SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION OR DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, MD 21740
(Name of company or companies filing this statement and address of
principal executive office)
Allegheny Energy, Inc.
(Name of top registered holding company parent of each
applicant or declarant)
Thomas K. Henderson, Esq.
Vice President
Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, MD 21740
(Name and address of agents for service)
<PAGE>
Item 1. Description of Proposed Transactions.
A. Introduction.
Allegheny Energy, Inc., a registered public utility holding company
("Allegheny") proposes to adopt and implement a stockholder protection rights
plan (the "Plan"). The Board of Directors (the "Board") of Allegheny intends to
declare a dividend of one right (a "Right") for each outstanding share of
Allegheny common stock, par value $1.25 per share (the "Common Stock"), payable
to all stockholders of record on a record date ("Record Time") to be established
by the Board after receipt of the Securities and Exchange Commission's (the
"Commission") authorization herein requested and after final Board action to
approve the Plan and declare the dividend. As of December 31, 1998, there were
approximately 122,436,317 shares of Common Stock outstanding. The Rights will be
created by and issued pursuant to a Rights Agreement (the "Rights Agreement"),
between Allegheny and ChaseMellon Shareholder Services, Inc. ("Rights Agent"),
as Rights Agent.
B. Background.
Unsolicited attempts to acquire public companies have required boards
of directors and their stockholders to make difficult decisions affecting the
value, and on occasion, the existence, of companies within extremely short time
periods. Such takeover attempts often occur when a company is particularly
vulnerable and when the board has determined that the company's inherent
long-term value is inadequately recognized by the marketplace.
The electric utility industry is undergoing dramatic technological and
regulatory changes, transforming from a highly regulated to a competitive
industry. State initiatives to introduce competition for retail customers, and
possible federal initiatives regarding retail competition, are compelling a
restructuring of the industry. Uncertainty regarding the future and state
regulators' focus on reducing retail rates has resulted in depressed market
values for certain utilities and increased takeover activity, including hostile
or other unwanted takeover bids, further indicating that Allegheny's
stockholders may be at risk of losing the long-term value of Allegheny.
Because Allegheny is a public utility holding company registered under
the Act, acquisitions of more than 5% of its Common Stock, a merger or
consolidation of Allegheny, and certain other transactions (such as sales of
assets as part of any takeover attempt) would require Commission approval.
Nonetheless, the changing regulatory environment suggests that public utility
holding companies, including Allegheny, and their stockholders are losing, to
some degree, the regulatory protection against hostile acquisitions that they
had formally. Proposals have been introduced in Congress for repeal or amendment
of the Public Utility Holding Company Act of 1935, as amended (the "Act"), some
of which have been supported by the Commission. Further, in response to state or
federal legislation or regulatory requirements or in order to continue to
compete in a dynamic utility industry, Allegheny may in the future pursue
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possible strategies that would, among other things, have the effect of
de-registration or terminating regulation of Allegheny by the Commission under
the Act.
Stockholder rights plans have become a widely accepted means to
maximize stockholder value by reducing the risk of nonrealization of stockholder
value due to opportunistic proposals. Such a plan would encourage potential
acquirers to negotiate with the Board. A stockholder rights plan may enhance the
probability that a competing offer will emerge. Over 1,700 public companies have
adopted rights plans, including about half of the Fortune 500 companies and an
increasing number of publicly traded utility companies. In addition, to date,
the Commission has authorized several registered holding companies to adopt
rights plans.
The Board believes that the Rights Agreement is appropriate and
necessary to preserve, in the event of an attempted takeover, Allegheny's value
for its stockholders. In this regard, the Rights Agreement is designed to deter
attempts to acquire Allegheny in a manner or on terms which the Board determines
are not in the best interests of all stockholders. Specifically, the Rights
Agreement is intended to:
(i) reduce the risk of two-tiered, front-end loaded
tender offers or partial tender offers which may
not offer fair and equal value to all stockholders
of Allegheny;
(ii) deter potential accumulators of Allegheny's shares
who (through open market and/or private purchases)
may achieve a position of substantial influence, or
even control, without paying to the selling or
remaining stockholders of Allegheny an appropriate
control premium for their shares;
(iii) deter potential accumulators of Allegheny's shares
who are only interested in putting Allegheny into
"play"; and
(iv) preserve for Allegheny's Board maximum bargaining
power and flexibility to deal with hostile
acquirors in order to be in a position to maximize
value for all stockholders.
The Rights Agreement attempts to achieve these goals by confronting a
potential acquiror of more than 15% of Allegheny's outstanding Common Stock with
the possibility that Allegheny's stockholders, by exercising their Rights, will
be able to increase substantially such acquiror's cost of acquiring Allegheny.
The Plan may in certain circumstances permit the Board to thwart an
inadequate offer. The Plan would also provide the Board a role (supplemental to
the role of the Commission under the Act) in discouraging implicitly coercive
takeover tactics and would enable the Board to provide stockholders adequate
time to properly assess a takeover bid without undue pressure.
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For all of these reasons, the Board believes that the Plan, including
the adoption of the Rights Agreement and the distribution of the Rights to
Allegheny's stockholders, would provide appropriate protections for such
stockholders from the takeover abuses discussed above.
C. Description of Rights.
1. Exercise Price. The Rights created under the proposed Rights
Agreement would entitle the holders to one share of Common Stock at a price to
be determined by the Board and expected to be between $95 and $125 (the
"Exercise Price"), subject to adjustment. Initially, the Rights would not be
exercisable and would trade with the outstanding shares of Common Stock. Upon
the occurrence of the triggering events described below, the Rights would become
exercisable and certificates (the "Rights Certificates") representing the Rights
would be distributed and would trade independently of such outstanding shares.
However, the Rights would not entitle the holders thereof to make a discounted
purchase of shares of Allegheny's Common Stock or of the common stock of the
person acquiring Allegheny until the occurrence of one of the events of
transactions described below under "Flip-in" and "Flip-over".
2. Triggering Events. The Rights would become exercisable (i.e., Common
Stock could be purchased at the Exercise Price pursuant to the Rights) upon the
earlier to occur of (i) the first date or such later date as the Board may from
time to time fix of public announcement by Allegheny that any person or group
(an "Acquiring Person") has acquired beneficial ownership of 15% or more of
Allegheny's outstanding Common Stock ("Flip-in Date") and (ii) 10 business days
(unless extended by the Board) after any person or group has commenced a tender
or exchange offer which would, upon its consummation, result in such person or
group becoming an Acquiring Person ("Flip-over Trigger").
3. Flip-in. Upon the occurrence of a Flip-in Date, the holders of the
Rights (other than an Acquiring Person and certain transferees thereof, whose
Rights will become void) would immediately have the right to receive, for each
Right exercised, depending upon circumstances either Common Stock having a
market value equal to two times or one times the Exercise Price then in effect
("Discount Purchase Right").
4. Flip-over. In the event that, on or after the Flip-in Date, (i)
Allegheny is acquired by another person or entity not controlled by Allegheny
("Acquiror") in a merger or other business combination transaction in which the
Common Stock is exchanged for securities or other property and, in the case of a
merger or other business combination, the Acquiring Person will receive
different treatment than all other holders of Common Stock, or (ii) 50% or more
of Allegheny's consolidated assets or earnings power is sold or transferred to
an Acquiror, each holder of a Right (except Rights which previously have been
voided as set forth above) will thereafter be entitled to receive, for each
Right exercised, common stock of the Acquiror having a market value equal to two
times the Exercise Price then in effect.
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5. Redemption of Rights. The Rights may be redeemed, as a whole, at the
discretion of the Board, at a Redemption Price of $.01 per Right, subject to
adjustment, which Redemption Price shall be paid, at Allegheny's option, in
cash, shares of Common Stock or other equivalent Allegheny securities, at any
time prior to the close of business on the date that any person has become an
Acquiring Person. The Rights will expire at the close of business ten years from
the date of the Rights Agreement, unless earlier redeemed or exchanged by
Allegheny as described below.
6. Exchange of Shares for Rights. At any time after a Flip-in Date and
prior to the time that any person (other than Allegheny and certain related
entities), together with its affiliates and associates, becomes the beneficial
owner of 50% or more of the outstanding shares of Common Stock, the Board may
direct the exchange of shares of Common Stock for all of the Rights (other than
Rights which have become void) at the exchange ratio of one share of Common
Stock per Right, subject to adjustment.
7. Adjustment to Exercise Price. The Exercise Price payable, and the
number of shares of Common Stock (or other securities, as the case may be)
issuable upon exercise of the Rights are subject to adjustment from time to time
to prevent dilution (i) in the event of a stock dividend on, or a subdivision or
combination of, the Common Stock, or (ii) upon the distribution to holders of
the Common Stock of securities or assets (excluding regular periodic cash
dividends) whether by dividend, reclassification, recapitalization or otherwise.
8. Amendments. The terms of the Rights may be amended by the Board (i)
prior to the Flip-in Date in any manner and (ii) on or after the Flip-in Date to
cure any ambiguity, to correct or supplement any provision of the Rights
Agreement which may be defective or inconsistent with any other provisions, or
in any manner not adversely affecting the interests of the holders of the Rights
generally.
D. Authorizations Sought.
In summary, Allegheny herein seeks authorization to implement the Plan
and the Rights Agreement, including, among other actions permitted by the Rights
Agreement, the following transactions:
(1) The dividend distribution of the Rights;
(2) The making of adjustments to the Exercise Price, and the
issuance and sale of Common Stock, or the transfer of
other assets, upon exercise of the Rights;
(3) The redemption of Rights, and the issuance of Common Stock
in exchange for Rights; and
(4) Amending of the Rights Agreement as permitted by the terms
hereof.
<PAGE>
E. Rule 54 Analysis.
Rule 54 provides that in determining whether to approve certain
transactions other than those involving exempt wholesale generators ("EWGs") or
foreign utility companies ("FUCOs"), as defined in the Act, the Commission will
not consider the effect of the capitalization of earnings of any subsidiary
which is an EWG or FUCO if Rule 53(a), (b) and (c) are satisfied. The
requirements of Rule 53(a), (b) and (c) are satisfied.
Rule 53(a)(1). Allegheny does not have any amounts invested, or
committed to be invested, in EWGs. Allegheny has committed to invest up to $5
million in partnerships that may invest in FUCOs. This investment represents
less than 1% of $898,629,000, the average of the consolidated retained earnings
of APS reported on Form 10-K or Form 10-Q, as applicable, for the four
consecutive quarters ended December 31, 1998.
Rule 53(a)(2). Allegheny will maintain books and records for any EWG
and FUCO in which it holds an interest and will make those books and records
available as required by Rule 53(a)(2).
Rule 53(a)(3). No more than 2% of the employees of Allegheny's domestic
public utility companies will, at any one time, directly or indirectly, render
services to EWGs or FUCOs in which Allegheny holds an interest.
Rule 53(a)(4). Allegheny will submit a copy of Item 9 and Exhibits G
and H of Allegheny's Form U5S to each of the public service commissions having
jurisdiction over the retail rates of any of Allegheny's affected public utility
companies.
Rule 53(b):
(i) Neither Allegheny nor any subsidiary of Allegheny is the subject of
any pending bankruptcy or similar proceeding;
(ii) Allegheny's average consolidated retained earnings for the four most
recent quarterly periods($898,629,000) represented a decrease of
approximately $131,840,000 (or 13%) in the average consolidated
retained earnings from the previous four quarterly periods
($1,030,469,000); however, Allegheny's aggregate investment in EWGs
and FUCOs does not exceed 2% of total capital invested in utility
operations; and
(iii) for the year ended December 31, 1998, there were no losses
attributable to Allegheny's investments in the partnerships that
invest in FUCOs.
Rule 53(c). Rule 53(c) is inapplicable because the requirements of Rule
53(a) and (b) have been satisfied.
<PAGE>
Item 2. Fees, Commissions and Expenses.
The estimated fees, commissions and expenses to be incurred in
connection with the proposed transactions will be filed by amendment.
Item 3. Applicable Statutory Provisions.
Sections 6(a), 7, 9(a), 10 and 12(c) of the Act and Rules 42 and 46
thereunder are believed to be applicable to the prosed dividend distribution of
Rights, and any subsequent exercise or redemption of the Rights.
While the Rights are technically a dividend on the Common Stock for
corporate law purposes, in and of themselves the Rights have no economic value
and, therefore, are not a "dividend" out of Allegheny's capital or capital
surplus for purpose of Section 12(c) of the Act.
Because there is no intent that the Rights ever become exercisable,
they are regarded more appropriately as being in the nature of an addition to
the rights of stockholders under Sections 6(a)(2) and 7(e) rather than as an
issuance of securities under Section 6(a)(1) and 7(c) and (d). However, if such
letter sections were to be regarded as applicable, then any issuance of Common
Stock pursuant to the Rights is deemed to meet the requirements of Section
7(c)(2)(D) and none of the negative findings required under Section 7(d) can be
made.
Item 4. Regulatory Approval.
No state or federal commission (other than the Securities and Exchange
Commission) has jurisdiction with respect to the proposed transactions.
Item 5. Procedure.
It is requested that the Commission issue an order with respect to the
transactions proposed herein at the earliest practicable date, but in any event,
not later than April 26, 1999. It is further requested that (i) there not be a
recommended decision by an Administrative Law Judge or other responsible officer
of the Commission, (ii) the Office of Public Utility Regulation be permitted to
assist in the preparation of the Commission's decision, and (iii) there be no
waiting period between the issuance of the Commission's order and the date on
which it is to become effective.
Item 6. Exhibits and Financial Statements.
1. Exhibits:
A-1 Charter of the Company, as amended, dated
September 16, 1997 (incorporated by
reference to Exhibit 3.1 to the Company's
Annual
<PAGE>
Report on Form 10-K for the year ended December 31,
1997 (File No. 1-00267))
A-2 By-laws of the Company, as amended, dated
May 14, 1998 (incorporated by reference to
Exhibit 3(ii) to the Company's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 1998 (File No. 1-00267))
A-3 Draft of Rights Agreement, including exhibits
B Not applicable
C Not applicable
D Not applicable
E Not applicable
F-1 Opinion of counsel (to be filed by amendment)
G Financial Data Schedules (to be filed by amendment)
H Proposed Form of Notice Pursuant to Rule 22(f)
2. Financial Statements:
Note: Allegheny corporate and consolidated actual and pro forma financial
statements are omitted because the proposed transactions will not
have a material impact thereon.
Item 7. Information as to Environmental Effects.
The proposed transactions are designed to assist Allegheny's Board in
responding to an unsolicited takeover. Consequently, the issuance of an order by
the Commission with respect to the subject transactions is not a major Federal
action significantly affecting the quality of the human environment.
No Federal agency has prepared or is preparing an environmental impact
statement with respect to the subject transactions. Reference is made to Item 4
hereof regarding regulatory approvals with respect to the proposed transactions.
<PAGE>
SIGNATURE
Pursuant to the Requirements of the Public Utility Holding Company Act
of 1935, the Undersigned Company Has Duly Caused this Statement to Be Signed on
its Behalf by the Undersigned Thereunto Duly Authorized.
ALLEGHENY ENERGY, INC.
By: /s/ Thomas K. Henderson
---------------------------
Thomas K. Henderson
Vice President
Date: March 2, 1999
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
99.1 Draft of Rights Agreement, including exhibits
99.2 Proposed Form of Notice Pursuant to Rule 22(f)
Draft of March 2, 1999
================================================================================
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
dated as of
______________, 1999
between
ALLEGHENY ENERGY, INC.
and
-------------------------,
as Rights Agent
================================================================================
<PAGE>
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions.....................................................2
ARTICLE 2
THE RIGHTS
Section 2.1 Summary of Rights..............................................11
Section 2.2 Legend on Common Stock Certificates............................11
Section 2.3 Exercise of Rights; Separation of Rights.......................12
Section 2.4 Adjustments to Exercise Price; Number of Rights................16
Section 2.5 Date on Which Exercise is Effective............................18
Section 2.6 Execution, Authentication, Delivery and Dating of
Rights Certificates ...........................................19
Section 2.7 Registration, Registration of Transfer and Exchange............19
Section 2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates......21
Section 2.9 Persons Deemed Owners..........................................22
Section 2.10 Delivery and Cancellation of Certificates......................22
Section 2.11 Agreement of Rights Holders....................................23
ARTICLE 3
ADJUSTMENTS TO THE RIGHTS IN
THE EVENT OF CERTAIN TRANSACTIONS
Section 3.1 Flip-in........................................................24
Section 3.2 Flip-over......................................................28
ARTICLE 4
THE RIGHTS AGENT
Section 4.1 General........................................................29
Section 4.2 Merger or Consolidation or Change of Name of Rights Agent......30
Section 4.3 Duties of Rights Agent.........................................31
Section 4.4 Change of Rights Agent.........................................34
ARTICLE 5
MISCELLANEOUS
Section 5.1 Redemption.....................................................36
Section 5.2 Expiration.....................................................36
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Page
Section 5.3 Issuance of New Rights Certificates............................37
Section 5.4 Supplements and Amendments.....................................37
Section 5.5 Fractional Shares..............................................38
Section 5.6 Rights of Action...............................................38
Section 5.7 Holder of Rights Not Deemed a Stockholder......................39
Section 5.8 Notice of Proposed Actions.....................................39
Section 5.9 Notices........................................................40
Section 5.10 Suspension of Exercisability...................................41
Section 5.11 Costs of Enforcement...........................................41
Section 5.12 Successors.....................................................41
Section 5.13 Benefits of this Agreement.....................................42
Section 5.14 Determination and Actions by the Board of Directors, etc.......42
Section 5.15 Descriptive Headings...........................................42
Section 5.16 GOVERNING LAW..................................................42
Section 5.17 Counterparts...................................................43
Section 5.18 Severability...................................................43
EXHIBITS
Exhibit A Form of Rights Certificate
(Together with Form of Election to Exercise)
-ii-
<PAGE>
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
STOCKHOLDER PROTECTION RIGHTS AGREEMENT (as amended from time to time,
this "Agreement"), dated as of ____________, 1999, between ALLEGHENY ENERGY,
INC., a Maryland corporation (the "Company"), and _____________, a
_____________, as Rights Agent (the "Rights Agent", which term shall include any
successor Rights Agent hereunder).
WITNESSETH:
WHEREAS, the Board of Directors of the Company has (a) authorized and
declared a dividend of one right ("Right") in respect of each share of Common
Stock (as hereinafter defined) held of record as of the close of business on the
date (the "Record Time") that is the tenth Business Day following the first
public announcement by the Company of the granting of an order of the Securities
and Exchange Commission permitting to become effective the Company's declaration
with respect to such dividend and the other transactions contemplated herein
pursuant to the Public Utility Holding Company Act of 1935, as amended (the
"Holding Company Act"), and (b) as provided in Section 2.4, authorized the
issuance of one Right in respect of each share of Common Stock issued after the
Record Time and prior to the Separation Time (as hereinafter defined) and, to
the extent provided in Section 5.3, each share of Common Stock issued after the
Separation Time;
WHEREAS, subject to the terms and conditions hereof, each Right
entitles the holder thereof, after the Separation Time, to purchase securities
or assets of the Company (or, in certain cases, securities of certain other
entities) pursuant to the terms and subject to the conditions set forth herein;
and
<PAGE>
WHEREAS, the Company desires to appoint the Rights Agent to act on
behalf of the Company, and the Rights Agent is willing so to act, in connection
with the issuance, transfer, exchange and replacement of Rights Certificates (as
hereinafter defined), the exercise of Rights and other matters referred to
herein;
NOW THEREFORE, in consideration of the premises and the respective
agreements set forth herein, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the following terms
have the meanings indicated:
"Acquiring Person" shall mean any Person who is a Beneficial Owner (as
hereinafter defined) of 15% or more of the outstanding shares of Common Stock;
provided, however, that the term "Acquiring Person" shall not include any Person
(i) who is the Beneficial Owner of 15% or more of the outstanding shares of
Common Stock on the date of this Agreement or who shall become the Beneficial
Owner of 15% or more of the outstanding shares of Common Stock solely as a
result of an acquisition by the Company of shares of Common Stock, until such
time hereafter or thereafter as any of such Persons shall become the Beneficial
Owner (other than by means of a stock dividend or stock split) of any additional
shares of Common Stock, (ii) who becomes the Beneficial Owner of 15% or more of
the outstanding shares of Common Stock but who acquired Beneficial Ownership of
shares of Common Stock without any plan or intention to seek or affect control
of the Company, if such Person promptly divests, or promptly enters into an
agreement with the
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Company satisfactory to the Company, in its sole discretion, to divest (in each
case, without exercising or retaining any power, including voting power, with
respect to such shares) sufficient shares of Common Stock (or securities
convertible into, exchangeable into or exercisable for Common Stock) so that
such Person ceases to be the Beneficial Owner of 15% or more of the outstanding
shares of Common Stock or (iii) who Beneficially Owns shares of Common Stock
consisting solely of one or more of (A) shares of Common Stock Beneficially
Owned pursuant to the grant or exercise of an option granted to such Person (an
"Option Holder") by the Company in connection with an agreement to merge with,
or acquire, the Company entered into prior to a Flip-in Date, (B) shares of
Common Stock (or securities convertible into, exchangeable into or exercisable
for Common Stock), Beneficially Owned by such Option Holder or its Affiliates or
Associates at the time of grant of such option, and (C) shares of Common Stock
(or securities convertible into, exchangeable into or exercisable for Common
Stock) acquired by Affiliates or Associates of such Option Holder after the time
of such grant which, in the aggregate, amount to less than 1% of the outstanding
shares of Common Stock. In addition, the Company, any wholly-owned Subsidiary of
the Company and any employee stock ownership or other employee benefit plan of
the Company or a wholly-owned Subsidiary of the Company shall not be an
Acquiring Person.
"Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 under the Exchange Act, as such Rule is in effect on
the date of this Agreement.
"Agreement" shall have the meaning set forth in the Preamble.
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<PAGE>
A Person shall be deemed the "Beneficial Owner", and to have
"Beneficial Ownership" of, and to "Beneficially Own", any securities as to which
such Person or any of such Person's Affiliates or Associates is or may be deemed
to be the beneficial owner of pursuant to Rules 13d-3 and 13d-5 under the
Exchange Act, as such Rules are in effect on the date of this Agreement, as well
as any securities as to which such Person or any of such Person's Affiliates or
Associates has the right to become Beneficial Owner (whether such right is
exercisable immediately or only after the passage of time or the occurrence of
conditions) pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), or upon the exercise
of conversion rights, exchange rights, rights (other than the Rights), warrants
or options, or otherwise; provided, however, that a Person shall not be deemed
the "Beneficial Owner", or to have "Beneficial Ownership" of, or to
"Beneficially Own", any security (i) solely because such security has been
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such tendered security is accepted
for payment or exchange or (ii) solely because such Person or any of such
Person's Affiliates or Associates has or shares the power to vote or direct the
voting of such security pursuant to a revocable proxy given in response to a
public proxy or consent solicitation made to more than ten holders of shares of
a class of stock of the Company registered under Section 12 of the Exchange Act
and pursuant to, and in accordance with, the applicable rules and regulations
under the Exchange Act, except if such power (or the arrangements relating
thereto) is then reportable under Item 6 of Schedule 13D under the Exchange Act
(or any similar provision of a comparable
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<PAGE>
or successor report). Notwithstanding the foregoing, no officer or director of
the Company shall be deemed to Beneficially Own any securities of any other
Person by virtue of any actions such officer or director takes in such capacity
and such officer or director shall not solely by reason of their status as such
constitute a group (notwithstanding that they may be Associates of one another
or may be deemed to constitute a group for purposes of Section 13(d) of the
Exchange Act). For purposes of this Agreement, in determining the percentage of
the outstanding shares of Common Stock with respect to which a Person is the
Beneficial Owner, all shares as to which such Person is deemed the Beneficial
Owner shall be deemed outstanding.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in The City of New York are generally
authorized or obligated by law or executive order to close.
"Close of business" on any given date shall mean 5:00 p.m. New York
City time on such date or, if such date is not a Business Day, 5:00 p.m. New
York City time on the next succeeding Business Day.
"Common Stock" shall mean the shares of Common Stock, par value $1.25
per share, of the Company.
"Company" shall have the meaning set forth in the Preamble.
"Election to Exercise" shall have the meaning set forth in Section
2.3(d) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Ratio" shall have the meaning set forth in Section 3.1(c)
hereof.
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<PAGE>
"Exchange Time" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to Section 3.1(c) hereof.
"Exercise Price" shall mean, as of any date, the price at which a
holder may purchase or for which a holder may exchange the securities and/or
cash and/or other assets issuable or exchangeable upon exercise or exchange of
one whole Right. Until adjustment thereof in accordance with the terms hereof,
the Exercise Price shall equal $_____________.
"Expansion Factor" shall have the meaning set forth in Section 2.4(a)
hereof.
"Expiration Time" shall mean the earliest of (i) the Exchange Time,
(ii) the Redemption Time, (iii) the close of business on the tenth anniversary
of the Record Time unless extended by action of the Board of Directors, and (iv)
immediately prior to the effective time of a consolidation, merger or share
exchange of the Company (A) into another corporation or (B) with another
corporation in which the Company is the surviving corporation but Common Stock
is converted into cash and/or securities of another corporation, in either case
pursuant to an agreement entered into by the Company prior to a Stock
Acquisition Date.
"Flip-in Date" shall mean any Stock Acquisition Date or such later date
as the Board of Directors of the Company may from time to time fix by resolution
adopted prior to the Flip-in Date that would otherwise have occurred.
"Flip-over Entity", for purposes of Section 3.2, shall mean (i) in the
case of a Flip-over Transaction or Event described in clause (i) of the
definition thereof, the Person issuing any securities into which shares of
Common Stock are being converted or exchanged and, if no such securities are
being issued, the other party to such Flip-over Transaction or
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<PAGE>
Event and (ii) in the case of a Flip-over Transaction or Event referred to in
clause (ii) of the definition thereof, the Person receiving the greatest portion
of the (A) assets or (B) operating income or cash flow being transferred in such
Flip-over Transaction or Event, provided in all cases if such Person is a
subsidiary of a corporation, the parent corporation shall be the Flip-over
Entity.
"Flip-over Stock" shall mean the capital stock (or similar equity
interest) with the greatest voting power in respect of the election of directors
(or other persons similarly responsible for direction of the business and
affairs) of the Flip-over Entity.
"Flip-over Transaction or Event" shall mean a transaction or series of
transactions after a Flip-in Date in which, directly or indirectly, (i) the
Company shall consolidate or merge or participate in a share exchange with any
other Person if, at the time of the consolidation, merger or share exchange or
at the time the Company enters into any agreement with respect to any such
consolidation, merger or share exchange, the Acquiring Person controls the Board
of Directors of the Company and either (A) any term of or arrangement concerning
the treatment of shares of capital stock in such consolidation, merger or share
exchange relating to the Acquiring Person is not identical to the terms and
arrangements relating to other holders of the Common Stock or (B) the Person
with whom the transaction or series of transactions occurs is the Acquiring
Person or an Affiliate or Associate of the Acquiring Person, or (ii) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer) assets (A) aggregating more than 50% of the assets
(measured by either book value or fair market value) or (B) generating more than
50% of the operating income or cash flow of the Company and its Subsidiaries
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(taken as a whole) to any Person (other than the Company or one or more of its
wholly-owned Subsidiaries) or to two or more such Persons which are Affiliates
or Associates or otherwise acting in concert, if, at the time of the entry by
the Company (or any such Subsidiary) into an agreement with respect to such sale
or transfer of assets, the Acquiring Person controls the Board of Directors of
the Company. An Acquiring Person shall be deemed to "control" the Company's
Board of Directors when, following a Flip-in Date, the persons who were
directors of the Company (or persons nominated and/or appointed as directors by
vote of a majority of such persons) before the Stock Acquisition Date of such
Acquiring Person shall cease to constitute a majority of the Company's Board of
Directors.
"Holding Company Act" shall have the meaning set forth in the Recitals.
"Market Price" per share of any securities on any date shall mean the
average of the daily closing prices per share of such securities (determined as
described below) on each of the 20 consecutive Trading Days through and
including the Trading Day immediately preceding such date; provided, however,
that if an event of a type analogous to any of the events described in Section
2.4 hereof shall have caused the closing prices used to determine the Market
Price on any Trading Days during such period of 20 Trading Days not to be fully
comparable with the closing price on such date, each such closing price so used
shall be appropriately adjusted in order to make it fully comparable with the
closing price on such date. The closing price per share of any securities on any
date shall be the last reported sale price, regular way, or, in case no such
sale takes place or is quoted on such date, the average of the closing bid and
asked prices, regular way, for each share of such securities, in either case as
reported in the principal consolidated transaction reporting system with respect
to
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securities listed or admitted to trading on the New York Stock Exchange, Inc.
or, if the securities are not listed or admitted to trading on the New York
Stock Exchange, Inc., as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the securities are listed or admitted to trading
or, if the securities are not listed or admitted to trading on any national
securities exchange, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or such other system then in use, or,
if on any such date the securities are not listed or admitted to trading on any
national securities exchange or quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the securities selected by the Board of Directors of the
Company; provided, however, that if on any such date the securities are not
listed or admitted to trading on a national securities exchange or traded in the
over-the-counter market, the closing price per share of such securities on such
date shall mean the fair value per share of securities on such date as
determined in good faith by the Board of Directors of the Company, after
consultation with a nationally recognized investment banking firm, and set forth
in a certificate delivered to the Rights Agent.
"Option Holder" shall have the meaning set forth in the definition of
Acquiring Person.
"Person" shall mean any individual, firm, partnership, association,
group (as such term is used in Rule 13d-5 under the Securities Exchange Act of
1934, as such Rule is in effect on the date of this Agreement), corporation or
other entity.
"Record Time" shall have the meaning set forth in the Recitals.
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"Redemption Price" shall mean an amount equal to one cent, i.e. $0.01.
"Redemption Time" shall mean the time at which the right to exercise
the Rights shall terminate pursuant to Section 5.1 hereof.
"Right" shall have the meaning set forth in the Recitals.
"Rights Agent" shall have the meaning set forth in the Preamble.
"Rights Certificate" shall have the meaning set forth in Section 2.3(c)
hereof.
"Rights Register" shall have the meaning set forth in Section 2.7(a)
hereof.
"Separation Time" shall mean the close of business on the earlier of
(i) the tenth business day (or such later date as the Board of Directors of the
Company may from time to time fix by resolution adopted prior to the Separation
Time that would otherwise have occurred) after the date on which any Person
commences a tender or exchange offer which, if consummated, would result in such
Person's becoming an Acquiring Person and (ii) the Flip-in Date; provided, that
if the foregoing results in the Separation Time being prior to the Record Time,
the Separation Time shall be the Record Time and provided further, that if any
tender or exchange offer referred to in clause (i) of this paragraph is
cancelled, terminated or otherwise withdrawn prior to the Separation Time
without the purchase of any shares of Common Stock pursuant thereto, such offer
shall be deemed, for purposes of this paragraph, never to have been made.
"Stock Acquisition Date" shall mean the first date of public
announcement by the Company expressly stating that a Person has become an
Acquiring Person.
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"Subsidiary" of any specified Person shall mean any corporation or
other entity of which a majority of the voting power of the equity securities or
a majority of the equity interest is Beneficially Owned, directly or indirectly,
by such Person.
"Trading Day", when used with respect to any securities, shall mean a
day on which the New York Stock Exchange, Inc. is open for the transaction of
business or, if such securities are not listed or admitted to trading on the New
York Stock Exchange, Inc." a day on which the principal national securities
exchange on which such securities are listed or admitted to trading is open for
the transaction of business or, if such securities are not listed or admitted to
trading on any national securities exchange, a Business Day.
ARTICLE 2
THE RIGHTS
2.1 Summary of Rights. As soon as practicable after the Record Time,
the Company will mail a letter summarizing the terms of the Rights to each
holder of record of Common Stock as of the Record Time, at such holder's address
as shown by the records of the Company.
2.2 Legend on Common Stock Certificates. Certificates representing the
Common Stock issued after the Record Time but prior to the Separation Time shall
represent one Right for each share of Common Stock represented thereby and shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
Until the Separation Time (as defined in the Rights Agreement referred
to below), this certificate also represents and entitles the holder
hereof to certain Rights as set
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forth in a Rights Agreement, dated as of _____________, 1999 (as such
may be amended from time to time, the "Rights Agreement"), between the
Company and _____________, as Rights Agent, the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of the Company. Under certain
circumstances and subject to the conditions set forth in the Rights
Agreement, such Rights may be redeemed, may become exercisable for
securities and/or cash and/or other assets of the Company or
securities of another entity, may be exchanged for shares of Common
Stock and/or other securities and/or cash and/or other assets of the
Company, may expire, may become void (if they are "Beneficially Owned"
by an "Acquiring Person" or an Affiliate or Associate thereof, as such
terms are defined in the Rights Agreement, or by any transferee of any
of the foregoing) or may be represented by separate certificates and
may no longer be represented by this certificate. The Company will
mail or arrange for the mailing of a copy of the Rights Agreement to
the holder of this certificate without charge after the receipt of a
written request therefor.
Certificates representing shares of Common Stock that are issued and outstanding
at the Record Time shall represent one Right for each share of Common Stock
represented thereby notwithstanding the absence of the foregoing legend.
If the Common Stock issued after the Record Time but prior to the
Separation Time shall be uncertificated, the registration of such Common Stock
on the stock transfer books of the Company shall evidence one Right for each
share of Common Stock represented thereby. The Company will mail or arrange for
the mailing of a copy of this Agreement to any Person that holds Common Stock,
as evidenced by the registration of the Common Stock in the name of such Person
on the stock transfer books of the Company, without charge after the receipt of
a written request therefor.
2.3 Exercise of Rights; Separation of Rights. (a) Subject to Sections
3.1, 5.1 and 5.10 and subject to adjustment as herein set forth, each Right will
entitle the holder thereof, after the Separation Time and prior to the
Expiration Time, to purchase, for the Exercise Price, one share of Common Stock.
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(b) Until the Separation Time, (i) no Right may be exercised and (ii)
each Right will be represented by the certificate for the associated share of
Common Stock (together, in the case of certificates issued prior to the Record
Time, with the letter mailed to the record holder thereof pursuant to Section
2.1) or, if the Common Stock shall be uncertificated, by the registration of the
associated share of Common Stock on the stock transfer books of the Company, and
will be transferable only together with, and will be transferred by a transfer
(whether with or without such letter) of, such associated share.
(c) Subject to the terms and conditions hereof, after the Separation
Time and prior to the Expiration Time, the Rights (i) may be exercised and (ii)
may be transferred independent of shares of Common Stock. Promptly following the
Separation Time, the Rights Agent will mail to each holder of record of Common
Stock as of the Separation Time (other than any Person whose Rights have become
void pursuant to Section 3.1(b)), at such holder's address as shown by the
records of the Company (the Company hereby agreeing to furnish copies of such
records to the Rights Agent for this purpose), (x) a certificate (a "Rights
Certificate") in substantially the form of Exhibit A hereto appropriately
completed, representing the number of Rights held by such holder at the
Separation Time and having such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any national securities
exchange or quotation system on which the Rights may from time to time be listed
or traded, or to conform to usage, and (y) a disclosure statement describing the
Rights.
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(d) Subject to the terms and conditions hereof, Rights may be exercised
on any Business Day after the Separation Time and prior to the Expiration Time
by submitting to the Rights Agent the Rights Certificate representing such
Rights with an Election to Exercise (an "Election to Exercise") substantially in
the form attached to the Rights Certificate duly completed, accompanied by
payment in cash, or by certified or official bank check or money order payable
to the order of the Company, of a sum equal to the Exercise Price multiplied by
the number of Rights being exercised and a sum sufficient to cover any transfer
tax or charge which may be payable in respect of any transfer involved in the
transfer or delivery of the Rights Certificates or the issuance or delivery of
certificates (or, if uncertificated, the registration on the stock transfer
books of the Company) for shares or depositary receipts (or both) in a name
other than that of the holder of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, with an Election to Exercise
accompanied by payment as set forth in Section 2.3(d), and subject to the terms
and conditions hereof, the Rights Agent will thereupon promptly (i)(A)
requisition from a transfer agent certificates representing such number of
shares or other securities to be purchased or, in the case of uncertificated
shares or other securities, requisition from a transfer agent a notice setting
forth such number of shares or other securities to be purchased for which
registration will be made on the stock transfer books of the Company (the
Company hereby irrevocably authorizing its transfer agents to comply with all
such requisitions) and (B) if the Company elects pursuant to Section 5.5 not to
issue certificates (or effect registrations on the stock transfer books of the
Company) representing fractional
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shares, requisition from the depositary selected by the Company depositary
receipts representing the fractional shares to be purchased or requisition from
the Company the amount of cash to be paid in lieu of fractional shares in
accordance with Section 5.5 and (ii) after receipt of such certificates,
depositary receipts, notices and/or cash, deliver the same to or upon the order
of the registered holder of such Rights Certificate, registered (in the case of
certificates, depositary receipts or notices) in such name or names as may be
designated by such holder.
(f) In case the holder of any Rights shall exercise less than all the
Rights evidenced by such holder's Rights Certificate, a new Rights Certificate
representing the Rights remaining unexercised will be issued by the Rights Agent
to such holder or to such holder's duly authorized assigns.
(g) The Company covenants and agrees that it will (i) take all such
action as may be necessary to ensure that all shares delivered (or evidenced by
registration on the stock transfer books of the Company) upon exercise of Rights
shall, at the time of delivery of the certificates (or registration)
representing such shares (subject to payment of the Exercise Price), be duly and
validly authorized, executed, issued and delivered (or registered) and fully
paid and nonassessable; (ii) take all such action as may be necessary to comply
with any applicable requirements of the Securities Act of 1933, the Exchange Act
or the Holding Company Act, and the rules and regulations thereunder, and any
other applicable law, rule or regulation, in connection with the issuance or
exchange of any securities and/or cash and/or other assets upon exercise or
exchange of Rights; and (iii) pay when due and payable any and all federal and
state transfer taxes and charges which may be payable in respect of
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the original issuance or delivery of the Rights Certificates or of any debt or
equity securities or cash or other assets issued upon the exercise or exchange
of Rights, provided, that the Company shall not be required to pay any transfer
tax or charge which may be payable in respect of any transfer involved in the
transfer or delivery of Rights Certificates or the issuance or delivery of
certificates (or the registration) representing securities in a name other than
that of the holder of the Rights being transferred or exercised.
2.4 Adjustments to Exercise Price; Number of Rights. (a) In the event
the Company shall at any time after the Record Time and prior to the Separation
Time (i) declare or pay a dividend on Common Stock payable in Common Stock, (ii)
subdivide the outstanding Common Stock or (iii) combine the outstanding Common
Stock into a smaller number of shares of Common Stock, (x) the Exercise Price in
effect after such adjustment will be equal to the Exercise Price in effect
immediately prior to such adjustment divided by the number of shares of Common
Stock (the "Expansion Factor") that a holder of one share of Common Stock
immediately prior to such dividend, subdivision or combination would hold
thereafter as a result thereof and (y) each Right held prior to such adjustment
will become that number of Rights equal to the Expansion Factor, and the
adjusted number of Rights will be deemed to be distributed among the shares of
Common Stock with respect to which the original Rights were associated (if they
remain outstanding) and the shares issued in respect of such dividend,
subdivision or combination, so that each such share of Common Stock will have
exactly one Right associated with it. Each adjustment made pursuant to this
paragraph shall be made as of the payment or effective date for the applicable
dividend, subdivision or combination.
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In the event the Company shall at any time after the Record Time and
prior to the Separation Time issue any shares of Common Stock otherwise than in
a transaction referred to in the preceding paragraph, each such share of Common
Stock so issued shall automatically have one new Right associated with it, which
Right shall be represented by the certificate representing such share (or, if
the Common Stock shall be uncertificated, such Right shall be represented by the
registration of such Common Stock on the stock transfer books of the Company).
Rights shall be issued by the Company in respect of shares of Common Stock that
are issued or sold by the Company after the Separation Time to the extent
provided in Section 5.3.
(b) In the event the Company shall at any time after the Record Time
and prior to the Separation Time issue or distribute any securities or assets
(other than periodic cash dividends) in respect of, in lieu of or in exchange
for Common Stock (other than in a transaction referred to in subparagraphs (i)
through (iii) of Section 2.4(a) or a dividend paid solely in Common Stock)
whether by dividend, in a reclassification or recapitalization (including any
such transaction involving a merger, consolidation or share exchange), or
otherwise, the Company shall make such adjustments, if any, in the Exercise
Price, number of Rights and/or securities or other property purchasable upon
exercise of Rights as the Board of Directors of the Company, in its sole
discretion, may deem to be appropriate under the circumstances in order to
adequately protect the interests of the holders of Rights generally, and the
Company and the Rights Agent shall amend this Agreement as necessary to provide
for such adjustments.
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(c) Each adjustment to the Exercise Price made pursuant to this Section
2.4 shall be calculated to the nearest cent. Whenever an adjustment to the
Exercise Price is made pursuant to this Section 2.4, the Company shall (i)
promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment and (ii) promptly file
with the Rights Agent and with each transfer agent for the Common Stock a copy
of such certificate.
(d) Rights Certificates shall represent the securities purchasable
under the terms of this Agreement, including any adjustment or change in the
securities purchasable upon exercise of the Rights, even though such
certificates may continue to express the securities purchasable at the time of
issuance of the initial Rights Certificates.
2.5 Date on Which Exercise is Effective. Each person in whose name any
certificate representing shares is issued (or registration on the stock transfer
books is effected) upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of the shares represented thereby on the
date upon which the Rights Certificate representing such Rights was duly
surrendered and payment of the Exercise Price for such Rights (and any
applicable taxes and other governmental charges payable by the exercising holder
hereunder) was made; provided, however, that if the date of such surrender and
payment is a date upon which the stock transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such shares on,
and such certificate (or registration) shall be dated, the next succeeding
Business Day on which the stock transfer books of the Company are open.
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2.6 Execution, Authentication, Delivery and Dating of Rights
Certificates.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or one of its Vice Presidents, and
countersigned by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Rights Certificates may be manual or
facsimile.
Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the countersignature and delivery of such Rights
Certificates.
Promptly after the Separation Time, the Company will notify the Rights
Agent of such Separation Time and will deliver Rights Certificates executed by
the Company to the Rights Agent for countersignature, and, subject to Section
3.1(b), the Rights Agent shall manually countersign and deliver such Rights
Certificates to the holders of the Rights pursuant to Section 2.3(c) hereof. No
Rights Certificate shall be valid for any purpose unless manually countersigned
by the Rights Agent.
(b) Rights Certificate shall be dated the date of countersignature
thereof.
2.7 Registration, Registration of Transfer and Exchange. (a) After the
Separation Time, the Company will cause to be kept a register (the "Rights
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company will provide for the registration and transfer of Rights. The Rights
Agent is hereby appointed "Rights Registrar" for the purpose of maintaining the
Rights Register for the Company and registering Rights and transfers of Rights
after the Separation Time as herein provided. In the
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event that the Rights Agent shall cease to be the Rights Registrar, the Rights
Agent will have the right to examine the Rights Register at all reasonable times
after the Separation Time.
After the Separation Time and prior to the Expiration Time, upon
surrender for registration of transfer or exchange of any Rights Certificate,
and subject to the provisions of Section 2.7(c) and (d), the Company will
execute, and the Rights Agent will countersign and deliver, in the name of the
holder or the designated transferee or transferees, as required pursuant to the
holder's instructions, one or more new Rights Certificates representing the same
aggregate number of Rights as did the Rights Certificate so surrendered.
(b) Except as otherwise provided in Section 3.1(b), all Rights issued
upon any registration of transfer or exchange of Rights Certificates shall be
the valid obligations of the Company, and such Rights shall be entitled to the
same benefits under this Agreement as the Rights surrendered upon such
registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of transfer
or exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company or the Rights Agent, as the case
may be, duly executed by the holder thereof or such holder's attorney duly
authorized in writing. As a condition to the issuance of any new Rights
Certificate under this Section 2.7, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
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(d) The Company shall not be required to register the transfer or
exchange of any Rights after such Rights have become void under Section 3.1(b),
been exchanged under Section 3.1(c) or been redeemed under Section 5.1.
2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates. (a) If
any mutilated Rights Certificate is surrendered to the Rights Agent prior to the
Expiration Time, then, subject to Sections 3.1(b), 3.1(c) and 5.1, the Company
shall execute and the Rights Agent shall countersign and deliver in exchange
therefor a new Rights Certificate representing the same number of Rights as did
the Rights Certificate so surrendered.
(b) If there shall be delivered to the Company and the Rights Agent
prior to the Expiration Time (i) evidence to their satisfaction of the
destruction, loss or theft of any Rights Certificate and (ii) such security or
indemnity as may be required by them to save each of them and any of their
agents harmless, then, subject to Sections 3.1(b), 3.1(c) and 5.1 and in the
absence of notice to the Company or the Rights Agent that such Rights
Certificate has been acquired by a bona fide purchaser, the Company shall
execute and upon its request the Rights Agent shall countersign and deliver, in
lieu of any such destroyed, lost or stolen Rights Certificate, a new Rights
Certificate representing the same number of Rights as did the Rights Certificate
so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate under
this Section 2.8, the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Rights
Agent) connected therewith.
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(d) Every new Rights Certificate issued pursuant to this Section 2.8 in
lieu of any destroyed, lost or stolen Rights Certificate shall represent an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Rights Certificate shall be at any time enforceable by
anyone, and, subject to Section 3.1(b) shall be entitled to all the benefits of
this Agreement equally and proportionately with any and all other Rights duly
issued hereunder.
2.9 Persons Deemed Owners. Prior to due presentment of a Rights
Certificate (or, prior to the Separation Time, the associated Common Stock
certificate or notice of transfer, if uncertificated) for registration of
transfer, the Company, the Rights Agent and any agent of the Company or the
Rights Agent may deem and treat the person in whose name such Rights Certificate
(or, prior to the Separation Time, such Common Stock certificate or Common Stock
registration, if uncertificated) is registered as the absolute owner thereof and
of the Rights represented thereby for all purposes whatsoever, including the
payment of the Redemption Price, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary. As used in this Agreement,
unless the context otherwise requires, the term "holder" of any Rights shall
mean the registered holder of such Rights (or, prior to the Separation Time, the
associated shares of Common Stock).
2.10 Delivery and Cancellation of Certificates. All Rights Certificates
surrendered upon exercise or for registration of transfer or exchange shall, if
surrendered to any person other than the Rights Agent, be delivered to the
Rights Agent and, in any case, shall be promptly cancelled by the Rights Agent.
The Company may at any time deliver to the Rights Agent for cancellation any
Rights Certificates previously countersigned and
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delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Rights Certificates so delivered shall be promptly cancelled
by the Rights Agent. No Rights Certificates shall be countersigned in lieu of or
in exchange for any Rights Certificates cancelled as provided in this Section
2.10, except as expressly permitted by this Agreement. The Rights Agent shall
destroy all cancelled Rights Certificates and deliver a certificate of
destruction to the Company.
2.11 Agreement of Rights Holders. Every holder of Rights by accepting
the same consents and agrees with the Company and the Rights Agent and with
every other holder of Rights that:
(a) prior to the Separation Time, each Right will be transferable only
together with, and will be transferred by a transfer of, the associated share of
Common Stock;
(b) after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
(c) prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Stock certificate or Common Stock
registration, if uncertificated) for registration of transfer, the Company, the
Rights Agent and any agent of the Company or the Rights Agent may deem and treat
the person in whose name the Rights Certificate (or, prior to the Separation
Time, the associated Common Stock certificate or Common Stock registration, if
uncertificated) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary;
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(d) Rights beneficially owned by certain Persons will, under the
circumstances set forth in Section 3.1(b), become void; and
(e) this Agreement may be supplemented or amended from time to time
pursuant to Section 2.4(b) or 5.4 hereof.
ARTICLE 3
ADJUSTMENTS TO THE RIGHTS IN
THE EVENT OF CERTAIN TRANSACTIONS
3.1 Flip-in. (a) In the event that prior to the Expiration Time a
Flip-in Date shall occur, except as provided in this Section 3.1, each Right
shall constitute the right to purchase from the Company, upon exercise thereof
in accordance with the terms hereof (but subject to Section 5.10 and to the last
sentence of this Section 3.1(a)), that number of shares of Common Stock having
an aggregate Market Price on the Stock Acquisition Date that gave rise to the
Flip-in Date equal to twice the Exercise Price for an amount in cash equal to
the Exercise Price (such right to be appropriately adjusted in order to protect
the interests of the holders of Rights generally in the event that on or after
such Stock Acquisition Date an event of a type analogous to any of the events
described in Section 2.4(a) or (b) shall have occurred with respect to the
Common Stock). If prior to the Expiration Time a Flip-in Date shall occur and
the Board of Directors determines that the purchase of Common Stock for cash may
give rise to pre-emptive rights under Article VII of the Company's Articles of
Incorporation, then upon public announcement prior to or within 10 days after
the Flip-in Date of the Board of Directors making such a determination, instead
of being exercisable for cash, each Right shall be exchanged upon exercise,
without cash
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payment, for a number of shares of Common Stock having an aggregate Market Price
on the Stock Acquisition Date that gave rise to the Flip-in Date equal to the
Exercise Price.
(b) Notwithstanding the foregoing, any Rights that are or were
Beneficially Owned on or after the Stock Acquisition Date by an Acquiring Person
or an Affiliate or Associate thereof or by any transferee, direct or indirect,
of any of the foregoing shall become void and any holder of such Rights
(including transferees) shall thereafter have no right to exercise or transfer
such Rights under any provision of this Agreement. If any Rights Certificate is
presented for assignment or exercise and the Person presenting the same will not
complete the certification set forth at the end of the form of assignment or
notice of election to exercise and provide such additional evidence of the
identity of the Beneficial Owner and its Affiliates and Associates (or former
Beneficial Owners and their Affiliates and Associates) as the Company shall
reasonably request, then the Company shall be entitled conclusively to deem the
Beneficial Owner thereof to be an Acquiring Person or an Affiliate or Associate
thereof or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced thereby to be void and not transferable or exercisable.
(c) The Board of Directors of the Company may, at its option, at any
time after a Flip-in Date and prior to the time that an Acquiring Person becomes
the Beneficial Owner of more than 50% of the outstanding shares of Common Stock,
elect to exchange all (but not less than all) the then outstanding Rights (which
shall not include Rights that have become void pursuant to the provisions of
Section 3.1(b)) for shares of Common Stock at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted in order to protect the interests
of holders of Rights generally in the event that after the Separation
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Time an event of a type analogous to any of the events described in Section
2.4(a) or (b) shall have occurred with respect to the Common Stock (such
exchange ratio, as adjusted from time to time, being hereinafter referred to as
the "Exchange Ratio").
Immediately upon the action of the Board of Directors of the Company
electing to exchange the Rights, without any further action and without any
notice, the right to exercise the Rights will terminate and each Right (other
than Rights that have become void pursuant to Section 3.1(b)) will thereafter
represent only the right to receive a number of shares of Common Stock equal to
the Exchange Ratio. Promptly after the action of the Board of Directors electing
to exchange the Rights, the Company shall give notice thereof (specifying the
steps to be taken to receive shares of Common Stock in exchange for Rights) to
the Rights Agent and the holders of the Rights (other than Rights that have
become void pursuant to Section 3.1(b)) outstanding immediately prior thereto by
mailing such notice in accordance with Section 5.9.
Each Person in whose name any certificate representing securities is
issued (or for whom any registration on the securities transfer books of the
Company is made) upon the exchange of Rights pursuant to this Section 3.1(c) or
Section 3.1(d) shall for all purposes be deemed to have become the holder of
record of the securities represented thereby on, and such certificate (or
registration on the securities transfer books of the Company) shall be dated (or
registered as of), the date upon which the Rights Certificate representing such
Rights was duly surrendered and payment of any applicable taxes and other
governmental charges payable by the holder was made; provided, however, that if
the date of such surrender and payment is a date upon which the securities
transfer books of the Company are
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closed, such Person shall be deemed to have become the record holder of such
securities on, and such certificate (or registration on the stock transfer books
of the Company) shall be dated (or registered as of), the next succeeding
Business Day on which the securities transfer books of the Company are open.
(d) In the event that there shall not be sufficient authorized but
unissued shares of Common Stock of the Company to permit the exercise or
exchange in full of the Rights in accordance with Section 3.1(a) or, if the
Company so elects, to make the exchange referred to in Section 3.1(c), the
Company shall either (i) call a meeting of stockholders seeking approval to
cause sufficient additional shares to be authorized (provided that if such
approval is not obtained the Company will take the action specified in clause
(ii) of this sentence) or (ii) take such action as shall be necessary to ensure
and provide, to the extent permitted by applicable law and any agreements or
instruments in effect on the Stock Acquisition Date to which it is a party, that
each Right shall thereafter constitute the right to receive, upon exercise
thereof in accordance with the terms hereof (but subject to Section 5.10), (x)
at the Company's option, either (A) in return for the Exercise Price, debt or
equity securities or cash or other assets (or a combination thereof) having a
fair value equal to twice the Exercise Price, or (B) without payment of
consideration (except as otherwise required by applicable law), debt or equity
securities or cash or other assets (or a combination thereof) having a fair
value equal to the Exercise Price, or (y) if the Board of Directors of the
Company elects to exchange the Rights in accordance with Section 3.1(c), debt or
equity securities or cash or other assets (or a combination thereof) having a
fair value equal to the product of the Market Price of a share of Common Stock
on the Flip-in Date times the
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Exchange Ratio in effect on the Flip-in Date, where in any case set forth in (x)
or (y) above the fair value of such debt or equity securities or cash or other
assets shall be as determined by the Board of Directors of the Company, after
consultation with a nationally recognized investment banking firm.
3.2 Flip-over. (a) Prior to the Expiration Time, the Company shall not
enter into any agreement with respect to, consummate or permit to occur any
Flip-over Transaction or Event unless and until it shall have entered into a
supplemental agreement with the Flip-over Entity, for the benefit of the holders
of the Rights, providing that, upon consummation or occurrence of the Flip-over
Transaction or Event (i) each Right shall thereafter constitute the right to
purchase from the Flip-over Entity, upon exercise thereof in accordance with the
terms hereof, that number of shares of Flip-over Stock of the Flip-over Entity
having an aggregate Market Price on the date of consummation or occurrence of
such Flip-over Transaction or Event equal to twice the Exercise Price for an
amount in cash equal to the Exercise Price (such right to be appropriately
adjusted in order to protect the interests of the holders of Rights generally in
the event that after such date of consummation or occurrence an event of a type
analogous to any of the events described in Section 2.4(a) or (b) shall have
occurred with respect to the Flip-over Stock) and (ii) the Flip-over Entity
shall thereafter be liable for, and shall assume, by virtue of such Flip-over
Transaction or Event and such supplemental agreement, all the obligations and
duties of the Company pursuant to this Agreement. The provisions of this Section
3.2 shall apply to successive Flip-over Transactions or Events.
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(b) Prior to the Expiration Time, the Company shall not enter into any
agreement with respect to, consummate or permit to occur any Flip-over
Transaction or Event if at the time thereof there are any rights, warrants or
securities outstanding or any other arrangements, agreements or instruments that
would eliminate or otherwise diminish in any material respect the benefits
intended to be afforded by this Rights Agreement to the holders of Rights upon
consummation of such transaction.
ARTICLE 4
THE RIGHTS AGENT
4.1 General. (a) The Company hereby appoints the Rights Agent to act as
agent for the Company in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted to be done by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability.
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(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any certificate for
securities (or registration on the securities transfer books of the Company)
purchasable or exchangeable upon exercise or exchange of Rights, Rights
Certificate, certificate for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper person or persons.
4.2 Merger or Consolidation or Change of Name of Rights Agent. (a) Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent is a party, or any corporation succeeding to the shareholder services
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 4.4 hereof. In case at the time
such successor Rights Agent succeeds to the agency created by this Agreement any
of the Rights Certificates have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates have not been
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countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
will have the full force provided in the Rights Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent is changed and at
such time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
4.3 Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel will be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent deems it necessary or desirable that any fact or matter be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless
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other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by a
person believed by the Rights Agent to be the Chairman of the Board, the Chief
Executive Officer, the President or any Vice President and by the Treasurer or
any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate will be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates, if any, for securities purchasable upon exercise of Rights or the
Rights Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and will be deemed to
have been made by the Company only.
(e) The Rights Agent will not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due authorization, execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any certificate, if any, representing
securities purchasable or issuable upon exercise or exchange of Rights or Rights
Certificate (except its countersignature thereof); nor will it be responsible
for any breach by the Company of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor will it be responsible for any
change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 3.1(b)
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hereof) or any adjustment required under the provisions of Section 2.4, 3.1 or
3.2 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights after receipt of
the certificate contemplated by Section 2.4 describing any such adjustment); nor
will it by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any securities purchasable upon exercise
of Rights or any Rights or as to whether any securities purchasable upon
exercise of Rights will, when issued, be duly and validly authorized, executed,
issued and delivered and fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the Chairman of the Board, the Chief
Executive Officer, the President or any Vice President or the Secretary or any
Assistant Secretary or the Treasurer or any Assistant Treasurer of the Company,
and to apply to such persons for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such person.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in Common Stock, Rights or other
securities of the
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Company or become pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent will not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
4.4 Change of Rights Agent. The Rights Agent may resign and be
discharged from its duties under this Agreement upon 90 days' notice (or such
lesser notice as is acceptable to the Company) in writing mailed to the Company
and to each transfer agent of Common Stock by registered or certified mail, and
to the holders of the Rights in accordance with Section 5.9. The Company may
remove the Rights Agent upon 30 days' notice in writing, mailed to the Rights
Agent and to each transfer agent of the Common Stock by registered or certified
mail, and to the holders of the Rights in accordance with Section 5.9. If the
Rights Agent should resign or be removed or otherwise become incapable of
acting, the Company will appoint a successor to the Rights Agent. If the Company
fails to make such appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of any Rights (which
holder shall, with such notice, submit such holder's
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Rights Certificate for inspection by the Company), then the holder of any Rights
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be a corporation organized and doing business under the laws
of the United States or any state of the United States, in good standing, which
is authorized under such laws to exercise the powers of the Rights Agent
contemplated by this Agreement and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000. After
appointment, the successor Rights Agent will be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company will file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock, and mail a
notice thereof in writing to the holders of the Rights. Failure to give any
notice provided for in this Section 4.4, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
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ARTICLE 5
MISCELLANEOUS
5.1 Redemption. (a) The Board of Directors of the Company may, at its
option, at any time prior to the Flip-in Date, elect to redeem all (but not less
than all) the then outstanding Rights at the Redemption Price and the Company,
at its option, may pay the Redemption Price either in cash or shares of Common
Stock or other securities of the Company deemed by the Board of Directors, in
the exercise of its sole discretion, to be at least equivalent in value to the
Redemption Price.
(b) Immediately upon the action of the Board of Directors of the
Company electing to redeem the Rights (or, if the resolution of the Board of
Directors electing to redeem the Rights states that the redemption will not be
effective until the occurrence of a specified future time or event, upon the
occurrence of such future time or event), without any further action and without
any notice, the right to exercise the Rights will terminate and each Right will
thereafter represent only the right to receive the Redemption Price in cash or
securities, as determined by the Board of Directors. Promptly after the Rights
are redeemed, the Company shall give notice of such redemption to the Rights
Agent and the holders of the then outstanding Rights by mailing such notice in
accordance with Section 5.9.
5.2 Expiration. The Rights and this Agreement shall expire at the
Expiration Time, and no Person shall have any rights pursuant to this Agreement
or any Right after the Expiration Time, except, if the Rights are exchanged or
redeemed, as provided in Section 3.1 or 5.1 hereof, respectively.
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5.3 Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates representing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the number or kind or class of shares of stock purchasable upon exercise of
Rights made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of shares of Common Stock by the Company
following the Separation Time and prior to the Expiration Time pursuant to the
terms of securities convertible or redeemable into shares of Common Stock or to
options, in each case issued or granted prior to, and outstanding at, the
Separation Time, the Company shall issue to the holders of such shares of Common
Stock, Rights Certificates representing the appropriate number of Rights in
connection with the issuance or sale of such shares of Common Stock; provided,
however, in each case, that (i) no such Rights Certificate shall be issued, if,
and to the extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax consequences to
the Company or to the Person to whom such Rights Certificates would be issued,
(ii) no such Rights Certificates shall be issued if, and to the extent that,
appropriate adjustment shall have otherwise been made in lieu of the issuance
thereof, and (iii) the Company shall have no obligation to distribute Rights
Certificates to any Acquiring Person or Affiliate or Associate of an Acquiring
Person or any transferee of any of the foregoing.
5.4 Supplements and Amendments. The Company and the Rights Agent may
from time to time supplement or amend this Agreement without the approval of any
holders of Rights (i) prior to the Flip-in Date, in any respect and (ii) on or
after the Flip-in
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Date, to make any changes that the Company may deem necessary or desirable and
which shall not materially adversely affect the interests of the holders of
Rights generally or in order to cure any ambiguity or to correct or supplement
any provision contained herein which may be inconsistent with any other
provisions herein or otherwise defective. The Rights Agent will duly execute and
deliver any supplement or amendment hereto requested by the Company which
satisfies the terms of the preceding sentence.
5.5 Fractional Shares. If the Company elects not to issue certificates
representing (or register on the stock transfer books of the Company) fractional
shares upon exercise or redemption of Rights, the Company shall, in lieu
thereof, in the sole discretion of the Board of Directors, either (a) represent
such fractional shares by depositary receipts issued pursuant to an appropriate
agreement between the Company and a depositary selected by it, providing that
each holder of a depositary receipt shall have all of the rights, privileges and
preferences to which such holder would be entitled as a beneficial owner of such
fractional share, or (b) pay to the registered holder of such Rights the
appropriate fraction of the Market Price per share in cash.
5.6 Rights of Action. Subject to the terms of this Agreement (including
Sections 3.1(b) and 5.14), rights of action in respect of this Agreement, other
than rights of action vested solely in the Rights Agent, are vested in the
respective holders of the Rights; and any holder of any Rights, without the
consent of the Rights Agent or of the holder of any other Rights, may, on such
holder's own behalf and for such holder's own benefit and the benefit of other
holders of Rights, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, such
holder's
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right to exercise such holder's Rights in the manner provided in such holder's
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
5.7 Holder of Rights Not Deemed a Stockholder. No holder, as such, of
any Rights shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of shares or any other securities which may at any time be
issuable on the exercise of such Rights, nor shall anything contained herein or
in any Rights Certificate be construed to confer upon the holder of any Rights,
as such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except as
provided in Section 5.8 hereof), or to receive dividends or subscription rights,
or otherwise, until such Rights shall have been exercised or exchanged in
accordance with the provisions hereof.
5.8 Notice of Proposed Actions. In case the Company shall propose after
the Separation Time and prior to the Expiration Time (i) to effect or permit a
Flip-over Transaction or Event or (ii) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right, in accordance with Section 5.9 hereof, a notice of such
proposed action, which shall specify the date on which such Flip-over
Transaction or Event, liquidation, dissolution, or winding up
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is to take place, and such notice shall be so given at least 20 Business Days
prior to the date of the taking of such proposed action.
5.9 Notices. Notices or demands authorized or required by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
to or on the Company shall be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, Maryland 21740-1766
Attention: [Secretary]
Any notice or demand authorized or required by this Agreement to be given or
made by the Company or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
[Rights Agent address]
Attention:
Notices or demands authorized or required by this Agreement to be given or made
by the Company or the Rights Agent to or on the holder of any Rights shall be
sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the registry books of the Rights Agent or, prior to the Separation Time, on
the registry books of the transfer agent for the Common Stock. Any
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notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice.
5.10 Suspension of Exercisability. To the extent that the Company
determines in good faith that some action will or need be taken pursuant to
Section 3.1 or to comply with any applicable law or any agreement or instrument
in effect on the Stock Acquisition Date to which the Company is a party, the
Company may suspend the exercisability and/or exchangeability of the Rights in
order to take such action or comply with such law, agreement or instrument. In
the event of any such suspension, the Company shall issue as promptly as
practicable a public announcement stating that the exercisability and/or
exchangeability of the Rights has been suspended. Notice thereof pursuant to
Section 5.9 shall not be required.
Failure to give a notice pursuant to the provisions of this Agreement
shall not affect the validity of any action taken hereunder.
5.11 Costs of Enforcement. The Company agrees that if the Company or
any other Person the securities of which are purchasable upon exercise of Rights
fails to fulfill any of its obligations pursuant to this Agreement, then the
Company or such Person will reimburse the holder of any Rights for the costs and
expenses (including legal fees) incurred by such holder in actions to enforce
such holder's rights pursuant to any Rights or this Agreement.
5.12 Successors. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
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5.13 Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
holders of the Rights any legal or equitable right, remedy or claim under this
Agreement and this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the holders of the Rights.
5.14 Determination and Actions by the Board of Directors, etc. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement. All such actions, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) done or made by the Board shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board of Directors of the
Company to any liability to the holders of the Rights.
5.15 Descriptive Headings. Descriptive headings appear herein for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
5.16 GOVERNING LAW. THIS AGREEMENT AND EACH RIGHT ISSUED HEREUNDER
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF MARYLAND
AND FOR ALL PURPOSES SHALL BE
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GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE
TO CONTRACTS TO BE MADE AND PERFORMED ENTIRELY WITHIN SUCH STATE.
5.17 Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
5.18 Severability. If any term or provision hereof or the application
thereof to any circumstance shall, in any jurisdiction and to any extent, be
invalid or unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions
hereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ALLEGHENY ENERGY, INC.
By:
----------------------------------
Name:
Title:
[NAME OF RIGHTS AGENT]
By:
----------------------------------
Name:
Title:
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EXHIBIT A
Certificate No. W- _______ Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION OR MANDATORY EXCHANGE, AT
THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR
AFFILIATES OR ASSOCIATES THEREOF (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) OR TRANSFEREES OF ANY OF THE FOREGOING
WILL BE VOID.
Rights Certificate
ALLEGHENY ENERGY, INC.
This certifies that ____________________, or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms, provisions and
conditions of the Stockholder Protection Rights Agreement, dated as of
_____________, 1999 (as amended from time to time, the "Rights Agreement"),
between Allegheny Energy, Inc., a Maryland corporation (the "Company"), and
_____________, a _____________, as Rights Agent (the "Rights Agent", which term
shall include any successor Rights Agent under the Rights Agreement), to
purchase from the Company at any time after the Separation Time (as such term is
defined in the Rights Agreement) and prior to the close of business on
_____________, 200_, one fully paid share of Common Stock, par value $1.25 per
share (the "Common Stock"), of the Company (subject to adjustment as provided in
the Rights Agreement) at the Exercise Price referred to below, upon presentation
and surrender of this Rights Certificate with the Form of Election to Exercise
duly executed at the principal office of the Rights Agent in [The City of New
York]. The Exercise Price shall initially be
<PAGE>
$_____________ per Right and shall be subject to adjustment in certain events as
provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, the Rights
represented hereby may entitle the registered holder thereof to purchase
securities of an entity other than the Company or securities of the Company
other than Common Stock or assets of the Company, all as provided in the Rights
Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of the Company and are
available without cost upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor evidencing an aggregate number of Rights equal to the aggregate number of
Rights represented by the Rights Certificate or Rights Certificates surrendered.
If this Rights Certificate shall be exercised in part, the registered holder
shall be entitled to receive, upon surrender hereof, another Rights Certificate
or Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, each Right
represented by this Certificate may be (a) redeemed by the Company under certain
circumstances, at its
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option, at a redemption price of $0.01 per Right or (b) exchanged by the Company
under certain circumstances, at its option, for one share of Common Stock per
Right (or, in certain cases, other securities or assets of the Company), subject
in each case to adjustment in certain events as provided in the Rights
Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of any
securities which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer upon
the holder hereof, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Rights represented by
this Rights Certificate shall have been exercised or exchanged as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
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<PAGE>
WITNESS the facsimile signature of the proper officers of the Company.
Date: ____________
ATTEST: ALLEGHENY ENERGY, INC.
By
- ----------------------------- ---------------------------------
Secretary
Countersigned:
[INSERT NAME OF RIGHTS AGENT]
By
---------------------------
Authorized Signature
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<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate.)
FOR VALUE RECEIVED ____________________________________ hereby
sells, assigns and transfers unto ______________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution. Dated: _______________, ____
Signature Guaranteed:
----------------------------------------
Signature
(Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular,
without alteration or enlargement or
any change whatsoever)
Signatures must be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee Medallion program), pursuant to
SEC Rule 17Ad-15.
- --------------------------------------
<PAGE>
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
shares of Common Stock, that the Rights evidenced by this Rights Certificate are
not, and, to the knowledge of the undersigned, have never been, Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement).
----------------------------------------
Signature
- ------------------------------------
NOTICE
In the event the certification set forth above is not completed in
connection with a purported assignment, the Company will deem the Beneficial
Owner of the Rights evidenced by the enclosed Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced by such Rights Certificate to be void and not transferable or
exercisable.
-2-
<PAGE>
[To be attached to each
Rights Certificate]
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to
exercise the Rights Certificate.)
TO: ALLEGHENY ENERGY, INC.
The undersigned hereby irrevocably elects to exercise
__________________ whole Rights represented by the attached Rights Certificate
to purchase the securities and/or cash and/or other assets issuable or
exchangeable upon the exercise of such Rights and requests that certificates for
any such securities be issued in the name of:
-----------------------------------
Address:
-----------------------------------
Social Security or Other Taxpayer
Identification Number:
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
-----------------------------------
Address:
-----------------------------------
Social Security or Other Taxpayer
Identification Number:
Dated: _______________, ____
Signature Guaranteed:
--------------------------------------
Signature
(Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular,
without alteration or enlargement or
any change whatsoever)
<PAGE>
Signatures must be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee Medallion program), pursuant to
SEC Rule 17Ad-15.
- ---------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of
Rights and shares of Common Stock, that the Rights evidenced by the attached
Rights Certificate are not, and, to the knowledge of the undersigned, have never
been, Beneficially Owned by an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement).
-----------------------------------
Signature
- ----------------------------------
NOTICE
In the event the certification set forth above is not completed in
connection with a purported exercise, the Company will deem the Beneficial Owner
of the Rights evidenced by the attached Rights Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
or a transferee of any of the foregoing and accordingly will deem the Rights
evidenced by such Rights Certificate to be void and not transferable or
exercisable.
-2-
EXHIBIT H
FORM OF NOTICE OF PROPOSED TRANSACTIONS
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- ; 70- )
Filings under the Public Utility Holding Company Act of 1935 ("Act")
Allegheny Energy, Inc. ("Allegheny" or the "Company")
March __, 1999
Notice is hereby given that the following filing(s) has/have been made
with the Securities and Exchange Commission (the "Commission") pursuant to
provisions of the Act and rules promulgated thereunder. All interested persons
are referred to the application(s) and/or declaration(s) for complete statements
of the proposed transaction(s) summarized below. The application(s) and/or
declaration(s) and any amendments thereto is/are available for public inspection
through the Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in writing by
_______________, 1999 to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549, and serve a copy of the relevant applicant(s) and or
declarant(s) at the address specified below. Proof of service (by affidavit or,
in the case of an attorney at law, by certificate) should be filed with the
request. Any request for hearing shall identify specifically the issues of fact
or law that are disputed. A person who so requests will be notified of any
hearing, if ordered, and will receive a copy of any notice or order issued in
the matter. After said date, the application(s) and/or declaration(s), as filed
or as amended, may be granted and/or permitted to become effective.
Allegheny Energy, Inc., 10435 Downsville Pike, Hagerstown, Maryland
21740, a registered public utility holding company ("Allegheny"), has filed a
declaration pursuant to Sections 6(a), 7, 9(a), 10 and 12(c) of the Act and
Rules 42 and 46 thereunder.
Allegheny proposes to adopt and implement a stockholder protection
rights plan (the "Plan"). The Board of Directors (the "Board") of Allegheny
intends to declare a dividend of one right (a "Right") for each outstanding
share of Allegheny common stock, par value $1.25 per share (the "Common Stock"),
payable to all stockholders of record on a record date ("Record Time") to be
established by the Board after receipt of the Commission authorization herein
requested and after final Board action to approve the Plan and declare the
dividend. As of December 31, 1998, there were approximately 122,436,317 shares
of Common Stock outstanding. The Rights will be created by and issued pursuant
to a Rights Agreement (the
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<PAGE>
"Rights Agreement"), between Allegheny and ChaseMellon Shareholder Services,
Inc. ("Rights Agent"), as Rights Agent.
Exercise Price. The Rights created under the proposed Rights Agreement
would entitle the holders to one share of Common Stock at a price to be
determined by the Board and expected to be between $95 and $125 (the "Exercise
Price"), subject to adjustment. Initially, the Rights would not be exercisable
and would trade with the outstanding shares of Common Stock. Upon the occurrence
of the triggering events described below, the Rights would become exercisable
and certificates (the "Rights Certificates") representing the Rights would be
distributed and would trade independently of such outstanding shares. However,
the Rights would not entitle the holders thereof to make a discounted purchase
of shares of Allegheny's Common Stock or of the common stock of the person
acquiring Allegheny until the occurrence of one of the events of transactions
described below under "Flip-in" and "Flip-over".
Triggering Events. The Rights would become exercisable (i.e., Common
Stock could be purchased at the Exercise Price pursuant to the Rights) upon the
earlier to occur of (i) the first date or such later date as the Board may from
time to time fix of public announcement by Allegheny that any person or group
(an "Acquiring Person") has acquired beneficial ownership of 15% or more of
Allegheny's outstanding Common Stock ("Flip-in Date") and (ii) 10 business days
(unless extended by the Board) after any person or group has commenced a tender
or exchange offer which would, upon its consummation, result in such person or
group becoming an Acquiring Person ("Flip-over Trigger").
Flip-in. Upon the occurrence of a Flip-in Date, the holders of the
Rights (other than an Acquiring Person and certain transferees thereof, whose
Rights will become void) would immediately have the right to receive, for each
Right exercised, depending on circumstances either Common Stock having a market
value equal to two times or one times the Exercise Price then in effect
("Discount Purchase Right").
Flip-over. In the event that, on or after the Flip-in Date, (i)
Allegheny is acquired by another person or entity not controlled by Allegheny
("Acquiror") in a merger or other business combination transaction in which the
Common Stock is exchanged for securities or other property and, in the case of a
merger or other business combination, the Acquiring Person will receive
different treatment than all other holders of Common Stock, or (ii) 50% or more
of Allegheny's consolidated assets or earnings power is sold or transferred to
an Acquiror, each holder of a Right (except Rights which previously have been
voided as set forth above) will thereafter be entitled to receive, for each
Right exercised, common stock of the Acquiror having a market value equal to two
times the Exercise Price then in effect.
Redemption of Rights. The Rights may be redeemed, as a whole, at the
discretion of the Board, at a Redemption Price of $.01 per Right, subject to
adjustment, which Redemption Price shall be paid, at Allegheny's option, in
cash, shares of Common Stock or other equivalent Allegheny securities, at any
time prior to the close of business on the date that any person has
2
<PAGE>
become an Acquiring Person. The Rights will expire at the close of business ten
years from the date of the Rights Agreement, unless earlier redeemed or
exchanged by Allegheny as described below.
Exchange of Shares for Rights. At any time after a Flip-in Date and
prior to the time that any person (other than Allegheny and certain related
entities), together with its affiliates and associates, becomes the beneficial
owner of 50% or more of the outstanding shares of Common Stock, the Board may
direct the exchange of shares of Common Stock for all of the Rights (other than
Rights which have become void) at the exchange ratio of one share of Common
Stock per Right, subject to adjustment.
Adjustment to Exercise Price. The Exercise Price payable, and the
number of shares of Common Stock (or other securities, as the case may be)
issuable upon exercise of the Rights are subject to adjustment from time to time
to prevent dilution (i) in the event of a stock dividend on, or a subdivision or
combination of, the Common Stock, or (ii) upon the distribution to holders of
the Common Stock of securities or assets (excluding regular periodic cash
dividends) whether by dividend, reclassification, recapitalization or otherwise.
Amendments. The terms of the Rights may be amended by the Board (i)
prior to the Flip-in Date in any manner and (ii) on or after the Flip-in Date to
cure any ambiguity, to correct or supplement any provision of the Rights
Agreement which may be defective or inconsistent with any other provisions, or
in any manner not adversely affecting the interests of the holders of the Rights
generally.
* * * * *
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
Jonathan G. Katz
Secretary
3
