As filed with the Securities and Exchange Commission on July 28, 1998
Registration No. ________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-8
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
-----------------------------------
WATKINS-JOHNSON COMPANY
(Exact name of issuer as specified in its charter)
California 94-1402710
(State of jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3333 Hillview Avenue, Palo Alto, CA 94304
(Address of Principal Executive Offices)
WATKINS-JOHNSON COMPANY
1989 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
(Full Title of the Plan)
Scott G. Buchanan
Vice President and Chief Financial Officer
Watkins-Johnson Company
3333 Hillview Avenue, Palo Alto, Ca 94304
(Name and address of agent for service)
Telephone number, including area code, of agent for service:
(650) 493-4141
Copies to:
James G. Leathers, Jr. Esq.
2175 N. California Blvd
Suite 525
Walnut Creek, CA 94596
This Registration Statement consists of 24 sequentially numbered pages.
The Exhibit Index is on sequentially numbered page 9.
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Calculation of Registration Fee
================================================================================
Title of Amount to be Proposed Proposed Amount of
securities to registered maximum maximum registration
be registered offering aggregate fee*
price per offering
share* price*
- --------------------------------------------------------------------------------
Common Stock 150,000 shares $ 24.125 $3,618,750 $ 1,248
================================================================================
* Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457(c) on the basis of $24.125, the average of the high low prices of
shares on the New York Stock Exchange on July 24, 1998.
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INFORMATION INCLUDED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are incorporated by reference in this registration
statement: (i) Watkins-Johnson Company's (the "Company") latest annual report
filed pursuant to Sections 13(a) or (d) of the Securities Exchange Act of 1934 (
the "Exchange Act"); (ii) all other reports filed by the Company pursuant to
Sections 13(a) or 15(d) of the Exchange Act since the end of the fiscal year
covered by the Company's latest annual report; and (iii) the description of the
Company's common stock set forth in the Company's Registration Statement on Form
8-A relating thereto, including any amendment or report filed for the purpose of
updating such description. All documents filed by the Company after the date of
this registration statement pursuant to Sections 13(a), 13(c), 14, and 15(d) of
the Exchange Act, prior to the filing of a post-effective amendment (that
indicates all securities offered have been sold or deregisters all securities
then remaining unsold), shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing of such
documents.
ITEM 4. DESCRIPTION OF SECURITIES
Inapplicable
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Inapplicable
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation eliminates the liability of its
directors and officers to the Company, its stockholders and any other parties
for monetary damages to the fullest extent permitted under California General
Corporation Law.
The Company's By-Laws provide for indemnification of directors and officers of
the Company, or of other enterprises if serving at the request of the Company,
against all reasonable costs, expenses, liabilities, judgments and losses
(including attorney fees and settlement costs) in connection with pending or
completed actions, suits or proceeding, whether civil, criminal, administrative
or investigative (other than action by or in the right of the Company);
provided, however, that no indemnification shall be provided such person (i) for
amounts paid in settling a claim without court approval (ii) for expenses
incurred in
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defending an action which is settled without court approval, and (iii) if a
court of competent jurisdiction finally determines that any indemnification is
unlawful.
In any action brought by or in the right of the Company for breach of duty to
the Company and its shareholders, the Company's By-Laws provide for
indemnification of directors and officers except for (i) acts or omissions
involving intentional misconduct or a knowing and culpable violation of law,
(ii) acts or omissions that a director believes are contrary to the best
interest of the Company or its shareholders or that involve the absence of good
faith on the part of the director, (iii) transactions from which the director
derived an improper personal benefit, (iv) acts or omissions showing a reckless
disregard for the director's duty to the Company or its shareholders where the
director was aware or should have been aware of a serious risk of injury to the
Company or its shareholders, (v) acts or omissions that constitute an unexcused
pattern of inattention amounting to abdication of the director's duty to the
Company or its shareholders, (vi) acts or omissions related to contracts in
which a director has a material financial interest, (vii) certain unlawful
dividends, distributions, loans and Guarantees and (viii) expenses incurred if
the director or officers is adjudged to be liable to the Company unless the
court specifically approves of the indemnification payment.
ITEM 8. EXHIBITS
4.1 The Watkins-Johnson Company 1989 Stock Option Plan For Nonemployee
Directors
4.2 Form of Director Stock Option Agreement under Company's 1989 Stock Option
Plan For Nonemployee Directors
5.1 Opinion of James G. Leathers, Jr., Esq.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of James G. Leathers, Jr., Esq. is contained in Exhibit 5.1.
24.1 Power of Attorney of Directors
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
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(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3 or Form S-8 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15 (d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any financial
statement required by Rule 3-19 at the start of any delayed offering or
throughout a continuous offering. Financial statements and information otherwise
required by Section 10(a)(3) of the Act need not be furnished, provided, that
the registrant includes in the prospectus, by means of a post-effective
amendment, financial
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statements required pursuant to this paragraph (a)(4) and other information
necessary to ensure that all other information in the prospectus is at least as
currant as the date of those financial statements. Notwithstanding the
foregoing, with respect to registration statements on Form F-3, a post-effective
amendment need not be filed to include financial statements and information
required by Section 10(a) (3) of the Act or Rule 3-19 of this chapter if such
financial statements and information are contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to Section 13 or
Section 15 (d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the Form F-3.
(b) The undersigned registrant hereby undertakes that, for purposed of
determining any liability under the Securities Act of 1933 each filing of the
registrant's annual report pursuant to Section 13 (a) or Section 15 (d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of the
Plan's annual report pursuant to Section 15 (d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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SIGNATURES
THE REGISTRANT
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on a Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Palo Alto, State of California on the ___ day of
July, 1998.
WATKINS-JOHNSON COMPANY
(Registrant)
/s/ Scott G. Buchanan
- --------------------
Scott G. Buchanan
Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
date indicated.
Signature Title Date
Principal Executive Officer:
* /s/ W. Keith Kennedy
- ---------------------
W. Keith Kennedy President and July 28, 1998
Chief Executive
Officer
Principal Financial and
Principal Accounting Officer:
/s/ Scott G. Buchanan
- ---------------------
Scott G. Buchanan Vice President July 28,1998
and Chief
Financial Officer
* By: /s/ Scott G. Buchanan
-----------------------------
Scott G. Buchanan
Attorney-in-fact
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THE DIRECTORS
* /s/ Dean A. Watkins
- ---------------------
Dean A. Watkins Director July 28, 1998
* /s/ H. Richard Johnson
- ------------------------
H. Richard Johnson Director July 28, 1998
* /s/ W. Keith Kennedy
- ----------------------
W. Keith Kennedy Director July 28, 1998
* /s/ John J. Hartmann
- ----------------------
John J. Hartmann Director July 28, 1998
* /s/ Raymond F. O'Brian
- ------------------------
Raymond F. O'Brien Director July 28, 1998
* /s/ Dr. William R. Graham
- ---------------------------
Dr.William R.Graham Director July 28, 1998
* /s/ Robert L. Prestel
- -----------------------
Robert L. Prestel Director July 28, 1998
* /s/ Gary M. Cusamano
- ----------------------
Gary M. Cusumano Director July 28, 1998
* By: /s/ Scott G. Buchanan
------------------------------
Scott G. Buchanan
Attorney-in-fact
A majority of the members of the Board of Directors.
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EXHIBIT INDEX
4.1 The Watkins-Johnson Company 1989 Stock Option Plan For Nonemployee
Directors
4.2 Form of Director Stock Option Agreement under Company's 1989 Stock Option
Plan For Nonemployee Directors
5.1 Opinion of James G. Leathers, Jr., Esq.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of James G. Leathers, Jr., Esq. is contained in Exhibit 5.1
24.1 Power of Attorney of Directors
9
WATKINS-JOHNSON COMPANY
1989 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
(Amended and Restated Effective as of January 29, 1996)
ARTICLE I
GENERAL
1. PURPOSE
This 1989 Stock Option Plan for Nonemployee Directors (the "Plan") is
intended to attract and retain the services of experienced and knowledgeable
independent directors of Watkins-Johnson Company (the "Company"), for the
benefit of the Company and its shareowners and to provide additional incentive
for such directors to continue to work for the best interests of the Company and
its shareowners.
2. ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company
(the "Board"). The Board shall have the power to construe the Plan, to determine
all questions arising thereunder and to adopt and amend such rules and
regulations for the administration of the Plan as it may deem desirable.
The interpretation and construction by the Board of any provisions of
the Plan or of any option granted under it shall be final and shall be given the
maximum deference permitted by law. No member of the Board shall be liable for
any action or determination made in good faith with respect to the Plan or any
option granted under it.
3. ELIGIBILITY
Each director of the Company who is not otherwise an employee of the
Company or any subsidiary on the Grant Date (as defined below) shall
automatically be granted options to purchase 3,000 shares of the Company's
common stock (subject to adjustment as provided in Article III hereof) on the
last Monday in April of fiscal years 1996 through and including 2005 (the "Grant
Dates"); provided, however, that such automatic option grants shall only be made
if the director (i) is not otherwise an employee of the Company or any
subsidiary on the Grant Date, (ii) has not been an employee of the Company or
any subsidiary for all or any part of the preceding fiscal year, and (iii) has
served on the Board of Directors for the entire preceding fiscal year.
In addition, on the date that any person is for the first time elected
by the shareowners of the Company to the Board of Directors (which shall include
the date that a director appointed by the Board of Directors is for the first
time elected by the shareowners of the Company to the Board), options to
purchase 3,000 shares of the Company's common stock (subject to adjustment as
provided in Article III hereof) shall automatically be granted to such newly
elected director; provided, however, that such automatic option grant shall only
be made if the director is not otherwise an employee of the Company or any
subsidiary on the
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date of such election and has not been an employee for all or any part of the
preceding fiscal year.
In the event that the number of shares of the Company's common stock
subject to future grant under the Plan is insufficient to make all automatic
grants required to be made on such date, then all nonemployee directors entitled
to a grant on such date shall ratably share in the number of options on shares
of the Company's common stock available for grant under the Plan.
4. SHARES OF STOCK SUBJECT TO THE PLAN
The shares that may be issued under the Plan shall be authorized and
unissued or reacquired shares of the Company's common stock (the "common
stock"). The aggregate number of shares which may be issued under the Plan shall
not exceed 350,000 shares of common stock, unless an adjustment is required in
accordance with Article III.
5. AMENDMENT OF THE PLAN
The Board of Directors may, insofar as permitted by law, from time to
time, suspend or discontinue the Plan or revise or amend it in any respect
whatsoever, except that no such amendment shall alter or impair or diminish any
rights or obligations under any option theretofore granted under the Plan
without the consent of the person to whom such option was granted. In addition,
without further shareowner approval, no such amendment shall increase the number
of shares subject to the Plan (except as authorized by Article III), increase
the number of shares for which an option may be granted to any optionee (except
as authorized by Article III), change the designation in Section 3 of Article I
of the class of persons eligible to receive options under the Plan, provide for
the grant of options having an option price per share less than fair market
value (as defined in Section 2 of this Article I) on the date of grant, extend
the term during which options may be exercised, extend the final date upon which
options under the Plan may be granted, or otherwise amend the Plan in a way that
would require shareowner approval under Rule 16b-3.
6. APPROVAL OF SHAREOWNERS
This amendment and restatement of the Plan is effective January 29,
1996, subject to approval by the affirmative votes of the holders of a majority
of the securities of the Company present, or represented, and entitled to vote
at the next annual meeting of the shareowners (with the shares held by the
interested directors not being entitled to vote thereon), or adjournment
thereof, duly held in accordance with California law. No option granted
hereunder may become exercisable unless and until such approval is obtained.
7. TERM OF PLAN
Options may be granted under the Plan until April 30, 2005, the date of
termination of the Plan. Notwithstanding the foregoing, each option granted
under the Plan shall remain in effect until such option has been satisfied by
the issuance of shares or terminated in accordance with the terms of the Plan.
8. RESTRICTIONS
All options granted under the Plan shall be subject to the requirement,
if at any time the Board shall determine, in its discretion, that the listing,
registration or qualification of the shares subject to options granted under the
Plan upon any securities exchange or under any
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state or federal law, or the consent or approval of any government regulatory
body, is necessary or desirable as a condition of, or in connection with, the
granting of such option or the issuance, if any, or purchase of shares in
connection therewith, such option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Board.
9. NONASSIGNABILITY
No option shall be assignable or transferable by the grantee except by
will or by the laws of descent and distribution. During the lifetime of the
optionee, the option shall be exercisable only by him, and no other person shall
acquire any rights therein.
10. WITHHOLDING TAXES
Whenever shares of common stock are to be issued under the Plan, the
Company shall have the right to require the optionee to remit to the Company an
amount sufficient to satisfy federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares.
11. DEFINITION OF "FAIR MARKET VALUE"
For the purposes of this Plan, the term "fair market value," when used
in reference to the date of grant of an option or the date of surrender of
common stock in payment for the purchase of shares pursuant to the exercise of
an option, as the case may be, shall be the closing price of the common stock on
the New York Stock Exchange on the day the valuation is to be made, or if no
sale of the Company's common stock shall have been made on said stock exchange
that day, on the next preceding day on which there was a sale of such stock.
ARTICLE II
STOCK OPTIONS
1. AWARD OF STOCK OPTIONS
Awards of stock options shall be made under the Plan under all the
terms and conditions herein. Each option granted under the Plan shall be
evidenced by an option agreement duly executed on behalf of the Company and by
the director to whom such option is granted, which option agreements may but
need not be identical and shall comply with and be subject to the terms and
conditions of the Plan. Any option agreement may contain such other terms,
provisions and conditions not inconsistent with the Plan as may be determined by
the Board.
2. TERM OF OPTIONS AND EFFECT OF TERMINATION
Notwithstanding any other provision of the Plan, no option granted
under the Plan shall be exercisable after the expiration of ten years from the
date of its grant. In the event that any outstanding option under the Plan
expires by reason of lapse of time or otherwise is terminated for any reason,
then the shares of common stock subject to any such option which
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have not been issued pursuant to the exercise of the option shall again become
available in the pool of shares of common stock for which options may be granted
under the Plan.
3. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be evidenced by agreements
in such form as the Board shall from time to time determine, which agreements
shall comply with the following terms and conditions.
A. Number of Shares
Each option agreement shall state the number of shares to which the
option pertains.
B. Option Price
Each option agreement shall state the option price per share which
shall be equal to 100% of the fair market value of a share of the common stock
on the date such option is granted.
C. Medium and Time of Payment
The option price shall be payable upon the exercise of an option in the
legal tender of the United States or in shares of the Company's common stock
valued at their fair market value on the date of such exercise or in a
combination of such legal tender and such shares. Upon receipt of payment, the
Company shall deliver to the optionee (or person entitled to exercise the
option) a certificate or certificates for the shares of common stock to which
the option pertains.
D. Exercise of Option
Options granted under the Plan shall become exercisable only after six
months from the grant.
To the extent that an option has become exercisable and subject to the
restrictions and limitations set forth in this Plan and in the option agreement,
it may be exercised in whole or in such lesser amount as may be authorized by
the option agreement; provided, however, that no option shall be exercised for
fewer than ten shares. If exercised in part, the unexercised portion of an
option shall continue to be held by the optionee and may thereafter be exercised
as herein provided.
E. Termination of Directorship Except by Death
In the event that an optionee shall cease to be a director of the
Company for any reason other than his or her death, his or her option shall be
exercisable, to the extent it was exercisable at the date he or she ceased to be
a director, for a period of one year after such date, and shall then terminate.
Such option may be exercised at any time within such period and prior to the
date on which the option expires by its terms.
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F. Death of Optionee and Transfer of Option
If an optionee dies while a director of the Company, or within the
period after termination of such status during which he or she is permitted to
exercise an option in accordance with Subsection 3 E of this Article II, such
option may be exercised at any time within one year after the optionee's death,
but only to the extent the option was exercisable at the time of death. Such
option may be exercised at any time within such one-year period and prior to the
date on which the option expires by its terms. During such period, such option
may be exercised by any person or persons designated by the optionee on a
Beneficiary Designation Form adopted by the Board for such purpose, or, if there
is no effective Beneficiary Designation Form on file with the Board, by the
executors or administrators of the optionee's estate or by any person or persons
who shall have acquired the option directly from the optionee by his will or the
applicable law of descent and distribution.
G. Stock Appreciation Rights-Limited Rights
1. Options granted pursuant to this plan ("Related Stock Options")
shall include stock appreciation rights (referred to herein as "Limited
Rights"). A Limited Right may be exercised only during the sixty-day period
beginning on an "Acceleration Date" (as defined in paragraph H hereof);
provided, however, that if the Acceleration Date occurs within the six-month
period following the grant of the Related Stock Option, then the Limited Right
will be exercisable for a period of sixty days following expiration of such
six-month period. Each Limited Right shall be exercisable only if; and to the
extent that, the Related Stock Option is exercisable and the holder of the
option is at the Acceleration Date, subject to the restrictions of Section 16
under the Securities Exchange Act of 1934.
(a) Upon the exercise of a Limited Right, such Related Stock
Option shall cease to be exercisable to the extent of the shares of
stock with respect to which such Limited Right is exercised, but shall
be considered to have been exercised to that extent for purposes of
determining the number of shares of stock available for the grant of
further options pursuant to this Plan. Upon the exercise or termination
of a Related Stock Option, the Limited Right with respect to such
Related Stock Option shall terminate to the extent of the shares of
stock with respect to which the Related Stock Option was exercised or
terminated.
(b) Upon the exercise of a Limited Right, the holder thereof
shall receive in cash from the Company whichever of the following
amounts is applicable:
(i) In the case of an exercise of Limited Rights by reason
of the occurrence of an Offer (as defined in paragraph H hereof),
an amount equal to the Offer Spread (as defined in subparagraph
(d) hereof); or
(ii) In the case of an exercise of Limited Rights by reason
of shareholder approval of an agreement described in paragraph H,
an amount equal to the Merger Spread (as defined in subparagraph
(f) hereof); or
(iii) In the case of an exercise of Limited Rights by
reason of shareholder approval of a plan of liquidation described
in paragraph H, an amount equal to the Liquidation Spread (as
defined in subparagraph (h) hereof); or
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(iv) In the case of an exercise of Limited Rights by reason
of an acquisition of stock described in paragraph H, an amount
equal to the Acquisition Spread (as defined in subparagraph (j)
hereof); or
(v) In the case of an exercise of Limited Rights by reason
of the election of 50% or more of the directors described in
paragraph H, an amount equal to the Director Spread (as defined
in subparagraph (l) hereof).
(c) The term "Offer Price per Share" as used herein shall mean,
with respect to the exercise of any Limited Right by reason of the
occurrence of an Offer, the greater of (i) the highest price per share
of stock paid in any Offer, which Offer is in effect at any time during
the sixty-day period ending on the date of which such Limited Right
becomes exercisable, or (ii) the highest Fair Market Value per Share of
the Stock during such sixty-day period. Any securities or property
which are part or all of the consideration paid for shares of stock in
the Offer shall be valued in determining the Offer Price per Share at
the higher of (A) the valuation placed on such securities or property
by the corporation, person or other entity making such Offer or (B) the
valuation placed on such securities or property by a committee
consisting of the outside directors (the "Committee").
(d) The term "Offer Spread" as used herein shall mean an amount
equal to the product computed by multiplying (i) the excess of (A) the
Offer Price per share over (B) the option price per share of stock at
which the related Stock Option is exercisable, by (ii) the number of
shares of stock with respect to which such Limited Right is being
exercised.
(e) The term "Merger Price per Share" as used herein shall mean,
with respect to the exercise of any Limited Right by reason of
shareholder approval of an agreement described in paragraph H, the
greater of (i) the fixed or formula price for the acquisition of shares
of stock specified in such agreement if such fixed or formula price is
determinable on the date on which such Limited Right becomes
exercisable, and (ii) the highest Fair Market Value per Share of the
Stock during the sixty-day period ending on the date on which such
Limited Right becomes exercisable. Any securities or property which are
part or all of the consideration paid for shares of stock pursuant to
such agreement shall be valued in determining the Merger Price per
Share at the higher of (A) the valuation placed on such securities or
property by the corporation, person or other entity which is a party
with the Company to such an agreement or (B) the valuation placed on
such securities or property by the Committee.
(f) The term "Merger Spread" as used herein shall mean an amount
equal to the product computed by multiplying (i) the excess of (A) the
Merger Price per Share over (B) the option price per share of stock at
which the Related Stock Option is exercisable by (ii) the number of
shares of stock with respect to which such Limited Right is being
exercised.
(g) The term "Liquidation Price per Share" as used herein shall
mean, with respect to the exercise of any Limited Right by reason of
shareholder approval of a plan of liquidation described in paragraph H,
the greater of (i) the highest amount paid or to be paid per share of
stock pursuant to the plan of liquidation as determined by the
Committee and (ii) the highest Fair Market Value per Share of the Stock
during the sixty-day period ending on the date on which such Limited
Right becomes exercisable. Any securities or property which (A) are
part or all of the consideration paid for shares of stock pursuant to
such
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plan of liquidation or (B) are to be sold and the proceeds distributed
in liquidation shall be valued in determining the Liquidation Price per
Share at the higher of (i) the valuation placed on such securities or
property by the Company upon the distribution of such securities or
property in accordance with the plan of liquidation, if known at the
time of the exercise of such Limited Right, or (ii) the valuation
placed on such securities or property by the Committee.
(h) The term "Liquidation Spread" as used herein shall mean an
amount equal to the product computed by multiplying (i) the excess of
(A) the Liquidation Price per Share over (B) the option price per share
of stock at which the Related Stock Option is exercisable, by (ii) the
number of shares of stock with respect to which such Limited Right is
being exercised.
(i) The term "Acquisition Price per Share" as used herein shall
mean, with respect to the exercise of any Limited Right by reason of an
acquisition of stock described in paragraph H, the greater of (i) the
highest price per share stated on the Schedule 13D, 14D-1 or similar
schedule (or amendment thereto) filed by the holder of 50% or more of
the Company's voting power which gives rise to the exercise of such
Limited Right, or (ii) the highest Fair Market Value per Share of the
Stock during the sixty-day period ending on the date the Limited Right
is exercised.
(j) The term "Acquisition Spread" as used herein shall mean an
amount equal to the product computed by multiplying (i) the excess of
(A) the Acquisition Price per Share over (B) the option price per share
of stock at which the Related Stock Option is exercisable, by (ii) the
number of shares of stock with respect to which such Limited Right is
being exercised.
(k) The term "Director Price per Share" as used herein shall
mean, with respect to the exercise of any Limited Right by reason of
the election of 50% or more of the directors described in paragraph H,
the highest Fair Market Value per Share of the Stock during the
sixty-day period ending on the date the Limited Right becomes
exercisable.
(1) The term "Director Spread" as used herein shall mean an
amount equal to the product computed by multiplying (i) the excess of
(A) the Director Price per Share over (B) the option price per share of
stock at which the Related Stock Option is exercisable, by (ii) the
number of shares of stock with respect to which such Limited Right is
being exercised.
(m) The term "Fair Market Value per Share of the Stock" as used
herein shall mean, as of a particular date, (i) if the shares of stock
are then listed on a national securities exchange, the definition
provided in Article I hereof; or (ii) if the shares of stock are not
then listed on a national securities exchange, the average of the
closing "bid" and "asked" prices for shares of stock in the
over-the-counter market for the last preceding date on which there was
a sale of stock in such market.
H. Acceleration of Option Exercise
If while unexercised options remain outstanding under the Plan, (i) any
corporation (other than the Company), person or group (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the
16
<PAGE>
"Act")) makes a tender or exchange offer which, if consummated, would make such
corporation, person or group the beneficial owner (within the meaning of Rule
13d-3, under the Act) of more than 30% of the Company's then outstanding stock
and, pursuant to such offer, purchases are made ("Offer"); (ii) the shareholders
or directors of the Company approve a definitive agreement to merge or
consolidate with or into another corporation and the Company is not the
surviving corporation, or agree to sell or otherwise dispose of all or
substantially all of the Company's assets, or adopt a plan of liquidation; (iii)
the Company becomes aware that any person or group (within the meaning of
Section 13(d) and 14(d)(2) of the Act), has become the beneficial owner (within
the meaning of Rule 13d-3, under the Act) of more than 20% of the Company's then
outstanding stock; (iv) 50% or more of the directors of the Company are elected
to the Board of Directors during any period of 24 months or less, such election
being without the approval of at least a majority of the members of the Board of
Directors of the Company in office immediately prior to such period; then on the
date of the first purchase of stock pursuant to such Offer, or the date of any
such shareholder approval or adoption, or the date on which the Company becomes
aware of the acquisition of such percentage of the Company's stock or on the
date of the election of such directors (any such date being referred to as an
"Acceleration Date"), each outstanding option shall be exercisable in full.
ARTICLE III
RECAPITALIZATIONS AND REORGANIZATIONS
The number of shares of common stock covered by the Plan, the number of
shares and price per share of each outstanding option, and the number of shares
subject to each grant provided for in Article I, Section 3 hereof shall be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding shares of common stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend or any other increase
or decrease in the number of issued and outstanding shares of common stock
effected without receipt of consideration by the Company.
If the Company shall be the surviving corporation in any merger or
consolidation, each outstanding option shall pertain to and apply to the
securities to which a holder of the same number of shares of common stock that
are subject to that option would have been entitled. A dissolution or
liquidation of the Company, or a merger or consolidation in which the Company is
not the surviving corporation, shall cause each outstanding option to terminate,
unless the agreement of merger or consolidation shall otherwise provide;
provided that, in the event such dissolution, liquidation, merger or
consolidation will cause outstanding options to terminate, each optionee shall
have the right immediately prior to such dissolution, liquidation, merger or
consolidation to exercise his option in whole or in part without regard to any
limitations on the exercisability of such option other than (i) the expiration
date of the option, (ii) the limitation set forth in Section 9 of Article I, and
(iii) the ten share limitation set forth in Section 3 D of Article II.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding, and conclusive, and shall
be given the maximum deference permitted by law.
17
<PAGE>
The grant of an option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
ARTICLE IV
MISCELLANEOUS PROVISIONS
1. RIGHTS AS A SHAREOWNER
An optionee or a transferee of an option shall have no rights as a
shareowner with respect to any shares covered by an option until the date of the
receipt of payment (including any amounts required by the Company pursuant to
Section 10 of Article I) by the Company. No adjustments shall be made as to any
option for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record data is
prior to such date, except as provided in Article III.
2. OTHER PROVISIONS
The option agreements authorized under the Plan shall contain such
other provisions, including, without limitation, restrictions upon the exercise
of the option or restrictions required by any applicable securities laws, as the
Board shall deem advisable.
3. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of common stock
pursuant to the exercise of options will be used for general corporate purposes.
4. NO OBLIGATION TO EXERCISE OPTION
The granting of an option shall impose no obligation upon the optionee
to exercise such option.
5. SECURITIES EXCHANGE ACT OF 1934
All transactions under the Plan are intended to comply with all
applicable conditions of Section 16 of the Securities Exchange Act of l934 and
Rule 16b-3 promulgated thereunder, and any future section, regulation or rule
amending or supplementing such provisions. To the extent that any provision of
this Plan, or any action taken under this Plan, fails to comply with such
provisions, such Plan provision or action shall be null and void to the fullest
extent permitted by law and deemed advisable by the Board.
18
DIRECTOR STOCK OPTION AGREEMENT
THIS AGREEMENT, dated _________________________, is between
WATKINS-JOHNSON COMPANY, a California corporation, (hereinafter called
"Company") and ___________________________________________, (hereinafter called
"Director").
WITNESSETH:
WHEREAS, the Company has established the Watkins-Johnson
Company Nonemployee Director Stock Option Plan (the "Plan"), adopted April 24,
1989, and amended and restated effective January 29, 1996, a copy of which is
attached hereto and by this reference incorporated herein as though set forth in
full; and
WHEREAS, the Board of Directors has determined that the
Director shall be granted a stock option under said Plan as hereinafter set
forth.
NOW, THEREFORE, the parties hereby agree as follows:
1. The Company hereby grants to Director an option to
purchase 3,000 shares of the no par value common
stock of the Company upon the following terms and
conditions:
a. This option is granted under and pursuant to
the above described Plan, and is subject to
each and all the provisions thereof,
including the provisions on acceleration of
option exercise and limited rights.
b. The option price shall be
____________________ per share, which is
agreed to be 100% of the fair market value
of the common stock of the Company on the
date of the granting of the option.
- --------------------------------------------------------------------------------
PAR-772 - 19 -
<PAGE>
c. Subject to the restrictions contained herein
and in the Plan, this option may be
exercised after six (6) months from the date
of grant. No such exercise shall be with
respect to less than ten (10) shares, or the
remaining shares covered by the option, if
less than ten (10).
d. In the event that the Director's service
with the Company terminates for any reason
prior to six (6) months from the date
hereof, Director's right to exercise this
option or any part thereof shall be
forfeited.
e. Unless sooner terminated as provided in the
Plan, the period for which this option is
granted is the period of ten (10) years from
the date hereof.
f. This option is not transferable by the
Director otherwise than by will or the laws
of descent and distribution and is
exercisable, during the Director's lifetime,
only by him or her. Neither this option nor
any interest therein may be transferred,
assigned, pledged or hypothecated by the
Director during this lifetime whether by
operation of law or otherwise, nor be made
subject to execution, attachment or similar
process.
2. Director may exercise this option by giving written
notice to the Company at Palo Alto, California,
attention of the Secretary, specifying the election
to exercise the option and the number of shares in
respect of which it is being exercised. Director or
Director's representative shall deliver to the
Secretary at the time of giving such notice payment
in United States dollars for the amount of the
purchase price. In addition, Director may deliver
Company stock, valued at its fair market value (as
defined in the Plan) on the date of such exercise, in
the full amount of the purchase price, or any portion
thereof, in payment for the shares.
The notice shall be signed by the Director exercising
the option. The Company shall thereafter cause to be
issued a certificate or certificates for the shares
as to which the option shall have been so exercised,
registered in the name of the Director.
- --------------------------------------------------------------------------------
PAR-772 - 20 -
<PAGE>
3. This Agreement shall be interpreted and construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties have executed this Agreement
of the day and year first above written.
WATKINS-JOHNSON COMPANY
By
---------------------------
ACCEPTED:
- ---------------------------
Director
- --------------------------------------------------------------------------------
PAR-772 - 21 -
EXHIBIT 5.1
July 28, 1998
Board of Directors
Watkins-Johnson Company
3333 Hillview Avenue
Palo Alto, CA 94304
Re: Watkins-Johnson Company 1989
Stock Option Plan For Nonemployee Directors
Gentlemen:
In connection with the granting of options to purchase, up to 150,000
shares of common stock of Watkins-Johnson Company (the "Options") under the
Watkins-Johnson Company 1989 Stock Option Plan for Nonemployee Directors (the
"Plan"), I am of the opinion that the shares of common stock of Watkins-Johnson
Company issuable upon exercise of the Options, when issued in accordance with
the terms of the Plan, will be legally issued, fully paid and nonassessable
shares of common stock, no par value, of Watkins-Johnson Company.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-8 filed with the Securities and Exchange
Commission with respect to the Options and the 150,000 shares of common stock of
Watkins-Johnson Company issuable upon exercise thereof as under each Option.
Very truly yours,
/s/ James G. Leathers, Jr.
--------------------------
James G. Leathers, Jr.
22
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Watkins-Johnson Company on Form S-8 of our reports dated February 9, 1998,
appearing in the Annual Report on Form 10-K of Watkins Johnson Company for the
year ended December 31, 1997 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
Deloitte & Touche LLP
San Jose, California
July 28, 1998
23
EXHIBIT 24.1
POWER OF ATTORNEY OF DIRECTORS
KNOW BY ALL PERSONS BY THESE PRESENTS:
Each of the undersigned hereby constitutes and appoints the President,
the Vice President and Chief Financial Officer, the Vice President and General
Counsel and the Treasurer of Watkins-Johnson Company and each of them with the
power to act alone, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign (either manually or by use of said
person's "Personal Identification Number" issued by the United States Securities
and Exchange Commission) a Registration Statement or Registration Statements on
Form S-8 relating to shares of common stock of Watkins-Johnson Company and
interests issuable under the various employee benefit plans of Watkins-Johnson
Company, and any and all amendments of any such Registration Statements,
including without limitation post-effective amendments, and to file the same,
together with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto such attorney-in-fact
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises hereof, as fully to
all intents and purposes as he or she might do or could do in person, thereby
ratifying and confirming all that said attorney-in-fact or his or her
substitutes may lawfully do or cause to be done by virtue hereof.
This power of attorney shall expire on December 31, 2000.
Executed on this 30th day of September, 1996.
/s/ Dean A. Watkins /s/ Raymond F. O'Brien
------------------- ----------------------
Dean A. Watkins Raymond F. O'Brien
/s/ H. Richard Johnson /s/ Dr. William R. Graham
---------------------- -------------------------
H. Richard Johnson Dr. William R. Graham
/s/ W. Keith Kennedy, Jr. /s/ Robert L. Prestel
------------------------- ---------------------
W. Keith Kennedy, Jr. Robert L. Prestel
/s/ John J. Hartmann /s/ Gary M. Cusumano
-------------------- --------------------
John J. Hartmann Gary M. Cusumano
24
