-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PmMcsWu9VZf/Te+1ik8AXkqoGST3z4JzfsHINvl/yLFqFY7whOV1dens0xTWfIj/ T0FV27C00lDh7wecgVgL8A== 0000030841-96-000011.txt : 19960618 0000030841-96-000011.hdr.sgml : 19960618 ACCESSION NUMBER: 0000030841-96-000011 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960617 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DYNATECH CORP CENTRAL INDEX KEY: 0000030841 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 042258582 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-07438 FILM NUMBER: 96581968 BUSINESS ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 BUSINESS PHONE: 6172726100 MAIL ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 10-K405 1 DYNATECH CORP. FORM 10-K MARCH 31, 1996 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. 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 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: 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. 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. 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. 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. 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. 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. 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. (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. 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 - ----------------------- 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 SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED MARCH 31, 1996, 1995 AND 1994 RESERVE FOR DOUBTFUL ACCOUNTS (In thousands) 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.
EX-3.(I) 2 ARTICLES OF DYNATECH CORPORATION 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. 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:
WITHOUT PAR VALUE WITH PAR VALUE CLASS OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE Preferred None 100,000 $1.00 Common None 1,500,000 $0.20
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 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- 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- 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- 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- 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- 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- 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- 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- 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 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 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: 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. 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 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 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. 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. 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 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 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. 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. 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 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 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:
WITHOUT PAR VALUE WITH PAR VALUE CLASS OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE AMOUNT Preferred Common 117,503 $.20 $23,500.60
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 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. 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. 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 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 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 4(b) Directors of Surviving Corporation are as follows:
NAME RESIDENCE POST OFFICE ADDRESS 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
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:
TITLE NAME RESIDENCE POST OFFICE ADDRESS 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)
(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. 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. 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 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. 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 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 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 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 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 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. 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. 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 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 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 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. 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. (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. (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. 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. 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; (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." (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. 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 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 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. The total presently authorized is:
WITH PAR VALUE STOCKS TYPE NUMBER OF SHARES PAR VALUE COMMON 24,000,000 $.20 PREFERRED 100,000 $1.00
CHANGE the total authorized to:
WITH PAR VALUE STOCKS TYPE NUMBER OF SHARES PAR VALUE COMMON 50,000,000 $.20 PREFERRED 100,000 $1.00
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 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 EX-3.(II) 3 SHAREHOLDER RIGHTS AGREEMENT 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 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 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 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 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 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. (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. (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. 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 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 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: 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. 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. 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, 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 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. (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. (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 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 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). (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 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). (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. (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. (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, 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 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 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 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. (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; (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. (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 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 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 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 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 (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 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 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 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. 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 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: 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 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. 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. 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 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) 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 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. (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 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. 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. 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. 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. (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. (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. 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. 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 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 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. 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 [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 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. 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:____________________ 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. 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 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. 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 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 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. EX-10 4 1982 INCENTIVE STOCK OPTION PLAN 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 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 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. 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. 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. EX-10 5 SPECIAL TERMINATION AGREEMENT BARGER/RENO 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; (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 (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 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"): 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 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, (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 (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 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. 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] EX-10 6 SPECIAL TERMINATION AGREEMENT EXEC OFFICERS 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. (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: (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 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. 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 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, 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. 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] EX-11 7 EXHIBIT 11 TO FORM 10-K DYNATECH CORPORATION EXHIBIT NO. 11 COMPUTATION OF PER SHARE EARNINGS HISTORICAL WEIGHTED AVERAGE
SHARES 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 ==========
EX-13 8 EXHIBIT 13 TO FORM 10-K 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) Dynatech Corporation
Five-Year Summary (Amounts in thousands except per share data) Years ended March 31, ............................... 1996 1995 1994 1993 1992 - --------------------------------------------------------------------------------------------------------------------- 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.
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.
Percent of Sales Percent of Change 1996 1995 1994 vs. vs. vs. Years ended March 31, 1996 1995 1994 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------------- 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
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. 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. 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.
Summary operating results of the discontinued operations are as follows: (Amounts in thousands) 1996 1995 1994 - ------------------------------------------------------------------- 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)
Consolidated Statements of Operations Dynatech Corporation (Amounts in thousands except per share data) Years ended March 31, 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------ 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.
Consolidated Balance Sheets Dynatech Corporation (Amounts in thousands except share data) March 31, 1996 1995 - -------------------------------------------------------------------------------------------------- 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.
Consolidated Balance Sheets Dynatech Corporation (Amounts in thousands except share data) March 31, 1996 1995 - -------------------------------------------------------------------------------------------------- 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.
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 - ------------------------------------------------------------------------------------------------------------------------------------ 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.
Consolidated Statements of Cash Flows Dynatech Corporation (Amounts in thousands) Years ended March 31, 1996 1995 1994 - -------------------------------------------------------------------------------------------------------------- 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.
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:
(Amounts in thousands) 1996 1995 ----------------------------------------------------------- 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 ======= =======
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. 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.
Summary operating results of the discontinued operations are as follows: (Amounts in thousands) 1996 1995 1994 - ---------------------------------------------------------------- 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)
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
Long-term debt is summarized below: (Amounts in thousands) 1996 1995 - ----------------------------------------------------- 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 ====== ======
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. 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
The components of the provision (benefit) for income taxes from continuing operations are as follows: (Amounts in thousands) 1996 1995 1994 - ---------------------------------------------------------------------- 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 ======== ======== ========
Reconciliations between U.S. federal statutory rate and the effective tax rate of continuing operations follow: 1996 1995 1994 - ----------------------------------------------------------------------------------------------- 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% ==== ==== ====
The principal components of the deferred tax assets and liabilities follow: (Amounts in thousands) 1996 1995 - -------------------------------------------------------------------------- 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 ======== ========
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. 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:
1996 1995 1994 - ----------------------------------------------------------------------------------------------------------- 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
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. 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.
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 - -------------------------------------------------------------------------------------------------------------------------------- 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.
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. 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
Summary of Operations by Quarter (Unaudited) (Amounts in thousands except per share data) 1996 Quarter First Second Third Fourth Year - ------------------------------------------------------------------------------------------------------------- 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.
EX-21 9 EXHIBIT 21 TO FORM 10-K 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 EX-23 10 EXHIBIT 23 TO FORM 10-K 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 EX-27 11 DYNATECH CORPORATION FINANCIAL DATA SCHEDULE
5 0000030841 #finef3k 1,000 USD YEAR MAR-31-1996 APR-01-1995 MAR-31-1996 1.000 46,094 0 46,324 (957) 26,916 5,981 48,589 (30,038) 205,189 41,321 0 0 0 3,721 156,998 205,189 293,042 293,042 111,436 156,931 (957) 0 (458) 26,108 10,394 15,714 (1,471) 0 0 14,243 0.078 0.078
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