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
Date of Report (Date of earliest event reported): December 11, 2000
Mpower Communications Corp.
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(Exact name of Registrant as specified in its charter)
Nevada 0-24059 88-0360042
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
175 Sully's Trail, Suite 300, Pittsford, NY 14534
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(Address of principal executive offices) (Zip Code)
Registrants telephone number,
including area code: (716) 218-6550
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(Former name or former address, if changed since last report.)
Item 5. Other Events.
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On December 11, 2000, the Board of Directors of Mpower
Communications Corp. (the "Company") declared a distribution of one Right for
each outstanding share of Common Stock, par value $.001 per share (the "Company
Common Stock"), to stockholders of record at the close of business on December
11, 2000 and for each share of Company Common Stock issued (including shares
distributed from Treasury) by the Company thereafter and prior to the
Distribution Date. Each Right entitles the registered holder, subject to the
terms of the Rights Agreement, to purchase from the Company one one-thousandth
of a share (a "Unit") of Series E Preferred Stock, par value $.0001 per share
(the "Preferred Stock"), at a Purchase Price of $36.50 per Unit, subject to
adjustment. The Purchase Price is payable in cash or by certified or bank check
payable to the order of the Company or by wire transfer of immediately available
funds to the account of the Company. The description and terms of the Rights are
set forth in a Rights Agreement between the Company and Continental Stock
Transfer & Trust Company as Rights Agent (the "Rights Agreement").
Initially, the Rights will attach to all certificates
representing shares of outstanding Company Common Stock, and no separate Rights
Certificates will be distributed. The Rights will separate from the Company
Common Stock and the Distribution Date will occur upon the earlier of (i) 10
days following a public announcement (the date of such announcement being the
"Stock Acquisition Date") that a person or group of affiliated or associated
persons (other than the Company, any Subsidiary of the Company or any employee
benefit plan of the Company or such Subsidiary) (an "Acquiring Person") has
acquired, obtained the right to acquire, or otherwise obtained beneficial
ownership of 15% or more of the then outstanding shares of Company Common Stock
and (ii) 10 business days (or such later date as may be determined by action of
the Board of Directors prior to such time as any person becomes an Acquiring
Person) following the commencement of a tender offer or exchange offer that
would result in a person or group beneficially owning 15% or more of the then
outstanding shares of Company Common Stock. West Highland Partners, L.P., West
Highland Capital, Inc., Mr. Lang H. Gerhard and Estero Partners, LLC, which
collectively own in excess of 15%, may generally purchase up to an additional 1%
without causing the Rights to become exercisable. Until the Distribution Date,
(i) the Rights will be evidenced by Company Common Stock certificates and will
be transferred with and only with such Company Common Stock certificates, (ii)
new Company Common Stock certificates issued after December 11, 2000 (also
including shares distributed from Treasury) will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates representing outstanding Company Common Stock will
also constitute the transfer of the Rights associated with the Company Common
Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date and
will expire at the close of business on the tenth anniversary of the Rights
Agreement unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of Company Common Stock as of
the close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
2
In the event that (i) the Company is the Surviving corporation
in a merger with an Acquiring Person and shares of Company Common Stock shall
remain outstanding, (ii) a Person becomes an Acquiring Person, (iii) an
Acquiring Person engages in one or more "self-dealing" transactions as set forth
in the Rights Agreement, or (iv) during such time as there is an Acquiring
Person, an event occurs which results in such Acquiring Person's ownership
interest being increased by more than l% (e.g., by means of a reverse stock
split or recapitalization) (each such event being a "Section 11(a)(ii) Event"),
then, in each such case, each holder of a Right will thereafter have the right
to receive, upon exercise, Units of Preferred Stock (or, in certain
circumstances, Company Common Stock, cash, property or other securities of the
Company) having a value equal to two times the exercise price of the Right. The
exercise price is the Purchase Price multiplied by the number of Units of
Preferred Stock issuable upon exercise of a Right prior to the events described
in this paragraph. Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void.
In the event that, at any time following the Stock Acquisition
Date, (i) the Company is acquired in a merger or other business combination
transaction and the Company is not the surviving corporation (other than a
merger described in the preceding paragraph), (ii) any Person consolidates or
merges with the Company and all or part of the Company Common Stock is converted
or exchanged for securities, cash or property of any other Person or (iii) 50%
or more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as described
above) shall thereafter have the right to receive, upon exercise, common stock
of the Acquiring Person having a value equal to two times the exercise price of
the Right.
The Purchase Price payable, and the number of Units of
Preferred Stock issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the Preferred Stock, (ii)
if holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to the
holders of the Preferred Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or warrants (other
than those referred to above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. The Company is not required to issue fractional Units. In lieu
thereof, an adjustment in cash may be made based on the market price of the
Preferred Stock prior to the date of exercise.
At any time until ten days following the Stock Acquisition
Date, the Company's Board of Directors may redeem the Rights in whole, but not
in part, at a price of $.0001 per Right (the "Redemption Price"), payable, at
the election of the Board, in cash or shares of Company Common Stock.
Immediately upon the action of the Company's Board of Directors ordering the
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
3
The Board of Directors, at its option, may exchange each Right
for (i) one Unit of Preferred Stock or (ii) such number of Units of Preferred
Stock as will equal (x) the difference between the aggregate market price of the
number of Units of Preferred Stock to be received upon a Section 11(a)(ii) Event
and the Purchase Price divided by (y) the market price per Unit of Preferred
Stock upon the Section 11(a)(ii) Event.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Units of Preferred Stock (or other consideration).
Any of the provisions of the Rights Agreement may be amended
at any time prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended in order to cure any
ambiguity, defect or inconsistency, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable.
The Units of Preferred Stock that may be acquired upon
exercise of the Rights will be nonredeemable and subordinate to any other shares
of preferred stock that may be issued by the Company.
Each Unit of Preferred Stock will have a minimum preferential
quarterly dividend rate of $.01 per Unit but will, in any event, be entitled to
a dividend equal to the per share dividend declared on the Company Common Stock.
In the event of liquidation, the holder of a Unit of Preferred
Stock will receive a preferred liquidation payment equal to the greater of $.01
per Unit and the per share amount paid in respect of a share of Company Common
Stock.
Each Unit of Preferred Stock will have one vote, voting
together with the Company Common Stock. The holders of Units of Preferred Stock,
voting as a separate class, shall be entitled to elect two directors if
dividends on the Preferred Stock are in arrears for six fiscal quarters.
In the event of any merger, consolidation or other transaction
in which shares of Company Common Stock are exchanged, each Unit of Preferred
Stock will be entitled to receive the per share amount paid in respect of each
share of Company Common Stock.
The rights of holders of the Preferred Stock to dividends,
liquidation and voting, and in the event of mergers and consolidations, are
protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the economic value of one Unit of Preferred Stock
that may be acquired upon the exercise of each Right should approximate the
economic value of one share of Company Common Stock.
4
The Rights may have certain anti-takeover effects. The Rights
will cause substantial dilution to a person or group that attempts to acquire
the Company on terms not approved by the Company's Board of Directors unless the
offer is conditioned on a substantial number of Rights being acquired. However,
the Rights should not interfere with any merger or other business combination
approved by the Company's Board of Directors because the Rights may be redeemed
by the Company at $.0001 per Right at any time on or prior to the tenth business
day following the Stock Acquisition Date (subject to extension by the Company's
Board of Directors). Thus, the Rights are intended to encourage persons who may
seek to acquire control of the Company to initiate such an acquisition through
negotiations with the Board of Directors. However, the effect of the Rights may
be to discourage a third party from making a partial tender offer or otherwise
attempting to obtain a substantial equity position in the equity securities of
or seeking to obtain control of, the Company. To the extent any potential
acquirors are deterred by the Rights, the Rights may have the effect of
preserving incumbent management in office.
The Form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit A the Form of
Rights Certificate, is attached hereto as Exhibit 4 and is incorporated herein
by reference. The foregoing description of the Rights does not purport to be
complete and is qualified in its entirety by reference to such Exhibit 4.
Item 7. Financial Statements and Exhibits
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Exhibit 4 Form of Rights Agreement dated as of December 11, 2000,
between Mpower Communications Corp. and Continental Stock
Transfer & Trust Company, including Form of Rights
Certificate as Exhibit A, Summary of Rights to Purchase
Preferred Stock as Exhibit B and the Form of Certificate of
Designation for the Preferred Stock as Exhibit C.
Exhibit 21(a) Press Release dated December 11, 2000.
Exhibit 21(b) Form of Letter to Stockholders of Mpower Communications
Corp. regarding the adoption of the Rights Plan pursuant to
the Rights Agreement.
5
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, thereto duly authorized.
MPOWER COMMUNICATIONS CORP.
By /s/ Russell Zuckerman
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Name: Russell Zuckerman
Title: Corporate Secretary
Date: December 15, 2000
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EXHIBIT INDEX
Exhibit
No. Description
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4 Form of Rights Agreement dated as of December 11, 2000,
between Mpower Communications Corp. and Continental Stock
Transfer & Trust Company, including Form of Rights
Certificate as Exhibit A, Summary of Rights to Purchase
Preferred Stock as Exhibit B and Form of Certificate of
Designation for the Preferred Stock as Exhibit C.
21(a) Press Release dated December 11, 2000.
21(b) Form of Letter to Stockholders of Mpower Communications
Corp. regarding the adoption of the Rights Plan pursuant to
the Rights Agreement.
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