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EXHIBIT 4.1
SUMMARY OF THE RIGHTS
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SUMMARY OF THE RIGHTS
On February 17, 1999, the Board of Directors of Ducommun
Incorporated (the "Company") authorized and declared a dividend of one preferred
stock purchase right (a "Right") for each share of common stock, par value $.01
per share, of the Company (the "Common Shares"). The dividend is payable on
March 3, 1999 (the "Record Date") to the holders of record of Common Shares as
of the close of business on such date.
The following is a brief description of the Rights. It is
intended to provide a general description only and is subject to the detailed
terms and conditions of the Rights Agreement (the "Rights Agreement") dated as
of February 17, 1999 by and between the Company and Harris Trust Company of
California, as Rights Agent (the "Rights Agent").
1. COMMON SHARE CERTIFICATES REPRESENTING RIGHTS
Until the Distribution Date (as defined in Section 2
below), (a) the Rights shall not be exercisable, (b) the Rights shall be
attached to and trade only together with the Common Shares and (c) the stock
certificates representing Common Shares also shall represent the Rights attached
to such Common Shares. Common Share certificates issued after the Record Date
and prior to the Distribution Date shall contain a notation incorporating the
Rights Agreement by reference.
2. DISTRIBUTION DATE
The "Distribution Date" is the earliest of (a) the tenth
business day following the date of the first public announcement that any person
(other than the Company or certain related entities, and with certain additional
exceptions) has become the beneficial owner of 15% or more of the then
outstanding Voting Shares (such person is a "15% Stockholder" and the date of
such public announcement is the "15% Ownership Date"), (b) the tenth business
day (or such later day as shall be designated by the Board of Directors)
following the date of the commencement of, or the announcement of an intention
to make, a tender offer or exchange offer, the consummation of which would cause
any person to become a 15% Stockholder or (c) the first date, on or after the
15% Ownership Date, upon which the Company is acquired in a merger or other
business combination in which the Company is not the surviving corporation or in
which the outstanding Common Shares are changed into or exchanged for stock or
assets of another person, or upon which 50% or more of the Company's
consolidated assets or earning power are sold (other than in transactions in the
ordinary course of business). In calculating the percentage of outstanding
Voting Shares that are beneficially owned by any person, such person shall be
deemed to beneficially own any Voting Shares issuable upon the exercise,
exchange or conversion of any options, warrants or other securities beneficially
owned by such person; provided, however, that such Voting Shares issuable upon
such exercise shall not be deemed outstanding for the purpose of calculating the
percentage of Voting Shares that are beneficially owned by any other person.
Upon the close of business of the Distribution Date, the
Rights shall separate from the Common Shares, Right certificates shall be issued
and the Rights shall become exercisable to purchase Preferred Shares as
described in Section 5 below.
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No Person who is the Beneficial Owner of 15% or more of the
outstanding Voting Shares as of February 17, 1999 shall be deemed a 15%
Stockholder unless or until such Person shall acquire, without the prior
approval of the Board of Directors, Beneficial Ownership of an additional 1% of
the Voting Shares then outstanding and, following such acquisition, is the
Beneficial Owner of more than 15% of the Voting Shares then outstanding. In
addition, any Person (a "Transferee") who purchases Voting Shares from such
Person shall not be deemed a 15% Stockholder if, after giving effect to such
acquisition, such Transferee holds no more than the sum of the Voting Shares so
acquired plus 1% of the Voting Shares then outstanding.
3. ISSUANCE OF RIGHT CERTIFICATES
As soon as practicable following the Distribution Date,
separate certificates representing only Rights shall be mailed to the holders of
record of Common Shares as of the close of business on the Distribution Date,
and such separate Right certificates alone shall represent such Rights from and
after the Distribution Date.
4. EXPIRATION OF RIGHTS
The Rights shall expire on February 17, 2009 (the
"Expiration Date"), unless earlier redeemed or exchanged, unless the
Distribution Date has previously occurred and the Rights have separated from the
Common Shares, in which case the Rights will remain outstanding for ten years
from the date they separate.
5. EXERCISE OF RIGHTS
Unless the Rights have expired or been redeemed or
exchanged, they may be exercised, at the option of the holders, pursuant to
paragraphs (a), (b) or (c) below. No Right may be exercised more than once or
pursuant to more than one of such paragraphs. From and after the first event of
the type described in paragraphs (b) or (c) below, each Right that is
beneficially owned by a 15% Stockholder or that was attached to a Common Share
that is subject to an option beneficially owned by a 15% Stockholder shall be
void.
(a) Right to Purchase Preferred Shares. From and after the
close of business on the Distribution Date, each Right (other than a Right that
has become void) shall be exercisable to purchase one one-hundredth (1/100) of a
share of Series C Junior Participating Cumulative Preferred Stock, par value
$.01 per share, of the Company (the "Preferred Shares"), at an exercise price of
$60.00 (Sixty Dollars) (the "Exercise Price"). Prior to the Distribution Date,
the Company may substitute for all or any portion of the Preferred Shares that
would otherwise be issuable upon exercise of the Rights, cash, assets or other
securities having the same aggregate value as such Preferred Shares. The
Preferred Shares are nonredeemable and, unless otherwise provided in connection
with the creation of a subsequent series of preferred stock, are subordinate to
any other series of the Company's preferred stock whether issued before or after
the issuance of the Preferred Shares. The Preferred Shares may not be issued
except upon exercise of Rights. The holder of a Preferred Share is entitled to
receive when, as and if declared, the greater of (i) cash and non-cash dividends
in an amount equal to 100 times the dividends declared on each Common Share or
(ii) a preferential annual dividend of $.01 per Preferred Share ($.0001 per one
one-hundredth (1/100) of a Preferred Share). In the event of liquidation, the
holders of Preferred Shares shall be entitled to receive a liquidation payment
in
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an amount equal to the greater of (1) $.01 per Preferred Share ($.0001 per one
one-hundredth (1/100) of a Preferred Share), plus all accrued and unpaid
dividends and distributions on the Preferred Shares, or (2) an amount equal to
100 times the aggregate amount to be distributed per Common Share. Each
Preferred Share has one hundred (100) votes per share (one vote per one
one-hundredth (1/100) of a Preferred Share), voting together with the Common
Shares. In the event of any merger, consolidation or other transaction in which
Common Shares are exchanged, the holder of a Preferred Share shall be entitled
to receive 100 times the amount received per Common Share. The rights of the
Preferred Shares as to dividends, voting and liquidation preferences are
protected by antidilution provisions. It is anticipated that the value of one
one-hundredth (1/100) of a Preferred Share should approximate the value of one
Common Share.
(b) Right to Purchase Common Shares of the Company. From
and after the close of business on the tenth business day following the 15%
Ownership Date, each Right (other than a Right that has become void) shall be
exercisable to purchase, at the Exercise Price (initially $60.00), Common Shares
with a market value equal to two times the Exercise Price. If the Company does
not have sufficient Common Shares available for all Rights to be exercised, the
Company shall substitute for all or any portion of the Common Shares that would
otherwise be issuable upon the exercise of the Rights, cash, assets or other
securities having the same aggregate value as such Common Shares.
(c) Right to Purchase Common Stock of a Successor
Corporation. If, on or after the 15% Ownership Date, (i) the Company is
acquired in a merger or other business combination in which the Company is not
the surviving corporation, (ii) the Company is the surviving corporation in a
merger or other business combination in which all or part of the outstanding
Common Shares are changed into or exchanged for stock or assets of another
person or (iii) 50% or more of the Company's consolidated assets or earning
power are sold (other than in transactions in the ordinary course of business),
then each Right (other than a Right that has become void) shall thereafter be
exercisable to purchase, at the Exercise Price (initially $60.00), shares of
common stock of the surviving corporation or purchaser, respectively (the
"Surviving Person"), with an aggregate market value equal to two times the
Exercise Price.
6. ADJUSTMENTS TO PREVENT DILUTION
The Exercise Price, the number of outstanding Rights and
the number of Preferred Shares or Common Shares issuable upon exercise of the
Rights are subject to adjustment from time to time as set forth in the Rights
Agreement in order to prevent dilution. With certain exceptions, no adjustment
in the Exercise Price shall be required until cumulative adjustments require an
adjustment of at least 1%.
7. CASH PAID INSTEAD OF ISSUING FRACTIONAL SECURITIES
No fractional securities shall be issued upon exercise of a
Right (other than fractions of Preferred Shares that are integral multiples of
one one-hundredth of a Preferred Share and that may, at the election of the
Company, be evidenced by depositary receipts) and in lieu thereof, an adjustment
in cash shall be made based on the market price of such securities on the last
trading date prior to the date of exercise.
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8. REDEMPTION
At any time prior to the earlier of (a) the tenth business
day following the 15% Ownership Date or (b) the first event of the type giving
rise to exercise rights under Section 5(c) above, the Board of Directors may, at
its option, direct the Company to redeem the Rights in whole, but not in part,
at a price of $.001 per Right (the "Redemption Price"), and the Company shall so
redeem the Rights. Immediately upon such action by the Board of Directors (the
date of such action being the "Redemption Date"), the only right of the holders
of Rights thereafter shall be to receive the Redemption Price.
9. EXCHANGE
At any time during the period of 180 days after the 15%
Ownership Date, the Board of Directors of the Company may, at its option,
authorize and direct the exchange of all, but not less than all, of the then
outstanding Rights for Common Shares, one one-hundredths of Preferred Shares,
debt securities of the Company, other property or any combination of the
foregoing, which, as of the date of the Board of Directors' action, has a
current market price equal to the difference between the Exercise Price and the
current market price of the shares that would otherwise be issuable upon
exercise of a Right on such date (the "Exchange Ratio"), and the Company shall
so exchange the Rights. Immediately upon such action by the Board of Directors,
the right to exercise Rights shall terminate and the only right of the holders
of Rights thereafter shall be to receive the securities so designated by the
Board of Directors in accordance with the Exchange Ratio.
10. NO STOCKHOLDER RIGHTS PRIOR TO EXERCISE
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company (other than rights resulting
from such holder's ownership of Common Shares), including, without limitation,
the right to vote or to receive dividends.
11. AMENDMENT OF RIGHTS AGREEMENT
The Board of Directors may, from time to time, without the
approval of any holder of Rights, direct the Company and the Rights Agent to
supplement or amend any provision of the Rights Agreement in any manner, whether
or not such supplement or amendment is adverse to any holder of Rights, and the
Company and the Rights Agent shall so supplement or amend such provision;
provided, however, that from and after the earliest of (a) the tenth business
day following the 15% Ownership Date, (b) the first event of the type giving
rise to exercise rights under Section 5(c) above or (c) the Redemption Date, the
Rights Agreement cannot be supplemented or amended in any manner that would
materially and adversely affect any holder of outstanding Rights other than a
15% Stockholder or a Surviving Person.
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