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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
WATKINS-JOHNSON COMPANY
(Exact Name of Registrant as Specified in its Charter)
California 94-1402710
(State of Incorporation or Organization) (I.R.S. Employer
Identification no.)
3333 Hillview Avenue, Palo Alto, California 94304
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(Address of principal executive offices) (Zip Code)
If this Form relates to the If this Form relates to the
registration of a class of debt registration of a class of debt
securities and is effective upon securities and is to become
filing pursuant to General effective simultaneously with the
Instruction A(c)(1) please check effectiveness of a concurrent
the following box. / / registration statement under the
Securities Act of 1933 pursuant to
General Instruction A(c)(2) please
check the following box. / /
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
Rights to Purchase Common Stock New York Stock Exchange, Inc.; Pacific
Stock Exchange Incorporated
Securities to be registered pursuant to Section 12(g) of the Act:
NONE
(Title of class)
(Title of class)
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Item 1. DESCRIPTION OF SECURITIES TO BE REGISTERED
Under a Rights Agreement dated as of September 30, 1996 (the "Rights
Agreement") between Watkins-Johnson Company (the "Company") and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent"), the
Company's Board of Directors has declared a dividend of one right ("Right") for
each outstanding share of Common Stock, no par value (the "Common Shares"). The
dividend is payable on October 20, 1996 to shareholders of record as of the
close business on October 10, 1996. Each Right entitles the registered holder to
purchase from the Company one Common Share at an exercise price of $160 (the
"Purchase Price"), subject to adjustment.
The Rights Agreement replaces the Rights Agreement between the Company
and Bank of America National Trust and Savings Association, as Rights Agent,
dated as of October 9, 1986 (the "Existing Rights Agreement"), which will expire
in accordance with its terms on October 20, 1996. Similarly, the Rights under
the Rights Agreement replace the rights to purchase Common Shares under the
Existing Rights Agreement, which will also expire on October 20, 1996 in
accordance with the terms of the Existing Rights Agreement.
The following summary of the principal terms of the Rights Agreement is
a general description only and is subject to the detailed terms and conditions
of the Rights Agreement. A copy of the Rights Agreement, including the form of
Rights Certificate and the Summary of Rights attached to the Rights Agreement as
Exhibits A and B, is filed as Exhibit 1 to this Registration Statement and is
incorporated herein by reference. A copy of the Rights Agreement is available to
shareholders free of charge from the Company.
RIGHTS EVIDENCED BY COMMON SHARE CERTIFICATES
The Rights will not be exercisable until the Distribution Date (defined
below). Certificates for the Rights ("Rights Certificates") will not be sent to
shareholders and the Rights will attach to and trade only together with the
Common Shares before the Distribution Date. Accordingly, Common Share
certificates outstanding on October 20, 1966 will evidence the Rights related
thereto, and Common Share certificates issued after that date will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender or
transfer of any certificates for Common Shares, outstanding as of October 10,
1996, even without notation or a copy of the Summary of Rights being attached
thereto, will also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate.
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DISTRIBUTION DATE
The Rights will separate from the Common Shares, Rights Certificates
will be issued and the Rights will become exercisable upon the earlier of: (i)
ten days after the first date of public announcement (the "Stock Acquisition
Date") that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired, or obtained the right to acquire, beneficial ownership of
15% or more of the outstanding Common Shares in a transaction not approved by
the Continuing Board, or (ii) ten days following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of the outstanding Common Shares in a transaction not
approved by the Continuing Board. The earlier of such dates is referred to as
the "Distribution Date." The term "Continuing Board," as used in this
Registration Statement, means a majority of the members of the Company's Board
of Directors who are not affiliated or associated with an Acquiring Person (or,
if there is no Acquiring Person, not affiliated or associated with a person or
group that proposes to become an Acquiring Person) and who either served as
directors on September 30, 1996 or were subsequently nominated by a majority of
those directors and others so nominated.
ISSUANCE OF RIGHTS CERTIFICATES
As soon as practicable following the Distribution Date, separate Rights
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 Rights Certificates
alone will then evidence the Rights from and after the Distribution Date. All
Common Shares issued before the Distribution Date will be issued with Rights.
Common Shares issued after the Distribution Date will be issued with Rights if
such shares are issued (i) upon the conversion of outstanding convertible
debentures or any other convertible securities issued after adoption of the
Rights Agreement or (ii) pursuant to the exercise of stock options or under
employee benefit plans or arrangements unless such issuance would result in (or
create a risk that) such options, plans or arrangements would not qualify for
otherwise available special tax treatment. Except as otherwise determined by the
Board of Directors, no other Common Shares issued after the Distribution Date
will be issued with Rights.
EXPIRATION OF RIGHTS
The Rights will expire on the earliest of (i) October 20, 2006 (the
"Final Expiration Date"), or (ii) redemption or exchange of the Rights as
described below.
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INITIAL RIGHT TO BUY SHARES
Following the Distribution Date and until one of the further events
described below, holders of the Rights will be entitled to receive, upon
exercise and the payment of $160 per Right, one Common Share. If the Company
does not have sufficient Common Shares available for all Rights to be exercised
or the Board of Directors decides that such action is necessary and not contrary
to the interest of Rights holders, the Company may instead substitute cash,
assets or other securities for the Common Shares (for example, preferred stock)
for which the Rights would have been exercisable.
RIGHT TO BUY ADDITIONAL COMMON SHARES
Unless the Rights are earlier redeemed or expire, if a person or group
of associated or affiliated persons becomes the beneficial owner of 15% or more
of the Common Shares then outstanding (other than pursuant to a transaction
approved by the Continuing Board), then proper provision will be made so that
each holder of a Right which has not theretofore been exercised (other than
Rights beneficially owned by the Acquiring Person or an affiliate or associate
of the Acquiring Person, which will thereafter be void) will thereafter have the
right to receive, upon exercise of the Rights, Common Shares (or, in certain
circumstances as determined by the Board of Directors, cash, other property or
other securities) having a value equal to two times the Purchase Price. Rights
are not exercisable following the occurrence of an event as described above
until such time as the Rights are no longer redeemable by the Company as set
forth below.
RIGHT TO BUY ACQUIRING COMPANY SHARES
Similarly, unless the Rights are earlier redeemed or expire, if, after a
Stock Acquisition Date, (i) the Company is acquired in a merger or other
business combination transaction, or (ii) 50% or more of the Company's assets or
earning power is sold (other than in transactions in the ordinary course of
business), proper provision must be made so that each holder of a Right which
has not theretofore been exercised (other than Rights beneficially owned by the
Acquiring Person or an affiliate or associate of the Acquiring Person, which
will thereafter be void) will thereafter have the right to receive, upon
exercise of the Rights, shares of common stock of the acquiring company (or the
equity securities or other equity interest having power to control or direct the
management of the acquiring company) having a value equal to two times the
Purchase Price.
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CONTINUING BOARD APPROVAL
The Rights will not become exercisable upon the acquisition of 15% or
more of the Company's outstanding Common Shares by a person or group of
associated or affiliated persons if the Continuing Board approves that
acquisition.
EXCHANGE PROVISION
At any time after any Person becomes an Acquiring Person, the Continuing
Board may cause the Company to exchange the Rights (other than Rights owned by
the Acquiring Person), in whole or in part, for Common Shares at an exchange
ratio of one Common Share per Right, appropriately adjusted to reflect any stock
split, reverse stock split, reclassification, stock dividend or similar
transaction occurring after the date of the Rights Agreement.
REDEMPTION
At any time on or before the close of business on the earlier of (i) the
tenth day after the Stock Acquisition Date, or (ii) the Final Expiration Date,
the Company may redeem the Rights in whole, but not in part, at a price of $.01
per Right.
ADJUSTMENTS TO PREVENT DILUTION
The Purchase Price payable, the number of Rights, and the number of
Common Shares or other securities issuable upon exercise of the Rights are
subject to adjustment from time to time in connection with dilutive issuances by
the Company as set forth in the Rights Agreement.
CASH PAID FOR FRACTIONAL SHARES
No fractional portion less than integral multiples of one Common Share
will be issued upon exercise of a Right. In lieu of fractional shares, an
adjustment in cash will be made based on the market price of the Common Shares
on the last trading date before the date of exercise.
NO RIGHTS AS SHAREHOLDER BEFORE EXERCISE
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
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AMENDMENT OF RIGHTS AGREEMENT
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Continuing Board before the Distribution Date. After the Distribution Date, the
Rights Agreement may only be amended by the Continuing Board, and then only in
order to cure any ambiguity, to correct or supplement any provision of the
Rights Agreement which may be defective or inconsistent with any other provision
of the Rights Agreement, to make changes which do not adversely affect the
interests of holders of Rights (excluding the interest of any Acquiring Person
or an affiliate or associate of an Acquiring Person), to shorten or lengthen any
time period under the Rights Agreement or to lower to 10% the threshold of
beneficial ownership of Common Shares that will trigger a Distribution Date and
will cause a person or group to become an Acquiring Person. However, no
amendment to lengthen the time period governing redemption shall be made at such
time as the Rights are not redeemable, and no amendment to lengthen any other
time period shall be made unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights (other than any Acquiring Person or an affiliate or associate
of an Acquiring Person).
CERTAIN ANTI-TAKEOVER EFFECTS
The Rights are designed to protect and maximize the value of the
outstanding equity interests in the Company in the event of an attempt by an
acquiror to take over the Company in a manner or on terms not approved by the
Continuing Board, including a gradual accumulation of shares in the open market
of a 15% or greater position and perhaps followed by a merger or a partial or
two-tier tender offer that does not treat all shareholders fairly. These tactics
can unfairly pressure shareholders, squeeze them out of their investment without
giving them meaningful choices and deprive them of the ability to receive the
full value of their shares.
The Rights are not intended to prevent all acquisitions of the Company.
However, they are intended to deter any attempt to acquire the Company in a
manner or on terms not approved by the Continuing Board. The Rights may be
redeemed by the Company at $.01 per Right within ten days (or such later date as
may be determined by the Continuing Board) after the accumulation of 15% or more
of the Company's shares by a single acquiror or group. In addition, the
Continuing Board may approve such an accumulation in advance, without redeeming
the Rights. Accordingly, the Rights should not interfere with any merger or
business combination approved by the Continuing Board.
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Issuance of the Rights does not in any way weaken the financial strength
of the Company or interfere with its business plans. The issuance has no
dilutive effect, will not affect reported earnings per share, should not be
taxable to the Company or to its shareholders, and will not change the way in
which the Company's shares are presently traded. The Company's Board of
Directors believes that the Rights represent a sound and reasonable means of
addressing the complex issues of corporate policy presented in a takeover
situation.
However, the Rights may have the effect of rendering more difficult or
discouraging an acquisition of the Company deemed coercive or otherwise
undesirable by the Continuing Board. The Rights may cause substantial dilution
to a person or group that attempts to acquire the Company on terms or in a
manner not approved by the Continuing Board, except pursuant to an offer
conditioned upon the purchase or redemption of the Rights or a judicial
declaration that the Rights are invalid.
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Item 2. EXHIBITS
1. Rights Agreement, dated as of September 30, 1996, between
Watkins-Johnson Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent, including the form of Rights Certificate
and the Summary of Rights attached thereto as Exhibits A and B,
respectively.
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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, hereunto duly authorized.
WATKINS-JOHNSON COMPANY
Date: September 30, 1996 By: /s/ W. Keith Kennedy, Jr.
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W. Keith Kennedy, Jr.
President and Chief
Executive Officer
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EXHIBIT INDEX
Exhibit Sequential
No. Exhibit Page No.
--- ------- --------
1. Rights Agreement dated as of September 30, 11
1996, between Watkins-Johnson Company and
ChaseMellon Shareholder Services, L.L.C., as
Rights Agent, including the form of Rights Certificate and
the Summary of Rights attached thereto as Exhibits A and
B, respectively.
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WATKINS-JOHNSON COMPANY
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
(RIGHTS AGENT)
RIGHTS AGREEMENT
DATED AS OF SEPTEMBER 30, 1996
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Section 1. Certain Definitions................................................................... 1
Section 2. Appointment of Rights Agent........................................................... 9
Section 3. Issuance of Rights Certificates....................................................... 9
Section 4. Form of Rights Certificates........................................................... 12
Section 5. Countersignature and Registration..................................................... 14
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates............................................................ 15
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights............................................................................. 16
Section 8. Cancellation and Destruction of Rights Certificates................................... 19
Section 9. Reservation and Availability of Common Stock.......................................... 20
Section 10. Common Stock Record Date ............................................................. 22
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights ........................................................... 23
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares ............................................................................... 36
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power ..................................................................... 36
Section 14. Fractional Rights and Fractional Shares .............................................. 40
Section 15. Rights of Action ..................................................................... 41
Section 16. Agreement of Rights Holders .......................................................... 42
Section 17. Rights Certificate Holder Not Deemed a Shareholder ................................... 43
Section 18. Concerning the Rights Agent .......................................................... 44
</TABLE>
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<TABLE>
PAGE
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<S> <C> <C>
Section 19. Merger or Consolidation or Change of Name of
Rights Agent ......................................................................... 45
Section 20. Duties of Rights Agent ............................................................... 46
Section 21. Change of Rights Agent ............................................................... 49
Section 22. Issuance of New Rights Certificates .................................................. 51
Section 23. Exchange ............................................................................. 52
Section 24. Redemption and Termination ........................................................... 54
Section 25. Notice of Certain Events ............................................................. 55
Section 26. Notices .............................................................................. 57
Section 27. Supplements and Amendments ........................................................... 58
Section 28. Successors ........................................................................... 59
Section 29. Determination and Actions by the Board, etc .......................................... 59
Section 30. Benefits of this Agreement ........................................................... 60
Section 31. Severability ......................................................................... 61
Section 32. Governing Law ........................................................................ 61
Section 33. Counterparts ......................................................................... 62
Section 34. Descriptive Headings ................................................................. 62
</TABLE>
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RIGHTS AGREEMENT
THIS IS A RIGHTS AGREEMENT, dated as of September 30, 1996
(the "Agreement") between Watkins-Johnson Company, a California corporation (the
"Company"), and ChaseMellon Shareholder Services, L.L.C., a New Jersey limited
liability company (the "Rights Agent").
B A C K G R O U N D
On September 30, 1996 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of Common Stock (as hereinafter
defined) of the Company outstanding at the Close of Business (as hereinafter
defined) on October 10, 1996 (the "Record Date"), and authorized the issuance of
one Right (as such number may hereafter be adjusted pursuant to the provisions
of Section 11(p) hereof) for each share of Common Stock of the Company issued
between October 20, 1996 and the Distribution Date (as hereinafter defined),
each Right initially representing the right to purchase one share of Common
Stock, upon the terms and subject to the conditions hereinafter set forth (the
"Rights").
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this
Agreement, the following terms have these meanings:
(a) "Acquiring Person" shall mean any Person who,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
but shall not include:
(i) the Company,
(ii) any Subsidiary of the Company,
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(iii) any employee benefit plan of the
Company or of any Subsidiary of the
Company, or any Person or entity
organized, appointed or established
by the Company for or pursuant to
the terms of any such plan, or
(iv) any Person who becomes an Acquiring
Person solely as a result of a
reduction in the number of shares of
Common Stock outstanding due to the
repurchase of shares of Common Stock
by the Company, unless and until
such Person shall thereafter
purchase or otherwise become the
Beneficial Owner of additional
shares of Common Stock constituting
1% or more of the shares of Common
Stock outstanding at the time that
such Person becomes the Beneficial
Owner of 15% or more of the then
outstanding shares of Common Stock.
Notwithstanding the foregoing, "Acquiring Person" shall not include any Person
whose ownership of 15% or more of the shares of Common Stock then outstanding
results from any action, transaction or series of transactions approved in
advance by a majority of the Continuing Directors who are not Affiliates or
Associates of such Person or representatives of such Person or of any such
Affiliate or Associate (provided that such Person shall become an Acquiring
Person if such Person shall thereafter purchase or otherwise become the
Beneficial Owner of additional shares of Common Stock constituting 1% or more of
the then outstanding shares of Common Stock unless otherwise approved in advance
by a majority of the Continuing Directors who are not Affiliates or Associates
of such Person or
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representatives of such Person or of any such Affiliate or Associate); provided,
however, that any transfer of shares of Common Stock by such Person to a third
party (other than the Company, any subsidiary of the Company, any employee
benefit plan of the Company or any trustee in respect thereof acting in such
capacity) who after such transfer owns 15% or more of the shares of Common Stock
then outstanding will cause the Rights to become exercisable at the time and in
the manner provided for herein, unless such transferee's ownership of 15% or
more of the shares of Common Stock is approved in advance by a majority of the
Continuing Directors who are not Affiliates or Associates of such transferee or
representatives of such transferee or of any such Affiliate or Associate.
(b) "Adjustment Shares" shall have the meaning set
forth in Section 11(a)(ii) hereof.
(c) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act.
(d) A Person shall be deemed the "Beneficial Owner"
of, and shall be deemed to "Beneficially Own," any securities:
(i) which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or understanding (whether or not
in writing) or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "Beneficially Own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's
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Affiliates or Associates until such tendered securities are accepted for
purchase or exchange, (B) securities issuable upon exercise of Rights at any
time before the occurrence of a Triggering Event, or (C) securities issuable
upon exercise of Rights from and after the occurrence of a Triggering Event
which Rights were acquired by such Person or any of such Person's Affiliates or
Associates before the Distribution Date or pursuant to Section 3(a) or Section
22 hereof (the "Original Rights") or pursuant to Section 11(a)(i) hereof in
connection with an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has the right to vote
or dispose of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "Beneficially Own," any security under this subparagraph (ii)
as a result of an agreement, arrangement or understanding to vote such security
if such agreement, arrangement or understanding: (A) arises solely from a
revocable proxy given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable provisions of the General
Rules and Regulations under the Exchange Act, and (B) is not also then
reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to
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a revocable proxy as described in the proviso to subparagraph (ii) of this
paragraph (c)) or disposing of any voting securities of the Company; provided,
however, that nothing in this paragraph (c) shall cause a Person engaged in the
business as an underwriter of securities to be deemed the "Beneficial Owner" of,
or to "Beneficially Own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition.
(e) "Board" shall mean the Board of Directors of the
Company.
(f) "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the State of New York
or California are authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean
5:00 p.m., California time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 p.m., California time, on the next
succeeding Business Day.
(h) "Common Stock" shall mean the common stock, no
par value, of the Company, except that "Common Stock" when used with reference
to any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
(i) "Continuing Director" shall mean (i) any member
of the Board, while such Person is a member of the Board, who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or Associate, and
who was a member of the Board on the date that the Board initially approved this
Agreement, or (ii) any Person who subsequently becomes a member of
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the Board, while such Person is a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a representative
of an Acquiring Person or of any such Affiliate or Associate, if such Person's
nomination for election or election to the Board is recommended or approved by a
majority of the Continuing Directors. If there are no Continuing Directors at
the time that any determination under this Agreement is to be made by a majority
of the Continuing Directors, that determination shall be made by the Board in
accordance with applicable law and the Company's Articles of Incorporation and
Bylaws.
(j) "Distribution Date" shall mean the earlier of (i)
the Close of Business on the tenth day after the Stock Acquisition Date and (ii)
the Close of Business on the tenth day after the date that a tender or exchange
offer by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, or any
Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan) is first published, sent or given within
the meaning of Rule 14d-2(a) of the General Rules and Regulations under the
Exchange Act, if upon consummation thereof, such Person would be the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding.
(k) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(l) "Exchange Ratio" shall have the meaning set forth
in Section 23 hereof.
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(m) "Expiration Date" shall mean the earlier of (i)
the Final Expiration Date, or (ii) the time at which the Rights are redeemed as
provided in Section 24 hereof.
(n) "Final Expiration Date" shall mean the Close of
Business on October 20, 2006.
(o) "Person" shall mean any individual or entity.
(p) "Original Rights" shall have the meaning set
forth in Section 1(c) hereof.
(q) "Principal Party" shall have the meaning set
forth in Section 13 hereof.
(r) "Purchase Price" shall have the meaning set forth
in Section 4 or Section 11 hereof, as the case may be.
(s) "Record Date" shall have the meaning set forth in
the recitals at the beginning of this Agreement.
(t) "Rights" shall have the meaning set forth in the
recitals at the beginning of this Agreement.
(u) "Rights Certificates" shall mean one or more
rights certificates, in substantially the form of Exhibit A hereto.
(v) "Rights Dividend Declaration Date" shall have the
meaning set forth in the recitals at the beginning of this Agreement.
(w) "Section 11(a)(ii) Event" shall mean the event
described in Section 11(a)(ii) hereof.
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(x) "Section 11(a)(ii) Trigger Date" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(y) "Section 13 Event" shall mean any event described
in clauses (x), (y) or (z) of Section 13(a) hereof.
(z) "Securities Act" shall mean the Securities Act of
1933, as amended.
(AA) "Stock Acquisition Date" shall mean the first
date of public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d) under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such; provided, however, if such Person has first been determined not to
have become an Acquiring Person pursuant to Section 1(a) hereof, then no Stock
Acquisition Date shall be deemed to have occurred.
(BB) "Subsidiary" of any Person shall mean any entity
of which a majority of the voting power of the voting equity securities or
equity interest is Beneficially Owned, directly or indirectly, by such Person.
(CC) "Summary of Rights" shall mean the summary of
rights to purchase Common Stock, in substantially the form of Exhibit B hereto.
(DD) "Trading Day" shall have the meaning set forth
in Section 11(d) hereof.
(EE) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
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SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall before the Distribution
Date also be the holders of the Common Stock) in accordance with the terms and
conditions hereof. The Rights Agent hereby accepts such appointment. The Company
may from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable. Contemporaneously with any such appointment the Company shall notify
the Rights Agent thereof.
SECTION 3. ISSUANCE OF RIGHTS CERTIFICATES.
(a) Until the Distribution Date, (i) the Rights will
be evidenced (subject to the provisions of 3(b) hereof) by the certificates for
the Common Stock registered in the names of the holders of the Common Stock
(which certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (ii) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). As soon as practicable after
the Distribution Date, the Rights Agent will send by first-class, insured,
postage prepaid mail, to each record holder of the Common Stock as of the Close
of Business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more Rights Certificates, evidencing one Right
for each share of Common Stock so held, subject to adjustment as provided
herein. If an adjustment in the number of Rights per share of Common Stock has
been made pursuant to Section 11(p) hereof, at the time of distribution of the
Right Certificates, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing
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<PAGE> 13
only whole numbers of Rights are distributed and an amount in cash calculated in
accordance with Section 14(a) hereof is paid in lieu of any fractional Rights.
As of and after the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates.
(b) On October 20, 1996 or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights, by first-class,
postage-prepaid mail, to each record holder of shares of Common Stock 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 certificates for Common Stock
outstanding as of the Close of Business on October 20, 1996, until the
Distribution Date, the Rights will be evidenced by such certificates for shares
of Common Stock registered in the names of the holders thereof (together with a
copy of the Summary of Rights). Until the Distribution Date (or the earlier
Redemption Date or Final Expiration Date), the surrender for transfer of any
certificate for shares of Common Stock outstanding at the Close of Business on
the Record Date, with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights associated with the
shares of Common Stock represented thereby.
(c) Certificates issued for shares of Common Stock
(including, without limitation, certificates issued upon transfer, exchange or
replacement of shares of Common Stock) after October 20, 1996 but before the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date shall bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between
Watkins-Johnson Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent, dated as of September 30, 1996 (the
"Rights Agreement"), the
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<PAGE> 14
terms of which are hereby incorporated herein by reference and
a copy of which is on file at the principal offices of
Watkins-Johnson Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by
this certificate. Watkins-Johnson Company will mail to the
holder of this certificate a copy of the Rights Agreement, as
in effect on the date of mailing, without charge promptly
after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued
to, or held by, any Person who is, was or becomes an Acquiring
Person or any Affiliate or Associate thereof (as such terms
are defined in the Rights Agreement), whether held by or on
behalf of such Person or by any subsequent holder, may become
null and void. If the Company purchases or acquires any Common
Stock after October 20, 1996 but before the Distribution Date,
any Rights associated with that Common Stock shall be deemed
cancelled so that the Company shall not be entitled to
exercise any Rights associated with the Common Stock which are
no longer outstanding.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date and (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
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<PAGE> 15
associated with the Common Stock represented by such certificates. If the
Company purchases or acquires any Common Stock after October 20, 1996 but before
the Distribution Date, any Rights associated with such Common Stock shall be
deemed cancelled so that the Company shall not be entitled to exercise any
Rights associated with the Common Stock which are no longer outstanding. After
October 20, 1996, all certificates representing shares of Common Stock that bear
legends that refer to the Rights Agreement between the Company and Bank of
America National Trust and Savings Association, as Rights Agent, dated as of
October 9, 1986, shall be deemed to bear the foregoing legend.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of
election to purchase and of assignment to be printed on the reverse thereof) 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 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 Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of October 20, 1996 and on their face
shall entitle the holders thereof to purchase such number of shares of Common
Stock as shall be set forth therein at the price set forth therein (such
exercise price per share, the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
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<PAGE> 16
(b) Any Rights Certificates issued pursuant to
Section 3(a) or Section 22 hereof that represents Rights Beneficially Owned by:
(i) an Acquiring Person or any Associate or Affiliate 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 before 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 Persons with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which a majority of the Continuing Directors has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect avoidance of Section 7(e) hereof, and any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement between
Watkins-Johnson Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent, dated as of September 30, 1996 (the
"Rights Agreement")). Accordingly, this Rights Certificate and
the Rights represented hereby
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<PAGE> 17
have become or may become null and void in the circumstances
specified in Section 7(e) of the Rights Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be signed on behalf
of the Company by its Chairman of the Board or its President, either manually or
by facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned by the Rights Agent, either manually or by
facsimile signature, and shall not be valid for any purpose unless so
countersigned. If any officer of the Company who shall have signed any of the
Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights 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 Rights Certificates had not ceased to be such officer
of the Company. Any Rights Certificates may be signed on behalf of the Company
by any person who, at the actual date of the signing of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights Certificate,
although at the date of the signing of this Agreement such person was not such
an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at one of its offices in California, books for
the registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective record holders of the
Rights Certificates, the number of Rights evidenced by each Rights Certificate
and the date of each Rights Certificate.
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<PAGE> 18
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHTS CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Sections 4(b), 7(e)
and 14 hereof, at any time after the Close of Business on the Distribution Date
and at or before the Close of Business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of shares of Common Stock as the Rights Certificate or
Certificates surrendered then entitled such holder (or former holder in the case
of a transfer) to purchase. Any registered holder desiring to transfer, split
up, combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) and Affiliates or
Associates thereof as the Company shall request. Subject to Sections 4(b), 7(e)
and 14 hereof, the Rights Agent shall then countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights 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 Rights Certificates.
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<PAGE> 19
(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 Rights Certificate and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will sign and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE
OF RIGHTS.
(a) Subject to Section 7(e) hereof, the registered
holder of any Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Sections 9(c), 11(a)(iii) and 24(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly signed, to the Rights Agent at
the principal office or offices of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each share of Common Stock as to
which such surrendered Rights are then exercisable, at or before the earlier of
(i) the Final Expiration Date, or (ii) the Expiration Date. (b) The Purchase
Price for each share of Common Stock purchasable under each Right shall
initially be $160, subject to adjustment from time to
16
<PAGE> 20
time as provided in Sections 11 and 13(a) hereof and shall be payable in lawful
money of the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly signed, accompanied by payment, with respect to each Right so exercised, of
the Purchase Price per share of Common Stock to be purchased as set forth below
and an amount equal to any applicable transfer tax, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Common Stock (or make available, if the Rights
Agent is the transfer agent for such shares) certificates for the total number
of shares of Common Stock 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 total number of shares of Common Stock
issuable upon exercise of the Rights hereunder with a depository agent,
requisition from the depository agent depository receipts representing such
number of shares of Common Stock as are to be purchased (in which case
certificates for the shares of Common Stock represented by such receipts shall
be deposited by the transfer agent with the depository agent) and the Company
shall direct the depository agent to comply with such request, (ii) requisition
from the Company the amount of cash, if any, to be paid in lieu of fractional
shares in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depository receipts, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate registered in such
name or names as may be designated by such holder, and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Rights Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii) hereof) may be
17
<PAGE> 21
made (x) in cash or by check or bank draft payable to the order of the Company,
or (y) by delivery of a certificate or certificates (with appropriate stock
powers signed in blank attached thereto) evidencing a number of shares of Common
Stock equal to the then Purchase Price divided by the closing price (as
determined pursuant to Section 11(d) hereof) per share of Common Stock on the
Trading Day immediately preceding the date of such exercise. If the Company is
obligated to issue other securities of the Company, pay cash and/or distribute
other property pursuant to Section 11(a) hereof, the Company shall make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when appropriate. The
Company reserves the right to require before the occurrence of a Triggering
Event that upon any exercise of Rights, a number of Rights be exercised so that
only whole shares of Common Stock would be issued.
(d) If the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificates, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights Beneficially Owned by (i) an Acquiring Person or an Associate or
Affiliate 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 before or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to
18
<PAGE> 22
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 a
majority of the Continuing Directors 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 Agreement or
otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder 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 Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) and Affiliates or
Associates thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS
CERTIFICATES. All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or any of its agents, be delivered to the
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<PAGE> 23
Rights Agent for cancellation or in cancelled form or, if surrendered to the
Rights Agent, shall be cancelled by it, and no Rights Certificates shall be
issued in lieu thereof except as expressly permitted by any of the provisions of
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company or shall, at the written request of the Company,
destroy such cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF COMMON STOCK.
(a) The Company shall cause to be reserved and kept available
out of its authorized and unissued shares of Common Stock, the number of shares
of Common Stock that, as provided in this Agreement including Section 11(a)(iii)
hereof, will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Common Stock issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as is required by
20
<PAGE> 24
law following the Distribution Date, as the case may be, a registration
statement under the Securities Act, with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Securities Act) until the date as
of which the Rights are no longer exercisable for such securities. The Company
will also take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in connection with
the exercisability of the Rights. A majority of the Continuing Directors may
cause the Company temporarily to suspend, for a period of time not to exceed 90
days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to enable the Company to
prepare and file such registration statement and permit it to become effective.
Upon any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained, the exercise thereof shall not
be permitted under applicable law or a registration statement shall not have
been declared effective.
(d) The Company shall take all such actions as may be
necessary to ensure that all shares of Common Stock delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable.
21
<PAGE> 25
(e) The Company 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 the Rights Certificates and of certificates for
shares of Common Stock upon the exercise of 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 Rights Certificates to a Person other than, or the
issuance or delivery of shares of Common Stock in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for shares of
Common Stock in a name other than that of the registered holder upon the
exercise of any Rights until such tax shall have been paid (any such tax being
payable by the holder of such Rights Certificates at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax is
due.
SECTION 10. COMMON STOCK RECORD DATE. Each Person in whose
name any certificate for shares of Common Stock is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
such shares of Common Stock represented thereby on, and such certificate shall
be dated, the date upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and all applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Common Stock transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Common Stock transfer books of the Company are open. Before the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a
22
<PAGE> 26
shareholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF
SHARES OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) If the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Common Stock payable in
shares of Common Stock, (B) subdivide the outstanding Common Stock, (C) combine
the outstanding Common Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the Common Stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the Purchase Price in
effect at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive, upon payment of the Purchase Price then in effect, the aggregate number
and kind of shares of capital stock which, if such Right had been exercised
immediately before such date and at a time when the Common Stock transfer books
of the Company were open, the holder would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision, combination or
23
<PAGE> 27
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made before,
any adjustment required by Section 11(a)(ii) hereof.
(ii) If, subject to the right of redemption granted
in Section 24 hereof, any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person organized, appointed or established by the Company for or
by the terms of any such plan), alone or together with its Affiliates and
Associates, at any time after October 1, 1996, is an Acquiring Person, other
than a Person that became an Acquiring Person pursuant to any transaction set
forth in Section 13(a) hereof, then, promptly after a Section 11(a)(ii) Event,
the Company and, to the extent necessary or appropriate, the Acquiring Person
and its Affiliates and Associates, shall make proper provision so that each
holder of a Right (except as provided below and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu of any
shares of Common Stock purchasable under Section 7(b) hereof, such number of
shares of Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of shares of
Common Stock for which a Right was exercisable immediately before the first
occurrence of a Section 11(a)(ii) Event, and (y) dividing that product (which,
following such first occurrence, shall thereafter be referred to as the
"Purchase Price" for each Right and for all purposes of this Agreement) by 50%
of the current market price (determined pursuant to Section 11(d)
24
<PAGE> 28
hereof) per share of Common Stock on the date of such first occurrence (such
number of shares, the "Adjustment Shares").
(iii) If the number of shares of Common Stock which
are authorized by the Company's Articles of Incorporation but not
outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii)
of this Section 11(a), the Company shall: (A) determine the excess of
(1) the value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value") over (2) the Purchase Price (such excess,
the "Spread"), and (B) with respect to each Right (subject to Section
7(e) hereof), make adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without limitation, shares of
preferred stock which the Board has deemed to have the same value as
shares of Common Stock (such shares of preferred stock, "common stock
equivalents")), (4) debt securities of the Company, (5) other assets,
or (6) any combination of the foregoing, having a total value equal to
the Current Value, where such total value has been determined by the
Board based upon the advice of a nationally recognized investment
banking firm selected by the Board; provided, however, if the Company
shall not have made adequate provision to deliver the value pursuant to
clause (B) above within 30 days after the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section 24(a) expires (the
later of (x) and (y) being referred to as the "Section 11(a)(ii)
Trigger Date"), then the
25
<PAGE> 29
Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, shares
of Common Stock (to the extent available) and then, if necessary, cash,
which shares and/or cash have a total value equal to the Spread. If the
Board determines in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights, the 30 day period set forth above may
be extended to the extent necessary, but not more than 90 days after
the Section 11(a)(ii) Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such additional shares
(such period, as it may be extended, the "Substitution Period"). To the
extent that the Company determines that some action need be taken
pursuant to the first and/or second sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the
Common Stock shall be the current market price (as determined pursuant
to Section 11(d) hereof) per share of the Common Stock on the Section
11(a)(ii) Trigger Date and the value of any "common stock equivalent"
shall be deemed to have the same value as the Common Stock on such
date.
26
<PAGE> 30
(b) If the Company fixes a record date for the
issuance of rights, options or warrants to all holders of Common Stock entitling
them to subscribe for or purchase (for a period expiring within 45 calendar days
after such record date) Common Stock or securities convertible into Common Stock
at a price per share of Common Stock (or having a conversion price per share, if
a security convertible into Common Stock) less than the current market price (as
determined pursuant to Section 11(d) hereof) per share of Common Stock on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately before such
record date by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding on such record date, plus the number of shares of
Common Stock which the total offering price of the total number of shares of
Common Stock so to be offered (and/or the total initial conversion price of the
convertible securities so to be offered) would purchase at such current market
price, and the denominator of which shall be the number of shares of Common
Stock outstanding on such record date, plus the number of additional shares of
Common Stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). If such
subscription price may be paid by delivery of consideration part or all of which
may be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of Rights. Shares of Common Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and if such rights or warrants are not so issued, the
Purchase Price shall
27
<PAGE> 31
be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) If the Company fixes a record date for a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, or assets
(other than a regular periodic cash dividend at a rate not in excess of 125% of
the rate of the last regular periodic cash dividend theretofore paid or a
dividend payable in shares of Common Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately before such record date by a fraction, the numerator
of which shall be the current market price (as determined pursuant to Section
11(d) hereof) per share of Common Stock on such record date, less the fair
market value (as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent) of the portion of
the assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of Common Stock and the
denominator of which shall be such current market price (as determined pursuant
to Section 11(d) hereof) per share of Common Stock. Such adjustments shall be
made successively whenever such a record date is fixed, and if such distribution
is not so made, the Purchase Price shall be adjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder,
other than computations made pursuant to Section 11(a)(iii) hereof, the "current
market price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices
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<PAGE> 32
per share of such Common Stock for the 30 consecutive Trading Days (as such term
is hereinafter defined) immediately before such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the ten
consecutive Trading Days immediately following such date; provided, however,
that if the current market price per share of the Common Stock is determined
during a period following the announcement of (i) a dividend or distribution on
such Common Stock payable in shares of such Common Stock or securities
convertible into shares of such Common Stock (other than the Rights), or (ii)
any subdivision, combination or reclassification of such Common Stock, and
before the expiration of the requisite 30 Trading Day or ten Trading Day period,
as set forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "current market price" shall
be properly adjusted to take into account ex-dividend trading. The closing price
for each day shall be the last sale price, regular way, or, if no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the
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<PAGE> 33
high bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or, if on any such date the shares
of Common Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Stock selected by the Board. If on any such date no
market maker is making a market in the Common Stock, the fair value of such
shares on such date as determined in good faith by the Board of Directors of the
Company shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of Common Stock are
listed or admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common Stock is not publicly held or
not so listed or traded, "current market price" per share shall mean the fair
value per share as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding,
no adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least one percent in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one-ten-thousandth of a
share. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by
30
<PAGE> 34
this Section 11 shall be made no later than the earlier of (i) three years after
the date of the transaction which mandates such adjustment, or (ii) or the
Expiration Date.
(f) If, as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock other
than Common Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Common
Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company after
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately before the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
shares of Common Stock (calculated to the nearest one-ten- thousandth) obtained
by (i) multiplying (x) the number of shares covered by a Right immediately
before this adjustment, by (y) the Purchase Price in effect immediately before
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<PAGE> 35
such adjustment of the Purchase Price, and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of shares of Common Stock issuable upon the exercise of
a Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of shares of Common Stock for which a
Right was exercisable immediately before such adjustment. Each Right held of
record before such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one-ten-thousandth) obtained by dividing
the Purchase Price in effect immediately before adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least ten days later
than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
before the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights
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<PAGE> 36
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Rights Certificates so to be distributed shall be issued,
signed and countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and shall be registered in
the names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of shares of Common Stock issuable upon the
exercise of the Rights, the Rights Certificates issued may continue to express
the Purchase Price per share and the number of shares which were expressed in
the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then stated value, if any, of
the Common Stock issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price 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 issuance to the holder of any Right exercised after
such record date the shares of Common Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the shares of Common Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise on the basis of the Purchase Price in effect
before 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 shares
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<PAGE> 37
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in its good faith judgment the Board and a
majority of the Continuing Directors shall determine to be advisable in order
that any (i) consolidation or subdivision of the Common Stock, (ii) issuance
wholly for cash of any shares of Common Stock at less than the current market
price, (iii) issuance wholly for cash of shares of Common Stock or securities
which by their terms are convertible into or exchangeable for shares of Common
Stock, (iv) stock dividends, or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders of its
Common Stock shall not be taxable to such shareholders.
(n) The Company shall not, at any time after the
Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
totalling more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or
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<PAGE> 38
other instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) before, simultaneously with or immediately after
such consolidation, merger or sale, the shareholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
(o) After the Distribution Date, the Company shall
not, except as permitted by Section 24 or Section 27 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action would diminish substantially or
otherwise eliminate any of the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, if the Company shall at any time after the Rights Dividend
Declaration Date and before the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but before the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately before such event by a fraction the numerator of which
shall be the total number of shares of Common Stock outstanding immediately
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<PAGE> 39
before the occurrence of the event and the denominator of which shall be the
total number of shares of Common Stock outstanding immediately after the
occurrence of such event.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER
OF SHARES. Whenever an adjustment is made as provided in Section 11 and Section
13 hereof, 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 Common Stock, a copy of such certificate, and (c) mail or cause
the Rights Agent to mail a brief summary thereof to each holder of a Rights
Certificate (or, if before the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 26
hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER.
(a) If, after the Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person, and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person shall consolidate
with, or merge with or into, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (z) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or
36
<PAGE> 40
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons, then, and in each such case, the Company and the Principal
Party (as such term is hereinafter defined) and its Affiliates and Associates
shall make proper provision so that: (i) each holder of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price in accordance with
the terms of this Agreement, such number of validly authorized and issued, fully
paid, nonassessable and freely tradeable shares of Common Stock of the Principal
Party, not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by (l) multiplying the
then current Purchase Price by the number of shares of Common Stock for which a
Right is exercisable immediately before the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred before the first occurrence
of a Section 13 Event, multiplying the number of shares of Common Stock for
which a Right was exercisable immediately before the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect immediately before such
first occurrence), and dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the "Purchase Price"
for each Right and for all purposes of this Agreement) by (2) 50% of the current
market price (determined pursuant to Section 11(d)(i) hereof) per share of the
Common Stock of such Principal Party on the date of consummation of such Section
13 Event; (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; (iv)
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such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares or units of its Common Stock) in
connection with the consummation of any such transactions as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares or units of Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the first occurrence of any
Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described
in clause (x) or (y) of the first sentence of Section 13(a), the Person that is
the issuer of any securities into which shares of Common Stock of the Company
are converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or consolidation; and
(ii) in the case of any transaction
described in clause (z) of the first sentence of Section 13(a), the Person that
is the party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions; provided, however,
that in any such case, (1) if the Common Stock of such Person is not at such
time and has not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person; and (2) if such
Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Stocks of two or more of which are and have been so
38
<PAGE> 42
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest total market value.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have signed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as practicable after
the date of any consolidation, merger or sale of assets mentioned in paragraph
(a) of this Section 13, the Principal Party shall:
(i) prepare and file a registration
statement under the Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and shall use
its best efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date; and
(ii) deliver to holders of the Rights
historical financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements for registration
on Form 10 under the Exchange Act.
This Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers. If a Section 13 Event shall occur at any time after
the occurrence of a Section
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11(a)(ii) Event, the Rights which have not been exercised shall thereafter
become exercisable in the manner described in Section 13(a).
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue
fractions of Rights, except before the Distribution Date as provided in Section
11(p) hereof, or to distribute Rights Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the registered
holders of the Rights 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 14(a), the
current market value of a whole Right shall be the closing price of the Rights
for the Trading Day immediately before the date on which such fractional Rights
would have been otherwise issuable. The closing price of the Rights for any day
shall be the last sale price, regular way, or, if no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or, if
the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional
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market maker making a market in the Rights selected by the Board. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board shall be used.
(b) The Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or upon any
exchange of Rights pursuant to Section 23 hereof, or to distribute certificates
which evidence fractional shares of Common Stock. In lieu of fractional shares
of Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided (or at the
time such Rights are exchanged as provided in Section 23 hereof, as the case may
be) an amount in cash equal to the same fraction of the current market value of
one share of Common Stock. For purposes of this Section 14(b), the current
market value of a share of Common Stock shall be the closing price of one share
of Common Stock (as determined pursuant to Section 11(d) hereof) for the Trading
Day immediately before the date of such exercise.
(c) The holder of a Right by the acceptance of the
Rights expressly waives the holder's right to receive any fractional Rights or
any fractional shares upon exercise of a Right, except as permitted by this
Section 14.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect
of this Agreement, except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, before the Distribution Date, the registered holders of the
Common Stock). Any registered holder of any Rights Certificate (or, before the
Distribution Date, of the Common Stock), without the consent of the Rights Agent
or of the holder of any other Rights Certificate (or, before the
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<PAGE> 45
Distribution Date, of the Common Stock), may, in the holder's own behalf and for
the holder's own benefit, enforce this Agreement, and may institute and maintain
any suit, action or proceeding against the Company to enforce this Agreement, or
otherwise enforce or act in respect of, the holder's right to exercise the
Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person (including, without
limitation, the Company) subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a
Right by accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) before the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights Agent designated
for such purposes, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate forms and certificates fully signed;
(c) subject to Section 6(a) and Section 7(f) hereof,
the Company and the Rights Agent may deem and treat the Person in whose name a
Rights Certificate (or, before the Distribution Date, the associated Common
Stock certificate) is registered as the
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absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the associated
Common Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e) hereof, shall be required to
be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company shall use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Stock or 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 Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a shareholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders
43
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(except as provided in Section 25 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Rights Certificate shall have been exercised in accordance with the provisions
hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company shall pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder in accordance with a fee
schedule to be mutually agreed upon and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
shall indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the reasonable costs and expenses of defending against any
claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, instruction, direction, consent, certificate,
statement, or other paper or document believed in good faith by it to be genuine
and to be signed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
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SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the signature or filing of any paper or any further act
on the part of any of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. If at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of such predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and if at that time any of
the Rights Certificates shall not have been countersigned, any successor Rights
Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) If at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and if at
that time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates
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either in its prior name or in its changed name; and in all such cases such
Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, it being understood that all such terms and conditions shall bind
the Company and the holders of Rights Certificates:
(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 authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of "current market price") be proved or established by the
Company before 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, the President, 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 this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
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<PAGE> 50
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates). All such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the signature and delivery hereof
(except the due signature hereof by the Rights Agent) or in respect of the
validity or signature of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner, method or amount
of any such adjustment or ascertaining the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Rights 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 shares of Common Stock to be issued pursuant
to this Agreement or any Rights Certificate or as to whether any shares of
Common Stock will, when so issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company shall perform, sign, acknowledge and deliver
or cause to be performed, signed, acknowledged and delivered all such further
and other acts, instruments and assurances as may reasonably be required by the
Rights Agent for the performance by the Rights Agent of this Agreement.
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<PAGE> 51
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the President, the Treasurer or the
General Counsel of the Company, and to apply to such officers for advice or
instructions in connection with its duties under this Agreement, 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 shareholder, director, 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 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 sign 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, however, that reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable
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<PAGE> 52
grounds for believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
(l) At any time and from time to time after the Distribution
Date, upon the request of the Company, the Rights Agent shall promptly deliver
to the Company a list, as of the most recent practicable date (or as of such
earlier date as may be specified by the Company), of the holders of record of
Rights.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company, and to each transfer
agent of the Common Stock, by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon ten 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 Stock, by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
resigning, removed, or incapacitated Rights Agent shall remit to the Company, or
to any successor Rights Agent designated by the Company, all books, records,
funds, certificates and other documents and
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<PAGE> 53
instruments of any kind then in its possession which were acquired or created by
such resigning, removed or incapacitated Rights Agent in connection with its
services as Rights Agent hereunder, and shall thereafter be discharged from all
further duties and obligations hereunder. Following notice of such removal,
resignation or incapacity, the Company shall appoint a successor to such 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 incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with such
notice, submit such holder's Rights Certificate for inspection by the Company),
then any registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of California (or of any other state of the United States so long
as such corporation is authorized to do business as a banking institution in the
State of California), in good standing, having an office or an affiliate with an
office in the State of New York, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which either has or is an
affiliate of a corporation which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $100,000,000. 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 and transfer to the successor Rights Agent any property at the time held
by it hereunder, and sign and deliver any further
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<PAGE> 54
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
Stock, and mail a notice thereof in writing to the registered holders of the
Rights Certificates. Failure to give any notice provided for in this Section 21,
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 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board to reflect any adjustment or change in the
Purchase Price or the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock after the Distribution Date and before the
redemption or expiration of the Rights, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or warrants or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be
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issued, and (ii) no such Rights Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.
SECTION 23. EXCHANGE.
(a) A majority of the Continuing Directors may, at their
option, at any time after any Person becomes an Acquiring Person, cause the
Company to exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the provisions
of Section 11(a)(ii) hereof) for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right, appropriately adjusted to reflect any stock
split, reverse stock split, reclassification, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
a majority of the Continuing Directors 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 shares of Common Stock for or pursuant to any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of Shares of Common Stock totalling 50% or more of the shares
of Common Stock then outstanding.
(b) Immediately upon the action of a majority of the
Continuing Directors ordering the exchange of any Rights pursuant to Section
23(a) hereof and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such
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<PAGE> 56
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company shall
promptly mail a notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear on the registry books of the Rights
Agent. Any notice 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 shares of Common Stock for
Rights will be effected and, in the event of any partial exchange, the number of
Rights that will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7(e) hereof) held by each holder of Rights.
(c) If there shall not be a sufficient number of shares of
Common Stock authorized but unissued and unreserved to permit any exchange of
Rights as contemplated by this Section 23, the Company shall take all such
action as may be necessary to authorize additional shares of Common Stock for
issuance upon the exchange of the Rights. If the Company shall, after good faith
effort, be unable to take all such action as may be necessary to authorize such
additional shares of Common Stock, the Company shall substitute for each share
of Common Stock that would otherwise be issuable upon exchange of a Right, a
number of shares of preferred stock or fraction thereof such that the current
per share market price of one share of preferred stock multiplied by such number
or fraction is equal to the current per share market price of one share of
Common Stock as of the date of issuance of such share of preferred stock or
fraction thereof.
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SECTION 24. REDEMPTION AND TERMINATION.
(a) A majority of the Continuing Directors may, at their
option, at any time before the earlier of (i) the Close of Business on the tenth
day following the Stock Acquisition Date or (ii) the Final Expiration Date,
cause the Company to redeem all but not less than all the then outstanding
Rights at a redemption price of $.01 per Right, as such amount may be
appropriately adjusted to reflect any stock split, reverse stock split,
reclassification, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"); provided, however, that if, after the Stock Acquisition Date and after
the expiration of the right of redemption hereunder but before any Triggering
Event, (i) a Person who is an Acquiring Person shall have transferred or
otherwise disposed of a number of shares of Common Stock in one transaction or a
series of transactions, not directly or indirectly involving the Company or any
of its Subsidiaries, which did not result in the occurrence of a Triggering
Event such that such Person is thereafter a Beneficial Owner of 10% or less of
the outstanding shares of Common Stock, and (ii) there are no other Persons,
immediately after the occurrence of the event described in clause (i), who are
Acquiring Persons, then the right of redemption shall be reinstated and
thereafter be subject to the provisions of this Section 24. Notwithstanding
anything contained in this Agreement to the contrary, subject to Section 27
hereof, the Rights shall not be exercisable after the first occurrence of a
Section 11(a)(ii) Event until such time as the Company's right of redemption
hereunder has expired. The Company may, at its option, pay the Redemption Price
in cash, shares of Common Stock (based on the "current market price," as defined
in Section 11(d)(i) hereof, of the Common
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<PAGE> 58
Stock at the time of redemption) or any other form of consideration deemed
appropriate by a majority of the Continuing Directors.
(b) Immediately upon the action of a majority of the
Continuing Directors ordering the redemption of the Rights, evidence of which
shall have been filed with the Rights Agent and without any further action and
without any notice, the right to exercise the Rights shall terminate and the
only right thereafter of the holders of Rights, as such, shall be to receive the
Redemption Price for each Right so held. Promptly after the action of a majority
of the Continuing Directors ordering the redemption of the Rights, the Company
shall give notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all such holders at each
holder's last address as it appears upon the registry books of the Rights Agent
or, before the Distribution Date, on the registry books of the Transfer Agent
for the Common Stock. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 24, and other
than in connection with the purchase of Common Stock before the Distribution
Date.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) If the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Common Stock or to make any other distribution to the holders of
Common Stock (other than a regular periodic cash dividend at a rate not in
excess of 125% of the rate of the last regular periodic
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cash dividend theretofore paid), or (ii) to offer to the holders of Common Stock
rights or warrants to subscribe for or to purchase any additional shares of
Common Stock or shares of stock of any class or any other securities, rights or
options, or (iii) to effect any reclassification of its Common Stock (other than
a reclassification involving only the subdivision of outstanding shares of
Common Stock), or (iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or to effect any sale or other transfer (or
to permit one or more of its Subsidiaries to effect any sale of other transfer),
in one transaction or a series of related transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(o) hereof), or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to the Rights Agent
and to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the shares of Common
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least 20 days before
the record date for determining holders of the shares of Common Stock for
purposes of such action, and in the case of any such other action, at least 20
days before the date of the taking of such
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proposed action or the date of participation therein by the holders of the
shares of Common Stock, whichever shall be the earlier.
(b) If any of the events set forth in Section 11(a)(ii) hereof
shall occur, then, in any such case, the Company shall as soon as practicable
thereafter give to the Rights Agent and to each holder of a Rights Certificate,
to the extent feasible and in accordance with Section 26 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof.
SECTION 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
Watkins-Johnson Company
3333 Hillview
Palo Alto, California 94304-1223
Attention: Chief Financial Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to 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:
ChaseMellon Shareholder Services, L.L.C.
50 California Street, 10th Floor
San Francisco, California 94111-4624
Attention: Stock Transfer Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
before the Distribution Date,
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to the holder of certificates representing shares of Common Stock) 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 Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Before the Distribution Date
and subject to the penultimate sentence of this Section 27, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the Distribution Date and
subject to the penultimate sentence of this Section 27, the Company and the
Rights Agent shall, if a majority of the Continuing Directors so directs,
supplement or amend this Agreement without the approval of any holders of Rights
Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time period hereunder
for any or all purposes (for example, the Company may shorten or lengthen the
period during which the Rights may be redeemed without changing the Distribution
Date), (iv) to change or supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable, or (v) lower the threshold set
forth in Section 1(a) to 10%. Notwithstanding the previous two sentences, in no
event shall any such supplement or amendment adversely affect the interests of
the holders of Rights (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person). In addition, this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of the second
sentence of this Section 27, (A) a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of
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protecting, enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person). Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with this Section 27, the Rights Agent shall sign such supplement
or amendment. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which changes the Redemption
Price, the Final Expiration Date, the Purchase Price or the number of shares of
Common Stock for which a Right is exercisable; provided, however, that at any
time before the Distribution Date, the Board, together with a majority of the
Continuing Directors, may amend this Agreement to increase the Purchase Price or
to extend the Final Expiration Date. Before the Distribution Date, the interests
of the holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock.
SECTION 28. SUCCESSORS. All of the provisions of this Agreement by or
for the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
SECTION 29. DETERMINATION AND ACTIONS BY THE BOARD, ETC. For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board (with, where specifically provided for herein, the
concurrence of the Continuing Directors) or, when specifically provided for
herein, a majority of the Continuing Directors acting alone, shall
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have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
or, when specifically provided for herein, a majority of the Continuing
Directors acting alone, or to the Company, or as may be necessary or advisable
in the administration of this Agreement, including, without limitation, the
right and power to (i) interpret this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not to redeem the Rights or to
amend this Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
in good faith, or, when specifically provided for herein, a majority of the
Continuing Directors acting alone, shall (x) be final, conclusive and binding on
the Company, the Rights Agent, the holders of the Rights and all other parties,
and (y) not subject the Board (including the Continuing Directors) to any
liability to the holders of Rights or to any other party.
SECTION 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, before the Distribution
Date, the registered holders of the Common Stock) any legal or equitable right,
remedy or claim under this Agreement. This Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, before the Distribution Date, the registered
holders of the Common Stock).
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SECTION 31. SEVERABILITY. If any provision of this Agreement
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the provisions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwithstanding anything in this Agreement
to the contrary, if any such provision is held by such court or authority to be
invalid, void or unenforceable and the Board and a majority of the Continuing
Directors determine in their good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of
this Agreement, the right of redemption set forth in Section 24 hereof shall be
reinstated and shall not expire until the Close of Business on the tenth day
after the date of such determination by the Board and a majority of the
Continuing Directors. Without limiting the foregoing, if any provision requiring
the approval of a majority of the Continuing Directors in order for the Company
to act is held by any court of competent jurisdiction or other authority to be
invalid, void or unenforceable, or if a majority of the Continuing Directors,
after consultation with counsel, concludes that any such provision is invalid,
void or unenforceable, such determination shall then be made by the Board and a
majority of the Continuing Directors.
SECTION 32. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of California and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
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SECTION 33. COUNTERPARTS. This Agreement may be signed 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.
SECTION 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly signed as of the date that appears in its first paragraph.
WATKINS-JOHNSON COMPANY
By: /s/ W. Keith W. Kennedy, Jr.
---------------------------------
Name: W. Keith Kennedy, Jr.
Title: President and Chief
Executive Officer
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By: /s/ Carol A. McFarland
-------------------------------
Name: Carol A. McFarland
Title: Assistant Vice President
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Exhibit A
[Form of Rights Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER OCTOBER 20, 2006 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. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON)
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED
BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON
WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]1
- --------
1 The portion of the legend in brackets shall be inserted only
if applicable and shall replace the preceding sentence.
1
<PAGE> 67
Rights Certificate
WATKINS-JOHNSON COMPANY
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 September 30, 1996 (the "Rights Agreement") between
Watkins-Johnson Company, a California corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent"), to purchase from
the Company at any time before 5:00 p.m. (California time) on October 20, 2006,
at the office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one fully paid, nonassessable share of Common Stock
(the "Common Stock") of the Company, at a purchase price of $160 per share
(the "Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
signed. The Purchase Price shall be paid, at the election of the holder, in cash
or shares of Common Stock of the Company having an equivalent value. The number
of Rights evidenced by this Rights Certificate (and the number of shares which
may be purchased upon exercise thereof) set forth above, and the Purchase Price
per share set forth above, are the number and Purchase Price as of October 10,
1996 based on the Common Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate
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of an Acquiring Person, such Rights shall become null and void and no holder
hereof shall have any right with respect to such Rights from and after the
occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Common Stock which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment
upon the happening of certain events, including Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Common Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder
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shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right at any time before the earlier of the Close of Business
on (i) the tenth day following the Stock Acquisition Date (as such time period
may be extended pursuant to the Rights Agreement), and (ii) the Final Expiration
Date. After the expiration of the redemption period, the Company's right of
redemption may be reinstated if an Acquiring Person reduces such holder's
beneficial ownership to 10% or less of the outstanding shares of Common Stock in
a transaction or series of transactions not involving the Company.
Subject to the provisions of the Rights Agreement, the Company may
elect to exchange the Rights evidenced by this Certificate in whole or in part
for shares of the Company's Common Stock (or shares of preferred stock of the
Company equal in market value to one share of Common Stock) at an exchange ratio
of one share of Common Stock per Right, subject to adjustment.
The Company is not required to issue fractional shares of Common Stock
upon the exercise of any Right or Rights evidenced hereby, but in lieu thereof a
cash payment may be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of shares of
Common Stock 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 shareholder of the Company or any right to vote for the
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election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of the ___ day of _________, 19__.
WATKINS-JOHNSON COMPANY
By:
___________________________________
Name:
Title:
Countersigned:
CHASEMELLON SHAREHOLDERS SERVICES, L.L.C.
By:
________________________________ Date:______________________________
Authorized Signature
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[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be signed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED_________________________________________________________
hereby sells, assigns and transfers unto___________________________________
___________________________________________________________________________
(Please print name and address of transferee)
___________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer this Rights Certificate on the books of Watkins-Johnson Company, with
full power of substitution.
Date: ___________________, 19__.
_______________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, broker, dealer, credit union or savings
association or other entity that is a member in good standing of a signature
guarantee medallion program approved by the Securities Transfer Association,
Inc.
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Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate
[ ] is
[ ] is not
being sold, assigned and transferred by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights Agreement);
and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Date: ___________________, 19__.
_______________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, broker, dealer, credit union or savings
association or other entity that is a member in good standing of a signature
guarantee medallion program approved by the Securities Transfer Association,
Inc.
NOTICE
The signature to the foregoing Assignment and Certificate must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
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FORM OF ELECTION TO PURCHASE
(a) (To be signed if holders desire to exercise Rights represented by
the Rights Certificate.)
To: WATKINS-JOHNSON COMPANY
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Common Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
Please insert social security or other identifying number:______________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number:______________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
________________________________________________________________________________
Dated: ___________________, 19___.
_______________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, broker, dealer, credit union or savings
association or other entity that is a member in good standing of a signature
guarantee medallion program approved by the Securities Transfer Association,
Inc.
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Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate
[ ] are
[ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person.
Dated: _____________________, 19__.
_______________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, broker, dealer, credit union or savings
association or other entity that is a member in good standing of a signature
guarantee medallion program approved by the Securities Transfer Association,
Inc.
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
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Exhibit B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On September 30, 1996, the Board of Directors of Watkins-Johnson
Company (the "Company") declared a dividend distribution of one Right for each
outstanding share of the Company's Common Stock. The distribution was made to
shareholders of record at the close of business on October 10, 1996. Each Right
entitles its registered holder to purchase from the Company one share of Common
Stock ("Common Stock"), at a purchase price of $160 per share, subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent.
Initially, the Rights will be attached to and trade with all the Common
Stock. No separate Rights certificates will initially be distributed. The Rights
will separate from the Common Stock and a "Distribution Date" will occur upon
the earlier of (i) ten days after a public announcement that a person or group
of affiliated or associated persons (in any such case, an "Acquiring Person")
has acquired, or obtained the right to acquire, beneficial ownership of 15% or
more of the outstanding shares of Common Stock (the "Stock Acquisition Date"),
except under certain circumstances, or (ii) ten days after the commencement of a
tender or exchange offer that would result in a person or group beneficially
owning 15% or more of such outstanding shares of Common Stock. Until the
Distribution Date, (i) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after October 20, 1996
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will contain a notation incorporating the Rights Agreement by reference, and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificates. Under the Rights Agreement,
before the occurrence of a Triggering Event (defined below), the Company may
require that, upon any exercise of Rights, a number of Rights be exercised so
that only whole shares of Common Stock will be issued.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on October 20, 2006 unless earlier redeemed by
the Company as described below.
As soon as practicable after the Distribution Date, Rights certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date. Thereafter, the separate Rights certificates
will represent the Rights. Except as otherwise determined by the Company's Board
of Directors (the "Board"), only shares of Common Stock issued before the
Distribution Date will be issued with Rights.
If any person acquires beneficial ownership of 15% or more of the
outstanding shares of Common Stock without the prior approval of a majority of
the Continuing Directors (defined below), except pursuant to certain
consolidations or mergers involving the Company or certain sales or transfers of
assets, each holder of a Right (other than the Acquiring Person and certain
related parties) will thereafter have the right to receive, upon exercise of the
Right, Common Stock (or, in certain circumstances, cash, property or other
securities of the Company such as preferred stock) having a value equal to two
times the exercise price of the Right. However, Rights are not exercisable
following the occurrence of the event described above until such time as the
Rights are no longer redeemable by the Company as described below. After
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the occurrence of the event described in this paragraph, all Rights that are (or
under certain circumstances specified in the Rights Agreement, were)
beneficially owned by any Acquiring Person (or an affiliated or associated
person) will be null and void.
For example, at an exercise price of $160 per Right, each Right not
owned by an Acquiring Person (or by certain related parties or transferees)
after an event set forth in the preceding paragraph would entitle its holder to
purchase $320 worth of Common Stock (or other consideration, as noted above)
for $160. If the Common Stock had a per share market price of $10, the
holder of each exercisable Right would be entitled to purchase 32 shares of
Common Stock for $160.
If at any time after the Stock Acquisition Date, (i) the Company is
acquired in a merger or other business combination in which the Company is not
the surviving corporation, (ii) the Company is the surviving corporation in a
consolidation or merger pursuant to which all or part of the outstanding shares
of Common Stock are changed into or exchanged for stock or other securities of
any other person or cash or any other property or (iii) more than 50% of the
combined assets or earning power of the Company and its subsidiaries is sold or
transferred (in each case other than certain consolidations with, mergers with
and into, or sales of assets or earning power by or to subsidiaries of the
Company as specified in the Rights Agreement), each holder of a Right (except
Rights which previously have been voided as set forth above) shall thereafter
have the right to receive, upon exercise, common stock or equivalent securities
of the acquiring company having a value equal to two times the exercise price of
the Rights. The events described in this paragraph and in the second preceding
paragraph are referred to as the "Triggering Events."
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The purchase price payable when Rights are exercised, the number and
kind of shares covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Common Stock, (ii) if holders of the Common Stock are granted certain rights or
warrants to subscribe for Common Stock or securities convertible into Common
Stock at less than the then current market price of the Common Stock, or (iii)
upon the distribution to holders of the Common Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends at a rate not
in excess of 125% of the rate of the last cash dividend theretofore paid or
dividends payable in shares of Common Stock) or of subscription rights or
warrants (other than those referred to in (ii) immediately above).
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments amount to at least 1% of the purchase
price. No fractional shares of Common Stock are required to be issued. In lieu
of fractions, the Company may pay in cash based on the market price of the
Common Stock on the trading date immediately before the date of exercise.
At any time after any person or group becomes an Acquiring Person and
before the acquisition by such person or group of 50% or more of the outstanding
shares of Common Stock, a majority of the Continuing Directors may cause the
Company to exchange the Rights (other than Rights owned by such person or group,
which will become void), in whole or in part, for shares of Common Stock at an
exchange ratio of one share of Common Stock (or in certain circumstances, other
securities including preferred stock) per Right, appropriately adjusted to
reflect any stock split, reverse stock split, reclassification, stock dividend
or similar transaction occurring after the date of the Rights Agreement.
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At any time before the close of business ten days after a Stock
Acquisition Date, a majority of the Continuing Directors may cause the Company
to redeem the Rights in whole, but not in part, for $.01 per Right (payable in
cash, shares of Common Stock or other consideration deemed appropriate by the
Continuing Directors). Immediately upon the action of the Continuing Directors
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the $.01 redemption price.
The term "Continuing Director" means any member of the Board who was a
member of the Board on the date the Board initially approved the Rights
Agreement, and any person who is later elected to the Board if such person is
recommended or approved by a majority of the Continuing Directors. However,
"Continuing Director" does not include an Acquiring Person, an affiliate or
associate of an Acquiring Person, or any representative of the foregoing persons
or entities.
Until a Right is exercised, its holder, as such, has no rights as a
shareholder of the Company, including, without limitation, the right to vote or
to receive dividends. While the distribution of the Rights will not be taxable
to shareholders or to the Company, shareholders may, depending upon the
circumstances, recognize taxable income if the Rights become exercisable.
Except for its provisions relating to the principal economic terms of
the Rights, the Rights Agreement may be amended by a majority of the Continuing
Directors before the Distribution Date. After the Distribution Date, the Rights
Agreement may be amended by majority of the Continuing Directors in order to
cure any ambiguity, to correct or supplement any provision of the Rights
Agreement which may be defective or inconsistent with any other provision of the
Rights Agreement, to make changes which do not adversely affect the interests
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<PAGE> 80
of holders of Rights (excluding the interest of any Acquiring Person or an
affiliate or associate of an Acquiring Person), to shorten or lengthen any time
period under the Rights Agreement or to lower the threshold described in the
second paragraph of this summary to 10%. However, no amendment to extend the
deadline for redeeming the Rights may be adopted after the Rights are no longer
redeemable, and no amendment may lengthen any other time period other than to
protect, enhance or clarify the rights of, and/or the benefits to, the holders
of Rights (other than any Acquiring Person or an affiliate or associate of an
Acquiring Person).
The Company filed a copy of the Rights Agreement with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A
dated September 30, 1996. A copy of the Rights Agreement is available free of
charge from the Rights Agent. This summary description of the Rights does not
purport to be complete. It is qualified in its entirety by reference to the
Rights Agreement, which is incorporated into this summary by reference.
6
