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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
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FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
NEWPORT NEWS SHIPBUILDING INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 74-1541566
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
4121 Washington Avenue
Newport News, Virginia 23607
(Address, including zip code, of principal executive offices)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Preferred Stock New York Stock Exchange
Purchase Rights Chicago Stock Exchange
If this Form relates to the registration of a class of securities
pursuant to Section 12(b) of the Exchange Act and is effective upon filing
pursuant to General Instruction A. (c), please check the following box. [ ]
If this Form relates to the registration of a class of securities
pursuant to Section 12(b) of the Exchange Act and is effective pursuant to
General Instruction A.(d), please check the following box. [ ]
Securities Act registration statement file number to which this form
relates: Not Applicable
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
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<PAGE>
Item 1. Description of Securities to be Registered.
On June 4, 1998, the Board of Directors of Newport News
Shipbuilding Inc. (the "Company") declared a dividend of one Right for each
outstanding share of Common Stock, par value $0.01 per share, of the Company
(the "Common Shares"). The Rights will be issued to the holders of record of
Common Shares outstanding at the Close of Business on June 10, 1998 (the
"Record Date") and with respect to Common Shares issued thereafter until
the Distribution Date (as defined below). Each Right, when it becomes
exercisable as described below, will entitle the registered holder to purchase
from the Company one one-thousandth (1/1,000th) of a share of Series A
Participating Cumulative Preferred Stock, par value $0.01 per share, of the
Company (the "Preferred Shares") at a price of $105.00 (the "Purchase Price").
The description and terms of the Rights are set forth in a Rights Agreement
dated as of the Close of Business on June 10, 1998 as it may be amended from
time to time (the "Rights Agreement"), between the Company and First Chicago
Trust Company of New York, as Rights Agent (the "Rights Agent").
Until the earlier of (i) such time as the Company learns that
a person or group (including any affiliate or associate of such person or group)
has acquired, or obtained the right to acquire, beneficial ownership of more
than 15% of the outstanding Common Shares (such person or group being called an
"Acquiring Person"), and (ii) such date, if any, as may be designated by the
Board of Directors of the Company following the commencement of, or first public
disclosure of an intention to commence, a tender or exchange offer for
outstanding Common Shares which could result in such person or group becoming
the beneficial owner of more than 15% of the outstanding Common Shares, (the
earlier of such dates being called the "Distribution Date"), the Rights will be
evidenced by certificates for Common Shares registered in the names of the
holders thereof (which certificates for Common Shares shall also be deemed to be
Right Certificates (as defined below) and not by separate Right Certificates.
With respect to any certificate for Common Shares outstanding as of the Record
Date, until the Distribution Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates along
with a copy of the Summary of Rights, set forth as Exhibit C to the Rights
Agreement, and the surrender for transfer of any such certificate shall
also constitute the transfer of the Rights associated with the Common Shares
represented thereby. Therefore, until the Distribution Date, the Rights will
be transferred with and only with the Common Shares.
As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Shares as of the close of business on
the Distribution Date, and such separate Right Certificates alone will
thereafter evidence the Rights.
The Rights are not exercisable until the Distribution Date and
will expire at the Close of Business on June 10, 2008 (the "Expiration Date"),
unless earlier redeemed or exchanged by the Company as described below.
The number of Preferred Shares or other securities issuable
upon exercise of the Rights is subject to adjustment by the Board of Directors
of the Company in the event of any change in the Common Shares or Preferred
Shares, whether by reason of stock dividends, stock splits, recapitalizations,
reclassifications, mergers, consolidations, combinations or exchanges of
securities, split-ups, split-offs, spin-offs, liquidations, other similar
changes in capitalization, any distribution or issuance of assets, evidences of
indebtedness or subscription rights, options or warrants to holders of Common
Shares or Preferred Shares or otherwise. The Purchase Price and the number of
Preferred Shares or other securities issuable upon exercise of the Rights are
subject to adjustment from time to time in the event of the declaration of a
stock dividend on the Common Shares payable in Common Shares or a subdivision or
combination of the Common Shares prior to the Distribution Date.
The Preferred Shares are authorized to be issued in fractions
which are an integral multiple of one one-thousandth (1/1,000th) of a Preferred
Share. The Company may, but is not required to, issue fractions of shares upon
the exercise of Rights, and in lieu of fractional shares, the Company may make a
cash payment based on the market price of such shares on the first trading date
prior to the date of exercise or utilize a depositary arrangement as provided by
the terms of the Preferred Shares.
Subject to the right of the Board of Directors of the Company
to redeem or exchange the Rights as described below, at such time as there is an
Acquiring Person, the holder of each Right will thereafter have the right to
receive, upon exercise thereof, for the Purchase Price, that number of one
one-thousandths of a Preferred Share equal to the number of Common Shares which
at the time of such transaction would have a market value of twice the Purchase
Price. Any Rights that are or were beneficially owned by an Acquiring Person on
or after the Distribution Date will become null and void and will not be
exercisable pursuant to these provisions.
In the event the Company is acquired in a merger or other
business combination by an Acquiring Person that is a publicly traded
corporation or 50% or more of the Company's assets or assets representing 50% or
more of the Company's earning power are sold, leased, exchanged or otherwise
transferred (in one or more transactions) to an Acquiring Person that is a
publicly traded corporation, proper provision must be made so that each Right
will entitle its holder to purchase, for the Purchase Price, that number of
common shares of such corporation which at the time of the transaction would
have a market value of twice the Purchase Price. In the event the Company is
acquired in a merger or other business combination by an Acquiring Person that
is not a publicly traded entity or 50% or more of the Company's assets or assets
representing 50% or more of the earning power of the Company are sold, leased,
exchanged or otherwise transferred (in one or more transactions) to an Acquiring
Person that is not a publicly traded entity, proper provision must be made so
that each Right will entitle its holder to purchase, for the Purchase Price, at
such holder's option, (i) that number of shares of the surviving corporation in
the transaction with such entity (or, at such holder's option, of the surviving
corporation in such acquisition, which could be the Company) which at the time
of the transaction would have a book value of twice the Purchase Price or (ii)
that number of shares of such entity which at the time of the transaction would
have a book value of twice the Purchase Price or (iii) if such entity has an
affiliate which has publicly traded common shares, that number of common shares
of such affiliate which at the time of the transaction would have a market
value of twice the Purchase Price. The "flip-over" provision only applies
to a merger or similar business combination with an Acquiring Person.
<PAGE>
The Rights are redeemable by the Board of Directors at a
redemption price of $.01 per Right (the "Redemption Price") any time prior to
the earlier of (i) such time as there is an Acquiring Person and (ii) the
Expiration Date. Immediately upon the action of the Board electing to redeem the
Rights, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
After there is an Acquiring Person, the Board of Directors may
elect to exchange each Right (other than Rights owned by an Acquiring Person)
for consideration per Right consisting of one-half of the securities that would
be issuable at such time upon the exercise of one Right pursuant to the terms of
the Rights Agreement. Notwithstanding the foregoing, the Board of Directors of
the Company shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.
At any time prior to such time as there shall be an Acquiring
Person, the Company may, without the approval of any holder of the Rights,
supplement or amend any provision of the Rights Agreement (including the date on
which the Expiration Date or the Distribution Date shall occur, the amount of
the Purchase Price or the definition of "Acquiring Person"), except that no
supplement or amendment shall be made that reduces the Redemption Price of the
Rights.
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.
Item 2. Exhibits.
1. Rights Agreement dated as of June 10, 1998, between Newport
News Shipbuilding Inc. and First Chicago Trust Company of New York, as Rights
Agent.
2. Form of Certificate of the Voting Powers, Designations, Preferences
and Relative Participating, Optional and Other Special Rights and
Qualifications, Limitations or Restrictions of Series A Participating Cumulative
Preferred Stock of Newport News Shipbuilding Inc. (which is attached as Exhibit
A to the Rights Agreement filed as Exhibit 1 hereto).
3. Form of Right Certificate (which is attached as Exhibit B to the
Rights Agreement filed as Exhibit 1 hereto).
4. Certificate of Elimination of Newport News Shipbuilding Inc.'s
Series A Participating Junior Preferred Stock (filed in connection with the
expiration of the Company's previous Rights Agreement), dated June 4, 1998.
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereto duly authorized.
NEWPORT NEWS SHIPBUILDING INC.
by /s/ Stephen B. Clarkson
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Name: Stephen B. Clarkson
Date: June 10, 1998 Title: Vice President,
General Counsel and
Secretary
<PAGE>
INDEX OF EXHIBITS
Exhibit No. Title
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1 Form of Rights Agreement dated as of June 10, 1998, between
Newport news Shipbuilding Inc. and First Chicago Trust Company of
New York, as Rights Agent.
2 Form of Certificate of the Voting Powers, Designations,
Preferences and Relative Participating, Optional and Other
Special Rights and Qualifications, Limitations or Restrictions of
Series A Participating Cummulative Preferred Stock of Newport
News Shipbuilding Inc. (which is attached as Exhibit A to the
Rights Agreement filed as Exhibit 1 hereto).
3 Form of Right Certificate (which is attached as Exhibit B to the
Rights Agreement filed as Exhibit 1 hereto).
4 Certificate of Elimination of Newport News Shipbuilding Inc.'s
Series A Participating Junior Preferred Stock (filed in
connection with the expiration of the Company's previous Rights
Agreement), dated June 4, 1998.
RIGHTS AGREEMENT
dated as of June 10, 1998
between
NEWPORT NEWS SHIPBUILDING INC.
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK
as Rights Agent
<PAGE>
Table of Contents
Section Page
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1. Certain Definitions ......................................... 1
2. Appointment of Rights Agent ............................... 9
3. Issue of Rights and Right Certificates ......................10
4. Form of Right Certificates ..................................12
5. Execution, Countersignature and
Registration ................................................12
6. Transfer, Split-Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates; Uncertificated
Rights ......................................................13
7. Exercise of Rights; Expiration Date
of Rights ...................................................14
8. Cancelation and Destruction of Right
Certificates ................................................17
9. Reservation and Availability of
Preferred Shares ............................................17
10. Preferred Shares Record Date ................................19
11. Adjustments in Rights After There Is an
Acquiring Person; Exchange of Rights for
Shares; Business Combinations................................20
12. Certain Adjustments .........................................25
13. Certificate of Adjustment ...................................27
14. Additional Covenants ........................................27
15. Fractional Rights and Fractional Shares .....................28
16. Rights of Action ............................................29
17. Transfer and Ownership of Rights and
Right Certificates ..........................................30
18. Right Certificate Holder Not Deemed
a Stockholder ...............................................30
19. Concerning the Rights Agent .................................30
20. Merger or Consolidation or Change
of Rights Agent .............................................31
21. Duties of Rights Agent ......................................32
22. Change of Rights Agent ......................................35
23. Issuance of Additional Rights and
Right Certificates ..........................................36
24. Redemption and Termination ..................................36
25. Notices .....................................................37
26. Supplements and Amendments ..................................38
27. Successors ..................................................39
<PAGE>
28. Benefits of Rights Agreement;
Determinations and Actions by the
Board of Directors, etc. ....................................39
29. Severability ................................................40
30. Governing Law ...............................................40
31. Counterparts; Effectiveness .................................40
32. Descriptive Headings ........................................41
Exhibits
A Certificate of Designation
B Form of Right Certificate
C Summary of Rights
<PAGE>
1
RIGHTS AGREEMENT dated as of the Close of
Business (as defined below) on June 10, 1998, between
NEWPORT NEWS SHIPBUILDING INC., a Delaware
corporation (the "Company"), and FIRST CHICAGO TRUST
COMPANY OF NEW YORK, a New York trust company, as
Rights Agent (the "Rights Agent") and effective
immediately upon the expiration of the Rights
Agreement dated as of December 11, 1996, as amended,
between the Company and the Rights Agent.
The Board of Directors of the Company has authorized and declared
a dividend of one Right (as hereinafter defined) for each share of Common
Stock, par value $0.01 per share, of the Company (the "Common Stock")
outstanding at the Close of Business (as hereinafter defined) on the date hereof
(the "Record Date"), and has authorized the issuance of one Right (as such
number may hereafter be adjusted pursuant to the provisions of this Rights
Agreement) with respect to each share of Common Stock that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date or the Expiration Date (as such terms are hereinafter
defined); provided, however, that Rights may be issued with respect to shares of
Common Stock that shall become outstanding after the Distribution Date and prior
to the earlier of the Redemption Date or the Expiration Date in accordance with
the provisions of Section 23. Each Right shall initially represent the right to
purchase one one-thousandth (1/1000) of a share of Series A Participating
Cumulative Preferred Stock, par value $0.01 per share, of the Company (the
"Preferred Shares"), having the powers, rights and preferences set forth in the
Certificate of Designation attached as Exhibit A.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. Certain Definitions. For purposes of this Rights Agreement,
the following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who or which, alone or
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of more than 15% of the Common Shares then outstanding, but
shall not include (a) the Company, any Subsidiary of the Company, any
<PAGE>
2
employee benefit or compensation plan of the Company or of any of its
Subsidiaries, or any Person holding Common Shares for or pursuant to the terms
of any such employee benefit or compensation plan ; (b) any Person who or which,
on the effectiveness hereof or on the date of the first public announcement of
the signing of this Rights Agreement, is the Beneficial Owner of more than 15%,
but less than 20%, of the outstanding Common Shares (provided that if any such
Person described in this clause (b), together with its Affiliates and
Associates, shall after the date of such first public announcement acquire
Beneficial Ownership of any additional Common Shares, then such Person shall,
immediately upon such acquisition (but subject to clause (c)(ii) and (c)(iii) of
this sentence), become an Acquiring Person); and (c) any Person who has become
and is the Beneficial Owner of more than 15% of the Common Shares at the time
outstanding solely as the result of (i) a change in the aggregate number of
Common Shares outstanding since the last date on which such Person acquired
Beneficial Ownership of any Common Shares, (ii) the acquisition by such Person
or one or more of its Affiliates or Associates of Beneficial Ownership of
additional Common Shares if such acquisition was made in the good faith belief
that such acquisition would not (A) cause the Beneficial Ownership by such
Person, together with its Affiliates and Associates, to exceed 15% of the Common
Shares outstanding at the time of such acquisition and such good faith belief
was based on the good faith reliance on information contained in publicly filed
reports or documents of the Company that are inaccurate or out-of-date or (B)
otherwise cause a Distribution Date or the adjustment provided for in Section
11(a) to occur, or (iii) the acquisition by such Person or one or more of its
Affiliates or Associates of Beneficial Ownership of additional Common Shares if
the Board of Directors of the Company determines that such acquisition was made
in good faith without the knowledge by such Person or Affiliates or Associates
that such Person would thereby become an Acquiring Person, which determination
of the Board of Directors of the Company shall be conclusive and binding on such
Person, the Rights Agent, the holders of the Rights and all other Persons).
Notwithstanding clause (c)(ii) or (c)(iii) of the prior sentence, if any Person
that is not an Acquiring Person due to such clause (c)(ii) or (c)(iii) does not
reduce its percentage of Beneficial Ownership of Common Shares to 15% or less by
the Close of Business on the tenth calendar day after notice from the Company
(the date of notice being the first day) that such Person's Beneficial Ownership
of Common Shares would make it an Acquiring Person, such Person shall, at the
end of such ten calendar day period, become an Acquiring Person (and such clause
(c)(ii) or (c)(iii) shall
<PAGE>
3
no longer apply to such Person). For purposes of this definition, the
determination whether any Person acted in "good faith" shall be conclusively
determined by the Board of Directors of the Company.
"Affiliate" and "Associate", when used with reference to any Person,
shall have the respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
of this Rights Agreement.
A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
to "beneficially own", and shall be deemed to have "Beneficial Ownership"
of, any securities:
(a) which such Person or any of such Person's Affiliates or
Associates is deemed to "beneficially own" within the meaning of Rule
13d-3 of the General Rules and Regulations under the Exchange Act, as
in effect on the date of this Rights Agreement;
(b) which such Person or any of such Person's Affiliates or
Associates has: (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (written or oral), 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 under clause (i) to be the Beneficial
Owner of, or to beneficially own, or to have Beneficial Ownership of,
any securities tendered pursuant to a tender or exchange offer made by
or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange thereunder or cease to be subject to withdrawal by the
tendering security holder; or (ii) the right to vote pursuant to any
agreement, arrangement or understanding (written or oral); provided,
however, that a Person shall not be deemed under this clause (ii) to be
the Beneficial Owner of, or to beneficially own, any security if (A)
the agreement, arrangement or understanding (written or oral) to vote
such security arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent solicitation made
generally to all holders of Common Shares of the Company pursuant to,
and in accordance with, the applicable rules and regulations under the
Exchange Act and (B) the beneficial ownership of such security is
<PAGE>
4
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(c) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (written or oral) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in the
proviso to clause (b)(ii) of this definition) or disposing of any
securities of the Company.
Notwithstanding the foregoing, nothing contained in this definition shall cause
a Person ordinarily engaged in business as an underwriter of securities to be
deemed the "Beneficial Owner" of, or to "beneficially own", or to have
"Beneficial Ownership" of, any securities acquired in a bona fide firm
commitment underwriting pursuant to an underwriting agreement with the Company.
"Book Value", when used with reference to Common Shares issued by any
Person, shall mean the amount of equity of such Person applicable to each Common
Share, determined (a) in accordance with generally accepted accounting
principles in effect on the date as of which such Book Value is to be
determined, (b) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except that no value shall be included in such assets for goodwill
arising from consummation of a business combination, and (c) after giving effect
to (i) the exercise of all rights, options and warrants to purchase such Common
Shares (other than the Rights), and the conversion of all securities convertible
into such Common Shares, at an exercise or conversion price, per Common Share,
which is less than such Book Value before giving effect to such exercise or
conversion (whether or not exercisability or convertibility is conditioned upon
occurrence of a future event), (ii) all dividends and other distributions on the
capital stock of such Person declared prior to the date as of which such Book
Value is to be determined and to be paid or made after such date, and (iii) any
other agreement, arrangement or understanding (written or oral), or transaction
or other action contemplated prior to the date as of which such Book Value is to
be determined that would have the effect of thereafter reducing such Book Value.
"Business Combination" shall have the meaning set forth in Section
11(c)(i).
<PAGE>
5
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in the Borough
of Manhattan, the City of New York, are authorized or obligated by law or
executive order to close.
"Certificate of Designation" shall mean the Certificate of
Designation of Series A Participating Cumulative Preferred Stock setting forth
the powers, preferences, rights, qualifications, limitations and restrictions of
such series of Preferred Stock of the Company, a copy of which is attached as
Exhibit A.
"Close of Business" on any given date shall mean 5:00 p.m., Eastern
time, on such date; provided, however, that, if such date is not a Business
Day, "Close of Business" shall mean 5:00 p.m., Eastern time, on the next
succeeding Business Day.
"Common Shares", when used with reference to the Company prior to a
Business Combination, shall mean the shares of Common Stock of the Company or
any other shares of capital stock of the Company into which the Common Stock
shall be reclassified or changed. "Common Shares", when used with reference to
any Person (other than the Company prior to a Business Combination), shall mean
shares of capital stock of such Person (if such Person is a corporation) of any
class or series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which do not limit (as a
maximum amount and not merely in proportional terms) the amount of dividends or
income payable or distributable on such class or series or the amount of assets
distributable on such class or series upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not provide that
such class or series is subject to redemption at the option of such Person, or
any shares of capital stock or units of equity interests into which the
foregoing shall be reclassified or changed.
"Common Stock" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement.
"Company" shall have the meaning set forth in the heading of this
Rights Agreement; provided, however, that if there is a Business
Combination, "Company" shall have the meaning set forth in Section 11(c)(iii).
<PAGE>
6
The term "control" with respect to any Person shall mean the power to
direct the management and policies of such Person, directly or
indirectly, by or through stock ownership, agency or otherwise, or pursuant to
or in connection with an agreement, arrangement or understanding (written or
oral) with one or more other Persons by or through stock ownership, agency or
otherwise; and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Distribution Date" shall have the meaning set forth in Section 3(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as in
effect on the date in question, unless otherwise specifically provided.
"Exchange Consideration" shall have the meaning set forth in Section
11(b)(i).
"Expiration Date" shall have the meaning set forth in Section 7(a).
"Major Part", when used with reference to the assets of the Company
and its Subsidiaries as of any date, shall mean assets (a) having a fair market
value aggregating 50% or more of the total fair market value of all the assets
of the Company and its Subsidiaries (taken as a whole) as of the date in
question, (b) accounting for 50% or more of the total value (net of depreciation
and amortization) of all the assets of the Company and its Subsidiaries (taken
as a whole) as would be shown on a consolidated or combined balance sheet of the
Company and its Subsidiaries as of the date in question, prepared in accordance
with generally accepted accounting principles then in effect, or (c) accounting
for 50% or more of the total amount of earnings before interest, taxes,
depreciation and amortization or of the revenues of the Company and its
Subsidiaries (taken as a whole) as would be shown on, or derived from, a
consolidated or combined statement of income or net earnings of the Company and
its Subsidiaries for the period of 12 months ending on the last day of the
Company's monthly accounting period next preceding the date in question,
prepared in accordance with generally accepted accounting principles then in
effect.
"Market Value", when used with reference to Common Shares on any date,
shall mean the average of the daily closing prices, per share, of such Common
Shares for the period which is the shorter of (a) 30 consecutive Trading
<PAGE>
7
Days ending on the Trading Day immediately prior to the date in question or (b)
the number of consecutive Trading Days beginning on the Trading Day immediately
after the date of the first public announcement of the event requiring a
determination of the Market Value of Common Shares and ending on the Trading Day
immediately prior to the record date of such event; provided, however, that, in
the event that the Market Value of such Common Shares is to be determined in
whole or in part during a period following the announcement by the issuer of
such Common Shares of any action of the type described in Section 12(a) that
would require an adjustment thereunder, then, and in each such case, the Market
Value of such Common Shares shall be appropriately adjusted to reflect the
effect of such action on the market price of such Common Shares. The closing
price for each Trading Day shall be the closing price quoted on the composite
tape for securities listed on the New York Stock Exchange, or, if such
securities are not quoted on such composite tape or if such securities are not
listed on such exchange, on the principal United States securities exchange
registered under the Exchange Act (or any recognized foreign stock exchange) on
which such securities are listed, or, if such securities are not listed on any
such exchange, the closing price quoted on The Nasdaq Stock Market or, if such
securities are not so quoted, the average of the closing bid and asked
quotations with respect to a share of such securities on any National
Association of Securities Dealers, Inc. quotations system or such other system
then in use, or if no such quotations are available, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in such securities selected by the Board of Directors of the Company, or if on
any such Trading Day no market maker is making a market in such securities, the
closing price of such securities on such Trading Day shall be deemed to be the
fair value of such securities as determined in good faith by the Board of
Directors of the Company (whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent, the
holders of Rights and all other Persons); provided, however, that for the
purpose of determining the closing price of the Preferred Shares for any Trading
Day on which there is no such market maker for the Preferred Shares the closing
price on such Trading Day shall be deemed to be the Formula Number (as defined
in the Certificate of Designation) multiplied by the closing price of the Common
Shares of the Company on such Trading Day.
"Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture,
<PAGE>
8
association, trust, unincorporated organization or other entity.
"Preferred Shares" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement. Any reference in this Rights
Agreement to Preferred Shares shall be deemed to include any authorized fraction
of a Preferred Share, unless the context otherwise requires.
"Principal Party" shall mean the Surviving Person in a Business
Combination; provided, however, that, (i) if such Surviving Person is a direct
or indirect Subsidiary of any other Person, "Principal Party" shall mean the
Person which is the ultimate parent of such Surviving Person and which is not
itself a Subsidiary of another Person, and (ii) in the event ultimate
control of such Surviving Person is shared by two or more Persons, "Principal
Party" shall mean that Person that is immediately controlled by such two or more
Persons.
"Purchase Price" with respect to each Right shall mean $105.00,
as such amount may from time to time be adjusted as provided herein, and shall
be payable in lawful money of the United States of America. All
references herein to the Purchase Price shall mean the Purchase Price as in
effect at the time in question.
"Record Date" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement.
"Redemption Date" shall have the meaning set forth in Section 24(a).
"Redemption Price" with respect to each Right shall mean $.01, as such
amount may from time to time be adjusted in accordance with Section 12. All
references herein to the Redemption Price shall mean the Redemption Price as in
effect at the time in question.
"Registered Common Shares" shall mean Common Shares that are, as of the
date of consummation of a Business Combination, and have continuously been for
the 12 months immediately preceding such date, registered under Section 12 of
the Exchange Act.
"Right Certificate" shall mean a certificate evidencing a Right in
substantially the form attached as Exhibit B.
<PAGE>
9
"Rights" shall mean the rights to purchase Preferred Shares (or other
securities) as provided in this Rights Agreement.
"Securities Act" shall mean the Securities Act of 1933, as in effect on
the date in question, unless otherwise specifically provided.
"Subsidiary" shall mean a Person, at least a majority of the total
outstanding voting power (being the power under ordinary circumstances (and
not merely upon the happening of a contingency) to vote in the election of
directors of such Person (if such Person is a corporation) or to participate in
the management and control of such Person (if such Person is not a corporation))
of which is owned, directly or indirectly, by another Person or by one or more
other Subsidiaries of such other Person or by such other Person and one or more
other Subsidiaries of such other Person.
"Surviving Person" shall mean (a) the Person which is the
continuing or surviving Person in a consolidation or merger specified in Section
11(c)(i)(A) or 11(c)(i)(B) or (b) the Person to which the Major Part of the
assets of the Company and its Subsidiaries is sold, leased, exchanged or
otherwise transferred or disposed of in a transaction specified in Section
11(c)(i)(C); provided, however, that, if the Major Part of the assets of the
Company and its Subsidiaries is sold, leased, exchanged or otherwise transferred
or disposed of in one or more related transactions specified in Section
11(c)(i)(C) to more than one Person, the "Surviving Person" in such case shall
mean the Person that acquired assets of the Company and/or its Subsidiaries with
the greatest fair market value in such transaction or transactions.
"Trading Day" shall mean a day on which the principal national
securities exchange (or principal recognized foreign stock exchange, as the case
may be) on which any securities or Rights, as the case may be, are listed or
admitted to trading is open for the transaction of business or, if the
securities or Rights in question are not listed or admitted to trading on any
national securities exchange (or recognized foreign stock exchange, as the case
may be), a Business Day.
SECTION 2. Appointment of Rights Agent. 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
<PAGE>
10
appointment. The Company may from time to time appoint one or more co-Rights
Agents as it may deem necessary or desirable (the term "Rights Agent" being used
herein to refer, collectively, to the Rights Agent together with any such
co-Rights Agents). In the event the Company appoints one or more co-Rights
Agents, the respective duties of the Rights Agent and any co-Rights Agents shall
be as the Company shall determine.
SECTION 3. Issue of Rights and Right Certificates. (a) One Right
shall be associated with each Common Share outstanding on the Record Date, each
additional Common Share that shall become outstanding between the Record Date
and the earliest of the Distribution Date, the Redemption Date or the
Expiration Date and each additional Common Share with which Rights are issued
after the Distribution Date but prior to the earlier of the Redemption Date or
the Expiration Date as provided in Section 23; provided, however, that, if the
number of outstanding Rights are combined into a smaller number of outstanding
Rights pursuant to Section 12(a), the appropriate fractional Right determined
pursuant to such Section shall thereafter be associated with each such Common
Share.
(b) Until the earlier of (i) such time as the Company learns that a
Person has become an Acquiring Person or (ii) the Close of Business on such
date, if any, as may be designated by the Board of Directors of the Company
following the commencement of, or first public disclosure of an intent to
commence, a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit or compensation plan of the
Company or of any of its Subsidiaries, or any Person holding Common Shares for
or pursuant to the terms of any such employee benefit or compensation plan) for
outstanding Common Shares, if upon consummation of such tender or exchange offer
such Person could be the Beneficial Owner of more than 15% of the outstanding
Common Shares (the Close of Business on the earlier of such dates being the
"Distribution Date"), (x) the Rights shall, except as otherwise provided in
Section 3(c), be evidenced by the certificates for Common Shares registered in
the names of the holders thereof and not by separate Right Certificates, (y) the
Rights, including the right to receive Right Certificates, shall be transferable
only in connection with the transfer of Common Shares and (z) the Company shall
notify the Rights Agent as promptly as practicable that the Distribution Date
has occurred. As soon as practicable after the Distribution Date, the Rights
Agent shall send, by first-class, postage-prepaid mail, to each record holder of
<PAGE>
11
Common Shares as of the Distribution Date, at the address of such holder shown
on the records of the Company, a Right Certificate evidencing one whole Right
for each Common Share (or for the number of Common Shares with which one whole
Right is then associated if the number of Rights per Common Share held by such
record holder has been adjusted in accordance with the proviso in Section 3(a)).
If the number of Rights associated with each Common Share has been adjusted in
accordance with the proviso in Section 3(a), at the time of distribution of the
Right Certificates the Company may make any necessary and appropriate rounding
adjustments so that Right Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional Right in accordance
with Section 15(a). The Company shall notify the Rights Agent as promptly as
practicable of any such adjustments. As of and after the Distribution Date, the
Rights shall be evidenced solely by such Right Certificates.
(c) As soon as practicable, and in any event no later than 30 days,
after the Record Date, the Company will send a copy of a Summary of Rights to
Purchase Preferred Shares, in substantially the form attached hereto as
Exhibit C (the "Summary of Rights"), by first-class, postage prepaid mail, to
each record holder of Common Shares as of the Close of Business on the Record
Date at the address of such holder shown on the records of the Company. With
respect to any certificate for Common Shares outstanding as of the Record Date,
until the earliest of the Distribution Date, the Redemption Date or the
Expiration Date, (i) the Rights associated with the Common Shares represented by
any such certificate shall be evidenced by such certificates for the Common
Shares with a copy of the Summary of Rights attached thereto and the registered
holders of the Common Shares shall also be the registered holders of the
associated Rights and (ii) the surrender for transfer of any such certificate,
even without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(d) Certificates issued for Common Shares after the Record Date
(including upon transfer or exchange of outstanding Common Shares), but prior
to the earliest of the Distribution Date, the Redemption Date or the
Expiration Date, shall have printed on, written on or otherwise affixed to them
the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a
<PAGE>
12
Rights Agreement dated as of June 10, 1998 as it may be amended from
time to time (the "Rights Agreement"), between Newport News
Shipbuilding Inc. (the "Company") and First Chicago Trust Company of
New York, as Rights Agent (the "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, as set forth in the Rights Agreement, such Rights shall
be evidenced by separate certificates and shall no longer be evidenced
by this certificate. The Company shall mail to the holder of this
certificate a copy of the Rights Agreement without charge after receipt
of a written request therefor. RIGHTS BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE
NULL AND VOID AND NONTRANSFERABLE.
Notwithstanding this Section 3(d), neither the omission of a legend nor the
inclusion of a legend that makes reference to a rights agreement other than the
Rights Agreement shall affect the enforceability of any part of this Rights
Agreement or the rights of any holder of Rights.
SECTION 4. Form of Right Certificates. The Right Certificates (and the
form of election to purchase and form of assignment to be printed on the
reverse side thereof) shall be in substantially the form set forth as
Exhibit B and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Rights
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Sections 7, 11 and 23, the Right
Certificates, whenever issued, shall be dated as of the Distribution Date, and
on their face shall entitle the holders thereof to purchase such number of
Preferred Shares as shall be set forth therein for the Purchase Price set forth
therein, subject to adjustment from time to time as herein provided.
SECTION 5. Execution, Countersignature and Registration. (a) The
Right Certificates shall be executed on behalf of the Company by the Chairman of
the Board, any Vice Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Treasurer or any
<PAGE>
13
Vice President (whether preceded by any additional title) of the Company, either
manually or by facsimile signature, and have affixed thereto the Company's seal
or a facsimile thereof, which shall be attested by the Secretary, an Assistant
Secretary or a Vice President (whether preceded by any additional title,
provided that such Vice President shall not have also executed the Right
Certificates) of the Company, either manually or by facsimile signature. The
Right Certificates shall be manually countersigned by the Rights Agent and shall
not be valid or obligatory for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Right Certificates shall
cease to be such an officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates may
nevertheless be countersigned by the Rights Agent and issued and delivered by
the Company with the same force and effect as though the person who signed such
Right Certificates had not ceased to be such an officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any person who, at
the actual date of execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
execution of this Rights Agreement any such person was not such an officer of
the Company.
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept, at its principal office in New York, New York, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced by each of the Right Certificates,
the certificate number of each of the Right Certificates and the date of each of
the Right Certificates.
SECTION 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates;
Uncertificated Rights. (a) Subject to the provisions of Sections 7(e) and 15, at
any time after the Distribution Date, and at or prior to the Close of Business
on the earlier of the Redemption Date or the Expiration Date, any Right
Certificate or Right Certificates may be transferred, split-up, combined or
exchanged for another Right Certificate or Right Certificates representing, in
the aggregate, the same number of Rights as the Right Certificate or Right
Certificates surrendered then represented. Any registered holder desiring to
transfer, split-up, combine or exchange any Right Certificate shall make such
request in writing
<PAGE>
14
delivered to the Rights Agent and shall surrender the Right Certificate or Right
Certificates to be transferred, split-up, combined or exchanged at the principal
office of the Rights Agent; provided, however, that neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any Right Certificate surrendered for transfer until the registered
holder shall have completed and signed the certification contained in the form
of assignment on the reverse side of such Right Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company or
the Rights Agent shall reasonably request. Thereupon the Rights Agent shall,
subject to Sections 7(e) and 15, countersign and deliver to the Person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split-up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a valid Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and, at
the Company's request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancelation of the Right Certificate if mutilated, the Company shall make a
new Right Certificate of like tenor and deliver such new Right Certificate to
the Rights Agent for delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
(c) Notwithstanding any other provision hereof, the Company and the
Rights Agent may amend this Rights Agreement to provide for
uncertificated Rights in addition to or in place of Rights evidenced by Right
Certificates.
SECTION 7. Exercise of Rights; Expiration Date of Rights. (a) Subject
to Section 7(e) and except as otherwise provided herein (including Section
11), each Right shall entitle the registered holder thereof, upon exercise
thereof as provided herein, to purchase for the Purchase Price, at any time
after the Distribution Date and at or prior to the earliest of (i) the Close
of Business on the 10th anniversary of the date of this Rights Agreement (the
Close of Business on such date being the "Expiration Date")
<PAGE>
15
or (ii) the Redemption Date, one one-thousandth (1/1000) of a Preferred Share,
subject to adjustment from time to time as provided in Sections 11 and 12.
(b) The registered holder of any Right Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein) in whole or
in part at any time after the Distribution Date, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal office of the Rights
Agent in New York, New York, together with payment of the Purchase Price for
each one one-thousandth (1/1000) of a Preferred Share as to which the Rights are
exercised, at or prior to the earlier of (i) the Expiration Date or (ii) the
Redemption Date.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the Preferred Shares to be
purchased together with an amount equal to any applicable transfer tax, in
lawful money of the United States of America, in cash or by certified check or
money order payable to the order of the Company, the Rights Agent shall
thereupon (i) either (A) promptly requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is the transfer agent)
certificates for the number of Preferred Shares to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests or (B) if the Company shall have elected to deposit the Preferred
Shares with a depositary agent under a depositary arrangement, promptly
requisition from the depositary agent depositary receipts representing the
number of one one-thousandths (1/1000s) of a Preferred Share to be purchased (in
which case certificates for the Preferred Shares to be represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and
the Company shall direct the depositary agent to comply with all such requests,
(ii) when appropriate, promptly requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section
15, (iii) promptly after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt promptly deliver such cash
to or upon the order of the registered holder of such Right Certificate.
<PAGE>
16
(d) In case the registered holder of any Right Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 15.
(e) Notwithstanding anything in this Rights Agreement to the contrary,
any Rights that are at any time beneficially owned by (i) an Acquiring Person or
an Affiliate or Associate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Rights Agreement or otherwise. The Company shall use all reasonable efforts
to ensure that the provisions of this Section 7(e) are complied with, but shall
have no liability to any holder of any Right Certificate or any other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliate or Associate, or any transferee thereof, hereunder.
(f) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake
any action with respect to a registered holder of any Right
Certificates upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or
<PAGE>
17
Affiliates or Associates thereof as the Company shall reasonably request.
(g) The Company may temporarily suspend, for a period of time not to
exceed 90 calendar days after the Distribution Date, the exercisability of the
Rights in order to prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights and permit such registration statement
to become effective; provided, however, that no such suspension shall remain
effective after, and the Rights shall without any further action by the Company
or any other Person become exercisable immediately upon, the effectiveness of
such registration statement. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended and shall issue a further public announcement at such time
as the suspension is no longer in effect. Notwithstanding any provision herein
to the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification under the blue sky or securities laws of such
jurisdiction shall not have been obtained or the exercise of the Rights shall
not be permitted under applicable law.
SECTION 8. Cancelation and Destruction of Right Certificates. All Right
Certificates surrendered or presented for the purpose of exercise, transfer,
split-up, combination or exchange shall, and any Right Certificate
representing Rights that have become null and void and nontransferable pursuant
to Section 7(e) surrendered or presented for any purpose shall, if surrendered
or presented to the Company or to any of its agents, be delivered to the Rights
Agent for cancelation or in canceled form, or, if surrendered or presented to
the Rights Agent, shall be canceled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by this Rights Agreement.
The Company shall deliver to the Rights Agent for cancelation and retirement,
and the Rights Agent shall so cancel and retire, any Right Certificate purchased
or acquired by the Company. The Rights Agent shall deliver all canceled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
SECTION 9. Reservation and Availability of Preferred Shares. (a) The
Company covenants and agrees that it shall cause to be reserved and kept
available out of its authorized and unissued Preferred Shares or any
<PAGE>
18
authorized and issued Preferred Shares held in its treasury, free from
preemptive rights or any right of first refusal, a number of Preferred Shares
sufficient to permit the exercise in full of all outstanding Rights.
(b) In the event that there shall not be sufficient Preferred Shares
issued but not outstanding or authorized but unissued to permit the
exercise or exchange of Rights in accordance with Section 11, the Company
covenants and agrees that it shall take all such action as may be necessary to
authorize additional Preferred Shares for issuance upon the exercise or exchange
of Rights pursuant to Section 11; provided, however, that if the Company is
unable to cause the authorization of additional Preferred Shares, then the
Company shall, or (if action by the Company's stockholders is necessary to cause
such authorization) in lieu of seeking any such authorization, the Company may,
to the extent necessary and permitted by applicable law and any agreements or
instruments in effect prior to the Distribution Date to which it is a party, (i)
upon surrender of a Right, pay cash equal to the Purchase Price in lieu of
issuing Preferred Shares and requiring payment therefor, (ii) upon due exercise
of a Right and payment of the Purchase Price for each Preferred Share as to
which such Right is exercised, issue equity securities having a value equal to
the value of the Preferred Shares that otherwise would have been issuable
pursuant to Section 11, which value shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors of the
Company, or (iii) upon due exercise of a Right and payment of the Purchase Price
for each Preferred Share as to which such Right is exercised, distribute a
combination of Preferred Shares, cash and/or other equity and/or debt securities
having an aggregate value equal to the value of the Preferred Shares that
otherwise would have been issuable pursuant to Section 11, which value shall be
determined by a nationally recognized investment banking firm selected by the
Board of Directors of the Company. To the extent that any legal or contractual
restrictions (pursuant to agreements or instruments in effect prior to the
Distribution Date to which it is party) prevent the Company from paying the full
amount payable in accordance with the foregoing sentence, the Company shall pay
to holders of the Rights as to which such payments are being made all amounts
that are not then restricted on a pro rata basis as such payments become
permissible under such legal or contractual restrictions until such payments
have been paid in full.
<PAGE>
19
(c) The Company covenants and agrees that it shall take all such
action as may be necessary to ensure that all Preferred Shares delivered upon
exercise or exchange of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) So long as the Preferred Shares issuable upon the exercise or
exchange of Rights are to be listed on any national securities exchange, the
Company covenants and agrees to use its best efforts to cause, from and after
such time as the Rights become exercisable or exchangeable, all Preferred Shares
reserved for such issuance to be listed on such securities exchange upon
official notice of issuance upon such exercise or exchange.
(e) The Company further covenants and agrees that it shall pay when due
and payable any and all Federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of Right
Certificates or of any Preferred Shares or Common Shares or other securities
upon the exercise or exchange of the Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any transfer
or delivery of Right Certificates to a Person other than, or in respect of the
issuance or delivery of certificates for the Preferred Shares or Common Shares
or other securities, as the case may be, in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or exchange or to issue or deliver any certificates for Preferred
Shares or Common Shares or other securities, as the case may be, upon the
exercise or exchange of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
SECTION 10. Preferred Shares Record Date. Each Person in whose name
any certificate for Preferred Shares or Common Shares or other securities is
issued upon the exercise or exchange of Rights shall for all purposes be deemed
to have become the holder of record of the Preferred Shares or Common Shares or
other securities, as the case may be, represented thereby on, and such
certificate shall be dated, the date on which the Right Certificate evidencing
such Rights was duly surrendered and payment of any Purchase Price (and any
applicable transfer taxes) was made; provided, however, that, if the date of
such surrender and
<PAGE>
20
payment is a date upon which the transfer books of the Company for the Preferred
Shares or Common Shares or other securities, as the case may be, are closed,
such Person shall be deemed to have become the record holder of such Preferred
Shares or Common Shares or other securities, as the case may be, on, and such
certificate shall be dated, the next succeeding Business Day on which the
transfer books of the Company for the Preferred Shares or Common Shares or other
securities, as the case may be, are open.
SECTION 11. Adjustments in Rights After There Is an Acquiring Person;
Exchange of Rights for Shares; Business Combinations. (a) Upon a Person
becoming an Acquiring Person, each holder of a Right, except as provided in
Section 7(e), shall thereafter have a right to receive, upon exercise thereof
for the Purchase Price in accordance with the terms of this Rights Agreement,
such number of one one- thousandths (1/1000s) of a Preferred Share as shall
equal the result obtained by multiplying the Purchase Price by a fraction, the
numerator of which is the number of one one- thousandths (1/1000s) of a
Preferred Share for which such Right is then exercisable and the denominator of
which is 50% of the Market Value of the Common Shares on the date on which such
Person became an Acquiring Person. As soon as practicable after a Person becomes
an Acquiring Person (provided the Company shall not have elected to make the
exchange permitted by Section 11(b)(i) for all outstanding Rights), the Company
covenants and agrees to use its best efforts to:
(i) prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Preferred
Shares purchasable upon exercise of the Rights;
(ii) cause such registration statement to become effective as
soon as practicable after such filing;
(iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date; and
(iv) qualify or register the Preferred Shares purchasable upon
exercise of the Rights under the blue sky or securities laws of such
jurisdictions as may be necessary or appropriate.
(b)(i) The Board of Directors of the Company may, at its option, at any
time after a Person becomes an
<PAGE>
21
Acquiring Person, mandatorily exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that shall have become null
and void and nontransferable pursuant to the provisions of Section 7(e)) for
consideration per Right consisting of either (A) one-half of the securities that
would be issuable at such time upon the exercise of one Right in accordance with
Section 11(a) or, if applicable, Section 9(b)(ii) or 9(b)(iii) or (B) if
applicable, the cash consideration specified in Section 9(b)(i) (the
consideration issuable per Right pursuant to this Section 11(b)(i) being the
"Exchange Consideration"). The Board of Directors of the Company may, at its
option, issue, in substitution for Preferred Shares, Common Shares in an amount
per Preferred Share equal to the Formula Number (as defined in the Certificate
of Designation) if there are sufficient Common Shares issued but not outstanding
or authorized but unissued. If the Board of Directors of the Company elects to
exchange all the Rights for Exchange Consideration pursuant to this Section
11(b)(i) prior to the physical distribution of the Rights Certificates, the
Corporation may distribute the Exchange Consideration in lieu of distributing
Right Certificates, in which case for purposes of this Rights Agreement holders
of Rights shall be deemed to have simultaneously received and surrendered for
exchange Right Certificates on the date of such distribution. Notwithstanding
the foregoing, the Board of Directors of the Company shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any Person holding Common Shares for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of more than 50% of the Common Shares then
outstanding.
(ii) Any action of the Board of Directors of the Company ordering
the exchange of any Rights pursuant to Section 11(b)(i) shall be
irrevocable and, immediately upon the taking of such action and without any
further action and without any notice, the right to exercise any such Right so
exchanged pursuant to Section 11(a) shall terminate and the only right
thereafter of a holder of such Right shall be to receive the Exchange
Consideration in exchange for each such Right held by such holder or, if the
Exchange Consideration shall not have been paid or issued, to exercise any such
Right pursuant to Section 11(c)(i). The Company shall promptly give public
notice of any such exchange; provided, however, that the failure to give, or any
defect in, such
<PAGE>
22
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all holders of the Rights to be
exchanged at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange shall state the method by which the exchange of the Rights for the
Exchange Consideration will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which shall have become null and void and nontransferable pursuant to the
provisions of Section 7(e)) held by each holder of Rights.
(c)(i) In the event that, directly or indirectly, any
transactions specified in the following clause (A), (B) or (C) of this Section
11(c)(i) (each such transaction being a "Business Combination") shall be
consummated:
(A) the Company shall consolidate with, or merge with and
into, any Acquiring Person or any Affiliate or Associate of an
Acquiring Person;
(B) any Acquiring Person or any Affiliate or Associate of an
Acquiring Person shall merge with and into the Company and, in
connection with such merger, all or part of the Common Shares shall be
changed into or exchanged for capital stock or other securities of the
Company or of any Acquiring Person or Affiliate or Associate of an
Acquiring Person or cash or any other property; or
(C) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its Subsidiaries shall sell,
lease, exchange or otherwise transfer or dispose of), in one or more
transactions, the Major Part of the assets of the Company and its
Subsidiaries (taken as a whole) to any Acquiring Person or any
Affiliate or Associate of an Acquiring Person,
then, in each such case, proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, the
<PAGE>
23
securities specified below (or, at such holder's option, the securities
specified in Section 11(a) if the Company is the surviving corporation in such
Business Combination):
(1) if the Principal Party in such Business Combination has
Registered Common Shares outstanding, each Right shall thereafter
represent the right to receive, upon the exercise thereof for the
Purchase Price in accordance with the terms of this Rights Agreement,
such number of Registered Common Shares of such Principal Party, free
and clear of all liens, encumbrances or other adverse claims, as shall
have an aggregate Market Value as of the time of exercise thereof equal
to the result obtained by multiplying the Purchase Price by two;
(2) if the Principal Party involved in such Business
Combination does not have Registered Common Shares outstanding, each
Right shall thereafter represent the right to receive, upon the
exercise thereof for the Purchase Price in accordance with the terms of
this Rights Agreement, at the election of the holder of such Right at
the time of the exercise thereof, any of:
(x) such number of Common Shares of the Surviving
Person in such Business Combination as shall have an aggregate
Book Value immediately after giving effect to such Business
Combination equal to the result obtained by multiplying the
Purchase Price by two;
(y) such number of Common Shares of the Principal
Party in such Business Combination (if the Principal Party is
not also the Surviving Person in such Business Combination) as
shall have an aggregate Book Value immediately after giving
effect to such Business Combination equal to the result
obtained by multiplying the Purchase Price by two; or
(z) if the Principal Party in such Business
Combination is an Affiliate of one or more Persons that has
Registered Common Shares outstanding, such number of
Registered Common Shares of whichever of such Affiliates of
the Principal Party has Registered Common Shares with the
greatest aggregate Market Value on the date of consummation of
such Business Combination as shall have an aggregate Market
Value on the date of such
<PAGE>
24
Business Combination equal to the result obtained by
multiplying the Purchase Price by two.
(ii) The Company shall not consummate any Business Combination
unless each issuer of Common Shares for which Rights may be exercised, as set
forth in this Section 11(c), shall have sufficient authorized Common Shares that
have not been issued or reserved for issuance (and which shall, when issued upon
exercise thereof in accordance with this Rights Agreement, be validly issued,
fully paid and nonassessable and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof) to permit the exercise in full of the Rights in accordance with this
Section 11(c) and unless prior thereto:
(A) a registration statement under the Securities Act on an
appropriate form, with respect to the Rights and the Common Shares of
such issuer purchasable upon exercise of the Rights, shall be effective
under the Securities Act; and
(B) the Company and each such issuer shall have:
(i) executed and delivered to the Rights Agent a
supplemental agreement providing for the assumption by such
issuer of the obligations set forth in this Section 11(c)
(including the obligation of such issuer to issue Common
Shares upon the exercise of Rights in accordance with the
terms set forth in Sections 11(c)(i) and 11(c)(iii)) and
further providing that such issuer, at its own expense, shall
use its best efforts to:
(x) cause a registration statement under the
Securities Act on an appropriate form, with respect
to the Rights and the Common Shares of such issuer
purchasable upon exercise of the Rights, to remain
effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the
Expiration Date;
(y) qualify or register the Rights and the
Common Shares of such issuer purchasable upon
exercise of the Rights under the blue sky or
securities laws of such jurisdictions as may be
necessary or appropriate; and
<PAGE>
25
(z) list the Rights and the Common Shares of
such issuer purchasable upon exercise of the Rights
on each national securities exchange on which the
Common Shares were listed prior to the consummation
of the Business Combination or, if the Common Shares
were not listed on a national securities exchange
prior to the consummation of the Business
Combination, on a national securities exchange;
(2) furnished to the Rights Agent a written opinion of
independent counsel stating that such supplemental
agreement is a valid, binding and enforceable agreement of
such issuer; and
(3) filed with the Rights Agent a certificate of a
nationally recognized firm of independent accountants setting
forth the number of Common Shares of such issuer that may be
purchased upon the exercise of each Right after the
consummation of such Business Combination.
(iii) After consummation of any Business Combination and subject
to the provisions of Section 11(c)(ii), (A) each issuer of Common Shares for
which Rights may be exercised as set forth in this Section 11(c) shall be
liable for, and shall assume, by virtue of such Business Combination, all the
obligations and duties of the Company pursuant to this Rights Agreement, (B) the
term "Company" shall thereafter be deemed to refer to such issuer, (C) each such
issuer shall take such steps in connection with such consummation as may be
necessary to assure that the provisions hereof (including the provisions of
Sections 11(a) and 11(c)) shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights, and (D) the number of Common Shares of each such
issuer thereafter receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11 and 12 and the provisions of
Section 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be, on like terms to any such Common Shares.
SECTION 12. Certain Adjustments. (a) To preserve the actual or
potential economic value of the Rights, if at any time after the date of this
Rights Agreement there shall be any change in the Common Shares or
<PAGE>
26
the Preferred Shares, whether by reason of stock dividends, stock splits,
reclassifications, recapitalizations, mergers, consolidations, combinations or
exchanges of securities, split-ups, split-offs, spin-offs, liquidations, other
similar changes in capitalization, any distribution or issuance of cash, assets,
evidences of indebtedness or subscription rights, options or warrants to holders
of Common Shares or Preferred Shares, as the case may be (other than
distribution of the Rights or regular quarterly cash dividends), or otherwise,
then, in each such event the Board of Directors of the Company shall make such
appropriate adjustments in the number of Preferred Shares (or the number and
kind of other securities) issuable upon exercise of each Right, the Purchase
Price and Redemption Price in effect at such time and the number of Rights
outstanding at such time (including the number of Rights or fractional Rights
associated with each Common Share) such that following such adjustment such
event shall not have had the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such event.
(b) If, as a result of an adjustment made pursuant to Section 12(a),
the holder of any Right thereafter exercised shall become entitled to receive
any securities other than Preferred Shares, thereafter the number of such
securities so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11 and 12 and the provisions of
Sections 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be, on like terms to any such other securities.
(c) All Rights originally issued by the Company subsequent to any
adjustment made to the amount of Preferred Shares or other securities
relating to a Right shall evidence the right to purchase, for the Purchase
Price, the adjusted number and kind of securities purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(d) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Shares or number or kind of other securities issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the terms that were expressed in the
initial Right Certificates issued hereunder.
<PAGE>
27
(e) In any case in which action taken pursuant to Section 12(a)
requires that an adjustment be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the Preferred Shares and/or other securities, if any, issuable upon such
exercise over and above the Preferred Shares and/or other securities, if any,
issuable before giving effect to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional securities upon the
occurrence of the event requiring such adjustment.
SECTION 13. Certificate of Adjustment. Whenever an adjustment is made
as provided in Section 11 or 12, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate (or, prior to
the Distribution Date, of the Common Shares) in accordance with Section 25. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained.
SECTION 14. Additional Covenants. (a) Notwith standing any other
provision of this Rights Agreement, no adjustment to the number of
Preferred Shares (or fractions of a share) or other securities for which a Right
is exer cisable or the number of Rights outstanding or associated with each
Common Share or any similar or other adjustment shall be made or be effective if
such adjustment would have the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such adjustment, includ ing the
benefits under Sections 11 and 12, unless the terms of this Rights Agreement are
amended so as to preserve such benefits.
(b) The Company covenants and agrees that, after the
Distribution Date, except as permitted by Section 26, it shall not take (or
permit any Subsidiary of the Company to take) any action if at the time such
action is taken it is intended or reasonably foreseeable that such action will
reduce or otherwise limit the benefits the holders of the Rights would have had
absent such action, including the benefits under Sections 11 and 12. Any action
taken by the Company during any period after any Person becomes an Acquiring
Person but prior to the Distribution Date shall be
<PAGE>
28
null and void unless such action could be taken under this Section 14(b) from
and after the Distribution Date. The Company shall not consummate any Business
Combination if any issuer of Common Shares for which Rights may be exercised
after such Business Combination in accordance with Section 11(c) shall have
taken any action that reduces or otherwise limits the benefits the holders of
the Rights would have had absent such action, including the benefits under
Sections 11 and 12.
SECTION 15. Fractional Rights and Fractional Shares. (a) The Company
may, but shall not be required to, issue fractions of Rights or
distribute Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, the Company may pay to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 15(a), the current market
value of a whole Right shall be the closing price of the Rights (as determined
pursuant to the second and third sentences of the definition of Market Value
contained in Section 1) for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable.
(b) The Company may, but shall not be required to, issue fractions
of Preferred Shares upon exercise of the Rights or distribute
certificates that evidence fractional Preferred Shares. In lieu of fractional
Preferred Shares, the Company may elect to (i) utilize a depository arrangement
as provided by the terms of the Preferred Shares or (ii) in the case of a
fraction of a Preferred Share (other than one one-thousandths (1/1000s) of a
Preferred Share or any integral multiple thereof), pay to the registered holders
of Right Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of one
Preferred Share, if any are outstanding and publicly traded (or the same
fraction of the current market value of one Common Share times the Formula
Number if the Preferred Shares are not outstanding and publicly traded). For
purposes of this Section 15(b), the current market value of a Preferred Share
(or Common Share) shall be the closing price of a Preferred Share (or Common
Share) (as determined pursuant to the second and third sentences of the
definition of Market Value contained in Section 1) for the Trading Day
immediately prior to the date of such exercise. If, as a result of an adjustment
made pursuant to Section 12(a), the holder of any Right thereafter exercised
shall become
<PAGE>
29
entitled to receive any securities other than Preferred Shares, the provisions
of this Section 15(b) shall apply, as nearly as reasonably may be, on like terms
to such other securities.
(c) The Company may, but shall not be required to, issue fractions
of Common Shares upon exchange of Rights pursuant to Section 11(b), or to
distribute certificates that evidence fractional Common Shares. In lieu of
such fractional Common Shares, the Company may pay to the registered holders of
the Right Certificates with regard to which such fractional Common Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current Market Value of one Common Share as of the date on which a Person became
an Acquiring Person.
(d) The holder of Rights by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right except as provided in this Section 15.
SECTION 16. Rights of Action. (a) All rights of action in respect
of this Rights Agreement are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Shares) may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Right Certificate
in the manner provided in such Right Certificate and in this Rights 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 Rights Agreement and shall
be entitled to specific performance of the obligations of any Person under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Rights Agreement.
(b) Any holder of Rights who prevails in an action to enforce the
provisions of this Rights Agreement shall be entitled to recover the
reasonable costs and expenses, including attorneys' fees, incurred in such
action.
<PAGE>
30
SECTION 17. Transfer and Ownership of Rights and Right
Certificates. (a) Prior to the Distribution Date, the Rights shall be
transferable only in connection with the transfer of the Common Shares and the
Right associated with each Common Share shall be automatically transferred upon
the transfer of each Common Share.
(b) After the Distribution Date, the Right Certificates shall be
transferable, subject to Section 7(e), only on the registry books of the
Rights Agent if surren dered at the principal office of the Rights Agent, duly
endorsed or accompanied by a proper instrument of transfer.
(c) The Company and the Rights Agent may deem and treat the Person in
whose name a Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any nota tions of
ownership or writing on the Right Certificates or the associated certificate for
Common Shares made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
SECTION 18. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote or
receive dividends or be deemed, for any purpose, the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Right Certifi cate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a stockholder of
the Company, including 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, or to receive dividends or other
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certifi cate shall have been exercised in accordance
with the provisions hereof.
SECTION 19. Concerning the Rights Agent. (a) The Company agrees to
pay to the Rights Agent reason able compensation for all services rendered
by it hereunder and from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Rights Agreement and the exercise and
performance of its duties
<PAGE>
31
hereunder, including any taxes or governmental charges imposed as a result of
the action taken by it hereunder (other than any taxes on the fees payable to
it).
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administra tion of this Rights Agreement in reliance upon any Right
Certificate or certificate for the Common Shares or 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 acknowl edged, by
the proper Person or Persons.
SECTION 20. Merger or Consolidation or Change of Rights Agent. (a) Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the stock
transfer or corporate trust business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Rights Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 22. In
case, at the time such successor Rights Agent shall succeed to the agency
created by this Rights Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, any succes sor Rights Agent may
countersign such Right 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
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been
countersigned but not deliv ered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so counter
signed; and, in case at that time any of the Right Certifi cates shall not have
been countersigned, the Rights Agent
<PAGE>
32
may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Rights Agreement.
SECTION 21. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Rights Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certifi cates (or, prior to the Distribution Date, of the Common Shares),
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete author ization and protection to the Rights Agent as to any action
taken, suffered or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including the identity of any Acquiring Person) be proved or
established by the Company prior to taking, refraining from taking or suffering
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 any one of the Chairman of the
Board, any Vice Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer, a Vice
President (whether preceded by any additional title), the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Rights Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or wilful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights Agreement or in the
Right Certifi cates (except as to its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
<PAGE>
33
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right Certifi
cate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 12 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
evidenced by Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Preferred Shares or Common Shares
to be issued pursuant to this Rights Agreement or any Right Certificate or as to
whether any Preferred Shares or Common Shares will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it shall 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 per forming
by the Rights Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the perfor mance of its duties hereunder from
any one of the Chairman of the Board, any Vice Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, a Vice
President (whether preceded by any additional title), the Secretary or the
Treasurer of the Company, in connection with its duties and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, direc tor, officer or
employee of the Rights Agent may buy, sell or deal in any of the 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
the Rights Agent under this
<PAGE>
34
Rights Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct provided reasonable care was exercised in
the selection and continued employment thereof.
(j) The Company agrees to indemnify and to hold the Rights Agent
harmless against any loss, liability, damage or expense (including
reasonable fees and expenses of legal counsel) which the Rights Agent may incur
resulting from its actions as Rights Agent pursuant to this Rights Agreement;
provided, however, that the Rights Agent shall not be indemnified or held
harmless with respect to any such loss, liability, damage or expense incurred by
the Rights Agent as a result of, or arising out of, its own negligence, bad
faith or wilful misconduct. In no case shall the Company be liable with respect
to any action, proceeding, suit or claim against the Rights Agent unless the
Rights Agent shall have notified the Company, by letter or by facsimile
confirmed by letter, of the assertion of any action, proceeding, suit or claim
against the Rights Agent, promptly after the Rights Agent shall have notice of
any such assertion of an action, proceeding, suit or claim or have been served
with the summons or other first legal process giving information as to the
nature and basis of the action, proceeding, suit or claim. The Company shall be
entitled to participate at its own expense in the defense of any such action,
proceeding, suit or claim, and, if the Company so elects, the Company shall
assume the defense of any such action, proceeding, suit or claim. In the event
that the Company assumes such defense, the Company shall not thereafter be
liable for the fees and expenses of any additional counsel retained by the
Rights Agent, so long as the Company shall retain counsel satisfactory to the
Rights Agent, in the exercise of its reasonable judgment, to defend such action,
proceeding, suit or claim. The Rights Agent agrees not to settle any litigation
in connection with any action, proceeding, suit or claim with respect to which
it may seek indemnification from the Company without the prior written consent
of the Company.
<PAGE>
35
SECTION 22. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares and the Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates (or, prior to
the Distribution Date, of the Common Shares) by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon 30 days' notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares and the Preferred Shares
by registered or certified mail, and to the holders of the Right Certificates
(or, prior to the Distribution Date, of the Common Shares) by first-class mail.
If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapaci tated Rights Agent
or by the holder of a Right Certificate (or, prior to the Distribution Date, of
the Common Shares) (who shall, with such notice, submit his Right Certificate
or, prior to the Distribution Date, the certificate representing his Common
Shares, for inspection by the Company), then the registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares) 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 (A) be a corporation organized and doing business under the laws of
the United States or of the State of New York (or of any other state of the
United States so long as such corporation is authorized to conduct a stock
transfer or corporate trust business in the State of New York), in good
standing, having a principal office in the State of New York, which is
authorized under such laws to exercise stock transfer or corporate trust powers
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 or (B) be an affiliate of a corporation
described in clause (A) of this sentence; provided that the principal transfer
agent for the Common Shares shall in any event be qualified to be the Rights
Agent. After appointment, the successor Rights Agent shall 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
<PAGE>
36
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 shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares and the
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates (or, prior to the Distribution Date, of the Common
Shares). Failure to give any notice provided for in this Section 22, 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.
SECTION 23. Issuance of Additional Rights and Right
Certificates. Notwithstanding any of the provisions of this Rights Agreement or
of the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change made in accordance with the
provisions of this Rights Agreement. In addition, in connection with the
issuance or sale of Common Shares following the Distribution Date and prior to
the earlier of the Redemption Date and the Expiration Date, the Company (a)
shall, with respect to Common Shares so issued or sold pursuant to the exercise
of stock options or under any employee plan or arrangement, or upon the exer
cise, conversion or exchange of securities, notes or deben tures issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Right Certificates representing the
appropriate number of Rights in connection with such issu ance or sale;
provided, however, that (i) no such Right 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 conse quences to the
Company or the Person to whom such Right Certificate would be issued, (ii) no
such Right Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof and
(iii) no such Right Certificate shall be issued to an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
SECTION 24. Redemption and Termination. (a) The Board of Directors of
the Company may, at its option, at any time prior to the earlier of (i) such
time as a Person becomes an Acquiring Person and (ii) the Expiration Date,
<PAGE>
37
order the redemption of all, but not fewer than all, the then outstanding Rights
at the Redemption Price (the date of such redemption being the "Redemption
Date"), and the Company, at its option, may pay the Redemption Price either in
cash or Common Shares or other securities of the Company deemed by the Board of
Directors of the Company, 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 ordering the redemption of the Rights, and without any further
action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 Business Days after the action of the Board of
Directors of the Company ordering the redemption of the Rights, the Company
shall give notice of such redemption to the holders of the then outstanding
Rights by mailing such notice to all such holders at their last addresses as
they appear upon the registry books of the Rights Agent or, prior to the Distri
bution Date, on the registry books of the transfer agent for the Common Shares.
Each such notice of redemption shall state the method by which payment of the
Redemption Price will be made. The notice, if mailed in the manner herein
provided, shall be conclusively presumed to have been duly given, whether or not
the holder of Rights receives such notice. In any case, failure to give such
notice by mail, or any defect in the notice, to any particular holder of Rights
shall not affect the sufficiency of the notice to other holders of Rights.
SECTION 25. Notices. Notices or demands author ized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of a Right
Certificate (or, prior to the Distribution Date, of the Common Shares) to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until
<PAGE>
38
another address is filed in writing with the Rights Agent) as follows:
Newport News Shipbuilding Inc.
4101 Washington Avenue
Newport News, Virgina 23607
Attention: Corporate Secretary
Subject to the provisions of Section 22, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of a Right
Certificate (or, prior to the Distribution Date, of the Common Shares) to or on
the Rights Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Company) as follows:
First Chicago Trust Company of New York
525 Washington Blvd.
Jersey City, New Jersey 07310
Attention: Tenders & Exchanges Administration
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to any holder of a Right Certificate (or, prior
to the Distribution Date, of the Common Shares) shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the Rights Agent
or, prior to the Distri bution Date, on the registry books of the transfer agent
for the Common Shares.
SECTION 26. Supplements and Amendments. At any time prior to the time
any person becomes an Acquiring Person, and subject to the last sentence
of this Section 26, the Company may, and the Rights Agent shall if the Company
so directs, supplement or amend any provision of this Rights Agreement
(including the date on which the Expiration Date or the Distribution Date shall
occur, the amount of the Purchase Price, the definition of "Acquiring Person" or
the time during which the Rights may be redeemed pursuant to Section 24) without
the approval of any holder of the Rights. From and after the time any Person
becomes an Acquiring Person, and subject to applicable law, the Company may, and
the Rights Agent shall if the Company so directs, amend this Rights Agreement
without the approval of any holders of Right Certificates (a) to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision of this Rights Agreement
or (b) to make any other
<PAGE>
39
provisions in regard to matters or questions arising hereunder which the Company
may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Right Certificates (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person). Any supplement or
amendment adopted during any period after any Person has become an Acquiring
Person but prior to the Distribution Date shall be null and void unless such
supplement or amendment could have been adopted under the prior sentence from
and after the Distribution Date. Any supplement or amendment to this Rights
Agreement duly approved by the Company that does not amend Sections 19, 20, 21
or 22 in a manner adverse to the Rights Agent shall become effective immediately
upon execution by the Company, whether or not also executed by the Rights Agent.
In addition, notwithstanding anything to the contrary contained in this Rights
Agreement, no supplement or amendment to this Rights Agreement shall be made
which reduces the Redemption Price (except as required by Section 12(a)).
SECTION 27. Successors. All the covenants and provisions of this
Rights 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.
SECTION 28. Benefits of Rights Agreement; Determinations and Actions
by the Board of Directors, etc. (a) Nothing in this Rights Agreement shall
be construed to give to any Person other than the Company, the Rights Agent
and the registered holders of the Right Certificates (and, prior to the
Distribution Date, of the Common Shares) any legal or equitable right, remedy or
claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, of the
Common Shares).
(b) Except as explicitly otherwise provided in this Rights
Agreement, the Board of Directors of the Company shall have the exclusive power
and authority to administer this Rights Agreement and to exercise all rights and
powers specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this
Rights Agreement, including the right and power to (i) interpret the provisions
of this Rights Agreement and (ii) make all determinations deemed necessary or
advisable for the administration of this Rights Agreement (including a
determination to redeem or not redeem the Rights or to amend
<PAGE>
40
this Rights Agreement and a determination of whether there is an Acquiring
Person).
(c) Nothing contained in this Rights Agreement shall be deemed to be in
derogation of the obligation of the Board of Directors of the Company to
exercise its fiduciary duty. Without limiting the foregoing, nothing
contained herein shall be construed to suggest or imply that the Board of
Directors shall not be entitled to reject any tender offer or other acquisition
proposal, or to recommend that holders of Common Shares reject any tender offer,
or to take any other action (including the commencement, prosecution, defense or
settlement of any litigation and the submission of additional or alternative
offers or other proposals) with respect to any tender offer or other acquisition
proposal that the Board of Directors believes is necessary or appropriate in the
exercise of such fiduciary duty.
SECTION 29. Severability. If any term, provi sion, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
SECTION 30. Governing Law. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
law of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the law of such State applicable to con tracts to
be made and performed entirely within such State.
SECTION 31. Counterparts; Effectiveness. This Rights 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. This Rights Agreement shall
be effective as of the Close of Business on the date hereof.
<PAGE>
41
SECTION 32. Descriptive Headings. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions of
this Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement
to be duly executed as of the day and year first above written.
NEWPORT NEWS SHIPBUILDING INC.,
by
------------------------------
Name:
Title:
FIRST CHICAGO TRUST COMPANY OF
NEW YORK,
by
------------------------------
Name:
Title:
<PAGE>
1
EXHIBIT A
CERTIFICATE OF THE VOTING POWERS,
DESIGNATIONS, PREFERENCES AND RELATIVE
PARTICIPATING, OPTIONAL AND OTHER SPECIAL
RIGHTS AND QUALIFICATIONS, LIMITATIONS
OR RESTRICTIONS OF SERIES A
PARTICIPATING CUMULATIVE
PREFERRED STOCK OF
NEWPORT NEWS SHIPBUILDING INC.
Pursuant to Section 151 of the General Corporation Law of the
State of Delaware, Newport News Shipbuilding Inc. (the "Company"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DOES HEREBY
CERTIFY:
That, pursuant to the authority conferred upon the Board of
Directors of the Company by Article FOURTH of the Restated Certificate of
Incorporation of the Company (the "Charter"), the Board of Directors of the
Company on June 4, 1998, adopted the following resolution designating a new
series of preferred stock as Series A Participating Cumulative Preferred Stock:
RESOLVED, that, pursuant to the authority vested in the Board
of Directors of the Company in accordance with the provisions of the
Restated Certificate of Incorporation, as amended, of the Company and
the provisions of Section 151(g) of the General Corporation Law of the
State of Delaware, a series of preferred stock of the Company is hereby
authorized, and the designation and number of shares thereof, and the
voting powers, preferences and relative, participating, optional and
other special rights, and the qualifications, limitations or
restrictions thereof, shall be as follows:
SECTION 1. Designation and Number of Shares. The shares of
such series shall be designated as "Series A Participating Cumulative Preferred
Stock" (the "Series A Preferred Stock"). The number of shares initially
constituting the Series A Preferred Stock shall be 400,000; provided, however,
that, if more than a total of 400,000 shares of Series A Preferred Stock shall
be issuable upon the exercise of Rights (the "Rights") issued pursuant to the
Rights Agreement dated as of the Close of Business on June 10, 1998, between the
Company and First Chicago Trust Company of New York, a New York trust company,
as Rights Agent (the "Rights Agreement"), the Board of Directors of the Company,
pursuant to Section 151(g) of the General Corporation Law of
<PAGE>
2
the State of Delaware, shall direct by resolution or resolutions that a
certificate be properly executed, acknowledged, filed and recorded, in
accordance with the provisions of Section 103 thereof, providing for the total
number of shares of Series A Preferred Stock authorized to be issued to be
increased (to the extent that the Charter then permits) to the largest number of
whole shares (rounded up to the nearest whole number) issuable upon exercise of
such Rights.
SECTION 2. Dividends or Distributions. (a) Subject to the
superior rights of the holders of shares of any other series of Preferred Stock
or other class of capital stock of the Company ranking superior to the shares of
Series A Preferred Stock with respect to dividends, the holders of shares of the
Series A Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors, out of the assets of the Company legally available
therefor, (1) quarterly dividends payable in cash on the last day of each fiscal
quarter in each year, or such other dates as the Board of Directors of the
Company shall approve (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or a fraction of a share of Series A
Preferred Stock, in the amount of $0.05 per whole share (rounded to the nearest
cent) less the amount of all cash dividends declared on the Series A Preferred
Stock pursuant to the following clause (2) since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock (the total of which shall not, in any event, be less
than zero) and (2) dividends payable in cash on the payment date for each cash
dividend declared on the Common Stock in an amount per whole share (rounded to
the nearest cent) equal to the Formula Number (as hereinafter defined) then in
effect times the cash dividends then to be paid on each share of Common Stock.
In addition, if the Company shall pay any dividend or make any distribution on
the Common Stock payable in assets, securities or other forms of noncash
consideration (other than dividends or distributions solely in shares of Common
Stock), then, in each such case, the Company shall simultaneously pay or make on
each outstanding whole share of Series A Preferred Stock a dividend or
distribution in like kind equal to the Formula Number then in effect times such
dividend or distribution on each share of the Common Stock. As used herein, the
"Formula Number" shall be 1,000; provided, however, that, if at any time after
the Close of Business on June 10, 1998, the Company shall (i) declare or pay any
dividend on the Common Stock payable in shares of
<PAGE>
3
Common Stock or make any distribution on the Common Stock in shares of Common
Stock, (ii) subdivide (by a stock split or otherwise) the outstanding shares of
Common Stock into a larger number of shares of Common Stock or (iii) combine (by
a reverse stock split or otherwise) the outstanding shares of Common Stock into
a smaller number of shares of Common Stock, then in each such event the Formula
Number shall be adjusted to a number determined by multiplying the Formula
Number in effect immediately prior to such event by a fraction, the numerator of
which is the number of shares of Common Stock that are outstanding immediately
after such event and the denominator of which is the number of shares of Common
Stock that are outstanding immediately prior to such event (and rounding the
result to the nearest whole number); and provided further that, if at any time
after June 10, 1998, the Company shall issue any shares of its capital stock in
a merger, reclassification, or change of the outstanding shares of Common Stock,
then in each such event the Formula Number shall be appropriately adjusted to
reflect such merger, reclassification or change so that each share of Preferred
Stock continues to be the economic equivalent of a Formula Number of shares of
Common Stock prior to such merger, reclassification or change.
(b) The Company shall declare a dividend or distribution on
the Series A Preferred Stock as provided in Section 2(a) immediately prior to or
at the same time it declares a dividend or distribution on the Common Stock
(other than a dividend or distribution solely in shares of Common Stock);
provided, however, that, in the event no dividend or distribution (other than a
dividend or distribution in shares of Common Stock) shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment Date
and the next subsequent Quarterly Dividend Payment Date, a dividend of $0.05 per
share on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a dividend or distribution declared thereon, which
record date shall be the same as the record date for any corresponding dividend
or distribution on the Common Stock.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from and after the Quarterly
Dividend Payment Date next pre ceding the date of original issue of such shares
of Series A Preferred Stock; provided, however, that dividends on such shares
which are originally issued after the record date for the determination of
holders of shares of Series A Preferred
<PAGE>
4
Stock entitled to receive a quarterly dividend and on or prior to the next
succeeding Quarterly Dividend Payment Date shall begin to accrue and be
cumulative from and after such Quarterly Dividend Payment Date. Notwithstanding
the foregoing, dividends on shares of Series A Preferred Stock which are
originally issued prior to the record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive a quarterly dividend on
the first Quarterly Dividend Payment Date shall be calculated as if cumulative
from and after the last day of the fiscal quarter next preceding the date of
original issuance of such shares. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.
(d) So long as any shares of the Series A Preferred Stock are
outstanding, no dividends or other distributions shall be declared, paid or
distributed, or set aside for payment or distribution, on the Common Stock
unless, in each case, the dividend required by this Section 2 to be declared on
the Series A Preferred Stock shall have been declared.
(e) The holders of the shares of Series A Preferred Stock
shall not be entitled to receive any dividends or other distributions except as
provided herein.
SECTION 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(a) Each holder of Series A Preferred Stock shall be entitled
to a number of votes equal to the Formula Number then in effect, for each share
of Series A Preferred Stock held of record on each matter on which holders of
the Common Stock or stockholders generally are entitled to vote, multiplied by
the maximum number of votes per share which any holder of the Common Stock or
stockholders generally then have with respect to such matter (assuming any
holding period or other requirement to vote a greater number of shares is
satisfied).
(b) Except as otherwise provided herein or by applicable law,
the holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class for the election of directors of
the Company and on all other matters submitted to a vote of stockholders of the
Company.
<PAGE>
5
(c) If, at the time of any annual meeting of stockholders for
the election of directors, the equivalent of six quarterly dividends (whether or
not consecutive) payable on any share or shares of Series A Preferred Stock are
in default, the number of directors constituting the Board of Directors of the
Company shall be increased by two. In addition to voting together with the
holders of Common Stock for the election of other directors of the Company, the
holders of record of the Series A Preferred Stock, voting separately as a class
to the exclusion of the holders of Common Stock, shall be entitled at said
meeting of stockholders (and at each subsequent annual meeting of stockholders),
unless all dividends in arrears have been paid or declared and set apart for
payment prior thereto, to vote for the election of two directors of the Company,
the holders of any Series A Preferred Stock being entitled to cast a number of
votes per share of Series A Preferred Stock equal to the Formula Number. Until
the default in payments of all dividends which permitted the election of said
directors shall cease to exist, any director who shall have been so elected
pursuant to the next preceding sentence may be removed at any time, without
cause, only by the affirmative vote of the holders of the shares of Series A
Preferred Stock at the time entitled to cast a majority of the votes entitled to
be cast for the election of any such director at a special meeting of such
holders called for that purpose, and any vacancy thereby created may be filled
by the vote of such holders. If and when such default shall cease to exist, the
holders of the Series A Preferred Stock shall be divested of the foregoing
special voting rights, subject to revesting in the event of each and every
subsequent like default in payments of dividends. Upon the termination of the
foregoing special voting rights, the terms of office of all persons who may have
been elected directors pursuant to said special voting rights shall forthwith
terminate, and the number of directors constituting the Board of Directors shall
be reduced by two. The voting rights granted by this Section 3(c) shall be in
addition to any other voting rights granted to the holders of the Series A
Preferred Stock in this Section 3.
(d) Except as provided herein, in Section 11 or by applicable
law, holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for authorizing or taking
any corporate action.
SECTION 4. Certain Restrictions. (a) Whenever quarterly
dividends or other dividends or distributions payable on the Series A Preferred
Stock as provided in Section
<PAGE>
6
2 are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Company shall not
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock; provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Company ranking junior
(either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(b) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
<PAGE>
7
SECTION 5. Liquidation Rights. Upon the liquida tion,
dissolution or winding up of the Company, whether voluntary or involuntary, no
distribution shall be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received an amount equal to the accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (x) $1,000 per whole share
or (y) an aggregate amount per share equal to the Formula Number then in effect
times the aggregate amount to be distributed per share to holders of Common
Stock or (2) to the holders of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
SECTION 6. Consolidation, Merger, etc. In case the Company
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash or any other property, then in any such case the then
outstanding shares of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share equal to the Formula
Number then in effect times the aggregate amount of stock, securities, cash or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is exchanged or changed. In the event both this
Section 6 and Section 2 appear to apply to a transaction, this Section 6 will
control.
SECTION 7. No Redemption; No Sinking Fund. (a) The shares of
Series A Preferred Stock shall not be subject to redemption by the Company or at
the option of any holder of Series A Preferred Stock; provided, however, that,
subject to Section 4(a)(iv), the Company may purchase or otherwise acquire
outstanding shares of Series A Preferred Stock in the open market or by offer to
any holder or holders of shares of Series A Preferred Stock.
(b) The shares of Series A Preferred Stock shall not be
subject to or entitled to the operation of a retirement or sinking fund.
SECTION 8. Ranking. The Series A Preferred Stock shall rank
junior to all other series of Preferred Stock of
<PAGE>
8
the Company unless the Board of Directors shall specifically determine otherwise
in fixing the powers, preferences and relative, participating, optional and
other special rights of the shares of such series and the qualifications,
limitations and restrictions thereof.
SECTION 9. Fractional Shares. The Series A Preferred Stock
shall be issuable upon exercise of the Rights issued pursuant to the Rights
Agreement in whole shares or in any fraction of a share that is one
one-thousandth of a share or any integral multiple of such fraction which shall
entitle the holder, in proportion to such holder's fractional shares, to receive
dividends, exercise voting rights, participate in distributions and to have the
benefit of all other rights of holders of Series A Preferred Stock. In lieu of
fractional shares, the Company, prior to the first issuance of a share or a
fraction of a share of Series A Preferred Stock, may elect (a) to make a cash
payment as provided in the Rights Agreement for fractions of a share other than
one one-thousandths of a share or any integral multiple thereof or (b) to issue
depository receipts evidencing such authorized fraction of a share of Series A
Preferred Stock pursuant to an appropriate agreement between the Company and a
depository selected by the Company; provided that such agreement shall provide
that the holders of such depository receipts shall have all the rights,
privileges and preferences to which they are entitled as holders of the Series A
Preferred Stock.
SECTION 10. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancelation become authorized but unissued
shares of Preferred Stock, without designation as to series until such shares
are once more designated as part of a particular series by the Board of
Directors pursuant to the provisions of the Charter.
SECTION 11. Amendment. None of the powers, preferences and
relative, participating, optional and other special rights of the Series A
Preferred Stock as provided herein shall be amended in any manner which would
alter or change the powers, preferences, rights or privileges of the holders of
Series A Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of at least 66-2/3% of the outstanding shares of Series A
Preferred Stock, voting as a separate class; provided, however, that no such
amendment approved by the holders of at least 66-2/3% of the outstanding shares
of Series A Preferred Stock shall be deemed to apply to the powers, preferences,
rights or
<PAGE>
9
privileges of any holder of shares of Series A Preferred Stock originally issued
upon exercise of the Rights after the time of such approval without the approval
of such holder.
IN WITNESS WHEREOF, the Company has caused this Certificate to
be duly executed in its corporate name on this 4th day of June, 1998.
NEWPORT NEWS SHIPBUILDING INC.,
by
---------------------------
Name:
Title:
<PAGE>
1
EXHIBIT B
[Form of Right Certificate]
Certificate No. [R]-
___________ Rights
NOT EXERCISABLE AFTER THE CLOSE OF BUSINESS ON JUNE 10, 2008,
OR EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT
TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS ARE NULL AND VOID AND NONTRANSFERABLE.
Right Certificate
NEWPORT NEWS SHIPBUILDING INC.
This certifies that ________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement dated as of the Close of Business on June
10, 1998 as it may be amended from time to time (the "Rights Agreement"),
between Newport News Shipbuilding Inc., a Delaware corporation (the
"Company"), and First Chicago Trust Company of New York, as Rights Agent (the
"Rights Agent"), unless the Rights evidenced hereby shall have been previously
redeemed or exchanged by the Company, to purchase from the Company at any
time after the Distribution Date (as defined in the Rights Agreement) and
prior to 5:00 p.m., New York City time, on the 10th anniversary of the
Close of Business on the date of the Rights Agreement (the "Expiration Date"),
at the principal office or offices of the Rights Agent designated for such
purpose, or its successors as Rights Agent, one one-thousandth
(1/1,000th) of a fully paid, nonassessable share of Series A Participating
Cumulative Preferred Stock, $.01 par value, of the Company (the "Preferred
Shares"), at a purchase price per one one-thousandth (1/1,000th) of a share
equal to $__.00 (the "Purchase Price") payable in cash, upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed.
<PAGE>
2
The Purchase Price and the number and kind of shares which may
be purchased upon exercise of each Right evidenced by this Right Certificate, as
set forth above, are the Purchase Price and the number and kind of shares which
may be so purchased as of the Close of Business on June 10, 1998. As provided in
the Rights Agreement, the Purchase Price and the number and kind of shares which
may be purchased upon the exercise of each Right evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events.
If the Rights evidenced by this Right Certificate are at any
time beneficially owned by an Acquiring Person or an Affiliate or Associate of
an Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and nontransferable and the holder of any such
Right (including any purported transferee or subsequent holder) shall not have
any right to exercise or transfer any such Right.
This Right Certificate is subject to all 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
reference to the Rights Agreement 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 Right Certificates. Copies
of the Rights Agreement are on file at the above-mentioned office of the Rights
Agent and are also available from the Company upon written request.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal stock transfer or corporate trust
office of the Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate number and kind of shares as the Rights evidenced
by the Right Certificate or Right Certificates surrendered shall have entitled
such holder to purchase. If this Right Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate may be redeemed by the Company at its option
at a redemption price (in cash or shares of Common Stock or other securities of
the Company deemed by the Board of Directors to be at least equivalent in
<PAGE>
3
value) of $.01 per Right (which amount shall be subject to adjustment as
provided in the Rights Agreement) at any time prior to the earlier of (i) such
time as a Person becomes an Acquiring Person and (ii) the Expiration Date.
The Company may, but shall not be required to, issue fractions
of Preferred Shares or distribute certificates which evidence fractions of
Preferred Shares upon the exercise of any Right or Rights evidenced hereby. In
lieu of issuing fractional shares, the Company may elect to make a cash payment
as provided in the Rights Agreement for fractions of a share other than one
one-thousandth (1/1,000th) of a share or any integral multiple thereof or to
issue certificates or utilize a depository arrangement as provided in the terms
of the Rights Agreement and the Preferred Shares.
No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company 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, including, without limitation,
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 other distributions or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have been exercised as
provided in accordance with the provisions of the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been counter signed by an authorized signatory
of the Rights Agent.
<PAGE>
4
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of:
NEWPORT NEWS SHIPBUILDING INC.,
by
----------------------------
Name:
Title:
Attest:
- -------------------------
Name:
Title:
Date of countersignature:
Countersigned:
First Chicago Trust Company of New York,
as Rights Agent,
by
---------------------
Authorized Signatory
<PAGE>
[On Reverse Side of Right Certificate]
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if
such holder desires to exercise the Rights
represented by this Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise
_____________ Rights represented by this Right Certificate to purchase the
Preferred Shares (or other shares) issuable upon the exercise of such Rights and
requests that certificates for such shares be issued in the name of: Please
insert social security or other identifying number
___________________________________________________________________
(Please print name and address)
___________________________________________________________________
<PAGE>
6
If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to: Please insert
social security or other identifying number
_______________________________________________________________________
(Please print name and address)
-----------------------------------------------------------------------
Dated:____________ ,_____
-----------------------------
Signature
Signature Guaranteed:
<PAGE>
7
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _________________________________________
hereby sells, assigns and transfer unto ______________________________________
______________________________________________________________________________
(Please print name and address of transferee)
- ------------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ______________ Attorney, to
transfer the within Right Certificate on the books of the within-named
Corporation, with full power of substitution.
Dated: ____________, ____
------------------------------
Signature
Signature Guaranteed:
The undersigned hereby certifies that (1) the Rights evidenced
by this Right Certificate are not being sold, assigned or transferred by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement), (2) this
Rights Certificate is not being sold, assigned or transferred to or on behalf of
any such Acquiring Person, Affiliate or Associate and (3) after inquiry and to
the best knowledge of the undersigned, the undersigned did not acquire the
Rights evidenced by this Right Certificate from any Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such terms are defined
in the Rights Agreement).
------------------------------
Signature
<PAGE>
8
NOTICE
The signature on the foregoing Form of Election to Purchase or
Form of Assignment must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever.
<PAGE>
1
EXHIBIT C
RIGHTS BENEFICIALLY OWNED BY ANY ACQUIRING PERSONS OR THEIR AFFILIATES OR
ASSOCIATES AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL AND VOID AND
NONTRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
SERIES A PARTICIPATING CUMULATIVE PREFERRED STOCK
OF NEWPORT NEWS SHIPBUILDING INC.
On June 4, 1998, the Board of Directors of Newport News
Shipbuilding Inc. (the "Company") declared a dividend of one Right for each
outstanding share of Common Stock, par value $0.01 per share, of the Company
(the "Common Shares"). The Rights will be issued to the holders of record of
Common Shares outstanding at the Close of Business on June 10, 1998 (the "
Record Date") and with respect to Common Shares issued thereafter until the
Distribution Date (as defined below). Each Right, when it becomes exercisable as
described below, will entitle the registered holder to purchase from the Company
one one-thousandth (1/1,000th) of a share of Series A Participating Cumulative
Preferred Stock, par value $0.01 per share, of the Company (the "Preferred
Shares") at a price of $105.00 (the "Purchase Price"). The description and terms
of the Rights are set forth in a Rights Agreement dated as of the Close of
Business on June 10, 1998 as it may be amended from time to time (the "Rights
Agreement"), between the Company and First
<PAGE>
2
Chicago Trust Company of New York, as Rights Agent (the "Rights Agent").
Until the earlier of (i) such time as the Company learns that
a person or group (including any affiliate or associate of such person or group)
has acquired, or obtained the right to acquire, beneficial ownership of more
than 15% of the outstanding Common Shares (such person or group being called an
"Acquiring Person"), and (ii) such date, if any, as may be designated by the
Board of Directors of the Company following the commencement of, or first public
disclosure of an intention to commence, a tender or exchange offer for
outstanding Common Shares which could result in such person or group becoming
the beneficial owner of more than 15% of the outstanding Common Shares, (the
earlier of such dates being called the "Distribution Date"), the Rights will be
evidenced by certificates for Common Shares registered in the names of the
holders thereof (which certificates for Common Shares shall also be deemed to be
Right Certificates (as defined below) and not by separate Right Certificates.
With respect to any certificate for Common Shares outstanding as of the Record
Date, until the Distribution Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates along
with a copy of this Summary of
<PAGE>
3
Rights, and the surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. Therefore, until the Distribution Date, the Rights will be
transferred with and only with the Common Shares.
As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Shares as of the close of business on
the Distribution Date, and such separate Right Certificates alone will
thereafter evidence the Rights.
The Rights are not exercisable until the Distribution Date and
will expire at the Close of Business on June 10, 2008 (the "Expiration Date"),
unless earlier redeemed or exchanged by the Company as described below.
The number of Preferred Shares or other securities issuable
upon exercise of the Rights is subject to adjustment by the Board of Directors
of the Company in the event of any change in the Common Shares or Preferred
Shares, whether by reason of stock dividends, stock splits, recapitalizations,
reclassifications, mergers, consolidations, combinations or exchanges of
securities,
<PAGE>
4
split-ups, split-offs, spin-offs, liquidations, other similar changes in
capitalization, any distribution or issuance of assets, evidences of
indebtedness or subscription rights, options or warrants to holders of Common
Shares or Preferred Shares or otherwise. The Purchase Price and the number of
Preferred Shares or other securities issuable upon exercise of the Rights are
subject to adjustment from time to time in the event of the declaration of a
stock dividend on the Common Shares payable in Common Shares or a subdivision or
combination of the Common Shares prior to the Distribution Date.
The Preferred Shares are authorized to be issued in fractions
which are an integral multiple of one one-thousandth (1/1,000th) of a Preferred
Share. The Company may, but is not required to, issue fractions of shares upon
the exercise of Rights, and in lieu of fractional shares, the Company may make a
cash payment based on the market price of such shares on the first trading date
prior to the date of exercise or utilize a depositary arrangement as provided by
the terms of the Preferred Shares.
Subject to the right of the Board of Directors of the Company
to redeem or exchange the Rights as described below, at such time as there is an
Acquiring Person, the
<PAGE>
5
holder of each Right will thereafter have the right to receive, upon exercise
thereof, for the Purchase Price, that number of one one-thousandths of a
Preferred Share equal to the number of Common Shares which at the time of such
transaction would have a market value of twice the Purchase Price. Any Rights
that are or were beneficially owned by an Acquiring Person on or after the
Distribution Date will become null and void and will not be subject to the
"flip-in" provision.
In the event the Company is acquired in a merger or other
business combination by an Acquiring Person that is a publicly traded
corporation or 50% or more of the Company's assets or assets representing 50% or
more of the Company's earning power are sold, leased, exchanged or otherwise
transferred (in one or more transactions) to an Acquiring Person that is a
publicly traded corporation, proper provision must be made so that each Right
will entitle its holder to purchase, for the Purchase Price, that number of
common shares of such corporation which at the time of the transaction would
have a market value of twice the Purchase Price. In the event the Company is
acquired in a merger or other business combination by an Acquiring Person that
is not a publicly traded entity or 50% or more of the Company's assets or assets
representing 50% or more
<PAGE>
6
of the earning power of the Company are sold, leased, exchanged or otherwise
transferred (in one or more transactions) to an Acquiring Person that is not a
publicly traded entity, proper provision must be made so that each Right will
entitle its holder to purchase, for the Purchase Price, at such holder's option,
(i) that number of shares of the surviving corporation in the transaction with
such entity (or, at such holder's option, of the surviving corporation in such
acquisition, which could be the Company) which at the time of the transaction
would have a book value of twice the Purchase Price or (ii) that number of
shares of such entity which at the time of the transaction would have a book
value of twice the Purchase Price or (iii) if such entity has an affiliate which
has publicly traded common shares, that number of common shares of such
affiliate which at the time of the transaction would have a market value of
twice the Purchase Price. The "flip-over" provision only applies to a merger or
similar business combination with an Acquiring Person.
ANY RIGHTS THAT ARE OR WERE, AT ANY TIME ON OR AFTER THE DATE
AN ACQUIRING PERSON BECOMES SUCH, BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
ANY AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (OR A TRANSFEREE THEREOF) WILL
BECOME NULL AND VOID AND ANY HOLDER OF ANY
<PAGE>
7
SUCH RIGHT (INCLUDING ANY SUBSEQUENT HOLDER) WILL BE UNABLE TO EXERCISE ANY SUCH
RIGHT.
The Rights are redeemable by the Board of Directors at a
redemption price of $.01 per Right (the "Redemption Price") any time prior to
the earlier of (i) such time as there is an Acquiring Person and (ii) the
Expiration Date. Immediately upon the action of the Board electing to redeem the
Rights, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
After there is an Acquiring Person the Board of Directors may
elect to exchange each Right (other than Rights owned by an Acquiring Person)
for consideration per Right consisting of one-half of the securities that would
be issuable at such time upon the exercise of one Right pursuant to the terms of
the Rights Agreement. Notwithstanding the foregoing, the Board of Directors of
the Company shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares for or pursuant to the terms of any such plan),
<PAGE>
8
together with all Affiliates and Associates of such person, becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding.
At any time prior to such time as there shall be an Acquiring
Person, the Company may, without the approval of any holder of the Rights,
supplement or amend any provision of the Rights Agreement (including the date on
which the Expiration Date or the Distribution Date shall occur, the amount of
the Purchase Price or the definition of "Acquiring Person"), except that no
supplement or amendment shall be made that reduces the Redemption Price of the
Rights.
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.
A copy of the Rights Agreement, including the terms of the
Preferred Shares, will be filed with the Securities and Exchange Commission as
an Exhibit to a Registration Statement on Form 8-A. A copy of the Rights
Agreement is available free of charge from the Company upon written request.
This summary description of the Rights
<PAGE>
9
does not purport to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is incorporated herein by reference.
EXECUTION COPY
CERTIFICATE OF ELIMINATION
of
SERIES A PARTICIPATING JUNIOR PREFERRED STOCK
of
NEWPORT NEWS SHIPBUILDING INC.
Newport News Shipbuilding Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Company"),
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the
Company on June 4, 1998, resolutions were duly adopted setting forth the
proposed elimination of the Series A Participating Junior Preferred Stock of the
Company (of which the Certificate of Designations was filed with the Secretary
of State of the State of Delaware on December 11, 1996) (the "Series A
Participating Junior Preferred Stock") as set forth herein:
RESOLVED, that no shares of the Series A Participating Junior
Preferred Stock are issued or outstanding and none will be issued; and
it is further
RESOLVED, that a Certificate of Elimination be prepared, which
shall have the effect when filed with the Secretary of State of the
State of Delaware of eliminating from the Restated Certificate of
Incorporation of the Company all matters set forth in the Certificate
of Designations previously filed with respect to the Series A
Participating Junior Preferred Stock, and that the appropriate officers
of the Company be, and they hereby are, authorized to execute and file,
on behalf of the Company and under its corporate seal, such Certificate
of Elimination with the Secretary of State of the State of Delaware;
and it is further
SECOND: That none of the authorized shares of the
Series A Participating Junior Preferred Stock are issued or outstanding and none
will be issued.
<PAGE>
THIRD: That in accordance with the provisions of Section
151(g) of the General Corporation Law of the State of Delaware, the Restated
Certificate of Incorporation of the Company is hereby amended to eliminate all
matters set forth in the Certificate of Designations previously filed with
respect to the Series A Participating Junior Preferred Stock.
IN WITNESS WHEREOF, the Company has caused this
certificate to be signed by Stephen B. Clarkson, its Vice
President, General Counsel and Secretary, and attested by
Peter A. V. Huegel, its Assistant Secretary, on this 4th day
of June, 1998.
NEWPORT NEWS SHIPBUILDING INC.
Stephen B. Clarkson
Vice President, General
Counsel and Secretary
Attest:
By
Peter A. V. Huegel
Assistant Secretary
