<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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) ____January 17, 1996________
Woodward Governor Company
(Exact name of registrant as specified in its charter)
Delaware 0-8408 36-1984010
(State or other (Commisssion File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
5001 North Second Street, Rockford, Illinois 61125-7001
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code ________(815)877-7441 _____
<PAGE>
ITEM 5. OTHER EVENTS
Pursuant to Instruction F to Form 8-K, the information contained
in the press release filed as Exhibit 20.1 hereto is hereby
incorporated by reference in answer to Item 5 of this Form 8-K.
<PAGE>
SIGNATURES
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 hereunto duly authorized.
WOODWARD GOVERNOR COMPANY
Date: January 18, 1996
By /S/ JOHN A. HALBROOK
John A. Halbrook
Chairman and Chief Executive Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF EXHIBIT NUMBERED PAGE
3.1 Amendments to ByLaws of Woodward
Governor Company dated January 10,
1996 and January 17, 1996.
4.1 Woodward Governor Company Rights
Plan Agreement, dated as of
January 17, 1996, between Woodward
Governor Company and Wachovia Bank
of North Carolina, N.A., as Rights
Agent, together with Exhibits
thereto.
4.2 Certificate of Designations of
Series A Preferred Stock of
Woodward Governor Company
(Pursuant to Section 151(g) of the
General Corporation Law of the
State of Delaware)
20.1 Press release dated January 17,
1996, relating to the adoption of
the Woodward Governor Company
Rights Plan Agreement
- - -
E-
ON CHAPMAN AND CUTLER LETTERHEAD]
304220/SP
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AMENDMENTS TO BYLAWS
OF WOODWARD GOVERNOR COMPANY
RESOLVED, that Section 4.1 of the ByLaws of the Corporation is hereby amended
and restated in its entirety to read as follows:
SECTION 4.1. COMMITTEES OF THE BOARD OF DIRECTORS.
The Board of Directors shall designate an Executive Committee, an Audit
Committee, a Compensation Committee, a Selection Committee, a Management
Operations Committee, and a Stock Option Committee, each of which shall have
and may exercise the powers and authority of the Board of Directors to the
extent hereinafter provided. The Board of Directors may designate one or more
additional committees of the Board of Directors with such powers and authority
and shall be specified in the resolution of the Board of Directors. Each
committee shall consist of such number of directors not less than two as shall
be determined from time to time by resolution of the Board of Directors. The
Chairman of the Board of Directors shall be ex-officio a member of all
committees of the Board of Directors other than the Audit Committee and the
Stock Option Committee, and he shall be chairman of the Executive Committee.
All actions of the Board of Directors designating committees, or electing or
removing members of such committees, shall be taken by a resolution passed by
a majority of the whole Board of Directors. Each committee shall keep a
written record of all action taken by it. All action taken by a committee
shall be reported to the Board of Directors at its meeting next succeeding
such action and shall be subject to approval and revision by the Board
of Directors, provided that no legal rights of third parties shall be affected
by such revisions and in no event shall the Board of Directors take any action
with respect to the Stock Option Committee which would cause the 1996 Long Term
Incentive Compensation Plan as amended from time to time (the "Long Term
Incentive Plan") to fail to comply with Rule 16b-3 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") or cause the members of the Stock
Option Committee not to qualify as "disinterested persons" under said Rule
16b-3.
RESOLVED FURTHER, that the ByLaws of the Corporation are hereby amended by
adding the following new Section 4.9 thereto immediately following Section 4.8:
SECTION 4.9. STOCK OPTION COMMITTEE.
The Stock Option Committee shall have the power to administer the Corporation's
Long Term Incentive Plan in accordance with the terms of the Long Term
Incentive Plan, and to make all determinations and to take all such action in
connection therewith or in relation thereto as it deems necessary or
advisable, including the granting of all incentives to eligible worker
members in accordance with the terms of the Long Term Incentive Plan.
<PAGE>
AMENDMENT TO BYLAWS OF WOODWARD GOVERNOR COMPANY
RESOLVED FURTHER, that the first sentence of Section 2.3 of the ByLaws of the
Corporation is amended and restated in its entirety to read as follows:
Each stockholder entitled to vote in accordance with the terms
of the Certificate of Incorporation and in accordance with the
provisions of these bylaws shall, except as otherwise provided
by the Certificate of Incorporation, be entitled to one vote, in
person or by proxy, for each share of stock entitled to vote
held by such stockholder, but no proxy shall be voted after
three years from its date unless such proxy provides for a
longer period.
<PAGE>
WOODWARD GOVERNOR COMPANY
RIGHTS PLAN AGREEMENT
DATED AS OF
JANUARY 17, 1996
BETWEEN
WOODWARD GOVERNOR COMPANY
AND
WACHOVIA BANK OF NORTH CAROLINA, N.A.
AS RIGHTS AGENT
<PAGE>
TABLE OF CONTENTS
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 4
Section 3. Issue of Right Certificates 4
Section 4. Form of Right Certificates 6
Section 5. Countersignature and Registration 6
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates 6
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights 7
Section 8. Cancellation Certificates and Destruction of
Right Certificates 8
Section 9. Availability of Preferred Shares 9
Section 10. Preferred Shares Record Date 9
Section 11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights 10
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares 16
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power 17
Section 14. Fractional Rights and Fractional Shares 18
Section 15. Rights of Action 19
Section 16. Agreement of Right Holders 19
Section 17. Right Certificate Holder Not Deemed a
Stockholder 20
Section 18. Concerning the Rights Agent 20
Section 19. Merger or Consolidation or Change of Name of
Rights Agent 21
Section 20. Duties of Rights Agent 21
Section 21. Change of Rights Agent 23
Section 22. Issuance of New Right Certificates 24
Section 23. Redemption 24
Section 24. Exchange 25
Section 25. Notice of Certain Events 26
Section 26. Notices 27
Section 27. Supplements and Amendments 28
<PAGE>
Section 28. Determination and Actions by the Board of
Directors 28
Section 29. Successors 28
Section 30. Benefits of this Agreement 28
Section 31. Severability 28
Section 32. Governing Law 29
Section 33. Counterparts 29
Section 34. Descriptive Headings 29
Exhibit A - Form of Certificate of Designations
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
<PAGE>
WOODWARD GOVERNOR COMPANY
RIGHTS PLAN AGREEMENT
THIS AGREEMENT is made and entered into as of January 17, 1996,
between WOODWARD GOVERNOR COMPANY, a Delaware corporation (the
"Company"), and WACHOVIA BANK OF NORTH CAROLINA, N.A. (the "Rights
Agent");
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a
"Right") for each Common Share (as hereinafter defined) of the
Company outstanding on February 2, 1996 (the "Record Date"), each
Right representing the right to purchase one one-hundredth (subject
to adjustment) of a Preferred Share (as hereinafter defined) upon
the terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right (subject
to adjustment) with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date
(as such terms are hereinafter defined);
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND THE MUTUAL
AGREEMENTS
HEREIN SET FORTH, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall be the Beneficial Owner (as such
term is hereinafter defined) of 15% or more of the Common
Shares of the Company then outstanding, but shall not include
(i) the Company, (ii) any Subsidiary (as such term is
hereinafter defined) of the Company, (iii) any employee benefit
plan of the Company or any Subsidiary of the Company or (iv)
any Person holding Common Shares for or pursuant to the terms
of any such employee benefit plan. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the
result of (x) an acquisition of Common Shares by the Company
which, by reducing the number of shares outstanding, increases
the proportionate number of shares beneficially owned by such
Person to 15% or more of the Common Shares of the Company then
outstanding or (y) the acquisition by such Person of
newly-issued Common Shares directly from the Company (it being
understood that a purchase from an underwriter or other
intermediary is not directly from the Company); provided,
however, that if a Person shall become the Beneficial Owner of
15% or more of the Common Shares of the Company then
outstanding by reason of share purchases by the Company or the
receipt of newly-issued Common Shares directly from the Company
and shall, after such share purchases or direct issuance by the
Company, become the Beneficial Owner of any additional Common
Shares of the Company, then such Person shall be deemed to be
<PAGE>
an "Acquiring Person"; provided further, however, that any
transferee from such Person who becomes the Beneficial Owner of
15% or more of the Common Shares of the Company then
outstanding shall nevertheless be deemed to be an "Acquiring
Person." Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person
who would otherwise be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), has
become such inadvertently, and such Person divests as promptly
as practicable (and in any event within ten Business Days after
notification by the Company) a sufficient number of Common
Shares so that such Person would no longer be an "Acquiring
Person," as defined pursuant to the foregoing provisions of
this paragraph (a), then such Person shall not be deemed to be
an "Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate," and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as in effect on the
date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to have "beneficial ownership" of or
"beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary
agreements with and between underwriters and selling group
members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights),
warrants or options, or otherwise; provided, however, that
a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase
or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also
then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
<PAGE>
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or
any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (other than
customary agreements with and between underwriters and
selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the
proviso to Section l(c)(ii)(B)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when
used with reference to a Person's Beneficial ownership of
securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding
which such Person would be deemed to own beneficially
hereunder; provided, however, that no Person who is an officer,
director or employee of an Exempt Person shall be deemed,
solely by reason of such Person's status or authority as such,
to be the "Beneficial Owner" of, to have "beneficial ownership"
of or to "beneficially own" any securities that are
"beneficially owned" (as defined in this Section 1(c)),
including, without limitation, in a fiduciary capacity, by an
Exempt Person or by any other such officer, director or
employee of an Exempt Person.
(d) "Board of Directors" shall mean the board of
directors of the Company.
(e) "Business Day" shall mean any day other than a
Saturday, a Sunday, or a day on which banking institutions in
the State of North Carolina are authorized or obligated by law
or executive order to close.
(f) "Close of Business" on any given date shall mean
5:00 P.M., Winston-Salem, North Carolina time, on such date;
provided, however, that if such date is not a Business Day it
shall mean 5:00 P.M., Winston-Salem, North Carolina time, on
the next succeeding Business Day.
(g) "Common Shares" when used with reference to the
Company shall mean the shares of common stock, $.0625 par value
per share, of the Company. "Common Shares" when used with
reference to any Person other than the Company shall mean the
capital stock (or equity interest) with the greatest voting
power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(h) "Distribution Date" shall have the meaning set forth
in Section 3 hereof.
(i) "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary (as such term is hereinafter defined) of the
Company, (iii) any employee benefit plan of the Company or any
Subsidiary of the Company or (iv) any Person holding Common
Shares for or pursuant to the terms of any such employee
benefit plan.
(j) "Final Expiration Date" shall have the meaning set
forth in Section 7 hereof.
<PAGE>
(k) "Person" shall mean any individual, corporation,
partnership, trust or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(l) "Preferred Shares" shall mean shares of Series A
Preferred Stock, par value $.01 per share, of the Company
having the rights and preferences set forth in the Form of
Certificate of Designations attached to this Agreement as
Exhibit A.
(m) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(n) "Shares Acquisition Date" shall mean the first date
of public announcement by the Company or an Acquiring Person
that an Acquiring Person has become such.
(o) "Subsidiary" of any Person shall mean any corporation
or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly
or indirectly, by such Person.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the
holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of the
Common Shares) in accordance with the terms and conditions hereof,
and the Rights Agent hereby accepts such appointment. The Company
may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier
of (i) the tenth day after the Shares Acquisition Date or (ii) the
fifteenth business day (or such later date as may be determined by
action of the Board of Directors prior to such time as any Person
becomes an Acquiring Person) after the date of the commencement by
any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding Common Shares for or pursuant to the
terms of any such plan) of, or of the first public announcement of
the intention of any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan) to commence, a tender or
exchange offer, the consummation of which would result in any Person
becoming the Beneficial Owner of Common Shares aggregating 15% or
more of the then outstanding Common Shares (including any such date
which is after the date of this Agreement and prior to the issuance
of the Rights; the earlier of such dates being herein referred to as
the "Distribution Date"), (x) the Rights will be evidenced (subject
to the provisions of Section 3(b) hereof) by the certificates for
Common Shares registered in the names of the holders thereof and not
by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the
transfer of Common Shares. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights
Agent will countersign, and the Company will send or cause to be
sent (and the Rights Agent will, if requested, send) by first-class,
postage-prepaid mail, to each record holder of Common Shares as of
the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right
<PAGE>
Certificate, in substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right (subject to adjustment) for each
Common Share so held. As of the Distribution Date, the Rights will
be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase
Preferred Shares, in substantially the form of Exhibit C hereto (the
"Summary of Rights"), by first-class, postage-prepaid mail, to each
record holder of Common Shares as of the close of business on the
Record Date, at the address of such holder shown on the records of
the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates registered in the
names of the holders thereof together with a copy of the Summary of
Rights. Until the Distribution Date (or the earlier of the
Redemption Date or the Final Expiration Date), the surrender for
transfer of any certificate for Common Shares outstanding on the
Record Date, with or without a copy of the Summary of Rights, shall
also constitute the transfer of the Rights associated with the
Common Shares represented thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to
in the last sentence of this paragraph (c)) after the Record Date
but prior to the earliest of the Distribution Date, the Redemption
Date or the Final Expiration Date shall have impressed on, printed
on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the
holder hereof to certain rights as set forth in
the Woodward Governor Company Rights Plan
Agreement between Woodward Governor Company and
Wachovia Bank of North Carolina, N.A., as Rights
Agent, dated as of January 17, 1996, as the same
may be amended from time to time (the "Rights
Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of
which is on file at the principal executive
offices of Woodward Governor Company. Under
certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be
evidenced by this certificate. Woodward
Governor Company will mail to the holder of this
certificate a copy of the Rights Agreement
without charge after receipt of a written
request therefor. Under certain circumstances,
as set forth in the Rights Agreement, Rights
owned by any Person who is or becomes an
Acquiring Person (as defined in the Rights
Agreement) and certain transferees thereof may
become null and void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common
Shares represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby. In the event
that the Company purchases or acquires any Common Shares after the
<PAGE>
Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares shall be deemed cancelled and
retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Shares which are no longer
outstanding.
Section 4. Form of Right Certificates. The Right Certificates
(and the forms of election to purchase Preferred Shares and of
assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this Agreement, or as
may be required to comply with any applicable law or with any rule
or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of
Section 22 hereof, the Right Certificates shall entitle the holders
thereof to purchase such number of one one-hundredths of a Preferred
Share as shall be set forth therein at the price per one one-
hundredth of a Preferred Share set forth therein (the "Purchase
Price"), but the number of such one one-hundredths of a Preferred
Share and the Purchase Price shall be subject to adjustment as
provided herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its Chief Executive Officer, its President,
any of its Vice Presidents, or its Treasurer, either manually or by
facsimile signature, shall have affixed thereto the Company's seal
or a facsimile thereof, and shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile
signature. The Right Certificates shall be manually countersigned
by the Rights Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued
and delivered by the Company with the same force and effect as
though the person who signed such Right Certificates had not ceased
to be such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any person who, at the actual
date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at
the date of the execution of this Rights Agreement any such person
was not such an officer. Following the Distribution Date, the
Rights Agent will keep or cause to be kept, at its principal office,
books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights
evidenced on its face by each of the Right Certificates and the date
of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. Subject to the provisions of Section 14 hereof, at
any time after the close of business on the Distribution Date, and
at or prior to the close of business on the earlier of the
Redemption Date or the Final Expiration Date, any Right Certificate
or Right Certificates (other than Right Certificates representing
<PAGE>
Rights that have become void pursuant to Section 11(a)(ii) hereof or
that have been exchanged pursuant to Section 24 hereof) may be
transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder
to purchase a like number of one one-hundredths of a Preferred Share
(or Common Shares or other securities, as the case may be, as
provided in this Agreement) as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office
of the Rights Agent. Thereupon the Rights Agent shall countersign
and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. Neither
the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such
surrendered Right Certificate until the registered holder shall have
completed and signed the certificate contained in the form of
assignment on the reverse side of such Right Certificate accompanied
by such documents as the Rights Agent may deem appropriate and the
Company shall have been provided with such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably
request. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of
Right Certificates. Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Right Certificate, and, in
case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to the
Rights Agent for delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
or Rights. (a) Subject to the provisions of Section 11(a)(iii) hereof, the
registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or
in part at any time after the Distribution Date upon surrender of
the Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at the
principal office of the Rights Agent, together with payment of the
Purchase Price for each one one-hundredth of a Preferred Share (or
such other securities or property, as the case may be, as provided
in this Agreement) as to which the Rights are exercised, at or prior
to the earliest of (i) the close of business on the tenth
anniversary of the date of this Agreement (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided
in Section 23 hereof (the "Redemption Date"), or (iii) the time at
which such Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth of a
Preferred Share purchasable pursuant to the exercise of a Right
shall initially be $300.00, and shall be subject to adjustment from
<PAGE>
time to time as provided in Section 11 or 13 hereof and shall be
payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the
shares (or such other securities or property, as the case may be, as
provided in this Agreement) to be purchased and an amount equal to
any applicable transfer tax required to be paid by the holder of
such Right Certificate in accordance with Section 9 hereof by
certified check, cashier's check or money order payable to the order
of the Company, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Shares
certificates for the number of Preferred Shares to be purchased and
the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) requisition from the
depositary agent depositary receipts representing interests in such
number of one one-hundredths of a Preferred Share as are to be
purchased (in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company hereby directs the
depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14
hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name
or names as may be designated by such holder and (iv) when
appropriate, after receipt, deliver such cash to or upon the order
of the registered holder of such Right Certificate. In the event
that the Company is obligated to issue other securities (including
Common Shares) of the Company, pay cash/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or
property are available for distribution by the Rights Agent if and
when appropriate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything to the contrary contained in this
Agreement or in any Right Certificate, if the Distribution Date or
the Shares Acquisition Date shall occur during the period after (but
not including) the date of this Agreement and on or prior to the
Record Date, the provisions of this Agreement, including (without
limitation) Sections 3, 11(a)(ii) and 11(a)(iii) hereof, shall be
applicable to the Rights upon their issuance to the same extent such
provisions would have been applicable if the Record Date were the
date of this Agreement.
Section 8. Cancellation Certificates and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to
the Rights Agent for cancellation or in cancelled form, or, if
<PAGE>
surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Rights
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent
shall deliver all cancelled Right Certificates to the Company, or
shall, at the written request of the Company, destroy such cancelled
Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Availability of Preferred Shares. The Company
covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares or any
Preferred Shares held in its treasury, the number of Preferred
Shares that will be sufficient to permit the exercise in full of all
outstanding Rights in accordance with Section 7. The Company
covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Shares delivered upon
exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully
paid and nonassessable shares.
The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery
of the Right Certificates or of any Preferred Shares (or Common
Shares and/or other securities as provided in this Agreement) upon
the exercise of Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a person other than,
or the issuance or delivery of certificates or depositary receipts
for the Preferred Shares (or Common Shares and/or other securities
as provided in this Agreement) in a name other than that of, the
registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any certificates
or depositary receipts for Preferred Shares upon the exercise of any
Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's
reasonable satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each person in whose
name any certificate for Preferred Shares (or Common Shares and/or
other securities as provided in this Agreement) is issued upon the
exercise of Rights shall for all purposes be deemed to have become
the holder of record of the Preferred Shares (or Common Shares
and/or other securities as provided in this Agreement) represented
thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Shares (or
Common Shares and/or other securities as provided in this Agreement)
transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on
which the Preferred Shares (or Common Shares and/or other securities
as provided in this Agreement) transfer books of the Company are
<PAGE>
open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of
a holder of Preferred Shares (or Common Shares and/or other
securities as provided in this Agreement) for which the Rights shall
be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number of
Preferred Shares or other securities covered by each Right and the
number of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred
Shares payable in Preferred Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred Shares into
a smaller number of Preferred Shares or (D) issue any shares of its
capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this
Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and
kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number
and kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, such
holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. If an event occurs
which would require an adjustment under both Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Section 24 of this Agreement, in the event any
Person becomes an Acquiring Person, each holder of a Right shall
have the right to receive, upon exercise thereof at a price equal to
the then current Purchase Price multiplied by the number of one one-
hundredths of a Preferred Share for which a Right is then
exercisable (whether or not such right was then exercisable), in
accordance with the terms of this Agreement and in lieu of Preferred
Shares, such number of Common Shares of the Company as shall equal
the result obtained by (x) multiplying the then current Purchase
Price by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable (whether or not such Right was
then exercisable) and dividing that product by (y) 50% of the then
current per share market price of the Company's Common Shares
(determined pursuant to Section 11(d) hereof) on the date of the
occurrence of such event; provided, however, that the Purchase Price
and the number of Common Shares so purchasable upon the exercise of
<PAGE>
a Right shall, following the occurrence of such event, be subject to
further adjustment as appropriate in accordance with Section 11(f)
hereof. In the event that any Person shall become an Acquiring
Person and the Rights shall then be outstanding, the Company shall
not take any action (except as permitted under Sections 24 and 27
hereof) which would eliminate or diminish the benefits intended to
be afforded by the Rights.
(iii) After a Person becomes an Acquiring Person, any Rights
that are or were acquired or beneficially owned by (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person
becomes an Acquiring Person or (iii) a transferee of an Acquiring
Person (or such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person becoming an
Acquiring Person and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding, whether written or oral,
regarding the transferred Rights or (B) a transfer which the Board
of Directors otherwise concludes in good faith is part of a plan,
arrangement or understanding (whether written or oral) which has as
a primary purpose or effect the avoidance of this
Section 11(a)(iii), shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights under any
provision of this Agreement. No Right Certificate shall be issued
pursuant to Section 3 that represents Rights beneficially owned by a
Person whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof; no Right Certificate shall be
issued at any time upon the transfer of any Rights to a Person whose
Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof or to any nominee of such Person,
Associate or Affiliate; and any Right Certificate delivered to the
Rights Agent for transfer to a Person whose Rights would be void
pursuant to the preceding sentence shall be cancelled.
(iv) In lieu of issuing Common Shares of the Company in
accordance with Section 11(a)(ii) hereof, the Company may, in the
sole discretion of the Board of Directors, elect to (and, in the
event that the Board of Directors has not exercised the exchange
right contained in Section 24 hereof and there are not sufficient
issued but not outstanding and authorized but unissued Common Shares
of the Company to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof, the Company shall) take
all such action as may be necessary to authorize, issue or pay, upon
the exercise of each Right, cash (including by way of a reduction of
the Purchase Price), property, Preferred Shares or other securities,
or any combination thereof, having an aggregate value equal to the
value of the Common Shares of the Company which otherwise would have
been issuable pursuant to Section 11(a)(ii) hereof upon the exercise
of a Right, which aggregate value shall be conclusively determined
by a majority of the Board of Directors. For purposes of the
preceding sentence, the value of the Common Shares of the Company
shall be determined pursuant to Section 11(d) hereof. Any such
election by the Board of Directors must be made and publicly
announced within 60 days following the Shares Acquisition Date. A
majority of the Board of Directors then in office may suspend the
exercisability of the Rights for a period of up to 60 days following
<PAGE>
the Shares Acquisition Date to the extent that such directors have
not determined whether to exercise the Company's right of election
under this Section 11(a)(iv). In the event of any such suspension,
the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred
Shares (or shares having the same rights, privileges and preferences
as the Preferred Shares ("equivalent preferred shares")) or
securities convertible into Preferred Shares or equivalent preferred
shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible
into Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares (as
defined in Section 11(d)) on such record date, the Purchase Price to
be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the
number of Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred shares
so to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such
current market price and the denominator of which shall be the
number of Preferred Shares outstanding on such record date plus the
number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par
value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid
in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as determined in
good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent. Preferred
Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is
fixed; and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had
not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (including
any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in Preferred
Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then current per share
market price of the Preferred Shares on such record date, less the
fair market value (as determined in good faith by the Board of
Directors, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or
<PAGE>
evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share
and the denominator of which shall be such current per share market
price of the Preferred Shares; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of
the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made,
the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been
fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for
the purpose of this Section 11(d)(i)) on any date shall be deemed to
be the average of the daily closing prices per share of such
Security for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current per share market price
of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or
securities convertible into such shares, or (B) any subdivision,
combination or reclassification of such Security and prior to the
expiration of 30 Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the
current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such
Security. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or
such other system then in use, or, if on any such date the Security
is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors.
The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Security is listed or
admitted to trading is open for the transaction of business or, if
the Security is not listed or admitted to trading on any national
securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be
determined in accordance with the method set forth in
Section 11(d)(i). If the Preferred Shares are not publicly traded,
the "current per share market price" of the Preferred Shares shall
be conclusively deemed to be the current per share market price of
the Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend
<PAGE>
or similar transaction occurring after the date hereof), multiplied
by one hundred. If neither the Common Shares nor the Preferred
Shares are publicly held or so listed or traded, "current per share
market price" shall mean the fair value per share as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at
least 1% in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall
be made to the nearest cent or to the nearest one one-millionth of a
Preferred Share or one ten-thousandth of any other share or security
as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three years from the date of
the transaction which requires such adjustment or (ii) the date of
the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to
Section 11(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the
Company other than Preferred Shares, thereafter the Purchase Price
and the number of such other shares so receivable upon exercise of
any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares contained in
Section 11(a) through (c), inclusive, (e), (h), (i) and (m) hereof,
as applicable, and the provisions of Sections 7, 9, 10, 13 and 14
with respect to the Preferred Shares shall apply on like terms to
any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number of
one one-hundredths of a Preferred Share purchasable from time to
time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and
(c), each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one one-hundredths of a
Preferred Share (calculated to the nearest one one-millionth of a
Preferred Share) obtained by (i) multiplying (x) the number of one
one-hundredths of a share covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-hundredths
<PAGE>
of a Preferred Share purchasable upon the exercise of a Right. Each
of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-hundredths of
a Preferred Share for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company
shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the
public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause
to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof,
if required by the Company, new Right Certificates evidencing all
the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record of
Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a Preferred Share
issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the
Purchase Price and the number of one one-hundredths of a Preferred
Share which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par
value, if any, of the Preferred Shares issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company
may validly and legally issue fully paid and nonassessable Preferred
Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right
exercised after such record date of the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon
such exercise over and above the Preferred Shares and other capital
stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to
such holder a due bill or other appropriate instrument evidencing
<PAGE>
such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that the
Board of Directors in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the
Preferred Shares, issuance wholly for cash of any Preferred Shares
at less than the current market price, issuance wholly for cash of
Preferred Shares or securities which by their terms are convertible
into or exchangeable for Preferred Shares, dividends on Preferred
Shares payable in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by
the Company to holders of its Preferred Shares shall not be taxable
to such stockholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common Shares payable in Common
Shares or (ii) effect a subdivision, combination or consolidation of
the Common Shares (by reclassification or otherwise than by payment
of dividends in Common Shares) into a greater or lesser number of
Common Shares, then in any such case (A) the number of one one-
hundredths of a Preferred Share purchasable after such event upon
proper exercise of each Right shall be determined by multiplying the
number of one one-hundredths of a Preferred Share so purchasable
immediately prior to such event by a fraction, the numerator of
which is the number of Common Shares outstanding immediately before
such event and the denominator of which is the number of Common
Shares outstanding immediately after such event, and (B) each common
share outstanding immediately after such event shall have issued
with respect to it that number of Rights which each Common Share
outstanding immediately prior to such event had issued with respect
to it. The adjustments provided for in this Section 11(n) shall be
made successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is effected.
(o) The Company shall use its best efforts to (i) file as soon
as practicable following the Distribution Date, a registration
statement under the Securities Act of 1933 (the "Securities Act")
with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements
of the Securities Act) until the date of the expiration of the
Rights. The Company will also take such action as may be
appropriate under the blue sky laws of the various states. The
Company may temporarily suspend, for a period of time not to exceed
90 days, the exercisability of the Rights in order to prepare and
file such registration statement or in order to comply with such
blue sky laws. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the rights
has been temporarily suspended.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or
13 hereof, the Company shall promptly (a) prepare a certificate
<PAGE>
setting forth such adjustment, and a brief statement of the facts
accounting for such adjustment, (b) file with the Rights Agent and
with each transfer agent for the Common Shares or the Preferred
Shares a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with
Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power. In the event, directly or indirectly, at any time
after a Person has become an Acquiring Person, (a) the Company shall
consolidate with, or merge with and into, any other Person, (b) any
Person shall consolidate with the Company, or merge with and into
the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all
or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or
cash or any other property, or (c) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or earning
power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person
other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be
made so that (i) each holder of a Right (except as otherwise
provided herein) shall thereafter have the right to receive, upon
the exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable, in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number
of Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation) as shall equal
the result obtained by (A) multiplying the then current Purchase
Price by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable and dividing that product by (B)
50% of the then current per share market price of the Common Shares
of such other Person (determined pursuant to Section 11(d) hereof)
on the date of consummation of such consolidation, merger, sale or
transfer; (ii) the issuer of such Common Shares shall thereafter be
liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such issuer; and (iv) such issuer
shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares thereafter deliverable upon the
exercise of the Rights. The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Person obligated
to issue Common Shares under this Section 13 shall have sufficient
Common Shares authorized to permit the full exercise of the Rights
and prior thereto the Company and such Person shall have executed
and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in this Section 13 and further providing
that, as soon as practicable after the date of any consolidation,
merger or sale of assets mentioned in this Section 13, such Person
will:
<PAGE>
(i) prepare and file a registration statement under the
Securities Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form,
and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until the
Final Expiration Date;
(ii) deliver to holders of the Rights historical financial
statements for such Person and each of its Affiliates which
comply in all respects with the requirements for registration
on Form 10 under the Exchange Act; and
(iii) take such actions as may be necessary or appropriate
under the blue sky laws of the various states.
The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction
there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of
the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares. (a) The
Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the
registered holders of the Right Certificates with regard to which
such fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a
whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which
such fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Rights are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange,
the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported
by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of
Directors. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors shall be used.
<PAGE>
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples
of one one-hundredth of a Preferred Share) upon exercise of the
Rights or to distribute certificates which evidence fractional
Preferred Shares (other than fractions which are integral multiples
of one one-hundredth of a Preferred Share). Interests in fractions
of Preferred Shares in integral multiples of one one-hundredth of a
Preferred Share may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it; provided that such
agreement shall provide that the holders of such depositary receipts
shall have all the rights, privileges and preferences to which they
are entitled as beneficial owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional
Preferred Shares that are not integral multiples of one one-
hundredth of a Preferred Share, the Company shall pay to the
registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Preferred Share. For
the purposes of this Section 14(b), the current market value of a
Preferred Share shall be the closing price of a Preferred Share (as
determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives such holder's right to receive any fractional
Rights or any fractional shares upon exercise of a Right (except as
provided above).
Section 15. Rights of Action. All rights of action in respect
of this Agreement, excepting the rights of action given to the
Rights Agent under Section 18 hereof, are vested in the respective
registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and
any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, of the Common Shares), may, on such
holder's behalf and for such holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, such holder's
right to exercise the Rights evidenced by such Right Certificate in
the manner provided in such Right Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders
of Rights would not have an adequate remedy at law for any breach of
this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to,
this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right, by accepting the same, consents and agrees with the Company
and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common
Shares;
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent
if surrendered at the principal office of the Rights Agent,
duly endorsed or accompanied by a proper instrument of transfer
and with appropriate forms and certificates duly executed;
(c) the Company and the Rights Agent may deem and treat
the person in whose name the Right Certificate (or, prior to
the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the
associated Common Shares certificate made by anyone other than
the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected
by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have
any liability to any holder of a Right or any other Person as a
result of its inability to perform any of its obligations under
this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court
of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority prohibiting or otherwise restraining
performance of such obligation.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of
the Preferred Shares or any other securities of the Company which
may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or
to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders (except
as provided in Section 25 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder.
The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred
without gross negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any
claim of liability.
<PAGE>
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or certificate for
the Preferred Shares or Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to
be genuine and to be signed, executed and, where necessary, verified
or acknowledged, by the proper person or persons, or otherwise upon
the advice of counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which
the Rights Agent or any successor Rights Agent shall be a party, or
any corporation succeeding to the stock transfer or corporate trust
powers of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of
any of the parties hereto; provided that such corporation would be
eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates
either in the name of the predecessor Rights Agent or in the name of
the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates
so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in
its changed name; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the
holders of Right Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion.
<PAGE>
(b) whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of
the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the Secretary
of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own gross negligence,
bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same,
but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to
Section 11(a)(iii) hereof) or any adjustment in the terms of
the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11, 13, 23 or 24, or the
ascertaining of the existence of facts that would require any
such change or adjustment (except with respect to the exercise
of Rights evidenced by Right Certificates after receipt of
actual notice that such change or adjustment is required); nor
shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or
reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any
Preferred Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its
duties hereunder from any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the
<PAGE>
Secretary or the Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or
suffered by it in good faith in accordance with instructions of
any such officer or for any delay in acting while waiting for
those instructions.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal
in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to
the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and
continued employment or retention thereof.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties
under this Agreement upon 30 days' notice in writing mailed to the
Company and to each transfer agent of the Common Shares or Preferred
Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon five days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as
the case may be, and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and to the holders
of the Right Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period
of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered
holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such
a court, shall be a corporation organized and doing business under
the laws of the United States or of the State of Illinois (or of any
other state of the United States so long as such corporation is
authorized to do business as a banking institution in the State of
Illinois), in good standing, having an office in the State of
Illinois, which is authorized under such laws to exercise corporate
trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time
of its appointment as Rights Agent a combined capital and surplus of
at least $50 million. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent
<PAGE>
without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company
shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Shares or Preferred
Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by
the Board of Directors to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made
in accordance with the provisions of this Agreement.
Section 23. Redemption. (a) The Board of Directors may, at its
option, at any time prior to such time as any Person becomes an
Acquiring Person, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price"). The
redemption of the Rights by the Board of Directors may be made
effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish. If
redemption of the Rights is to be effective as of a future date, the
Rights shall continue to be exercisable, subject to Section 7
hereof, until the effective date of the redemption, provided that
nothing contained herein shall preclude the Board of Directors from
subsequently causing the Rights to be redeemed at a date earlier
than the previously scheduled effective date of the redemption. The
Company may, at its option, pay the Redemption Price in cash, Common
Shares (based on the current per share market price of the Common
Shares at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors
ordering the redemption of the Rights pursuant to paragraph (a) of
this Section 23 (or at the effective time of such redemption
established by the Board of Directors of the Company pursuant to
paragraph (a) of this Section 23), and without any further action
and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice
shall not affect the validity of such redemption. Within 10 days
after such action of the Board of Directors ordering the redemption
of the Rights (or, if later, the effectiveness of the redemption of
the Rights), the Company shall mail a notice of redemption to all
the holders of the then outstanding Rights at their last addresses
as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer
<PAGE>
agent for the Common Shares. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will
state the method by which the payment of the Redemption Price will
be made. The Company may, at its option, discharge all of its
obligations with respect to the payment of the Redemption Price by
(i) issuing a press release announcing the manner of redemption of
the Rights, (ii) depositing funds necessary for such redemption, in
trust, with a bank or trust company having a capital and surplus of
at least $100,000,000, to be applied to the redemption of the Rights
so called for redemption and (iii) arranging for the mailing of the
Redemption Price to the registered holders of the Rights. Neither
the Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any manner
other than that specifically set forth in this Section 23 or in
Section 24 hereof, and other than in connection with the purchase of
Common Shares prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company
may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become
void pursuant to the provisions of Section 11(a)(iii) hereof) for
Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any such
plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Shares
then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 and without any further action and
without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Common Shares equal to the number
of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Shares for
Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of
Section 11(a)(ii) hereof) held by each holder of Rights.
<PAGE>
(c) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with
this Section 24, the Company shall take all such action as may be
necessary to authorize additional Common Shares for issuance upon
exchange of the Rights. In the event the Company shall, after good
faith effort, be unable to take all such action as may be necessary
to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be issuable
upon exchange of a Right, a number of Preferred Shares or fraction
thereof such that the current per share market price of one
Preferred Share multiplied by such number or fraction is equal to
the current per share market price of one Common Share as of the
date of issuance of such Preferred Shares or fraction thereof.
(d) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence
fractional Common Shares. In lieu of such fractional Common Shares,
the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares
would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole Common Share. For
the purposes of this paragraph (d), the current market value of a
whole Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company
shall propose (i) to pay any dividend payable in stock of any class
to the holders of its Preferred Shares or to make any other
distribution to the holders of its Preferred Shares (other than a
regular quarterly cash dividend), (ii) to offer to the holders of
its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any
class or any other securities, rights or options, (iii) to effect
any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding
Preferred Shares), (iv) to effect any consolidation or merger into
or with, or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer),
in one or more transactions, of 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, (v) to effect the liquidation, dissolution or winding
up of the Company, or (vi) to declare or pay any dividend on the
Common Shares payable in Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common
Shares), then, in each such case, the Company shall give to each
holder of a Right Certificate, in accordance with Section 26 hereof,
a notice of such proposed action, which shall specify the record
date for the purposes of such stock dividend, or distribution of
rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or
winding up is to take place and the date of participation therein by
the holders of the Common Shares and/or Preferred Shares, if any
such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least 10
days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of any
such other action, at least 10 days prior to the date of the taking
<PAGE>
of such proposed action or the date of participation therein by the
holders of the Common Shares and/or Preferred Shares, whichever
shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, in accordance
with Section 26 hereof, a notice of the occurrence of such event,
which notice shall describe such event and the consequences of such
event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Each notice, request, demand, approval or
other communication which may be or is required to be given under
this Agreement shall be in writing and shall be deemed to have been
properly given when delivered personally at the address set forth
below for the intended party during normal business hours at such
address, when sent by facsimile or other electronic transmission to
the respective facsimile transmission numbers of the parties set
forth below with telephone confirmation of receipt, or when sent by
recognized overnight courier or by the United States registered or
certified mail, return receipt requested, postage prepaid, addressed
as follows:
If to the Company:
Woodward Governor Company
5001 North Second Street
Rockford, Illinois 61125-7001
Attention: Corporate Secretary
Facsimile: (815) 877-9547
Confirm: (815) 877-7441
If to the Rights Agent:
Wachovia Bank of North Carolina, N.A.
301 North Church Street
Winston-Salem, North Carolina 27101
Attention: Robert W. Seifert
Facsimile: (910) 770-4832
Confirm: (910) 770-6454
Notices shall be given to such other addressee or address, or both,
or by way of such other facsimile transmission number, as a
particular party may from time to time designate by written notice
to the other party hereto. Each notice, request, demand, approval
or other communication which is sent in accordance with this Section
shall be deemed given and received for all purposes of this
Agreement as of three business days after the date of deposit
thereof for mailing in a duly constituted United States post office
or branch thereof, one business day after deposit with a recognized
overnight courier service or upon confirmation of receipt of any
facsimile transmission. Notice given to a party hereto by any other
method shall only be deemed to be given and received when actually
received in writing by such party.
<PAGE>
Section 27. Supplements and Amendments. The Company may from
time to time supplement or amend this Agreement without the approval
of any holders of Right Certificates in order to cure any ambiguity,
to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to
make any other provisions with respect to the Rights which the
Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the
Rights Agent; provided, however, that from and after such time as
any Person becomes an Acquiring Person, this Agreement shall not be
amended in any manner which would adversely affect the interests of
the holders of Rights. Without limiting the foregoing, the Company
may at any time prior to such time as any Person becomes an
Acquiring Person amend this Agreement to lower the thresholds set
forth in Sections 1(a) and 3(a) to not less than the greater of (i)
the sum of .001% and the largest percentage of the outstanding
Common Shares then known by the Company to be beneficially owned by
any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any Subsidiary of the
Company, or any entity holding Common Shares for or pursuant to the
terms of any such plan) and (ii) 10%.
Section 28. Determination and Actions by the Board of Directors.
The Board of Directors shall have the exclusive power and authority
to administer this Agreement and to exercise the rights and powers
specifically granted to the Board of Directors or to the Company, or
as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration
of this Agreement (including, without limitation, a determination to
redeem or not to redeem the Rights or to amend this Agreement). All
such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with
respect to the foregoing) that are done or made by the Board of
Directors in good faith, shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights, as
such, and all other parties, and (y) not subject the Board of
Directors to any liability to the holders of the Rights.
Section 29. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation
other than the Company, the Rights Agent and the registered holders
of the Right Certificates (and, prior to the Distribution Date, the
Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
<PAGE>
restrictions of this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such
State.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any
of the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and attested, all as of the day and year first
above written.
WOODWARD GOVERNOR COMPANY
Attest:
By /s/ Carol Manning By /s/ John A. Halbrook
Carol J. Manning, Secretary John A. Halbrook, Chairman,
Chief Executive Officer and
President
Attest: WACHOVIA BANK OF NORTH CAROLINA,
N.A., as Rights Agent
By /s/ Gail Murray By /s/ Robert W. Seifert
Title: Assistant Secretary Title: Vice President
<PAGE>
EXHIBIT A
CERTIFICATE OF DESIGNATIONS
OF
SERIES A PREFERRED STOCK
OF
WOODWARD GOVERNOR COMPANY
(Pursuant to Section 151(g) of the
General Corporation Law of the State of Delaware)
Woodward Governor Company, a corporation organized and existing
under the General Corporation Law of the State of Delaware
(hereinafter referred to as the "Corporation"), hereby certifies
that the following resolution was adopted by the Board of Directors
of the Corporation (hereinafter referred to as the "Board of
Directors") pursuant to Section 151(g) of the General Corporation
Law of the State of Delaware at a meeting of the Board of Directors
held on January 17, 1996:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors in accordance with the provisions of the
Certificate of Incorporation of the Corporation, the Board of
Directors hereby creates a series of the Preferred Stock, par value
$.01 per share (hereinafter referred to as the "Preferred Stock"),
of the Corporation and hereby states the designation and number of
shares, and fixes the relative rights, preferences and limitations
thereof as follows:
SERIES A PREFERRED STOCK:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Preferred Stock" (hereinafter
referred to as the "Series A Preferred Stock") and the number of
shares constituting the Series A Preferred Stock shall be 250,000.
Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, however, that no decrease shall
reduce the number of shares of Series A Preferred Stock to a number
less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into
Series A Preferred Stock.
Section 2. Dividends and Distributions. (A) Subject to the
rights of the holders of any shares of any series of Preferred Stock
(or any similar stock) ranking prior and superior to the Series A
Preferred Stock with respect to dividends, the holders of shares of
<PAGE>
Series A Preferred Stock, in preference to the holders of Common
Stock, par value $.0625 per share (hereinafter referred to as the
"Common Stock"), of the Corporation, and of any other junior stock,
shall be entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred
to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a
share or fraction of a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater
of (a) $1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A
Preferred Stock. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution
shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on
the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time
<PAGE>
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Series A Preferred Stock shall entitle
the holder thereof to 100 votes on all matters submitted to a
vote of the stockholders of the Corporation. In the event the
Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in
each such case the number of votes per share to which holders
of shares of Series A Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred
Stock or any similar stock, or by law, the holders of shares of
Series A Preferred Stock and the holders of shares of Common
Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided
by law, holders of Series A Preferred Stock shall have no
special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for the taking of any
corporate action.
Section 4. Certain Restrictions. (A) Whenever quarterly
dividends or other dividends or distributions payable on the Series
A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A
Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock;
<PAGE>
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except dividends
paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking on a parity with the Series A Preferred
Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences
of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could,
under paragraph (A) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation or in any other Certificate of
Designations creating a series of Preferred Stock or any similar
stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock
shall have received $100.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or
not declared, to the date of such payment, provided that the holders
of shares of Series A Preferred Stock shall be entitled to receive
an aggregate amount per share, subject to the provision for
<PAGE>
adjustment hereinafter set forth, equal to 100 times the aggregate
amount to be distributed per share to holders of shares of Common
Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding
up) with the Series A Preferred Stock, except distributions made
ratably on the Series A Preferred Stock and all such parity stock in
proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding
up. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series
A Preferred Stock were entitled immediately prior to such event
under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series A Preferred
Stock shall at the same time be similarly exchanged or changed into
an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event the Corporation shall
at any time declare or pay any dividend on the Common Stock payable
in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares
of Series A Preferred Stock shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets,
junior to all series of any other class of the Preferred Stock of
the Corporation.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights
of the Series A Preferred Stock so as to affect them adversely
<PAGE>
without the affirmative vote of the holders of at least two-thirds
of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
<PAGE>
IN WITNESS WHEREOF, this Certificate of Designations is executed
on behalf of the Corporation by its Chairman of the Board and
attested by its Secretary this 17th day of January, 1996, who do
hereby affirm, under penalties of perjury, that the foregoing
Certificate of Designations is the act and deed of the Corporation
and that the facts stated therein are true.
WOODWARD GOVERNOR COMPANY
By /S/ JOHN A. HALBROOK
John A. Halbrook, Chairman, Chief
Executive Officer and President
Attest:
By /S/ CAROL J. MANNING
Carol J. Manning, Secretary
<PAGE>
EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER JANUARY 17, 2006, OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
OWNED BY ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS
DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES
THEREOF MAY BECOME NULL AND VOID.
RIGHT CERTIFICATE
WOODWARD GOVERNOR COMPANY
This certifies that _______________________, or registered
assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Woodward Governor Company
Rights Plan Agreement, dated as of January 17, 1996, as the same may
be amended from time to time (the "Rights Agreement"), between
Woodward Governor Company, a Delaware corporation (the "Company"),
and Wachovia Bank of North Carolina, N.A. (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00
P.M., Chicago time, on January 17, 2006, at the principal office of
the Rights Agent, or at the office of its successor as Rights Agent,
one one-hundredth of a fully paid non-assessable share of Series A
Preferred Stock, par value $.01 per share (the "Preferred Shares"),
of the Company, at a purchase price of $300.00 per one one-hundredth
of a Preferred Share (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to
Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-hundredths of a
Preferred Share which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of _____________________, based on the
Preferred Shares as constituted at such date. As provided in the
Rights Agreement, the Purchase Price and the number of
one one-hundredths of a Preferred Share which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are
subject to modification and adjustment upon the happening of certain
events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder
<PAGE>
of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned
offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the Rights
Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of Preferred Shares as
the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate
or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at
a redemption price of $.0l per Right or (ii) may be exchanged in
whole or in part for shares of the Company's Common Stock, par value
$.0625 per share.
No fractional Preferred Shares will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-hundredth of a Preferred Share,
which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may
at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer
upon the holder hereof, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or
to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders (except
as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as
provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
<PAGE>
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of ____________, 199__.
Attest:
By
WOODWARD GOVERNOR COMPANY
By
Its_____________________________
Countersigned:
[Rights Agent]
By
Authorized Signature
Its________________________________
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _______________________________ hereby sells,
assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
________________ Attorney, to transfer the within Right Certificate
on the books of the within-named Company, with full power of
substitution.
Dated: ___________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association
of Securities Dealers, Inc., or a commercial bank or trust company
having an office or correspondent in the United States.
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).
Signature
<PAGE>
Form of Reverse Side of Right Certificate - continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: WOODWARD GOVERNOR COMPANY
The undersigned hereby irrevocably elects to exercise
__________________________ Rights represented by this Right
Certificate to purchase [check appropriate box] [___] the Preferred
Shares or [___] the Common Shares as provided in Section 11(a)(ii)
of the Rights Agreement or [___] the shares described in Section 13
of the Rights Agreement, issuable upon the exercise of such Rights
and requests that certificates for such shares be issued in the name
of:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: ______________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association
of Securities Dealers, Inc., or a commercial bank or trust company
having an office or correspondent in the United States.
<PAGE>
Form of Reverse Side of Right Certificate - continued
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).
Signature
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written
upon the face of this Right Certificate in every particular, without
alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be,
is not completed, the Company and the Rights Agent will deem the
beneficial owner of the Rights evidenced by this Right Certificate
to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and such Assignment or Election to
Purchase will not be honored.
<PAGE>
EXHIBIT C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
OWNED BY ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN
THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF MAY BECOME NULL
AND
VOID.
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On January 17, 1996, the Board of Directors of Woodward
Governor Company (the "Company") declared a dividend of one
preferred share purchase right (a "Right") for each outstanding
share of common stock, par value $.0625 per share (the "Common
Shares"), of the Company. The dividend is payable on February 2,
1996 (the "Record Date"), to the stockholders of record on that
date. Each Right entitles the registered holder thereof to purchase
from the Company one one-hundredth of a share of Series A Preferred
Stock, par value $.01 per share (the "Preferred Shares"), of the
Company at a price of $300.00 per one one-hundredth of a Preferred
Share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Woodward
Governor Company Rights Plan Agreement (the "Rights Agreement")
between the Company and Wachovia Bank of North Carolina, N.A., as
Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") have acquired beneficial ownership
of 15% or more of the outstanding Common Shares or (ii) 15 business
days (or such later date as may be determined by action of the Board
of Directors of the Company prior to such time as any person or
group of affiliated persons becomes an Acquiring Person) following
the commencement of, or announcement of an intention to make, a
tender offer or exchange offer, the consummation of which would
result in the beneficial ownership by a person or group of 15% or
more of the outstanding Common Shares (the earlier of such dates
being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificate with a copy of
this Summary of Rights attached thereto.
The Company, its subsidiaries, any employee benefit plan of the
Company or any of its subsidiaries, any person or entity holding
Common Shares of the Company for or pursuant to the terms of any
such employee benefit plan and any person or entity acquiring Common
Shares directly from the Company after date of the Rights Agreement
are exempt from the applicability of the Rights Agreement as it
relates to the acquisition of 15% or more of the outstanding Common
Shares.
The Rights Agreement provides that, until the Distribution Date
(or earlier redemption or expiration of the Rights), the Rights will
be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the
Rights), new Common Share certificates issued after the Record Date
upon transfer or new issuance of Common Shares will contain a
notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the
Rights), the surrender for transfer of any certificates for Common
Shares outstanding as of the Record Date, even without such notation
or a copy of this Summary of Rights being attached thereto, will
also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business
on the Distribution Date and such separate Right Certificates alone
will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on January 17, 2006 (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless the
Rights are earlier redeemed or exchanged by the Company, in each
case, as described below.
The Purchase Price payable, and the number of Preferred Shares
or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Shares, (ii) upon
the grant to holders of the Preferred Shares of certain rights or
warrants to subscribe for or purchase Preferred Shares at a price,
or securities convertible into Preferred Shares with a conversion
price, less than the then-current market price of the Preferred
Shares or (iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or
dividends payable in Preferred Shares) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-
hundredths of a Preferred Share issuable upon exercise of each Right
are also subject to adjustment in the event of a stock split of the
Common Shares or a stock dividend on the Common Shares payable in
Common Shares or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution
Date.
Preferred Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preferred Share will be entitled to a
minimum preferential quarterly dividend payment of $1.00 per share
but will be entitled to an aggregate dividend of 100 times the
dividend declared per Common Share. In the event of liquidation,
the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $100 per share but will be
entitled to an aggregate payment of 100 times the payment made per
Common Share. Each Preferred Share will have 100 votes, voting
together with the Common Shares. Finally, in the event of any
merger, consolidation or other transaction in which Common Shares
are exchanged, each Preferred Share will be entitled to receive 100
times the amount received per Common Share. These rights are
protected by customary anti-dilution provisions.
In the event that the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated
assets or earning power is sold after a person or group has become
an Acquiring Person, proper provision will be made so that each
holder of a Right will thereafter have the right to receive, upon
the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring
company which at the time of such transaction will have a market
value of two times the exercise price of the Right. In the event
that any person or group of affiliated or associated persons becomes
an Acquiring Person, proper provision shall be made so that each
holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which Rights will thereafter be void), will
thereafter have the right to receive upon exercise that number of
Common Shares having a market value of two times the exercise price
of the Right. The Board of Directors of the Company may elect, in
lieu of issuing Common Shares upon the exercise of the Rights, to
pay or issue cash, property or other securities, or any combination
thereof, having a market value equal to the market value of the
Common Shares which would otherwise be issuable upon exercise of the
Rights.
At any time after any person or group becomes an Acquiring
Person and prior to the acquisition by such person or group of 50%
or more of the outstanding Common Shares, the Board of Directors of
the Company may exchange the Rights (other than Rights owned by such
person or group which will have become void), in whole or in part,
at an exchange ratio of one Common Share (or one or more Preferred
Shares having a value equivalent to the value of one Common Share),
per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment
of at least 1% in such Purchase Price.
No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment
in cash will be made based on the market price of the Preferred
Shares on the last trading day prior to the date of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or
more of the outstanding Common Shares, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price
of $.01 per Right (the "Redemption Price"). The redemption of the
Rights may be made effective at such time, on such basis and with
such conditions as the Board of Directors of the Company in its sole
discretion may establish. Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption
Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the
Rights, including an amendment to lower certain thresholds described
above to not less than the greater of (i) the sum of .001% and the
largest percentage of the outstanding Common Shares then known to
the Company to be beneficially owned by any person or group of
affiliated or associated persons and (ii) 10%, except that from and
after such time as any person or group of affiliated or associated
persons becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights.
<PAGE>
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Current Report
on Form 8-K dated January 17, 1996. A copy of the Rights Agreement
is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
CERTIFICATE OF DESIGNATIONS
OF
SERIES A PREFERRED STOCK
OF
WOODWARD GOVERNOR COMPANY
(Pursuant to Section 151(g) of the
General Corporation Law of the State of Delaware)
Woodward Governor Company, a corporation organized
and existing under the General Corporation Law of the
State of Delaware (hereinafter referred to as the
"Corporation"), hereby certifies that the following
resolution was adopted by the Board of Directors of the
Corporation (hereinafter referred to as the "Board of
Directors") pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware at a meeting
of the Board of Directors held on January 17, 1996:
RESOLVED, that pursuant to the authority granted to
and vested in the Board of Directors in accordance with
the provisions of the Certificate of Incorporation of
the Corporation, the Board of Directors hereby creates
a series of the Preferred Stock, par value $.01 per
share (hereinafter referred to as the "Preferred
Stock"), of the Corporation and hereby states the
designation and number of shares, and fixes the
relative rights, preferences and limitations thereof as
follows:
SERIES A PREFERRED STOCK:
Section 1. Designation and Amount. The shares of
such series shall be designated as "Series A Preferred
Stock" (hereinafter referred to as the "Series A
Preferred Stock") and the number of shares constituting
the Series A Preferred Stock shall be 250,000. Such
number of shares may be increased or decreased by
resolution of the Board of Directors; provided,
however, that no decrease shall reduce the number of
shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the
number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities
issued by the Corporation convertible into Series A
Preferred Stock.
Section 2. Dividends and Distributions. (A)
Subject to the rights of the holders of any shares of
any series of Preferred Stock (or any similar stock)
ranking prior and superior to the Series A Preferred
Stock with respect to dividends, the holders of shares
<PAGE>
of Series A Preferred Stock, in preference to the
holders of Common Stock, par value $.0625 per share
(hereinafter referred to as the "Common Stock"), of the
Corporation, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the
first day of March, June, September and December in
each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 or (b)
subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all
cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or
other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date
or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In
the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment
of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in
each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after
such event and the denominator of which is the number
of shares of Common Stock that were outstanding
immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as
provided in paragraph (A) of this Section immediately
after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares
of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on
the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00
per share on the Series A Preferred Stock shall
nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Preferred
Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the
date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the
determination of holders of shares of Series A
Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends
shall not bear interest. Dividends paid on the shares
of Series A Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and
<PAGE>
payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which
record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares
of Series A Preferred Stock shall have the following
voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A
Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event
the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding
shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case
the number of votes per share to which holders of
shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the
numerator of which is the number of shares of
Common Stock outstanding immediately after such
event and the denominator of which is the number
of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in
any other Certificate of Designations creating a
series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series A
Preferred Stock and the holders of shares of
Common Stock and any other capital stock of the
Corporation having general voting rights shall
vote together as one class on all matters
submitted to a vote of stockholders of the
Corporation.
(C) Except as set forth herein, or as
otherwise provided by law, holders of Series A
Preferred Stock shall have no special voting
rights and their consent shall not be required
(except to the extent they are entitled to vote
with holders of Common Stock as set forth herein)
for the taking of any corporate action.
Section 4. Certain Restrictions. (A) Whenever
quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any
other distributions, on any shares of stock
ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the
Series A Preferred Stock;
<PAGE>
(ii) declare or pay dividends, or make any
other distributions, on any shares of stock
ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except dividends
paid ratably on the Series A Preferred Stock and
all such parity stock on which dividends are
payable or in arrears in proportion to the total
amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire
for consideration shares of any stock ranking
junior (either as to dividends or upon
liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock
in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends
or upon dissolution, liquidation or winding up) to
the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire
for consideration any shares of Series A Preferred
Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in
accordance with a purchase offer made in writing
or by publication (as determined by the Board of
Directors) to all holders of such shares upon such
terms as the Board of Directors, after
consideration of the respective annual dividend
rates and other relative rights and preferences of
the respective series and classes, shall determine
in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any
subsidiary of the Corporation to purchase or otherwise
acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise
acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of
Series A Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new
series of Preferred Stock subject to the conditions and
restrictions on issuance set forth herein, in the
Certificate of Incorporation or in any other
Certificate of Designations creating a series of
Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding
Up. Upon any liquidation, dissolution or winding up of
the Corporation, no distribution shall be made (1) to
the holders of shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A
Preferred Stock shall have received $100.00 per share,
plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to
the date of such payment, provided that the holders of
shares of Series A Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the
<PAGE>
provision for adjustment hereinafter set forth, equal
to 100 times the aggregate amount to be distributed per
share to holders of shares of Common Stock, or (2) to
the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series
A Preferred Stock and all such parity stock in
proportion to the total amounts to which the holders of
all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the
Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of
shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in
clause (1) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock
outstanding immediately after such event and the
denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. In case
the Corporation shall enter into any consolidation,
merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other
property, then in any such case each share of Series A
Preferred Stock shall at the same time be similarly
exchanged or changed into an amount per share, subject
to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in
kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the
event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding
sentence with respect to the exchange or change of
shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock
outstanding immediately after such event and the
denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such
event.
Section 8. No Redemption. The shares of Series A
Preferred Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock
shall rank, with respect to the payment of dividends
and the distribution of assets, junior to all series of
any other class of the Preferred Stock of the
Corporation.
Section 10. Amendment. The Certificate of
Incorporation of the Corporation shall not be amended
in any manner which would materially alter or change
the powers, preferences or special rights of the Series
A Preferred Stock so as to affect them adversely
<PAGE>
without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A
Preferred Stock, voting together as a single class.
<PAGE>
IN WITNESS WHEREOF, this Certificate of Designations
is executed on behalf of the Corporation by its
Chairman of the Board and attested by its Secretary
this 17th day of January, 1996, who do hereby affirm,
under penalties of perjury, that the foregoing
Certificate of Designations is the act and deed of the
Corporation and that the facts stated therein are true.
WOODWARD GOVERNOR COMPANY
By /S/ JOHN A. HALBROOK
John A. Halbrook, Chairman,
Chief Executive Officer and
President
Attest:
By /S/ CAROL J. MANNING
Carol J. Manning, Secretary
<PAGE>
PRESS RELEASE
WOODWARD GOVERNOR COMPANY ANNOUNCES RIGHTS PLAN
Rockford, Illinois, January 17, 1996 - The Board of Directors of Woodward
Governor Company, a Delaware corporation, announced the adoption of a Rights
Plan intended to protect the interests of the Woodward shareholders
in the event of a takeover of the company which is not approved by the Woodward
Governor Board of Directors.
The company's management said that it is not aware of any efforts to gain
control of the company at this time and described the Rights Plan as a
standard safeguard against unfair takeover practices.
"In a takeover attempt, the Plan will help assure that all of the Woodward
Governor shareholders will receive fair and equal treatment," said John A.
Halbrook, the company's Chairman and Chief Executive Officer. "We want to
protect our shareholders from partial tender offers, squeeze outs, open market
accumulations and other potentially abusive tactics that might be used to gain
control of the company without paying a control premium to all shareholders."
Under the terms of the plan, Woodward Governor Company will make a dividend
distribution of one Preferred Share Purchase Right with respect to each
outstanding share of Woodward common stock to all common
shareholders of record on February 2, 1996. Separate Rights Certificates will
not be distributed as the Rights will automatically trade with the common
stock currently outstanding. The distribution is not taxable to
shareholders. Each Right will expire on January 17, 2006.
Shareholders can exercise the rights only if an individual or group acquires
or announces a tender offer for 15% or more of the company's common stock.
If the Rights first become exercisable as a result of an announced tender
offer, each Right would entitle the holder to buy one one-hundredth of a
share of a new series of preferred stock at an exercise price of $300.00.
Once an individual or group acquires 15% or more of Woodward Governor Company
common stock, however, each Right will then entitle the holder to purchase a
number of Woodward Governor Company common shares at a 50% discount to the
then market price of the Woodward common shares. The Woodward Governor
Company Board of Directors may also elect to issue or pay, upon the exercise
of the Rights and in lieu of the Common Shares, cash, property or other
securities, or any combination thereof, having a fair market value equal to
the value of the Common Shares which would otherwise be issuable upon the
exercise of the Rights.
After an individual or group acquires 15% of the company's common stock, and
before they acquire 50%, Woodward's Board of Directors may exchange the
<PAGE>
Rights (other than any owned by such individual or group) in whole or in
part, at an exchange ratio of one share of common stock per Right.
Before an investor or group acquires 15% of Woodward's common stock, the
Rights are redeemable for $.01 per right at the option of the Woodward
Governor Company Board of Directors.
Woodward Governor Company's Board of Directors is also authorized to reduce
the 15% threshold to no less than 10%.
The Rights are intended to enable all Woodward Governor shareholders to
realize the long-term value of their investment in the company. The Rights
will not prevent a takeover but should encourage anyone seeking to acquire
the company to negotiate with the Woodward Governor Company Board of
Directors prior to attempting a takeover.
The Woodward Governor Company serves prime mover control and accessory
markets. It has headquarters and a plant in Rockford, Illinois and plants in
Fort Collins, Colorado; Loveland, Colorado; Avon, Connecticut; Rockton,
Illinois; Buffalo, New York, U.S.A.; Sydney, Australia; Campinas, Brazil;
Reading, England; Aken, Germany; Kelbra, Germany; Ballabgarh, Haryana, India;
Tomisato, Japan; Kobe, Japan; Hoofddorp, The Netherlands; Singapore
