of The Prudential Insurance Company of America since
June 1997. He served as Chief Financial Officer of The Prudential from May
1995 to June 1997 and was Executive Vice President, The Chase Manhattan Bank,
N.A. from 1991 to May 1995. Mr. Grier has been a director of RG&E since 1997.
JAY T. HOLMES. (age 56) Mr. Holmes has been a commercial arbitrator
and practicing attorney since May 1996. He served as Executive Vice
President and Chief Administrative Officer of Bausch & Lomb Incorporated from
March 1995 until his retirement in May 1996. Mr. Holmes previously held
numerous executive positions at Bausch & Lomb, serving as Senior Vice
President and Chief Administrative Officer from November 1994 to March 1995
and as Senior Vice President - Corporate Affairs and Secretary from 1983
until November 1994. Mr. Holmes has been a director of RG&E since 1992.
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<PAGE> 30
CORNELIUS J. MURPHY. (age 68) Mr. Murphy has served as Senior Vice
President of Goodrich & Sherwood Company, a management consulting and human
resource services company, since 1990. Prior to assuming his current
responsibilities, Mr. Murphy held a number of senior management positions at
Eastman Kodak Company, the last of which was Senior Vice President and
Project Manager, Office of the Chief Executive until March 1989. He is a
director of Transmation, Inc. Mr. Murphy has been a director of RG&E since
1981.
SECURITY OWNERSHIP OF MANAGEMENT.
The following table indicates the number of shares (and percentage) of
RG&E common stock and equivalent units beneficially owned as of February 1, 1999
by (a) each director and nominee, (b) each of the executive officers named in
the Summary Compensation Table, and (c) the seven current executive officers and
directors as a group. No director, nominee or executive officer beneficially
owns over [1%] of the outstanding shares, and the total beneficially owned by
all of the directors, nominees and executive officers as a group represents
____% of the total shares outstanding.
<TABLE>
<CAPTION>
NAME OF
BENEFICIAL OWNER COMMON STOCK COMMON STOCK TOTAL COMMON
BENEFICIALLY EQUIVALENT UNITS STOCK AND
OWNED (1)(2) BENEFICIALLY COMMON STOCK
OWNED (3) EQUIVALENT UNITS
BENEFICIALLY OWNED
<S> <C> <C> <C>
Michael J. Bovalino
Angelo J. Chiarella
Allan E. Dugan
Mark B. Grier
Susan R. Holliday
Jay T. Holmes
Samuel T. Hubbard, Jr.
Cleve L. Killingsworth, Jr.
Roger W. Kober
Constance M. Mitchell
Cornelius J. Murphy
Charles I. Plosser
Thomas S. Richards
Robert E. Smith
J. Burt Stokes
Michael T. Tomaino
Paul C. Wilkens
All Directors, Nominees
and Executive Officers
as a group
(17 Individuals)
</TABLE>
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<PAGE> 31
(1) Includes shares over which the director, nominee or executive officer has
direct or indirect voting or investment power, as well as indirect family
holdings of which the following persons disclaim beneficial ownership with
respect to shares held by their spouses: Mr. Chiarella, ____ shares; Ms.
Holliday, ____ shares; Mr. Kober, ____ shares; and all directors, nominees
and executive officers as a group, including the aforementioned, ____
shares.
(2) Includes shares of RG&E common stock which may be acquired through the
exercise of stock options which are currently exercisable. The persons who
have such options and the number of shares which may be acquired are as
follows: Mr. Bovalino, ____ shares; Mr. Kober, ____ shares; Mr. Richards,
____ shares; Mr. Smith, ____ shares; Mr. Stokes, ____ shares; Mr. Tomaino,
____ shares; Mr. Wilkens, ____ shares; and all directors, nominees and
executive officers as a group, including the aforementioned, ____ shares.
(3) Includes RG&E common stock equivalent units accrued under RG&E's Long Term
Incentive Plan, 401(k) Restoration Plan, Directors' Deferred Compensation
Plan and Deferred Stock Unit Plan for Non-Employee Directors for which the
director, nominee or executive officer does not
have voting rights.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Section 16(a) of the Securities Exchange Act of 1934 requires RG&E's
directors and executive officers, as well as persons holding 10% or more of
RG&E's equity securities, to file reports of ownership and changes in ownership
with the SEC and the New York Stock Exchange. These reporting persons are also
required to provide RG&E with copies of all such Section 16(a) forms they file.
Based solely on our review of the copies of the reports received by us, and on
certain written representations from certain reporting persons, we believe that
during 1998 all filing requirements were timely satisfied by the directors and
executive officers of RG&E.
MEETINGS AND STANDING COMMITTEES OF THE BOARD OF DIRECTORS.
The Board of Directors met ten times during 1998. All nominees attended at
least 75% of the total meetings of the Board and the committees on which they
served.
EXECUTIVE AND FINANCE COMMITTEE. The Executive and Finance Committee,
with certain exceptions, possesses all of the authority of the Board of
Directors. During 1998, the Committee met four times. Messrs. Kober
(Chairman), Dugan, Holmes, Murphy, Plosser and Richards are currently members
of the Committee.
AUDIT COMMITTEE. The Audit Committee monitors the integrity of RG&E's
financial statements and its financial reporting process. It reviews
management's internal controls and RG&E's policies and procedures that monitor
compliance with all applicable laws, regulations and ethical business practices.
The Committee also recommends to the Board independent auditors to be retained
by RG&E for the ensuing year, reviews the results of the auditors' examinations
of RG&E's financial statements and recommends any actions deemed necessary.
During 1998, the Committee met four times. Mrs. Mitchell (Chairman) and Messrs.
Chiarella, Grier and Hubbard are currently members of the Committee.
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<PAGE> 32
COMMITTEE ON MANAGEMENT. The Committee on Management reviews RG&E's
executive compensation and benefits program, including awards under RG&E's
annual Executive Incentive Plan, Long Term Incentive Plan and the Performance
Stock Option Plan. The Committee sets the compensation of the Chief Executive
Officer and reviews the compensation levels of members of management proposed by
the Chief Executive Officer. The Committee oversees RG&E's organizational
structure, corporate goals and objectives and management development, including
management succession. During 1998, the Committee met five times. Messrs. Murphy
(Chairman), Dugan, Hubbard and Plosser are currently members of the Committee.
COMMITTEE ON DIRECTORS. The Committee on Directors is responsible for
evaluation of director performance, director compensation, director
succession, committee membership and corporate governance issues. The
Committee recommends to the Board of Directors candidates to be nominated for
election as directors. During 1998, the Committee met four times. Messrs.
Holmes (Chairman) and Chiarella and Mmes. Holliday and Mitchell are currently
members of the Committee.
Shareholders wishing to recommend candidates for nomination to the Board
should submit in writing to the Secretary of RG&E the name of the nominee, a
statement of the nominee's qualifications and the written consent of the person
so named. Suggestions received prior to October 1, 1999, will be considered by
the Committee when recommending nominees for election at the 2000 annual meeting
of shareholders.
REPORT OF THE COMMITTEE ON MANAGEMENT ON EXECUTIVE COMPENSATION.
To be inserted after the Committee has met and prepared its report.
EXECUTIVE COMPENSATION.
EXECUTIVE OFFICERS. The following tables show the compensation RG&E paid
for services of the chief executive officer and the next five most highly
compensated executive officers for each of the last three fiscal years:
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<PAGE> 33
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
COMPENSATION
NAME AND PRINCIPAL LTIP SECURITIES
POSITION FISCAL BONUS PAYOUTS UNDERLYING ALL OTHER
YEAR SALARY ($) ($)(1) ($)(2) OPTIONS (3) COMPENSATION($)(4)
<S> <C> <C> <C> <C> <C> <C>
THOMAS S. RICHARDS 1998 325,704 TBD TBD 27,984 8,143
Chairman of the Board, 1997 246,710 73,846 277,849 48,427 6,168
President and 1996 223,825 37,265 41,853 N/A 5,596
Chief Executive
Officer (5)
ROBERT E. SMITH 1998 226,061 TBD TBD 0 5,652
Senior Vice 1997 224,931 42,411 277,776 31,785 5,623
President(6) 1996 217,689 27,305 41,853 N/A 5,442
J. BURT STOKES 1998 208,820 TBD TBD 0 5,221
Senior Vice President, 1997 198,717 42,411 277,744 31,785 4,968
Corporate Services and 1996 190,000 27,305 41,853 N/A 4,750
Chief Financial Officer
MICHAEL T. TOMAINO 1998 197,928 TBD TBD 0 4,948
Senior Vice President 1997 47,502 10,603 277,643 33,218 1,188
and
General Counsel (7) 1996 N/A N/A N/A N/A N/A
MICHAEL J. BOVALINO 1998 182,297 TBD TBD 0 4,557
President and Chief 1997 167,148 42,411 277,719 31,785 4,179
Executive Officer 1996 N/A N/A N/A N/A N/A
Energetix, Inc. (8)
PAUL C. WILKENS 1998 157,990 TBD TBD 15,157 3,950
Senior Vice President, 1997 115,030 13,831 70,753 14,511 2,876
Generation (9) 1996 108,942 8,598 N/A N/A 2,724
</TABLE>
N/A - Not Applicable
(1) Pursuant to the Executive Incentive Plan, the amount of annual awards
depends upon the level of achievement of one-year goals. If performance is
below a minimal level, no award is earned. Actual amounts of annual awards
earned under the plan are shown.
(2) Pursuant to the Long Term Incentive Plan, the amount of annual awards
depends upon the total shareholder return over a three-year period ending
in December of such year, as compared to the companies which comprise the
Edison Electric Institute 100 Index of investor-owned electric utilities.
The Plan also includes a financial performance measurement which compares
RG&E's cash flow return on net assets against a pre-established target
goal identified in RG&E's corporate business plan. The table reports
actual amounts earned at the end of each performance cycle, grossed up to
cover federal and state income taxes. Awards granted under the Plan are
paid in cash. Participants are required to invest the after-tax proceeds
in shares of RG&E's common stock and to retain the shares for a period of
at least three years.
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<PAGE> 34
(3) Options granted in 1997 and 1998.
(4) Company contributions to RG&E Savings Plus Plan, 401(k) Plan and the
401(k) Restoration Plan.
(5) Mr. Richards was elected Chairman of the Board, President and Chief
Executive Officer effective January 1, 1998.
(6) Mr. Smith retired from RG&E effective January 1, 1999.
(7) Mr. Tomaino was elected Senior Vice President and General Counsel
effective October 1, 1997.
(8) Mr. Bovalino was elected President and Chief Executive Officer of
Energetix effective January 1, 1998.
(9) Mr. Wilkens was elected Senior Vice President, Generation effective March
1, 1998.
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<PAGE> 35
LONG TERM INCENTIVE PLAN - GRANTS IN LAST FISCAL YEAR (1998)
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS
NUMBER OF PERFORMANCE
COMMON OR OTHER
STOCK PERIOD
EQUIVALENT UNTIL
NAME AND PRINCIPAL UNITS MATURATION THRESHOLD TARGET MAXIMUM
POSITION (#)(1) OR PAYOUT (#) (#) (#)
-------- ------ --------- --- --- ---
<S> <C> <C> <C> <C> <C>
THOMAS S. RICHARDS 4,000 3 Years 0 - 3,999 4,000 8,000
Chairman of the Board,
President and
Chief Executive
Officer
ROBERT E. SMITH 2,000 3 Years 0 - 1,999 2,000 4,000
Senior Vice President
J. BURT STOKES 2,000 3 Years 0 - 1,999 2,000 4,000
Senior Vice President,
Corporate Services and
Chief Financial
Officer
MICHAEL T. TOMAINO 2,000 3 Years 0 - 1,999 2,000 4,000
Senior Vice President
and
General Counsel
MICHAEL J. BOVALINO 2,000 3 Years 0 - 1,999 2,000 4,000
President and Chief
Executive
Officer, Energetix,
Inc.
PAUL C. WILKENS 1,750 3 Years 0 - 1,749 1,750 3,500
Senior Vice President,
Generation
</TABLE>
(1) Pursuant to the Long Term Incentive Plan, in January 1998, officers were
granted a specific number of performance shares based upon their salary
grade. Each performance share is deemed to be equivalent to one share of
RG&E common stock. Stock dividend equivalents will be deemed to be paid
and reinvested during the length of a performance cycle. The Committee on
Management may award from 0% to 200% of each officer's performance share
account at the end of a three-year performance cycle (2000 for this cycle)
based on RG&E's ranking against the Edison Electric Institute 100 Index of
investor-owned electric utilities for total shareholder return on a
three-year annualized basis and RG&E's cash flow return on net assets
compared to a pre-established target goal identified in RG&E's corporate
business plan. The number of performance shares payable, if any, will be
based on the average closing price of RG&E common stock for December 2000.
Any award will be paid in cash by March 1, 2001. Participants are required
to invest the after-tax proceeds of any award in shares of RG&E's common
stock and to retain the shares for a period of at least three years.
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<PAGE> 36
OPTION GRANTS IN LAST FISCAL YEAR (1998)
INDIVIDUAL GRANTS (1)
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS GRANT DATE
UNDERLYING GRANTED TO EXERCISE OR PRESENT VALUE
OPTIONS EMPLOYEES BASE PRICE EXPIRATION YEAR
NAME GRANTED (#) IN FISCAL ($/SHARE) DATE ($)(2)
---- ----------- --------- --------- ---- ------
<S> <C> <C> <C> <C> <C>
Thomas S. Richards 27,984 64.9 $33.9065 1/1/08
Robert E. Smith 0 N/A N/A N/A N/A
J. Burt Stokes 0 N/A N/A N/A N/A
Michael T. Tomaino 0 N/A N/A N/A N/A
Michael J. Bovalino 0 N/A N/A N/A N/A
Paul C. Wilkens 15,157 35.1 31.0005 3/1/08
</TABLE>
N/A - Not Applicable.
(1) The options shown in this table were granted in 1998 under the 1996
Performance Stock Option Plan. During the exercise period, the recipient
of the option grant may exercise 25% of the total options granted after
the stock price closes at $35 or more for five consecutive trading days,
50% after the stock closes at $40 or more for five consecutive trading
days, 75% after the stock closes at $45 or more for five consecutive
trading days, and 100% after the stock closes at $50 or more for five
consecutive trading days. Options carry dividend equivalent rights which
provide for a cash payment upon exercise of an option equal to the
quarterly dividend payments per share of RG&E common stock paid to RG&E's
shareholders from the date the option was granted to the date of exercise.
(2) The grant date valuation was calculated using the Black-Scholes option
pricing model assuming an option value ranging between $0.86 to $1.08 per
share, stock price volatility of 17%, a risk-free rate of return ranging
between 6.39% to 6.56% and an annual dividend yield of 9.44%.
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<PAGE> 37
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR (1998)
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised Unexercised In-the-Money
Options at Fiscal Year Options at Fiscal
End (#) Year End ($)(1)
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas S. Richards 0 0 36,320 40,091 397,250 183,919
Robert E. Smith 0 0 23,838 7,947 260,728 86,920
J. Burt Stokes 0 0 23,838 7,947 260,728 86,920
Michael T. Tomaino 0 0 16,609 16,609 87,197 87,197
Michael J. Bovalino 0 0 23,838 7,947 260,728 86,920
Paul C. Wilkens 0 0 10,883 18,785 119,033 24,517
</TABLE>
(1) Based on the market value of the stock at fiscal year-end less exercise
price. Does not include dividend equivalent rights from the date the
option was granted to the date of exercise at the current annual rate of
$1.80 per share.
EMPLOYMENT AGREEMENTS.
RG&E has entered into change in control agreements for an indefinite term
with Messrs. Richards, Stokes, Tomaino, Bovalino and Wilkens. The agreements
provide that each of the officers that is a party to the agreements is entitled
to specified compensation if, within two years after a change in control (as
defined in the agreements), the officer's employment is involuntarily terminated
other than for cause (as defined in the agreements) or by reason of death,
disability or normal retirement. Involuntary termination also includes the
employee's resignation following a change in duties or the employment
relationship (as defined in the agreements). If an involuntary termination
occurs within the two-year covered period, Mr. Richards will receive a lump sum
payment equal to three times his annual salary and bonus (final year or final
three-year average, whichever is higher), and the other senior officers will
receive two times their annual salary and bonus, subject to reduction in order
to maximize the after-tax effects to the officer. If Mr. Richards were to reach
his normal retirement age (65) prior to three years following his termination
date (two years for the other officers), the lump sum payment would be reduced
pro-rata with a minimum payment of one times annual salary and bonus. A payment
of one times annual salary and bonus would be payable in the case of voluntary
termination during the two-year period with a pro-rata reduction in the payment
if termination occurs within one year prior to normal retirement.
DIRECTORS' COMPENSATION.
RG&E pays directors an annual retainer of $18,000, plus $800 for each
Board or committee meeting they attend. RG&E pays committee chairmen and
Executive and Finance Committee members an additional retainer of $2,500 and
$1,500, respectively. If a director attends more than one Board or committee
meeting on the same day, the fee for each subsequent
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<PAGE> 38
meeting is $600. RG&E does not pay officers of the Company any fees for their
services as directors. The total amount of compensation RG&E pays to its
directors is comparable to the total compensation paid to directors of similar
sized combination electric and gas utility companies.
RG&E has deferral plans under which a director's fees may either be
deferred with interest in a cash account or deferred and converted to common
stock equivalent units which earn dividends equal to dividends declared on RG&E
common stock. In either case, deferred amounts are paid in cash, in a lump sum
or over a period of up to ten years commencing no later than the director's 70th
birthday.
RG&E has a Deferred Stock Unit Plan for Non-Employee Directors which
serves to align the directors' financial interests with those of the
shareholders. Each director's deferred stock account is based on the amount of
the annual retainer, the number of years of Board service, and the price of
RG&E's common stock. Under the Plan, each non-employee director is credited
annually with deferred stock units equal to 75% of his or her annual retainer.
Benefits under the Plan become partially vested after five years of service and
are fully vested after ten years. Upon cessation of membership on the Board,
deferred amounts will be payable in cash in a lump sum or in up to ten annual
installments as determined by each director.
SHAREHOLDER RETURN COMPARISON.
The following graph compares the cumulative total shareholder return on
RG&E's common Stock with the Edison Electric Institute 100 Index of
investor-owned electric utilities for the past five years. Total return was
calculated assuming investment of $100 on December 31, 1993 and reinvestment of
all dividends.
FIVE-YEAR CUMULATIVE TOTAL RETURN COMPARISON
(RG&E, EEI INDEX, AND S&P STOCK INDEX)
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
RG&E $100 $86 $101 $94 $179
EEI 100 $100 $88 $116 $117 $149
S&P 500 $100 $101 $139 $171 $228
</TABLE>
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<PAGE> 39
PENSION PLAN TABLE.
RG&E has a non-contributory, tax qualified, defined benefit pension plan
known as the RG&E Retirement Plan. It also has an unfunded, non-qualified plan
known as the RG&E Unfunded Retirement Income Plan. All employees, including
executive officers, are eligible to participate in these plans. The annual
pension benefit under the plans, taken together, is determined by the employee's
years of service and annual compensation (salary and bonus). Under the Internal
Revenue Code of 1986, the annual benefit payable by the funded plan was limited
to $130,000 for 1998. The unfunded plan will provide those benefits which cannot
be fully provided by the funded plan. The table below may be used to calculate
the approximate annual benefits payable at normal retirement age (65) under the
two plans in specified remuneration and years-of-service classifications.
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETIREMENT BENEFITS BASED ON YEARS OF SERVICE ($)(2)
SALARY ($)(1) 5 10 15 20 25 30 40
<S> <C> <C> <C> <C> <C> <C> <C>
150,000 12,000 24,000 36,000 48,000 60,000 72,000 87,800
200,000 16,300 32,600 48,900 65,100 81,400 97,700 119,000
250,000 20,600 41,100 61,700 82,300 102,900 123,400 150,300
300,000 24,900 49,700 74,600 99,400 124,300 149,100 181,500
350,000 29,100 58,300 87,400 116,600 145,700 174,900 212,800
400,000 33,400 66,900 100,300 133,700 167,100 200,600 244,000
450,000 37,700 75,400 113,100 150,900 188,600 226,300 275,300
500,000 42,000 84,000 126,000 168,000 210,000 252,000 306,500
550,000 46,300 92,600 138,900 185,100 231,400 277,700 337,800
</TABLE>
(1) Average annual salary includes base pay (three highest consecutive years)
and annual bonus (three highest years) during the last ten years before
retirement. The amounts shown in the salary and bonus columns in the
Summary Compensation Table constitute qualifying compensation under the
plans.
(2) Messrs. Richards, Smith, Stokes, Tomaino, Bovalino and Wilkens have been
credited with 15, 39, 3, 9, 2 and 25 years of service, respectively, under
the plans.
-32-
<PAGE> 40
INDEPENDENT ACCOUNTANTS
RG&E has appointed PricewaterhouseCoopers LLP, a firm of independent
certified public accountants, to continue as its auditors for the year 1999. We
expect representatives of PricewaterhouseCoopers LLP to be present at the annual
meeting and available to answer appropriate questions from shareholders. They
will also have the opportunity to make a statement if they desire to do so. From
time to time, PricewaterhouseCoopers LLP performs certain management advisory
services for the Company.
EXPERTS
We have incorporated by reference (a) the consolidated balance sheets as
of December 31, 1998, 1997 and 1996, (b) the consolidated statements of income,
changes in common stock equity, and cash flows for each of the three years in
the period ended December 31, 1998, and (c) the related financial statement
schedule incorporated in this Proxy Statement and Prospectus by reference from
RG&E's Annual Report on Form 10-K. In doing so, we have relied on the report of
PricewaterhouseCoopers LLP, a firm of independent certified public accountants,
given on the authority of that firm as experts in accounting and auditing.
DEADLINE FOR SHAREHOLDER PROPOSALS
Rule 14a-3(c) of the SEC's proxy rules allows RG&E to use discretionary
voting authority to vote on a matter coming before an annual meeting of
shareholders which is not included in its proxy statement if RG&E does not have
notice of the matter at least 90 days before the date of the annual meeting. In
addition, discretionary voting authority may generally also be used if RG&E
receives timely notice of such matter (as described in the preceding sentence)
and if RG&E describes the nature of such matter in its proxy statement.
Accordingly, for RG&E's year 2000 annual meeting of shareholders, any such
notice must be received by RG&E's Secretary at 89 East Avenue, Rochester, New
York 14649, on or before __________, 1999.
RG&E's by-laws provide that any shareholder who wishes to submit a
proposal must notify RG&E 90 days in advance of a meeting and must submit the
following: (a) a brief description of the business desired to be brought before
the annual meeting and the reasons for conducting the business at that meeting,
(b) the shareholder's name and address, as they appear on RG&E's books, (c) the
class and number of shares of RG&E that are owned by the shareholder, and (d)
any material interest of such shareholder in such business.
These requirements are separate and apart from the SEC's requirements that
a shareholder must meet in order to have a shareholder proposal included in the
Company's proxy statement for its year 2000 annual meeting. Specific proposals
of common shareholders intended to be presented at RG&E's year 2000 annual
meeting of shareholders (or at HoldCo's year 2000 annual meeting if the Plan of
Exchange is approved) must be received by the Secretary of the Company at 89
East Avenue, Rochester, New York 14649, no later than November 9, 1999 in order
to be eligible for inclusion in RG&E's (or HoldCo's) proxy materials relating to
that meeting.
-33-
<PAGE> 41
OTHER MATTERS
The Board of Directors does not know of any other business matters to be
presented for action at the annual meeting. However, the enclosed Proxy will
confer discretionary authority for the transacting of any such business properly
brought before the annual meeting or any adjournment thereof. If any such
business is so brought before the meeting, the persons named in the enclosed
Proxy form, or their substitutes, will vote according to their discretion.
New York State law requires RG&E to inform shareholders of the initiation
or renewal of insurance indemnifying itself and its officers and directors. This
insurance, which is carried with Associated Electric and Gas Insurance Services
Limited, has been renewed for a one-year term, effective _______________, 1999.
The policy insures RG&E against any obligations it may incur as a result of the
indemnification of its directors and officers. The effective cost of the
insurance will be $_______________ for 1999 as RG&E received a member's
continuity credit which partially offset the premium for the policy. In
addition, RG&E has a policy with Energy Insurance Mutual Limited that provides
excess coverage for such insurance for a one-year term, effective January 1,
1999. RG&E expects that the effective cost of this policy will be
$______________________ for 1999 as it anticipates receiving a dividend from the
insurance carrier in 1998. RG&E also renewed a fiduciary liability insurance
policy carried with Associated Electric and Gas Insurance Services Limited,
effective May 1, 1998. The premium cost for this policy was $39,455 for a
one-year term.
COST OF SOLICITATION
The accompanying Proxy is being solicited on behalf of the Board of
Directors of RG&E. RG&E will pay the costs of this solicitation, including
reimbursing brokerage firms and others for their expenses in forwarding proxy
material to beneficial owners of stock. Directors, officers and employees of
RG&E may solicit proxies by telephone, other electronic means or in person
without additional compensation. In addition, RG&E has retained Morrow & Co. to
assist in soliciting proxies at an anticipated fee of approximately
$___________, plus out-of-pocket expenses.
By Order of the Board of Directors
David C. Heiligman
Vice President and Corporate
Secretary
Dated: March 8, 1999
Rochester, New York
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<PAGE> 42
EXHIBIT A
AGREEMENT AND PLAN OF SHARE EXCHANGE
OF
ROCHESTER GAS AND ELECTRIC CORPORATION
AND
RG&E HOLDINGS, INC.
<PAGE> 43
AGREEMENT AND PLAN OF SHARE EXCHANGE
OF
ROCHESTER GAS AND ELECTRIC CORPORATION
AND
RG&E HOLDINGS, INC.
This Agreement and Plan of Share Exchange (the "Plan of Exchange") is
dated and executed as of the ___ day of November 1998, by and between Rochester
Gas & Electric Corporation, a New York corporation, and RG&E Holdings, Inc., a
New York corporation.
1. The name of the acquiring corporation is RG&E Holdings, Inc. (the
"Acquiring Corporation"). The name of the subject corporation is Rochester Gas
and Electric Corporation (the "Subject Corporation"). The name under which the
Subject Corporation was originally formed was Rochester Railway and Light
Company.
2. The designation and number of outstanding shares of capital stock of
the Subject Corporation, as of November 13, 1998, are as follows: Common Stock,
$5 par value per share, each of which is entitled to one vote and of which
37,761,613 shares are outstanding (the "Subject Corporation Common Stock"); 4%
Preferred Stock, Series F, $100 par value per share, of which 120,000 shares are
outstanding; 4.10% Preferred Stock, Series H, $100 par value per share, of which
80,000 shares are outstanding; 4 3/4% Preferred Stock, Series I, $100 par value
per share, of which 60,000 shares are outstanding; 4.10% Preferred Stock, Series
J, $100 par value per share, of which 50,000 shares are outstanding; 4.95%
Preferred Stock, Series K, $100 par value per share, of which 60,000 shares are
outstanding; 4.55% Preferred Stock, Series M, $100 par value per share, of which
100,000 shares are outstanding; 7.50% Preferred Stock, Series N, $100 par value
per share, of which no shares are outstanding; 8.60% Preferred Stock, Series P,
$100 par value per share, of which no shares are outstanding; 8.25% Preferred
Stock, Series R, $100 par value per share, of which no shares are outstanding;
7.45% Preferred Stock, Series S, $100 par value per share, of which no shares
are outstanding; 7.55% Preferred Stock, Series T, $100 par value per share, of
which no shares are outstanding; 7.65% Preferred Stock, Series U, $100 par value
per share, of which 100,000 shares are outstanding and 6.60% Preferred Stock,
Series V, $100 par value per share, of which 250,000 shares are outstanding
(said series of preferred stock are collectively referred to herein as the
"Subject Corporation Preferred Stock"). The Subject Corporation is also
authorized by its Certificate of Incorporation to issue Preference Stock, $1 par
value per share, of which no shares are outstanding (the "Subject Corporation
Preference Stock"). Holders of Subject Corporation Preferred Stock and Subject
Corporation Preference Stock are not entitled to vote except as provided in the
Certificate of Incorporation of the Subject Corporation and as otherwise
provided by law. The number of shares set forth in this paragraph is subject to
change prior to the Effective Time (as defined below) insofar as the Subject
Corporation may during said period issue Subject Corporation Preference Stock,
issue additional Subject Corporation Common Stock and Subject Corporation
Preferred Stock and may reacquire Subject Corporation Preferred Stock and may
repurchase Subject Corporation Common Stock.
A-1
<PAGE> 44
The designation and number of outstanding shares of the Acquiring
Corporation are: Common Stock, $.01 par value per share, each of which is
entitled to one vote and of which 1,000 shares are outstanding (the "Acquiring
Corporation Common Stock"), and Preferred Stock, $.01 par value per share, of
which no shares are outstanding (the "Acquiring Corporation Preferred Stock").
In accordance with the provisions of Section 913(c) of the New York
Business Corporation Law (the "BCL"), this Plan of Exchange shall be submitted
to the holders of the Subject Corporation Common Stock for their approval and
adoption. The affirmative vote of the holders of two-thirds of the votes of all
outstanding shares of Subject Corporation Common Stock entitled to vote thereon
shall be necessary to approve and adopt this Plan of Exchange.
3. Upon the time of filing of a Certificate of Exchange in connection with
the share exchange contemplated hereby (the "Share Exchange") by the Department
of State of the State of New York or as otherwise specified in the Certificate
of Exchange (the "Effective Time"):
(a) Each share of Subject Corporation Common Stock outstanding at
the Effective Time shall, by operation of law and without further action,
be exchanged for one share of Acquiring Corporation Common Stock;
(b) Each share of Acquiring Corporation Common Stock outstanding
immediately prior to the Effective Time shall be canceled and shall be
restored to the status of an authorized but unissued share of Acquiring
Corporation Common Stock;
(c) Each share of Subject Corporation Common Stock held in the
treasury of the Subject Corporation immediately prior to the Effective
Time shall be canceled and shall be restored to the status of an
authorized but unissued share of Subject Corporation Common Stock; and
(d) Immediately after the Effective Time, all of the outstanding
shares of Subject Corporation Common Stock will be held by the Acquiring
Corporation, and all of the outstanding shares of Acquiring Corporation
Common Stock will be held by the holders of shares of Subject Corporation
Common Stock that were outstanding immediately prior to the Effective
Time.
4. Shares of Subject Corporation Preferred Stock and Subject Corporation
Preference Stock shall not be exchanged or otherwise affected by this Plan of
Exchange. Each share of Subject Corporation Preferred Stock and Subject
Corporation Preference Stock that was outstanding immediately prior to the
Effective Time shall continue to be outstanding following the Effective Time.
5. Each outstanding certificate which immediately prior to the Effective
Time represents Subject Corporation Common Stock shall, without any further
action on the part of the holder thereof, be deemed and treated for all
corporate purposes to represent the ownership of the same number of shares of
Acquiring Corporation Common Stock as though a surrender or transfer and
exchange had taken place.
A-2
<PAGE> 45
6. At the Effective Time, the Acquiring Corporation will, as appropriate,
succeed to and assume responsibility for the Subject Corporation's 1996
Performance Stock Option Plan, Automatic Dividend Reinvestment and Stock
Purchase Plan and RG&E Savings Plus Plan (collectively referred to as the
"Plans"); and, by virtue of the Share Exchange and without any action on the
part of the holder thereof, each right or option under the Plans to purchase
shares of Subject Corporation Common Stock granted and outstanding immediately
prior to the Effective Time shall be converted into and become a right or option
to purchase an equivalent number of shares of Acquiring Corporation Common Stock
at the same price per share, and upon the same terms and subject to the same
conditions, as applicable immediately prior to the Effective Time under the
relevant right or option.
The Acquiring Corporation will reserve, for purposes of the Plans, a
number of shares of Acquiring Corporation Common Stock equivalent to the number
of shares of Subject Corporation Common Stock reserved by the Subject
Corporation for such purposes immediately prior to the Effective Time.
7. The Plan of Exchange shall be conditioned upon:
(a) Receipt of the requisite vote of shareholders of the Subject
Corporation pursuant to Section 913(c)(2) of the BCL;
(b) Effectiveness of a registration statement under the Securities
Act of 1933 relating to Acquiring Corporation Common Stock to be issued or
reserved for issuance in connection with the Share
Exchange;
(c) Approval for listing, on official notice of issuance of such
shares of Acquiring Corporation Common Stock, on the New York Stock
Exchange;
(d) Receipt of an opinion of counsel covering certain United States
federal income tax matters;
(e) Receipt of an opinion of counsel as to the legality of Acquiring
Corporation Common Stock issuable in connection with the Share Exchange;
(f) Receipt of all consents and approvals that are necessary and
appropriate for the consummation of the Share Exchange, in form and
substance satisfactory to the Subject Corporation and the Acquiring
Corporation; and
(g) Filing of the Certificate of Exchange of the Acquiring
Corporation by the Department of State of the State of New York.
8. At any time prior to the Effective Time, this Plan of Exchange may be
amended or modified by mutual consent of the respective Boards of Directors of
the Subject Corporation and the Acquiring Corporation; provided, however, that
once the Plan of Exchange is approved by the holders of the Common Stock of the
Subject Corporation, no amendment or modification may be made that either
changes the number or kind of shares to be received by the holders of the
Subject Corporation Common Stock pursuant to the Plan of Exchange or affects the
rights of any shareholder of the Subject Corporation in any manner that is
materially adverse to such
A-3
<PAGE> 46
shareholder in the judgment of the Board of Directors of the Subject
Corporation. The Plan of Exchange may be abandoned by resolution approved by the
Board of Directors of either the Subject Corporation or the Acquiring
Corporation, at any time before the Effective Time, whether or not the
shareholders of the Subject Corporation have cast their votes with regard to the
Plan of Exchange.
9. The Subject Corporation and the Acquiring Corporation, respectively,
shall take all such action as may be necessary or appropriate in order to
effectuate the Share Exchange and the other transactions contemplated by this
Plan of Exchange. If at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Plan of Exchange, the
officers and directors of each of the Acquiring Corporation and the Subject
Corporation shall take such further action.
10. The Plan of Exchange was duly adopted by the Board of Directors of the
Subject Corporation on November ___, 1998.
11. The Plan of Exchange was duly adopted by the Board of Directors
of the Acquiring Corporation on November ___, 1998
IN WITNESS WHEREOF, the parties hereto have caused this Plan of Exchange
to be duly executed by their respective duly authorized representatives as of
the date first above written.
ROCHESTER GAS AND ELECTRIC CORPORATION
By:
Name: Thomas S. Richards
Title: Chairman of the Board, President
and Chief Executive Officer
RG&E HOLDINGS, INC.
By:
Name: Thomas S. Richards
Title: President and Director
A-4
<PAGE> 47
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
RG&E HOLDINGS, INC.
UNDER SECTION 807 OF THE
BUSINESS CORPORATION LAW
<PAGE> 48
CERTIFICATE OF INCORPORATION
OF
RG&E HOLDINGS, INC.
(Under Section 402 of the New York Business Corporation Law)
The undersigned, a natural person at least eighteen years of age, for the
purpose of forming a corporation pursuant to the provisions of the Business
Corporation Law of the State of New York, hereby certifies that:
I. The name of the Corporation is RG&E Holdings, Inc.
II. Its duration shall be perpetual.
III. The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the New York Business
Corporation Law, and it is not formed to engage in any act or activity requiring
the consent or approval of any state official, department, board, agency or
other body without such consent or approval first being obtained.
IV. Its principal office is situated in the City of Rochester,
County of Monroe, State of New York.
V. The Secretary of State of the State of New York is hereby
designated by the Corporation as its agent upon whom process against it may be
served. The address to which the Secretary of State shall mail a copy of any
process against the Corporation served upon him is 89 East Avenue, Rochester,
New York 14649.
VI. No director of the Corporation shall be personally liable to the
Corporation or its shareholders for damages for any breach of duty in such
capacity except where a judgment or other final adjudication adverse to the
director establishes: (i) that the director's acts or omissions were in bad
faith or involved intentional misconduct or a knowing violation of law; or (ii)
that the director personally gained in fact a financial profit or other
advantage to which the director was not legally entitled; or (iii) that the
director's acts violated Section 719 of the New York Business Corporation Law.
If the New York Business Corporation Law is hereafter amended to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of directors of the Corporation shall be
eliminated or limited to the fullest extent permitted by the New York Business
Corporation Law, as so amended. Any repeal of this Article, or any amendment of
this Article insofar as it would in any way enlarge the liability of any
director of the Corporation, shall be ineffective with respect to any acts or
omissions occurring prior to the date of such repeal or amendment.
B-1
<PAGE> 49
VII. The capital of the Corporation shall be at least equal to the
sum of the aggregate par value of all issued shares having par value, plus the
aggregate amount of consideration received by the Corporation for the issuance
of shares without par value, plus such amounts as, from time to time, by
resolution of the Board of Directors, may be transferred thereto.
VIII. The total number of shares which the Corporation is authorized
to issue is 110 million, of which 10 million shares shall be Preferred Stock,
par value $.01 per share, and 100 million shares shall be Common Stock, par
value $.01 per share.
If at any time a vacancy in the office of any director shall occur,
during the term of his office, by reason of death, resignation, removal or
disability, or for any other cause, such vacancy shall be filled in the manner
provided in the Bylaws of the Corporation.
The Corporation shall be entitled to treat the person in whose name
any share or other security is registered as the owner thereof, for all
purposes, and shall not be bound to recognize any equitable or other claim to or
interest in such share or other security on the part of any other person,
whether or not the Corporation shall have notice thereof, save as may be
expressly provided by the laws of the State of New York. The Corporation from
time to time may resell any of its own stock or any securities convertible into
or carrying options or warrants to purchase its own stock, purchased or
otherwise acquired by it, at such price as may be fixed by its Board of
Directors or Executive and Finance Committee.
No holder of shares of the Corporation of any class, now or
hereafter authorized, shall have any preferential or preemptive rights to
subscribe for, purchase or receive any shares of the Corporation of any class,
now or hereafter authorized, or any options or warrants for such shares, or any
rights to subscribe for or purchase such shares, or any securities convertible
into or exchangeable for such shares, which may at any time be issued, sold or
offered for sale by the Corporation.
A. Preferred Stock
The Board of Directors may authorize the issuance, from time to
time, in one or more series, of the authorized and unissued Preferred Stock and
may fix, from time to time, before issuance, the designations, preferences,
privileges and voting powers of the shares of each series thereof, and the
restrictions or qualifications thereof, to the extent that the designations,
preferences, privileges and voting powers, and the restrictions and
qualifications thereof, are not herein expressly prescribed, determined and set
forth. Subject to the provisions of this Certificate of Incorporation, the
authority of the Board of Directors with respect to each series of Preferred
Stock shall include, but not be limited to, determination of the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates;
B-2
<PAGE> 50
(c) Whether shares of that series shall participate in unlimited
dividend rights, and, if so, the extent of such participation;
(d) Whether shares of that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms
of such voting rights;
(e) Whether shares of that series shall have the right to be
converted into shares of the Corporation of any other authorized
class or classes, and, if so, the terms and conditions of such
conversion, including provision for adjustment of the conversion
rate, or whether options or warrants to purchase shares of stock of
the Corporation shall be issued in connection with that series, and
the terms and conditions of such options or warrants;
(f) Whether the shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption, including the date
or dates upon or after which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may
vary under different conditions and at different redemption dates;
(g) Whether there will be sinking fund provisions in connection with
that series, and, if so, the terms and conditions of such
provisions;
(h) The amounts payable on the shares of that series in the event of
voluntary or involuntary liquidation or dissolution of the
Corporation; and
(i) Any other relative rights, preferences, and limitations of
shares of that series.
B. Common Stock
The holders of the Common Stock have voting rights on the basis of
one vote for each share of such stock held by them. The provisions of this
paragraph, insofar as they relate to the manner of voting for the election of
directors, may be altered, amended, changed, added to or repealed only by a vote
of the holders of two-thirds of all the shares of Common Stock then outstanding
and entitled to vote.
IX. Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
seventy-five percent (75%) of the outstanding shares entitled to vote in the
election of directors, voting together as a single class, shall be required to
alter, amend or repeal unnumbered paragraph 4 of Article VIII, this Article IX
or Article X of this Certificate of Incorporation.
B-3
<PAGE> 51
X. Bylaws of the Corporation may be amended, repealed or adopted by
vote of the holders of record of the shares at the time entitled to vote in the
election of any directors. Bylaws may also be amended, repealed, or adopted by
the Board of Directors, but any Bylaw adopted by the Board may be amended or
repealed by the shareholders entitled to vote thereon as hereinabove provided;
provided, that notwithstanding the foregoing and anything contained in this
Certificate of Incorporation to the contrary, Sections 1.2 and 1.5 of Article I,
Sections 2.2, 2.3, 2.7, 2.8 and 2.9 of Article II and Section 5.6 of Article V
of the Bylaws shall not be altered, amended or repealed and no provision
inconsistent therewith shall be adopted without the affirmative vote of the
holders of at least seventy-five percent (75%) of the outstanding shares
entitled to vote in the election of directors, voting together as a single
class.
IN WITNESS WHEREOF, I have made and subscribed this Certificate and
hereby affirm under the penalties of perjury that its contents are true on this
5th day of November, 1998.
/s/ David C. Heiligman
--------------------------------
David C. Heiligman, Incorporator
B-4
<PAGE> 52
EXHIBIT C
BY-LAWS
OF
RG&E HOLDINGS, INC.
<PAGE> 53
RG&E HOLDINGS, INC.
BYLAWS
ARTICLE I
SHAREHOLDERS
SECTION 1.1 ANNUAL MEETING An annual meeting of shareholders for the
election of directors and the transaction of other business shall be held on
such date and at such time as may be fixed by the Board of Directors not less
than ten days prior thereto.
SECTION 1.2 SPECIAL MEETINGS Special meetings of the shareholders may be
called by the Chairman of the Board of Directors or by the President, and shall
be called by the Chairman of the Board or by the Secretary at the request in
writing of a majority of the Board of Directors. Such meetings shall be held at
such time as may be fixed in the call and stated in the notice of meeting. Any
such written request shall state the purpose or purposes of the proposed
meeting.
SECTION 1.3 PLACE OF MEETINGS Meetings of shareholders shall be held at
such place, within or without the State of New York, as may be fixed in the
notice of meeting. Unless otherwise provided by action of the Board of
Directors, all meetings of shareholders shall be held at the principal office of
the Corporation in Rochester, New York.
SECTION 1.4 NOTICE OF MEETINGS Notice of each meeting of shareholders
shall be in writing and shall state the place, date and hour of the meeting and
the purpose or purposes for which the meeting is called. The notice of a special
meeting shall also state that it is being issued by or at the direction of the
person or persons calling the meeting.
A copy of the notice of any meeting shall be given, personally or by mail,
not less than ten or more than sixty days before the date of the meeting, to
each shareholder entitled to vote at such meeting. If mailed, such notice is
given when deposited in the United States mail, with postage prepaid, directed
to the shareholder at his address as it appears on the record of shareholders,
or, if he shall have filed with the Secretary of the Corporation a written
request that notices to him be mailed to some other address, then directed to
him at such other address.
When a meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted on the original date of the meeting.
However, if after the adjournment the Board of Directors fixes a new record date
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each shareholder of record on the new record date entitled to notice under the
preceding paragraphs of this Section 1.4.
C-1
<PAGE> 54
SECTION 1.5 NOTICE OF SHAREHOLDER BUSINESS At an annual meeting of the
shareholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual meeting,
business must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (b) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors, or (c) otherwise properly brought before the meeting by a
shareholder. For business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation, not less than ninety (90) days prior to the meeting. A
shareholder's notice to the Secretary shall set forth as to each matter the
shareholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of the shareholder proposing such
business, (c) the class and number of shares of the Corporation which are
beneficially owned by the shareholder, and (d) any material interest of the
shareholder in such business. Notwithstanding anything in the Bylaws to the
contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 2.10. The chairman of
an annual meeting shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting and in
accordance with the provisions of this Section and if he should so determine, he
shall so declare to the meeting and any such business not properly brought
before the meeting shall not be transacted.
SECTION 1.6 INSPECTORS OF ELECTION The Board of Directors, in advance of
any shareholders' meeting, may appoint one or more inspectors to act at the
meeting or any adjournment thereof. If inspectors are not so appointed, the
person presiding at a shareholders' meeting may, and on the request of any
shareholder entitled to vote thereat shall, appoint two inspectors. In case any
person appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board in advance of the meeting or at the meeting by the
person presiding thereat. Each inspector, before entering upon the discharge of
his duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability.
The inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, and the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all shareholders. On request of the person
presiding at the meeting or any shareholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge, question or matter
determined by them and execute a certificate of any fact found by them. Any
report or certificate made by them shall be prima facie evidence of the facts
stated and of the vote as certified by them.
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SECTION 1.7 LIST OF SHAREHOLDERS AT MEETINGS A list of shareholders as of
the record date, certified by the Secretary or any Assistant Secretary or by a
transfer agent, shall be produced at any meeting of shareholders upon the
request thereat or prior thereto of any shareholder. If the right to vote at any
meeting is challenged, the inspectors of election, or person presiding thereat,
shall require such list of shareholders to be produced as evidence of the right
of the persons challenged to vote at such meeting, and all persons who appear
from such list to be shareholders entitled to vote thereat may vote at such
meeting.
SECTION 1.8 QUALIFICATION OF VOTERS Each shareholder of record of Common
Stock of the Corporation shall be entitled at each meeting of shareholders to
one vote for each share of Common Stock standing in his name on the record of
shareholders at the record date.
SECTION 1.9 QUORUM OF SHAREHOLDERS The holders of a majority of the shares
entitled to vote thereat shall constitute a quorum at a meeting of shareholders
for the transaction of any business.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent withdrawal of any shareholders.
The shareholders present, in person or by proxy, and entitled to vote may,
by a majority of votes cast, adjourn the meeting despite the absence of a
quorum.
SECTION 1.10 VOTE OF SHAREHOLDERS Directors shall, except as otherwise
required by law, be elected by a plurality of the votes cast at a meeting of
shareholders by the holders of shares entitled to vote in the election.
Whenever any corporate action, other than the election of directors, is to
be taken by vote of the shareholders, it shall, except as otherwise required by
law, be authorized by a majority of the votes cast at a meeting of shareholders
by the holders of shares entitled to vote thereon.
SECTION 1.11 PROXIES Each shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting may authorize
another person or persons to act for him by proxy.
Each proxy must be signed by the shareholder or his attorney-in-fact. No
proxy shall be valid after the expiration of eleven months from the date thereof
unless otherwise provided in the proxy. Each proxy shall be revocable at the
pleasure of the shareholder executing it, except as otherwise provided by law.
The authority of the holder of a proxy to act shall not be revoked by the
incompetence or death of the shareholder who executed the proxy unless, before
the authority is exercised, written notice of an adjudication of such
incompetence or of such death is received by the Secretary or any Assistant
Secretary.
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SECTION 1.12 FIXING RECORD DATE For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or to express consent to or dissent from any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action, the Board of Directors may fix, in advance, a date
as the record date for any such determination of shareholders. Such date shall
not be more than sixty or less than ten days before the date of such meeting,
nor more than fifty days prior to any other action.
When a determination of shareholders of record entitled to notice of or to
vote at any meeting of shareholders has been made as provided in this section,
such determination shall apply to any adjournment thereof, unless the Board of
Directors fixes a new record date for the adjourned meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1 POWER OF BOARD AND QUALIFICATION OF DIRECTORS The business of
the Corporation shall be managed by the Board of Directors, each of whom shall
be at least twenty-one years of age.
SECTION 2.2 NUMBER OF DIRECTORS The number of directors shall be fixed
from time to time by the majority vote of the entire Board of Directors. No
decrease in the number of directors shall shorten the term of any incumbent
director. Any newly created directorships or any decrease in directorships shall
be so apportioned among the classes as to make all classes as nearly equal in
number as possible. If the number of directors is increased by the Board and any
newly created directorships are filled by the Board, additional directors in
each class will serve until the next annual meeting of shareholders and
thereafter until their successors shall be elected and shall qualify, which
election shall be conducted in accordance with the provisions of these Bylaws
applicable to the election of the initial classified board.
SECTION 2.3 ELECTION AND TERM OF DIRECTORS Directors shall be elected at
each annual meeting of the shareholders, or, if no such election shall be held,
at a meeting called and held in accordance with the statutes of the State of New
York. Each director shall be elected to hold office until the expiration of the
term for which he is elected, and thereafter until a successor shall be elected
and shall qualify. The directors shall be divided, with respect to the terms for
which they severally hold office, into three classes, hereby designated as Class
I, Class II and Class III. The three classes shall be as nearly equal in number
as possible. The initial terms of office of the Class I, Class II and Class III
directors, elected at the 1999 annual meeting of shareholders, shall expire at
the next succeeding annual meeting of shareholders, the second succeeding annual
meeting of shareholders and the third succeeding annual meeting
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of shareholders, respectively. At each annual meeting of shareholders after
1999, the successors of the class of directors whose term expires at that
meeting shall be elected to hold office for a term expiring at the annual
meeting of shareholders to be held in the third year following the year of their
election.
SECTION 2.4 QUORUM OF THE BOARD; ACTION BY THE BOARD One-third of the
entire Board of Directors shall constitute a quorum for the transaction of
business and, except as otherwise provided in these Bylaws, the vote of a
majority of the directors present at the time of such vote, if a quorum is then
present, shall be the act of the Board.
SECTION 2.5 MEETINGS OF THE BOARD An annual meeting of the Board of
Directors shall be held in each year directly after adjournment of the annual
shareholders' meeting. Regular meetings of the Board may be held at such times
as may from time to time be fixed by resolution of the Board. Special meetings
of the Board may be held at any time upon the call of the Chairman of the Board
of Directors, the President or any two directors.
Meetings of the Board of Directors may be held at such place, within or
without the State of New York, as from time to time may be fixed by resolution
of the Board for annual and regular meetings and in the notice of meeting for
special meetings. If no place is so fixed, meetings of the Board shall be held
at the principal office of the Corporation in Rochester, New York.
No notice need be given of annual or regular meetings of the Board of
Directors. Notice of each special meeting of the Board shall be given by oral,
telegraphic or written notice, duly given or sent or mailed to each director not
less than one day before such meetings.
Notice of a meeting of the Board of Directors need not be given to any
director who submits a signed waiver of notice whether before or after the
meeting, or who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to him.
A notice, or waiver of notice, need not specify the purpose of any meeting
of the Board of Directors.
A majority of the directors present, whether or not a quorum is present,
may adjourn any meeting to another time and place. Notice of any adjournment of
a meeting to another time or place shall be given, in the manner described
above, to the directors who were not present at the time of the adjournment and,
unless such time and place are announced at the meeting, to the other directors.
SECTION 2.6 RESIGNATIONS Any director of the Corporation may resign at any
time by giving written notice to the Board of Directors or to the Chairman of
the Board of Directors or to the President or to the Secretary of the
Corporation. Such resignation shall take effect at the time specified therein;
and unless otherwise specified therein the acceptance of such resignation shall
not be necessary to make it effective.
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SECTION 2.7 REMOVAL OF DIRECTORS Any of the directors may be removed from
office, for cause only, by action of the Board of Directors or by vote of the
shareholders.
SECTION 2.8 NEWLY CREATED DIRECTORSHIPS AND VACANCIES Newly created
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board of Directors for any reason may be filled by
vote of a majority of the directors then in office, although less than a quorum
exists. A director elected to fill a vacancy shall be elected to hold office
until the next annual meeting of the shareholders and thereafter until a
successor shall be elected and shall qualify.
SECTION 2.9 NOMINATIONS Nominations for the election of directors may be
made by the Board of Directors or a committee appointed by the Board of
Directors or by any shareholder entitled to vote in the election of directors
generally. However, any shareholder entitled to vote in the election of
directors generally may nominate one or more persons for election as a director
at a meeting only if written notice of such shareholder's intent to make such
nomination or nominations has been given, either by personal delivery or by
United States mail, postage prepaid, to the Secretary of the Corporation not
later than (i) with respect to an election to be held at an annual meeting of
shareholders, ninety (90) days in advance of such meeting, and (ii) with respect
to an election to be held at a special meeting of shareholders for the election
of directors, the close of business on the tenth day following the date on which
notice of such meeting is first given to shareholders. Each such notice shall
set forth: (a) the name and address of the shareholder who intends to make the
nomination and of the person or persons to be nominated; (b) a representation
that the shareholder is a holder of record of stock of the Company entitled to
vote at such meeting and intends to appear in person or by proxy at the meeting
to nominate the person or persons specified in the notice; (c) a description of
all arrangements or understandings between the shareholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the shareholder; (d) such other
information regarding each nominee proposed by such shareholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission, had the nominee been nominated, or
intended to be nominated, by the Board of Directors; and (e) the consent of each
nominee to serve as a director of the Company if so elected. The chairman of the
meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedure.
SECTION 2.10 EXECUTIVE AND FINANCE COMMITTEE AND OTHER COMMITTEES OF THE
BOARD OF DIRECTORS The Board of Directors, by resolution adopted by a majority
of the entire Board, shall designate from among its members an Executive and
Finance Committee consisting of three or more directors, and which shall have
all the authority of the Board, except that no such Committee shall have
authority as to the following matters:
(a) The submission to shareholders of any action that needs
shareholders' approval;
(b) The filling of vacancies in the Board or in the Executive and
Finance Committee;
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(c) The fixing of compensation of the directors for serving on the
Board or on the Executive and Finance Committee;
(d) The amendment or repeal of the Bylaws, or the adoption of new
Bylaws;
(e) The amendment or repeal of any resolution of the Board which, by its
terms, shall not be so amendable or repealable;
(f) The declaration of dividends.
The Board of Directors may designate one or more directors as alternate
members of the Executive and Finance Committee, who may replace any absent
member or members at any meeting of such Committee.
A majority of the entire authorized number of members of the Executive and
Finance Committee or any other Committee authorized by the Board of Directors
shall constitute a quorum for the transaction of business and, except as
otherwise provided in these Bylaws, the vote of a majority of the members
present at the time of such vote, if a quorum is present at such time, shall be
the act of such Committee.
The Executive and Finance Committee shall serve at the pleasure of the
Board of Directors.
The Executive and Finance Committee shall cause to be kept regular minutes
of its proceedings, which may be transcribed in the regular minute book of the
Corporation, and all such proceedings shall be reported to the Board of
Directors at its next succeeding meeting, and shall be subject to revision or
alteration by the Board, provided that no rights of third persons shall be
affected by such revision or alteration. The Executive and Finance Committee
may, from time to time, subject to the approval of the Board of Directors,
prescribe rules and regulations for the calling and conduct of meetings of the
Committee, and other matters relating to its procedure and the exercise of its
powers.
The Board of Directors by resolution adopted by a majority of the entire
Board may designate from among its members other committees, each to consist of
at least three directors, and each of which committees shall have authority only
to the extent provided in such resolution. The Board may by resolution designate
directors to act as alternate members of a committee to replace absent members
at meetings of the committee. Such committees shall serve at the pleasure of the
Board of Directors.
SECTION 2.11 ACTION WITHOUT A MEETING Any action required or permitted to
be taken by the Board of Directors or any Committee thereof may be taken without
a meeting if all members of the Board or the Committee consent in writing to the
adoption of a resolution authorizing the action. The resolution and written
consents thereto shall be filed with the minutes of the proceedings of the Board
or Committee.
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SECTION 2.12 PARTICIPATION IN BOARD MEETINGS BY CONFERENCE TELEPHONE Any
one or more members of the Board of Directors or any committee thereof may
participate in a meeting of such Board or committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at a meeting.
SECTION 2.13 COMPENSATION OF DIRECTORS The Board of Directors shall have
authority to fix the compensation of directors for services in any capacity.
SECTION 2.14 INTEREST OF DIRECTOR IN A TRANSACTION Unless shown to be
unfair and unreasonable as to the Corporation at the time it is approved by the
Board of Directors, a committee of such Board or the shareholders, no contract
or other transaction between the Corporation and one or more of its directors,
or between the Corporation and any other corporation, firm, association or other
entity in which one or more of the directors are directors or officers, or are
financially interested, shall be either void or voidable irrespective of whether
such interested director or directors are present at the meeting of the Board of
Directors or of a committee thereof, which approves such contract or transaction
and irrespective of whether his or their votes are counted for such purpose. Any
such contract or transaction may be conclusively approved as fair and reasonable
by:
(a) the Board of Directors, or a duly empowered committee thereof, by a
vote sufficient for such purpose without counting the vote or votes of
such interested director or directors (and he or they may not be counted
in determining the presence of a quorum at the meeting which approves such
contract or transaction), if the fact of such common directorship,
officership or financial interest is disclosed or known to the Board or
committee (as the case may be); or
(b) the shareholders entitled to vote for the election of directors, if
such common directorship, officership or financial interest is disclosed
or known to such shareholders.
SECTION 2.15 LOANS TO DIRECTORS A loan shall not be made by the
Corporation to any director unless it is authorized by vote of the shareholders.
For this purpose, the shares of the director who would be the borrower shall not
be shares entitled to vote.
SECTION 2.16 INDEMNIFICATION OF DIRECTORS AND OFFICERS (a) To the full
extent authorized by law, the Corporation shall indemnify any person, made or
threatened to be made, a party in any civil or criminal action or proceeding by
reason of the fact that he, his testator or intestate, is or was a director or
officer of the Corporation or any subsidiary of the Corporation, or is or was
serving at the request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise.
(b) Except as prohibited by law or as provided in paragraph (c) below, in
addition to the rights granted in paragraph (a), every person shall be entitled
as of right to be indemnified by the Corporation against all expenses and any
liability paid or incurred by such person in connection with any actual or
threatened claim, action, suit or proceeding, civil, criminal, administrative,
investigative or other, whether brought by or in the right of the Corporation or
otherwise, in
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which he or she may be involved as a party or otherwise, by reason of such
person being or having been a director or officer of the Corporation or by
reason of the fact that such person is or was serving at the request of the
Corporation as a director, officer, employee, fiduciary or other representative
of another corporation, partnership, joint venture, trust, employee benefit plan
or other entity (any such actual or threatened claim, action, suit or proceeding
hereinafter being referred to as an "action"). Such indemnification shall
include advances of any expense incurred by such person in connection with an
action prior to final disposition of such action to the maximum extent not
prohibited by the provisions of any applicable statute. As used herein,
"expense" shall include, without limitation, costs of investigation, including
experts, the costs of defense of actions and appeals therefrom and fees and
expenses of counsel selected by such person, and "liability" shall include
amounts of judgments, excise taxes, fines and penalties, amounts paid in
settlement (provided the Corporation shall have consented to such settlement,
which consent shall not be unreasonably withheld by it), and any other amounts
which the person may be obligated to pay as a result of any action.
(c) No right of indemnification under paragraph (b) shall exist for any
person unless it is determined by a court or, if not finally adjudicated by a
court, by the Board of Directors that such person did not act in bad faith or
with an active and deliberate dishonesty and which was material to the action,
or that he or she did not personally gain in fact a financial profit or other
economic advantage to which he or she was not legally entitled. In making such a
determination, the Board of Directors may act by a quorum consisting of
directors who are not parties to such action or, if such a quorum is not
obtainable or, if obtainable, such quorum is unable to make such a finding and
directs, (i) by the Board of Directors upon having received the opinion in
writing of independent legal counsel that indemnification is proper because the
standard of conduct set forth herein has been met or (ii) by the shareholders
entitled to vote in the election of directors upon a finding that such standard
has been met. Indemnification amounts shall be advanced or promptly reimbursed
by the Corporation under paragraph (b) in advance of the final disposition of
such action or proceeding and prior to the determination to be made under this
paragraph (c), subject to the obligation of the person indemnified to repay the
Corporation if, and upon a determination that, such person acted or benefited as
specified above. If indemnification is denied because of a finding by the Board
in the absence of a judgment or other final adjudication, such action by the
Board will in no way affect the right of the person seeking such indemnification
to make application therefor in any court having jurisdiction thereof; in such
action or proceeding the issue will be whether the director or officer met the
standard of conduct set forth in this paragraph (c), not whether the finding of
the Board that he did not was correct, and the determination of such issue will
not be affected by the Board's finding. If the judgment or other final
adjudication in such action or proceeding establishes that the director or
officer met such standard, the Board shall then find such standard to have been
met and shall grant such indemnification, and also shall grant, to the person
entitled to such indemnification, indemnification of the expenses incurred by
such person in the action or proceeding resulting in the judgment or other final
adjudication that such standard of conduct was met.
(d) The right of indemnification provided for herein shall not be deemed
exclusive of any other rights to which those seeking indemnification hereunder
may be entitled under applicable law, by agreement or otherwise, and the
provisions hereof shall inure to the benefit of the heirs
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and legal representatives of persons entitled to indemnification hereunder and
shall be applicable to actions commenced before or after the adoption hereof,
whether arising from acts or omissions occurring before or after the adoption
hereof. The Corporation is authorized to enter into agreements with any of its
directors or officers extending rights to indemnification and advancement of
expenses to such person to the full extent permitted by law, but the failure to
enter into any such agreement shall not affect or limit the rights of such
person pursuant to this bylaw.
(e) This provision shall be deemed to constitute a right of the persons
entitled to indemnification and may not, without the consent of such person, be
amended or repealed to have effect with respect to any event, act or omission
occurring or allegedly occurring prior to the end of the term of office he or
she is serving when such amendment or repeal is adopted.
ARTICLE III
OFFICERS
SECTION 3.1 OFFICERS The Board of Directors, as soon as may be practicable
after the annual election of directors, shall elect a Chairman of the Board of
Directors, a President, one or more Vice Presidents (one or more of whom may be
designated Executive Vice Presidents or Senior Vice Presidents), a Controller, a
Secretary and a Treasurer. From time to time the Board may elect, or the Board
or the Chairman of the Board upon subsequent ratification by the Board may
appoint such other officers as may be determined to be appropriate. Any two or
more offices may be held by the same person, except the offices of President and
Secretary.
SECTION 3.2 TERM OF OFFICE AND REMOVAL Each officer shall hold office for
the term for which he is elected or appointed, and until his successor has been
elected or appointed and qualified. Unless otherwise provided in the resolution
of the Board of Directors electing or appointing an officer, the term of office
of each officer shall extend to and expire at the meeting of the Board following
the next annual meeting of shareholders. Any officer may be removed by the
Board, with or without cause, at any time. Removal of an officer without cause
shall be without prejudice to his contract rights, if any, but his election or
appointment as an officer shall not of itself create contract rights.
SECTION 3.3 POWERS AND DUTIES The officers of the Corporation shall each
have such powers and authority and perform such duties in the management of the
property and affairs of the Corporation, as from time to time may be prescribed
by the Board of Directors and, to the extent not so prescribed, they shall each
have such powers and authority and perform such duties in the management of the
property and affairs of the Corporation, subject to the control of the Board, as
generally pertain to their respective offices.
Without limitation of the foregoing:
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(a) Chairman of the Board of Directors The Chairman of the Board of
Directors shall be the chief executive officer of the Corporation. He
shall preside at all meetings of the Board and of the shareholders. He
shall ex officio be a member of the Executive and Finance Committee.
(b) President The President shall be charged with the responsibility for
the direction and supervision of the business and affairs of the
Corporation subject only to the supervision of the Board of Directors, the
Executive and Finance Committee and the Chairman of the Board. In the
absence of the Chairman of the Board, he shall preside at all meetings of
the Board and of the shareholders. In the event of the death, resignation,
removal, disability or absence of the Chairman of the Board, the President
shall possess the powers and perform the duties of the Chairman of the
Board. The President shall ex officio be a member of the Executive and
Finance Committee.
(c) Vice Presidents The Executive Vice President and Senior Vice
Presidents (if such there be) and other Vice Presidents shall have such
powers and duties as usually pertain to their respective offices, except
as otherwise directed by the Board of Directors or by the Executive and
Finance Committee, and shall also have such powers and duties as may from
time to time be conferred upon them by the Board of Directors, the
Executive and Finance Committee, the Chairman of the Board, or the
President. In the absence of the President, the Executive Vice President,
the Senior Vice Presidents or one of the Vice Presidents designated by the
Board of Directors or by the Chairman of the Board or by the President
shall have all the powers and perform all the duties of the President.
(d) Secretary The Secretary shall issue notices of all meetings of
shareholders and directors where notices of such meetings are required by
law or these Bylaws, and shall keep the minutes of such meetings. He shall
attend and keep the minutes of all meetings of the shareholders, Board of
Directors and Executive and Finance Committee. He shall sign such
instruments and attest such documents as require his signature or
attestation and affix the corporate seal thereto where appropriate.
Assistant Secretaries shall assist the Secretary in the performance of his
powers and duties and in his absence exercise such powers and duties.
(e) Treasurer The Treasurer shall have custody of the corporate funds and
securities and shall deposit all monies and other financial instruments in
the name of the Corporation or such other name as the Board of Directors
may designate. He shall disburse the funds of the Corporation as
appropriate and Assistant Treasurers shall assist the Treasurer in the
performance of his powers and duties and in his absence exercise such
powers and duties.
(f) Controller The Controller of the Corporation shall have full control
of the books of account of the Corporation and keep true and accurate
record of all property owned by it, of its contracts, debts, and of its
revenues and expenses, and shall keep all accounting records of the
Corporation other than those relating to the deposit and custody of monies
and securities which shall be kept by the Treasurer. The Controller shall
make reports to the Chairman of the Board of Directors, the President, and
as required to the Board of
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Directors or, when appropriate, to others relating to the financial
condition of the Corporation. Assistant Controllers shall assist the
Controller in the performance of his powers and duties and in his
absence exercise such powers and duties.
ARTICLE IV
SHARE CERTIFICATE AND LOSS THEREOF - TRANSFER OF SHARES
SECTION 4.1 FORM OF SHARE CERTIFICATES The shares of the Corporation shall
be represented by certificates, in such forms as the Board of Directors may from
time to time prescribe, signed by the Chairman of the Board, or the President,
or a Vice President and the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer, and may be sealed with the seal of the Corporation or
a facsimile thereof. The signatures of the officers upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent or registered
by a registrar other than the Corporation or its employee. In case any officer
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer at
the date of issue.
Each certificate representing shares shall, when issued, state upon the
face thereof:
(a) That the Corporation is formed under the laws of the State of New
York;
(b) The name of the person or persons to whom issued; and
(c) The number, class and series, if any, of shares which such certificate
represents.
SECTION 4.2 LOST, STOLEN OR DESTROYED SHARE CERTIFICATES No certificate or
certificates for shares of the Corporation shall be issued in place of any
certificate alleged to have been lost, stolen or destroyed, except upon
production of such evidence of the loss, theft or destruction, and upon such
indemnification and payment of costs of the Corporation and its agent to such
extent and in such manner as the Board of Directors may from time to time
prescribe.
SECTION 4.3 TRANSFER OF SHARES Shares of the Corporation shall be
transferable on the books of the Corporation by the registered holder thereof in
person or by his duly authorized attorney, by delivery for cancellation of a
certificate or certificates for the same number of shares, with proper
indorsement consisting of either a written assignment of the certificate or a
power of attorney to sell, assign or transfer the same or the shares represented
thereby, signed by the person appearing by the certificate to be the owner of
the shares represented thereby, either written thereon or attached thereto, with
such proof of the authenticity of the signature as the Corporation or its agents
may reasonably require. Such indorsement may be either in blank or to a
specified person, and shall have affixed thereto all stock transfer stamps
required by law.
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ARTICLE V
OTHER MATTERS
SECTION 5.1 RECORDS The Corporation shall keep (a) correct and complete
books and records of account; (b) minutes of the proceedings of the
shareholders, Board of Directors and any committees of the Board; and (c) a
current list of the directors and officers and their resident addresses.
The Corporation shall also keep at its office in the State of New York or
at the office of its transfer agent, if any, a record containing the names and
addresses of all shareholders, the number and class of shares held by each and
the dates when they respectively became the owners of record thereof.
SECTION 5.2 CHECKS AND SIMILAR INSTRUMENTS All checks and drafts on the
Corporation's bank accounts and all bills of exchange and promissory notes and
all acceptances, obligations and other instruments, for the payment of money,
shall be signed by the Treasurer (by facsimile or otherwise) on behalf of the
Corporation or by such officer or officers or person or persons as shall be
thereunto authorized from time to time by the Board of Directors or designated
by the Treasurer.
SECTION 5.3 STOCK OF OTHER CORPORATIONS The Board of Directors shall have
the right to authorize any officer or other person on behalf of the Corporation
to attend, act and vote at meetings of the shareholders of any corporation in
which the Corporation shall hold shares, and to exercise thereat any and all the
rights and powers incident to the ownership of such shares and to execute
waivers of notice of such meetings and calls therefor; and authority may be
given to exercise the same either on one or more designated occasions, or
generally on all occasions until revoked by the Board. In the event that the
Board shall fail to give such authority, such authority may be exercised by the
President in person or by proxy appointed by him on behalf of the Corporation.
SECTION 5.4 CORPORATE SEAL The corporate seal shall have inscribed thereon
the name of the Corporation and such other appropriate legend as the Board of
Directors may from time to time determine. In lieu of the corporate seal, when
so authorized by the Board, a facsimile thereof may be affixed or impressed or
reproduced in any other manner.
SECTION 5.5 FISCAL YEAR The fiscal year of the Corporation shall be the
calendar year.
SECTION 5.6 AMENDMENTS Except as otherwise provided by these Bylaws and
the Certificate of Incorporation, the Bylaws of the Corporation may be amended,
repealed or adopted by vote of the holders of record of the shares at the time
entitled to vote in the election of any directors; provided that Sections 1.2
and 1.5 of Article I, Sections 2.2, 2.3, 2.7, 2.8 and 2.9 of Article II and
Section 5.6 of Article V of the Bylaws shall not be altered, amended or repealed
and no provision inconsistent therewith shall be adopted without the affirmative
vote of the holders of at least seventy-five percent (75%) of the outstanding
shares entitled to vote in the
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election of directors, voting together as a single class. Except as otherwise
provided above, Bylaws may also be amended, repealed, or adopted by the Board of
Directors, but any Bylaw adopted by the Board may be amended or repealed by the
shareholders entitled to vote thereon as hereinabove provided.
If any Bylaw regulating an impending election of directors is adopted,
amended or repealed by the Board of Directors, there shall be set forth in the
notice of the next meeting of shareholders for the election of directors the
Bylaws so adopted, amended or repealed, together with a concise statement of the
change made.
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<PAGE> 67
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The New York Business Corporation Law provides that, under certain
circumstances, New York corporations may indemnify their directors and officers
against judgments, fines, amounts paid in settlement and reasonable expenses
actually and necessarily incurred by them in connection with settling or
otherwise disposing of suits or threatened suits to which such directors and
officers are a party or threatened to be made a party by reason of acting in any
such capacities. Such indemnification may only be made if such person acted in
good faith and in a manner which he or she reasonably believed to be in the best
interests of the corporation. Additionally, in criminal actions or proceedings,
such person must have had no reasonable cause to believe that his or her conduct
was unlawful.
HoldCo's by-laws provide for indemnification to the fullest extent
permitted by New York law, including the payment of expenses in advance of the
resolution of any such action. Moreover, HoldCo's charter limits the potential
personal monetary liability of the members of its Board of Directors to HoldCo
or its stockholders for certain breaches of their duty of care or other duties
as directors.
The New York Business Corporation Law permits corporations to purchase
liability insurance on behalf of their officers and directors and HoldCo has
purchased such insurance.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
See Exhibit Index.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described in Item 20 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful
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<PAGE> 68
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Proxy Statement and
Prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form S-4, within one
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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<PAGE> 69
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Rochester, State of New
York, on the 17th day of November, 1998.
RG&E HOLDINGS, INC.
By: /s/ Thomas S. Richards
------------------------------
Thomas S. Richards
President and Director
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature appears
below constitutes and appoints Thomas S. Richards, Michael T. Tomaino and David
C. Heiligman, and each of them, his or her true and lawful attorney-in-fact, and
agents, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any or
all amendments to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 17th day of November, 1998.
SIGNATURE TITLE
Principal Executive Officer:
/s/ Thomas S. Richards President and Director
- --------------------------------
Thomas S. Richards
Principal Financial Officer and Controller
or Principal Accounting Officer:
/s/ J. Burt Stokes Vice President and Director
- --------------------------------
J. Burt Stokes
/s/ Michael T. Tomaino Director
- --------------------------------
Michael T. Tomaino
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<PAGE> 70
EXHIBIT INDEX
EXHIBIT NO. METHOD OF FILING
2.1 Agreement and Plan of Share Exchange.... Included as Exhibit A
to the Proxy
Statement and
Prospectus.
3.1 Certificate of Incorporation of HoldCo.. Included as
Exhibit B to the Proxy
Statement and
Prospectus.
3.2 By-laws of HoldCo....................... Included as Exhibit C
to the Proxy
Statement and
Prospectus.
5.1 Opinion of Nixon, Hargrave, Devans & To be filed by
Doyle with respect to the legality of amendment.
the securities registered hereunder.....
23.1 Consent of Counsel...................... Included in opinion
filed as Exhibit 5.1.
23.2 Consent of PricewaterhouseCoopers LLP... Filed herewith.
24.1 Power of Attorney of Directors and Included on signature
Officers................................ page.
99.1 Form of Proxy........................... Filed herewith.
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<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Rochester Gas
and Electric Corporation of our report dated January 23, 1998 appearing on page
35 of Rochester Gas and Electric Corporation's Annual Report on Form 10-K for
the year ended December 31, 1997. We also consent to the reference to us under
the heading "Experts" in such Prospectus.
[PricewaterhouseCoopers LLP]
PricewaterhouseCoopers LLP
Rochester, New York
November 13, 1998
<PAGE> 1
[R G AND E LOGO]
Exhibit 99.1
VOTE BY TELEPHONE, INTERNET OR MAIL
The accompanying Proxy Statement and Prospectus addresses important issues
affecting your investment in RG&E. Help us save time and postage costs by voting
your proxy electronically - either by touch-tone telephone or over the Internet.
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you completed and returned a Proxy card in the mail.
TO VOTE BY TOUCH-TONE TELEPHONE TO VOTE ON THE INTERNET
/ / have your Proxy card handy and / / have your proxy card handy and
call 1-888-XXX-XXXX TOLL FREE go to web site:
www.equiserve.com/proxy/
/ / enter the 13-digit control number / / enter the 13-digit control number
located above your name and located above your name and
address in the lower left corner address in the lower left corner
of your Proxy card of your Proxy card
/ / follow the simple recorded / / follow the instructions on the
instructions screen
/ / you may also indicate if you
wish to receive future proxy
communications via the Internet
If you prefer to vote by mail, simply complete and return your Proxy card in the
postage-paid envelope provided. DO NOT MAIL THE PROXY CARD IF YOU ARE VOTING BY
TELEPHONE OR OVER THE INTERNET.
Are you receiving more than one copy of our annual report? To discontinue
duplicate mailings of the report to the same address, mark the "Discontinue
Duplicate Annual Report" box (see below) on the Proxy card for those
accounts for which you do not want to receive the report.
Thank you for voting
Detach Proxy card here
- --------------------------------------------------------------------------------
/ / Please
mark
votes
as in
this
example
PROPOSAL 1: AGREEMENT AND PLAN OF EXCHANGE
For Against Abstain
/ / / / / /
PROPOSAL 2: ELECTION OF DIRECTORS
Nominees (Class I): S. T. Hubbard, Jr.,
C.L. Killingsworth, Jr., R. W. Kober
and _____________
For Withheld
/ / / /
/ /_______
For all nominees except as noted above
PROPOSAL 3: OTHER MATTERS In their
discretion the proxies are authorized to
vote upon such other business as may
properly come before the meeting. As of
March 8, 1999, the Board of Directors does
not know of any other matters to come
before the meeting.
Discontinue
Duplicate
Annual Report / / Mark here for / /
address change
and note at left
This Proxy, when properly executed, will
be voted in the manner directed herein by
the undersigned shareholder. If no
direction is made, this proxy will be
voted FOR the Agreement and Plan of
Exchange and FOR the election of the
listed nominees for directors.
Please sign exactly as name appears at left
Signature: ___________________________ Date:___________
Signature: ___________________________ Date:____________
<PAGE> 2
- --------------------------------------------------------------------------------
Detach proxy card here
ROCHESTER GAS AND ELECTRIC CORPORATION
89 East Avenue, Rochester, New York 14649-0001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints T. S. Richards, M. T. Tomaino and D. C.
Heiligman and each of them as proxies, with power of substitution, to vote
all Common Stock of the undersigned, as directed on the reverse side, at the
Rochester Gas and Electric Corporation Annual Meeting of Shareholders to be
held on April 29, 1999 or any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED
REORGANIZATION AND FOR THE LISTED NOMINEES.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
