U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended March 31, 1996
Commission file number 0-7438
DYNATECH CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS ....................................... 04-2258582
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3 New England Executive Park
Burlington, Massachusetts 01803-5087
(Address of principal executive offices)(Zip code)
Registrant's telephone number, including area code: (617) 272-6100
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.20 per share
(Title of class)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. {X}
At June 7, 1996, the aggregate market value of the Common Stock of the
registrant held by non-affiliates was $596,522,233.
At June 7, 1996 there were 17,663,839 shares of Common Stock of the registrant
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1996 Annual Report to Shareholders are incorporated by reference
in Parts I and II.
Portions of the proxy statement for the 1996 Annual Meeting of Shareholders are
incorporated by reference in Part III.
<PAGE>
PART I
ITEM 1. BUSINESS.
PRODUCTS AND SERVICES
Incorporated in Massachusetts in 1959, Dynatech Corporation (the
"Company") has its principal offices at 3 New England Executive Park,
Burlington, Massachusetts 01803. Production facilities are located in seven
states.
The Company is a global communications equipment firm engaged in the
business of developing, manufacturing, marketing, and selling network technology
solutions. These solutions can be categorized into three product types:
Communications Test, Industrial and Scientific Communications Systems, and
Non-Broadcast Video Technologies. In fiscal 1996, these accounted for 59%, 20%,
and 21%, respectively, of consolidated revenues.
COMMUNICATIONS TEST
The Company provides a broad range of test and analysis products,
service, and support which enable customers worldwide to develop, manufacture,
install, and maintain communications networks and equipment. These products are
designed, manufactured, and marketed by Telecommunications Techniques
Corporation (TTC), Tele-Path Instruments, Inc. (TPI), and Synergistic Solutions
Inc. (SSI), wholly owned subsidiaries of the Company based in Maryland,
Virginia, and Georgia, respectively.
The market for these products comprise: i) service providers including
the Bell operating companies, long-distance companies, competitive access
providers, cable television operators, and Europe's Post Telephone and Telegraph
service providers (PTT); ii) service users including large corporate and
government network operators; and iii) manufacturers of communications equipment
and systems.
Since the divestiture of AT&T in 1984, the amount of digital traffic
transmitted through the worldwide telecommunications system has increased
dramatically, in part due to the proliferation of computer networks and the
increased desire to communicate electronically. Growth of LAN backbones and
interconnections, high-speed interconnects, Internet access, and
cellular/wireless communications systems are leading to the deployment of new
high-speed transmission technologies such as Synchronous Optical Network
(SONET), Asynchronous Transfer Mode (ATM), frame relay, and Integrated Services
Digital Network (ISDN). The market for the Company's products is driven in part
by the rapid deployment of these technologies and other new communications
standards, as well as efforts on the part of communication service providers and
users to improve service quality and to reduce costs. Deregulatory activity
around the world, such as the Telecommunications Act of 1996 in the United
States, is expected to lead to increased competition among service providers and
to further drive demands for more integrated and intelligent test solutions.
The Company's communications test products are used in two key
categories of applications: Transmission Testing and Network Services Testing.
Transmission Testing products are geared primarily to long-distance and local
service providers for testing the digital transport, digital loop, and the
terrestrial portion of wireless communications networks. Network Services
Testing products are used by service providers as well as service users to test
Datacom Services (the data services provided to businesses) and Internetworking
(maintaining the interconnections between LANs and WANs).
The Company sells its communications test products under the following
brand names: T-BERD(R), FIREBERD(R), CENTEST(R), INTERCEPTOR(R), FIBERSCAN(R),
TPI(R), and SSI(R).
TRANSMISSION TESTING
Digital transport test products analyze high-speed ATM, SONET/SDH, DS3,
DS1, and DS0 transmission circuits while measuring multiple performance
parameters. The products are used by service providers to determine the quality
of newly installed high-speed circuits by performing various measurements over a
timed test period. The Company introduced in fiscal 1996 a version of its T-BERD
<PAGE>
310 analyzer which integrates DS3 ATM functions to enable users to test and
maintain ATM switches and facilities as well as high-speed SONET networks.
The Company's digital transport products also serve the international
telecommunications industry by providing portable digital testing capability for
transmission systems that operate in accordance with the Consultative Committee
on International Telephone and Telegraph (CCITT) standards. These products,
marketed under the INTERCEPTOR name, comply with International
Telecommunications Union (ITU) standards, which are used everywhere that North
American standards are not.
Digital loop test products test the link between a service provider's
central office and the customer premises. Technicians use these products to
perform fault location and data quality testing of voice or data circuits,
whether carried on copper wire pairs or fiber optic cable.
The Company's rack-mounted centralized test systems are used in the
service provider central office environment to test high-speed communication
circuits remotely. The CENTEST models 550 and 650 allow monitoring and testing
of DS1 and DS3 signals, respectively, for ongoing maintenance, so that network
trouble spots can be quickly identified and mobile repair crews can be
efficiently directed from a central location.
The Company markets, develops, and sells products which are designed to
test the terrestrial portion of wireless networks. In fiscal 1996, the Company
introduced the INTERCEPTOR 116 and an optional module for its T-BERD 107A
analyzer. These products can decode and monitor the quality of compressed voice
signals in GSM (Global System for Mobile communications) wireless networks.
The Company also sells modular, portable fiber optic test instruments
which allow both central office and field technicians to isolate fiber optic
cable breaks and measure degradation caused by aging connectors and related
components. The instruments include an optical time domain reflectometer used to
locate cable breaks and damage, an optical power meter used to determine the
signal levels on optical fibers, and a stable optical source.
NETWORK SERVICES TESTING
The Company's data communications analyzers perform up to 60
simultaneous performance and error measurements on a wide range of network
transmission equipment. For its family of FIREBERD 4000 and 6000 products, the
Company offers a wide range of test interfaces, including Euro-ISDN (a leading
European communications service), which enable users to tailor the instrument to
specific test requirements. In fiscal 1996, the Company acquired TPI which
supplies hand-held, single-function test sets for installing and maintaining
ISDN and frame relay circuits.
The Company markets internetwork protocol analyzers to test and verify
interconnections between LANs and WANs. The FIREBERD 500, a Windows-based
modular test platform introduced in fiscal 1995, is capable of analyzing ATM,
frame relay, FDDI, ISDN, CDPD (a cellular protocol), and SMDS communications
networks. The FIREBERD 500 enables network managers to monitor network behavior
and to pinpoint problems within the internetwork.
INDUSTRIAL AND SCIENTIFIC COMMUNICATIONS SYSTEMS
The Company's industrial and scientific communications products address
a worldwide trend towards increasingly complex and sophisticated computing and
communications requirements in harsh environments outside of the office and the
home.
By selling through direct marketing channels under the name of
Industrial Computer Source, the Company provides a broad range of industrial
computer, input/output and accessory products, and communications devices which
are designed to operate continuously and reliably under adverse conditions.
These products are built to withstand disruptive electrical interference,
vibration, extremes of heat and cold, airborne dust, moisture and other hazards.
The Company's Industrial and Scientific Communications Systems can be
classified into the following categories:
<PAGE>
RUGGEDIZED COMPUTER SYSTEM CHASSIS
The Company specializes in system chassis (computer enclosures or
housings) that protect either industry-standard motherboards or passive
backplane technology for industrial or telecommunications applications. Passive
backplanes contain no electronically active components, but act as a place to
plug in components or cards such as central processing unit cards. Generally,
backplane architectures offer greater flexibility than standard PCs and up to
three times the feature card capacity.
Industrial chassis like the Company's 7310 Series, for example, allow
the user to configure all the major components within the system to provide a
virtually custom solution for specific application requirements. To this end,
the Company offers a complete line of plug-in computer boards with a wide range
of computing processors including the Intel Pentium.
GRAPHICAL INDUSTRIAL USER INTERFACE
The Company offers industrial color and monochrome monitors and
accessory products. In a production plant environment, these products can
display production process information on a computer screen to simplify
interaction with plant machinery and processes.
COMMUNICATING DEVICES
The Company provides a complete selection of networking products such
as LAN adapters, transceivers and repeaters, bridges, hubs, trunk access units,
data compressors, as well as other application specific network products and
accessories. These products are compatible with most popular network protocols
and meet the increasing demands of network managers in a variety of application
environments from computer-integrated manufacturing to telecommunications. In
these environments, data are being linked for the purpose of analyzing,
controlling, or reporting on a variety of parameters such as a factory
production process.
STORAGE AND RETRIEVAL SYSTEMS
The Company provides expansion chassis, such as its Model 6531-RMDB Series
of rack mount drive bays which, when loaded with up to eight disk drives of
various types, can provide up to 14 gigabytes of storage capacity. These are
suited to applications such as telecommunications which require large amounts of
memory storage for voice, video, and data communications processing. The
Company's line of storage and retrieval products include floppy and hard drives
in all popular formats, CD-ROM drives, SIMM memory modules, RAID and tape backup
systems.
ENVIRONMENTAL SENSING DEVICES
The Company sells devices used to convert real world "analog" process
signals such as temperature and flow into digital data that can be communicated
via the network to other processing units for local or remote analysis, control,
reporting, storage or any other use related to improving process efficiency. The
Model LC1600-P, for example, typifies modern PC-based input/output boards by
providing several different analog and digital data acquisition functions on the
same plug-in board.
NON-BROADCAST VIDEO TECHNOLOGIES
The Company sells a range of digital video hardware and software
products which are used primary for non-broadcast applications. These products
are sold under the names Parallax Graphics, DataViews, AIRSHOW, and daVinci
Systems.
Parallax Graphics' products combine full-color live video using
real-time digital video compression with computer graphics and text for such
applications as product training, display of financial market information,
geographic display, and information systems. These products include a live video
windowing system for SUN Microsystems, Hewlett-Packard, DEC, and IBM
workstations.
DataViews software is used in the development of custom graphic user
interfaces for various UNIX-based computer systems. Applications for this
software include the creation of custom graphics for displaying real-time data
such as found in manufacturing process control and communications network
analysis.
<PAGE>
AIRSHOW passenger cabin video information systems display position
defining maps, airport terminal charts, and in-flight information.
daVinci Systems line of digital color correction systems are used to
enhance and color-match video program and commercial material as it is
transferred from film origination to video tape for editing and distribution.
These systems are sold to teleproduction and commercial production facilities.
Dynatech also offers software solutions for the pharmacy industry, via
its ComCoTec Rx Claims, an on-line prescription claims adjudication system.
DISCONTINUED OPERATIONS AND DIVESTED BUSINESSES
During fiscal 1996, the Company announced a formal plan to discontinue
certain non-strategic businesses and to sell them during the next 12 to 18
months. Five businesses were sold during fiscal 1996 with an additional ten
business held for sale as of March 31, 1996.
CUSTOMERS AND MARKETING
Dynatech markets its products to a diverse customer base. The Company's
products are sold to a broad range of communications service providers,
including telephone companies, broadcasters, cable television operations, and a
wide array of computer and data communication users, corporate and industrial
customers, and scientific and educational organizations.
Most of the Company's revenues are generated through a direct sales
force. The Company also uses distributorships and representative relationships
to sell its products in areas of the United States and the rest of the world
with relatively low sales volume.
COMPETITION
The markets in which the Company competes are highly competitive and
are characterized by rapidly changing technology. Principal competitors include
businesses with significant financial, development, marketing, and manufacturing
resources, as well as numerous small specialized companies. The Company believes
it holds a relatively favorable position with respect to the important
competitive factors in each of its markets. The Company considers rapid product
development, product functionality and features, and highly trained technical
sales and support staff to be key competitive factors.
MAJOR CUSTOMERS
The Company's sales of goods and services to various agencies of the
United States federal government were approximately $12,785,000, $20,040,000,
and $14,600,000 in fiscal years ended 1996, 1995, and 1994, respectively. No
single customer accounted for more than 10% of sales in any of the three years.
INTERNATIONAL
The Company maintains marketing subsidiaries or branches in major
countries in Western Europe and Asia and has distribution agreements in many
other countries where sales volume does not warrant a direct sales organization.
The Company's foreign sales from continuing operations (including exports from
the United States directly to foreign customers) were approximately 20%, 23%,
and 25% of consolidated net sales in fiscal years 1996, 1995, and 1994,
respectively.
The Company's international business is subject to risks customarily
found in foreign operations, such as fluctuations in currency exchange rates,
import and export controls, and regulatory policies of foreign governments. A
summary of the Company's sales, earnings and identifiable assets by geographic
area is found in the 1996 Annual Report to Shareholders which is incorporated
herein by reference.
<PAGE>
PRODUCT DEVELOPMENT
As the technologies in the Company's markets are continually changing,
the Company's success depends on its ability to develop new products and improve
existing ones. All businesses within the Company maintain product development
capability focused on and experienced in the technologies important to the
specific business. Consolidated product development expense in the years ended
March 31, 1996, 1995, and 1994 were as follows: $36,456,000, $30,585,000, and
$26,863,000, respectively.
BACKLOG
The Company's backlog of orders believed to be firm at March 31, 1996
and 1995 were $57,317,000 and $40,343,000, respectively. Of the increase,
$13,251,000 related to companies acquired during fiscal 1996.
EMPLOYEES
The Company employs approximately 1,500 people at its continuing
operations. There are approximately 800 additional employees at businesses that
are held for sale. The Company's experience has been that employees having
requisite skills for the Company's purposes are generally available in the areas
where its facilities are located. The Company considers its labor relations to
be good.
PATENTS AND TRADEMARKS
The Company generally seeks patent protection for inventions and
improvements to its products, which it believes to be patentable. It holds
numerous United States and foreign patents and patent applications covering many
products. While the Company considers its patent position important, it believes
its technical marketing and manufacturing capabilities are of greater
competitive significance.
Fireberd, T-Berd, Centest, Interceptor, Fiberscan, and Airshow are
among registered trademarks which the Company considers valuable assets.
Dynatech is a registered service mark of the Company in the United
States and a registered trade or service mark (issued or applied for) of the
Company in most other major industrialized countries of the world.
SUPPLIERS
Materials and components used in the Company's products are normally
available stock items or can be obtained to Company specifications from more
than one potential supplier. The Company's plasticware is molded by
subcontractors using molds owned by the Company.
Some components and assemblies are purchased in Asia under volume
contracts.
ENVIRONMENTAL FACTORS
Federal, state and local laws or regulations which have been enacted or
adopted regulating the discharge of materials into the environment have not had,
and under present conditions, the Company does not foresee that they will have,
a material adverse effect on capital expenditures, earnings, or the competitive
position of the Company.
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
EXECUTIVE
OFFICER
NAME CURRENT POSITION AGE SINCE
John F. Reno President and Chief Executive Officer 57 1979
Robert H. Hertz Treasurer and Chief Financial Officer, 53 1980
Clerk
John R. Peeler Corporate Vice President 41 1992
Communications Test Business
George A. Merrick Corporate Vice President 48 1994
Display Business
Roger C. Cady Corporate Vice President 57 1993
Business Development
John A. Mixon Corporate Vice President 50 1989
Human Resources
Robert W. Woodbury, Jr. Corporate Controller 39 1996
Nancy J. Jenkins Assistant Treasurer 50 1990
Officers are elected annually by the Board of Directors at its meeting
following the Annual Meeting of Shareholders and serve until the next annual
election or until their successors have been duly elected at any other
Director's meeting. There are no arrangements or understandings between any of
the Directors or Officers and any other person regarding election as a Director
or Officer of the Company.
Each of the Company's officers has served in various capacities with
the Company for more than five years, except Messrs. Cady, Merrick and Woodbury.
Mr. Cady joined the Company in March 1993. From 1986 to 1993, he was
President and founder of Arcadia Consulting, a management consulting firm which
assisted high technology companies.
Mr. Merrick joined the Company in September 1994. From 1990 to 1994, he
served as Executive Vice President of Worldwide Sales and Marketing at Ampex
Systems Corp., a supplier of professional video, broadcasting, and recording
products.
Mr. Woodbury joined the Company in January 1996. From 1992 to January
1996, he served as Vice President and Controller for Kollmorgen Corporation, a
manufacturer of motion control devices. From 1990 to 1992, he was Chief
Financial Officer of Kidde Fenwal, Inc., a manufacturer of fire suppression
equipment.
<PAGE>
ITEM 2. PROPERTIES.
The Company's policy is generally to lease real property for its
manufacturing and sales operations. It does however, own two buildings used for
manufacturing. Properties for continuing operations are as follows:
Leased Facilities:
LOCATION SQUARE FEET LEASE TERMINATION
Burlington, Massachusetts 22,200 1998
Germantown, Maryland 30,000 2006
Germantown, Maryland 68,000 2001
Germantown, Maryland 98,000 2003
Germantown, Maryland 14,700 1996
San Diego, California 72,860 1999
Northampton, Massachusetts 22,500 1996
Tustin, California 24,300 1999
Salem, Virginia 21,000 2004
Lombard, Illinois 23,300 1998
The Company has other leases for continuing operations manufacturing
space and sales offices, but in each case the total footage is under 15,000
square feet.
The Company has approximately 370,000 square feet in various facilities
in discontinued operations. Two of the facilities are owned and the remainder
are leased. The Company expects to transfer the lease obligations to future
buyers.
ITEM 3. LEGAL PROCEEDINGS.
The Company is party to several pending legal proceedings and claims,
none of which, in the opinion of management or counsel primarily responsible for
such matters, is considered to be material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS.
(a) The Company's common stock is quoted on the Nasdaq National Market.
The quarterly range of high and low prices for the past two years as reported by
the Nasdaq National Market and published in The Wall Street Journal may be found
on page 32 in the Company's 1996 Annual Report to Shareholders, which is
incorporated herein by reference.
(b) There were approximately 997 common stockholders of record as of
June 7, 1996.
(c) The Company has never paid a cash dividend on its Common Stock and
does not intend to make such a payment in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA.
Reference is made to information contained in the section entitled
"Five-Year Summary" on page 16 in the Company's 1996 Annual Report to
Shareholders, copies of which have been filed with the U.S. Securities and
Exchange Commission pursuant to Rule 14a-3(c) under the Securities Exchange Act
of 1934, as amended, which information is incorporated herein by reference.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Reference is made to the information on pages 17 - 19 in the Company's 1996
Annual Report to Shareholders, copies of which have been filed with the U.S.
Securities and Exchange Commission pursuant to Rule 14a-3(c) under the
Securities Exchange Act of 1934, as amended, which information is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Reference is made to the Company's consolidated financial statements
and notes thereto on pages 20 - 31 in the Company's 1996 Annual Report to
Shareholders together with the Report of Independent Accountants dated May 20,
1996 on page 32 thereto and "Summary of Operations by Quarter" on page 32
thereto, copies of which have been filed with the U.S. Securities and Exchange
Commission pursuant to Rule 14a-3(c) under the Securities Exchange Act of 1934,
as amended, which information is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Reference is made to the information responsive to Items 401 and 405 of
Regulation S-K contained in the Company's definitive Proxy Statement relating to
its 1996 Annual Meeting of Shareholders which will be filed with the U.S.
Securities and Exchange Commission within 120 days after the close of the
Company's fiscal year ended March 31, 1996 pursuant to Rule 14a-6(b) under the
Securities and Exchange Act of 1934, as amended; said information is
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Reference is made to the information responsive to Item 402 of
Regulation S-K contained in the Company's definitive Proxy Statement relating to
its 1996 Annual Meeting of Shareholders which will be filed with the U.S.
Securities and Exchange Commission within 120 days after the close of the
Company's fiscal year ended March 31, 1996 pursuant to Rule 14a-6(b) under the
Securities Exchange Act of 1934, as amended; said information is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Reference is made to the information responsive to Item 403 of
Regulation S-K contained in the Company's definitive Proxy Statement relating to
its 1996 Annual Meeting of Shareholders which will be filed with the U.S.
Securities and Exchange Commission within 120 days after the close of the
Company's fiscal year ended March 31, 1996 pursuant to Rule 14a-6(b) under the
Securities Exchange Act of 1934, as amended; said information is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Reference is made to the information responsive to Item 404 of
Regulation S-K contained in the Company's definitive Proxy Statement relating to
its 1996 Annual Meeting of Shareholders which will be filed with the U.S.
Securities and Exchange Commission within 120 days after the close of the
Company's fiscal year ended March 31, 1996 pursuant to Rule 14a-6(b) under the
Securities Exchange Act of 1934, as amended; said information is incorporated
herein by reference.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.
(a) Documents filed as part of this report
(1) Financial statements
No financial statements have been filed with this Form 10-K other than
those incorporated by reference in Item 8.
(2) Financial statement schedules Page
II. Valuation and Qualifying Accounts 14
Schedules other than those listed above have been omitted because they
are either not required or not applicable or because the required information
has been included elsewhere in the financial statements or notes thereto.
Individual financial statements of the Company have been omitted
because it is primarily an operating Company and no subsidiaries have material
minority equity interests, nor are any indebted to any person other than the
parent or consolidated subsidiaries, in amounts which are material in relation
to total consolidated assets at the date of the March 31, 1996 balance sheet,
except indebtedness incurred in the ordinary course of business which is not
overdue.
(b) Reports on Form 8-K
A current report on Form 8-K dated February 5, 1996 was filed by the
Company concerning: (i) the agreement for the sale of the assets of Dynatech
Laboratories Worldwide; (ii) the Company's plan of disposal to discontinue its
operations engaged in broadcast video equipment and selected data transmission
operations; and (iii) the authorization by the Board of Directors to repurchase
up to 1,000,000 shares of common stock.
(c) Exhibits
EXHIBIT NO.
(3) Articles of Organization and By-Laws -
(1) The Registrant's Restated Articles of Organization is
filed herewith as Exhibit 3 (1).
(2) The Registrant's By-Laws, as amended, were filed as
Exhibit 3 to Form 10-K for the year ended March 31, 1992,
and are incorporated herein by reference.
(3) Shareholder Rights Agreement, dated February 16, 1989,
as amended and restated as of March 12, 1990, is filed
herewith as Exhibit 3 (3).
(4) Instruments defining the rights of security holders, including
indentures
(1) Multicurrency Revolving Credit and Term Loan Agreement,
as amended, dated October 27, 1995 between Dynatech and
the First National Bank of Boston, ABW AMRO Bank N.V., and
Mellon Bank and is incorporated by reference to Exhibit 4
(a) on Form 10-Q for the quarter ended December 31, 1995.
<PAGE>
(10) Material Contracts -
(1) 1982 Incentive Stock Option Plan, as amended, is filed
herewith as Exhibit 10 (1).
(2) Form of Special Termination Agreement between Dynatech
Corporation and each of Messrs. Barger and Reno is filed
herewith as Exhibit 10 (2).
(3) Form of Special Termination Agreement between Dynatech
Corporation and each of its other Executive Officers is
filed herewith as Exhibit 10 (3).
(4) 1992 Stock Option Plan incorporated by reference to
Exhibit 3 to Form 10-Q for the quarter ended June 30, 1992.
(5) Letter Agreement dated March 24, 1993 by and between
J. P. Barger and Dynatech Corporation incorporated by
reference to Exhibit 10 (5) to Form 10-K of the year ended
March 31, 1993.
(6) 1994 Stock Option and Incentive Plan incorporated by
reference to Exhibit 4.1 to Form S-8 filed on January 30,
1996.
(11) Computation of per share earnings.
(13) Dynatech Corporation 1996 Annual Report to Shareholders which,
except for those portions expressly incorporated herein by
reference, is furnished only for the information of the Securities
Exchange Commission and is not deemed to be filed.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Accountants.
(27) Financial Data Schedule.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DYNATECH CORPORATION
----------------------
June 14, 1996 By: ROBERT H. HERTZ
----------------------
Treasurer and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
RICHARD K. LOCHRIDGE Chairman of the Board, Director June 14, 1996
- -----------------------
JOHN F. RENO President and Chief Executive Officer,
- ----------------------- Director June 14, 1996
ROBERT H. HERTZ Treasurer and Chief Financial Officer June 14, 1996
- -----------------------
ROBERT W. WOODBURY, JR. Controller, Principal Accounting Officer June 14, 1996
- -----------------------
RONALD L. BITTNER Director June 14, 1996
- -----------------------
WILLIAM R. COOK Director June 14, 1996
- -----------------------
O. GENE GABBARD Director June 14, 1996
- -----------------------
JAMES B. HANGSTEFER Director June 14, 1996
- -----------------------
L. DENNIS KOZLOWSKI Director June 14, 1996
- -----------------------
ROBERT G. PAUL Director June 14, 1996
- -----------------------
PETER VAN CUYLENBURG Director June 14, 1996
- -----------------------
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Dynatech Corporation:
Our report on the consolidated financial statements of Dynatech
Corporation has been incorporated by reference in this Form 10-K from the 1996
Annual Report to Shareholders of Dynatech Corporation. In connection with our
audits of such financial statements, we have also audited the related financial
statement schedule on page 195 of this Form 10-K.
In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
May 20, 1996
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED
MARCH 31, 1996, 1995 AND 1994
RESERVE FOR DOUBTFUL ACCOUNTS (In thousands)
<S> <C>
BALANCE, March 31, 1993 ................................. $ 3,634(a)
Additions charged to income .................... 1,232
Write-off of uncollectible accounts, net ....... (961)
-------
BALANCE, March 31, 1994 ................................. 3,905(a)
Additions charged to income .................... 2,685
Write-off of uncollectible accounts, net ....... (1,293)
Allowances of divisions sold ................... (220)
-------
BALANCE, March 31, 1995 ................................. 5,077(a)
Additions charged to income .................... 356
Write-off of uncollectible accounts, net ....... (494)
Allowances reclassified, related to
discontinued operations (3,982)
BALANCE, March 31, 1996 ................................. $ 957
=======
(a) Prior year balances have not been restated to reflect elimination of
discontinued operations.
</TABLE>
THE COMMONWEALTH OF MASSACHUSETTS
JOHN F. X. DAVOREN
Secretary of the Commonwealth
STATE HOUSE, BOSTON, MASS
FEDERAL IDENTIFICATION
NO. 04-2258582
RESTATED ARTICLES OF ORGANIZATION
General Laws, Chapter 156B, Section 74
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of stockholders adopting the
restated articles of organization. The fee for filing this certificate is
prescribed by General Laws, Chapter 156B, Section 114. Make check payable to the
Commonwealth of Massachusetts.
We, J.P. BARGER, President and K.D. ROBERTS, Clerk of DYNATECH CORPORATION
located at 17 Tudor Street, Cambridge, Massachusetts do hereby certify that the
following restatement of the articles of organization of the corporation was
duly adopted at a meeting held on November 20, 1968, by vote of 69,171 shares of
Common Stock out of 97,335 shares outstanding, being at least two-thirds of each
class of stock outstanding and entitled to vote and of each class or series of
stock adversely affected thereby:
1. The name by which the corporation shall be known is Dynatech Corporation.
2. The purposes for which the corporation is formed are as follows: To provide
engineering, research, consulting and development services of every nature
and description; to design, manufacture, test, lease, sell or otherwise
deal in equipment, machinery and other goods and products of every nature
and description; to carry on any activity which may be necessary or
appropriate to the performance of any of the foregoing purposes; and in
general to carry on any business permitted to a corporation organized under
Massachusetts General Laws, chapter 156B.
<PAGE>
3. State the total number of shares and the par value, if any, of each class
of stock which the corporation is authorized to issue is as follows:
<TABLE>
<CAPTION>
WITHOUT PAR VALUE WITH PAR VALUE
CLASS OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE
<S> <C> <C> <C>
Preferred None 100,000 $1.00
Common None 1,500,000 $0.20
</TABLE>
4. If more than one class is authorized, a description of each of the
different classes of stock with, if any, the preferences, voting powers,
qualifications, special or relative rights or privileges as to each class
thereof and any series now established:
See pages 2A-2F
5. The restrictions, if any, imposed by the articles of organization upon the
transfer of shares of stock of any class are as follows:
None
6. Other lawful provision, if any, for the conduct and regulation of the
business and affairs of the corporation, for its voluntary dissolution, or
for limiting, defining, or regulating the powers of the corporation, or of
its directors or stockholders, or of any class of stockholders:
See pages 2G-2H
<PAGE>
ARTICLE 4. A description of each of the different classes of stock with
the preferences, voting powers, qualifications, special or relative rights or
privileges as to each class thereof is as follows:
SERIAL PREFERENCE STOCK
I. The Serial Preference Stock may from time to time be divided into and
issued in one or more series. The different series shall be established and
designated, and the variations in the relative rights and preferences as between
the different series shall be fixed and determined by the Board of Directors as
provided in Section II hereof. In all other respects all shares of Serial
Preference Stock shall be identical.
The Serial Preference Stock may be issued from time to time by
authority of the Board of Directors for such consideration as from time to time
may be fixed by vote of the Board of Directors providing for the issue of such
stock.
II. The Board of Directors is hereby expressly authorized, subject to the
provisions of these Articles of Organization, to establish one or more series of
Serial Preference Stock and, with respect to each series, to fix and determine
by vote providing for the issue of such series:
(a) the number of shares to constitute such series and the
distinctive designation thereof;
(b) the dividend rate on the shares of such series and the dividend
payment dates;
(c) whether or not the shares of such series shall be redeemable,
and, if redeemable, the redemption prices which the shares of
such series shall be entitled to receive and the terms and manner
of redemption;
(d) the preferences, if any, and the amounts which the shares of such
series shall be entitled to receive and all other special or
relative rights of the shares of such series, upon the voluntary
and involuntary dissolution of, or upon any distribution of the
assets of, the corporation;
(e) whether or not the shares of such series shall be subject to the
operation of retirement or sinking
-2A-
<PAGE>
funds to be applied for redemption of such shares and, if such
retirement or sinking fund or funds be established, the annual
amount thereof and the terms and provisions relative to the
operation thereof;
(f) whether or not the shares of such series shall be convertible
into, or exchangeable for, shares of any other class or classes
or of any other series of the same or any other class or classes
of stock of the corporation and the conversion price or prices or
ratio or ratios or the rate or rates at which such exchange may
be made, with such adjustments, if any, as shall be stated in
such vote;
(g) whether or not the shares of such series shall have voting
rights, and, if so, the conditions under which the shares of such
series shall vote as a separate class; and
(h) such other designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations
or restrictions of such series to the full extent now or
hereafter permitted by the laws of the Commonwealth of
Massachusetts.
Notwithstanding the fixing of the number of shares constituting a particular
series, the Board of Directors may at any time thereafter authorize the issuance
of additional shares of the same series.
III. Holders of Serial Preference Stock shall be entitled to receive, when
and as declared by the Board of Directors but only out of funds legally
available for the payment of dividends, cumulative cash dividends at the annual
rates fixed by the Board of Directors for the respective series and no more,
payable on such dates in each year as the Board of Directors shall fix for the
respective series as provided in subsection II(b) (hereinafter referred to as
"dividend dates"). Until all accrued dividends on all series of Serial
Preference Stock have been declared and set apart for payment through the last
preceding dividend date set for all such series, no cash payment or distribution
shall be made to holders of any other class of Stock of the Corporation.
Dividends on shares of Serial Preference Stock of any series shall accumulate
from and after the day on which such shares are issued, but arrearages in the
payment thereof shall not bear interest. No dividend shall be declared and set
-2B-
<PAGE>
apart for payment on any series of Serial Preference Stock in respect of any
dividend period unless there shall likewise be declared and set apart for
payment on all shares of Serial Preference Stock of each series at the time
outstanding such dividends as would be payable on the said shares through the
last preceding dividend date if all dividends were declared and paid in full.
Nothing herein contained shall be deemed to limit the right of the corporation
to purchase or otherwise acquire at any time any shares of its capital stock;
provided that no shares of its capital stock; provided that no shares of capital
stock shall be repurchased at any time when accrued dividends on any series of
Serial Preference Stock remain unpaid for any period to any including the last
preceding dividend date.
For purposes of these Articles of Organization, and of any vote fixing
the terms of any series of Serial Preference Stock the amount of dividends
"accrued" on any share of Serial Preference Stock of any series as at any
dividend date shall be deemed to be the amount of any unpaid dividends
accumulated thereon to and including such dividend date, whether or not earned
or declared, and the amount of dividends "accrued" on any such share of Serial
Preference Stock of any series as at any date other than a dividend date shall
be calculated as the amount of any unpaid dividends accumulated thereon to and
including the last preceding dividend date, whether or not earned or declared,
plus an amount computed, on the basis of 360 days per annum, for the period
after such last preceding dividend date to and including the date as of which
the calculation is made at the annual dividend rate fixed for the shares of such
series.
IV. Upon the dissolution of, or upon any distribution of the assets of, the
corporation, before any payment or distribution of the assets of the corporation
(whether capital or surplus) shall be made to or set apart for any other class
of stock, the holders of Serial Preference Stock shall be entitled to payment of
the amount of the preference payable upon such dissolution of, or distribution
of the assets of, the corporation fixed by the Board of Directors for the
respective series as provided in subsection II(d), and shall be entitled to no
further payment. If upon any such dissolution or distribution the assets of the
corporation shall be insufficient to pay in full to the holders of the Serial
Preference Stock the preferential amount aforesaid, then such assets, or the
proceeds thereof, shall be distributed among the holders of each series of
Serial Preference Stock ratably in accordance
-2C-
<PAGE>
with the sums which would be payable on such distribution if all sums payable
were discharged in full. The voluntary sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other consideration) of all or
substantially all of the property and assets of the corporation, the merger or
consolidation of the corporation into or with any other corporation, or the
merger of any other corporation into it, shall not be deemed to be a dissolution
of, or a distribution of the assets of, the corporation, for the purpose of this
Section IV.
V. In the event that and during the period in which the Serial Preference
Stock of any series shall be redeemable, then, at the option of the Board of
Directors, the corporation from time to time may redeem all or any part of the
outstanding shares of such series at the redemption price and upon the terms and
conditions fixed by the Board of Directors as provided in subsection II(c) (the
sum so payable upon any redemption of Serial Preference Stock being herein
referred to as the "redemption price"); provided, that not less than 30 days
previous to the date fixed for redemption notice of the time and place thereof
shall be mailed to each holder of record of the shares so to be redeemed at his
address as shown by the records of the corporation; and provided, further, that
in case of redemption of less than all of the outstanding shares of any series
of Serial Preference Stock the shares to be redeemed shall be chosen by lot or
in such equitable manner as may be prescribed by the Board of Directors. At any
time after notice of redemption shall have been mailed as above provided but
before the redemption date, the corporation may deposit the aggregate redemption
price in trust with a bank or trust company in New York, New York, Boston,
Massachusetts, or any other city in which the corporation shall at that time
maintain a transfer agency with respect to any class of its stock, having
capital, surplus and undivided profits of at least $5,000,000, and named in such
notice. Upon the making of such deposit, or if no such deposit is made then upon
such redemption date (unless the corporation shall default in making payment of
the redemption price), holders of the shares of Serial Preference Stock called
for redemption shall cease to be stockholders with respect to such shares
notwithstanding that any certificate for such shares shall not have been
surrendered; and thereafter such shares shall no longer be transferable on the
books of the corporation and such holders shall have no interest in or claim
against the corporation with respect to said
-2D-
<PAGE>
shares, except the right (a) to receive payment of the redemption price upon
surrender of their certificates, or (b) to exercise on or before the date fixed
for redemption the rights, if any, not theretofore expiring, to convert the
shares so called for redemption into, or to exchange such shares for, shares of
stock of any other class or classes or of any other series of the same class or
any other class or classes of stock of the corporation. Any funds deposited in
trust as aforesaid which shall not be required for such redemption, because of
the exercise of any right of conversion subsequent to the date of such deposit
or otherwise, shall be returned to the corporation forthwith. The corporation
shall be entitled to receive from any such bank or trust company the interest,
if any, allowed on any moneys deposited pursuant to this Section, and the
holders of any shares so redeemed shall have no claim to any such interest. Any
funds so deposited by the corporation and unclaimed at the end of five years
from the date fixed for such redemption shall be repaid to the corporation upon
its request, after which repayment the holders of such shares who shall not have
made claim against such moneys prior to such repayment shall be deemed to be
unsecured creditors of the corporation, but only for a period of two years from
the date of such repayment (after which all rights of the holders of such shares
as unsecured creditors or otherwise shall cease), for an amount equivalent to
the amount deposited as above stated for the redemption of such shares and so
repaid to the corporation, but shall in no event be entitled to any interest.
In order to facilitate the redemption of any shares of Serial
Preference Stock, the Board of Directors is authorized to cause the transfer
books of the corporation to be closed as to the shares to be redeemed.
VI. Any shares of Serial Preference Stock which shall at any time have been
redeemed, or which shall at any time have been surrendered for conversion or
exchange or for cancellation pursuant to any retirement or sinking fund
provisions with respect to any series of Serial Preference Stock, shall be
retired and shall thereafter have the status of authorized and unissued shares
of Serial Preference Stock undesignated as to series.
COMMON STOCK
I. The Common Stock may be issued from time to time by authority of the
Board of Directors for such consideration
-2E-
<PAGE>
as from time to time may be fixed by vote of the Board of Directors providing
for the issue of such stock.
II. Holders of Common Stock shall be entitled to receive dividends when and
as declared by the Board of Directors but only out of funds legally available
for the payment thereof and not until all accrued dividends on all series of
Serial Preference Stock shall have been declared and set apart for payment
through the last preceding dividend date set for all such series.
III. Upon the dissolution of, or upon any distribution of the assets of,
the corporation, the assets, or the proceeds thereof, which are available for
distribution to stockholders shall be distributed ratably among the holders of
Common Stock after payment to the holders of each series of Serial Preference
Stock of the amount of the preference payable upon such dissolution of, or
distribution of the assets of, the corporation.
IV. The Common Stock shall have exclusive voting rights except as otherwise
required by law and except to the extent the Board of Directors may, at the time
any series of Serial Preference Stock is established, determine that the shares
of such series shall have exclusive voting rights or shall vote together as a
single class with shares of Common Stock and/or with shares of one or more other
series of Serial Preference Stock on all or certain matters.
-2F-
<PAGE>
Article 6(a) TRANSACTIONS WITH INTERESTED PERSONS
1. In the absence of bad faith, no contract or transaction by this
Corporation shall be void, voidable or in any way invalid by reason of the fact
that it is with an Interested Person.
2. For this purpose, Interested Person shall mean an officer, director,
stockholder or employee of the Corporation, any person in any other way
interested in the Corporation, and a corporation or organization in which an
officer, director, stockholder or employee of this Corporation is an officer,
director, stockholder or employee or in any way interested.
3. In the absence of bad faith, no Interested Person shall be liable
because of his interest in this Corporation, to the Corporation or any other
Interested Person for any loss or expense incurred by reason of such contract or
transaction or be accountable for any gain or profit realized from such contract
or transaction.
4. The provisions of this Article 6(a) shall be operative notwithstanding
the fact that the presence of an Interested Person was necessary to constitute a
quorum at a meeting of directors or stockholders of the corporation at which
such contract or transaction was authorized or that the vote of an Interested
Person was necessary for the authorization of such contract or transaction.
Article 6(b) INDEMNIFICATION
1. Each Officer shall be indemnified by the Corporation against all
Expenses incurred in connection with any Suit in which he may be involved as a
result of being or having been an officer of this Corporation or any other
corporation which he has served at the request of this Corporation.
2. For the purpose of this Article 6(b), "Officer" means any person who
serves or has served as a Director or Officer of this Corporation including any
person who holds a position regularly filled by election or appointment by the
Stockholders or Board of Directors who, by name or by
-2G-
<PAGE>
position held, is designated by the Board of Directors as an Officer for the
purposes of this Article.
3. Suit means any action, suit or proceeding, civil or criminal, brought or
threatened including any proceeding before any administrative or legislative
body or agency.
4. Expenses means a judgment or liability fixed by a court or any amount
paid in settlement of a Suit together with attorneys' fees and expenses
reasonably incurred in such Suit provided:
(a) It shall not include any amount paid with respect to any matter
as to which the Officer shall have been adjudicated not to have
acted in good faith in the reasonable belief that his action was
in the best interest of this Corporation, and
(b) In the event of settlement of Suit, it shall be limited to
Expenses incurred in connection with matters as to which the
Corporation has been advised by counsel that in the opinion of
such counsel the Officer acted in good faith in the reasonable
belief that his action was in the best interests of this
Corporation.
5. The right of indemnification under this Article 6(b) is in addition to
any right which any Officer may have either as a matter of law or by agreement
with the Corporation.
Article 6(c) PLACE OF MEETINGS OF STOCKHOLDERS
Meetings of stockholders may be held at such place within the United
States, within or without the Commonwealth of Massachusetts, as may be
determined by the Board of Directors or the President.
-2H-
<PAGE>
We further certify that the foregoing restated articles of organization
effect no amendments to the articles of organization of the corporation as
heretofore amended, except amendments to the following articles 2, 3 and 4.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 20th day of November in the year 1968.
SIGNATURES
J.P. BARGER
President
K.D. ROBERTS
Clerk
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
RESTATED ARTICLES OF ORGANIZATION
(General Laws, Chapter 156B, Section 74)
I hereby approve the within restated articles of
organization and, the filing fee in the amount of
$750.00 having been paid, said articles are deemed
to have been filed with me this
21st day of November, 1968.
JOHN F. X. DAVOREN
KEVIN H. WHITE
Secretary of the Commonwealth
State House, Boston, Mass.
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF RESTATED ARTICLES OF ORGANIZATION TO BE SENT
TO: Wallace F. Whitney, Jr.
Goodwin, Procter & Hoar
84 State Street
Boston, Massachusetts
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
JOHN F. X. DAVOREN
Secretary of the Commonwealth
STATE HOUSE, BOSTON, MASS.
FEDERAL IDENTIFICATION
NO. 04-2258582
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of stockholders adopting the
amendment. The fee for filing this certificate is prescribed by General Laws,
Chapter 156B, Section 114. Make check payable to the Commonwealth of
Massachusetts.
----------
We, J. P. BARGER, President and KENNETH D. ROBERTS, Clerk of Dynatech
Corporation located at 17 Tudor Street, Cambridge, Massachusetts do hereby
certify that the following amendment to the articles of organization of the
corporation was duly adopted at a meeting held on June 27, 1969, by vote of
371,218 shares of Common Stock out of 503,648 shares outstanding, being at least
a majority of each class outstanding and entitled to vote thereon:
<PAGE>
VOTED: To amend the Articles of Organization of the Corporation by adopting
the following new Article 6(d):
ARTICLE 6(D). PROVISIONS RELATIVE TO MAKING, AMENDING AND REPEALING
BY-LAWS.
The By-laws of this Corporation may provide that the Directors may
make, amend or repeal the By-laws in whole or in part, except with
respect to any provision thereof which by law, the Articles of
Organization or the By-laws requires action by the stockholders.
<PAGE>
The foregoing amendment will become effective when these articles of
amendment are filed in accordance with Chapter 156B, Section 6 of the General
Laws unless these articles specify, in accordance with the vote adopting the
amendment, a later effective date not more than thirty days after such filing,
in which event the amendment will become effective on such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 27th day of June, in the year 1969.
SIGNATURES
J P BARGER
President
KENNETH D. ROBERTS
Clerk
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of amendment and, the filing fee in the
amount of $25.00 having been paid, said articles are deemed to have been filed
with me this 1st day of July, 1969.
JOHN F. X. DAVOREN
Secretary of the Commonwealth
State House, Boston, Mass
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO: Wallace F. Whitney, Jr.
Goodwin, Procter & Hoar
28 State Street
Boston, Massachusetts
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
PAUL GUZZI
Secretary of the Commonwealth
One Ashburton Place, Boston, Mass. 02108
FEDERAL IDENTIFICATION
NO. 04-2258582
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of the stockholders adopting the
amendment. The fee for filing this certificate is prescribed by General Laws,
Chapter 156B, Section 114. Make check payable to the Commonwealth of
Massachusetts.
We, J.P. BARGER, PRESIDENT, and KENNETH D. ROBERTS, CLERK of Dynatech
Corporation located at 16 New England Executive Park, Burlington, MA 01803 do
hereby certify that the following amendment to the articles of organization of
the corporation was duly adopted at a meeting held on July 31, 1978, by a vote
of 757,255 shares of Common Stock out of 1,040,232 shares outstanding, being at
least a majority of each class outstanding and entitled to vote thereon:
To amend Article 3 of the Restated Articles of Organization of the
Corporation by increasing the authorized common stock of the
Corporation from 1,500,000 shares of common stock par value $.20 per
share to 4,000,000 shares of common stock par value $.20 per share and
that there be no change in the authorized preferred stock of the
Corporation.
<PAGE>
The total amount of capital stock already authorized is 100,000 shares preferred
with par value and 1,500,000 shares common with par value.
The amount of additional capital stock authorized is 2,500,000 shares common
with par value.
<PAGE>
The foregoing amendment will become effective when these articles of amendment
are filed in accordance with Chapter 156B, Section 6 of the General Laws unless
these articles specify, in accordance with the vote adopting the amendment, a
later effective date not more than thirty days after such filing, in which event
the amendment will become effective on such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 31st day of July, in the year 1978.
SIGNATURES
J.P. BARGER
PRESIDENT
KENNETH D. ROBERTS
CLERK
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of amendment and, filing the fee in the
amount of $1,250.00 having been paid, said articles are deemed to have been
filed with me this 2nd day of August, 1978.
SIGNATURE
PAUL GUZZI
SECRETARY OF THE COMMONWEALTH
State House, Boston, Mass.
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO:
Richard A. Soden, Esq.
Goodwin, Procter & Hoar
28 State Street
Boston, MA 02109
Telephone: 523-5700
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
Secretary of the Commonwealth
One Ashburton Place, Boston, Mass. 02108
FEDERAL IDENTIFICATION
NO. 04-2258582
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of the stockholders adopting the
amendment. The fee for filing this certificate is prescribed by General Laws,
Chapter 156B, Section 114. Make check payable to the Commonwealth of
Massachusetts.
We, J.P. Barger, President, and Kenneth D. Roberts, Clerk of Dynatech
Corporation located at 16 New England Executive Park, Burlington, Massachusetts
do hereby certify that the following amendment to the articles of organization
of the corporation was duly adopted at a meeting held on July 28, 1980, by vote
of at least a majority of each class outstanding and entitled to vote thereon:
VOTED: That the Corporation's Restated Articles of Organization, as
amended, be further amended to increase the authorized Common
Stock of the Corporation from 4,000,000 shares of Common
Stock, par value $.20 per share, to 12,000,000 shares of
Common Stock, par value $.20 per share.
<PAGE>
The total amount of capital stock already authorized is 100,000 shares preferred
with par value and 4,000,000 shares common with par value.
The amount of additional capital stock authorized is 8,000,000 shares common
with par value.
<PAGE>
The foregoing amendment will become effective when these articles of amendment
are filed in accordance with Chapter 156B, Section 6 of the General Laws unless
these articles specify, in accordance with the vote adopting the amendment, a
later effective date not more than thirty days after such filing, in which event
the amendment will become effective on such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this twenty-eighth day of July, in the year 1980.
SIGNATURES
J.P. BARGER
PRESIDENT
KENNETH D. ROBERTS
CLERK
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of amendment and, filing the fee in the
amount of $4,000.00 having been paid, said articles are deemed to have been
filed with me this 29th day of August, 1980.
SIGNATURE
MICHAEL JOSEPH CONNOLLY
SECRETARY OF THE COMMONWEALTH
State House, Boston, Mass.
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO:
Richard A. Soden, Esq.
GOODWIN, PROCTER & HOAR
28 State Street
Boston, MA 02109
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
Secretary of State
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
FEDERAL IDENTIFICATION
NO. 04-2258582
CERTIFICATE OF RESTORATION OF
REACQUIRED SHARES
General Laws, Chapter 156B, Section 21A
This certificate must be submitted to the Secretary of the Commonwealth within
sixty days after the date of the vote of STOCKHOLDERS or BOARD OF DIRECTORS
adopting the restoration of reacquired shares to the status of authorized but
unissued shares.
We, J.P. BARGER, President, and KENNETH D. ROBERTS, Clerk of DYNATECH
CORPORATION located at 3 New England Executive Park, Burlington, Massachusetts
hereby certify in compliance with the provisions of law, that a restoration of
reacquired shares to the status of authorized but unissued shares has been made
and was duly adopted at a meeting held on November 24, 1981, by vote of the
Board of Directors.
The restoration of reacquired shares to the status of authorized but unissued
shares is as follows:
<TABLE>
<CAPTION>
WITHOUT PAR VALUE WITH PAR VALUE
CLASS OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE AMOUNT
<S> <C> <C> <C>
Preferred
Common 117,503 $.20 $23,500.60
</TABLE>
<PAGE>
The Aggregate Number of Authorized Shares:
100,000 shares preferred with par value
12,000,000 shares common with par value
Aggregate Number of Shares Issued and Outstanding After Restoration:
no shares preferred with par value
2,579,279 shares common with par value
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this day of December, in the year 1981.
SIGNATURES
J.P. BARGER
PRESIDENT
KENNETH D. ROBERTS
CLERK
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
Secretary of State
One Ashburton Place, Boston, Mass. 02108
FEDERAL IDENTIFICATION
NO. 04-2258582
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of stockholders adopting the
amendment. The fee for filing this certificate is prescribed by General Laws,
Chapter 156B, Section 114. Make check payable to the Commonwealth of
Massachusetts.
We, J.P. Barger, President, and Kenneth D. Roberts, Clerk of DYNATECH
CORPORATION located at 3 New England Executive Park, Burlington, Massachusetts,
01803, do hereby certify that the following amendment to the articles of
organization of the corporation was duly adopted at a meeting held on July 25,
1983, by vote of 3,445,753 shares of common stock out of 5,322,790 shares
outstanding, being at least a majority of each class outstanding and entitled to
vote thereon:
VOTED: That the Corporation's Restated Articles of Organization, as
amended, be further amended to increase the authorized Common
Stock of the Corporation from 12,000,000 shares of Common
Stock, par value $.20 per share, to 24,000,000 shares of
Common Stock, par value $.20 per share.
<PAGE>
The total amount of capital stock already authorized is 100,00 shares preferred
with par value and 12,000,000 shares common with par value.
The amount of additional capital stock authorized is 12,000,000 shares common
with par value.
<PAGE>
The foregoing amendment will become effective when these articles of amendment
are filed in accordance with Chapter 156B, Section 6 of The General Laws unless
these articles specify, in accordance with the vote adopting the amendment, a
later effective date not more than thirty days after such filing, in which event
the amendment will become effective on such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 26th day of July, in the year 1983.
SIGNATURES
J.P. BARGER
PRESIDENT
KENNETH D. ROBERTS
CLERK
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of amendment and, filing the fee in the
amount of $6,000.00 having been paid, said articles are deemed to have been
filed with me this 13th day of September, 1983.
SIGNATURE
MICHAEL JOSEPH CONNOLLY
SECRETARY OF STATE
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO:
Edward T. O'Dell, Jr., Esq.
Goodwin, Procter & Hoar
28 State Street
Boston, MA 02109
Telephone: 523-5700
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
Secretary of State
ONE ASHBURTON PLACE
BOSTON, MASS. 02108
FEDERAL IDENTIFICATION
NO. 04-2258582
FEDERAL IDENTIFICATION
NO. Applied for
ARTICLES OF MERGER
PURSUANT TO GENERAL LAWS, CHAPTER 156B, SECTION 78
The fee for filing this certificate is prescribed by
General Laws, Chapter 156B, Section 114.
Make checks payable to the Commonwealth of Massachusetts.
MERGER OF MICROBASE MASSACHUSETTS SOFTWARE, INC. and DYNATECH CORPORATION, the
constituent corporations into Dynatech Corporation, one of the constituent
corporations.
The undersigned officers of each of the constituent corporations certify under
the penalties of perjury as follows:
1. An agreement of merger has been duly adopted in compliance with the
requirements of subsections (b) and (c) of General Laws, Chapter 156B, Section
78, and will be kept as provided by subsection (d) thereof. The surviving
corporation will furnish a copy of said agreement to any of its stockholders, or
to any person who was a stockholder of any constituent corporation, upon written
request and without charge.
2. The effective date of the merger determined pursuant to the agreement
referred to in paragraph 1 shall be May 10, 1985.
3. The following amendments to the articles of organization of the
SURVIVING corporation have been affected pursuant to the agreement of merger
referred to in paragraph 1:
None
<PAGE>
4(b) Directors of Surviving Corporation are as follows:
<TABLE>
<CAPTION>
NAME RESIDENCE POST OFFICE ADDRESS
<S> <C> <C>
Warren M. Rohsenow 47 Windsor Road 3 New England Executive
Waban, MA 02168 Park
Burlington, MA 01803
J.P. Barger 4 Central Green 3 New England Executive
Winchester, MA 01890 Park
Burlington, MA 01803
James B. Hangstefer 19 Richard Road 3 New England Executive
Lexington, MA 02173 Park
Burlington, MA 01803
Theodore Cohn 57 Winding Way 3 New England Executive
West Orange, NJ 07052 Park
Burlington, MA 01803
Warren A. Law 15 Fletcher Road 3 New England Executive
Belmont, MA 02178 Park
Burlington, MA 01803
</TABLE>
<PAGE>
4. The following information shall not for any purpose be treated as a
permanent part of the articles of organization of the surviving corporation.
(a) The post office address of the initial principal office of the
surviving corporation in Massachusetts is:
3 New England Executive Park, Burlington, MA 01803
(b) The name, residence and post office address of each of the initial
directors and President, Treasurer and Clerk of the surviving corporation is as
follows:
<TABLE>
<CAPTION>
TITLE NAME RESIDENCE POST OFFICE ADDRESS
<S> <C> <C> <C>
President J.P. Barger 4 Central Green 3 New England Executive
Winchester, MA 01890 Park
Burlington, MA 01803
Treasurer Kenneth D. Roberts 72 Windsor Road 3 New England Executive
Wellesley Hills, MA 02181 Park
Burlington, MA 01803
Clerk Edward T. O'Dell, Jr. 96 Wildwood Road 3 New England Executive
Andover, MA 01810 Park
Burlington, MA 01803
Directors (see previous page)
</TABLE>
(c) The date initially adopted on which the fiscal year of the surviving
corporation ends is March 31, 1985.
(d) The date initially fixed in the by-laws for the Annual Meeting of
stockholders of the surviving corporation is:
Any day of the week that begins with the fourth Monday of the month of
July.
<PAGE>
The undersigned officers of the several constituent corporations listed above
further state under the penalties of perjury as to their respective corporations
that the agreement of merger referred to in paragraph 1 has been duly executed
on behalf of such corporation and duly approved by the stockholders of such
corporation in the manner required by General Laws, Chapter 156B, Section 78.
SIGNATURES
JERRY STUART LEVIN
PRESIDENT
EDWARD T. O'DELL, JR.
CLERK
of Microbase Massachusetts Software, Inc.
KENNETH D. ROBERTS
VICE PRESIDENT
EDWARD T. O'DELL, JR.
CLERK
of Dynatech Corporation.
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF MERGER
(General Laws, Chapter 156B, Section 78)
I hereby approve the within articles of merger and, the filing fee in the amount
of $200 having been paid, said articles are deemed to have been filed with me
this 10th day of May, 1985.
SIGNATURE
MICHAEL JOSEPH CONNOLLY
SECRETARY OF STATE
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF ARTICLES OF MERGER TO BE SENT
TO:
Mari A. Wilson, Esquire
Goodwin, Procter & Hoar
28 State Street
Boston, MA 02109
Telephone: (617) 523-5700
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
MICHAEL JOSEPH CONNOLLY, SECRETARY
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
FEDERAL IDENTIFICATION
NO. 04-2258582
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of stockholders adopting the
amendment. The fee for filing this certificate is prescribed by General Laws,
Chapter 156B, Section 114. Make check payable to the Commonwealth of
Massachusetts.
We, J.P. BARGER, PRESIDENT and EDWARD T. O'DELL, JR., CLERK of Dynatech
Corporation located at 3 New England Executive Park, Burlington, MA 01803 do
hereby certify that the following amendment to the articles of organization of
the corporation was duly adopted at a meeting held on July 27, 1987, by vote of
* 9,019,646 shares of Common out of 11,206,592 shares outstanding, and
**8,926,075 shares of Common out of 11,206,592 shares outstanding,
being at least two-thirds of each class outstanding and entitled to vote thereon
and of each class or series of stock whose rights are adversely affected
thereby:
*VOTED: To amend and restate Article 6(b) of the
Corporation's Restated Articles of
Organization so that said Article 6(b) shall
read as stated on pages 2A - 2C attached
hereto.
**VOTED: To add a new Article 6(e) to the Corporation's
Restated Articles of Organization. Said
Article 6(e) shall read as stated on page 2D
attached hereto.
<PAGE>
ARTICLE 6(B) INDEMNIFICATION
1. DEFINITIONS. For purposes of this Article
(a) A "Director" or "Officer" means any person serving as a director of
the Corporation or in any other office filled by appointment or election by the
directors or the stockholders and also includes (i) a Director or Officer of the
Corporation serving at the request of the Corporation as a director, officer,
employee, trustee, partner or other agent of another organization or who serves
at its request in any capacity with respect to any employee benefit plan, and
(ii) any person who formerly served as a Director or Officer;
(b) "Expenses" means (i) all expenses (including attorneys' fees and
disbursements) actually and reasonably incurred in connection with a Proceeding,
in being a witness in a Proceeding, or in successfully seeking indemnification
under this Article, and (ii) any judgments, awards, fines or penalties paid by a
Director or Officer in connection with a Proceeding or amounts paid in
settlement of a Proceeding, including any taxes or penalties imposed on such
Director or Officer with respect to any employee benefit plan under applicable
law; and
(c) A "Proceeding" means any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
and any claim which could be the subject of a Proceeding.
2. RIGHTS TO INDEMNIFICATION. Except as limited by law, the Corporation shall
indemnify its Directors and Officers against all Expenses incurred by them in
connection with any Proceeding resulting from their serving as an Officer or
Director, except that no indemnification shall be provided regarding any matter
as to which it shall be adjudicated that such Director or Officer did not act in
good faith and in the reasonable belief that his or her action was in the best
interests of the Corporation (the "Standard"); for purposes of this Section 2 in
connection with service to an employee benefit plan, no Director or Officer
shall be deemed to have failed to have acted in accordance with the Standard if
he or she acted in good faith in the reasonable belief that his or her action
was in the best interests of the participants or beneficiaries of said plan; and
provided that as to any matter disposed of by a compromise payment by the
Director or Officer seeking indemnification hereunder, pursuant to a consent
decree or otherwise, no indemnification shall be provided unless such compromise
shall be approved (i) by a majority vote of the directors who were not parties
to such Proceeding, or (ii) by legal counsel (who may be the counsel regularly
employed by the Corporation) in a written opinion to the effect that such
Director's or Officer's actions were not contrary to the Standard or (iii) by
vote of a majority of stockholders present in person or by proxy at a meeting at
which a quorum is present.
2A
<PAGE>
The Board of Directors may, by general vote pertaining to a specific
employee or agent or class thereof, authorize indemnification of the
Corporation's employees and agents to whatever extent it may determine, which
may be in the same manner and to the same extent provided above.
3. ADVANCE PAYMENTS. Except as limited by law, expenses of a Director or Officer
shall be paid by the Corporation in advance of the final determination of a
Proceeding, no later than 45 days after the written request therefor by said
Director or Officer, unless it is determined (i) by a majority vote of a quorum
consisting of the directors who were not parties to such Proceeding, or (ii) by
legal counsel (who may be the counsel regularly employed by the Corporation) in
a written opinion, to the effect that such Director or Officer did not act in
accordance with the Standard; provided, however, that such advance shall only be
made upon receipt of an undertaking by the Director or Officer to repay the
advances if it is ultimately determined that he or she is not eligible to be
indemnified, which undertaking may be unsecured and accepted without regard to
the financial ability of such Director or Officer to make repayment.
4. INSURANCE. The Corporation shall have the power to purchase and maintain
insurance on behalf of any Director or Officer against any liability or cost
incurred by him or her as a Director or Officer or arising out of such status,
whether or not the Corporation would have the power to indemnify such Director
or Officer against such liability or cost.
5. OTHER RIGHTS AND REMEDIES. The provisions of this Article shall not be
construed to limit the power of the Corporation to indemnify its Officers or
Directors to the full extent permitted by law or to enter into specific
agreements, commitments or arrangements for indemnification permitted by law.
The indemnification provided hereunder shall inure to the benefit of the
heirs and personal representative of a Director or officer.
All rights to indemnification under this Article shall be deemed to be
in the nature of a contractual obligation of the Corporation bargained for by
each Director and Officer who serves in such capacity at any time while this
Article or other relevant provisions of the Massachusetts Corporation Law and
other applicable law, if any, are in effect. No repeal or modification of this
Article shall adversely affect any such rights or obligations then existing with
respect to any state of facts then or theretofore existing or any Proceeding
theretofore or thereafter brought based in whole or in part upon any such state
of facts.
2B
<PAGE>
In the event that the laws of the Commonwealth of Massachusetts
hereafter shall be amended, the effect of which is to modify, change, expand or
contract the right or ability of a Massachusetts corporation to provide
indemnification to any or all of its Officers or Directors, the Board of
Directors of the Corporation shall be authorized to amend the By-laws of the
Corporation to insert therein an indemnification provision not inconsistent with
the statutory law of Massachusetts then in effect and any such By-law provision
shall not be invalid or unenforceable by reason of the fact that it is
inconsistent with the provisions of this Article 6(b).
2C
<PAGE>
The foregoing amendment will become effective when these articles of
amendment are filed in accordance with Chapter 156B, Section 6 of The General
Laws unless these articles specify, in accordance with the vote adopting the
amendment, a later effective date not more than thirty days after such filing,
in which event the amendment will become effective on such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 31st day of August, in the year 1987.
SIGNATURES
J.P. BARGER
PRESIDENT
EDWARD T. O'DELL, JR.
CLERK
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of amendment and, the filing fee in the
amount of $75 having been paid, said articles are deemed to have been filed with
me this 31st day of August, 1987.
SIGNATURE
MICHAEL JOSEPH CONNOLLY
SECRETARY OF STATE
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO:
Philip H. Newman, Esquire
Goodwin, Procter & Hoar
Suite 2400, Exchange Place
Boston, MA 02109
Telephone: 617-570-1000
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
SECRETARY OF STATE
ONE ASHBURTON PLACE
BOSTON, MASS. 02108
FEDERAL IDENTIFICATION
NO. 04-2258582
ARTICLES OF
MERGER OF PARENT AND SUBSIDIARY CORPORATIONS
PURSUANT TO GENERAL LAWS, CHAPTER 156B, SECTION 82
The fee for filing this certificate is prescribed by
General Laws, Chapter 156B, Section 114.
Make check payable to the Commonwealth of Massachusetts
We, J.P. Barger and Robert H. Hertz, President and Clerk of Dynatech Corporation
organized under the laws of Massachusetts and herein called the parent
corporation, do hereby certify as follows:
1. That the subsidiary corporation to be merged into the parent corporation
is as follows:
State of Date of
Name Organization Organization
---- ------------ ------------
Lightning Location FLA. 2/6/75
and Protection, Inc.
2. That the parent corporation owns at least ninety percent of the
outstanding shares of each class of the stock of each subsidiary corporation to
be merged into the parent corporation.
3. That in the case of each of the above-named corporations the laws of the
state of its organization, if other than Massachusetts, permit the merger herein
provided for and that all action required under the laws of each such state in
connection with this merger has been duly taken.
<PAGE>
4. That at a meeting of the directors of the parent corporation the
following vote, pursuant to subsection (a) of General Laws, Chapter 156B,
Section 82, was duly adopted:
VOTED: That the Corporation merge with and into
itself its wholly owned subsidiary known as
Lightning Location and Protection, Inc., a
Florida corporation ("LLP FLA."), and that
the Corporation be the surviving entity.
<PAGE>
5. The effective date of the merger as specified in the vote set out under
Paragraph 4 is the date of filing of these Articles of Merger.
6. The parent corporation hereby agrees that it may be sued in the
Commonwealth of Massachusetts for any prior obligation of any subsidiary
corporation organized under the laws of Massachusetts with which it has merged,
and any obligation hereafter incurred by the parent corporation, including the
obligation created by subsection (e) of General Laws, Chapter 156B, Section 82,
so long as any liability remains outstanding against the parent corporation in
the Commonwealth of Massachusetts and it hereby irrevocably appoints the
Secretary of the Commonwealth as its agent to accept service of process for the
enforcement of any such obligations, including taxes, in the same manner as
provided in Chapter 181.
IN WITNESS WHEREOF and under the penalties of perjury we have hereto
signed our names this 30th day of November, 1988.
SIGNATURES
J.P. BARGER
PRESIDENT
ROBERT H. HERTZ
CLERK
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF MERGER OF PARENT AND SUBSIDIARY CORPORATIONS
(General Laws, Chapter 156B, Section 82)
I hereby approve the within articles of merger of parent and subsidiary
corporations and, the filing fee in the amount of $250 having been paid, said
articles are deemed to have been filed with me this 2nd day of February, 1989.
SIGNATURE
MICHAEL JOSEPH CONNOLLY
SECRETARY OF STATE
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF MERGER TO BE SENT
TO:
C T Corporation System
2 Oliver Street
Boston, Massachusetts 02109
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
MICHAEL JOSEPH CONNOLLY, SECRETARY
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
FEDERAL IDENTIFICATION
NO. 04-2258582
CERTIFICATE OF VOTE OF DIRECTORS ESTABLISHING
A SERIES OF A CLASS OF STOCK
General Laws, Chapter 156B, Section 26
We, J.P. BARGER, PRESIDENT and ROBERT H. HERTZ, CLERK of DYNATECH
CORPORATION located at 3 NEW ENGLAND EXECUTIVE PARK, BURLINGTON, MASSACHUSETTS
01803 do hereby certify that at a meeting of the directors of the corporation
held on February 16, 1989, the following vote establishing and designating a
series of a class of stock and determining the relative rights and preferences
thereof was duly adopted:
VOTED: That pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provision of its Articles of
Organization, a series of Preferred Stock of the Corporation is hereby created
and that the designation and amount thereof and the voting powers, preferences
and relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof are as
follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Cumulative Preferred Stock" (the
"Series A Preferred Stock"), and the number of shares constituting such series
shall be 24,000.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) (i) The holders of shares of Series A Preferred 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) $60 or (b)
subject to the provision for adjustment hereinafter set forth, 2000 times the
aggregate per share amount of all cash dividends, and 2000 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
<PAGE>
otherwise), declared on the Common Stock, par value $0.20 per share, of the
Corporation (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. The multiple of cash and non-cash dividends declared on the
Common Stock to which holders of the Series A Preferred Stock are entitled,
which shall be 2000 initially but which shall be adjusted from time to time as
hereinafter provided, is hereinafter referred to as the "Dividend Multiple." In
the event the Corporation shall at any time after February 16, 1989 (the "Rights
Declaration Date") declare or pay any dividend on 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 Dividend Multiple
thereafter applicable to the determination of the amount of dividends which
holders of shares of Series A Preferred Stock shall be entitled to receive shall
be the Dividend Multiple applicable immediately prior to such event multiplied
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.
(ii) Notwithstanding anything else contained in this paragraph
(A), the Corporation shall, out of funds legally available for that purpose,
declare a dividend or distribution on the Series A Preferred Stock as provided
in this paragraph (A) 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 $60
per share on the Series A Preferred Stock shall nevertheless be paid out of
funds legally available for the purpose on such subsequent Quarterly Dividend
Payment Date.
(B) 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 of Series A Preferred Stock, 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
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 no more than 60 days prior to the date fixed
for the payment thereof.
<PAGE>
Section 3. VOTING RIGHTS. In addition to any other voting rights
required by law, the holders of shares of Series A Preferred Stock shall have
the following voting rights:
(A) Subject to the provision of adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 2000 votes
on all matters submitted to a vote of the stockholders of the Corporation. The
number of votes which a holder of a share of Series A Preferred Stock is
entitled to cast, which shall be 2000 initially but which may be adjusted from
time to time as hereinafter provided, is hereinafter referred to as the "Vote
Multiple." In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Vote Multiple thereafter applicable to the determination of the number of
votes per share to which holders of shares of Series A Preferred Stock shall be
entitled shall be the Vote Multiple immediately prior to such event multiplied
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 or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock shall
be in arrears in an amount equal to six (6) quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a period (herein
called a "default period") which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During
each default period, the holders of the Series A Preferred Stock shall have the
right to elect two (2) Directors.
(ii) During any default period, such voting right of the
holders of Series A Preferred stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any
annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that such voting right shall not be exercised unless the
holders of ten percent (10%) in number of shares of Series A Preferred Stock
outstanding shall be present in person or by proxy. The absence of a quorum of
the holders of Common Stock shall not affect the exercise by the holders of
Series A Preferred Stock of such voting right. At any meeting at which the
holders of Series A Preferred Stock shall exercise such voting right initially
during an existing default period, they shall have the right, voting as a class,
to elect Directors to fill such vacancies, if any, in the Board of Directors as
may then exist up to two (2) Directors or, if such right is exercised at an
annual meeting, to elect two (2) Directors. If the number which may be so
elected at any special meeting does not amount to the required number, the
holders of the Series A Preferred Stock shall have the right to make such
increase in the number of Directors as shall be necessary to permit the election
by them of the required number.
<PAGE>
(iii) Unless the holders of Series A Preferred Stock shall,
during an existing default period, have previously exercised their right to
elect Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Series A Preferred Stock outstanding may request, the
calling of a special meeting of the holders of Series A Preferred Stock, which
meeting shall thereupon be called by the President, a Vice President or the
Clerk of the Corporation. Notice of such meeting and of any annual meeting at
which holders of Series A Preferred Stock are entitled to vote pursuant to this
paragraph (C)(iii) shall be given to each holder of record of Series A Preferred
Stock by mailing a copy of such notice to him at his last address as the same
appears on the books of the Corporation. Such meeting shall be called for a time
not earlier than 20 days and not later than 60 days after such order or request
or, in default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Series A Preferred Stock outstanding. Notwithstanding
the provisions of this paragraph (C)(iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date fixed for
the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Series A
Preferred Stock shall have exercised their right to elect two (2) Directors
voting as a class, after the exercise of which right (x) the directors so
elected by the holders of Series A Preferred Stock shall continue in office
until their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of Directors
may (except as provided in paragraph (C)(ii) of this Section 3) be filled by
vote of a majority of the remaining Directors theretofore elected by the holders
of the class of stock which elected the Director whose office shall have become
vacant. References in this paragraph (C) to Directors elected by the holders of
a particular class of stock shall include Directors elected by such Directors to
fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Series A Preferred Stock to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Series A
Preferred Stock as a class shall terminate, and (z) the number of Directors
shall be such number as may be provided for in the Articles of Organization or
by-laws irrespective of any increase made pursuant to the provisions of
paragraph (C)(ii) of this Section 3 (such number being subject, however, to
change thereafter in any manner provided by law or in the Articles of
Organization or by-laws). Any vacancies in the Board of Directors effected by
the provisions of clauses (y) and (z) in the preceding sentence may be filled by
a majority of the remaining Directors.
<PAGE>
(D) Except as otherwise required by applicable law or as set forth
herein, 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 taking any
corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 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 on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except dividends paid ratably on the Series A Preferred Stock and all
such parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity 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) 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.
<PAGE>
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
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any voluntary
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (x) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (1) $200,000 per share or
(2) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 2000 times the aggregate amount to be
distributed per share to holders of Common stock, or (y) to the holders of any
other class or series of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In
the event the Corporation shall at any time declare or pay any dividend on
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
(x) 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.
Neither the consolidation of nor merging of the Corporation with or
into any other corporation or corporations, nor the sale or other transfer of
all or substantially all of the assets of the Corporation, shall be deemed to be
a liquidation, dissolution or winding up of the Corporation within the meaning
of this Section 6.
<PAGE>
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 or any other property, then in any such case the shares 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 2000 times the aggregate amount of stock,
securities, cash or any other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is changed or exchanged, plus
accrued and unpaid dividends, if any, payable with respect to the Series A
Preferred Stock. In the event the Corporation shall at any time declare or pay
any dividend on 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. REDEMPTION.
(A) For purposes of this Section 8, the following terms have the
meanings indicated:
(i) "Acquiring Person" shall mean any Person (as such term
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 20% or more of the shares of Common Stock then outstanding, but shall not
include the Corporation, any subsidiary of the Corporation, any employee benefit
plan of the Corporation or any subsidiary thereof or any entity holding shares
of Common Stock organized, appointed or established by the Corporation or any
subsidiary thereof for or pursuant to the terms of any such plan.
(ii) "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").
(iii) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(a) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act) or has
the right to dispose of;
<PAGE>
(b) 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 after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights
(other than rights initially exercisable for Series A
Preferred Stock), 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 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 (whether or not in
writing); PROVIDED, HOWEVER, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own,"
any security under this clause (B) if the agreement,
arrangement or understanding to vote such security (1)
arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and
in accordance with, the applicable rules and regulations of
the Exchange Act and (2) is not also then reportable by such
person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(c) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person or any of such
Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in clause (B) of
subparagraph (b) of this paragraph (iii) or disposing of any
securities of the Corporation.
(iv) "Disinterested Director" shall mean (A) any member of the
Corporation's Board of Directors who is not an officer or employee of the
Corporation or any of its subsidiaries and who is not an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person or nominee of an Acquiring
Person or any such Affiliate or Associate and was a member of the Corporation's
Board of Directors prior to the Rights Declaration Date, and (B) any Person who
subsequently becomes a member of the Company's Board of Directors who is not an
Acquiring Person or an Affiliate or an Associate of an Acquiring Person or
nominee of an Acquiring Person or any such Affiliate or Associate, if such
Person's nomination is recommended or approved by a majority of the
Disinterested Directors.
(v) "Person" shall mean any individual, firm,
corporation, partnership or other entity.
(B) Subject to Section 4 hereof, the Corporation may, at any time
(unless otherwise prevented by law) by the affirmative vote of a majority of the
directors then in office, including, if at the time of such vote there is an
Acquiring Person, a majority of the Disinterested Directors, redeem all or any
portion of the Series A Preferred Stock then outstanding. The amount per share
of Series A Preferred Stock to be redeemed to be paid upon any such redemption
shall be equal to $200,000 plus accrued and unpaid dividends, if any, payable
with respect thereto. The total sum payable per share of Series A Preferred
Stock on the date on which the Corporation redeems any shares of Series A
Preferred Stock (the "Redemption Date") is hereinafter referred to as the
"Redemption Price."
<PAGE>
(C) If less than all of the outstanding shares of Series A Preferred
Stock are to be redeemed, the Corporation shall select the shares to be redeemed
by lot. Notice of redemption pursuant to this Section 8 shall be sent by
first-class mail, postage prepaid, to the holders of record of the shares of
Series A Preferred Stock to be redeemed at their respective addresses as the
same shall appear on the books of the Corporation. Such notice shall be mailed
not less than 30 nor more than 60 days in advance of the applicable Redemption
Date and shall specify the Redemption Date, the Redemption Price and the place
at which payment may be obtained as to such shares. At any time on or after the
Redemption Date applicable thereto, the holders of record of shares of Series A
Preferred Stock to be redeemed on such Redemption Date shall be entitled to
receive the Redemption Price therefor upon actual delivery to the Corporation or
its agent of the certificates representing the shares to be redeemed.
If such notice of redemption shall have been duly given, and if on or
before any Redemption Date the funds necessary for such redemption (taking into
account any conversions) shall have been deposited by the Corporation with a
bank or trust company designated by the Board of Directors and having capital
and surplus of at least $50,000,000 in trust for the pro rata benefit of the
holders of the shares of Series A Preferred Stock so called for redemption,
then, notwithstanding that any certificate for shares of Series A Preferred
Stock so called for redemption shall not have been surrendered for cancellation,
from and after such Redemption Date (unless there shall have been a default in
payment of the Redemption Price) all shares of Series A Preferred Stock so
called for redemption shall no longer be deemed to be outstanding and all rights
with respect to such shares shall forthwith cease and terminate, except only the
right of the holders thereof to receive from such bank or trust company upon
surrender of their certificate or certificates at any time after the time of
such deposit the funds so deposited, without interest. The balance of any funds
so deposited and unclaimed at the end of one year from such Redemption Date
shall be released or repaid to the Corporation, after which the holders of the
shares so called for redemption shall look only to the Corporation for payment
thereof, without interest.
Section 9. RANKING. Unless otherwise provided in the Articles of
Organization of the Corporation or a Certificate of Vote of Directors
Establishing a Class of Stock relating to a subsequently designated series of
Preferred Stock of the Corporation, the Series A Preferred Stock shall rank
junior to any other series of Corporation's Preferred Stock, as to the payment
of dividends and the distribution of assets on liquidation, dissolution or
winding up and shall rank senior to the Common Stock.
Section 10. AMENDMENT. The Articles of Organization of the Corporation
and this Certificate of Vote 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 (within the meaning of
Section 77 of Chapter 156B of the Massachusetts General Laws) without the
affirmative vote of the holders of two-thirds or more of the outstanding shares
of Series A Preferred Stock, voting separately as a class.
<PAGE>
Section 11. FRACTIONAL SHARES. Series A Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
SIGNATURES
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 21st day of February in the year 1989.
J.P. BARGER
PRESIDENT
ROBERT H. HERTZ
CLERK
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
CERTIFICATE OF VOTE OF DIRECTORS ESTABLISHING
A SERIES OF CLASS OF STOCK
(General Laws, Chapter 156B, Section 26)
I hereby approve the within certificate and, the filing fee in the amount of
$100 having been paid, said certificate is hereby filed this 27th day of
February, 1989.
SIGNATURE
MICHAEL JOSEPH CONNOLLY
SECRETARY OF STATE
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF CERTIFICATE TO BE SENT
TO:
Grant Goodman, Esq.
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
Telephone: (617) 570-1513
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
William Francis Galvin
Secretary of the Commonwealth
ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108
FEDERAL IDENTIFICATION
NO. 04-2258582
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
We John F. Reno, President, and Robert H. Hertz, Clerk of Dynatech Corporation
located at 3 New England Executive Park, Burlington, Massachusetts 01803 do
hereby certify that these ARTICLES OF AMENDMENT affecting Articles NUMBERED: 3
of the Articles of Organization were duly adopted at a meeting held in July 27,
1995, by vote of 14,364,005 shares of Common Stock out of 17,593,778 shares
outstanding, being at least a majority of each type, class or series outstanding
and entitled to vote thereon:
VOTED: To amend Article 3 of the Restated Articles of Organization of
the Corporation, as amended, by increasing the authorized
Common Stock of the Corporation from 24,000,000 shares of
Common Stock, par value $.20 per share, to 50,000,000 shares
of Common Stock, par value $.20 per share, and that there be
no change in the authorized Preferred Stock of the
Corporation.
<PAGE>
The total presently authorized is:
<TABLE>
<CAPTION>
WITH PAR VALUE STOCKS
TYPE NUMBER OF SHARES PAR VALUE
<S> <C> <C>
COMMON 24,000,000 $.20
PREFERRED 100,000 $1.00
</TABLE>
CHANGE the total authorized to:
<TABLE>
<CAPTION>
WITH PAR VALUE STOCKS
TYPE NUMBER OF SHARES PAR VALUE
<S> <C> <C>
COMMON 50,000,000 $.20
PREFERRED 100,000 $1.00
</TABLE>
<PAGE>
The foregoing amendment will become effective when these articles of amendment
are filed in accordance with Chapter 156B, Section 6 of The General Laws unless
these articles specify, in accordance with the vote adopting the amendment, a
later effective date not more than thirty days after such filing, in which event
the amendment will become effective on such later date.
SIGNATURES
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto signed
our names this 16th day of August, in the year 1995.
JOHN F. RENO
PRESIDENT
ROBERT H. HERTZ
CLERK
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
GENERAL LAWS, CHAPTER 156B, SECTION 72
I hereby approve the within articles of amendment and, the filing fee in the
amount of $26,000 having been paid, said articles are deemed to have been filed
with me this 16th day of August, 1995.
SIGNATURE
WILLIAM FRANCIS GALVIN
SECRETARY OF THE COMMONWEALTH
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF ARTICLES OF AMENDMENT TO BE SENT
TO:
Reginald F. Thors, Esq.
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
Telephone: (617) 570-1513
Exhibit 3(3)
DYNATECH CORPORATION
and
THE FIRST NATIONAL BANK OF BOSTON
as Rights Agent
-------------------
Shareholder Rights Agreement
Dated as of February 16, 1989
as amended and restated
as of March 12, 1990
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
1 Certain Definitions................................... 1
2 Appointment of Rights Agent........................... 5
3 Issue of Right Certificates........................... 6
4 Form of Right Certificates............................ 8
5 Countersignature and Registration..................... 9
6 Transfer. Split Up. Combination and Exchange
of Right Certificates; Mutilated,
Destroyed. Lost or Stolen Right
Certificates.......................................... 10
7 Exercise of Rights; Exercise Price; Expiration
Date of Rights........................................ 11
8 Cancellation and Destruction of
Right Certificates.................................... 13
9 Reservation and Availability of
Preferred Stock....................................... 13
10 Preferred Stock Record Date........................... 15
11 Adjustment of Exercise Price. Number and Kind
of Shares or Number of Rights......................... 15
12 Certificate of Adjusted Exercise Price or
Number of Shares...................................... 25
13 Consolidation, Merger or Sale or Transfer
of Assets or Earning Power............................ 26
14 Fractional Rights and Fractional Shares............... 28
15 Rights of Action...................................... 29
16 Agreement of Right Holders............................ 29
17 Right Certificate Holder Not Deemed
a Shareholder......................................... 30
<PAGE>
18 Concerning the Rights Agent........................... 31
19 Merger or Consolidation or Change of Name
of Rights Agent....................................... 31
20 Duties of Rights Agent................................ 32
21 Change of Rights Agent................................ 35
22 Issuance of New Right Certificates.................... 36
23 Redemption and Termination............................ 36
24 Exchange.............................................. 38
25 Notice of Certain Events.............................. 38
26 Notices............................................... 39
27 Supplements and Amendments............................ 40
28 Successors............................................ 41
29 Determinations and Actions by the
Board of Directors.................................... 41
30 Benefits of this Agreement............................ 42
31 Severability.......................................... 42
32 Governing Law......................................... 43
33 Counterparts.......................................... 43
34 Descriptive Headings.................................. 43
Exhibit A -- Form of Certificate of Vote of Directors Establishing Series A
Junior Participating Cumulative Preferred Stock
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Summary of Rights
<PAGE>
SHAREHOLDER RIGHTS AGREEMENT
Agreement, dated as of February 16, 1989, as amended and restated as of
March 12, 1990, between Dynatech Corporation, a Massachusetts corporation (the
"Company"), and The First National Bank of Boston, a national banking
association (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on February 16, 1989 the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as hereinafter
defined) for each outstanding share of Common Stock, par value $0.20 per share,
of the Company (the "Common Stock") outstanding as of the close of business on
March 3, 1989 (the "Record Date"), (other than shares of Common Stock held in
the Company's treasury on the Record Date), and contemplates the issuance of one
Right for each share of Common Stock of the Company issued (whether originally
issued or sold from the Company's treasury) between the Record Date and the
earlier of the Distribution Date and the Expiration Date (as such terms are
defined in Section 3 hereof), each Right initially representing the right to
purchase one two-thousandth of a share of Series A Junior Participating
Cumulative Preferred Stock of the Company having the rights, powers and
preferences set forth in the form of Certificate of Vote of Directors
Establishing a Series of a Class of Stock attached hereto as Exhibit A, upon the
terms and subject to the conditions hereinafter set forth (the "Rights");
WHEREAS, in accordance with the terms of the Shareholder Rights
Agreement dated as of February 16, 1989 (the "Rights Agreement") between the
Company and the Rights Agent, the Company deems it advisable and, in the best
interests of its shareholders to make certain amendments to the Rights
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree that the Rights Agreement
is hereby amended and restated 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 (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 15% or more of the shares of Common Stock then outstanding, but shall not
include (i) the Company, (ii) any Subsidiary of the Company (as such term is
<PAGE>
hereinafter defined), (iii) any employee benefit plan of the Company or any
Subsidiary of the Company (as such term is hereinafter defined) or (iv) any
entity or Person holding shares of Common Stock organized, appointed or
established by the Company or any Subsidiary for or pursuant to the terms of any
such plan. The Persons described in clauses (i) through (iv) above are referred
to herein as "Exempt Persons." Notwithstanding the foregoing, no Person shall
become an "Acquiring Person" as the result of an acquisition of Common Stock 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 Stock of the Company then outstanding; provided, however, that if
a Person shall become the Beneficial Owner of 15% or more of the Common Stock of
the Company then outstanding by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the Beneficial Owner of
any additional shares of Common Stock of the Company, then such Person shall be
deemed to be an "Acquiring Person".
(b) "ADVERSE PERSON" shall mean any Person declared to be an
Adverse Person by the Board of Directors upon a determination of the Board of
Directors that the criteria set forth in Section 11(a)(ii)(B) apply to such
Person.
(c) "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the date of this Agreement; PROVIDED, HOWEVER, that no
Person who is a director or officer of the Company shall be deemed an Affiliate
or an Associate of any other director or officer of the Company solely as a
result of his or her position as director or officer of the Company.
(d) A Person shall be deemed the "BENEFICIAL OWNER" of, and
shall be deemed to "BENEFICIALLY OWN," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, beneficially owns (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act, as in effect on the date of this Agreement) or
has the right to dispose of;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has
(A) the right to acquire (whether such right
is exercisable immediately or after the passage of
<PAGE>
time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) 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," (1) securities tendered
pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or
Associates until such tendered securities are
accepted for purchase or exchange; (2) securities
issuable upon exercise of Rights at any time prior to
the occurrence of a Triggering Event; or (3)
securities issuable upon exercise of Rights from and
after the occurrence of a Triggering Event, which
Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Sections 3(a), 11(i)
or 22 hereof; or
(B) the right to vote pursuant to any
agreement, arrangement or understanding (whether or not in
writing); however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," any
security under this clause (B) if the agreement, arrangement
or understanding to vote such security (1) arises solely from
a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations of the Exchange Act and
(2) is not also then reportable by such person on Schedule 13D
under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in clause (B) of Section
1(d)(ii) hereof) or disposing of any securities of the Company;
PROVIDED, HOWEVER, that (1) no Person engaged in business as an underwriter of
securities shall be deemed the Beneficial Owner of any securities acquired
through such Person's participation as an underwriter in good faith in a firm
commitment underwriting until the expiration of 40 days after the date of such
acquisition and (2) no Person who is a director or an officer of the Company
shall be deemed, solely as a result of his or her position as director or
officer of the Company, the Beneficial Owner of any securities of the Company
that are beneficially owned by any other director or officer of the Company.
<PAGE>
(e) "BUSINESS DAY" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the Commonwealth of
Massachusetts 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., Boston time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 PM., Boston time, on the next succeeding
Business Day.
(g) "COMMON STOCK" shall mean the Common Stock, par value
$0.20 per share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company shall mean the capital stock with
the greatest voting power, or the equity securities or other equity interests
having power to control or direct the management, of such Person or, if such
Person is a Subsidiary of another Person, the Person which ultimately controls
such first-mentioned Person and which has issued and outstanding such capital
stock, equity securities or equity interests.
(h) "DISINTERESTED DIRECTOR" shall mean (i) any member of the
Company's Board of Directors who is not an employee of the Company or any of its
Subsidiaries and is not an Acquiring Person, an Adverse Person or an Affiliate
or Associate of any such Person or a representative or nominee of an Acquiring
Person, an Adverse Person or any such Affiliate or Associate and was a member of
the Company's Board of Directors prior to the date of this Agreement, and (ii)
any person who subsequently becomes a member of the Company's Board of Directors
who is not an Acquiring Person, an Adverse Person or an Affiliate or Associate
of any such Person or a representative or nominee of an Acquiring Person, an
Adverse Person or of any such Affiliate or Associate, if such Person's
nomination is recommended or approved by a majority of the Disinterested
Directors.
(i) "DISTRIBUTION DATE" shall have the meaning defined in
Section 3(a) hereof.
(j) "EXERCISE PRICE" shall have the meaning defined in
Section 7(b) hereof.
(k) "EXPIRATION DATE" and "Final Expiration Date" shall
have the meanings defined in Section 7(a) hereof.
(l) "FAIR MARKET VALUE" of any securities or other
property shall be as determined in accordance with Section
11(d) hereof.
<PAGE>
(m) "PERSON" shall mean any individual, firm, corporation,
partnership or other entity.
(n) "PREFERRED STOCK" shall mean shares of Series A Junior
Participating Cumulative Preferred Stock, par value $1.00 per
share, of the Company having the rights and preferences set
forth in the form of Certificate of Vote of Directors
Establishing a Series of a Class of Stock attached hereto as
Exhibit A.
(o) "PRINCIPAL PARTY" shall have the meaning defined in
Section 13(b) hereof.
(p) "REDEMPTION PRICE" shall have the meaning defined in
Section 23 hereof.
(q) "SECTION 11(a)(ii) EVENT" shall mean any event
described in Section 11(a)(ii) hereof.
(r) "SECTION 13 EVENT" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(s) "STOCK ACQUISITION DATE" shall mean 5:00 p.m. Boston time
on the date of the first public announcement (which, for
purposes of this definition shall include, without limitation,
a press release or a report filed pursuant to Section 13(d)
under the Exchange Act) by the Company or an Acquiring Person
that an Acquiring Person has become such.
(t) A "SUBSIDIARY" of any Person shall mean any other
Person of which a majority of the voting power of the voting
equity securities or voting interests is owned, directly or
indirectly, by such Person, or which is otherwise controlled
by such Person.
(u) "TRIGGERING EVENT" shall mean any Section 11(a)(ii)
Event or any Section 13 Event.
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 (as
hereinafter defined in Section 3(a)) also be the holders of the Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time a point such
Co-Rights Agents as it may deem necessary or desirable. In the event the Company
appoints one or more Co-Rights Agents, the respective duties of the Rights Agent
and any Co-Rights Agents shall be as the Company shall determine.
<PAGE>
Section 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the close of business on the
tenth day after the Stock Acquisition Date, (ii), the close of business on the
tenth Business Day after the date of the commencement, by any Person, other than
an Exempt Person, of a tender or exchange offer if, upon consummation thereof,
such Person would be an Acquiring Person or (iii) the determination by the Board
of Directors of the Company, pursuant to the criteria set forth in Section
11(a)(i)(B) hereof, that a Person is an Adverse Person (including any such date
which is after the date of this Agreement and prior to the issuance of the
Rights) (the earliest 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 certificates for the Common Stock
registered in the names of the holders of the Common Stock (which certificates
for Common Stock shall be deemed also to be certificates for Rights) and not by
separate certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common Stock. As soon
as practicable after the Company has notified the Rights Agent of the occurrence
of the Distribution Date, the Rights Agent will send, by first-class, insured,
postage prepaid mail, to each record holder of the Common Stock as of the close
of business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more certificates, in substantially the form of
Exhibit B hereto (the "Right Certificates"), evidencing one Right for each share
of Common Stock so held. In the event that an adjustment in the number of Rights
per share of Common Stock has been made pursuant to Section 11(o) hereof, the
Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) at the time of distribution of the Right
Certificates, so that Right Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Rights. As of
and after the close of business on the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) Not later than ten days after the Record Date, the Company
will send a copy of a Summary of Rights, in substantially the form attached
hereto as Exhibit C (the "Summary of Rights"), by first-class, postage prepaid
mail, to each record holder of the Common Stock as of the close of business on
the Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for the Common Stock outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock with or without a copy of the Summary of
Rights attached thereto, and the registered holders of the Common Stock shall
<PAGE>
also be the registered holders of the associated Rights. Until the Distribution
Date (or earlier redemption, expiration or termination of the Rights), the
transfer of any of the certificates for the Common Stock outstanding on the
Record Date, even without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with the Common
Stock represented by such certificate.
(c) Certificates for the Common Stock issued after the Record
Date, but prior to the earlier of the Distribution Date or the Expiration Date,
shall be deemed also to be certificates for Rights, and shall bear the following
legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Shareholder
Rights Agreement between Dynatech Corporation and The First
National Bank of Boston, as Rights Agent, dated as of
February 16, 1989, as amended as of March 12, 1990 (the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal offices of Dynatech Corporation. 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. Dynatech
Corporation may redeem the Rights at a redemption price of
$0.02 per Right, subject to adjustment, under the terms of
the Rights Agreement. Dynatech Corporation will mail to the
holder of this certificate a copy of the Rights Agreement,
as in effect on the date of mailing, without charge promptly
after receipt of a written request therefor. Under certain
circumstances, Rights issued to or held by Acquiring
Persons, Adverse Persons or any Affiliates or Associates
thereof (as defined in the Rights Agreement) and any
subsequent holder of such Rights may become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date or the Expiration Date, the Rights associated
with the Common Stock represented by such certificates shall be evidenced by
such certificates alone, and the transfer of any of such certificates shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates. In the event that the Company purchases or
<PAGE>
acquires any shares of Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Stock shall be deemed
cancelled and retired so that the Company shall not be entitled to exercise any
Rights associated with the shares of Common Stock which are no longer
outstanding.
Section 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to
purchase shares and of assignment and certificate to be printed on the reverse
thereof) shall each be substantially in the form of 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, rule or regulation or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to usage, Subject to the provisions of Section 11 and
Section 22 hereof, the Right Certificates, whenever distributed, shall be dated
as of the Record Date, and on their face shall entitle the holders thereof to
purchase such number of one two-thousandths of a share of Preferred Stock as
shall be set forth therein at the price set forth therein (the "Exercise
Price"), but the number of such shares and the Exercise Price shall be subject
to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by (i) an Acquiring
Person, an Adverse Person or any Associate or Affiliate of such a Person, (ii) a
transferee of an Acquiring Person or an Adverse Person (or of any such Associate
or Affiliate) who becomes a transferee after the Acquiring Person or Adverse
Person becomes such, or (iii) a transferee of an Acquiring Person or an Adverse
Person (or of any such Associate or Affiliate) who becomes a transferee prior to
or concurrently with the Acquiring Person or Adverse Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse Person to holders of equity
interests in such Acquiring Person or Adverse Person or to any Person with whom
the Acquiring Person or Adverse Person has any continuing agreement, arrangement
or understanding regarding the transferred Rights or (B) a transfer which the
Board of Directors of the Company has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect the avoidance of
Section 7(e) hereof, and any Right Certificate issued pursuant to Section 6 or
Section 11 upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain the following legend:
<PAGE>
The Rights represented by this Right Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person, an Adverse Person or an Affiliate or an
Associate of an Acquiring Person or an Adverse Person (as
such terms are defined in the Rights Agreement). This Right
Certificate and the Rights re resented hereby may become
null and void under certain circumstances as specified in
Section 7(e) of the Rights Agreement.
The Company shall give notice to the Rights Agent promptly after it becomes
aware of the existence and identity of any Acquiring Person or Adverse Person or
any Associate or Affiliate thereof.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice President and by
its Treasurer or any Assistant Treasurer, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Clerk or any Assistant Clerk 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 so 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 Certificates 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.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at one of its offices designated as the appropriate
place, for surrender of Right Certificates upon exercise or transfer, 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.
<PAGE>
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e)
and 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 Expiration
Date, any Right Certificate or Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Certificates, entitling
the registered holder to purchase a like number of one two-thousandths of a
share of Preferred Stock (or following a Triggering Event, Preferred Stock, cash
property, debt securities, common stock or any combination thereof) as the Right
Certificate or Certificates surrendered then entitled such holder to purchase.
Any registered holder desiring to transfer, split up, combine or exchange any
Right Certificate shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Certificates to be
transferred, split up, combined or exchanged, with the form of assignment and
certificate duly executed, at the office or offices of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered 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 and shall have provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 4(b). Section 7(e) and
Section 14 hereof, countersign and deliver to the Person entitled thereto a
Right Certificate or Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to Cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
<PAGE>
Section 7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE OF
RIGHTS,
(a) Subject to Section 7(e) 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 and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office or offices of the Rights Agent
designated for such purpose, together with payment of the aggregate Exercise
Price for the total number of one two-thousandths of a share of Preferred Stock
(or other securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercised, at or prior to the earlier of (i) the
close of business on February 16, 1999 (the "Final Expiration Date") or (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof (the
earlier of (i) or (ii) being herein referred to as the "Expiration Date").
Except as set forth in Section 7(e) hereof and notwithstanding any other
provision of this Agreement, any Person who prior to the Distribution Date
becomes a record holder of shares of Common Stock may exercise all of the rights
of a registered holder of a Right Certificate with respect to the Rights
associated with such shares of Common Stock in accordance with the provisions of
this Agreement, as of the date such Person becomes a record holder of shares of
Common Stock.
(b) The Exercise Price for each one two-thousandth of a share
of Preferred Stock pursuant to the exercise of a Right shall initially be
$100.00, shall be subject to adjustment from time to time as provided in Section
11 and Section 13(a) hereof and shall be payable in lawful money of the United
States of America in accordance with Section 7(c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the certificate on
the reverse side thereof duly executed, accompanied by payment of the Exercise
Price for the shares to be purchased and an amount equal to any applicable
transfer tax (as determined by the Rights Agent) in cash, or by certified check
or bank draft payable to the order of the Company, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i)(A) requisition from any
transfer agent of Preferred Stock (or make available, if the Rights Agent is the
transfer agent therefor) certificates for the number of one two-thousandths of a
share of Preferred Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of shares of Preferred
Stock issuable upon exercise of the Rights hereunder with a depositary agent,
<PAGE>
requisition from the depositary agent depositary receipts representing such
number of one two-thousandths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares, of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company the
amount of cash, if any, to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder and (iv) when appropriate,
after receipt promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate. In the event that the Company is obligated to
issue other securities (including Common Stock) 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 or other
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 and delivered 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 in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by (i) an Acquiring Person, an Adverse Person or any
Associate or Affiliate of such a Person or (ii) a transferee of an Acquiring
Person or an Adverse Person (or of any such Associate or Affiliate) who becomes
a transferee after the Acquiring Person becomes such or (iii) a transferee of an
Acquiring Person or an Adverse Person (or of any such Associate or Affiliate)
who becomes a transferee prior to or concurrently with the Acquiring Person or
Adverse Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person or Adverse
Person to holders of equity interests in such Acquiring Person or Adverse Person
or to any Person with whom the Acquiring Person or Adverse Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null
<PAGE>
and void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Right Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person, an Adverse Person or any Affiliates or
Associates thereof or any transferee of any of them hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of Rights upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. CANCELLATION 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 any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if 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 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. RESERVATION AND AVAILABILITY OF PREFERRED STOCK.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or any authorized and issued shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that will be sufficient to
permit the exercise in full of all outstanding and exercisable Rights.
<PAGE>
(b) The Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares of Preferred Stock
issued or reserved for issuance to be listed, upon official notice of issuance,
upon the principal national securities exchange, if any, upon which the Common
Stock is listed or, if the principal market for the Common Stock is not on any
national securities exchange, to be eligible for quotation on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or any
successor thereto or other comparable quotation system.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the occurrence of a
Section 11(a)(ii) Event as of which the consideration to be delivered by the
Company Upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as required by law following the
Distribution Date, as the case may be, a registration statement under the
Securities Act of 1933, as amended (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 that at all times meets the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities, and (B) the Expiration Date. The Company
will also take such action as may be appropriate under, and which will ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may temporarily
suspend for a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. Notwithstanding any such provision of
this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price), be duly
and validly authorized and issued and fully paid and nonassessable.
<PAGE>
(e) 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 certificates for shares of Preferred Stock upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a person other than, or in respect of the issuance or
delivery of securities in a name other than that of, the registered holder of
the Right Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for securities in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for Preferred Stock is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the shares of
Preferred Stock 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 Exercise 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 Stock transfer books of the Company
are closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Stock transfer books of the Company are open. Prior to
the exercise of the Right evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a shareholder of the Company with respect
to shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions 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 EXERCISE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Exercise Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a smaller number of
<PAGE>
shares or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a) and Section
7(e) hereof, the Exercise 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 Stock transfer
books of the Company were open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. 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) In the event
(A) any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person; or
(B) the Board of Directors of the Company
shall declare any Person to be an Adverse Person, after (x) a determination that
such Person, alone or together with its Affiliates and Associates, has become
the Beneficial Owner of 10% or more of the outstanding shares of Common Stock
and (y) a determination by the Board of Directors, after reasonable inquiry and
investigation, including such consultation, if any, with such persons as such
directors shall deem appropriate, that (a) such Beneficial Ownership by such
Person is intended to cause, is reasonably likely to cause or will cause the
Company to repurchase the Common Stock beneficially owned by such Person or to
cause pressure on the Company to take action or enter into a transaction or
series of transactions which would provide such Person with short-term financial
gain under circumstances where the Board of Directors determines that the best
long-term interests of the Company and its stockholders, but for the actions and
possible actions of such Person, would not be served by taking such action or
entering into such transactions or series of transactions at that time or (b)
such Beneficial Ownership is causing or reasonably likely to cause a material
adverse impact (including, but not limited to, impairment of relationships with
customers or impairment of the Company's ability to maintain its competitive
position) on the business or prospects of the Company; PROVIDED, HOWEVER, that
<PAGE>
the Board of Directors of the Company may not declare a Person to be an Adverse
Person if, prior to the time that such Person acquired 10% or more of the shares
of Common Stock then outstanding, such Person provided to the Board of Directors
in writing a statement of such Person's purpose and intentions in connection
with the proposed acquisition of Common Stock, together with any other
information reasonably requested of such Person by the Board of Directors, and
the Board of Directors, based on such statement and reasonable inquiry and
investigation, including such consultation, if any, with such persons as the
directors shall deem appropriate, determines to notify and notifies such Person
in writing that it will not declare such Person to be an Adverse Person;
PROVIDED FURTHER, that the Board of Directors may expressly condition in any
manner a determination not to declare a Person an Adverse Person on such
conditions as the Board of Directors may select, including without limitation,
such Person's not acquiring more than a specified amount of stock and/or on such
Person's not taking actions inconsistent with the purposes and intentions
disclosed by such Person in the statement provided to the Board of Directors. No
delay or failure by the Board of Directors to declare a Person to be an Adverse
Person shall in any way waive or otherwise affect the power of the Board of
Directors subsequently to declare a Person to be an Adverse Person. In the event
that the Board of Directors should at any time determine, upon reasonable
inquiry and investigation, including consultation with such persons as the
directors shall deem appropriate, that such Person has not met or complied with
any condition specified by the Board of Directors, the Board of Directors may at
any time thereafter declare such Person to be an Adverse Person pursuant to the
provisions of this Section 11(a)(ii)(B);
then, and in each such case, promptly following any such occurrence, proper
provision shall be made so that each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have a right to receive, upon exercise
thereof at the then current Exercise Price in accordance with the terms of this
Agreement, such number of shares of Preferred Stock of the Company as shall
equal the result obtained by (x) multiplying the then current Exercise Price by
the then number of one two-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event and dividing that product by (y) 50% of the Fair Market Value
per one two-thousandth of a share of the Preferred Stock (determined pursuant to
Section 11(d)) on the date of the occurrence of any one of the events listed
above in this Section 11(a)(ii); PROVIDED, HOWEVER, that if the transaction that
would otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of Section 13 shall
apply and no adjustment shall be made pursuant to this Section 11(a)(ii).
<PAGE>
(iii) In the event that there shall not be
sufficient Treasury shares or authorized but unissued shares of Preferred Stock
to permit the exercise in full of the Rights in accordance with the foregoing
Section 11(a)(ii), the Company shall take all action as may be necessary to
authorize and reserve for issuance such number of additional shares of Preferred
Stock as may from time to time be required to be issued upon the exercise in
full of all Rights outstanding and, if necessary, shall use its best efforts to
obtain shareholder approval thereof. Notwithstanding the foregoing provisions of
this Section 11(a)(iii), in lieu of issuing shares of Preferred Stock in
accordance with Section 11(a)(ii) hereof, if a majority of the Disinterested
Directors then in office determines that such action is necessary or appropriate
and is not contrary to the interests of the holders of the Rights, they may
elect to cause the Company to pay, and if sufficient shares of Preferred Stock
cannot be issued for such purpose in accordance with the provisions hereof, the
Company shall issue or pay upon the exercise of the Rights, cash, property, debt
securities, shares of Preferred Stock or Common Stock, or any combination
thereof, having an aggregate Fair Market Value equal to the Fair Market Value of
the shares of Preferred Stock which otherwise would have been issuable pursuant
to Section 11(a)(ii). Any such election by a majority of the Disinterested
Directors of the Company must be made and publicly announced within 30 days of
the date on which any Section 11(a)(ii) Event first occurs following the Stock
Acquisition Date.
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or securities having the same rights,
privileges and preferences as the shares of Preferred Stock ("preferred stock
equivalents")) or securities convertible into Preferred Stock or preferred stock
equivalents at a price per share of Preferred Stock or per share of preferred
stock equivalents (or having a conversion price per share, if a security
convertible into Preferred Stock or preferred stock equivalents) less than the
Fair Market Value (as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock on such record date, the Exercise Price to be in effect after
such record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of shares of Preferred Stock which the aggregate offering
price of the total number of shares of Preferred Stock to be offered (and the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Fair Market Value and the denominator of which
<PAGE>
shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of additional shares of Preferred Stock and preferred
stock equivalents to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). 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 the Fair
Market Value thereof determined in accordance with Section 11(d) hereof. Shares
of Preferred Stock owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustments
shall be made successively whenever such a record date is fixed; and in the
event that such rights or warrants are not so issued, the Exercise Price shall
be adjusted to be the Exercise Price which would then be in effect if such
record date had not been fixed.
(c) If the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
periodic cash dividend out of the earnings or retained earnings of the Company),
assets (other than a dividend payable in Preferred Stock, but including any
dividend payable in stock other than Preferred Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b)), the Exercise Price to
be in effect after such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Fair Market Value (as determined pursuant to
Section 11(d) hereof) per one two-thousandth of a share of Preferred Stock on
such record date, less the Fair Market Value (as determined pursuant to Section
11(d) hereof) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or, of such convertible securities, subscription rights or
warrants applicable to one two-thousandth of a share of Preferred Stock and the
denominator of which shall be the Fair Market Value (as determined pursuant to
Section 11(d) hereof) per one two-thousandth of a share of Preferred Stock. 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 Exercise Price shall
again be adjusted to be the Exercise Price which would be in effect if such
record date had not been fixed.
(d) For the purpose of this Agreement, the "Fair Market Value"
of any share of Preferred Stock, Common Stock or any other stock or any Right or
other security or any other property shall be determined as provided in this
Section 11(d).
<PAGE>
(i) In the case of a publicly-traded stock or other
security, the Fair Market Value on any date shall be deemed to be the
average of the daily closing prices or share of such stock or per unit
of such other 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 Fair Market Value per share of any
share of stock is determined during a period following the announcement
by the issuer of such stock of (x) a dividend or distribution on such
stock payable in shares of such stock or securities convertible into
shares of such stock or (y) any subdivision, combination or
reclassification of such stock, and prior to the expiration of the 30
Trading Day period 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 Fair Market Value
shall be properly adjusted to take into account ex-dividend trading.
The closing price for each day shall be the last sale price, regular
way, or, 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 securities 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 such
security is listed or admitted to trading; or, if not listed or
admitted to trading on any national securities exchange, the last
quoted price (or, if not so quoted, the average of the last quoted 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 no
bids for such security are 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 such security selected by the Board of
Directors of the Company. If on any such date no market maker is making
a market in such security, the Fair Market Value of such security on
such date shall be determined reasonably and with utmost good faith to
the holders of the Rights by the Board of Directors of the Company,
including, if at the time of such determination there is an Acquiring
Person or an Adverse Person, a majority of the Disinterested Directors
then in office, or if there are no Disinterested Directors, by a
nationally recognized investment banking firm selected by the Board of
Directors, which determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which such security is
listed or admitted to trading is open for the transaction of business
or, if such security is not listed or admitted to trading on any
national securities exchange, a Business Day.
<PAGE>
(ii) If a security is not publicly held or not so
listed or traded, "Fair Market Value" shall mean the fair value per
share of stock or per other unit of such security determined reasonably
and with utmost good faith to the holders of the Rights by the Board of
Directors of the Company, including, if at the time of such
determination there is an Acquiring Person or an Adverse Person, a
majority of the Disinterested Directors then in office or if there are
no Disinterested Directors, by a nationally recognized investment
banking firm selected by the Board of Directors, which determination
shall be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent and the holders of the Rights; PROVIDED,
HOWEVER, that for the purposes of making any adjustment proved for by
Section 11(a)(ii) hereof, the Fair Market Value of a share of Preferred
Stock shall not be less than the product of the then Fair Market Value
of a share of Common Stock multiplied by the higher of the then
Dividend Multiple or Vote Multiple applicable to the Preferred Stock
(as defined in the Certificate of Vote of Directors establishing the
Preferred Stock attached as Exhibit A hereto) and shall not exceed 105%
of the product of the then Fair Market Value of a share of Common Stock
multiplied by the higher of the then Dividend Multiple or Vote Multiple
applicable to the Preferred Stock.
(iii) In the case of property other than securities,
the Fair Market Value thereof shall be determined reasonably and with
utmost good faith to the holders of Rights by the Board of Directors of
the Company, including, if at the time of such determination there is
an Acquiring Person, a majority of the Disinterested Directors then in
office, or if there are no Disinterested Directors, by a nationally
recognized investment banking firm selected by the Board of Directors,
which determination shall be described in a statement filed with the
Rights Agent and shall be binding upon the Rights Agent and the holders
of the Rights.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Exercise Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Exercise 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 ten-thousandth of a share of
Common Stock or one-millionth of a share of Preferred Stock,
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 (3) years
from the date of the transaction which mandates such
adjustment or (ii) the Expiration Date.
<PAGE>
(f) If as a result of any provision of 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 Stock,
thereafter 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 Stock contained in Section 11(a), (b), (c), (e), (g) through (k) and
(m), inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with
respect to the Preferred Stock 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 Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one two-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Exercise Price as a
result of the calculations made in Section 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 Exercise Price, that number of one
two-thousandths of a share of Preferred Stock (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one two-thousandths
of a share of Preferred Stock for which a Right may be exercisable immediately
prior to this adjustment by (y) the Exercise Price in effect immediately prior
to such adjustment of the Exercise Price and (ii) dividing the product so
obtained by the Exercise Price in effect immediately after such adjustment of
the Exercise Price.
(i) The Company may elect on or after the date of any
adjustment of the Exercise Price to adjust the number of Rights, in substitution
for any adjustment in the number of shares of Preferred Stock purchasable upon
the exercise of a Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of one two-thousandths
of a share of Preferred Stock 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-two hundred thousandth) obtained by dividing the Exercise Price in
effect immediately prior to adjustment of the Exercise Price by the Exercise
Price in effect immediately after adjustment of the Exercise Price. The Company
shall make a public announcement of its election to adjust the number of Rights,
<PAGE>
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 Exercise Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten (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 may bear, at
the option of the Company, the adjusted Exercise Price) 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 Exercise
Price or the number of one two-thousandths of a share of Preferred Stock
issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Exercise Price per share and the
number of shares which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Exercise Price below the then stated value, if any, of the number
of one two-thousandths of a share of Preferred Stock issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of Preferred Stock at such
adjusted Exercise Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise 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
the number of one two-thousandths of a share of Preferred Stock or other capital
stock or securities of the Company, if any, issuable upon such exercise over and
<PAGE>
above the number of one two-thousandths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Exercise 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 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
Exercise Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the Preferred
Stock, issuance wholly for cash of any shares of Preferred Stock at less than
the Fair Market Value, issuance wholly for cash of shares of Preferred Stock or
securities which by their terms are convertible into or exchangeable for shares
of Preferred Stock, stock dividends or issuance of rights, options or warrants
referred to hereinabove in this Section 11, hereafter made by the Company to
holders of its Preferred Stock, shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with, (ii) merge with or into,
or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries taken as a whole, to any other Person or Persons if (x) at the time
of or immediately after such consolidation) merger or sale there are any rights,
warrants or other instruments outstanding or agreements or arrangements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale the shareholders of a
Person who constitutes, or would constitute, the "Principal Party" for the
purposes of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates. The
Company further covenants and agrees that after the Distribution Date it will
not, except as permitted by Section 23 or Section 27 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it Is
reasonably foreseeable that such action will substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights.
(o) In the event the Company shall at any time after the date
of this Agreement and prior to the Distribution Date (i) declare a dividend on
the outstanding Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, (iii) combine the outstanding Common Stock into a
<PAGE>
smaller number of shares or (iv) issue any shares of its capital stock in a
reclassification of the outstanding Common Stock, the number of Rights
associated with each share of Common Stock shall be proportionately adjusted so
that the number of Rights thereafter associated with each share of Common Stock
following any such event shall equal the result obtained by multiplying the
number of Rights associated with each share of Common Stock immediately prior to
such event by a fraction, the numerator of which shall be the total number of
shares of Common Stock outstanding immediately prior to the occurrence of any
such event listed in clauses (i), (ii), (iii) or (iv) above and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event listed in clauses (i), (ii),
(iii) or (iv) above.
(p) The exercise of Rights under Section 11(a)(ii) shall only
result in the loss of rights under Section 11(a)(ii) to the extent so exercised
and shall not otherwise affect the rights of holders of Right Certificates under
this Rights Agreement, including rights to purchase securities of the Principal
Party following a Section 13 Event which has occurred or may thereafter occur,
as set forth in Section 13 hereof. Upon exercise of a Right Certificate under
Section 11(a)(ii), the Rights Agent shall return such Right Certificate duly
marked to indicate that such exercise has occurred.
Section 12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11. Section 13 or Section
23(d) hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer agent
for the Preferred Stock and the Common Stock a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate in accordance
with Section 26 hereof. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment contained therein and shall not be
deemed to have knowledge of any such adjustment unless and until it shall have
received such certificate.
Section 13. CONSOLIDATION. MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which is not prohibited by Section 11(n) hereof), and the Company
shall not be the continuing or surviving corporation of such consolidation or
merger, (y) any Person (other than a Subsidiary of the Company in a transaction
<PAGE>
which is not prohibited by Section 11(n) hereof) 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 shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell, mortgage or otherwise transfer (or one
or more of its Subsidiaries shall sell, mortgage or otherwise transfer), in one
transaction or a series of related 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 or Persons (other than the
Company or any Subsidiary of the Company in one or more transactions, each of
which is not prohibited by Section 11(n) hereof), then, and in each such case,
proper provision shall be made so that: (i) each holder of a Right, except as
provided in Section 7(e) hereof, shall have the right to receive, upon the
exercise thereof at the then current Exercise Price in accordance with the terms
of this Agreement, such number of validly authorized and issued, fully paid and
nonassessable shares of freely tradeable Common Stock of the Principal Party (as
hereinafter defined in Section 13(b)), free and clear of rights of call or first
refusal, liens, encumbrances or other adverse claims, as shall be equal to the
result obtained by (1) multiplying the number of such one two-thousandths of a
share for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event) by the Exercise Price in effect
immediately prior to such first occurrence, and dividing that product by (2) 50%
of the Fair Market Value (determined pursuant to Section 11(d) hereof) per share
of the Common Stock of such Principal Party on the date of consummation of such
consolidation, merger, sale or transfer; (ii) such Principal Party 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 Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply to such Principal Party; and (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock to permit exercise of all
outstanding Rights in accordance with this Section 13(a)) 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 its
shares of Common Stock thereafter deliverable upon the exercise of the Rights.
<PAGE>
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a), the Person
that is the issuer of any securities into which shares of Common Stock
of the Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to the
merger or consolidation; and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the Person that is
the party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
PROVIDED, HOWEVER, that in any such case, (x) if the Common Stock of
such Person is not at such time and has not been continuously over the
preceding 12-month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so registered,
"Principal Party" shall refer to such other Person; and (y) in case
such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest aggregate market
value of shares outstanding.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto (x) the Principal Party shall have
a sufficient number of authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13, and (y) the Company and each Principal Party
and each other Person who may become a Principal Party as a result of such
consolidation, merger, sale or transfer shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
Section 13(a) and (b) and further providing that, as soon as practicable after
the date of any consolidation, merger, sale or transfer of assets mentioned in
Section 13(a), the Principal Party at its own expense will
(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, use its
best efforts to cause such registration statement to become effective
as soon as practicable after such filing and use its best efforts to
cause such registration statement to remain effective (with a
prospectus that at all times meets the requirements of the Securities
Act) until the Expiration Date;
<PAGE>
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights under
the blue sky laws of such jurisdictions as may be necessary or
appropriate;
(iii) use its best efforts to list (or continue the
listing of) the Rights and the securities purchasable upon exercise of
the Rights on a national securities exchange or to meet the eligibility
requirements for quotation on NASDAQ; and
(iv) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
which comply in all material respects with the requirements for
registration on Form 10 under the Exchange Act.
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, except prior to the Distribution Date as provided in Section 11(o)
hereof, or to distribute Right Certificates which evidence fractional Rights. If
the Company elects not to issue such fractional Rights, the Company shall pay,
in lieu of such fractional Rights, 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 Fair Market Value
of a whole Right, as determined pursuant to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one two-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one two-thousandth of a
share of Preferred Stock). If the Company elects not to issue such fractional
shares, the Company shall pay, in lieu of fractional shares of Preferred Stock
that are not integral multiples of one two-thousandth of a share of Preferred
Stock, to the registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the satisfaction of
the Fair Market Value of one two-thousandth of a share of Preferred Stock. For
purposes of this Section 14(b), the Fair Market Value of one two-thousandth of a
share of Preferred Stock shall be determined pursuant to Section 11(d) hereof
for the Trading Day immediately prior to the date of such exercise.
<PAGE>
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Sections 18 and 20 hereof, are vested in the respective registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Right Certificate
(or, prior to the Distribution Date, of the Common Stock), without the consent
of the Right Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Stock), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Right 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 shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Holders of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to enforce
the provisions of 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, each Right will be
transferable only simultaneously and together with the transfer of shares of
Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the
person in whose name a Right Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute owner
<PAGE>
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall e
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have Any liability to
any holder of a Right or other Person as the 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 obligations; provided, however, that the Company must use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. 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 shares of Preferred
Stock or any other securities of the Company which may at any time be Issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (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.
(a) 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
disbursements 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
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
<PAGE>
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 arising therefrom, directly or
indirectly. The indemnity provided for herein shall survive the expiration of
the Rights and the termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for Common Stock, Preferred Stock, or 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.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or shareholder services business 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 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.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
<PAGE>
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 selected
by it (who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of "Fair Market Value") 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 a
person believed by the Rights Agent to be the Chairman of the Board, a Vice
Chairman of the Board, the President, a Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or an Assistant Secretary, the Clerk or an
Assistant Clerk of the Company and delivered to the Rights Agent. Any 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 only for
its own 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
<PAGE>
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 7(e) hereof) or any
adjustment required under the provisions of Sections 11, 13 or 23(c) hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after receipt of a certificate describing any such adjustment furnished in
accordance with Section 12 hereof), nor shall it be responsible for any
determination by the Board of Directors of the Company of current market value
of the Rights or Preferred Stock pursuant to the provisions of Section 14
hereof; nor shall it by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any shares of Common Stock
or Preferred Stock to be issued pursuant to this Agreement or any Right
Certificate or as to whether any shares of Common Stock or Preferred Stock will,
when so 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 and
certificates delivered pursuant to any provision hereof from any person believed
by the Rights Agent to be the Chairman of the Board, any Vice Chairman of the
Board, the President, a Vice President, the Secretary or an Assistant Secretary,
the Clerk, an Assistant Clerk, the Treasurer or an Assistant Treasurer of the
Company, and is authorized 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 to be taken by it in good faith in accordance with instructions of
any such officer. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this
Agreement and the date on or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in such application on or after the date specified in such application
<PAGE>
(which date shall not be less than five Business Days after the date any officer
of the Company actually receives such application, unless any such officer shall
have consented in writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the Rights Agent
shall have received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may 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, omission, default, neglect or misconduct
of any such attorneys or agents or for any loss to the Company or to the holders
of the Rights resulting from any such act, omission, default, neglect or
misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause (1) or clause
(2) thereof, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.
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 thirty (30) days' notice in writing mailed to the Corn any, and to each
transfer agent of the Common Stock and the Preferred Stock, by registered or
<PAGE>
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
(with or without cause) upon thirty (30) days' notice in writing, mailed to the
Right. Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock and Preferred Stock 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 thirty (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 incumbent Rights Agent or
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)
a corporation organized and doing business under the laws of the United States
or of the Commonwealth of Massachusetts or the State of New York (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 Commonwealth of Massachusetts or the
State of New York), in good standing, which is authorized under such laws to
exercise stock transfer or corporate trust powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an Affiliate of a corporation described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and 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 Stock
and the Preferred Stock, 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
<PAGE>
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Exercise Price per share and the number or kind or class of shares of
stock or other securities or property purchasable sable under the Right
Certificates made in accordance with the provisions of this Agreement, in
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the Redemption or expiration of the
Rights, the Company (a) shall, with respect to shares of Common Stock so issued
or sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate, by the Board of Directors of the Company, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Right Certificate
shall be issue, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material adverse tax
consequences to the Company or the person to whom such Right Certificate would
be issued, and (ii) no such Right Certificate shall be issued if, and to the
extent that, appropriate adjustments shall otherwise have been made in lieu of
the issuance thereof.
Section 23. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Company may, at its option,
redeem all but not less than all of the then outstanding Rights at a redemption
price of $0.02 per Right subject to adjustments as provided in Section 23(d)
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"). The Rights may be redeemed only until the earliest of (i) 5:00 p.m.,
Boston time, on the tenth day after the Stock Acquisition Date, (ii) the
declaration by the Board of Directors that any Person is an Adverse Person,
(iii) the occurrence of a Section 13 Event, or (iv) the Final Expiration Date.
The Rights may not be redeemed at any time while there is an Acquiring Person or
an Adverse Person or at any time on or after the date of a change (resulting
from one or more proxy or consent solicitations) in a majority of the directors
in office at the commencement of any such solicitation if any Person who is a
participant in any such solicitation is an Adverse Person or has stated (or, if
upon the commencement of such solicitation a majority of the Board of Directors
of the Company has determined in good faith) that such Person (or any of its
Affiliates or Associates) intends to take, or may consider taking, any action
which would result in such person becoming an Acquiring Person or which would
cause the occurrence of a Triggering Event unless there are Disinterested
<PAGE>
Directors then in office and redemption of the Rights is authorized by the Board
of Directors, including at least a majority of the Disinterested Directors.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, and without any further
action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held, Promptly after the action of the Board
of Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to the Rights Agent and to all such
holders 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 Agent for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any Rights at
any time in any manner other than that specifically set forth in this Section
23, or in connection with the purchase, acquisition or redemption of shares of
Common Stock prior to the Distribution Date.
(c) The Company may, at its option, pay the Redemption Price
in cash, shares of Common Stock (based on the Fair Market Value of the Common
Stock as of the time of redemption) or any other form of consideration deemed
appropriate by the Board.
(d) In the event the Company shall at any time after the date
of this Rights Agreement (i) pay any dividend on Common Stock in shares of
Common Stock, (ii) subdivide the outstanding shares of Common Stock into a
greater number of shares or (iii) combine the outstanding shares of Common Stock
into a smaller number of shares of the outstanding shares of Common Stock, then
and in each such event the Redemption Price after such event shall equal the
Redemption Price immediately prior to such event multiplied by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event; provided,
however, that in each case such adjustment to the Redemption Price shall be made
only if the amount of the Redemption Price shall be reduced or increased by
$0.002 per Right.
<PAGE>
Section 24. EXCHANGE.
(a) The Company may, only if there are Disinterested Directors
then in office and such action is authorized by the Board of Directors,
including at least a majority of the Disinterested Directors then in office, at
any time on or after the occurrence of a Section 11(a)(ii) Event, 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 7(e) hereof)
for shares of Common Stock or Preferred Stock (or any combination thereof) at an
exchange ratio of one share of Common Stock or one two-thousandth of a share of
Preferred Stock 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").
(b) Immediately upon the action of the Company ordering the
exchange of any Rights pursuant to subsection (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 shares of Common Stock or one two-thousandths of a
share of Preferred Stock (or any combination thereof) equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give notice of any such exchange in accordance with Section 26
hereof; PROVIDED, HOWEVER, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. Each such notice of
exchange will state the method by which the exchange of the shares of Common
Stock or Preferred Stock 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 7(e) hereof)
held by each holder of Rights.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular periodic cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Common
Stock or Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Common Stock or Preferred Stock or shares of stock of any
class or any other securities, rights or options, or (iii) to effect any
reclassification of its Common Stock or Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of Common
<PAGE>
Stock or preferred Stock), or (iv) to effect any consolidation or merger into or
with, or to effect any sale, mortgage or other transfer (or to permit one or
more of its Subsidiaries to effect any sale, mortgage or other transfer), in one
transaction or a series of related 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 (other than a Subsidiary of the Company in one or more transactions
each of which is not prohibited by Section 11(n) hereof), or (v) to effect the
liquidation, dissolution or winding up of the Company, 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, distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the shares of Preferred Stock,
if any such date is to be fixed, ani such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Common or
Preferred Stock for purposes of such action, and in the case of any such other
action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Common or Preferred Stock, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then the
Company shall as soon as practicable thereafter give to each registered holder
of a Right Certificate, in accordance with Section 26 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Dynatech Corporation
3 New England Executive Park
Burlington, Massachusetts 01803
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
<PAGE>
The First National Bank of Boston
P.O., Box 1865
Boston, MA 02105-1865
Attention: Shareholder Services Division,
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, prior to
the Distribution Date, to the holder of any certificate representing shares of
Common Stock) shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 27, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement as the Company may deem necessary or desirable without the
approval of any holders of certificates representing shares of Common Stock.
From and after the Distribution Date and subject to the penultimate sentence of
this Section 27, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holder
of Right Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period
hereunder (which shortening or lengthening shall be effective only if there are
Disinterested Directors then in office and shall require the concurrence of such
Disinterested Directors if (A) such supplement or amendment occurs at or after
the time a Person becomes an Acquiring Person or an Adverse Person or (B) such
supplement or amendment occurs on or after the date of a change (resulting from
one or more proxy or consent solicitations) in a majority of the directors then
in office at the commencement of such solicitation if any Person who is a
participant in such solicitation is an Adverse Person or has stated (or, if upon
the commencement of such solicitation, a majority of the Board of Directors of
the Company has determined in good faith) that such Person (or any of its
Affiliates or Associates) intends to take, or may consider taking, any action
which would result in such Person becoming an Acquiring Person or which would
cause the occurrence of a Triggering Event), or (iv) to change or supplement the
provisions hereof in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Right Certificates (other than an Acquiring Person, an Adverse Person or any
Affiliate or Associate of such a Person, PROVIDED, HOWEVER, that this Agreement
may not be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at such
<PAGE>
time as the Rights are not then redeemable or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and the benefits to, the holders of Rights. Upon the delivery of such
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment, Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment
shall be made on or after the Distribution Date which changes the Redemption
Price, the Final Expiration Date, the Exercise Price or the number of one
two-thousandths of a share of Preferred Stock for which a Right is exercisable
or which affects any right vested in the Rights Agent, Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
Section 28. SUCCESSORS. All 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 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act as in effect on the date hereof. The Board of Directors
of the Company (with, where specifically provided for herein, the concurrence of
the Disinterested Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board (with, where specifically provided for herein, the
concurrence of the Disinterested 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 a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors (or, where specifically provided for herein, by the Disinterested
Directors) in good faith shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and
(y) not subject any member of the Board of Directors or any of the Disinterested
Directors to any liability to the holders of the Rights or to any other person.
<PAGE>
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 Stock) 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, registered holders
of the Common Stock).
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 restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
PROVIDED, HOWEVER, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company (including, if at the time of such determination, there
is an Acquiring Person or an Adverse Person, a majority of the Disinterested
Directors then in office) determines in its good faith judgment that severing
the invalid language from the Agreement would adversely affect the purpose or
effect of the Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors.
Section 32. GOVERNING LAW. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the Commonwealth of Massachusetts and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts to be made and to be performed entirely within Massachusetts.
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.
<PAGE>
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
[Corporate Seal]
ATTEST: DYNATECH CORPORATION
By MAUREEN A. REDFERN By ROBERT H. HERTZ
Title: Chief Financial Officer
[Corporate Seal]
ATTEST: THE FIRST NATIONAL
BANK OF BOSTON, as
Rights Agent
By:/S/_____________________ By DARLENE M. DIODATO
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF
CERTIFICATE OF VOTE OF DIRECTORS ESTABLISHING
SERIES A JUNIOR PARTICIPATING CUMULATIVE
PREFERRED STOCK
of
DYNATECH CORPORATION
Pursuant to General Laws, Chapter 156B, Section 26
of the Commonwealth of Massachusetts
We, J.P. Barger, President, and Edward O'Dell, Jr., Clerk, of Dynatech
Corporation, located at 3 New England Executive Park, Burlington, Massachusetts
01803, do hereby certify that at a meeting of the directors of the corporation
held on February 16, 1989, the following vote establishing and designating a
series of a class of stock and determining relative rights and preferences
thereof was duly adopted.
VOTED: That pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of its Articles of
Organization, a series of Preferred Stock of the Corporation is hereby created
and that the designation and amount thereof and the voting powers, preferences
and relative, participating, optional and other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof are as
follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Cumulative Preferred Stock" (the
"Series A Preferred Stock"), and the number of shares constituting such series
shall be 24,000.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A)(i) The holders of shares of Series A Preferred 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) $60.00 or (b)
<PAGE>
subject to the provision for adjustment hereinafter set forth, 2000 times the
aggregate per share amount of all cash dividends, and 2000 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, par value $0.20 per share, of the
Corporation (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. The multiple of cash and non-cash dividends declared on the
Common Stock to which holders of the Series A Preferred Stock are entitled,
which shall be 2000 initially but which shall be adjusted from time to time as
hereinafter provided, is hereinafter referred to as the "Dividend Multiple". In
the event the Corporation shall at any time after February 16, 1989 (the "Rights
Declaration Date") declare or pay any dividend on 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 Dividend Multiple
thereafter applicable to the determination of the amount of dividends which
holders of shares of Series A Preferred Stock shall be entitled to receive shall
be the Dividend Multiple applicable immediately prior to such event multiplied
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.
(ii) Notwithstanding anything else contained in this paragraph
(A), the Corporation shall, out of funds legally available for that purpose,
declare a dividend or distribution on the Series A Preferred Stock as provided
in this paragraph (A) 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
$60.00 per share on the Series A Preferred Stock shall nevertheless be paid out
of funds legally available for the purpose on such subsequent Quarterly Dividend
Payment Date.
(B) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment, Payment
Date preceding the date of issue of such shares of Series A Preferred Stock,
unless the date of issue of such shares is prior to the record date for the
<PAGE>
first Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from that 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 hares 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
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 no more than 60 days prior to the date fixed
for the payment thereof.
Section 3. VOTING RIGHTS. In addition to any other-voting rights
required by law, 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 2000 votes
on all matters submitted to a vote of the stockholders of the Corporation. The
number of votes which a holder of a share of Series A Preferred Stock is
entitled to cast, which shall be 2000 initially but which may be adjusted from
time to time as hereinafter provided, is hereinafter referred to as the "Vote
Multiple". In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Vote Multiple thereafter applicable to the determination of the number of
votes per share to which holders of shares of Series A Preferred Stock shall be
entitled shall be the Vote Multiple immediately prior to such event multiplied
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 or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
<PAGE>
(C)(i) If at any time dividends on any Series A Preferred Stock
shall be in arrears in an amount equal to six (6) quarterly dividends thereon,
the occurrence of Such contingency shall mark the beginning of a period (herein
called a "default period") which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During
each default period, the holders of the Series A Preferred Stock shall have the
right to elect two (2) Directors.
(ii) During any default period, such voting right of the
holders of Series A Preferred stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any
annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that such voting right shall not be exercised unless the
holders of ten percent (10%) in number of shares of Series A Preferred Stock
outstanding shall be present in person or by proxy. The absence of a quorum of
the holders of Common Stock shall not affect the exercise by the holders of
Series A Preferred Stock of such voting right. At any meeting at which the
holders of Series A Preferred Stock shall exercise such voting right initially
during an existing default period, they shall have the right, voting as a class,
to elect Directors to fill such vacancies, if any, in the Board of Directors as
may then exist up to two (2) Directors or, if such right is exercised at an
annual meeting, to elect two (2) Directors. If the number which may be so
elected at any special meeting does not amount to the required number, the
holders of the Series A Preferred Stock shall have the right to make such
increase in the number of Directors as shall be necessary to permit the election
by them of the required number.
(iii) Unless the holders of Series A Preferred Stock shall,
during an existing default period, have previously exercised their right to
elect Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Series A Preferred Stock outstanding may request, the
calling of a special meeting of the holders of Series A Preferred Stock, which
<PAGE>
meeting shall thereupon be called by the President, a Vice President or the
Clerk of the, Corporation. Notice of such meeting and of any annual meeting at
which holders of Series A Preferred Stock are entitled to vote pursuant to this
paragraph (C)(iii) shall be given to each holder of record of Series A Preferred
Stock by mailing a copy of such notice to him at his last address as the same
appears on the books of the Corporation. Such meeting shall be called for a time
not earlier than 20 days and not later than 60 days after such order or request
or, in default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Series A Preferred Stock outstanding. Notwithstanding
the provisions of this paragraph (C)(iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date fixed for
the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Series A
Preferred Stock shall have exercised their right to elect two (2) Directors
voting as a class, after the exercise of which right (x) the Directors so
elected by the holders of Series A Preferred Stock shall continue in office
until their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of Directors
may (except as provided in paragraph (C)(ii) of this Section 3) be filled by
vote of a majority of the remaining Directors theretofore elected by the holders
of the class of stock which elected the Director whose office shall have become
vacant, References in this paragraph (C) to Directors elected by the holders of
a particular class of stock shall include Directors elected by such Directors to
fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Series A Preferred Stock to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Series A
Preferred Stock as a class shall terminate, and (z) the number of Directors
shall be such number as may be provided for in the Articles of Organization or
by-laws irrespective of any increase made pursuant to the provisions of
paragraph (C)(ii) of this Section 3 (such number being subject, however, to
change thereafter in any manner provided by law or in the Articles of
Organization or by-laws). Any vacancies in the Board of Directors effected by
the provisions of clauses (y) and (z) in the preceding sentence may be filled by
a majority of the remaining Directors.
(D) Except as otherwise required by applicable law or as set forth
herein, 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 taking any
corporate action.
<PAGE>
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 on, make any other
distributions on, or redeem or purchase or otherwise
acquire for consideration any shares of stock ranking
junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on or make any
other distributions on any shares of stock
ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding
up) with the Series A Preferred Stock,
except dividends paid ratably on the Series
A Preferred Stock and all such parity stock
on which dividends are payable or in arrears
in proportion to the total amounts to which
the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on
a parity (either as to dividends or upon
liquidation, dissolution or winding up) with
the Series A Preferred Stock, provided that
the Corporation may at any time redeem,
purchase or otherwise acquire shares of any
such parity 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) 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.
<PAGE>
(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
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. LIQUIDATION DISSOLUTION OR WINDING UP. Upon any voluntary
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (x) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (1) $200,000 per share or
(2) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 2000 times the aggregate amount to be
distributed per shore to holders of Common Stock, or (y) to the holders of any
other class or series of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In
the event the Corporation shall at any time declare or pay any dividend on
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
(x) 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.
<PAGE>
Neither the consolidation of nor merging of the Corporation with or
into any other corporation or corporations, nor the sale or other transfer of
all or substantially all of the assets of the Corporation, shall be deemed to be
a liquidation, dissolution or winding up of the Corporation within the meaning
of this Section 6.
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 or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an mount per share (subject to the provision for adjustment
hereinafter set forth) equal to 2000 times the aggregate amount of stock,
securities, cash or any other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is changed or exchanged, plus
accrued and unpaid dividends, if any, payable with respect to the Series A
Preferred Stock. In the event the Corporation shall at any time declare or pay
any dividend on 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. REDEMPTION.
(A) For purposes of this Section 8, the following terms the have the
meanings indicated:
(i) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 20% or more of the shares of Common Stock then outstanding, but shall not
include the Corporation, any subsidiary of the Corporation, any employee benefit
plan of the Corporation or any subsidiary thereof or any entity holding shares
of Common Stock organized, appointed or established by the Corporation or any
subsidiary thereof for or pursuant to the terms of any such plan.
<PAGE>
(ii) 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").
(iii) A Person shall be deemed the "Beneficial Owner" of,
and shall be deemed, to "beneficially own," any securities:
(a) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act) or has the right to dispose of;
(b) 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 after the passage of time) pursuant
to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights,
rights (other than rights initially exercisable for Series A Preferred
Stock), 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 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 (whether or not in writing); PROVIDED,
HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," any security under this clause (B) if the
agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations of the Exchange Act and (2) is not
also then reportable by such person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(c) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in clause (B) of
subparagraph (b) of this paragraph (iii)) or disposing of any
securities of the Corporation.
<PAGE>
(iv) "Disinterested Director" shall mean (A) any member of the
Corporation's Board of Directors who is not an officer or employee of the
Corporation or any of its subsidiaries and who is not an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person or nominee of an Acquiring
Person or any such Affiliate or Associate and was a member of the Corporation's
Board of Directors prior to the Rights Declaration Date, and (B) any Person who
subsequently becomes a member of the Company's Board of Directors who is not an
Acquiring Person or an Affiliate or an Associate of an Acquiring Person or
nominee of an Acquiring Person or any such Affiliate or Associate, if such
Person's nomination is recommended or approved by a majority of the
Disinterested Directors.
(v) "Person" shall mean any individual firm,
corporation, partnership or other entity.
(B) Subject to Section 4 hereof, the Corporation may, at any time
(unless otherwise prevented by law) by the affirmative vote of a majority of the
directors then in office, including, if at the time of such vote there is an
Acquiring Person, a majority of the Disinterested Directors, redeem all or any
portion of the Series A Preferred Stock then outstanding. The amount per share
of Series A Preferred Stock to be redeemed to be paid upon any such redemption
shall be equal to $200,000 plus accrued and unpaid dividends, if any, payable
with respect thereto. The total sum payable per share of Series A Preferred
Stock on the date on which the Corporation redeems any shares of Series A
Preferred Stock (the "Redemption Date") is hereinafter referred to as the
"Redemption Price."
(C) If less than all of the outstanding shares of Series A Preferred
Stock are to be redeemed, the Corporation shall select the shares to be redeemed
by lot. Notice of redemption pursuant to this Section 8 shall be sent by
first-class mail, postage prepaid, to the holders of record of the shares of
Series A Preferred Stock to be redeemed at their respective addresses as the
same shall appear on the books of the Corporation. Such notice shall be mailed
not less than 30 nor more than 60 days in advance of the applicable Redemption
Date and shall specify the Redemption Date, the Redemption Price and the place
at which payment may be obtained as to such shares. At any time on or after the
Redemption Date applicable thereto, the holders of record of shares of Series A
Preferred Stock to be redeemed on such Redemption Date shall be entitled to
receive the Redemption Price therefor upon actual delivery to the Corporation or
its agent of the certificates representing the shares to be redeemed.
<PAGE>
If such notice of redemption shall have been duly given, and if on or
before any Redemption Date the funds necessary for such redemption (taking into
account any conversions) shall have been deposited by the Corporation with a
bank or trust company designated by the Board of Directors and having capital
and surplus of at least $50,000,000 in trust for the pro rata benefit of the
holders of the shares of Series A Preferred Stock so called for redemption,
then, notwithstanding that any certificate for shares of Series A Preferred
Stock so called for redemption shall not have been surrendered for cancellation,
from and after such Redemption Date (unless there shall have been a default in
payment of the Redemption Price) all shares of Series A Preferred Stock so
called for redemption shall no longer be deemed to be outstanding and all rights
with respect to such shares shall forthwith cease and terminate, except only the
right of the holders thereof to receive from such bank or trust company upon
surrender of their certificate or certificates at any time after the time of
such deposit the funds so deposited, without interest. The balance of any funds
so deposited and unclaimed at the end of one year from such Redemption Date
shall be released or repaid to the Corporation, after which the holders of the
shares so called for redemption shall look only to the Corporation for payment
thereof, without interest.
Section 9. RANKING. Unless otherwise provided in the Articles of
Organization of the Corporation or a Certificate of Vote of Directors
Establishing a Class of Stock relating to a subsequently-designated series of
Preferred Stock of the Corporation, the Series A Preferred Stock shall rank
junior to any other series of the Corporation's Preferred Stock, as to the
payment of dividends and the distribution of assets on liquidation, dissolution
or winding up and shall rank senior to the Common Stock.
Section 10. AMENDMENT. The Articles of Organization of the Corporation
and this Certificate of Vote 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 (within the meaning of
Section 77 of Chapter 156B of the Massachusetts General Laws) without the
affirmative vote of the holders of two-thirds or more of the outstanding shares
of Series A Preferred Stock, voting separately as a class.
Section 11. FRACTIONAL SHARES. Series A Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
<PAGE>
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER FEBRUARY 16, 1999 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.02 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
[UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
(AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID]. [THE RIGHTS REPRESENTED BY THIS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID UNDER CERTAIN CIRCUMSTANCES
AS SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]
Right Certificate
DYNATECH CORPORATION
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 Shareholder Rights Agreement dated as of February 16, 1989, as amended and
restated as of March 12, 1990 (the "Rights Agreement") between Dynatech
Corporation (the "Company"), and The First National Bank of Boston (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 the close of
business on February 16, 1999 at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, two-thousandth
of a share of a fully paid, non-assessable share of the Series A Junior
Participating Cumulative Preferred Stock (the "Preferred Stock") of the Company,
at a purchase price of $ per one two-thousandth of a share (the "Exercise
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase and the related Certificate duly executed. The number of
<PAGE>
Rights evidenced by this Right Certificate (and the number of shares which may
be purchased upon exercise thereof) set forth above, and the Exercise Price per
share set forth above, are the number and Exercise Price as of _______, based on
the Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a Person who, after such transfer, became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
As provided in the Rights Agreement, the Exercise Price and the number
of shares of Preferred Stock or other securities 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 of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal offices of the
Company and the Rights Agent and are also available upon written request to the
Company or the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Certificates of like
tenor and date evidencing Rights entitling the holder to Purchase a like
aggregate number of shares of Preferred Stock as the Rights evidenced by the
Right Certificate or 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
<PAGE>
Certificates for the number of whole Rights not exercised. If this Right
Certificate shall be exercised in whole or in part pursuant to Section 11(a)(ii)
of the Rights Agreement, the holder shall be entitled to receive this Right
Certificate duly marked to indicate that such exercise has occurred as set forth
in the Rights Agreement.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Board of Directors of the Company at
its option at a redemption price of $0.02 per Right (payable in cash, Common
Stock or other consideration deemed appropriate by the Board of Directors).
The Company is not obligated to issue fractional shares of stock upon
the exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one two-thousandth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary receipts).
If the Company elects not to issue such fractional shares, 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 shares of Preferred
Stock, Common Stock or 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.
[Corporate Seal] DYNATECH
CORPORATION
Attested:
By__________________________
Name:
By________________________________ Title:
[Secretary or Assistant Secretary] [Chairman, Vice
Chairman, President or
Vice President]
Countersigned:
THE FIRST NATIONAL BANK OF BOSTON
as Rights Agent
- ---------------------------------
Authorized Officer
<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: _________________, 19__
-----------------------------
Signature
Signature Guaranteed: ___________________
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate ______ are ________
are not being transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are
defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned ___ did ____ did not directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of any such Person.
Dated:______________, 19___ ______________________________
Signature
<PAGE>
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To DYNATECH CORPORATION:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Right Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of:
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 or if the Rights are being exercised pursuant to Section
11(a)(ii) of the Rights Agreement, a new Right Certificate for the balance of
such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number: __________________________________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
________________________________________________________________________________
Dated:_________________, 19__
___________________________
Signature
Signature Guaranteed:____________________
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate _______ are _______
not being exercised by or on behalf of a Person who was an Acquiring Person or
an Affiliate or Associate of any such Person (as such terms are defined in the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned ___ did ____ did not directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of any such Person.
Dated: __________ 19__ ____________________________
Signature
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On February 16, 1989, the Board of Directors of Dynatech Corporation
(the "Company") declared a dividend distribution of one Preferred Stock Purchase
Right for each outstanding share of Common Stock of the Company to stockholders
of record at the close of business on March 3, 1989. Each Right entitles the
registered holder to purchase from the Company a unit consisting of one
two-thousandth of a share (a "Unit") of Series A Junior Participating Cumulative
Preferred Stock, par value $1.00 per share (the "Preferred Stock"), at a cash
Exercise Price of $100.00 per Unit, subject to adjustment. The description and
terms of the Rights are set forth in a Shareholder Rights Agreement dated as of
February 16, 1989, as amended as of March 12, 1990 between the Company and The
First National Bank of Boston, as Rights Agent.
Initially, the Rights will not be exercisable and will be attached to
all outstanding shares of Common Stock. No separate Right Certificates will be
distributed until the Distribution Date. The Rights will separate from the
Common Stock and the Distribution Date will occur upon the earliest of (i) 10
days following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired beneficial ownership of
15% or more of the outstanding shares of Common Stock (the date of said
announcement being referred to as the "Stock Acquisition Date"), (ii) 10
business days following the commencement of a tender offer or exchange offer
that would result in a person or group becoming an Acquiring Person or (iii) the
declaration by the Board of Directors that any person is an "Adverse Person.
The Board of Directors could declare a person to be an Adverse Person
after (1) a determination that such person, alone or together with its
affiliates and associates, has become the beneficial owner of 10% or more of the
outstanding shares of Common Stock and (2) a determination by the Board of
Directors, after reasonable inquiry and investigation, including such
consultation, if any, with such persons as such directors shall deem
appropriate, that (a) such beneficial ownership by such person is intended to
cause, is reasonably likely to cause or will cause the Company to repurchase the
Common Stock beneficially owned by such person or to cause pressure on the
Company to take action or enter into a transaction or series of transactions
which would provide such person with short-term financial gain under
circumstances where the Board of Directors determines that the best long-term
<PAGE>
interests of the Company and its stockholders, but for the actions and possible
actions of such person, would not be served by taking such action or entering
into such transaction or series of transactions at that time or (b) such
beneficial ownership is causing or is reasonably likely to cause a material
adverse impact (including, but not limited to, impairment of relationships with
customers or impairment of the Company's ability to maintain its competitive
position) on the business or prospects of the Company; PROVIDED, HOWEVER, that
the Board of Directors of the Company may not declare a person to be an Adverse
Person if, prior to the time that such person acquired 10% or more of the shares
of Common Stock then outstanding, such person provided to the Board of Directors
in writing a statement of such person's purpose and intentions in connection
with the proposed acquisition of Common Stock, together with any other
information reasonably requested of such person by the Board of Directors, and
the Board of Directors, based on such statement and such reasonable inquiry and
investigation, including such consultation, if any, with such persons as the
directors shall deem appropriate, determines to notify and notifies such person
in writing, that it will not declare such person to be Adverse Person; PROVIDED,
HOWEVER, that the Board of Directors may expressly condition in any manner a
determination not to declare a person an Adverse Person on such conditions as
the Board of Directors may select, including without limitation such person's
not acquiring more than a specified amount of stock and/or on such person's not
taking actions inconsistent with the purposes and intentions disclosed by such
person in the statement provided to the Board of Directors. No delay or failure
by the Board of Directors to declare a person to be an Adverse Person shall in
any way waive or otherwise affect the power of the Board of Directors
subsequently to declare a person to be an Adverse Person. In the event that the
Board of Directors should at any time determine, upon reasonable inquiry and
investigation, including consultation with such persons as the directors shall
deem appropriate, that such person has not met or complied with any condition
specified by the Board of Directors, the Board of Directors may at any time
thereafter declare the person to be an Adverse Person.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), (a) the Rights will be evidenced by the Common Stock certificates and
will be transferred with and only with such Common Stock certificates, (b) new
Common Stock certificates issued after March 3, 1989 will contain a notation
incorporating the Shareholder Rights Agreement by reference, and (C), the
surrender for transfer of any certificates for Common Stock will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.
<PAGE>
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on February 16, 1999, unless previously redeemed
by the Company as described below.
As soon as practicable after the Distribution Date, Right Certificates
will be mailed to holders of record of Common Stock as of the close of business
on the Distribution Date and, thereafter, the separate Right Certificates alone
will represent the Rights. Except as otherwise determined by the Board of
Directors, only shares of Common Stock issued prior to the Distribution Date
will be issued with Rights.
In the event that a Stock Acquisition Date occurs or the Board of
Directors determines that a person is an Adverse Person, proper provision will
be made so that each holder of a Right will thereafter have the right to receive
upon exercise that number of Units of Preferred Stock of the Company having a
market value of two times the exercise price of the Right (such right being
referred to as the "Subscription Right"). In the event that, at any time
following the Stock Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction or (ii) 50% or more of the Company's
assets or earning power is sold, each holder of a Right shall thereafter have
the right to receive, upon exercise, common stock of the acquiring company
having a market value equal to two times the exercise price of the Right (such
right being referred to as the "Merger Right"). The Holder of a Right will
continue to have the Merger Right whether or not such holder has exercised the
Subscription Right. Rights that are or were beneficially owned by an Acquiring
Person or an Adverse Person may (under certain circumstances specified in the
Shareholder Rights Agreement) become null and void.
At any time after a Stock Acquisition Date occurs or the Board of
Directors determines that a person is an Adverse Person, the Board of Directors
may, at its option, exchange all or any part of the then outstanding and
exercisable Rights for shares of Common Stock or Units of Preferred Stock at an
exchange ratio of one share of Common Stock or one Unit of Preferred Stock per
Right.
The Exercise Price payable, and the number of Units of Preferred Stock
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 Stock, (ii) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or convertible securities at
less than the current market price of the Preferred Stock, or (iii) upon the
<PAGE>
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Exercise Price will be
required until cumulative adjustments amount to at least 1% of the Exercise
Price. The Company is not obligated to issue fractional Units. If the Company
elects not to issue fractional Units, in lieu thereof an adjustment in cash will
be made based on the fair market value of the Preferred Stock on the last
trading date prior to the date of exercise.
Any of the provisions of the Shareholder Rights Agreement may be
amended by the Board of Directors of the Company at any time prior to the
Distribution Date. From and after the Distribution Date, the Board of Directors
of the Company may, subject to certain limitations specified in the Rights
Agreement, amend the Rights Agreement to cure any ambiguity, defect or
inconsistency, to shorten or lengthen any time period under the Rights
Agreement, or to make other changes that do not adversely affect the interests
of the Rights holders (excluding the interests of Acquiring Persons, Adverse
Persons or their Affiliates or Associates).
The Rights may be redeemed in whole, but not in part, at a price of
$0.02 per Right (payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors) by the Board of Directors at any time
prior to the date on which a person is declared to be an Adverse Person, the
tenth day after the Stock Acquisition Date or the occurrence of an event giving
rise to the Merger Right. Immediately upon the action of the Board of Directors
ordering redemption of the Rights, the Rights will terminate and thereafter the
only right of the holders of Rights will be to receive the redemption price.
Until a Right is exercised, the holder will have no rights as a
Stockholder of the Company (beyond those as an existing Stockholder), including
the right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Preferred Stock (or other consideration) of the
Company or for common stock of an acquiring company as set forth above.
A copy of the Shareholder Rights Agreement dated as of February 16,
1989, as amended and restated as of March 12, 1990, has been filed with the
Securities and Exchange Commission as an Exhibit to a Current Report on Form 8-K
<PAGE>
dated March 19, 1990. A copy of the Shareholder 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
Shareholder Rights Agreement.
Exhibit 10(1)
THE DYNATECH CORPORATION
1982 INCENTIVE STOCK OPTION PLAN
The purpose of this Plan is to encourage and enable certain employees
of Dynatech Corporation (the "Company") and of any subsidiary of the Company, as
defined in the Internal Revenue Code of 1986, as amended (the "Code"), to
acquire an interest in the Company through the granting of options, as herein
provided, to acquire its Common Stock, $.20 par value (the "Common Stock"). The
Company intends that this purpose will be effected by the granting of incentive
stock options ("Incentive Options") as defined in Section 422A(b) of the Code
(and by permitting certain options already granted to certain employees to
qualify as Incentive Options), and the granting of nonqualified stock options
("Nonqualified Options"), under the Plan.
1. SHARES OF STOCK SUBJECT TO THE PLAN
The stock that may be issued and sold pursuant to options granted under
the Plan shall not exceed, in the aggregate, 825,000 shares of Common Stock of
the Company, which may be (i) authorized but unissued shares, (ii) treasury
shares, or (iii) shares previously reserved for issue upon exercise of options
under the Plan, which options have expired or been terminated; provided,
however, that the number of shares subject to the Plan shall be subject to
adjustment as provided in Section 6.
2. ELIGIBILITY
Options granted under the Plan may be either Incentive Options or
Nonqualified Options. Options will be granted only to persons who are key
employees of the Company or a subsidiary (as defined in the Code). Incentive
Options will be granted only to persons who are eligible to receive an incentive
stock option under the Code. For the purposes of this Plan, "key employees"
shall be those full-time employees of the Company who are selected by the Board
of Directors because of their responsibility in respect of the affairs of the
Company and its subsidiaries. Directors of the Company or a subsidiary who are
not employees thereof are not eligible to receive options under the Plan. The
Board of Directors of the Company (the "Board") acting by a majority of its
disinterested Directors, shall determine the employees to be granted options
("Optionees"), the number of shares subject to each option, and the terms of the
options, consistent with the provisions of the Plan. The Board may appoint from
its disinterested Directors a committee of three or more persons who may
exercise the powers of the Board in granting options under the Plan. As used
<PAGE>
herein, a "disinterested" Director shall mean one who is not presently eligible,
and has not been eligible at any time within one year prior to granting of the
options in question, to receive any option granted under the Plan or any stock,
stock options or stock appreciation rights under any other employee benefit plan
of the Company or its affiliates.
3. PRICE AND LIMITATION ON GRANT AND OPTIONS
The purchase price of shares which may be purchased under each option
shall be at least equal to the fair market value per share of the outstanding
Common Stock of the Company at the time the option is granted as determined by
the Board acting in good faith, and the Board in its discretion may set a higher
price. Notwithstanding the foregoing, if an Incentive Option is granted to an
employee, who at the time of such grant owns stock possessing more than 10% of
the combined voting power of all classes of stock of the Company or of a parent
or subsidiary of the Company (such employees are referred to hereinafter as "Ten
Percent Shareholders"), the purchase price of shares which may be purchased
under each such Incentive Option shall be at least equal to one hundred ten
percent (110%) of the fair market value per share of the outstanding Common
Stock of the Company at the time such Incentive Option is granted as determined
by the Board acting in good faith, and the Board in its discretion may set a
higher price. In any calendar year ending prior to January 1, 1987, the
aggregate fair market value (determined as of the time the option is granted) of
the stock for which an individual may be granted Incentive Options in any
calendar year under this Plan and all plans of the Company or any parent or
subsidiary of the Company (as defined in the Code) shall not exceed $100,000
plus any unused limit carryover" as that term is defined in Section 422A of the
Code. With respect to Incentive Options granted after December 31, 1986, the
aggregate fair market value (determined at the time the option is granted) of
the stock with respect to which Incentive Options are exercisable for the first
time by any individual during any calendar year (under all plans of the Company
and its parent and subsidiary corporations as defined in Section 425 of the
Code) shall not exceed $100,000.
4. PERIOD OF OPTION AND CERTAIN LIMITATIONS ON RIGHT TO EXERCISE
Each option shall be exercisable at such time or times as the Board
shall from time to time determine, but in no event after the expiration of ten
years from the date such option is granted. In determining when options granted
under the Plan shall be exercisable, the Board may establish such terms,
conditions, or incentives as it, in its sole discretion, deems appropriate. An
<PAGE>
Incentive Option granted to a Ten Percent Shareholder shall in no event be
exercisable after the expiration of five years from the date such option is
granted. The delivery of certificates representing shares under any option will
be contingent upon receipt from the Optionee (or, in the event of the Optionee's
death, his personal representative acting in his stead in accordance with the
provisions of the option) by the Company of the full purchase price for such
shares and the fulfillment of any other requirements contained in the option or
applicable provisions of law. Payment for shares of Common Stock shall be made
either in (i) cash, or (ii) in the discretion of the Board, shares of Common
Stock of the Company valued at their fair market value on the date of exercise,
as determined in good faith by the Board.
5. NON-TRANSFERABILITY OF OPTION
Each option granted under the Plan shall provide that it is personal to
the Optionee, is not transferable by the Optionee in any manner otherwise than
by will or the laws of descent and distribution and is exercisable, during the
Optionee's lifetime, only by him. However, the rights and obligations of the
Company under the Plan and any option may be assigned by the Company to a
successor to the whole or any substantial part of its business provided that
such successor assumes in writing all of such rights and obligations.
6. DILUTION OR OTHER ADJUSTMENTS
The terms of the options and the number of shares subject to this Plan
shall be equitably adjusted in such manner as to prevent dilution or enlargement
of option rights in the following instances:
(a) the declaration of a dividend payable to the holders of Common
Stock in stock of the same class;
(b) a split-up of the Common Stock or a reverse split thereof;
(c) a recapitalization of the Company under which shares of one or
more different classes of stock are distributed in exchange
for or upon the Common Stock without payment of any valuable
consideration by the holders thereof.
The terms of any such adjustment shall be conclusively determined by
the Board.
<PAGE>
7. CHANGE IN CONTROL
In the event of a "Change in Control," unless the agreement evidencing
the option otherwise provides, any stock option that is not previously
exercisable and vested shall become fully exercisable and vested.
"Change in Control" means any one of the following events: (i) when,
without the prior approval of the Prior Directors of the Company, any Person is
or becomes the beneficial owner (as defined in Section 13(d) of the Exchange Act
and the Rules and Regulations thereunder), together with all Affiliates and
Associates (as such terms are used in Rule l2b-2 of the General Rules and
Regulations of the Exchange Act) of such Person, directly or indirectly, of 25%
or more of the outstanding Common Stock of the Company, (ii) the failure of the
Prior Directors to constitute a majority of the Board of Directors at any time
within two years following any Electoral Event, or (iii) any other event that
the Prior Directors shall determine constitutes an effective change in the
control of the Company. As used in the preceding sentence, the following
capitalized terms shall have the respective meanings set forth below:
(a) "Person" shall include any natural person, any entity, any
"affiliate" of any such natural person or entity as such term
is defined in Rule 405 under the Securities Act of 1933 and
any "group" (within the meaning of such term in Rule 13d-5
under the Exchange Act);
(b) "Prior Directors" shall mean the persons sitting on the
Company's Board of Directors immediately prior to any
Electoral Event (or, if there has been no Electoral Event,
those persons sitting on the Company's Board of Directors on
the date of this Agreement) and any future director of the
Company who has been nominated or elected by a majority of the
Prior Directors who are then members of the Board of Directors
of the Company; and
(c) "Electoral Event" shall mean any contested election of
Directors, or any tender or exchange offer for the Company's
common stock, not approved by the Prior Directors, by any
Person other than the Company or a subsidiary of the Company.
<PAGE>
8. SHAREHOLDER APPROVAL
The Plan is subject to the approval of the shareholders of the Company,
and although options may be granted prior to such approval, none may be
exercised until shareholder approval has been obtained. If such approval is not
given within twelve months after the date hereof, the Plan and all outstanding
options shall terminate and be null and void.
9. ADMINISTRATION AND AMENDMENT OF THE PLAN
The Plan shall be administered by the Board, or a committee thereof as
provided in Section 2, which shall effect the grant of options under the Plan,
determine the form of options to be granted in each case, and make any other
determination under or interpretation of any provision of the Plan and any
option. Any of the foregoing actions taken by the Board or such committee shall
be final and conclusive. The Board may amend and make such changes in and
additions to the Plan as it may deem proper and in the best interest of the
Company, provided, however, that no such action shall adversely affect or impair
any options theretofore granted under the Plan without the consent of the
Optionee; and provided, further, that no amendment (i) increasing the maximum
number of shares which may be issued under the Plan, except as provided in
Section 6, (ii) extending the term of the Plan or any option, (iii) changing the
minimum exercise price of options to be granted under the Plan, or (iv) changing
the requirements as to eligibility for participation in the Plan, shall be
adopted without the approval of shareholders.
10. EXPIRATION AND TERMINATION OF THE PLAN
Options may be granted under the Plan at any time, or from time to
time, within ten years from the date the Plan is adopted or the date on which it
is approved by the shareholders of the Company, whichever is earlier, as long as
the total number of shares purchased under the Plan and subject to outstanding
options under the Plan does not exceed 825,000 shares of the Common Stock of the
Company, subject to adjustment as provided in Section 6. The Plan may be
abandoned or terminated at any time by the Board, except with respect to any
options then outstanding under the Plan.
Exhibit 10(2) FORM FOR MESSRS. BARGER
RENO AND HERTZ
SPECIAL TERMINATION AGREEMENT
AGREEMENT made as of the 1st day of April, 1990 by and between Dynatech
Corporation, a Massachusetts corporation (the "Company"), and ____________, an
individual presently employed by the Company in the capacity of
_____________________ (the "Executive").
1. PURPOSE. In order to allow the Executive to consider the prospect of
a Change in Control (as defined in Section 2) in an objective manner and in
consideration of the services to be rendered by the Executive to the Company and
other good and Valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the Company, the Company is willing to provide, subject
to the terms of this Agreement, certain severance benefits to protect the
Executive from the consequences of a Terminating Event (as defined in Section 3)
occurring subsequent to a Change in Control.
2. Change in Control. A "Change in Control" shall be deemed to have
occurred in any one of the following events:
(i) when any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a) becomes a "beneficial owner" (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) (other than
the Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company), directly or indirectly, of, or announces an intention to make
a tender offer for, securities of the Company representing fifteen
percent (15%) or more of the total number of votes that may be cast for
the election of directors of the Company, and the Board of Directors of
the Company has not consented to such event by a two-thirds Vote of all
of the members of such Board of Directors adopted either prior to such
event or within ninety (90) days thereafter, except that if at the time
such a consent vote is adopted after such event, the persons who were
directors of the Company immediately prior to such event do not
constitute two-thirds of the Board of Directors of the Company such
vote shall not be deemed to constitute consent for the purposes of this
Agreement; or (b) commences or announces an intention to commence a
proxy contest to seat or unseat two or more persons as directors;
<PAGE>
(ii) persons who, as of the date of execution of this
Agreement, constituted the Company's Board of Directors (the "Incumbent
Board") cease for any reason, including without limitation as a result
of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board, provided that any person
becoming a director of the Company subsequent to the date of execution
of this Agreement whose election was approved by at least a majority of
the directors then comprising the Incumbent Board shall, for purposes
of this Agreement, be considered a member of the Incumbent Board;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (a)
a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or (b) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 15% of the
combined voting power of the Company's then outstanding securities; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity of which less than 50% of the outstanding voting
securities are held by the Company or its stockholders.
3. TERMINATING EVENT. A "Terminating Event" shall mean any of the
events provided in this Section 3 occurring subsequent to a Change in Control as
defined in Section 2:
(a) termination by the Company of the employment of the Executive with
the Company for any reason other than (i) death, (ii) an act of deliberate
dishonesty with respect to any matter involving the Company or any subsidiary or
affiliate as to which the Executive did not act in good faith in the reasonable
belief that such action was in the best interests of the Company and its
subsidiaries and affiliates, or (iii) conviction of the Executive of a crime
involving moral turpitude; or
<PAGE>
(b) resignation of the Executive from the employ of the Company, while
the Executive is not receiving payments or benefits from the Company by reason
of the Executive's disability, subsequent to the occurrence of any of the
following events:
(i) a significant change, not consented to by the Executive,
in the nature or scope of the Executive's responsibilities,
authorities, powers, functions or duties from the responsibilities,
authorities, powers, functions or duties exercised by the Executive
immediately prior to the Change in Control; or
(ii) a determination by the Executive that, as a result of a
Change in Control, he is unable to exercise the responsibilities,
authorities, powers, functions or duties exercised by the Executive
immediately prior to such Change in Control; or
(iii) a reduction in the Executive's annual base salary as in
effect on the date hereof or as the same may be increased from time to
time except for across-the-board salary reductions similarly affecting
all management personnel of the Company and all management personnel of
any person in control of the Company; or
(iv) the failure by the Company to pay to the Executive any
portion of his current compensation or to pay to the Executive any
portion of an installment of deferred compensation under any deferred
compensation program of the Company within seven (7) days of the date
such compensation is due; or
(v) the failure by the Company to continue in effect any
material compensation, incentive, bonus or benefit plan in which the
Executive participates immediately prior to the Change in Control,
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the
failure by the Company to continue the Executive's participation
therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive's participation relative to
other participants, as existed at the time of the Change in Control; or
(vi) the failure by the Company to continue to provide the
Executive with benefits substantially similar to those
available to the Executive under any of the life insurance,
medical, health and accident, or disability plans or any other
material benefit plans in which the Executive was
<PAGE>
participating at the time of the Change in Control, or the
taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits, or the
failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is
entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect
at the time of the Change in Control; or
(vii) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform
this Agreement;
provided, however, that the event described in subparagraph (b)(ii) of this
Section 3 shall not be a Terminating Event if it occurs subsequent to a Change
in Control (as defined in Section 2) if the transaction or transactions causing
such change shall have been approved by the affirmative vote of at least a
majority of the members of the Board of Directors in office immediately prior to
the Change in Control or, in the case of subparagraphs (i) and (iv) of Section
2, within ninety (90) days thereafter, so long as in the latter cases the
persons who were directors of the Company immediately prior to such event
constitute two-thirds of the Board of Directors at the time the consent vote is
adopted.
4. SEVERANCE PAYMENT. (a) In the event a Terminating Event occurs
within two (2) years after a Change in Control, the Company shall pay to the
Executive an amount equal to the product of (i) the sum of his average annual
base salary over the five (5) years preceding the Change in Control and the
average annual bonus awarded to him pursuant to the Company's Executive Bonus
Plan or any successor plan over the five (5) years preceding the Change in
Control; and (ii) that following percent which corresponds to the number of
years of employment with the Company or a subsidiary, including if applicable
the number of years of employment with that subsidiary prior to its acquisition
by the Company, completed by the Executive as of the date of delivery to the
other party by the Company or the Executive of written notice of the Executive's
termination or resignation as provided in Section 3 hereof ("Date of
Termination"):
<PAGE>
NUMBER OF YEARS
% OF EMPLOYMENT
100 3-5
120 6
140 7
160 8
180 9
200 10
220 11
240 12
260 13
280 14
299.9 15 or more
said amount to be payable in one lump-sum payment no later than fifteen (15)
calendar days following the Date of Termination. For purposes of this paragraph
4(a), the Company and the Executive hereby acknowledge that he has completed 15
full years of service with the Company as of the date of this Agreement.
(b) (i) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by the Company
to or for the benefit of the Executive, whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise (the
"Severance Payments"), would be subject to the excise tax imposed by Section
4999 of the Code, or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on the Severance Payments and any interest and/or
penalties assessed with respect to such Excise Tax, shall be equal to the
Severance Payments.
(ii) Subject to the provisions of Section 4(b)(iii), all
determinations required to be made under this Section 4(b), including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be
made by Coopers & Lybrand (the "Accounting Firm"), which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the Date of Termination, if applicable, or at such earlier time as is
reasonably requested by the Company or the Executive. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income taxes at the highest marginal rate of federal income taxation
applicable to individuals for the calendar year in which the Gross-Up Payment is
<PAGE>
to be made and state and local income taxes at the highest marginal rates of
individual taxation in the state and locality of the Executive's residence on
the Date of Termination, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes. The
initial Gross-Up Payment, if any, as determined pursuant to this Section
4(b)(ii), shall be paid to the Executive within five days of the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, the Company shall furnish the Executive
with an opinion of counsel that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made (an "Underpayment"). In the event that the Company exhausts its remedies
pursuant to Section 4(b)(iii) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred, consistent with the calculations required to be
made hereunder, and any such Underpayment, and any interest and penalties
imposed on the Underpayment and required to be paid by the Executive in
connection with the proceedings described in Section 4(b)(iii), shall be
promptly paid by the Company to or for the benefit of the Executive.
(iii) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-up Payment. Such notification shall be given
as soon as practicable but no later than 10 business days after the Executive
knows of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period following the
date on which he gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
(1) give the Company any information reasonably requested by
the Company relating to such claim,
(2) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney selected by the Company,
<PAGE>
(3) cooperate with the Company in good faith in order
effectively to contest such claim, and
(4) permit the Company to participate in any proceedings
relating to such claim;
provided, however that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 4(b)(iii), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income
tax, including interest or penalties with respect thereto, imposed with respect
to such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issues raised by the Internal Revenue Service or any other
taxing authority.
(iv) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 4(b)(iii), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
<PAGE>
(subject to the Company's complying with the requirements of Section 4(b)(iii))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 4(b)(iii), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
5. TERM. This Agreement shall take effect on and as of April 1, 1990
and shall continue in effect through March 31, 1992; provided, however, that
commencing on April 1, 1992, and each April 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than 90 days preceding the then scheduled termination date, the Company
shall have given notice that it does not wish to extend this Agreement; and
provided, further, that if a Change in Control of the Company as defined in
Section 2 shall have occurred during the original or extended term of this
Agreement, this Agreement shall continue in effect for a period of not less than
twenty-four (24) months beyond the month in which such Change in Control
occurred.
6. WITHHOLDING. All payments made by the Company under this Agreement
shall be net of any tax or other amounts required to be withheld by the Company
under applicable law.
7. ARBITRATION OF DISPUTES. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by arbitration
in accordance with the laws of the Commonwealth of Massachusetts by three
arbitrators, one of whom shall be appointed by the Company, one by the Executive
and the third by the first two arbitrators. If the first two arbitrators cannot
agree on the appointment of a third arbitrator, then the third arbitrator shall
be appointed by the American Arbitration Association in the City of Boston. Such
arbitration shall be conducted in the City of Boston in accordance with the
rules of the American Arbitration Association, except with respect to the
selection of arbitrators which shall be as provided in this Section 9. Judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. In the event that it shall be necessary or desirable for
the Executive to retain legal counsel and/or incur other costs and expenses in
connection with the enforcement of any or all of the Executive's rights under
<PAGE>
this Agreement, the Company shall pay (or the Executive shall be entitled to
recover from the Company, as the case may be) the Executive's reasonable
attorneys' fees and other reasonable costs and expenses in connection with the
enforcement of said rights (including the enforcement of any arbitration award
in court) regardless of the final outcome, unless and to the extent the
arbitrators shall determine that under the circumstances recovery by the
Executive of all or a part of any such fees and costs and expenses would be
unjust. This provision shall not apply to Section 5(b), except in the event that
the Company and the Executive cannot agree on the selection of the accounting
partner described in said Section.
8. ASSIGNMENT: PRIOR AGREEMENTS. Neither the Company nor the Executive
may make any assignment of this Agreement or any interest herein, by operation
of law or otherwise, without the prior written consent of the other party, and
without such consent any attempted transfer shall be null and void and of no
effect. This Agreement shall inure to the benefit of and be binding upon the
Company and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns. In the event of the Executive's
death prior to the completion by the Company of all payments due him under this
Agreement, the Company shall continue such payments to the Executive's
beneficiary designated in writing to the Company prior to his death (or to his
estate, if he fails to make such designation). This Agreement supersedes any
prior agreement covering the subject matter hereof.
9. ENFORCEABILITY. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
10. WAIVER. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
11. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Company, or to the Company at its main office, attention of the Board of
Directors.
<PAGE>
12. ELECTION OF REMEDIES. An election by the Executive to resign after
a Change in Control under the provisions of this. Agreement shall not constitute
a breach by the Executive of any employment agreement between the Company and
the Executive and shall not be deemed a voluntary termination of employment by
the Executive for the purpose of interpreting the provisions of any of the
Company's benefit plans, programs or policies. Nothing in this Agreement shall
be construed to limit the rights of the Executive under any employment agreement
he may then have with the Company; provided, however, that if there is a
Terminating Event under Section 3 hereof, the Executive may elect either to
receive the severance payment provided under Section 4 or such termination
benefits as he may have under any such employment agreement, but may not elect
to receive both.
13. AMENDMENT. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Company.
14. GOVERNING LAW. This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized officer, and by the Executive,
as of the date first above written.
WITNESS:
- ------------------------------- -------------------------------
ATTEST: DYNATECH CORPORATION
_______________________________ By:____________________________
Name: Name:
Title: Title:
[Seal]
Exhibit 10(3) FORM FOR EXECUTIVE OFFICERS
SPECIAL TERMINATION AGREEMENT
AGREEMENT made as of the 1st day of April, 1990 by and between Dynatech
Corporation, a Massachusetts corporation (the "Company"), and _____________, an
individual presently employed by the Company in the capacity of
_____________________ (the "Employee").
1. PURPOSE. In order to allow the Employee to consider the prospect of
a Change in Control (as defined in Section 2) in an objective manner and in
consideration of the services to be rendered by the Employee to the Company and
other good and Valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the Company, the Company is willing to provide, subject
to the terms of this Agreement, certain severance benefits to protect the
Employee from the consequences of a Terminating Event (as defined in Section 3)
occurring subsequent to a Change in Control.
2. CHANGE IN CONTROL. A "Change in Control" shall be deemed to have
occurred in any one of the following events:
(i) when any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a) becomes a "beneficial owner" (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) (other than
the Company, any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any corporation owned,
directly or indirectly, by the Stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company), directly or indirectly, of, or announces an intention to make
a tender offer for, securities of the Company representing fifteen
percent (15%) or more of the total number of votes that may be cast for
the election of directors of the Company, and the Board of Directors of
the Company has not consented to such event by a two-thirds vote of all
of the members of such Board of Directors adopted either prior to such
event or within ninety (90) days thereafter, except that if at the time
such a consent Vote is adopted after such event, the persons who were
directors of the Company immediately prior to such event do not
constitute two-thirds of the Board of Directors of the Company such
vote shall not be deemed to constitute consent for the purposes of this
Agreement; or (b) commences or announces an intention to commence a
proxy contest to seat or unseat two or more persons as directors.
<PAGE>
(ii) persons who, as of the date of execution of this
Agreement, constituted the Company's Board of Directors (the "Incumbent
Board") cease for any reason, including without limitation as a result
of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board, provided that any person
becoming a director of the Company subsequent to the date of execution
of this Agreement whose election was approved by at least a majority of
the directors then comprising the Incumbent Board shall, for purposes
of this Agreement, be considered a member of the Incumbent Board;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (a)
a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 80% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or (b) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 15% of the
combined voting power of the Company's then outstanding securities;
provided, however, that the events in this subparagraph (iii) shall not
be deemed to be a Change in Control if the transaction, transactions or
elections causing such change shall have been approved by the
affirmative vote of at least a majority of the members of the Board of
Directors of the Company in office immediately prior to the Change in
Control; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets, and the Board of Directors of the Company has not consented to
such event by a two-thirds vote of all of the members of such Board of
Directors adopted either prior to such event or within ninety (90) days
thereafter, except that if at the time such a consent vote is adopted
after such event, the persons who were directors of the Company
immediately prior to such event do not constitute two-thirds of the
Board of Directors of the Company such vote shall not be deemed to
constitute consent for the purposes of this Agreement.
3. TERMINATING EVENT. A "Terminating Event" shall mean any of the
events provided in this Section 3 occurring subsequent to a Change in Control as
defined in Section 2:
<PAGE>
(a) termination by the Company of the employment of the Employee with
the Company for any reason other than (i) death, (ii) deliberate dishonesty of
the Employee with respect to the Company or any subsidiary or affiliate, or
(iii) conviction of the Employee of a crime involving moral turpitude; or
(b) resignation of the Employee from the employ of the Company, while
the Employee is not receiving payments or benefits from the Company by reason of
the Employee's permanent disability, subsequent to the occurrence of any of the
following events:
(i) a significant change, other than by reason of promotion,
in the nature or scope of the Employee's responsibilities, authorities,
powers, functions or duties from the responsibilities, authorities,
powers, functions or duties exercised by the Employee immediately prior
to the Change in Control; or
(ii) a reduction in the Employee's annual base salary as in
effect on the date hereof or as the same may be increased from time to
time except for across-the-board salary reductions similarly affecting
all management personnel of the Company and all management personnel of
any person in control of the Company; or
(iii) the failure by the Company to pay to the Employee any
portion of his current compensation or to pay to the Employee any
portion of an installment of deferred compensation under any deferred
compensation program of the Company within seven (7) days of the date
such compensation is due; or
(iv) the failure by the Company to continue in effect any
material compensation, incentive, bonus or benefit plan in which the
Employee participates immediately prior to the Change in Control,
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the
failure by the Company to continue the Employee's participation therein
(or in such substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of benefits provided and
the level of the Employee's participation relative to other
participants, as existed at the time of the Change in Control; or
(v) the failure by the Company to continue to provide the
Employee with benefits substantially similar to those available to the
Employee under any of the life insurance, medical, health and accident,
or disability plans or any other material benefit plans in which the
<PAGE>
Employee was participating at the time of the Change in Control, or the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits, or the failure by the Company
to provide the Employee with the number of paid vacation days to which
the Employee is entitled on the basis of years of service with the
Company in accordance with the Company's normal vacation policy in
effect at the time of the Change in Control; or
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement.
4. SEVERANCE PAYMENT. In the event a Terminating Event occurs within
two (2) years after a Change in Control, the Company shall pay to the Employee
an amount equal to the product of (i) the sum of his average annual base salary
over the five (5) years preceding the Change in Control and the average annual
bonus awarded to him pursuant to the Company's Executive Bonus Plan or any
successor plan over the five (5) years preceding the Change in Control; and (ii)
that following percent which corresponds to the number of years of employment
with the Company or a subsidiary, including if applicable the number of years of
employment with that subsidiary prior to its acquisition by the Company,
completed by the Employee as of the date of delivery to the other party by the
Company or the Employee of written notice of the Employee's termination or
resignation as provided in Section 3 hereof ("Date of Termination"):
NUMBER OF YEARS
% OF EMPLOYMENT
100 3-5
120 6
140 7
160 8
180 9
200 10
220 11
240 12
260 13
280 14
299.9 15 or more
said amount to be payable in one lump-sum payment no later than fifteen (15)
calendar days following the Date of Termination. For purposes of this paragraph
4, the Company and the Employee hereby acknowledge that he has completed 11 full
years of service with the Company as of the date of this Agreement.
<PAGE>
5. LIMITATION ON BENEFITS.
(a) It is the intention of the Employee and of the Company that no
payments by the Company to or for the benefit of the Employee under this
Agreement or any other agreement or plan pursuant to which he is entitled to
receive payments or benefits shall be non-deductible to the Company by reason of
the operation of Section 280G of the Code relating to parachute payments.
Accordingly, and notwithstanding any other provision of this Agreement or any
such agreement or plan, if by reason of the operation of said Section 280G, any
such payments exceed the amount which can be deducted by the Company, such
payments shall be reduced to the maximum amount which can be deducted by the
Company. To the extent that payments exceeding such maximum deductible amount
have been made to or for the benefit of the Employee, such excess payments shall
be refunded to the Company with interest thereon at the applicable Federal Rate
determined under Section 1274(d) of the Code, compounded annually, or at such
other rate as may be required in order that no such payments shall be
non-deductible to the Company by reason of the operation of said Section 280G.
To the extent that there is more than one method of reducing the payments to
bring them within the limitations of said Section 280G, the Employee shall
determine which method shall be followed, provided that if the Employee fails to
make such determination within forty-five (45) days after the Company has sent
him written notice of the need for such reduction, the Company may determine the
method of such reduction in its sole discretion.
(b) If any dispute between the Company and the Employee as to any of
the amounts to be determined under this Section 5, or the method of calculating
such amounts, cannot be resolved by the Company and the Employee, either the
Company or the Employee after giving three days written notice to the other, may
refer the dispute to a partner in the Boston office of a firm of independent
certified public accountants selected jointly by the Company and the Employee.
The determination of such partner as to the amount to be determined under
Section 5(a) and the method of calculating such amounts shall be final and
binding on both the Company and the Employee. The Company shall bear the costs
of any such determination.
6. EMPLOYMENT STATUS. This Agreement is not an agreement for the
employment of the Employee and shall confer no rights on the Employee except as
herein expressly provided.
7. TERM. This Agreement shall take effect on and as of April 1, 1990
and shall continue in effect through March 31, 1992; provided, however, that
commencing on April 1, 1992, and each April 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
<PAGE>
later than 90 days preceding the then scheduled termination date, the Company
shall have given notice that it does not wish to extend this Agreement; and
provided, further, that if a Change in Control of the Company as defined in
Section 2 shall have occurred during the original or extended term of this
Agreement, this Agreement shall continue in effect for a period of not less than
twenty-four (24) months beyond the month in which such Change in Control
occurred.
8. WITHHOLDING. All payments made by the Company under this Agreement
shall be net of any tax or other amounts required to be withheld by the Company
under applicable law.
9. ARBITRATION OF DISPUTES. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by arbitration
in accordance with the laws of the Commonwealth of Massachusetts by three
arbitrators, one of whom shall be appointed by the Company, one by the Employee
and the third by the first two arbitrators. If the first two arbitrators cannot
agree on the appointment of a third arbitrator, then the third arbitrator shall
be appointed by the American Arbitration Association in the City of Boston. Such
arbitration shall be conducted in the City of Boston in accordance with the
rules of the American Arbitration Association, except with respect to the
selection of arbitrators which shall be as provided in this Section 9. Judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. In the event that it shall be necessary or desirable for
the Employee to retain legal counsel and/or incur other costs and expenses in
connection with the enforcement of any or all of the Employee's rights under
this Agreement, the Company shall pay (or the Employee shall be entitled to
recover from the Company, as the case may be) the Employee's reasonable
attorneys' fees and other reasonable costs and expenses in connection with the
enforcement of said rights (including the enforcement of any arbitration award
in court) regardless of the final outcome, unless and to the extent the
arbitrators shall determine that under the circumstances recovery by the
Employee of all or a part of any such fees and costs and expenses would be
unjust. This provision shall not apply to Section 5(b), except in the event that
the Company and the Employee cannot agree on the selection of the accounting
partner described in said Section.
10. ASSIGNMENT: PRIOR AGREEMENTS. Neither the Company nor the Employee
may make any assignment of this Agreement or any interest herein, by operation
of law or otherwise, without the prior written consent of the other party, and
without such consent any attempted transfer shall be null and void and of no
effect. This Agreement shall inure to the benefit of and be binding upon the
Company and the Employee, their respective successors, executors,
<PAGE>
administrators, heirs and permitted assigns. In the event of the Employee's
death prior to the completion by the Company of all payments due him under this
Agreement, the Company shall continue such payments to the Employee's
beneficiary designated in writing to the Company prior to his death (or to his
estate, if he fails to make such designation). This Agreement Supersedes any
prior agreement covering the subject matter hereof.
11. ENFORCEABILITY. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
12. WAIVER. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
13. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Employee at the last address the Employee has filed in writing with the Company,
or to the Company at its main office, attention of the Board of Directors.
14. ELECTION OF REMEDIES. An election by the Employee to resign after a
Change in Control under the provisions of this Agreement shall not constitute a
breach by the Employee of any employment agreement between the Company and the
Employee and shall not be deemed a voluntary termination of employment by the
Employee for the purpose of interpreting the provisions of any of the Company's
benefit plans, programs or policies. Nothing in this Agreement shall be
construed to limit the rights of the Employee under any employment agreement he
may then have with the Company, except as otherwise provided in Section 5
hereof; provided, however, that if there is a Terminating Event under Section 3
hereof, the Employee may elect either to receive the severance payment provided
under Section 4 or such termination benefits as he may have under any such
employment agreement, but may not elect to receive both.
15. AMENDMENT. This Agreement may be amended or modified only by a
written instrument signed by the Employee and by a duly authorized
representative of the Company.
<PAGE>
16. GOVERNING LAW. This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized officer, and by the Employee,
as of the date first above written.
WITNESS:
- ------------------------------- -------------------------------
ATTEST: DYNATECH CORPORATION
_______________________________ By:____________________________
Name: Name:
Title: Title:
[Seal]
DYNATECH CORPORATION
EXHIBIT NO. 11
COMPUTATION OF PER SHARE EARNINGS
HISTORICAL
WEIGHTED
AVERAGE
<TABLE>
<CAPTION>
SHARES
<S> <C>
For the year ended March 31, 1994:
Weighted average common stock outstanding,
net of treasury stock .................................. 18,579,000
==========
For the year ended March 31, 1995:
Weighted average common stock outstanding,
net of treasury stock .................................. 17,846,000
==========
For the year ended March 31, 1996:
Common stock outstanding, net of treasury stock,
beginning of year ...................................... 17,572,000
Weighted average treasury stock issued during the year . 461,000
Weighted average common stock equivalents .............. 351,000
Weighted average treasury stock repurchased ............ (69,000)
----------
Weighted average common stock outstanding,
net of treasury stock .................................. 18,315,000
==========
</TABLE>
EXHIBIT 13
DYNATECH CORPORATION
Excerpts of 1996 Annual Report To Shareholders
Five Year Summary
Management's Discussion and Analysis of Financial
Consolidation and Results of Operations
Consolidated Financial Statements
Notes to Consolidated Financial Statements
Summary of Operations by Quarter (Unaudited)
<PAGE>
Dynatech Corporation
<TABLE>
<CAPTION>
Five-Year Summary
(Amounts in thousands except per share data)
Years ended March 31, ............................... 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Results of operations (a)
Sales ............................................... $ 293,042 $ 243,078 $ 199,612 $ 190,000 $ 142,249
Cost of sales ....................................... 111,436 91,412 72,103 65,738 45,607
--------- --------- --------- --------- ---------
Gross profit ........................................ 181,606 151,666 127,509 124,262 96,642
Selling, general and administrative expense ......... 98,487 86,329 70,719 73,704 53,682
Product development expense ......................... 36,456 30,585 26,863 23,691 19,583
Purchased incomplete technology ..................... 16,852 -- -- -- --
Amortization of intangibles ......................... 5,136 5,106 5,728 5,087 2,676
--------- --------- --------- --------- ---------
Operating income .................................... 24,675 29,646 24,199 21,780 20,701
Interest expense .................................... (1,723) (3,919) (3,794) (2,229) (3,470)
Interest income ..................................... 2,181 1,518 1,244 1,592 2,248
Other income, net ................................... 975 850 2,198 77 1,737
--------- --------- --------- --------- ---------
Income from continuing operations before income taxes 26,108 28,095 23,847 21,220 21,216
Provision for income taxes .......................... 10,394 11,671 9,897 9,231 9,059
--------- --------- --------- --------- ---------
Income from continuing operations ................... 15,714 16,424 13,950 11,989 12,157
Discontinued operations, net of income taxes ........ (1,471) 3,763 (43,933) 4,446 1,266
Extraordinary charge, net of income taxes ........... -- (1,019) -- -- --
--------- --------- --------- --------- ---------
Net income (loss) ................................... $ 14,243 $ 19,168 $ (29,983) $ 16,435 $ 13,423
========= ========= ========= ========= =========
Income (loss) per common share
Continuing operations .......................... $ 0.86 $ 0.92 $ 0.75 $ 0.65 $ 0.65
Discontinued operations ........................ (0.08) 0.21 (2.36) 0.25 0.07
Extraordinary charge ........................... -- (0.06) -- -- --
--------- --------- --------- --------- ---------
$ 0.78 $ 1.07 $ (1.61) $ 0.90 $ 0.72
========= ========= ========= ========= =========
Balance sheet data (b)
Net working capital ................................. $ 105,861 $ 91,513 $ 91,010 $ 118,509 $ 126,278
Total assets ........................................ $ 205,189 $ 256,392 $ 280,553 $ 303,023 $ 312,531
Long-term debt ...................................... $ 1,800 $ 7,915 $ 33,006 $ 50,873 $ 80,845
Shareholders' equity ................................ $ 160,719 $ 154,320 $ 142,643 $ 171,904 $ 158,649
Shares of stock outstanding ......................... 17,585 17,573 18,594 18,506 18,421
Shareholders' equity per share ...................... $ 9.14 $ 8.78 $ 7.67 $ 9.29 $ 8.61
(a) Results have been restated to reflect discontinued operations.
(b) Balance sheet data for fiscal 1992 through 1995 have not been restated to reflect discontinued operations.
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This annual report contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, product demand and market
acceptance risks, the effect of economic conditions, the impact of competitive
products and pricing, product development, commercialization and technological
difficulties, capacity and supply constraints or difficulties, availability of
capital resources, general business and economic conditions, the effect of the
Company's accounting policies, and other risks detailed below and in the
Company's Securities and Exchange Commission filings.
BUSINESS
Dynatech is a global communications equipment company focused on network
technology solutions. Its products address communications test, industrial and
scientific communications, and non-broadcast video technology applications.
During the fourth quarter of 1996, the Board of Directors approved, and the
Company announced a formal plan to discontinue its non-core businesses.
Results of operations have been restated to reflect discontinued operations.
The following table and commentary should be read in conjunction with the
Consolidated Financial Statements and related Notes to Consolidated Financial
Statements.
<TABLE>
<CAPTION>
Percent of Sales Percent
of Change
1996 1995 1994
vs. vs. vs.
Years ended March 31, 1996 1995 1994 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales ............................................... 100.0% 100.0% 100.0% 20.5% 21.8% 5.1%
Gross profit ........................................ 62.0 62.4 63.9 19.7 18.9 2.6
Selling, general and administrative expense ......... 33.6 35.5 35.4 14.1 22.1 (4.0)
Product development expense ......................... 12.4 12.6 13.5 19.2 13.9 13.4
Purchased incomplete technology ..................... 5.8 -- -- 100.0 -- --
Amortization of intangibles ......................... 1.8 2.1 2.9 0.6 (10.9) 12.6
Operating income (loss) ............................. 8.4 12.2 12.1 (16.8) 22.5 11.1
Interest expense .................................... (0.5) (1.6) (1.9) (56.0) 3.3 70.2
Interest income ..................................... 0.7 0.6 0.6 43.7 22.0 (21.9)
Other income (expense) .............................. 0.3 0.3 1.1 14.7 (61.3) *
Income (loss) from continuing operations before taxes 8.9 11.5 11.9 (7.1) 17.8 12.4
Income taxes ........................................ 3.5 4.8 4.9 (10.9) 17.9 7.2
Income (loss) from continuing operations ............ 5.4 6.7 7.0 (4.3) 17.7 16.4
* not meaningful
</TABLE>
FISCAL 1996 COMPARED TO FISCAL 1995
SALES
Consolidated sales from continuing operations increased 20.5% to $293.0
million from $243.1 million in fiscal 1995 as a result of increased
revenue of 24.6% in domestic and 7.1% in international sales including
export sales.
Sales of communications test products rose 20% due to increased
demand for existing products and increased volume generated by two
acquisitions during the year. The new acquisitions generated $16.6
million in additional revenue during fiscal 1996. Sales of industrial
and scientific communications products rose 29% driven by strong demand
for these products in a broad range of markets.
Backlog from ongoing operations was $57.3 million at March 31, 1996
as compared to $40.3 million at March 31, 1995.
GROSS PROFIT
Consolidated gross profit from continuing operations for fiscal 1996
was 62.0% compared to 62.4% for the prior year. The slight reduction
was primarily driven by increased sales of industrial and scientific
communications products which have a lower gross margin than the
consolidated average.
<PAGE>
EXPENSES
As a percentage of consolidated sales, selling, general and
administrative expenses decreased to 33.6% as compared to 35.5% in the
previous year. General and administrative costs increased at a rate
slower than revenue growth, primarily due to the increased revenues
generated from new acquisitions. Product development expense was 12.4%
of sales in fiscal 1996 down slightly from 12.6% in fiscal 1995
primarily due to relatively low development expenses within newly
acquired businesses. Amortization of intangibles remained relatively
unchanged. Decreases of amortization on existing businesses was offset
with the amortization costs associated with current year acquisitions.
During 1996, the Company purchased incomplete technology activities
of Tele-Path Industries, Inc., resulting in a pretax charge to
operations of $16.8 million. This incomplete technology had not reached
technological feasibility and had no alternative use.
Interest expense declined compared to the prior year as a result of
repayment of debt. Interest income increased primarily from higher
average cash balances during the course of the year.
TAXES
The effective tax rate declined in fiscal 1996 to 39.8% compared to
41.5% as a result of the resolution of certain prior year tax rebates
and utilization of certain foreign loss carry forwards .
EXTRAORDINARY CHARGE
In February 1995, the Corporation recorded an extraordinary charge of
$1.7 million ($1.0 million, net of taxes), reflecting a payment penalty
for early debt redemption of its $30 million 10.15% term notes.
NET INCOME
Net income from continuing operations for fiscal 1996 was $15.7 million
or $.86 per share, as compared to $.92 per share in fiscal 1995. Net
income in the current year includes a write-off of incomplete purchased
technology that accounted for a pretax charge of $16.8 million with an
after-tax effect on earnings per share of $(.56).
FISCAL 1995 COMPARED TO FISCAL 1994
SALES
Consolidated sales from continuing operations increased 21.8% in fiscal
1995 as a result of a 24.2% increase in domestic sales and 14.5% growth
in international sales. International sales, including export sales,
were 23.1% of consolidated sales in fiscal 1995 and 24.6% of
consolidated sales in fiscal 1994.
Sales for communications test products and industrial and scientific
communications products rose 23.2% and 22.4%, respectively, in fiscal
1995 versus fiscal 1994.
Backlog from ongoing operations was $40.3 million at March 31, 1995,
compared with $32.8 million at March 31, 1994.
GROSS PROFIT
Consolidated gross profit from continuing operations was 62.4% for
fiscal 1995, compared to 63.9% for the prior year. The decrease in rate
was a result of higher production costs for new products.
Communications test products gross margin declined to 66.2%, compared
to 67.2% in the prior year, while industrial and scientific
communications products declined 2.7% to 41.3%.
EXPENSES
Selling, general and administrative expenses were relatively constant
at 35.5% in fiscal 1995 versus 35.4% in fiscal 1994, respectively.
Amortization of intangibles as a percentage of sales declined in fiscal
1995 to 2.1% versus 2.9% in the previous fiscal year. The percentage
decline was attributed to increased sales volume. Product development
expense was 12.6% of sales in fiscal 1995, compared to 13.5% in fiscal
1994. The reduction was attributed primarily to the completion of a
number of projects during 1995 which had been accelerated in 1994.
Interest expense remained virtually unchanged compared to the prior
year. Interest income, primarily from short-term deposits in Europe,
increased reflecting higher investment rates, earnings on notes
acquired in divestment activities, and favorable operating cash flow.
TAXES
The effective tax rate from continuing operations remained constant at
41.5% for fiscal years ended March 31, 1995 and March 31, 1994.
<PAGE>
EXTRAORDINARY CHARGE
In February 1995, the Corporation recorded an extraordinary charge of
$1.7 million ($1.0 million, net of taxes), reflecting a prepayment
penalty for early debt redemption of its $30 million 10.15% term notes.
This redemption, partially accomplished by the use of excess cash, was
undertaken as part of Dynatech's efforts to reduce its interest costs.
NET INCOME (LOSS)
Net income in fiscal 1995 was $19.2 million for a record $1.07 per
share. The net loss in fiscal 1994 was $30.0 million, or $(1.61) per
share. Net income from discontinued operations was $3.8 million or $.21
per share in 1995 as compared to a net loss of $43.9 million or $(2.36)
per share in 1994.
CAPITAL RESOURCES AND LIQUIDITY
Dynatech's funded debt stood at 1.5% of total capital at March 31,
1996, the lowest year-end level in Company history. Cash proceeds from
divestitures and favorable operating cash flow enabled Dynatech to
repay its $30 million term note in February 1995. The working capital
ratio at March 31, 1996 improved to 4 to 1, an increase from 2 to 1 at
March 31, 1995.
Net cash flows from operating activities were $22.4 million in
fiscal 1996, $31.0 million in fiscal 1995 and $35.1 million in fiscal
1994. The decrease in fiscal 1996 over fiscal 1995 was due to cash
outlays for discontinued operations. Combined accounts receivable and
inventories at year-end were 25% of fiscal 1996 sales compared to 27%
in fiscal 1995 and 29% in fiscal 1994. Cash balances primarily reflect
short-term deposits in Europe.
Investment in property and equipment was $8.2 million in fiscal
1996, compared to $16.4 million and $17.8 million in fiscal 1995 and
1994, respectively. Average net fixed assets employed in continuing
operations were $18.4 million, or 6% of fiscal 1996 sales, compared to
$37.0 million, or 8% of sales in fiscal 1995. Dynatech anticipates that
its capital spending in property and equipment in fiscal 1997 will be
at the same approximate level as in fiscal 1996. Funding for capital
expenditures is expected to be provided primarily from internal
sources.
The Corporation's financial performance, together with its reserve
debt capacity and working capital, leave it well positioned to finance
its current and anticipated cash requirements for fiscal 1997.
Inflation rates were moderate during fiscal 1996 and did not have a
major impact on operations.
DISCONTINUED OPERATIONS
The Company is currently employing a business strategy that involves,
among other things, the expansion and growth of its telecommunications
test and industrial and scientific communications businesses. On
February 7, 1996, the Board of Directors approved, and the Company
announced, a formal plan to discontinue non-core businesses. Net sales,
operating costs and expenses, other income and expense, and income
taxes for fiscal 1994, 1995, and the first three quarters of 1996
associated with discontinued units have been reclassified in the
accompanying statements of operations as discontinued operations. The
actual fourth quarter operating losses for the discontinued units up to
the measurement date have also been included in discontinued
operations. The Company's balance sheet and statements of cash flows
have not been restated for discontinued businesses in prior years. Net
assets of discontinued companies held for sale were $22.8 million at
the end of fiscal 1996. Gains on the business disposed of prior to
March 31, 1996, and cost related to the disposition of businesses,
including operating losses after the measurement date, have been
recorded on the balance sheet.
The Company expects to dispose of the units held for sale during
fiscal 1997. Management believes that the net proceeds from these
dispositions will exceed the carrying amounts and anticipated ongoing
costs to operate the businesses for fiscal 1997. Anticipated gains will
not be reflected in the statements of operations until they are
realized at the completion of the divestiture program.
In fiscal 1996, the Company sold five businesses in non-core
products for $48.9 million in cash. The effects of these transactions
were reflected in discontinued operations. The Company has ten
businesses for sale at March 31, 1996 and has hired an investment
banker to help in disposing the businesses in fiscal 1997.
During fiscal 1995, the Corporation sold ten businesses for
approximately $27.1 million in cash and long-term promissory notes
approximating $5.2 million. The provision for losses was reflected in
fiscal 1994 and did not affect fiscal 1995 earnings.
In fiscal 1994, the Corporation sold four businesses for $3.3
million.
<TABLE>
<CAPTION>
Summary operating results of the discontinued operations are as follows:
(Amounts in thousands) 1996 1995 1994
- -------------------------------------------------------------------
<S> <C> <C> <C>
Sales .................... $ 182,040 $ 256,452 $ 310,072
Gross margin ............. 79,571 109,563 126,739
Operating income ......... (3,703) 6,252 (53,488)
Income (loss) before taxes (3,460) 6,711 (58,202)
Net income (loss) ........ $ (1,471) $ 3,763 $ (43,933)
</TABLE>
<PAGE>
<TABLE>
Consolidated Statements of Operations Dynatech Corporation
(Amounts in thousands except per share data)
Years ended March 31, 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales ...................................................................... $ 293,042 $ 243,078 $ 199,612
Cost of sales .............................................................. 111,436 91,412 72,103
--------- --------- ---------
Gross profit ............................................................... 181,606 151,666 127,509
Selling, general and administrative expense ................................ 98,487 86,329 70,719
Product development expense ................................................ 36,456 30,585 26,863
Purchased incomplete technology ............................................ 16,852 -- --
Amortization of intangibles ................................................ 5,136 5,106 5,728
--------- --------- ---------
Operating income ........................................................... 24,675 29,646 24,199
Interest expense ........................................................... (1,723) (3,919) (3,794)
Interest income ............................................................ 2,181 1,518 1,244
Other income, net .......................................................... 975 850 2,198
--------- --------- ---------
Income from continuing operations before income taxes ...................... 26,108 28,095 23,847
Provision for income taxes ................................................. 10,394 11,671 9,897
--------- --------- ---------
Income from continuing operations .......................................... 15,714 16,424 13,950
Discontinued operations
Operating income (loss), net of income tax provision (benefit) of $(1,009)
in 1996, $2,948 in 1995 and $(18,668) in 1994 .................. (1,471) 3,763 (43,393)
--------- --------- ---------
Income (loss) before extraordinary charge .................................. 14,243 20,187 (29,983)
Extraordinary charge for early retirement of debt, net of income tax benefit
of $738 ............................................................... -- (1,019) --
--------- --------- ---------
Net income (loss) .......................................................... $ 14,243 $ 19,168 $ (29,983)
========= ========= =========
Income (loss) per common share
Continuing operations ................................................. $ .86 $ .92 $ .75
Discontinued operations ............................................... (.08) .21 (2.36)
Extraordinary charge .................................................. -- (.06) --
--------- --------- ---------
$ .78 $ 1.07 $ (1.61)
========= ========= =========
Weighted average number of common shares ................................... 18,315 17,846 18,579
========= ========= =========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Consolidated Balance Sheets Dynatech Corporation
(Amounts in thousands except share data)
March 31, 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................................... $ 46,094 $ 27,795
Accounts receivable (less allowance of $957 and $5,077, respectively) 45,367 72,152
Inventories
Raw materials ................................................... 10,210 26,752
Work in process ................................................. 9,381 14,168
Finished goods .................................................. 7,325 19,560
--------- ---------
26,916 60,480
Other current assets ................................................ 5,981 24,251
Net assets of discontinued operations held for sale ................. 22,824 --
--------- ---------
Total current assets ................................................ 147,182 184,678
--------- ---------
Property and equipment, at cost:
Land, building and improvements ..................................... -- 1,927
Machinery and equipment ............................................. 39,441 68,618
Furniture and fixtures .............................................. 6,680 16,523
Leasehold improvements .............................................. 2,468 5,173
--------- ---------
48,589 92,241
Less accumulated depreciation and amortization ...................... (30,038) (57,450)
--------- ---------
18,551 34,791
Other assets:
Intangible assets, net .............................................. 28,406 29,104
Other ............................................................... 11,050 7,819
--------- ---------
$ 205,189 $ 256,392
========= =========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets Dynatech Corporation
(Amounts in thousands except share data)
March 31, 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt ................. $ 655 $ 4,374
Accounts payable .................................................... 9,849 19,651
Accrued expenses:
Compensation and benefits ......................................... 16,120 23,922
Taxes, other than income taxes .................................... 834 3,139
Deferred revenue .................................................. 3,424 3,644
Streamlining and restructuring .................................... -- 22,556
Other ............................................................. 9,500 14,656
Accrued income taxes ................................................ 939 1,223
--------- ---------
Total current liabilities ........................................... 41,321 93,165
--------- ---------
Long-term debt .......................................................... 1,800 7,915
Deferred income taxes ................................................... 531 992
Deferred compensation ................................................... 818 --
Commitments and contingencies
Shareholders' equity:
Serial preference stock, par value $1 per share;
authorized 100,000 shares; none issued
Common stock, par value $.20 per share; authorized 26,000,000 shares;
issued and outstanding 18,605,298 ................................. 3,721 3,721
Additional paid-in capital .......................................... 12,102 7,432
Retained earnings ................................................... 165,657 151,414
Cumulative translation adjustments .................................. 342 2,659
Treasury stock, at cost; 1,020,605 and 1,032,760 shares, respectively (21,103) (10,906)
--------- ---------
Total shareholders' equity .......................................... 160,719 154,320
--------- ---------
$ 205,189 $ 256,392
========= =========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Shareholders' Equity Dynatech Corporation
(Amounts in thousands)
Number of Shares Additional Cumulative Total
Common Treasury Common Paid-In Retained Translation Treasury Shareholders'
Stock Stock Stock Capital Earnings Adjustments Stock Equity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1993 ..... 12,384 (3,131) $ 2,477 $ 9,160 $215,940 $ (347) $(55,326) $171,904
Net loss - 1994 ............. (29,983) (29,983)
Translation adjustments ..... (410) (410)
Exercise of stock options and
other issuances ........... 3 41 (111) 878 767
Tax benefit from exercise of
stock options ............. 365 365
-------- -------- -------- -------- -------- -------- -------- --------
Balance, March 31, 1994 ..... 12,387 (3,090) 2,477 9,414 185,957 (757) (54,448) 142,643
Net income - 1995 ........... 19,168 19,168
Purchases of treasury stock . (597) (12,576) (12,576)
Translation adjustments ..... 3,416 3,416
Exercise of stock options and
other issuances ........... 90 (215) 1,790 1,575
Retirement of treasury stock (3,085) 3,085 (617) (53,711) 54,328 --
Two-for-one stock split ..... 9,303 (521) 1,861 (1,861) --
Tax benefit from exercise of
stock options ............. 94 94
-------- -------- -------- -------- -------- -------- -------- --------
Balance, March 31, 1995 ..... 18,605 (1,033) 3,721 7,432 151,414 2,659 (10,906) 154,320
Net income - 1996 ........... 14,243 14,243
Purchases of treasury stock . (800) (19,367) (19,367)
Translation adjustments ..... (2,317) (2,317)
Exercise of stock options and
other issuances ........... 812 3,688 9,170 12,858
Tax benefit from exercise of
stock options ............. 982 982
-------- -------- -------- -------- -------- -------- -------- --------
Balance, March 31, 1996 ..... 18,605 (1,021) $ 3,721 $ 12,102 $165,657 $ 342 $(21,103) $160,719
======== ======== ======== ======== ======== ======== ======== ========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows Dynatech Corporation
(Amounts in thousands)
Years ended March 31, 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities:
Net income (loss) from operations ................................... $ 15,714 $ 20,187 $(26,220)
Adjustment for non-cash items included in net income (loss):
Depreciation ..................................................... 8,279 14,112 13,754
Amortization of intangibles ...................................... 5,136 8,471 18,153
Purchased incomplete technology .................................. 16,852 -- --
Streamlining and restructuring charges ........................... -- -- 35,276
Increase (decrease) in deferred income taxes ..................... (5,173) 7,187 (79)
Other ............................................................ 457 283 1,947
Changes in operating assets and liabilities, net of effects of
purchase acquisitions and divestitures ........................... (19,556) (16,013) (13,545)
-------- -------- --------
Net cash provided by continuing operations .......................... 21,709 34,227 29,286
Net cash provided by (used in) discontinued operations .............. 699 (3,250) 5,771
-------- -------- --------
Net cash provided by operating activities ........................... 22,408 30,977 35,057
-------- -------- --------
Investing activities:
Purchases of property and equipment ................................. (8,198) (16,426) (17,834)
Disposals of property and equipment ................................. 308 437 636
Proceeds from sales of businesses ................................... 48,901 27,140 3,262
Businesses acquired in purchase transactions, net of cash acquired .. (17,143) (1,056) (2,757)
Other ............................................................... 5,597 (1,095) 2,629
-------- -------- --------
Net cash flows provided by (used in) continuing operations .......... 29,465 9,000 (14,064)
Net cash flows used in discontinued operations ...................... (5,487) -- --
-------- -------- --------
Net cash flows provided by (used in) investing activities ........... 23,978 9,000 (14,064)
-------- -------- --------
Financing activities:
Debt borrowings ..................................................... -- 6,121 --
Repayment of debt ................................................... (9,400) (30,246) (20,312)
Premium paid on early retirement of debt ............................ -- (1,757) --
Proceeds from exercise of stock options ............................. 952 1,461 767
Purchases of treasury stock ......................................... (19,367) (12,576) --
-------- -------- --------
Net cash flows used in financing activities ......................... (27,815) (36,997) (19,545)
-------- -------- --------
Effect of exchange rate on cash ........................................... (272) 1,714 (2,697)
-------- -------- --------
Increase (decrease) in cash and cash equivalents .......................... 18,299 4,694 (1,249)
Cash and cash equivalents at beginning of year ............................ 27,795 23,101 24,350
-------- -------- --------
Cash and cash equivalents at end of year .................................. $ 46,094 $ 27,795 $ 23,101
======== ======== ========
Change in operating asset and liability components:
Decrease (increase) in trade accounts receivable .................... $(10,287) $ (1,215) $ 12,717
Increase in inventories ............................................. (2,007) (2,820) (4,876)
Decrease (increase) in other current assets ......................... (297) 180 (15,629)
Increase (decrease) in accounts payable ............................. (402) 129 (3,232)
Decrease in accrued expenses and taxes .............................. (6,563) (12,287) (2,525)
-------- -------- --------
Change in operating assets and liabilities .......................... $(19,556) $(16,013) $(13,545)
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest ......................................................... $ 1,739 $ 4,833 $ 5,090
Income taxes ..................................................... $ 13,798 $ 7,672 $ 11,798
Tax benefit of disqualifying dispositions of stock options ........... $ 982 $ 94 $ 365
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DYNATECH CORPORATION
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
Dynatech is a global communications equipment company focused on
network technology solutions. Its products address communications test,
industrial and scientific communications, and non-broadcast video
technology applications.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
parent company and its wholly owned domestic and international
subsidiaries. Intercompany accounts and transactions have been
eliminated. Certain prior-year amounts, principally related to
discontinued operations, have been reclassified to conform with the
current year.
REVENUE RECOGNITION
Sales of products and services are recorded based on product shipment
and performance of service, respectively.
RESEARCH, DEVELOPMENT AND WARRANTY COSTS
Costs relating to research, development and product warranty are
expensed as incurred. Warranty costs are not material to the
consolidated financial statements.
FOREIGN CURRENCY TRANSLATION
The functional currency for the majority of the Company's foreign
operations is the applicable local currency. The translation from the
applicable foreign currencies to U.S. dollars is performed for balance
sheet accounts using the exchange rates in effect at the balance sheet
date and for revenue and expense accounts using a weighted average
exchange rate during the period. The gains or losses resulting from
such translation are included in stockholders' equity. Gains or losses
resulting from foreign currency transactions are included in other
income.
CASH EQUIVALENTS
Cash equivalents represent highly liquid debt instruments with a
maturity of three months or less at the time of purchase. Financial
instruments, which potentially subject the Corporation to
concentrations of credit risk, consist primarily of short-term deposits
in Europe with major banks, with investment levels and debt ratings set
to limit exposure from any one institution.
DERIVATIVES
The Company enters into a limited number of forward exchange contracts
to manage the exposure to foreign currency fluctuations associated with
certain monetary assets and liabilities denominated in a foreign
currency, as well as certain highly anticipated cash flows or firm
commitments. Gains and losses on these contracts will be included in
income when the operating revenue and expenses related to the
underlying transactions are recognized. Notional amounts as of March
31, 1996 are $1.0 million.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out or
average) or market.
INTANGIBLE ASSETS
Intangible assets acquired primarily from business acquisitions are
summarized as follows:
<TABLE>
<CAPTION>
(Amounts in thousands) 1996 1995
-----------------------------------------------------------
<S> <C> <C>
Product technology .................... $18,259 $30,859
Excess of cost over net assets acquired 17,424 18,687
Other intangible assets ............... 13,307 14,123
------- -------
48,990 63,669
Less accumulated amortization ......... 20,584 34,565
------- -------
Total ................................. $28,406 $29,104
======= =======
</TABLE>
<PAGE>
At each balance sheet date, management evaluates whether there has been
a permanent impairment in the value of goodwill or intangible assets by
assessing the carrying value of the asset against the anticipated
future cash flows from related operating activities. Factors which
management considers in performing this assessment include current
operating results, trends and prospects, and, in addition, demand,
competition, and other economic factors.
Product technology and other intangible assets are amortized on a
straight-line basis primarily over three to ten years, but in no event
longer than their expected useful lives. Amortization expense related
to product technology was $1.9 million in fiscal 1996, $1.6 million in
fiscal 1995, and $1.8 million in fiscal 1994, and was excluded from
cost of sales. Excess of cost over fair market value of net assets is
being amortized on a straight-line basis primarily over 15 years.
DEPRECIATION AND AMORTIZATION
Depreciation of machinery, equipment, and fixtures is computed on the
straight-line method over estimated useful lives of two to ten years.
Leasehold improvements are amortized over the lesser of the lives of
the leases or estimated useful lives of the improvements. Buildings are
depreciated on the straight-line method over the estimated useful
lives.
The cost of improvements is charged to the property accounts, while
maintenance and repairs are charged to income as incurred. Upon
retirement or other disposition of property and equipment, the cost and
related depreciation are removed from the accounts, and any resulting
gain or loss is reflected in the Statement of Operations.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reported period. Significant estimates in these
financial statements include allowances for accounts receivable, net
realizable value of inventories, tax valuation reserves, and the net
realizable value of assets from discontinued operations held for sale.
Actual results could differ from those estimates.
INCOME TAXES
The Company provides for income taxes in accordance with Statement of
Financial Accounting Standard No. 109., "Accounting for Income Taxes."
Under this method, deferred tax assets and liabilities are determined
based on the differences between the financial reporting and tax basis
of assets and liabilities and are measured using the enacted tax rates
and laws that will be in effect when the differences are expected to
reverse. The Corporation's policy is not to provide for U.S. taxes on
undistributed earnings of foreign subsidiaries to the extent that such
earnings are determined to be permanently invested outside the United
States.
INCOME PER SHARE
Income per share is based on the weighted average number of common
shares and common share equivalents outstanding including the effect of
the deferred stock compensation for directors.
TREASURY STOCK
The Company delivers treasury shares upon the exercise of stock options
and the difference between the cost of the treasury shares, on a
last-in, first-out basis, and the exercise price of the options is
reflected in additional paid-in capital. Repurchase of treasury stock
is accounted for by using the cost method of accounting.
DISCONTINUED OPERATIONS
The Company is currently employing a business strategy that involves,
among other things, the expansion and growth of its telecommunications
test and industrial and scientific communications businesses. On
February 7, 1996, the Board of Directors approved, and the Company
announced, a formal plan to discontinue non-core businesses. Net sales,
operating costs and expenses, other income and expense, and income
taxes for fiscal 1994, 1995, and the first three quarters of 1996
associated with discontinued units have been reclassified in the
accompanying statements of operations as discontinued operations. The
actual fourth quarter operating losses for the discontinued units up to
the measurement date have also been included in discontinued
operations. The Company's balance sheet and statements of cash flows
have not been restated for discontinued businesses in prior years. Net
assets of discontinued companies held for sale were $22.8 million at
the end of fiscal 1996. Gains on the business disposed of prior to
March 31, 1996, and cost related to the disposition of businesses,
including operating losses after the measurement date, have been
recorded on the balance sheet.
<PAGE>
The Company expects to dispose of the units held for sale during
fiscal 1997. Management believes that the net proceeds from these
dispositions will exceed the carrying amounts and anticipated ongoing
costs to operate the businesses for fiscal 1997. Anticipated gains will
not be reflected in the statements of operations until they are
realized at the completion of the divestiture program.
In fiscal 1996, the Company sold five businesses in non-core
products for $48.9 million in cash. The effects of these transactions
were reflected in discontinued operations. The Company has ten
businesses for sale at March 31, 1996 and has hired an investment
banker to help in disposing the businesses in fiscal 1997.
During fiscal 1995, the Corporation sold ten businesses for
approximately $27.1 million in cash and long-term promissory notes
approximating $5.2 million. The provision for losses was reflected in
fiscal 1994 and did not affect fiscal 1995 earnings.
In fiscal 1994, the Corporation sold four businesses for $3.3
million.
<TABLE>
<CAPTION>
Summary operating results of the discontinued operations are as follows:
(Amounts in thousands) 1996 1995 1994
- ----------------------------------------------------------------
<S> <C> <C> <C>
Sales .................... $ 182,040 $ 256,452 $ 310,072
Gross margin ............. 79,571 109,563 126,739
Operating income ......... (3,703) 6,252 (53,488)
Income (loss) before taxes (3,460) 6,711 (58,202)
Net income (loss) ........ $ (1,471) $ 3,763 $ (43,933)
</TABLE>
NOTES PAYABLE
Short-term notes payable, primarily in Europe, were $640,200 and $4.4
million at March 31, 1996 and 1995, respectively. The maximum amount of
short-term borrowings, domestic and foreign, at any month-end during
the year was $1.1 million in fiscal 1996, $4.4 million in 1995, and
$2.4 million in 1994. The average amount of short-term borrowings
during the year was $886,000 in fiscal 1996, $3.4 million in 1995, and
$2.7 million in 1994. The approximate weighted average interest rate
was 6.6% in fiscal 1996, 6.2% in 1995, and 6.6% in 1994 (calculated by
dividing interest expense for such borrowings by the weighted average
borrowings outstanding during the year). The weighted average interest
rate at year-end was 6.8% in fiscal 1996, 6.3% in 1995, and 6.3% in
1994.
At year-end, the Corporation had short-term unused lines of credit
aggregating $243,000 for continuing foreign operations.
LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt is summarized below:
(Amounts in thousands) 1996 1995
- -----------------------------------------------------
<S> <C> <C>
Revolving credit and term bank loan $1,800 $7,900
Other long-term debt .............. 15 38
------ ------
Total debt ........................ 1,815 7,938
Less current portion ............ 15 23
------ ------
Long-term debt .................... $1,800 $7,915
====== ======
</TABLE>
The Corporation has an unsecured $70 million revolving credit and term
bank loan agreement with several commercial banks which allows for
borrowings in various currencies and provides for interest to be
payable at the Eurocurrency rate, or base or money market rate quoted
by the lender, depending upon the currencies borrowed and the form of
borrowing. Principal borrowings outstanding at March 31, 1996 under the
revolving credit and term bank loan will convert to a term loan payable
in eight equal quarterly installments beginning September 30, 1998. A
commitment fee at a rate of .25% is charged on the unused portion.
The approximate weighted average cost of capital was 8.6% in fiscal
1996 and 10.7% in fiscal 1995. The composite rate at March 31, 1996
was 5.9% and at March 31, 1995 was 8.4%.
The terms of the revolving credit agreement require, among other
things, specific levels of current ratio, fixed charge coverage ratio,
and minimum tangible net worth.
<PAGE>
Aggregate maturities of the above term debt for each of the years in
the five-year period ending March 31, 2001 are $15,000, $0, $675,000,
$900,000, and $225,000, respectively.
Income Taxes
<TABLE>
<CAPTION>
The components of the provision (benefit) for income taxes from continuing operations are as follows:
(Amounts in thousands) 1996 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Provision for income taxes:
United States .................. $ 9,092 $ 9,552 $ 7,717
Foreign ........................ (428) 127 329
State .......................... 1,730 1,992 1,851
-------- -------- --------
Total ........................ $ 10,394 $ 11,671 $ 9,897
======== ======== ========
Components of income tax provision:
Current:
Federal ...................... $ 15,247 $ 10,609 $ 7,360
Foreign ...................... (423) 112 342
State ........................ 3,072 2,130 1,849
-------- -------- --------
Total current ........... 17,896 12,851 9,551
-------- -------- --------
Deferred:
Federal ...................... (6,155) (1,057) 357
Foreign ...................... (5) 15 (13)
State ........................ (1,342) (138) 2
-------- -------- --------
Total deferred .......... (7,502) (1,180) 346
-------- -------- --------
Total .............. $ 10,394 $ 11,671 $ 9,897
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Reconciliations between U.S. federal statutory rate and the effective tax rate
of continuing operations follow:
1996 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax at U.S. federal statutory rate ................................ 35.0% 35.0% 35.0%
Increases (reductions) to statutory tax rate resulting from:
Foreign income subject to tax at a rate different than U.S. rate (0.5) 0.4 0.9
State income taxes, net of federal income tax benefit .......... 4.3 4.4 5.0
Research and development tax credit ............................ (0.7) (0.9) (0.9)
Non-deductible amortization .................................... 1.9 1.8 2.4
Other .......................................................... (0.2) 0.8 (0.9)
---- ---- ----
Total ........................................................ 39.8% 41.5% 41.5%
==== ==== ====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The principal components of the deferred tax assets and liabilities follow:
(Amounts in thousands) 1996 1995
- --------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carry forwards ............ $ 1,993 $ 11,802
Streamlining and restructuring ............... 9,914
Vacation benefits ............................ 632 794
Bad debt allowance ........................... 196 1,148
Inventory capitalization ..................... 347 931
Depreciation and amortization ................ 9,283 2,076
Other deferred assets ........................ 3,979 5,175
-------- --------
16,430 31,840
Valuation allowance ............................... (1,993) (13,173)
-------- --------
14,437 18,667
-------- --------
Deferred tax liabilities:
Depreciation and amortization ................ 531 992
Other deferred liabilities ................... 1,319 1,461
-------- --------
1,850 2,453
-------- --------
Net deferred tax assets ........................... $ 12,587 $ 16,214
======== ========
Deferred income taxes are included in the following
balance sheet accounts:
Other current assets ......................... $ 3,495 $ 14,393
Other assets ................................. 9,623 2,813
Deferred income taxes ........................ (531) (992)
-------- --------
$ 12,587 $ 16,214
======== ========
</TABLE>
The valuation allowance principally applies to net operating loss carry
forwards that may not be fully utilized by the Company. The decrease in
the valuation reserve relates to the reclassification of deferred tax
components, principally net operating losses, related to discontinued
operations.
The cumulative amount of undistributed earnings of consolidated
foreign subsidiaries from continuing operations, for which federal
income taxes have not been provided, was $12.1 million at March 31,
1996. These earnings, which reflect full provision for non-U.S. income
taxes, are indefinitely reinvested in non-U.S. operations or will be
remitted substantially free of additional tax. Accordingly, no
provision has been made for taxes that might be payable upon remittance
of such earnings, nor is it practicable to determine the amount of this
liability.
EMPLOYEE RETIREMENT PLANS
The Corporation has a trusteed employee retirement profit sharing and
401(k) savings plan for eligible U.S. employees. The Plan does not
provide for stated benefits upon retirement.
Employees outside the U.S. are covered principally by
government-sponsored plans that are deferred contribution plans and the
cost of company-provided plans is not material.
Effective April 1, 1995, the Company adopted a non-qualified
deferred compensation plan which permits certain key employees to
annually elect to defer a portion of their compensation for their
retirement. The amount of compensation deferred and related investment
earnings will be placed in an irrevocable rabbi trust and presented as
assets in the Corporation's balance sheet because they will be
available to the general creditors of the Corporation in the event of
the Company's insolvency. An offsetting liability will reflect amounts
due employees.
Corporate contributions to employee retirement plans were $3.3 million
in 1996, $3.0 million in 1995, and $2.0 million in 1994.
<PAGE>
STOCK OPTIONS
Under Dynatech's Stock Option Plans, common stock is available for
grant to key employees at prices not less than fair market value (110%
of fair market value for employees holding more than 10% of the
outstanding common stock) at the date of grant determined by the Board
of Directors. Incentive or non-qualified options may be issued under
the Plans and are exercisable from one to ten years after grant.
Options available for future grants under the Plans were 1.4 million,
zero, and 499,146, at March 31, 1996, 1995, and 1994, respectively. A
summary of changes in the outstanding options is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares under option, beginning of year ........................... 1,296,720 705,806 820,984
Options granted (at an exercise price of $15.50 to $20.25 in 1996,
$10.375 to $17.50 in 1995, $13.75 in 1994) .................... 673,700 927,000 20,000
Options exercised ................................................ (126,500) (193,920) (81,630)
Options canceled ................................................. (159,340) (142,166) (53,548)
--------- --------- -------
Shares under option, end of year ................................. 1,684,580 1,296,720 705,806
========= ========= =======
Shares exercisable 261,780 163,936 291,206
Price of options exercised $ 8.625 to $ 8.625 to $ 8.625 to
$ 17.50 $ 14.125 $ 14.125
</TABLE>
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (SFAS 123), which is effective for
transactions entered into for fiscal years that begin after December
15, 1995. SFAS 123 established a fair value-based method of accounting
for stock-based compensation plans. The Company will adopt the
disclosure method in 1997. The Company does not anticipate SFAS 123 to
have a material effect on the Company's financial position or results
of operations in fiscal 1997.
SHAREHOLDER RIGHTS PLAN
In February 1989, the Board of Directors adopted a Shareholder Rights
Plan and declared a dividend distribution of one Right for each
outstanding share of Dynatech's common stock. The Plan was amended in
March 1990. Each Right, when exercisable, entitles a qualifying
shareholder to buy shares of Dynatech junior participating cumulative
preferred stock. The Rights would only become exercisable (i) ten days
after a person has become the beneficial owner of 15% or more of
Dynatech's common stock, or (ii) ten business days after the
commencement of a tender offer that would result in the ownership of
15% or more of the common stock, or (iii) upon determination by the
Board of Directors that a person who holds 10% or more of Dynatech's
common stock intends to, or is likely to, act in certain specified
manners adverse to the interests of Dynatech and its shareholders.
In the event Dynatech is acquired and is not the surviving
corporation in a merger, or in the event of the acquisition of 50% or
more of the assets or earning power of Dynatech, each Right would then
entitle the qualified holder to purchase, at the then-current exercise
price, shares of common stock of the acquiring company having a value
of twice the exercise price of the Right. Furthermore, if any party
were to acquire 15% or more of Dynatech's common stock or were
determined to be an adverse person as described above, qualified
holders of the Rights would be entitled to acquire shares of Dynatech
junior participating cumulative preferred stock having a value of twice
the then-current exercise price. At the option of the Board of
Directors, all of the Rights could be exchanged into shares of common
or preferred stock.
The Rights will expire February 16, 1999, but may be redeemed at the
option of the Board for $.02 per Right until one of the triggering
events described above has occurred. The Rights do not entitle holders
to any voting power or other shareholder benefits. Issuance of the
Rights does not dilute the shareholders' ownership of Dynatech, nor
does it affect reported earnings per share.
COMMITMENTS AND CONTINGENCIES
The Corporation has operating leases from continuing operations
covering plant, office facilities, and equipment which expire at
various dates through 2006. Future minimum annual fixed rentals
required during the years ending in fiscal 1997 through 2001 under
non-cancelable operating leases having an original term of more than
one year are $5.9 million, $5.5 million, $4.7 million, $3.9 million,
and $3.4 million, respectively. The aggregate obligation subsequent to
fiscal 2001 is $7.7 million. Rent expense from continuing operations
was approximately $5.7 million, $4.4 million, and $4.6 million in
fiscal 1996, 1995, and 1994, respectively.
<PAGE>
The Corporation is a party to several pending legal proceedings and
claims. Although the outcome of such proceedings and claims cannot be
determined with certainty, the Corporation's counsel and management are
of the opinion that the final outcome should not have a material
adverse effect on the Corporation's operations or financial position.
ACQUISITIONS
1996 ACQUISITIONS
On February 20, 1996, Dynatech acquired the stock of Synergistic
Solutions, Inc. (SSI), of Atlanta, Georgia, for approximately $5.5
million. SSI offers the telecommunications industry software solutions
to help simplify deployment of new transmission equipment and forecast
system growth. Acquired technology and other intangible assets of
approximately $4.3 million are being amortized over four to seven
years. The investment in excess of fair market value of assets
purchased of $964,000 is being amortized over 15 years.
On September 1, 1995, Dynatech acquired substantially all of the
business and assets of Tele-Path Industries, Inc. (TPI), of Salem,
Virginia for $23.6 million. The transaction was composed of
approximately $12.6 million was cash, including a $2.6 million
contingent adjustment for the stock prices, and 688,096 shares of the
Corporation's common stock at $19.91 per share. TPI manufactures
communication test instruments used by regional Bell operating
companies and other communication service providers to test North
American ISDN technology standards. Acquired complete technology and
other intangible assets of approximately $6.7 million are being
amortized over five years.
Incident to this acquisition, the Company purchased the incomplete
technology activities of TPI, resulting in a one-time pretax charge in
the second quarter of approximately $16.9 million, or ($.56) per share
after the effect of tax. This purchased incomplete technology that had
not reached technological feasibility and which had no alternative
future use was valued using a risk adjusted cash flow model under which
future cash flows associated with in-process research and development
were discounted considering risks and uncertainties related to the
viability of and potential changes in future target markets and to the
completion of the products that will ultimately be marketed by the
Company.
Since the effects of the purchase acquisition for the period April
1, 1995 through the date of acquisition and for the 12 months ended
March 31, 1996 is not material to the consolidated financial
statements, pro forma information is not reflected herein. Both
acquisitions were recorded using the purchase method of accounting.
1995 ACQUISITIONS
In October 1994, the Corporation acquired selected assets of Time
Logic, Inc. (TLI), of Moorpark, California, for approximately $1
million in cash. TLI manufactures telecine editing systems for the
post-production and corporate video markets. Acquired intangible assets
of $450,000 are being amortized over five years. The investment in
excess of fair market value of assets purchased of $606,000 is being
amortized over 15 years.
The acquisition was accounted for under the purchase method of
accounting, and results of its operations have been included from the
date of acquisition. Since the effects of the purchase acquisition for
the period April 1, 1994 through the date of acquisition and for the 12
months ended March 31, 1995 is not material to the consolidated
financial statements, pro forma information is not reflected herein.
In addition, the Company purchased technology rights and licenses
from various parties aggregating $2.1 million which are being amortized
over five years.
1994 ACQUISITIONS
In fiscal 1994, two acquisitions, recorded as purchases, were made for
$2.8 million in cash and assumed liabilities of $1.6 million. The
effects of the purchase acquisitions for the period April 1, 1993
through the dates of acquisition and for the 12 months ended March 31,
1994 are not material to the consolidated financial statements.
SEGMENT INFORMATION AND GEOGRAPHIC AREAS
The Corporation operates predominantly in a single industry as a
manufacturer of telecommunications test and industrial and scientific
communications products. Dynatech is a multi-national corporation with
continuing operations outside the United States consisting of
distribution and sales offices in the Channel Islands, England and
France.
Net income (loss) in fiscal 1996, 1995, and 1994 included currency
gains (losses) of approximately $(90,300), $292,900, and $(149,700),
respectively.
<PAGE>
<TABLE>
<CAPTION>
Information by geographic areas for the years ended March 31, 1996, 1995, and 1994 is summarized below:
Outside U.S.
(Amounts in thousands) United States (principally Europe) Combined
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to unaffiliated customers
1996............................................$268,830* $24,212 $293,042
1995............................................ 220,907* 22,171 243,078
1994............................................ 178,338* 21,274 199,612
Income (loss) before taxes from continuing operations
1996............................................$ 26,657 $ (549) $ 26,108
1995............................................ 27,771 324 28,095
1994............................................ 23,338 509 23,847
Identifiable assets at
March 31, 1996..................................$186,186 $19,003 $205,189
March 31, 1995.................................. 177,317 79,075 256,392
March 31, 1994.................................. 200,620 79,933 280,553
* Includes export sales of $35,844, $33,929 and $27,739 in 1996, 1995 and 1994, respectively.
</TABLE>
SUBSEQUENT EVENT
On April 30, 1996, the Corporation sold the assets of Dynatech Nevada,
Inc. to Lionheart Technologies for $7.7 million in cash and a note of
$1.0 million. The purchase agreement also provided for potential future
royalties on revenue of certain product lines. Dynatech Nevada, Inc. is
one of the companies recorded in discontinued operations. Any gain on
this or other transactions will be recorded against net assets of
discontinued operations held for sale on the Company's balance sheet
until completion of the divestiture plan.
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of Dynatech Corporation:
We have audited the accompanying consolidated balance sheets of Dynatech
Corporation as of March 31, 1996 and 1995, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of
the three fiscal years in the period ended March 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Dynatech Corporation as of March 31, 1996 and 1995, and the consolidated
results of its operations and its cash flows for each of the three fiscal
years in the period ended March 31, 1996, in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
May 20, 1996
<PAGE>
<TABLE>
<CAPTION>
Summary of Operations by Quarter (Unaudited)
(Amounts in thousands except per share data)
1996 Quarter First Second Third Fourth Year
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales .................................... $66,758 $68,513 $80,540 $77,231 $293,042
Gross profit ............................. 41,509 42,251 49,917 47,929 181,606
Income (loss) from continuing operations . 5,047 (4,883)(c) 8,141 7,409 15,714(c)
Net income ............................... 4,625 (4,993) 7,807 6,804 14,243
Income (loss) per common share
Continuing operations ............ $ 0.28 $ (0.27) $ 0.45 $ 0.40 $ 0.86
Net income ....................... $ 0.26 $ (0.28) $ 0.43 $ 0.37 $ 0.78
Market Share Price (a) - High ............ $ 20.50 $ 22.25 $ 17.50 $ 25.50
Low $ 14.75 $ 15.13 $ 14.00 $ 16.00
1995 Quarter First Second Third Fourth Year
- ------------------------------------------------------------------------------------------------------------
Sales .................................. $53,807 $60,011 $66,241 $63,019 $243,078
Gross profit ........................... 32,407 38,114 41,117 40,028 151,666
Income (loss) from continuing operations 2,111 4,588 5,033 4,692 16,424
Net income (loss) ...................... 3,660 5,084 5,608 4,816(b) 19,168(b)
Income (loss) per common share
Continuing operations .......... $ 0.11 $ 0.26 $ 0.28 $ 0.27 $ 0.92
Net income (loss) .............. $ 0.20 $ 0.28 $ 0.32 $ 0.27 $ 1.07
Market Share Price (a)- High ........... $ 11.00 $ 11.25 $ 16.75 $ 19.38
Low ............ $ 7.88 $ 10.38 $ 10.75 $ 13.50
(a) Dynatech common shares are traded on the NASDAQ - National Market System
No cash dividends have been paid on Dynatech common shares.
(b) Includes extraordinary charge, net of tax, of $1,019 for early retirement of debt.
(c) Includes charge for purchased incomplete technology.
</TABLE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT.
NAME OF PARENT OF SUBSIDIARY OF ORGANIZATION STATE OR OTHER JURISDICTION
- -------------------------------------------- ---------------------------
Dynatech Corporation - Parent Massachusetts
Dynatech U.S.A., Inc. Massachusetts
Alpha Image, Inc. Delaware
Alta Group, Inc. (inactive) California
AIRSHOW, Incorporated California
ColorGraphics Systems, Inc. Wisconsin
ComCoTec, Inc. Illinois
Computerized Medical Systems, Inc. Missouri
DaVinci Systems, Inc. Florida
Digital Technology, Inc. Ohio
Dyna FSC Corporation (inactive) U.S. Virgin Islands
Dynatech Cable Products Group, Inc. Utah
Dynatech Communications, Inc. Delaware
Dynatech Laboratories, Inc. Delaware
Dynatech Leasing Corporation Nevada
Dynatech Nevada, Inc. Nevada
Dynatech NewStar, Inc. Wisconsin
Dynatech Precision Sampling Corporation Louisiana
Dynatech Tactical Communications, Inc. Massachusetts
Dynatech Video Group, Inc. Utah
Dynatech Video & Specialty Computers, Inc.
(inactive) Wisconsin
Industrial Computer Source, Inc. California
L.E.A. Dynatech, Incorporated Florida
Parallax Graphics, Inc. California
Piiceon, Inc. California
Quanta Corporation Utah
Quanta International Corporation Utah
Science Associates, Inc. (in liquidation) New Jersey
Telecommunications Techniques Corporation Maryland
Trontech, Inc. New Jersey
Unex Corporation Massachusetts
U.S. Computer Systems, Inc. Ohio
Utah Scientific Inc. Nevada
DataViews Corporation Massachusetts
XKD Corporation California
Cromemco, G.m.b.H. (inactive) Germany
Dynatech A.G. (in liquidation) Switzerland
TTC Canada Ltd. Canada
Dynatech Corporation Ltd. England
Dynatech Scandinavia A/S (inactive) Norway
Dynatech Communications SRL Italy
Dynatech Communications Svenska A.B. Sweden
Dynatech Data Communications, Ltd. Guernsey, Channel Islands
Dynatech Communications Espana (in liquidation) Spain
Dynatech Communications G.m.b.H. Germany
Dynatech Deutschland, G.m.b.H. Germany
Dynatech Gesellschaft Furdated Verarbeitung Germany
Dynatech Systems France, SA France
Dynatech Holdings Ltd. Guernsey, Channel Islands
Dynatech Holdings Ltd. England
Dynatech Holdings S.A.R.L. France
Dynatech Hong Kong, Ltd. Hong Kong
Dynatech Investments, Ltd. Guernsey, Channel Islands
Nihon Dynatech K.K. Japan
Dynatech Medical Products, Ltd. Guernsey, Channel Islands
Industrial Computer Source France France
Laboratorie Dynatech S.A.R.L. France
Dynatech Laboratories s.r.o. Czech Republic
Telecommunications Techniques Company
(Ireland) Ltd. Ireland
EXHIBIT 23
Consent of Independent Accountants
We consent to the incorporation by reference in the registration statements of
Dynatech Corporation on Form S-3 (File Nos. 2-78465, 2-81026, 2-82260, 2-85387,
2-86457, 2-92391, 2-94757, 33-365, 33-2387, 33-5544, 33-17169, 33-24058,
33-30610 and 33-62551) and on Form S-8 (File Nos. 2-87779, 33-10465, 33-17243,
33-42427, 33-50768, 33-57491, 33-57495 and 333-01639) of our reports dated May
20, 1996, on our audits of the consolidated financial statements and financial
statement schedules of Dynatech Corporation as of March 31, 1996 and 1995 and
for each of the years ended March 31, 1996, and 1995 and 1994, which reports
have been incorporated by reference or included in this Annual Report on Form
10-K.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 14, 1996
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<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
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