SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report
(Date of earliest event reported)
March 2, 2000
Allegheny Energy, Inc.
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(Exact name of registrant as specified in its charter)
Maryland 1-00267 13-5531602
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(State of (Commission File Number) (IRS Employer
incorporation) Identification No.)
10435 Downsville Pike, Hagerstown, Maryland 21740-1766
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(Address of principal executive offices) (Zip Code)
(301) 790-3400
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(Registrant's telephone number,
including area code)
N/A
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(Former name or former address, if changed since last report)
<PAGE>
Items 1-4. Not Applicable.
Item 5. Other Events.
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On March 2, 2000, the Board of Directors of Allegheny Energy, Inc., a
Maryland corporation (the "Company"), declared a dividend of one right (a
"Right") for each outstanding share of common stock, par value $1.25 per share
("Common Stock"), of the Company held of record at the close of business on
March 16, 2000 (such date, the "Record Time"), or issued thereafter and prior to
the Separation Time (as hereinafter defined) and thereafter pursuant to options
and convertible securities, if any, outstanding at the Separation Time. The
Rights will be issued pursuant to a Stockholder Protection Rights Agreement (the
"Rights Agreement"), between the Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (the "Rights Agent"). Each Right entitles its registered
holder to purchase from or exchange with the Company, after the Separation Time,
the securities and/or cash and/or other assets issuable or exchangeable upon
exercise or exchange of one Right, for a price of $100.00 (the "Exercise
Price"), subject to adjustment.
The Rights will be represented by the Common Stock certificates (or in
the case of uncertificated Common Stock, by the registration of the associated
share of Common Stock on the stock transfer books of the Company) until the
close of business on the earlier of (either, the "Separation Time") (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 (as
defined in the Rights Agreement) commences a tender or exchange offer which, if
consummated, would result in such Person's becoming an Acquiring Person, (as
defined below), and (ii) the first date or such later date as the Board of
Directors of the Company may from time to time fix (the "Flip-in Date") of
public announcement by the Company expressly stating that any Person has become
an Acquiring Person (the date of such public announcement being, the "Stock
Acquisition 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 a tender or exchange offer referred to in
clause (i) is cancelled, terminated or otherwise withdrawn prior to the
Separation Time without the purchase of any shares of stock pursuant thereto,
such offer shall be deemed never to have been made. An Acquiring Person is any
Person having Beneficial Ownership (as defined in the Rights Agreement) of 15%
or more of the outstanding shares of Common Stock, which term shall not include
(i) the Company, any wholly-owned subsidiary of the Company or any employee
stock ownership or other employee benefit plan of the Company or a wholly-owned
subsidiary of the Company, (ii) any person who is the Beneficial Owner of 15% or
more of the outstanding Common Stock as of the date of the Rights Agreement or
who shall become the Beneficial Owner of 15% or more of the outstanding Common
Stock solely as a result
<PAGE>
of an acquisition of Common Stock by the Company, until such time as such Person
acquires additional Common Stock, other than through a dividend or stock split,
(iii) any Person who becomes the Beneficial Owner of 15% or more of the
outstanding Common Stock without any plan or intent to seek or affect control of
the Company if such Person, promptly divests sufficient securities such that
such 15% or greater Beneficial Ownership ceases or (iv) any Person who
Beneficially Owns shares of Common Stock consisting solely of (A) shares
acquired pursuant to the grant or exercise of an option granted 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 owned by such Person and its Affiliates
(as defined in the Rights Agreement) and Associates (as defined in the Rights
Agreement) at the time of such grant and (C) shares, amounting to less than 1%
of the outstanding Common Stock, acquired by Affiliates and Associates of such
Person after the time of such grant. The Rights Agreement provides that, until
the Separation Time, the Rights will be transferred with and only with the
Common Stock. Common Stock certificates 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 contain a legend incorporating by reference the
terms of the Rights Agreement (as such may be amended from time to time).
Notwithstanding the absence of the aforementioned legend, certificates
representing shares of Common Stock outstanding at the Record Time shall also
represent one Right for each share of Common Stock represented thereby.
Uncertificated Common Stock issued after the Record Time but prior to the
Separation time which has been registered on the Company's stock transfer books
shall represent one Right for each share of Common Stock registered. Promptly
following the Separation Time, separate certificates representing the Rights
("Rights Certificates") will be mailed to holders of record of Common Stock at
the Separation Time.
The Rights will not be exercisable until the Business Day (as defined
in the Rights Agreement) following the Separation Time. The Rights will expire
on the earliest of (i) the Exchange Time (as defined below), (ii) the close of
business on the tenth anniversary of the Record Time, unless extended by action
of the Board of Directors, (iii) the date on which the Rights are redeemed as
described below and (iv) upon the merger of the Company into another corporation
pursuant to an agreement entered into prior to a Stock Acquisition Date (in any
such case, the "Expiration Time").
The Exercise Price and the number of Rights outstanding, or in certain
circumstances the securities purchasable upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution in the event of a
Common Stock dividend on, or a subdivision or a combination into a smaller
number of shares of, Common Stock, or the issuance or distribution of any
securities or assets in respect of, in lieu of or in exchange for Common Stock.
<PAGE>
In the event that prior to the Expiration Time a Flip-in Date occurs,
the Company shall take such action as shall be necessary to ensure and provide,
to the extent permitted by applicable law, that each Right (other than Rights
Beneficially Owned by the Acquiring Person or any Affiliate or Associate
thereof, which Rights shall become void) shall constitute the right to purchase
from the Company, upon the exercise thereof in accordance with the terms of the
Rights Agreement, that number of shares of Common Stock of the Company having an
aggregate Market Price (as defined in the Rights Agreement), 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 then current Exercise Price. In
addition, 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 (other
than Rights Beneficially Owned by the Acquiring Person or any Affiliate or
Associate thereof, which Rights shall become void) for shares of Common Stock at
an exchange ratio of one share of Common Stock per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date of the Separation Time (the "Exchange Ratio"). Immediately upon
such action by the Board of Directors (the "Exchange Time"), the right to
exercise the Rights will terminate and each Right will thereafter represent only
the right to receive a number of shares of Common Stock equal to the Exchange
Ratio.
In the event that prior to the Expiration Time the Company enters into,
consummates or permits to occur a transaction or series of transactions after
the time an Acquiring Person has become such in which, directly or indirectly,
(i) the Company shall consolidate or merge or participate in a binding 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 an agreement with respect
to such consolidation, merger or share exchange, the Acquiring Person controls
the Board of Directors of the Company and (A) any term of or arrangement
concerning the treatment of shares of capital stock in such merger,
consolidation or share exchange relating to the Acquiring Person is not
identical to the terms and arrangements relating to other holders of Common
Stock or (B) the Person with whom such transaction or series of transactions
occurs is the Acquiring Person or an Affiliate or Associate thereof 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 (taken as a whole) to any other Person (other than the Company or
one or more of its wholly-owned subsidiaries) or to two or more such Persons
which are affiliated or otherwise acting in concert, if, at the time of such
sale or transfer of assets or at the time the Company (or any such subsidiary)
enters into an agreement with respect to such sale or transfer, the Acquiring
Person controls the Board of Directors of the Company (a "Flip-over Transaction
or Event"), the Company shall take such action as
<PAGE>
shall be necessary to ensure, and shall not enter into, consummate or permit to
occur such Flip-over Transaction or Event until it shall have entered into a
supplemental agreement with the Person engaging in such Flip-over Transaction or
Event or the parent corporation thereof (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 of the Rights Agreement, that number of
shares of common 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 then
current Exercise Price 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 the Rights Agreement. For purposes of the foregoing description, the term
"Acquiring Person" shall include any Acquiring Person and its Affiliates and
Associates counted together as a single Person.
The Board of Directors of the Company may, at its option, at any time
prior to the close of business on the Flip-in Date, redeem all (but not less
than all) the then outstanding Rights at a price of $0.01 per Right) (the
"Redemption Price"), as provided in the Rights Agreement. Immediately upon the
action of the Board of Directors of the Company electing to redeem the Rights,
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 for each Right so held.
The holders of Rights will, solely by reason of their ownership of
Rights, have no rights as stockholders of the Company, including, without
limitation, the right to vote or to receive dividends.
The Rights will not prevent a takeover of the Company. However, the
Rights may cause substantial dilution to a person or group that acquires 15% or
more of the Common Stock unless the Rights are first redeemed by the Board of
Directors of the Company. Nevertheless, the Rights should not interfere with a
transaction that is in the best interests of the Company and its stockholders
because the Rights can be redeemed on or prior to the Flip-in Date, before the
consummation of such transaction.
As of March 2, 2000 there were 122,436,317 shares of Common Stock
issued (of which 110,436,317 shares were outstanding and 137,563,683 shares were
authorized but unissued) and 11,610,774 shares reserved for issuance pursuant to
employee benefit plans. As long as the Rights are attached to the Common Stock,
the Company will issue one Right with each new share of Common Stock so that all
such shares will have Rights attached.
<PAGE>
The Rights Agreement (which includes as Exhibit A the forms of Rights
Certificate and Election to Exercise) is attached hereto as an exhibit and is
incorporated herein by reference. The foregoing description of the Rights and
the Rights Agreement is qualified in its entirety by reference to the Rights
Agreement and such exhibit thereto.
Item 6. Not Applicable.
Item 7. Exhibits.
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(4) Rights Agreement, which includes as Exhibit A the forms of Rights
Certificate and Election to Exercise.
(99) Press release, dated March 2, 2000, issued by the Company.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALLEGHENY ENERGY, INC.
By /s/ Thomas K. Henderson
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Name: Thomas K. Henderson
Title: Vice President
Date: March 6, 2000
EXECUTION COPY
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STOCKHOLDER PROTECTION RIGHTS AGREEMENT
dated as of
March 2, 2000
between
ALLEGHENY ENERGY, INC.
and
CHASEMELLON SHAREHOLDER SERVICES L.L.C.,
as Rights Agent
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<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............20
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......................23
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.........................................35
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Page
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ARTICLE 5
MISCELLANEOUS
Section 5.1 Redemption.....................................................37
Section 5.2 Expiration.....................................................37
Section 5.3 Issuance of New Rights Certificates............................38
Section 5.4 Supplements and Amendments.....................................38
Section 5.5 Fractional Shares..............................................39
Section 5.6 Rights of Action...............................................39
Section 5.7 Holder of Rights Not Deemed a Stockholder......................40
Section 5.8 Notice of Proposed Actions.....................................41
Section 5.9 Notices........................................................41
Section 5.10 Suspension of Exercisability...................................42
Section 5.11 Costs of Enforcement...........................................43
Section 5.12 Successors.....................................................43
Section 5.13 Benefits of this Agreement.....................................43
Section 5.14 Determination and Actions by the Board of Directors, etc.......43
Section 5.15 Descriptive Headings...........................................44
Section 5.16 GOVERNING LAW..................................................44
Section 5.17 Counterparts...................................................44
Section 5.18 Severability...................................................45
EXHIBITS
Exhibit A Form of Rights Certificate (Together with Form of Election to
Exercise)
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<PAGE>
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
STOCKHOLDER PROTECTION RIGHTS AGREEMENT (as amended from time to time,
this "Agreement"), dated as of March 2, 2000, between ALLEGHENY ENERGY, INC., a
Maryland corporation (the "Company"), and CHASEMELLON SHAREHOLDER SERVICES
L.L.C., a New Jersey limited liability company, as Rights Agent (the "Rights
Agent", which term shall include any successor Rights Agent hereunder).
WITNESSETH:
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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
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<PAGE>
(or, in certain cases, securities of certain other entities) pursuant to the
terms and subject to the conditions set forth herein; and
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
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<PAGE>
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 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.
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<PAGE>
"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.
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
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<PAGE>
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 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.
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<PAGE>
"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.
"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 $100.00.
"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.
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<PAGE>
"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 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
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<PAGE>
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 (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
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<PAGE>
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 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.
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"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.
"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.
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"Stock Acquisition Date" shall mean the first date of public
announcement by the Company expressly stating that a Person has become an
Acquiring Person.
"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:
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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 forth in a Rights Agreement, dated as
of March 2, 2000 (as such may be amended from time to time, the "Rights
Agreement"), between the Company and ChaseMellon Shareholder Services
LLC, 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
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thereof, after the Separation Time and prior to the Expiration Time, to
purchase, for the Exercise Price, one share of Common Stock.
(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 whom the Rights Agent has
been notified by the Company as being a Person whose Rights have become null and
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 (but which do not change or increase the rights, duties or
obligations of the Rights Agent) and as are not inconsistent with the
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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.
(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 and properly 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 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. The Rights Agent
shall have no duty or obligation to take any action under any Section of this
Agreement which requires the payment by a Rights holder of applicable taxes and
charges unless and until the Rights Agent is satisfied that all such taxes
and/or charges have been paid.
(e) Upon receipt of a Rights Certificate, with a properly completed
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
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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 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, but only upon
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
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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 taxes and charges which may be payable in
respect of 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 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 combi nation would hold
thereafter as a result thereof and (y) each Right held prior to such adjustment
will
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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.
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
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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.
(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 and computations 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. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained and
shall have no duty with respect to and shall not be deemed to have knowledge of
any adjustment unless and until it shall have received such a 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
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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.
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
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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 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.
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(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.
(d) The Company shall not be required to register the transfer or
exchange of any Rights after such Rights have become null and 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
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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.
(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
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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 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,
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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;
(d) Rights beneficially owned by certain Persons will, under the
circumstances set forth in Section 3.1(b), become null and 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)
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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 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 null and 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 or the
Rights Agent shall reasonably request, then the Company or the Rights Agent
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.
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(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 null and 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 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 null and 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 null and 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
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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
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
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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 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
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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.
(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 preparation,
execution, delivery, amendment and administration of this Agreement and the
exercise and performance of its duties hereunder.
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The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, damage, judgment, fine, penalty, claim,
demand, settlement, cost or expense, incurred without gross negligence, bad
faith or willful misconduct on the part of the Rights Agent, as determined by a
court of competent jurisdiction, for any action taken, suffered 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.
(b) The Rights Agent shall be authorized and protected and shall incur
no liability for or in respect of any action taken, suffered or omitted by it in
connection with its acceptance and 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
Person into which the Rights Agent or any successor Rights Agent may be merged
or with which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent is a
party, or any Person 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
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of any paper or any further act on the part of any of the parties hereto,
provided that such Person 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 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 only the duties
and obligations expressly 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:
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(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel will be full
and complete authorization and protection to the Rights Agent, and the Rights
Agent shall incur no liability for or in respect of, any action taken, suffered
or omitted by it in good faith and in accordance with such advice or 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 (including, without limitation, the identity of an
acquiring Person and the determination of Market Price or fair value) prior to
taking or suffering or omitting to take any action hereunder, such fact or
matter (unless 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 and the Rights Agent
shall incur no liability for or in respect of, any action taken, omitted to be
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 gross
negligence, bad faith or willful misconduct, as finally determined by a court of
competent jurisdiction. Anything to the contrary notwithstanding, in no event
shall the Rights Agent be liable for special, punitive, indirect, consequential
or incidental loss or damage of any
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kind whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such loss or damage.
(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 null
and void pursuant to Section 3.1(b) 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
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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, omitted to be taken or
suffered by it in good faith in accordance with instructions of any such person.
(h) The Rights Agent and any stockholder, Affiliate, director, officer
or employee of the Rights Agent may buy, sell or deal in Common Stock, Rights or
other securities of the 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.
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(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, absent gross negligence, bad faith or willful misconduct,
as finally determined by a court of competent jurisdiction, in the selection and
continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
make out-of-pocket disbursements in connection with the performance of its
duties if it reasonably believes that repayment of such funds or adequate
indemnification against any such expense is not probable.
4.4 Change of Rights Agent. The Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 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
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or by the holder of any Rights (which holder shall, with such notice, submit
such holder's 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 Person 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 provi sions 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 and which does not increase or
change the Rights Agent's duties, liabilities or obligations.
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. The Rights Agent
shall have no duty or obligation under this Section unless and until the Company
has provided or caused to be provided to the Rights Agent sufficient depositary
receipts or cash necessary to satisfy the Company's obligations with respect to
fractional shares.
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;
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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 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
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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 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: Eileen Beck,
Corporate 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:
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ChaseMellon Shareholder Services L.L.C.
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Relationship Manager
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 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 (with prompt notice thereof to the Rights
Agent) 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.
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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.
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
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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. The Rights Agent shall always be entitled to
assume that the Company's Board of Directors acted in good faith and shall be
fully protected and incur no liability in reliance thereon.
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 GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF SUCH STATE APPLICABLE TO CONTRACTS TO BE MADE AND PERFORMED ENTIRELY
WITHIN SUCH STATE; PROVIDED, HOWEVER, THAT ALL PROVISIONS REGARDING THE RIGHTS,
DUTIES AND OBLIGATIONS OF THE RIGHTS AGENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE 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.
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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: /s/ Thomas K. Henderson
-----------------------------------
Name: Thomas K. Henderson
Title: Vice President
CHASEMELLON SHAREHOLDER
SERVICES L.L.C.
By: /s/ Robert G. Scott
------------------------------------
Name: Robert G. Scott
Title: Vice President
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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 March 2,
2000 (as amended from time to time, the "Rights Agreement"), between Allegheny
Energy, Inc., a Maryland corporation (the "Company"), and ChaseMellon
Shareholder Services L.L.C., a New Jersey limited liability company, 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 March 16, 2010, 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 office
<PAGE>
of the Rights Agent in The City of New York. The Exercise Price shall initially
be $100.00 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.
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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 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.
-3-
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company.
Date: ___________ __, 20__
ATTEST: ALLEGHENY ENERGY, INC.
By
- --------------------------- --------------------------------
Secretary
Countersigned:
CHASEMELLON SHAREHOLDER
SERVICES L.L.C.
By
----------------------------
Authorized Signature
-4-
<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 the
attached 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.
FOR IMMEDIATE RELEASE
---------------------
ALLEGHENY ENERGY, INC.
ADOPTS STOCKHOLDER PROTECTION RIGHTS AGREEMENT
HAGERSTOWN, MD., MARCH 2, 2000 - Allegheny Energy, Inc. (NYSE: AYE) has
adopted a Stockholder Protection Rights Agreement.
The Rights Agreement is similar to plans adopted by more than 1,700
U.S. corporations, including about half of the Fortune 500 companies and an
increasing number of publicly traded utility companies. The Rights Agreement was
not adopted in response to any specific effort to acquire control of Allegheny
Energy. The Rights may cause substantial dilution to a person that acquires 15
percent or more of Allegheny Energy's common stock. Nevertheless, the Rights
should not interfere with a transaction that is in the best interests of
Allegheny Energy and its shareholders, because the Rights can be redeemed prior
to a triggering event for $0.01 per Right.
Alan J. Noia, Chairman, President, and Chief Executive Officer of
Allegheny Energy, stated that, "The Rights Agreement does not in any way weaken
Allegheny Energy's financial strength or interfere with its business plans. The
issuance of the Rights has no dilutive effect, will not affect reported earnings
per share, is not taxable to Allegheny Energy or its shareholders, and will not
change the way in which shares of Allegheny Energy common stock are traded."
Under the Rights Agreement, Rights will be distributed as a dividend at
the rate of one Right per each share of Allegheny Energy common stock. The
dividend will be paid to shareholders of record as of March 16, 2000.
Under its principal provision, if any person or group acquires 15
percent or more of Allegheny Energy's outstanding common stock, all other
shareholders of the Company would be entitled to buy, for the exercise price of
$100 per Right, common stock of Allegheny having a market value equal to twice
the exercise price, thereby substantially diluting the acquiring person's or
group's investment.
-more-
<PAGE>
-2-
The Securities and Exchange Commission previously issued an order
pursuant to the Public Utility Holding Company Act of 1935, as amended, granting
Allegheny Energy the authority to adopt and implement the Rights Agreement.
Allegheny Energy, Inc. is a diversified energy company headquartered in
Hagerstown, Md. The Allegheny Energy family includes Allegheny Power, which
delivers energy to about three million people in parts of Maryland, Ohio,
Pennsylvania, Virginia, and West Virginia; Allegheny Energy Supply Company, LLC,
which operates and markets competitive retail and wholesale electric generation
and operates regulated electric generation for its affiliates; and Allegheny
Ventures, which actively invests in and develops energy-related and
telecommunications projects. For more information, check our web site at
www.alleghenyenergy.com.
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