SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): December 10, 1998
WATKINS-JOHNSON COMPANY
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(Exact name of registrant as specified in its charter)
CALIFORNIA 1-5631 94-1402710
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(State of Incorporation (Commission File Number) (I.R.S. Employer
or Organization) Identification No.)
3333 Hillview Avenue, Palo Alto, California 94304-1223
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(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including area code: (650) 493-4141
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
At a meeting of the Board of Directors (the "Board") of Watkins-Johnson
Company (the "Company") on December 10, 1998, the Board approved, and the
Company and ChaseMellon Shareholder Services, L.L.C. ("ChaseMellon") executed,
an amendment to the Rights Agreement, dated September 30, 1996, between the
Company and ChaseMellon (the "Rights Agreement"). The amendment to the Rights
Agreement, among other things: (i) decreases from 15% to 10% the threshold level
of non-Board-approved common stock ownership which would trigger the share
purchase rights (the "Rights") under the Rights Agreement; (ii) provides that a
person or group who inadvertently triggers the Rights under the Rights Agreement
may cure such inadvertent triggering by reducing its beneficial ownership of
common stock of the Company to less than 10% within a specified time limit; and
(iii) eliminates references to "Continuing Directors" throughout the Rights
Agreement and provides that all actions previously authorized to be taken by the
Continuing Directors shall be taken by the Board. The amendment to the Rights
Agreement is attached hereto as Exhibit 4.1, which is incorporated by reference
herein. The original Rights Agreement was filed as Exhibit 1 to the Comapny's
filing on Form 8-A dated September 30, 1996. Reference is made to such filing
for all of the other terms of the Rights Agreememt.
At the same meeting, the Board amended and restated the Company's
By-Laws (the "By-Laws") to read in their entirety as set forth in Exhibit 3(ii)
hereto, which is incorporated by reference herein. Such amendment and
restatement amends the By-Laws by, among other things: (i) adding a new Section
9.12 to the By-Laws, amending the advance notice requirements for the submission
by shareholders of Board nominations or proposals for other business at annual
shareholder meetings (which were previously set forth as paragraphs (h) and (i)
of Section 2.3 of the By-Laws) by requiring that such submissions be delivered
to the Company within a period of not less than 45 or more than 75 days prior to
the anniversary of the mailing of proxy materials for the previous year's annual
shareholder meeting (previously, the required period for submitting notice was
14 to 50 days prior to any upcoming shareholders meeting); (ii) adding a new
paragraph (b) to Section 9.5 of the By-Laws, setting forth the procedure for
fixing the record date to determine the shareholders entitled to participate in
written consent to corporate action without a meeting; and (iii) amending
Section 9.2 to eliminate the requirement that the annual meeting of shareholders
be held in April of each year and instead providing that the Board shall fix the
date for such meeting each year.
Item 7. Exhibits.
3(ii) Amended and Restated By-Laws of Watkins-Johnson Company
4.1 Amendment No. 1 to Rights Agreement, dated as of December 10,
1998, to Rights Agreement, dated as of September 30, 1996,
between Watkins-Johnson Company and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent.
99.1 Press Release issued by Watkins-Johnson Company on December
11, 1998
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WATKINS-JOHNSON COMPANY
/s/ W. Keith Kennedy, Jr.
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W. Keith Kennedy, Jr.
President and
Chief Executive Officer
Dated: December 10, 1998
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EXHIBIT INDEX
Sequential
Exhibit Description Page No.
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3(ii) Amended and Restated By-Laws of Watkins-Johnson Company. 5
4.1 Amendment No. 1 to Rights Agreement, dated as of 22
December 10, 1998, to Rights Agreement, dated as of
September 30, 1996, between Watkins-Johnson Company
and ChaseMellon Services, L.L.C., as Rights Agent.
99.1 Press Release issued by Watkins-Johnson Company on 24
December 11, 1998
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EXHIBIT 3(ii)
BY-LAWS
of
WATKINS-JOHNSON COMPANY
(A California Corporation)
As Amended and Restated on December 10, 1998
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Article I
OFFICES
Section 1.1. Principal Office. The principal office for the transaction
of the business of the corporation is hereby fixed and located at 3333 Hillview
Avenue, Palo Alto, County of Santa Clara, State of California. The Board of
Directors is hereby granted full power and authority to change said principal
office from one location to another in said county.
Section 1.2. Other Offices. One or more branch or other subordinate
offices may at any time be fixed and located by the Board of Directors at such
place or places within or without the State of California as it deems
appropriate.
Article II
DIRECTORS
Section 2.1. Exercise of Corporate Powers. Except as otherwise provided
by these By-Laws, by the Articles of Incorporation of the corporation or by the
laws of the State of California now or hereafter in force, all corporate powers
of the corporation shall be vested in and exercised by or under the authority of
and the business and affairs of the corporation shall be controlled by, the
Board of Directors.
Section 2.2. Number. The number of the corporation's directors shall be
the number thereof stated in the Articles of Incorporation of the corporation
until changed by (a) an amendment of the Articles of Incorporation, or (b) an
amendment of this Section 2.2 adopted by the shareholders of the corporation
entitled to exercise four-fifths of the voting power of the corporation.
Section 2.3. Qualification of Directors.
(a) The directors of the corporation shall be shareowners
of the corporation.
(b) No person shall be a member of the Board of Directors of
the corporation who is a director, officer, employee, agent, nominee, attorney
or owner or director, officer, employee, agent, nominee or attorney of the owner
of 5% or more of the stock, common or preferred, of any corporation or
subsidiary or affiliate thereof, which directly competes with this corporation.
(c) No person shall be a member of the Board of Directors of
the corporation who has, as a result of employment or otherwise, any conflict of
interests which would prevent him from acting in the best interests of the
corporation. In the event the qualifications of the nominee for election as a
director are challenged pursuant to this section, the results of election shall
not become final and the prior Board of Directors shall continue to serve until
the existence of a conflict of interests has been submitted to counsel for the
corporation. Unless such
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counsel advises the corporation that such a conflict of interests exists within
thirty (30) days after such challenge, such nominee shall not be disqualified by
virtue of a challenge pursuant to this section.
(d) No person shall be a member of the Board of Directors of
the corporation who has, or is the nominee of anyone who has, any contract,
arrangement or understanding with any other corporation, company, partnership,
venture, or other business entity (other than the corporation or one of its
subsidiaries), or subsidiary or affiliate thereof, or with any officer,
director, employee, agent, nominee, owner of 5% or more of the stock, common or
preferred, attorney or other representative thereof, that he will reveal or in
any way utilize information obtained as a director of the corporation, or that
he will, directly or indirectly, attempt to effect or encourage any action of
the corporation.
(e) No person shall be a member of the Board of Directors of
this corporation who is: (a) a foreign citizen, or (b) an employee or officer or
nominee of a foreign corporation other than a controlled foreign subsidiary of a
United States corporation, or (c) a director, partner, agent or attorney of any
foreign person or organization as to which a reasonable basis exists for the
conclusion that compromise of classified information might result from the
service of such person as a director of this corporation. The purpose of this
prohibition is to protect the corporation from possible loss of substantial
portions of its business should it lose its U.S. Government-granted facility
security clearances pursuant to the provisions of the Executive Directorate,
Industrial Security, Defense Logistics Agency, Department of Defense Industrial
Security Letter No. 77L-4.
(f) No person who reasonably can be expected to be unable to
obtain a security clearance to at least the level of SECRET from the United
States Department of Defense, or who within twelve (12) months after application
therefor fails to obtain such clearance, shall be qualified to serve as a
director of this corporation. Determination of the probability of obtaining such
clearance and therefore of the eligibility in this respect of a candidate for
director shall be made by the Board of Directors of this corporation. Failure to
obtain such clearance as above set forth shall be cause for removal of such
person as a director by vote of the remaining directors.
(g) Any nominee for election to the Board of Directors of the
corporation who is not an incumbent director shall be present in person at the
meeting of shareholders at which such election is to be held, in order that he
may be examined by the shareholders of the corporation with respect to his
qualifications to serve as a director of the corporation.
(h) No person who is controlled by (as that term is defined in
Rule 12b-2 of the General Rules and Regulations under the Securities and
Exchange Act of 1934 as in effect on March 31, 1970) any person precluded from
being a director by virtue of Sections (a) through (f) of this Article II,
Section 2.3, shall be a member of the Board of Directors of the corporation.
(i) The restrictions set forth in this Article II, Section
2.3, shall not be waived except pursuant to the affirmative vote or written
consent of shareowners holding 80% of the outstanding shares of the corporation.
Section 2.4. Compensation. Directors who are not also employees shall
receive for their services as directors, a fixed annual fee and a fixed fee for
each Board meeting attended and for each committee meeting attended. Such
Directors shall also receive actual travel expenses incurred coming from and
returning to their principal places of business or residence. Further, such
Directors shall be eligible for such benefits as the Board shall from time to
time determine. The amount of all fees and benefits shall be determined by the
Board of Directors pursuant to a resolution duly adopted. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 2.5. Election and Term of Office. Except as otherwise provided
by the Articles of Incorporation of this corporation, the directors shall be
elected annually by the shareholders entitled to vote at the annual meeting of
said shareholders; provided, that if for any reason, said annual meeting or an
adjournment thereof is not held or the directors are not elected thereat, then
the directors may be elected at any special meeting of the shareholders called
and held for that purpose. The term of office of the directors shall begin
immediately after their election and, except
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as otherwise provided by said Articles of Incorporation, shall continue until
the next annual meeting of the shareholders and until their respective
successors are elected.
Section 2.6. Vacancies. A vacancy or vacancies in the Board of
Directors shall exist in case of the death, resignation or removal of any
director, or if the authorized number of directors is increased, or if the
shareholders entitled to vote fail, at any annual or special meeting of
shareholders at which any director is elected, to elect the full authorized
number of directors to be voted for at that meeting. The Board of Directors may
declare vacant the office of a director if he is declared of unsound mind by an
order of court, or finally convicted of a felony or if, within 60 days after
notice of his election, he does not accept the office either in writing or by
attending a meeting of the Board of Directors. Vacancies may be filled by a
majority of the remaining directors, though less than a quorum, or by a sole
remaining director. The shareholders entitled to vote may elect a director at
any time to fill any vacancy not filled by the directors or to supersede a
director elected by the directors. If the Board of Directors accepts the
resignation of a director tendered to take effect at a future time, the Board of
Directors or the shareholders entitled to vote may elect a successor to take
office when the resignation becomes effective. A reduction of the authorized
number of directors shall not remove any director prior to the expiration of his
term of office.
Section 2.7. Removal. The entire Board of Directors or any individual
director may be removed from office by a vote of shareholders holding a majority
of the outstanding shares entitled to vote at an election of directors; provided
that, unless the entire Board of Directors is removed, an individual director
shall not be removed if the number of shares voted against the resolution for
his removal exceeds the quotient arrived at when the total number of outstanding
shares entitled to vote is divided by one plus the authorized number of
directors. If any or all directors are so removed, new directors may be elected
at the same meeting.
Section 2.8. Power and Duties. Without limiting the generality or
extent of the general corporate powers provided by Section 2.1 of these By-Laws
to be exercised by the Board of Directors, but subject to the provisions of
Section 10.6 hereof, it is hereby provided that the Board of Directors shall
have full power with respect to the following matters:
(a) To purchase, lease, and acquire any and all kinds of
property, real, personal or mixed, and at its discretion to pay therefor in
money, in property and/or in stocks, bonds, debentures or other securities of
the corporation, provided however, that:
(1) The Board of Directors shall have no power to
purchase or agree to purchase shares of any class of issued Company stock at a
price in excess of the market value of such shares from any person or entity
holding more than 3% of the shares of the class to be purchased, and who has
held such shares for less than two years, without the approval (by vote or
written consent) of the holders of at least four-fifths (4/5) of the class of
shares to be purchased.
(2) The term "market price" shall be defined as the
closing price of the shares on the New York Stock Exchange on the date prior to
the date of the proposed purchase plus or minus ten percent (10%), or if the
class of shares is unlisted, the price of the most recent sale of the shares
plus or minus ten percent (10%).
(b) To enter into any and all contracts and agreements which
in its judgment may be beneficial to the interest and purposes of the
corporation.
(c) To fix and determine and to vary from time to time the
amount or amounts to be set aside or retained as surplus, reserve funds, or as
working capital of the corporation or for maintenance, repairs, replacements or
enlargements of its properties.
(d) To declare and pay dividends in cash, shares and/or
property out of any funds of the corporation at the time legally available for
the declaration and payment of dividends on its shares.
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(e) To adopt such rules and regulations for the conduct of its
meetings and the management of the affairs of the corporation as it may deem
proper.
(f) To prescribe the manner in which and the person or persons
by whom any or all of the checks, drafts, notes, bills of exchange, contracts
and other corporate instruments shall be executed.
(g) To accept resignations of directors; to declare vacant the
office of a director as provided in Section 2.6 hereof; and, in case of any
vacancy from any cause whatsoever in the office of directors, to fill the same
as provided in Section 2.6 hereof.
(h) To create offices in addition to those for which provision
is made by law or by these By-Laws; to elect and remove at pleasure all officers
of the corporation, fix their terms of office, prescribe their powers and
duties, limit their authority and fix their salaries in a way it may deem
advisable which is not contrary to law or these By-Laws; and, if it sees fit, to
require from the officers or any of them security for faithful service.
(i) To designate some person to perform the duties and
exercise the powers of any officer of the corporation during the temporary
absence or disability of such officer.
(j) To appoint or employ and to remove at pleasure such agents
end employees as it may see fit, to prescribe their titles, powers and duties,
limit their authority, and fix their salaries in any way it may deem advisable
which is not contrary to law or these By-Laws; and, if it sees fit, to require
from them or any of them security for faithful performance.
(k) To fix a time in the future which shall not be more than
thirty (30) days prior to the date of the meeting or event for the purposes of
which it is fixed, as a record date for the determination of the shareholders
entitled to notice of and to vote at any meeting, or entitled to receive any
dividend or distribution, or any allotment of rights, or to exercise rights in
respect to any change, conversion or exchange of shares; and in such case only
shareholders of record on the date so fixed shall be entitled to notice of and
to vote at the meeting or to receive the dividend, distribution or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after any record date
fixed as aforesaid. The Board of Directors may close the books of the
corporation against transfers of shares during the whole or any part of such
period.
(l) To change the principal office for the transaction of the
business of the corporation from one location to another within the same county
as provided in Section 1.1 hereof; to fix and locate from time to time one or
more branch or other subordinate offices of the corporation within or without
the State of California as provided in Section 1.2 hereof; to designate any
place within or without the State of California for the holding of any meeting
or meetings of the Board of Directors as provided in Section 10.1 hereof; and to
adopt, make and use a corporate seal, and to prescribe the forms of certificates
for shares and to alter the form of such seal and of such certificates from time
to time as in its judgment it may deem best, provided such seal and such
certificates shall at all time comply with the provisions of law.
(m) To authorize the issue of shares of stock of the
corporation in accordance with the laws of the State of California and the
Articles of Incorporation of the corporation.
(n) Subject to the limitations provided in Section 14.2
hereof, to adopt, amend or repeal from time to time and at any time these
By-Laws and any and all amendments of the same.
(o) To borrow money, and incur indebtedness of the
corporation, including the power and authority to borrow money from any of the
shareholders, directors or officers of the corporation, and to cause to be
executed and delivered therefor in the corporate name promissory notes, bonds,
debentures, deeds of trust, mortgages, pledges, hypothecations or other
evidences of debt and securities therefor, and the note or other obligation
given for any indebtedness of the corporation, signed officially by any officer
or officers thereunto duly authorized by the Board of Directors shall be binding
on the corporation.
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(p) Generally to do and perform every act and thing whatever
that pertain to the office of a director or to a Board of Directors.
Article III
OFFICERS
Section 3.1. Election and Qualifications. The officers of this
corporation shall consist of a President, one or more Vice Presidents, a
Secretary, a Controller, and a Treasurer who shall be chosen by the Board of
Directors and such other officers, including a Chairman of the Board of
Directors, as the Board of Directors shall deem expedient, who shall be chosen
in such manner and hold their offices for such terms as the Board of Directors
may prescribe. Any two or more of such offices except of those of President and
Secretary may be held by the same person. Any Vice President, Assistant
Treasurer, or Assistant Secretary, respectively, may exercise any of the powers
of the President, the Treasurer, or the Secretary, respectively, as directed by
the Board of Directors and shall perform such other duties as are imposed upon
him by the By-Laws or the Board of Directors.
Section 3.2. Term of Office and Compensation. The term of office and
salary of each of said officers and the manner and time of the payment of such
salaries shall be fixed and determined by the Board of Directors and may be
altered by said Board from time to time at its pleasure.
Section 3.3. Removal and Vacancies. Any officer of the corporation may
be removed at the pleasure of the Board of Directors at any meeting or by vote
of shareholders entitled to exercise the majority of voting power of the
corporation at any meeting. If any vacancy occurs in any office of the
corporation, the Board of Directors may elect a successor to fill such vacancy
for the remainder of the unexpired term and until his successor is duly chosen
and qualified.
Article IV
CHAIRMAN OF THE BOARD
Section 4.1. Powers and Duties
(a) The Chairman of the Board of Directors, if there be one,
shall have the power to preside at all meetings of the Board of Directors and,
when designated as the chief executive officer of the corporation by the Board
of Directors, shall have the powers and duties set forth herein in Article V,
Section 5.1 (a), (b), and (c) and in the absence of the President, the powers
and duties as set forth in Section 5.1 (d), and shall have such other powers and
shall be subject to such duties as the Board of Directors may from time to time
prescribe.
(b) The Vice Chairman of the Board of Directors, if there be
one, shall, in the absence of the Chairman, have the power to preside at all
meetings of the Board of Directors and, when designated as the chief executive
officer of the corporation by the Board of Directors, shall have the powers and
duties set forth herein in Article V, Section 5.1 (a), (b), and (c), and in the
absence of the Chairman and the President, the powers and duties, as set forth
in Section 5.1 (d), and shall have such other powers, and shall be subject to
such other duties as the Board of Directors may from time to time prescribe.
Article V
PRESIDENT
Section 5.1. Powers and Duties. The powers and duties of the President
are:
(a) To act as the chief executive officer of the corporation
when so designated by the Board of Directors and, as such, and subject to the
control of the Board of Directors, to have general supervision, direction and
control of the business affairs of the corporation.
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(b) To preside at all meetings of the shareholders and at all
meetings of the Board of Directors in the absence of the Chairman and the Vice
Chairman of the Board.
(c) To call meetings of the shareholders and also the Board of
Directors, as duly designated chief executive officer of the corporation, to be
held at such time and, subject to the limitations prescribed by law or by these
By-Laws, at such places as he shall deem proper.
(d) To affix the signature of the corporation to all deeds,
conveyances, mortgages, leases, obligations, bonds, certificates and other
papers and instruments in writing which have been authorized by the Board of
Directors or which, in the judgment of the Chairman of the Board or the Vice
Chairman in his absence, or the President in the absence of both should be
executed on behalf of the corporation, to sign certificates for shares of stock
of the corporation and, subject to the direction of the Board of Directors, to
have general charge of the property of the corporation and to supervise and
control all officers, agents and employees of the corporation.
Section 5.2. President pro tem. If neither the Chairman of the Board,
the Vice Chairman of the Board, the President nor any Vice President is present
at any meeting of the Board of Directors, a President pro tem may be chosen to
preside and act at such a meeting. If neither the President nor any Vice
President is present at any meeting of the shareholders, a President pro tem may
be chosen to preside at such meeting.
Article VI
VICE PRESIDENT
Section 6.1. Powers and Duties. In case of the absence, disability or
death of the President, the Vice President, or one of the Vice Presidents, shall
exercise all his powers and perform all his duties. If there is more than one
Vice President, the order in which the Vice Presidents shall succeed to the
powers and duties of the President shall be fixed by the Board of Directors. The
Vice President or Vice Presidents shall have such other powers and perform such
other duties as may be granted or prescribed by the Board of Directors.
Article VII
SECRETARY
Section 7.1. Powers and Duties. The powers and duties of the Secretary
are:
(a) To keep a book of minutes at the principal office of the
corporation, or such other place as the Board of Directors may order, of all
meetings of its directors and shareholders with the time and place of holding,
whether regular or special, and if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings and the proceedings thereof.
(b) To keep the seal of the corporation and to affix the same
to all instruments which may require it.
(c) To keep or cause to be kept at the principal office of the
corporation, or at the office of the transfer agent or agents, a share register,
or duplicate share registers, showing the names of the shareholders and their
addresses, the number and classes of shares held by each, the number and date of
certificates issued for shares, and the number and date of cancellation of every
certificate surrendered for cancellation.
(d) To keep a supply of certificates for shares of the
corporation, to fill in all certificates issued, and to make a proper record of
each such issuance; provided, that so long as the corporation shall have one or
more duly appointed and acting transfer agents of the shares, or any class or
series of shares, of the corporation, such duties with respect to such shares
shall be performed by such transfer agent or transfer agents.
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(e) To transfer upon the share books of the corporation any
and all shares of the corporation; provided, that so long as the corporation
shall have one or more duly appointed and acting transfer agents of the shares,
or any class or series of shares, of the corporation, such duties with respect
to such shares shall be performed by such transfer agent or transfer agents, and
the method of transfer of each certificate shall be subject to the reasonable
regulations of the transfer agent to which the certificate is presented for
transfer, and also, if the corporation then has one or more duly appointed and
acting registrars, to the reasonable regulations of the registrar to which the
new certificate is presented for registration; and provided, further, that no
certificate for shares of stock shall be issued or delivered or, if issued or
delivered, shall have any validity whatsoever until and unless it has been
signed or authenticated in the manner provided in Section 11.4 hereof.
(f) To make service and publication of all notices that may be
necessary or proper, and without command or direction from anyone. In case of
the absence, disability, refusal or neglect of the Secretary to make service or
publication of any notices, then such notices may be served and/or published by
the President or a Vice President, or by any person thereunto authorized by
either of them or by the Board of Directors or by the holders of a majority of
the outstanding shares of the corporation.
(g) Generally to do and perform all such duties as pertain to
his office and as may be required by the Board of Directors.
Article VIII
TREASURER
Section 8.1. Powers and Duties. The powers and duties of the Treasurer
are:
(a) To have the custody of all funds, securities, evidences of
indebtedness and other valuable documents of the corporation and, at his
discretion, to cause any or all thereof to be deposited for the account of the
corporation with such depository as may be designated from time to time by the
Board of Directors.
(b) To receive or cause to be received, and to give or cause
to be given, receipts and acquittances for moneys paid in for the account of
corporation.
(c) To disburse, or cause to be disbursed, all funds of the
corporation as may be directed by the Board of Directors, taking proper vouchers
for such disbursements.
(d) To render to the President and to the Board of Directors,
whenever they may require, accounts of all transactions as Treasurer and of the
financial condition of the corporation.
(e) Generally to do and perform all such duties as pertain to
his office and as may be required by the Board of Directors.
Article VIII-A
CONTROLLER
Section 8-A.1. Powers and Duties. The powers and duties of the
Controller are:
(a) To supervise and control the keeping and maintaining of
adequate and correct accounts of the corporation's properties and business
transactions, gains, losses, capital surplus and shares. Any surplus, including
earned surplus, paid-in surplus and surplus arising from a reduction of stated
capital, shall be classified according to source and shown in a separate
account. The books of account shall at all reasonable times be open to
inspection by any director.
(b) To assist in establishing budgets.
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(c) To cause the preparation of financial statements for
shareowners, governmental agencies and corporate purposes.
(d) To direct the internal audits for the corporation.
(e) To provide for insurance coverage for the corporation.
(f) To do and perform such other duties pertaining to said
office as may be required by the Board of Directors.
Article IX
MEETINGS OF SHAREHOLDERS
Section 9.1. Place of Meetings. Meetings (whether regular, special or
adjourned) of the shareholders of the corporation shall be held at the principal
office for the transaction of business as specified in Section 1.1 hereof, which
is hereby designated as an office for such purpose in accordance with the laws
of the State of California, or at any place within or without the State which
may be designated by the Board of Directors.
Section 9.2. Annual Meetings. The annual meeting of the shareholders,
shall be held at such place, on such date and at such time as the Board of
Directors shall each year determine. Such annual meeting shall be held for the
purpose of the election of directors, for the making of reports of the affairs
of the corporation and for the transaction of such other business as may
properly come before the meeting.
Section 9.3. Special Meetings. Special meeting of the shareholders for
any purpose or purposes whatsoever, may be called at any time by the Chairman,
the Vice Chairman, or the President or by the Board of Directors, or by one or
more shareholders holding not less than 50% plus 1 share of the voting power of
the corporation. Upon request in writing by registered mail to the Chairman,
Vice Chairman, or Secretary, or delivered to any such officer in person, by any
persons entitled to call a meeting of shareholders, or by any persons entitled
under the provisions of the Articles of Incorporation of the corporation to
request a meeting of shareholders, it shall be the duty of such officer
forthwith to cause notice to be given to the shareholders entitled to vote that
a meeting will be held at a time fixed by such officer not less than 10 or more
than 60 days after the receipt of such request, subject, however, to the
provisions of the Articles of Incorporation.
Section 9.4. Notice of Meetings. Notice of any meeting of shareholders
shall be given in writing to shareholders entitled to vote by the Secretary or
an Assistant Secretary, or other person charged with that duty, or if there be
no such officer or person, or in case of his neglect or refusal, by any director
or shareholder. A notice may be given by the corporation to any shareholder,
either personally or by mail or other means of written communication, charges
prepaid, addressed to such shareholder at his address appearing on the books of
the corporation or given by him to the corporation for the purpose of notice. If
a shareholder gives no address, notice shall be deemed to have been given him if
sent by mail or other means of written communication addressed to the place
where the principal office of the corporation is situated, or if published at
least once in some newspaper of general circulation in the county in which said
office is located. Any notice shall be deemed to have been given when deposited
in the United States mail, postage prepaid, and addressed as hereinbefore
provided. Notice of any meeting of shareholders shall be sent to each
shareholder entitled thereto not less than seven days before such meeting.
Notice of any meeting of shareholders shall specify the place, the day, and the
hour of the meeting, and the general nature of the business to be transacted.
Section 9.5. Consent to Shareholders' Meetings.
(a) The transactions of any meeting of shareholders, however
called and noticed, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present either in person or by proxy,
and if, either before or after the meeting, each of the shareholders entitled to
vote, not present in person or by proxy, signs a written waiver of notice, or a
consent to the holding of such meeting, or an approval of the minutes
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thereof. All such waivers, consents or approvals shall be filed with the
corporate records or made a part of the minutes of the meeting. Any action which
may be taken at a meeting of the shareholders, except approval of an agreement
for merger or consolidation of the corporation with any other corporation, may
be taken without a meeting if authorized by a writing signed by all of the
shareholders who would be entitled to vote upon such action at a meeting and
filed with the Secretary of the corporation.
(b) Notwithstanding any other provision of these By-Laws, in
order that the corporation may determine the shareholders entitled to consent to
corporate action in writing without a meeting, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than 10 days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. Any
shareholder of record seeking to have the shareholders authorize or take
corporate action by written consent shall, by written notice to the Secretary,
request the Board of Directors to fix a record date. The Board of Directors
shall promptly, but in all events within 10 days after the date on which such a
request is received, adopt a resolution fixing the record date. If no record
date has been fixed by the Board of Directors within 10 days of the date on
which such a request is received, the record date for determining shareholders
entitled to consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is required by applicable law, shall be
the first date on which a signed written consent setting forth the action taken
or proposed to be taken is delivered to the corporation by delivery to its
registered office in the State of California, its principal place of business,
or any officer or agent of the corporation having custody of the book in which
proceedings of meetings of shareholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required by applicable
law, the record date for determining shareholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the date on which the Board of Directors adopts the resolution taking such
prior action.
Section 9.6. Quorum. Subject to the provisions of the Articles of
Incorporation of the corporation and these By-Laws, the presence in person or by
proxy of the persons entitled to vote a majority of the voting shares at any
meeting shall constitute a quorum for the transaction of business. Shares shall
not be counted to make up a quorum for a meeting if voting of them at the
meeting has been enjoined or for any reason they cannot be lawfully voted at the
meeting. The shareholders present at a duly called or held meeting at which a
quorum is present may continue to do business until adjournment notwithstanding
the withdrawal of enough shareholders to leave less than a quorum.
Section 9.7. Adjourned Meetings. Any shareholders' meeting, whether or
not a quorum is present, may be adjourned from time to time by the vote of a
majority of shares, the holders of which are either present in person or
represented by proxy thereat, but, except as provided in Section 9.6 hereof, in
the absence of a quorum no other business may be transacted at such meeting.
When a meeting is adjourned for thirty days or more, notice of the adjourned
meeting shall be given as in the case of an original special meeting. Save as
aforesaid, it shall be given as in the case of an original special meeting. Save
as aforesaid, it shall not be necessary to give any notice of the time and place
of the adjourned meeting or of the business to be transacted thereat other than
by announcement at the meeting at which such adjournment is taken.
Section 9.8. Voting Rights. Only persons in whose names shares entitled
to vote stand on the stock records of the corporation on the day three days
prior to any meeting of shareholders, or, if some other day be fixed for the
determination of shareholders of record, then on such other day, shall be
entitled to vote at such meeting. Each such person shall be entitled to one vote
for each share.
Section 9.9. Written Consents. When written consents are given with
respect to any shares, they shall be given by and accepted from the persons in
whose names such shares stand on the books of the corporation at the time such
respective consents are given, or their proxies. Any shareholder giving a
written consent, or his proxy, or his transferee or personal representative, or
their respective proxies, may revoke the same prior to the time that written
consents of the number of shares required to authorize the proposed action have
been filed with the Secretary of the corporation, but may not do so thereafter.
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Section 9.10. Elections for Directors. Every shareholder entitled to
vote at any election for directors of the corporation may cumulate his votes and
give one candidate a number of votes equal to the number of directors to be
elected multiplied by the number of votes to which his shares are entitled, or
distribute his votes on the same principle among as many candidates as he thinks
fit. The candidates receiving the highest number of votes up to the number of
directors to be elected shall be and be declared elected. Elections for
directors need not be by ballot except upon demand made by a shareholder at the
election and before the voting begins.
Section 9.11. Proxies. Every person entitled to vote or execute
consents shall have the right to do so either in person or by one or more agents
authorized by a written proxy executed by such person or his duly authorized
agent and filed with the Secretary of the corporation; provided, that no such
proxy shall be valid after the expiration of eleven (11) months from the date of
its execution, unless the person executing it specified therein the length of
time for which such proxy is to continue in force, which in no case shall exceed
seven (7) years from the date of its execution.
Section 9.12. Shareholder Nominations and Proposals at Annual Meetings.
Notwithstanding any other provision of these By-Laws, the following requirements
shall apply with respect to nominations of persons for election to the Board of
Directors and the proposal of business to be transacted by the shareholders at
annual meetings:
(a) Nominations of persons for election to the Board of
Directors and the proposal of business to be transacted by the shareholders may
be made at an annual meeting of shareholders (i) pursuant to the corporation's
notice with respect to such meeting, (ii) by or at the direction of the Board of
Directors or (iii) by any shareholder of record of the corporation who was a
shareholder of record at the time of the giving of the notice provided for in
the following paragraph (b), who is entitled to vote at the meeting and who has
complied with the notice procedures set forth in this Section 9.12.
(b) For nominations or other business to be properly brought
before an annual meeting by a shareholder pursuant to clause (iii) of the
foregoing paragraph (a), (i) the shareholder must have given timely notice
thereof in writing to the Secretary of the corporation, (ii) such notice must
contain the information required by paragraph (d) below, (iii) such business
must be a proper matter for shareholder action under the California Corporations
Code and the corporation's Articles of Incorporation and these By-Laws, (iv) if
the shareholder, or the beneficial owner on whose behalf any such proposal or
nomination is made, has provided the corporation with a Solicitation Notice, as
that term is defined in clause (ii)(C) of paragraph (d), below, such shareholder
or beneficial owner must, in the case of a proposal, have delivered a proxy
statement and form of proxy to holders of at least the percentage of the
corporation's voting shares required under applicable law to carry any such
proposal, or, in the case of a nomination or nominations, have delivered a proxy
statement and form of proxy to holders of a percentage of the corporation's
voting shares reasonably believed by such shareholder or beneficial holder to be
sufficient to elect the nominee or nominees proposed to be nominated by such
shareholder, and must, in either case, have included in such materials the
Solicitation Notice and (v) if no Solicitation Notice relating thereto has been
timely provided pursuant to this Section 9.12, the shareholder or beneficial
owner proposing such business or nomination must not have solicited a number of
proxies sufficient to have required the delivery of such a Solicitation Notice
under this Section 9.12.
(c) To be timely under clause (i) of paragraph (b) above, a
shareholder's notice shall be delivered to the Secretary at the principal
executive offices of the corporation not less than 45 or more than 75 days prior
to the first anniversary (the "Anniversary") of the date on which the
corporation first mailed its proxy materials for the preceding year's annual
meeting of shareholders; provided, however, that if the date of the annual
meeting is advanced more than 30 days prior to or delayed by more than 30 days
after the anniversary of the preceding year's annual meeting, notice by the
shareholder to be timely must be so delivered not later than the close of
business on the later of (i) the 90th day prior to such annual meeting or (ii)
the 10th day following the day on which public announcement of the date of such
meeting is first made.
(d) Such shareholder's notice shall set forth (i) as to
business, other than nominations for the election or reelection of directors,
that the shareholder proposes to bring before the meeting, a brief description
of such business, the reasons for conducting such business at the meeting and
any material interest in such business of
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such shareholder and the beneficial owner, if any, on whose behalf the proposal
is made, (ii) as to the shareholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (A) the name and
address of such shareholder, as they appear on the corporation's books, and of
such beneficial owner, (B) the class and number of shares of the corporation
that are owned beneficially and of record by such shareholder and such
beneficial owner, and (C) whether either such shareholder or beneficial owner
intends to deliver a proxy statement and form of proxy to holders of, in the
case of a proposal, at least the percentage of the corporation's voting shares
required under applicable law to carry the proposal or, in the case of a
nomination or nominations, a sufficient number of holders of the corporation's
voting shares to elect such nominee or nominees (an affirmative statement of
such intent being a "Solicitation Notice" for the purposes of this Section
9.12), and (iii) as to each person whom the shareholder proposes to nominate for
election as a director who is not an incumbent director and as to each person,
acting alone or in conjunction with one or more other persons, who makes such
nominations, or organizes, directs or finances such nomination or solicits
proxies to vote for the nominee:
(1) the name, age, residence address, and business
address of such proposed nominee and of such person;
(2) the principal occupation or employment, the name,
type of business and address of the corporation or other organization in which
such employment is carried on of such proposed nominee and of each such person;
(3) if the proposed nominee is an attorney, a
statement as to whether or not either he or any attorney or firm with whom he
has an office relationship as partner, associate, employee, or otherwise, is an
attorney for any corporation, affiliate or subsidiary thereof, engaged in
business in California;
(4) a statement as to such proposed nominee and a
statement as to each such person stating whether the nominee or person concerned
has been a participant in any proxy contest within the past ten years, and if
so, the principals involved, the subject matter of the contest, the outcome
thereof, and the relationship of the nominee to the principals;
(5) the amount of stock in the corporation owned
beneficially, directly or indirectly, by such proposed nominee or by members of
his family residing with him and the names of the registered owners thereof;
(6) the amount of stock of the corporation owned of
record but not beneficially by such proposed nominee or by members of his family
residing with him and the names of the beneficial owners thereof;
(7) if any shares specified in clause (5) or (6)
above were acquired in the last two years, a statement of the dates of
acquisition and amounts acquired on each date;
(8) a statement showing the extent of any borrowings
to purchase shares of the corporation specified in clauses (5) or (6) above
acquired within the preceding two years, and if funds were borrowed otherwise
than pursuant to a margin account or bank loan in the regular course of business
of a bank, the material provisions of such borrowings and the names of the
lenders;
(9) the details of any contract, arrangement or
understanding relating to the securities of the corporation to which such
proposed nominee or to which each such person is a party, such as joint venture
or option arrangements as to the division of losses or profits or with respect
to the giving or withholding of proxies, and the name or names of the persons
with whom such contracts, arrangements or understandings exist;
(10) a description of any arrangement or
understanding of such proposed nominee and each such person with any person
regarding future employment or with respect to any future transaction to which
the corporation will or may be a party;
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(11) a statement as to such proposed nominee and a
statement as to each such person as to whether or not the nominee or person
concerned will bear any part of the expense incurred in any proxy solicitation,
and if so, the amount thereof;
(12) a statement as to such proposed nominee and a
statement as to each such person describing any conviction for a felony that
occurred during the preceding ten years involving the unlawful possession,
conversion or appropriation of money or other property, or the payment or
nonpayment of taxes; and
(13)any other information relating to such proposed
nominee or each such person as would be required to be disclosed in
solicitations of proxies for the election of such nominees as directors pursuant
to Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and such nominee's written consent to serve as a director if
elected.
(e) Notwithstanding anything to the contrary set forth in
paragraph (c) of this Section 9.12, in the event that the number of directors to
be elected to the Board of Directors is increased and there is no public
announcement naming all of the nominees for director or specifying the size of
the increased Board of Directors made by the corporation at least 55 days prior
to the Anniversary, a shareholder's notice required by this By-Law shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the corporation not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the corporation.
(f) Only persons nominated in accordance with the procedures
set forth in this Section 9.12 shall be eligible to serve as directors and only
such business shall be conducted at an annual meeting of shareholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this Section 9.12. The chair of the meeting shall have the power and the duty
to determine whether a nomination or any business proposed to be brought before
the meeting has been made in accordance with the procedures set forth in these
By-Laws and, if any proposed nomination or business is not in compliance with
these By-Laws, to declare that such defective proposed business or nomination
shall not be presented for shareholder action at the meeting and shall be
disregarded.
(g) Notwithstanding the foregoing provisions of this Section
9.12, a shareholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to matters
set forth in this Section 9.12. Nothing in this Section 9.12 shall be deemed to
affect any rights of shareholders to request inclusion of proposals in the
corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
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Article X
MEETINGS OF DIRECTORS
Section 10.1. Place of Meetings. Meetings (whether regular, special or
adjourned) of the Board of Directors of this corporation shall be held at the
principal office of the corporation for the transaction of business, as
specified in Section 1.1 hereof, which is hereby designated as an office for
such purpose in accordance with the laws of the State of California, or at any
other place within or without the State which has been designated from time to
time by resolution of the Board or by written consent of all members of the
Board. Any meeting shall be valid wherever held, if held upon the written
consent of all members of the Board of Directors given either before or after
the meeting and filed with the Secretary of the corporation.
Section 10.2. Regular Meetings. Regular meetings of the Board of
Directors, of which no notice need be given except as required by the laws of
the State of California, shall be held after the adjournment of each annual
meeting of the shareholders (which meeting shall be designated as the Regular
Annual Meeting) and at such other times as may be designated from time to time
by resolution of the Board of Directors. Such regular meetings shall be held at
the principal office of the corporation for the transaction of business as
specified in Section 1.1 hereof, unless notice of the place thereof be given in
the same manner as for special meetings.
Section 10.3. Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman, the Vice Chairman, or the
President or by a majority of the directors.
Section 10.4. Notice of Special Meetings. Except in the case of regular
meetings, notice of which has been dispensed with, written notice of the time
and place of the meetings of the Board of Directors shall be delivered
personally to each director, or sent to each director by mail or by other form
of written communication, at least twenty-four (24) hours before the meeting. If
the address of a director is not shown on the records and is not readily
ascertainable, notice shall be addressed to him at the city or place in which
the meetings of the directors are regularly held. Notice of the time and place
of holding an adjourned meeting need not be given to absent directors if the
time and place be fixed at the meeting adjourned.
Section 10.5. Waiver of Notice and Consent. Subject to the provisions
of Section 10.6 hereof, the transactions of any meeting of the Board of
Directors, however called and noticed or wherever held, shall be as valid as
though had at a meeting duly held after regular call and notice, if a quorum is
present, and if either before or after the meeting, each of the directors not
present signs a written waiver or notice, a consent to holding such meeting, or
an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the corporate records and made a part of the minutes of the
meeting.
Section 10.6. Quorum. Except where the vote of seventy-five percent
(75%) of the directors is required to take action as hereinafter provided in
this Section 10.6, a majority of the authorized number of directors shall
constitute a quorum of the Board for the transaction of business. In the absence
of a quorum, a majority of the directors present may adjourn from time to time
until the time fixed for the next regular meeting of the Board. Every act or
decision done or made by a majority of the directors present at a meeting duly
held at which a quorum is present shall be regarded as the act of the Board of
Directors, provided, however, that the affirmative vote of seventy-five percent
(75%) of the Board of Directors shall be required in order to do or make any of
the following acts or decisions:
(a) Declare any dividend or authorize any other distribution
to the shareholders of the corporation.
(b) Sell, exchange, convey, lease, or otherwise dispose of
assets of the corporation in other than ordinary course of the operation of the
business of the corporation, in any calendar year the value of which in the
aggregate shall exceed five percent (5%) of the Shareowners' Equity of the
Corporation.
(c) Authorize the issuance or sale of any unissued shares of
stock of the corporation.
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(d) Authorize or grant any option for the purchase of any
unissued shares of stock of the corporation.
(e) Appoint an Executive Committee.
(f) Amend these By-Laws.
(g) Change the number of directors pursuant to Article Fourth
of the Articles of Incorporation.
(h) Hold any meeting of the Board of Directors at a place
other than the principal office of the corporation for the transaction of
business, specified in Section 1.1 hereof.
Section 10.7. Consent in Writing. Any action required or permitted to
be taken by the Board of Directors under the General Corporation Law of the
State of California may be taken without a meeting, if all members of the Board
shall individually or collectively consent in writing to such action. Such
written consent or consents shall be filed with the minutes of the proceedings
of the Board. Such action by written consent shall have the same force and
effect as a unanimous vote of such Directors.
Article XI
SUNDRY PROVISIONS
Section 11.1. Instruments in Writing. All checks, drafts, demands for
money and notes of the corporation, and all written contracts of the
corporation, shall be signed by such officer or officers, agent or agents, as
the Board of Directors may from time to time by resolution designate. No
officer, agent, or employee of the corporation shall have power to bind the
corporation by contract or otherwise unless authorized to do so by these By-Laws
or by the Board of Directors.
Section 11.2. Fiscal Year. The fiscal year of this corporation shall
begin on the lst day of January of each year and end on the 31st day of December
of the same year.
Section 11.3. Shares Held by the Corporation. Shares in other
corporations standing in the name of this corporation may be voted or
represented and all rights incident thereto may be exercised on behalf of this
corporation by any officer of this corporation authorized so to do by resolution
of the Board of Directors.
Section 11.4. Certificates of Stock. There shall be issued to each
holder of fully paid shares of the capital stock of the corporation a
certificate or certificates for such shares. Every such certificate shall be
either (a) signed by the President or a Vice President and the Secretary or an
Assistant Secretary of the corporation and countersigned by a transfer agent of
the corporation (if the corporation shall then have a transfer agent), and
registered by a registrar of the shares of capital stock of the corporation (if
the corporation shall then have a registrar); or (b) authenticated by facsimiles
of the signatures of the President and Secretary of the corporation or by a
facsimile of the signature of the President and the written signature of the
Secretary or an Assistant Secretary and countersigned by a transfer agent of the
corporation and registered by a registrar of the shares of the capital stock of
the corporation. The countersignature by a transfer agent may be made by
facsimile signature subject to approval by the New York Stock Exchange if each
certificate bearing such facsimile signature of a transfer agent is registered
by the written signature of a bank or trust company as registrar and if the
transfer agent authorized to use such facsimile signature shall indemnify this
corporation from all loss arising out of any act done in reliance upon the
authenticity of any such facsimile signature resembling or purported to be such
facsimile signature.
Section 11.5 Lost Certificates. The Board of directors may by
resolution provide that in the event any certificate or certificates for shares
of the capital stock of the corporation shall be alleged to have been lost or
destroyed, no new certificate or certificates shall be issued in lieu thereof
until an indemnity bond in such form and in such amount as shall be approved by
the President or a Vice President of the corporation shall have been
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furnished. The Board of Directors may adopt such other provisions and
restrictions with reference to lost certificates as it shall in its discretion
deem appropriate.
Section 11.6. Certification and Inspection of By-Laws. The corporation
shall keep in its principal office for the transaction of business the original
or a copy of these By-Laws as amended or otherwise altered to date, certified by
the Secretary, which shall be open to inspection by the shareholders at all
reasonable times during office hours.
Section 11.7. Annual Report. The annual report to shareholders referred
to in Section 3006 of the California Corporations Code is hereby expressly
dispensed with.
Article XII
CONSTRUCTION OF BY-LAWS WITH REFERENCE
TO PROVISIONS OF LAW
Section 12.1. By-Law Provisions Additional and Supplemental to
Provisions of Law. All restrictions, limitations, requirements and other
provisions of these By-Laws shall be construed, insofar as possible, as
supplemental and additional to all provisions of law applicable to the subject
matter thereof and shall be fully complied with in addition to the said
provisions of law unless such compliance shall be illegal.
Section 12.2 By-Law Provisions Contrary to or Inconsistent with
Provisions of Law. Any article, section, subsection, subdivision, sentence,
clause or phrase of these By-Laws which, upon being construed in the manner
provided in Section 12.1 hereof, shall be contrary to or inconsistent with any
applicable provision of law, shall not apply so long as said provisions of law
shall remain in effect, but such result shall not affect the validity or
applicability of any other portions of these By-Laws, it being hereby declared
that these By-Laws would have been adopted and each article, section,
subsection, subdivision, sentence, clause, or phrase thereof, irrespective of
the fact that any one or more articles, sections, subsections, subdivisions,
sentences, clauses or phrases is or are illegal.
Article XIII
This Article deleted and stricken from the By-Laws at time of corporate
reorganization, July 3, 1961.
Article XIV
ADOPTION, AMENDMENT OR REPEAL OF BY-LAWS.
Section 14.1. By Shareholders. By-Laws may be adopted, amended or
repealed by the vote or written assent of shareholders entitled to exercise
four-fifths of the voting power of the corporation.
Section 14.2. By the Board of Directors. Subject to the right of
shareholders to adopt, amend, or repeal By-Laws, By-Laws other than a By-Law or
amendment thereof (a) changing the authorized number of directors or (b)
changing, amending, repealing or in any way modifying the provisions of Section
10.6 of Article X or this Article XIV may be adopted, amended or repealed by the
affirmative vote of seventy-five percent (75%) of the Board of Directors. A
By-Law adopted by the shareholders may limit or restrict the power of the
Directors to adopt, amend or repeal By-Laws, or may deprive them of the power.
Article XV
INDEMNIFICATION
Section 15.1. Indemnification of Directors and Officers. Each person
who was or is a party or is threatened to be made a party to or is involved in
any threatened, pending or completed action, suit or proceeding, formal or
informal, whether brought in the name of the corporation or otherwise and
whether of a civil, criminal, administrative or investigative nature (hereafter
a "proceeding"), by reason of the fact that he or she, or a person of
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whom he or she is the legal representative, is or was a director or officer of
the corporation or is or was serving at the request of the corporation as a
director or officer of another corporation or other enterprise, including
employee benefit plans, whether the basis of such proceeding is an alleged
action or inaction in an official or other capacity while serving as a director
or officer, shall, subject to any agreement between the corporation and such
person, be indemnified and held harmless by the corporation to the fullest
extent permissible under California law and the corporation's Articles of
Incorporation, against all costs, charges, expenses, liabilities, and losses
including attorneys' fees, judgments, fines, ERISA excise taxes or penalties,
and amounts paid or to be paid in settlement (hereafter, collectively,
"losses"), reasonably incurred or suffered by such person in connection
therewith. Such indemnification shall continue as to a person who has ceased to
be a director or officer and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that (a) the corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of the corporation; (b) the
corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) other than a proceeding by or in
the name of the corporation to procure a judgment in its favor only if any
settlement of such a proceeding is approved in writing by the corporation; (c)
no such person shall be indemnified (i) except to the extent that the aggregate
of losses to be indemnified exceeds the amount of such losses paid pursuant to
any directors' and officers' liability insurance policy maintained by the
corporation; (ii) on the account of any suit in which judgment is rendered
against such person for an accounting of profits made from the purchase or sale
by such person of securities of the corporation pursuant to the provision of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any federal, state or local statutory law; (iii) if a
court of competent jurisdiction finally determines that any indemnification
hereunder is unlawful; and (iv) as to circumstances in which indemnity is
expressly prohibited by Section 317 of the California General Corporation Law
(the "Law") and (d) that no such person shall be indemnified with regard to any
action brought by or in the right of the corporation for breach of duty to the
corporation and its shareholders for (i) acts or omissions involving intentional
misconduct or knowing and culpable violation of law; (ii) acts or omissions that
the director or officer believes to be contrary to the best interests of the
corporation or its shareholders or that involve the absence of good faith on the
part of the director or officer; (iii) any transaction from which the director
or officer derived an improper personal benefit; (iv) acts or omissions that
show a reckless disregard for the director's or officer's duty to the
corporation or its shareholders where the director or officer was aware, or
should have been aware, of a risk of serious injury to the corporation or its
shareholders; (v) acts or omissions that constitute an unexcused pattern of
inattention amounting to an abdication of the director's or officer's duties to
the corporation or its shareholders; and (vi) for losses arising under Section
310 or 316 of the Law. The right to indemnification herein conferred shall be a
contract right and shall include the right to be paid by the corporation
expenses incurred in defending any proceeding in advance of its final
disposition; provided, however, that if the Law requires the payment of such
expenses incurred by a director or officer in his or her capacity as a director
or officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a
proceeding, such advances shall be made only upon delivery to the corporation of
an undertaking, by or on behalf of such director or officer, to repay all
amounts to the corporation if it shall be ultimately determined that such person
is not entitled to be indemnified.
Section 15.2. Indemnification of Employee and Agents. A person who was
or is a party or is threatened to be made a party to or is involved in any
proceeding by reason of the fact that he or she is or was an employee or agent
of the corporation or is or was serving at the request of the corporation as an
employee or agent of another corporation or other enterprise, including employee
benefit plans, whether the basis of such action is an alleged action or inaction
in an official or other capacity while serving as an employee or agent, may,
subject to any agreement between the corporation and such person, be indemnified
and held harmless by the corporation to the fullest extent permitted by
California law and the corporation's Articles of Incorporation, against all
loses as defined above reasonably incurred or suffered by such person in
connection therewith. The immediately preceding sentence is not intended to be
and shall not be considered to confer a contract right on any employee or agent
(other than directors and officers) of the corporation.
Section 15.3. Right of Directors and Officers to Bring Suit. If a claim
under Section 15.1 of this Article is not paid in full by the corporation within
30 days after a written claim has been received by the corporation, the claimant
may at any time thereafter bring suit against the corporation to recover the
unpaid amount of the claim and,
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<PAGE>
if successful in whole or in part, the claimant shall also be entitled to be
paid the expense of prosecuting such claim. Neither the failure of corporation
(including its Board, independent legal counsel, or its shareholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is permissible in the circumstances because he
or she has met the applicable standard of conduct, if any, nor an actual
determination by the corporation (including its Board, independent legal
counsel, or its shareholders) that the claimant has not met the applicable
standard of conduct, shall be a defense to the action or create a presumption
for the purpose of an action that the claimant has not met the applicable
standard of conduct.
Section 15.4 Successful Defense. Notwithstanding any other provision of
this Article, to the extent that a director or officer has been successful on
the merits or otherwise (including the dismissal of an action without prejudice
or the settlement of a proceeding or action without admission of the liability)
in defense of any proceeding referred to in Section 5.1 or in defense of any
claim, issue or matter therein, he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred in connection
therewith.
Section 15.5. Non-Exclusivity of Rights. The right to indemnification
provided by this Article shall not be exclusive of nor limit any other right
which any person may have or hereafter acquire under any statute, by-law,
agreement, vote of shareholders, or disinterested directors or otherwise.
Section 15.6. Insurance. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee, or agent of the
corporation or another corporation, or other enterprise against any expense,
liability or loss, whether or not the corporation would have the power to
indemnify such person against such expense, liability or loss under the law.
Section 15.7 Expenses as a Witness. To the extent that any director,
officer, employee, or agent of the corporation is by reason of such position, or
a position with another entity at the request of the corporation, a witness in
any action, suit or proceeding, he or she shall be indemnified against all costs
and expenses actually and reasonably incurred by him or her on his or her behalf
in connection therewith.
Section 15.8. Indemnity Agreements. The corporation may enter into
agreements with any director, officer, employee, or agent of the corporation or
any person who serves at the request of the corporation as a director, officer,
employee, or agent of another corporation or other enterprise, providing for
indemnification to the fullest extent permissible under the Law and the
corporation's Articles of Incorporation.
Section 15.9. Separability. Each and every paragraph, sentence, term
and provision of this Article is separate and distinct so that if any paragraph,
sentence, term or provision hereof, shall be held to be invalid or unenforceable
for any reason, such invalidity or unenforceability shall not affect the
validity or enforceability of any other paragraph, sentence, term or provision
hereof. To the extent required, any paragraph, sentence, term or provision of
this Article may be modified by a court of competent jurisdiction to preserve
its validity and to provide the claimant with, subject to the limitations set
forth in this Article and any agreement between the corporation and claimant,
the broadest possibly indemnification permitted under applicable law.
Section 15.10. Effect of Repeal or Modification. Any repeal or
modification of this Article shall not adversely affect any right of
indemnification of a director or officer existing at the time of such repeal or
modification with respect to any action or omission occurring prior to such
repeal or modification.
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EXHIBIT 4.1
WATKINS-JOHNSON COMPANY
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
THIS AMENDMENT NO. 1 TO RIGHTS AGREEMENT (the "Amendment") is made as
of December 10, 1998 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
The Company and the Rights Agent entered into a Rights Agreement as of
September 30, 1996 (the "Rights Agreement"). They now wish to amend the Rights
Agreement as set forth below. This Amendment has been approved by the Board and
each of its members. All terms not defined in this Amendment that begin with
initial capital letters have the meanings assigned to them in the Rights
Agreement.
ACCORDINGLY, THE COMPANY AND THE RIGHTS AGENT HEREBY AGREE AS FOLLOWS:
1. Each and every "15%" that appears in Sections 1(a) and 1(j) of the
Rights Agreement is hereby replaced with "10%". However if, when the Board
approved this Amendment, any Person had already become the Beneficial Owner of
10% or more (but not 15% or more) of the outstanding shares of Common Stock,
then that Person shall not be treated as an Acquiring Person so long as that
Person does not become the Beneficial Owner of at least that percentage of the
outstanding Common Stock that equals the sum of the percentage of such stock
that Person Beneficially Owned at the close of business on the day the Board
adopted this Amendment plus one percent of the outstanding Common Stock.
2. A new sentence is hereby added to the end of Section 1(a) of the
Rights Agreement that reads as follows: "Notwithstanding the foregoing, if,
within five Business Days after a Person would otherwise have become an
Acquiring Person but for this sentence, that Person notifies the Board that such
Person did so inadvertently and, within two Business Days after such
notification, that Person is the Beneficial Owner of less than 10% of the
outstanding Common Stock, that Person shall not be deemed to have become an
Acquiring Person."
3. The definition of "Continuing Director" as set forth in Section 1(i)
of the Rights Agreement is hereby deleted. All references in the Rights
Agreement to "Continuing Directors" shall be considered references to the Board.
All requirements in the Rights Agreement that certain decisions be made by the
Board and a majority of the Continuing Directors shall be requirements that
those conditions be made by the Board alone.
4. Section 2 of the Rights Agreement is hereby modified and amended by
deleting from the first sentence thereof the following clause: "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."
5. A new sentence is hereby added to the end of the first paragraph of
Section 18 of the Rights Agreement that reads as follows: "Anything to the
contrary notwithstanding, in no event shall the Rights Agent be liable for
special, indirect, punitive, consequential or incidental loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such loss or damage."
6. Except as specifically modified by this Amendment, the Rights
Agreement shall remain in full force and effect in all respects.
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IN WITNESS WHEREOF, the Company and the Rights Agent have signed and
delivered this Amendment as of the date that appears in its first paragraph.
WATKINS-JOHNSON COMPANY
By: /s/ W. Keith Kennedy, Jr.
-------------------------
W. Keith Kennedy Jr.,
President and Chief
Executive Officer
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By: /s/ Daniel W. Spengel
-------------------------
Daniel W. Spengel
Assistant Vice President
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EXHIBIT 99.1
Information Contact:
Frank E. Emery (editorial and financial) 650-813-2752
FOR RELEASE AT 3:00 PM PST, December 10, 1998
WATKINS-JOHNSON COMPANY AMENDS SHAREHOLDER RIGHTS PLAN AND BYLAWS
Palo Alto, Calif., December 10, 1998. Watkins-Johnson Company (NYSE:WJ) today
announced amendments by its board of directors to its Shareholder Rights Plan
and company bylaws. These amendments are designed to enhance the protection
afforded to shareholders in realizing fair value and equal treatment in the
event of any attempted takeover of the company and to protect the company and
its shareholders against coercive takeover tactics. The full texts of the
amendments will be filed shortly with the Securities and Exchange Commission.
Amendment to Shareholder Rights Plan
The amendment to the company's Shareholder Rights Plan decreases from 15% to 10%
the threshold level of the common stock ownership that would trigger the
issuance of share purchase rights under the Rights Plan. An "inadvertent
triggering" cure mechanism has also been added. Additionally, the amendment
provides that the Board of Directors will take all actions previously authorized
to be taken by the "Continuing Directors" (directors who were members of the
board of directors on the date the Rights Plan was adopted or whose nomination
or election to the board was recommended or approved by a majority of such
directors).
- more -
Watkins-Johnson Company, page 2
Amendment to Bylaws
The amended bylaws provide that nominations or other matters for consideration
at annual shareholder meetings must be received by the company within a 45 to 75
day period prior to the first anniversary of the mailing of the company proxy
materials for the previous year's annual shareholders' meeting (the proxy
materials for the 1998 annual shareholders' meeting
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were mailed on March 17, 1998). Previously, the required period for submitting
notice was 14 to 50 days prior to any upcoming annual shareholders' meeting.
The board also adopted a bylaw relating to the setting of a record date to
determine shareholders eligible to participate in shareholder action by written
consent without a meeting. In addition, the board amended the bylaw relating to
shareholder meetings to delete the requirement that such meetings be held each
year in April. Instead, the annual meeting will be held at a date to be
determined each year by the board.
Forward-Looking Statements
The statements in this news release that relate to future plans are
forward-looking statements that involve risks and uncertainties, including the
efficacy of the company's amended Shareholder Rights Plan and amended bylaws in
protecting shareholders and other risks identified in the filings the company
makes with the SEC. Actual results may vary materially.
- more -
Watkins-Johnson Company, page 3
About Watkins-Johnson Company
Watkins-Johnson Company, headquartered in Palo Alto, California, specializes in
two high-technology business areas. WJ's wireless-communications units produce
radio-frequency components, subassemblies and receiver equipment for fixed and
mobile networks worldwide. The company's Semiconductor Equipment Group produces
atmospheric-pressure dielectric chemical-vapor-deposition systems for
high-volume integrated-circuit manufacturing. Sales in 1997 exceeded $291
million.
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