EX. 4.1
RIGHTS AGREEMENT
____________________________________
DHB INDUSTRIES, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
Rights Agent
____________________________________
Dated as of October 6, 2006
INDEX
PAGE
SECTION 1. CERTAIN DEFINITIONS.............................................................................1
SECTION 2. APPOINTMENT OF RIGHTS AGENT.....................................................................6
SECTION 3. ISSUE OF RIGHT CERTIFICATES.....................................................................6
SECTION 4. FORM OF RIGHT CERTIFICATES......................................................................7
SECTION 5. COUNTERSIGNATURE AND REGISTRATION...............................................................8
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST
OR STOLEN RIGHT CERTIFICATES....................................................................9
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS...................................9
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.............................................11
SECTION 9. RESERVATION AND AVAILABILITY OF SHARES OF PREFERRED STOCK......................................11
SECTION 10. PREFERRED STOCK RECORD DATE....................................................................12
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF RIGHTS.............................13
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.....................................19
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER...........................19
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES........................................................21
SECTION 15. RIGHTS OF ACTION...............................................................................23
SECTION 16. AGREEMENT OF RIGHT HOLDERS.....................................................................23
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER..............................................24
SECTION 18. CONCERNING THE RIGHTS AGENT....................................................................24
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT......................................24
SECTION 20. DUTIES OF RIGHTS AGENT.........................................................................25
SECTION 21. CHANGE OF RIGHTS AGENT.........................................................................27
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES.............................................................27
SECTION 23. REDEMPTION AND TERMINATION.....................................................................28
SECTION 24. EXCHANGE.......................................................................................28
SECTION 25. NOTICE OF PROPOSED ACTIONS.....................................................................30
SECTION 26. NOTICES........................................................................................30
SECTION 27. SUPPLEMENTS AND AMENDMENTS.....................................................................31
SECTION 28. PERIODIC REVIEW AND EVALUATION.................................................................31
SECTION 29. SUCCESSORS.....................................................................................32
SECTION 30. BENEFITS OF THIS RIGHTS AGREEMENT..............................................................32
SECTION 31. SEVERABILITY...................................................................................32
SECTION 32. GOVERNING LAW..................................................................................32
SECTION 33. COUNTERPARTS...................................................................................32
SECTION 34. DESCRIPTIVE HEADINGS...........................................................................33
SECTION 35. FORCE MAJEURE..................................................................................33
Exhibit A Form of Certificate of Designation for
Series B Junior Participating
Preferred Stock
Exhibit B Form of Right Certificate
Exhibit C Summary of Preferred Stock Purchase Rights
ii
RIGHTS AGREEMENT
This Rights Agreement, dated as of October 6, 2006 ("Rights
Agreement"), is entered into between DHB Industries, Inc., a Delaware
corporation (the "Company"), and American Stock Transfer & Trust Company, a New
York corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on October 6, 2006, the Board of Directors of the
Company authorized and declared a dividend distribution of one right
(hereinafter referred to as a "Right") for each share of Common Stock, par value
$0.001 per share, of the Company outstanding at the close of business on October
10, 2006 (the "Record Date"), (other than shares of such Common Stock held in
the Company's treasury on such date) and has authorized the issuance of one
Right in respect of each share of Common Stock of the Company issued between the
Record Date (whether originally issued or issued from the Company's treasury)
and the Distribution Date (as such term is defined in Section 3 hereof), each
Right representing the right to purchase one one-thousandth of a share of Series
B Junior Participating Preferred Stock of the Company having the rights, powers
and preferences set forth in the form of Certificate of Designation attached
hereto as Exhibit A, upon the terms and subject to the conditions hereinafter
set forth; and
WHEREAS, the Company desires to appoint the Rights Agent to
act as provided herein, and the Rights Agent is willing to so act.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Rights
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as hereinafter
defined) who or which, together with all Affiliates (as hereinafter defined) and
Associates (as hereinafter defined) of such Person, without the Prior Written
Approval of the Company (as hereinafter defined), shall be the Beneficial Owner
(as hereinafter defined) of securities of the Company constituting 15% or more
of the Voting Power (as hereinafter defined) of the Company or was such a
Beneficial Owner at any time after the date hereof, whether or not such Person
continues to be the Beneficial Owner of securities representing 15% or more of
the Voting Power of the Company, but shall not include (i) the Company, any
Subsidiary of the Company, any employee benefit plan or compensation arrangement
of the Company or any Subsidiary of the Company, or any entity holding
securities of the Company to the extent organized, appointed or established by
the Company or any Subsidiary of the Company for or pursuant to the terms of any
such employee benefit plan or compensation arrangement, (ii) any Person who or
which, together with all Affiliates and Associates of such Person, inadvertently
may become the Beneficial Owner of securities of the Company representing 15% or
more of the Voting Power of the Company or otherwise becomes such a Beneficial
Owner without a plan or intention to acquire control of the Company, so long as
such Person, individually or together with the Affiliates and Associates of such
Person, promptly enters into, and delivers to the Company, an irrevocable
commitment promptly to divest, and thereafter promptly divests (without
exercising or retaining any power, including voting, with respect to such
securities), sufficient securities of the Company so that such Person, together
with all Affiliates and Associates of such Person, ceases to be the Beneficial
Owner of 15% or more of the Voting Power of the Company, or (iii) a
Grandfathered Person (as hereinafter defined). Notwithstanding the foregoing, no
Person shall become an "Acquiring Person" as the result of an acquisition of
voting securities of the Company by the Company which, by reducing the amount of
such securities outstanding, increases the proportionate voting power of such
securities beneficially owned by such Person to 15% or more of the Voting Power
of the Company; PROVIDED, HOWEVER, that if a Person becomes the Beneficial Owner
of securities constituting 15% or more of the Voting Power of the Company by
reason of purchases by the Company and shall, after such purchases by the
Company, become the Beneficial Owner of any additional voting securities of the
Company without the Prior Written Approval of the Company, then such Person
shall be deemed to be an Acquiring Person.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date hereof.
(c) 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 beneficially owns, directly or indirectly as
determined pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act, as in effect on the date hereof;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), or
upon the exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise, PROVIDED,
HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of
securities tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for payment or
exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding, PROVIDED, HOWEVER, that a Person shall
not be deemed the "Beneficial Owner" of any security under this clause
(B) if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given in
response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations under 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 with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy or consent as described in
clause (B) of subparagraph (ii) of this paragraph (c)) or disposing of
any securities of the Company.
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Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used with
reference to a Person's Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder.
(d) "Board of Directors" shall mean the Board of Directors of
the Company as constituted from time to time.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York or
Florida 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., Eastern Standard Time, on such date; PROVIDED, HOWEVER, that if such date
is not a Business Day it shall mean 5:00 P.M., Eastern Standard Time, on the
next succeeding Business Day.
(g) "Common Stock" shall mean the Common Stock, par value
$0.001 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 of such Person or the equity securities or other
equity interest having power to control or direct the management of such Person
or, if such Person is a Subsidiary (as hereinafter defined) of another Person,
of the Person which ultimately controls such first mentioned Person and which
has issued and outstanding such capital stock, equity securities or equity
interests.
(h) "Company" shall have the meaning set forth in the Preamble
of this Rights Agreement.
(i) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(j) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(k) "Exchange Ratio" shall have the meaning set forth in
Section 24(a) hereof.
(l) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(m) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(n) "Grandfathered Person" shall mean any Person who, as of
the close of business on October 10, 2006 (the "Grandfather Date"), together
with all Affiliates and Associates of such Person, was the Beneficial Owner of
securities of the Company constituting 15% or more of the Voting Power of the
Company; PROVIDED, HOWEVER, that such Person, together with such Person's
Affiliates and Associates, does not increase its or their percentage ownership
of the Voting Power of the Company by more than one (1) percentage point over
its or their percentage Beneficial Ownership on the Grandfather Date (other than
through any acquisition of voting securities of the Company with the Prior
Written Approval of the Company); PROVIDED FURTHER that, for purposes of the one
(1) percentage calculation, any increase in percentage ownership shall not take
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into account the effect of any repurchases of Common Stock (or other of its own
securities) by the Company so long as the Grandfathered Person, together with
such Grandfathered Person's Affiliates and Associates, does not acquire any
voting securities of the Company without the Prior Written Approval of the
Company after the acquisition of voting securities of the Company by the
Company. If a Person, or an Affiliate or Associate of such Person, is the
involuntary transferee of voting securities of the Company from a Grandfathered
Person (including, but not limited to, when such involuntary transfer is as a
result of the death of a Grandfathered Person), such Person shall then become a
Grandfathered Person.
(o) "Independent Director" shall have the meaning set forth in
Section 28 hereof.
(p) "Nasdaq" shall have the meaning set forth in Section
11(f)(i) hereof.
(q) "Number of Adjustment Shares" shall have the meaning set
forth in Section 11(b) hereof.
(r) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity, and shall include any
successor (by merger or otherwise) of any such entity.
(s) "Preferred Stock" shall mean the Series B Junior
Participating Preferred Stock, par value $0.001 per share, of the Company.
(t) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(u) "Prior Written Approval of the Company" shall mean prior
express written consent of the Company to the actions in question, executed on
behalf of the Company by a duly authorized officer of the Company following
express approval by action of at least a majority of the members of the Board of
Directors then in office.
(v) "Purchase Price" shall have the meaning set forth in
Section 4(a) hereof.
(w) "Record Date" shall have the meaning set forth in the
Recitals of this Rights Agreement.
(x) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(y) "Registrar" shall have the meaning set forth in Section
4(a) hereof.
(z) "Right" shall have the meaning set forth in the Recitals
of this Rights Agreement.
(aa) "Rights Agent" shall have the meaning set forth in the
Preamble of this Rights Agreement.
(bb) "Right Certificate" shall have the meaning set forth in
Section 3(a) hereof.
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(cc) "Rights Agreement" shall have the meaning set forth in
the Preamble of this Rights Agreement.
(dd) "Section 11(b) Event" shall have the meaning set forth in
Section 11(b) hereof.
(ee) "Section 13 Event" shall mean an event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(ff) "Securities Act" shall mean the Securities Act of 1933,
as amended.
(gg) "Security" shall have the meaning set forth in Section
11(f)(i) hereof.
(hh) "Stock Acquisition Date" shall mean the earlier of (i)
the first date of public announcement by the Company or a Person that an
Acquiring Person has become an Acquiring Person, or (ii) the date on which the
Company first has notice, direct or indirect, or otherwise determines that a
Person has become an Acquiring Person.
(ii) "Subsidiary" shall mean, with respect to any Person, any
other Person of which securities or other ownership interests having ordinary
Voting Power, in the absence of contingencies, to elect a majority of the board
of directors (or other persons performing similar functions) of such other
Person are at the time directly or indirectly owned by such Person or one or
more of such Person's Subsidiaries, except that "Subsidiary" when used with
reference to the Company shall mean any Person of which either a majority of the
Voting Power of the voting equity securities or a majority of the equity
interests is owned, directly or indirectly, by the Company.
(jj) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(kk) "Trading Day" shall have the meaning set forth in Section
11(f)(i) hereof.
(ll) "Voting Power" shall mean the voting power of all
securities of a Person then outstanding generally entitled to vote for the
election of directors of the Person (or, where appropriate, for the election of
persons performing similar functions).
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Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Stock) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable upon ten (10) days' prior written notice to
the Rights Agent. The Rights Agent shall have no duty to supervise, and in no
event shall be liable for, the acts or omissions of any such Co-Rights Agent. In
the event the Company appoints one or more Co-Rights Agents, the respective
duties of the Rights Agents 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 Business Day after the Stock Acquisition Date or (ii) the Close of
Business on the tenth Business Day (or such later date as may be determined by
action of the Board of Directors but in no event later than the tenth Business
Day after such time as any Person becomes an Acquiring Person) after the date
that a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan or compensation arrangement
of the Company or of any Subsidiary of the Company, or any entity holding
securities of the Company to the extent organized, appointed or established by
the Company or any Subsidiary of the Company for or pursuant to the terms of any
such employee benefit plan or compensation arrangement) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, without the Prior Written Approval of the
Company, which tender or exchange offer would result in any Person becoming the
Beneficial Owner of Voting Power aggregating 15% or more of the outstanding
Voting Power (including any such date which is after the date of this Rights
Agreement and prior to the issuance of the Rights; the earlier of such dates
being herein referred to as the "Distribution Date"), (y) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section 3) by the
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
Right Certificates) and not by separate Right Certificates, as more fully set
forth below, and (z) the Rights (and the right to receive certificates therefor)
will be transferable only in connection with the transfer of the underlying
shares of Common Stock, as more fully set forth below. As soon as practicable
after the Company has notified the Rights Agent of the occurrence of the
Distribution Date, the Company shall prepare and execute, and the Rights Agent
shall countersign and 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, a right certificate, in substantially the form of Exhibit B hereto (the
"Right Certificate"), evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided herein. As of and after the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Preferred Stock,
in substantially the form of Exhibit C hereto (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 (or the earlier
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redemption, expiration or termination of the Rights), the Rights will be
evidenced by such certificates for the Common Stock registered in the names of
the holders of the Common Stock and the registered holders of the Common Stock
shall also be registered holders of the associated Rights. Until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), the surrender for transfer of any of the certificates for the Common
Stock outstanding in respect of which Rights have been issued 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 redemption,
expiration or termination of the Rights shall be deemed also to be certificates
for Rights and shall have impressed, printed or written on, or otherwise affixed
to them a legend substantially to the following effect:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between
DHB Industries, Inc. (the "Company") and American Stock
Transfer & Trust Company, as Rights Agent, as it may from time
to time be supplemented or amended (the "Rights Agreement"),
the terms of which are incorporated herein by reference and a
copy of which is on file at the principal executive offices of
the Company. Under certain circumstances, as set forth in the
Rights Agreement, such Rights may expire or may be redeemed,
exchanged or be evidenced by separate certificates and no
longer be evidenced by this certificate. The Company will mail
to the holder of this certificate a copy of the Rights
Agreement without charge promptly after receipt of a written
request therefor. Under certain circumstances, Rights issued
to or held by Acquiring Persons or their Affiliates or
Associates (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
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for 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 Common
Stock after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Stock shall be deemed canceled and retired so that
the Company shall not be entitled to exercise any Rights associated with 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 to be printed on the reverse thereof) shall be
in substantially the same form as Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Rights 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 customary usage. Subject to the provisions of Section 11 and Section
7
22 hereof, the Right Certificates, whenever issued, shall be dated as of the
Record Date, and on their face shall entitle the holders thereof to purchase
such number of one one-thousandths of a share of Preferred Stock as shall be set
forth therein at the price per one one-thousandth of a share as set forth
therein (the "Purchase Price"), but the number and identity of such shares and
the Purchase Price shall be and remain subject to adjustment as provided in
Sections 11, 13 and 22 hereof.
(b) Any Right Certificate issued pursuant hereto that
represents Rights beneficially owned by (i) an Acquiring Person or any Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or such Associate or Affiliate) or to any
Person with whom such Acquiring Person (or such Associate or Affiliate) has any
continuing plan, agreement, arrangement or understanding regarding either the
transferred Rights, shares of Company Common Stock or the Company or (B) a
transfer which a majority of the Board of Directors has determined to be part of
a plan, agreement, arrangement or understanding which has as a primary purpose
or effect the avoidance of Section 7(e), and any Right Certificate issued
pursuant to Section 6 hereof, Section 11 hereof or Section 22 hereof upon
transfer, exchange, replacement or adjustment of any other Right Certificate
referred to in this sentence, shall contain (to the extent feasible) 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 or an Affiliate or an Associate of an Acquiring Person.
Accordingly, this Right Certificate and the Rights represented
hereby are void in the circumstances specified in Section 7(e)
of the Rights Agreement.
The failure to print the foregoing legend on any such Right Certificate or any
defect therein shall not affect in any manner whatsoever the application or
interpretation of the provisions of Section 7(e) hereof.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman, President, Chief Executive Officer, Chief Financial
Officer or any Senior Vice President, 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 Secretary or any Assistant Secretary of the Company,
either manually or by facsimile signature. The Right Certificates shall be
countersigned manually or by facsimile signature by the Rights Agent or the
registrar or co-registrar for the Common Stock (the "Registrar") and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company whose manual or facsimile signature is affixed to the Right Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent or the Registrar and issuance and delivery by the Company, such
Right Certificates, nevertheless, may be countersigned by the Rights Agent or
the Registrar, issued and delivered with the same force and effect as though the
person who signed such Right Certificates had not ceased to be such officer of
8
the Company. Any Right Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Right Certificate, shall
be a proper officer of the Company to sign such Right Certificate, although at
the date of the execution of this Rights Agreement any such person was not such
an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its stockholder services office or such other
office designated for such purpose, 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, the certificate
number of 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 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 (as such term is defined in Section
7(a) hereof), any Right Certificate or Right Certificates may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of
shares of Preferred Stock as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the stockholder services office of the Rights Agent or
such office designated for such purpose. Thereupon, the Rights Agent shall
countersign and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. 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 reasonably 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 make 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; PURCHASE PRICE; EXPIRATION DATE
OF RIGHTS.
(a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the stockholder services office of
the Rights Agent or such office designated for such purpose, together with
payment of the Purchase Price for each one one-thousandth of a share of
Preferred Stock as to which the Rights are exercised, at or prior to the Close
of Business on the Expiration Date. The "Expiration Date", as used in this
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Rights Agreement, shall be the earliest of (i) the Final Expiration Date (as
defined below), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof, or (iii) the time at which the Rights are exchanged as
provided in Section 24 hereof. The "Final Expiration Date", as used in this
Rights Agreement, shall be October 10, 2016.
(b) The Purchase Price for each one one-thousandth of a share
of Preferred Stock pursuant to the exercise of a Right shall initially be
$15.00, shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate, with the form of
election to purchase duly executed, accompanied by payment of the Purchase Price
for each one one-thousandth of a share of Preferred Stock to be purchased and an
amount equal to any applicable transfer tax required to be paid by the holder of
the Rights pursuant hereto in accordance with Section 9 hereof by certified
check, bank draft or money order payable to the order of the Company or the
Rights Agent, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) either (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the number of shares of Preferred Stock to be purchased and the
Company hereby irrevocably authorizes any such transfer agent to comply with all
such requests, or (B) if the Company, in its sole discretion, shall have elected
to deposit the shares of Preferred Stock issuable upon exercise of the Rights
hereunder into a depositary, requisition from the depositary agent depositary
receipts representing such number of one one-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 hereby directs such depositary
agent to comply with all such requests, (ii) 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, (iii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14 hereof, (iv) after receipt of
any such cash, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate, (v) when appropriate, requisition from the
Company the amount of cash or securities issuable upon exercise of a Right
pursuant to the adjustment provisions of Section 11 or the exchange provisions
of Section 24, and (vi) after receipt of any such cash or securities, promptly
deliver such cash or securities to or upon the order of the registered holder of
such Right Certificate, of any such cash or securities.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Rights Agreement to the
contrary, upon the first occurrence of a Section 11(b) Event or a Section 13
Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives such
10
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or any such Associate or Affiliate) or to
any Person with whom such Acquiring Person (or such Associate or Affiliate) has
any continuing plan, agreement, arrangement or understanding regarding the
transferred Rights, shares of Company Common Stock or the Company or (B) a
transfer which a majority of the Board of Directors has determined to be part of
a plan, agreement, arrangement or understanding which has as a primary purpose
or effect the avoidance of this Section 7(e), shall be 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) are complied with, but shall
have no liability to any holder of Rights or any other Person as a result of its
failure to make any determination under this Section 7(e) or Section 4(b) with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless the certificate
contained in the appropriate form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise shall have
been properly completed and duly executed by the registered holder thereof and
the Company shall have been provided with such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
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 to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF SHARES 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 its 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 Rights and, after the occurrence
of a Section 11(b) Event or a Section 13 Event, shall so reserve and keep
available a sufficient number of shares of Preferred Stock, Common Stock and/or
other securities which may be required to permit the exercise in full of the
Rights pursuant to this Rights Agreement.
(b) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
and/or other securities delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities (subject to
11
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares or securities.
(c) Subject to and after the date on which the Company comes
into compliance with its periodic filing requirements under Securities and
Exchange Commission (the "SEC") rules and regulations (it being understood that
the exercisability of the Rights will be temporarily suspended until such time
as the Company is in compliance with said requirements), the Company shall use
its best efforts to (i) file, as soon as practicable following the first
occurrence of an event which would establish the Distribution Date, a
registration statement under the Securities Act, with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date. The Company will also take such action as may be
appropriate under the "blue sky laws" of the various states. In addition, after
the Company has come into compliance with its periodic filing requirements under
SEC rules and regulations, the Company may temporarily suspend, for a period of
time not to exceed 90 days after the later of (A) the date set forth in clause
(i) of the first sentence of this Section 9(c) and (B) the date the Company
comes into compliance with its periodic filing requirements under SEC rules and
regulations, the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective or to obtain any other
required regulatory approval in connection with the exercisability of the
Rights. Upon any 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 provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
registration or qualification in such jurisdiction shall have been effected or
obtained.
(d) 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 shares of Preferred Stock and/or other securities 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 involved in the
transfer or delivery of Right Certificates or the issuance or delivery of
certificates or depositary receipts for Preferred Stock and/or other securities
in a name other than that of the registered holder of the Right Certificate
evidencing Rights surrendered for exercise, nor shall the Company be required to
issue or deliver any certificates or depositary receipts for shares of Preferred
Stock and/or other securities upon the exercise of any Rights until any such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. PREFERRED STOCK RECORD DATE. Each person (other
than the Company) in whose name any certificate for shares of Preferred Stock
(or other securities) is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the Preferred Stock
(or other securities) represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; PROVIDED, HOWEVER, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or other securities) transfer
12
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 (or other securities)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a stockholder 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 PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and identity 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) In the event the Company shall at any time after the date
of this Rights Agreement (i) declare a dividend on the Preferred Stock payable
in shares of Preferred Stock, (ii) subdivide the outstanding Preferred Stock,
(iii) combine the outstanding Preferred Stock into a smaller number of shares or
(iv) 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, the Purchase
Price in effect at the time of the record date for such dividend or the time of
the effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock, including Preferred Stock, issuable
upon exercise of a Right, shall be proportionately adjusted so that the holder
of any Right exercised after such time, upon payment of the aggregate
consideration such holder would have had to pay to exercise such Right prior to
such time, shall be entitled to receive the aggregate number and kind of shares
of capital stock, including Preferred 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, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification.
(b) In the event any Person becomes an Acquiring Person
("Section 11(b) Event"), then proper provision shall be made so that each holder
of a Right, subject to Section 7(e) and Section 24 hereof and except as provided
below, shall after the later of the occurrence of such event and the effective
date of an appropriate registration statement pursuant to Section 9 hereof, have
a right to receive, upon exercise thereof at the then current Purchase Price,
multiplied by the then number of one one-thousandths of a share of Preferred
Stock for which a Right is then exercisable, in accordance with the terms of
this Rights Agreement, in lieu of shares of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the result obtained by (y)
multiplying the then current Purchase Price by the then number of one
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by (z) 50% of the current market price per
one share of Common Stock (determined pursuant to Section 11(f) hereof on the
date of the occurrence of the Section 11(b) Event) (such number of shares being
referred to as the "Number of Adjustment Shares").
(c) In the event that there shall not be sufficient Treasury
shares or authorized but unissued shares of Common Stock to permit the exercise
in full of the Rights in accordance with the foregoing Section 11(b), and the
Rights become so exercisable, notwithstanding any other provision of this Rights
13
Agreement, to the extent necessary and permitted by applicable law and any
agreements in effect on the date hereof to which the Company is a party, each
Right shall thereafter represent the right to receive, upon exercise thereof at
the then current Purchase Price, multiplied by the then number of one
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable, in accordance with the terms of this Rights Agreement, a number of
shares, or units of shares, of (y) Common Stock, and (z) preferred stock (or
other equity securities) of the Company, including, but not limited to Preferred
Stock, equal in the aggregate to the Number of Adjustment Shares where the Board
of Directors shall have in good faith deemed such shares or units, other than
the shares of Common Stock, to have at least the same value and voting rights as
the Common Stock (a "common stock equivalent"); PROVIDED, HOWEVER, if there are
unavailable sufficient shares (or fractions of shares) of Common Stock and/or
common stock equivalents, then the Company shall take all such action as may be
necessary to authorize additional shares of Common Stock or common stock
equivalents for issuance upon exercise of the Rights, including the calling of a
meeting of stockholders; AND PROVIDED, FURTHER, that if the Company is unable to
cause sufficient shares of Common Stock and/or common stock equivalents to be
available for issuance upon exercise in full of the Rights, then the Company, to
the extent necessary and permitted by applicable law and any agreements or
instruments in effect on the date thereof to which it is a party, shall make
provision to pay an amount in cash equal to twice the Purchase Price (as
adjusted pursuant to this Section 11), in lieu of issuing shares of Common Stock
and/or common stock equivalents. To the extent that the Company determines that
some action needs to be taken pursuant to this Section 11(c), the Board of
Directors by action of at least a majority of its members then in office may
suspend the exercisability of the Rights for a period of up to sixty (60) days
following the date on which the Section 11(b) Event shall have occurred, in
order to decide the appropriate form of distribution to be made pursuant to this
Section 11(c) and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended. The Board of
Directors may, but shall not be required to, establish procedures to allocate
the right to receive Common Stock and common stock equivalents upon exercise of
the Rights among holders of Rights, which such allocation may be, but is not
required to be, pro rata.
(d) If the Company shall fix a record date for the issuance of
rights or warrants to all holders of Preferred Stock entitling them (for a
period expiring within 90 calendar days after such record date) to subscribe for
or purchase Preferred Stock (or securities having the same or more favorable
rights, privileges and preferences as the Preferred Stock ("equivalent preferred
stock")) or securities convertible into Preferred Stock or equivalent preferred
stock, at a price per share of Preferred Stock or per share of equivalent
preferred stock or having a conversion or exercise price per share, as the case
may be, less than the current market price per share of Preferred Stock (as
defined in Section 11(f) hereof) on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such 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 or equivalent
preferred stock to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such current
market price, and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of additional
shares of Preferred Stock and/or equivalent preferred stock 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
14
value of such consideration shall be as determined in good faith by a majority
of the Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent. 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 adjustment 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 Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(e) 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 or surviving corporation) of evidences of indebtedness, cash (other
than a regular periodic cash dividend out of 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
convertible securities, subscription rights or warrants (excluding those
referred to in Section 11(d) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price for one share of Preferred Stock (as defined
in Section 11(f) hereof) on such record date less the fair market value (as
determined in good faith by a majority of the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such convertible securities, subscription rights or warrants applicable to
one share of Preferred Stock, and the denominator of which shall be such current
market price for one 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 Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(f) (i) For the purpose of any computation hereunder,
the "current market price" of any security (a "Security" for purposes
of this Section 11(f)(i)) on any date shall be deemed to be the average
of the daily closing prices per share of such Security for the 30
consecutive Trading Days (as hereinafter defined) immediately prior to
such date; PROVIDED, HOWEVER, that in the event that the current market
price per share of such Security is determined during a period
following the announcement by the issuer of such Security of (A) a
dividend or distribution on such Security payable in shares of such
Security or securities convertible into shares of such Security or (B)
any subdivision, combination or reclassification of such Security, and
prior to the expiration of 30 Trading Days after the ex-dividend date
for such dividend or distribution or the record date for such
subdivision, combination or reclassification, then, and in each such
case, the "current market price" shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security.
The closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Security is not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the principal national securities
15
exchange on which the Security is listed or admitted to trading or, if
the Security is not listed or admitted to trading on any national
securities exchange, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("Nasdaq") National
Market, or if the Security is not listed or admitted to trading on any
national securities exchange or included in the Nasdaq National Market,
the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system
then in use, or, if on any such date the Security is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Security selected by a majority of the Board of Directors. If on any
such date no market maker is making a market in the Security, the fair
value of such Security on such date as determined in good faith by a
majority of the Board of Directors shall be used. The term "Trading
Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open
for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange a day on which
the Nasdaq National Market is open for the transaction of business or,
if the Security is not listed or admitted to trading on any national
securities exchange or included in the Nasdaq National Market, a
Business Day. If the Security is not publicly held or not so listed or
traded, "current market price" shall mean the fair value as determined
in good faith by a majority of the Board of Directors, whose
determination shall be described in a statement filed with the Rights
Agent.
(ii) For the purpose of any computation hereunder,
the "current market price" per share (or one one-thousandth of a share)
of Preferred Stock shall be determined in the same manner as set forth
above for the Common Stock in clause (i) of this Section 11(f) (other
than the last sentence thereof). If the current market price per share
(or one one-thousandth of a share) of Preferred Stock cannot be
determined in the manner provided above or if the Preferred Stock is
not publicly held or listed or traded in a manner described in clause
(i) of this Section 11(f), the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to
1,000 (as such number may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with respect to the
Common Stock occurring after the date of this Rights Agreement)
multiplied by the current market price per share of the Common Stock
and the "current market price" per one one-thousandth of a share of
Preferred Stock shall be equal to the current market price per share of
the Common Stock (as appropriately adjusted). If neither the Common
Stock nor the Preferred Stock is publicly held or so listed or traded,
"current market price" per share shall mean the fair value per share as
determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent and shall
be conclusive for all purposes.
(g) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(g) 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, as the case may be. Notwithstanding the first sentence of this Section
11(g), any adjustment required by this Section 11 shall be made no later than
16
the earlier of (i) three years from the date of the transaction which mandates
such adjustment or (ii) the Expiration Date.
(h) In the event that at any time, as a result of an
adjustment made pursuant to Section 11(a) or (b) hereof, the holder of any Right
shall be entitled to receive upon exercise of such Right any shares of capital
stock of the Company other than shares of 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 shares contained in Section
11(a) through (e) hereof, inclusive, and the provisions of Sections 7, 9, 10, 13
and 14 hereof with respect to the shares of Preferred Stock shall apply on like
terms to any such other shares.
(i) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock or other capital stock of the Company purchasable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment of the Purchase Price.
(j) Unless the Company shall have exercised its election as
provided in Section 11(k) hereof, upon each adjustment of the Purchase Price as
a result of the calculations made in Section 11(d) and (e) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a share of Preferred Stock (calculated to the nearest
one-ten-thousandth) obtained by (i) multiplying (A) the number of one
one-thousandths of a share of Preferred Stock covered by a Right immediately
prior to the adjustment by (B) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(k) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of shares of Preferred Stock purchasable upon
the exercise of a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of one one-thousandths
of a share of Preferred Stock for which such Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest one-ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(k), 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
17
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 Purchase 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.
(l) Irrespective of any adjustment or change in the Purchase
Price or the number of shares of Preferred Stock issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of shares which were
expressed in the initial Right Certificates issued hereunder.
(m) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the shares of
Common Stock or other securities and below one one-thousandth of the then par
value, if any, of the 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 such Preferred Stock, Common Stock or
other securities at such adjusted Purchase Price. If upon any exercise of the
Rights, a holder is to receive a combination of Common Stock and common stock
equivalents, a portion of the consideration paid upon such exercise, equal to at
least the then par value of a share of Common Stock of the Company, shall be
allocated as the payment for each share of Common Stock of the Company so
received.
(n) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; PROVIDED, HOWEVER, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares upon the occurrence of the event requiring
such adjustment.
(o) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment a majority of
the Board of Directors shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any Preferred Stock at less than the then current market price, (iii)
issuance wholly for cash of Preferred Stock or securities which by their terms
are convertible into or exchangeable for Preferred Stock, (iv) stock dividends
or (v) issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to the holders of its Preferred Stock,
shall not be taxable to such stockholders.
(p) In the event that at any time after the date of this
Rights Agreement and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common Stock payable in shares of Common
Stock or (ii) effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in shares
18
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in any such case (y) the number of one one-thousandths of a share of Preferred
Stock purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-thousandths of a share of
Preferred Stock so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event, and (z) each
share of Common Stock outstanding immediately after such event shall have issued
with respect to it that number of Rights which each share of Common Stock
outstanding immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(p) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.
(q) The Company covenants and agrees that it shall not, at any
time after the Distribution Date and so long as the Rights have not been
redeemed pursuant to Section 23 hereof or exchanged pursuant to Section 24
hereof, (i) consolidate with, (ii) merge with or into, or (iii) sell or
transfer, in one or more transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person, if at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(r) The Company covenants and agrees that, after the Stock
Acquisition Date, it will not, except as permitted by Sections 23 and 24 hereof,
take any action the purpose or effect of which is to diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER
OF SHARES. Whenever an adjustment is made as provided in Sections 11 or 13
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) include
a brief summary thereof in a mailing to each holder of a Right Certificate in
accordance with Section 26 hereof, or prior to the Distribution Date, disclose a
brief summary in a filing under the Exchange Act. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustments
therein contained.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER.
(a) In the event that, directly or indirectly, at any time
after a Person has become an Acquiring Person, (x) the Company shall consolidate
with, or merge with and into, any other Person, (y) any Person shall consolidate
with or merge with and into the Company, and the Company shall be the continuing
or surviving corporation of such merger and, in connection with such merger, all
or part of the Common Stock shall be changed into or exchanged for stock or
other securities of any other Person (or the Company) or cash or any other
property, or (z) the Company shall sell, or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
19
other Person other than to the Company or one or more of its wholly owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right, subject to Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price multiplied by the then number of one one-thousandths of a
share of Preferred Stock for which a Right is then exercisable (or if a Section
11(b) Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-thousandths of a share for which a Right
was exercisable immediately prior to the first occurrence of a Section 11(b)
Event by the Purchase Price in effect immediately prior to such first
occurrence) in accordance with the terms of this Rights Agreement, in lieu of
Preferred Stock, such number of shares of freely tradable Common Stock of the
Principal Party (as hereinafter defined), free and clear of liens, rights of
call or first refusal, encumbrances or other adverse claims, as shall be equal
to the result obtained by (A) multiplying the then current Purchase Price by the
number of one one-thousandths of a share of Preferred Stock for which a Right is
then exercisable (or if a Section 11(b) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such one
one-thousandths of a share for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(b) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product by (B)
50% of the current market price per share of the Common Stock of such Principal
Party (determined in the manner described in Section 11(f) hereof) on the date
of consummation of such consolidation, merger, sale or transfer; (ii) the
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 Rights 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, except for the provisions of
11(b), shall apply to such Principal Party; and (iv) such Principal Party shall
take such steps (including, but not limited to, the authorization and
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 the shares of its 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) hereof, 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, including the Company, 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) hereof, 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 case described in clause (i) or (ii) in
this Section 13(b), (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 or Affiliate of another Person,
"Principal Party" shall refer to such other Person; (y) in case such
Person is a Subsidiary, directly or indirectly, or Affiliate of more
than one Person, the Common Stocks of all of which are and have been so
20
registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest aggregate market
value, and (z) in case such Person is, or is owned directly or
indirectly by, a partnership or joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in (x) and (y) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such
party were a "Subsidiary" of both or all of such joint venturers and
the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of shares of its authorized 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 unless prior thereto 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
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of
assets mentioned in paragraph (a) of this Section 13, the Principal Party will
(if the Company is the Principal Party, subject to and after the date on which
the Company comes into compliance with its periodic filing requirements under
SEC rules and regulations):
(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, will
use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and will use its
best efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting 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; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
which comply in all 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. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(b) Event, the Rights which have not theretofore been exercised shall
thereafter also become exercisable in the manner described in Section 13(a)
hereof.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
21
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the
principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, as reported by the Nasdaq National Market or,
if the Rights are not listed or admitted to trading on any national securities
exchange or included in the Nasdaq National Market, the last quoted price, or,
if not so quoted, the average of the high bid and low asked prices in the over
the counter market, as reported by Nasdaq or such other system then in use or,
if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by a majority of the Board
of Directors. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith by
a majority of the Board of Directors shall be used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-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 one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the shares of Preferred Stock represented by
such depositary receipts. In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-thousandth of a share of Preferred Stock,
the Company may pay to the registered holders of Right Certificates at the time
such Right Certificates are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one one-thousandth of a
share of Preferred Stock. For purposes of this Section 14(b), the current market
value of one one-thousandth of a share of Preferred Stock shall be one
one-thousandth of the closing price of a share of Preferred Stock (as determined
pursuant to Section 11(f)(ii) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) Following the occurrence of one of the transactions or
events specified in Section 11 hereof giving rise to the right to receive common
stock equivalents (other than Preferred Stock) or other securities upon the
exercise of a Right, the Company shall not be required to issue fractions of
shares or units of such common stock equivalents or other securities upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of such common stock equivalents or other securities. In lieu of
fractional shares or units of such common stock equivalents or other securities,
the Company may pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
22
fraction of the current market value of a share or unit of such common stock
equivalent or other securities. For purposes of this Section 14(c), the current
market value shall be determined in the manner set forth in Section 11(f) hereof
for the Trading Day immediately prior to the date of such exercise and, if such
common stock equivalent is not traded, each such common stock equivalent shall
have the value of one one-thousandth of a share of Preferred Stock.
(d) Except as otherwise expressly provided in this Section 14,
the holder of a Right by the acceptance of the Right expressly waives such
holder's right to receive any fractional Rights or any fractional share upon
exercise of Rights.
Section 15. RIGHTS OF ACTION. All rights of action in respect
of this Rights Agreement, except for rights of action given to the Rights Agent
under Section 18 or Section 20 hereof, are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of 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 Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Stock), may, in such holder's
own behalf and for such holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, such holder's right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Rights 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 Rights Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Rights 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 Rights Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a
Right by accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of 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 stockholder services office of the Rights Agent or such office designated
for such purpose, duly endorsed or accompanied by a proper instrument of
transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common 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 Certificate 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 be
affected by any notice to the contrary.
23
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock, Common
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 stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(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
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Rights Agreement, including the costs and expenses of defending against any
claim of liability.
(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 Rights Agreement in reliance upon any
Right Certificate or certificate for Preferred Stock, Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT.
(a) Any Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
corporate trust powers or business or the stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Rights 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 Person
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 Rights Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
24
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Rights 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 Rights Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent
undertakes the duties and obligations imposed by this Rights Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman,
President, Chief Executive Officer, Chief Financial Officer or any Senior Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Rights
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights 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 Rights 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 Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Sections 11 or 13 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
25
evidenced by Right Certificates after actual notice to the Rights Agent of any
such adjustment); 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 Preferred Stock or other securities to be issued pursuant to this Rights
Agreement or any Right Certificate or as to whether any shares of Preferred
Stock or other securities will, when issued, be validly authorized and issued,
fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman, President, Chief Executive Officer, Chief Financial Officer, any
Senior Vice President, the Secretary, any Assistant Secretary, the Treasurer or
any Assistant Treasurer of the Company, and to apply to such officers for advice
or instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions.
(h) The Rights Agent and any stockholder, director, officer,
employee, agent or representative 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 Rights Agreement. Nothing
herein shall preclude the Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided that reasonable care was exercised
in the selection and continued employment thereof.
(j) No provision of this Rights 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 Rights 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, clause 2
and/or, in the case of the certificate attached to the form of election to
purchase, clause 3 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise of transfer without first consulting
with the Company.
26
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company 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. In the event the transfer agency relationship in effect between the
Company and the Rights Agent terminates, the Rights Agent will be deemed to
resign automatically on the effective date of such termination, and any required
notice will be sent by the Company. The Company may remove the Rights Agent or
any successor Rights Agent upon 30 days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Common Stock and Preferred Stock by registered or certified mail, and to
the holders of the Right Certificates by first class mail or, prior to the
Distribution Date, through any filing made by the Company pursuant to the
Exchange Act. If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within a period of 30
days after 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 (which holder shall, with such notice, submit
such holder's Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be (a) a
corporation or other entity organized and doing business under the laws of the
United States or of any state, in good standing, having an office in the States
of New York or Florida, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority or (b) an affiliate of a corporation
or other entity 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 Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Right Certificates
or, prior to the Distribution Date, through any filing made by the Company
pursuant to the Securities Exchange Act of 1934, as amended. Failure to give any
notice provided for 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
(a) Notwithstanding any of the provisions of this Rights
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 a majority of the Board of Directors then in office to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares of
stock or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Rights Agreement.
(b) In addition, in connection with the issuance or sale of
Common Stock following the Distribution Date and prior to the redemption,
exchange or expiration of the Rights, the Company (a) shall with respect to
27
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee benefit plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; PROVIDED, HOWEVER, that (i) no
such Right Certificates shall be issued if, 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 Certificates would be issued, and (ii) no Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. REDEMPTION AND TERMINATION.
(a) A majority of the Board of Directors then in office may,
at its option, at any time prior to the earlier of (i) the Close of Business on
the Stock Acquisition Date or (ii) the Close of Business on the Final Expiration
Date, elect to redeem all but not less than all of the then outstanding Rights
at a redemption price of $0.01 per Right, as appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"). The redemption of the Rights by the Board of Directors may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish.
(b) Immediately upon the action of a majority of the Board of
Directors then in office electing to redeem the Rights, evidence of which shall
be promptly filed with the Rights Agent, or, when appropriate, immediately upon
the time or satisfaction of such conditions as the Board of Directors may have
established, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public disclosure of any such redemption; PROVIDED, HOWEVER, that the
failure to give, or any defect in, any such disclosure shall not affect the
validity of such redemption. Within 10 days after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the holders of the then outstanding Rights by mailing such
notice 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.
(c) Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or in
Section 24 hereof and other than in connection with the purchase of Common Stock
prior to the Distribution Date.
Section 24. EXCHANGE.
(a) The Board of Directors may, at its option, at any time
after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become null and void pursuant to the provisions of Section 7(e) hereof) for
28
Common Stock at an exchange ratio of one-half of a share of Common Stock per
Right, appropriately adjusted to reflect adjustments in the number of Rights
pursuant to Section 11 of this Rights Agreement (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan or compensation arrangement of the Company or any such
Subsidiary, or any entity holding securities of the Company to the extent
organized, appointed or established by the Company or any such Subsidiary for or
pursuant to the terms of any such employee benefit plan or compensation
arrangement), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Voting Power of the Company.
(b) Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to paragraph (a) of this Section 24
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company promptly shall give public notice of any such exchange; PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of Common 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.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Stock (or equivalent preferred stock, as
such term is defined in Section 11(d) hereof) for Common Stock exchangeable for
Rights, at the initial rate of one one-thousandth of a share of Preferred Stock
(or equivalent preferred stock) for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred Stock
pursuant to the terms thereof, so that the fraction of a share of Preferred
Stock delivered in lieu of each share of Common Stock shall have the same voting
rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of
Common Stock or Preferred Stock (or equivalent preferred stock) issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional shares of Common Stock or
Preferred Stock (or equivalent preferred stock) for issuance upon exchange of
the Rights.
(e) The Company shall not be required to issue fractions of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to the registered holders of the Right Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this paragraph (e), the current
market value of a whole share of Common Stock shall be the closing price of a
29
share of Common Stock (as determined pursuant to the second sentence of Section
11(f)(i) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
Section 25. NOTICE OF PROPOSED ACTIONS
(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 the Preferred Stock or to make any other distribution to the holders
of the Preferred Stock (other than a regular periodic cash dividend out of
earnings or retained earnings of the Company), (ii) to offer to the holders of
the Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any other class or
any other securities, rights or options, (iii) to effect any reclassification of
the Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), (iv) to effect any
consolidation or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sales or other
transfer), in one or more transactions, of 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any other
Person, (v) to effect the liquidation, dissolution or winding up of the Company,
or (vi) to declare or pay any dividend on the Common Stock payable in Common
Stock or to effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in Common
Stock), then, in each such case, the Company shall give to each holder of a
Right, 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
Common Stock and/or Preferred Stock, if any such date is to be fixed. Such
notice shall be so given in the case of any action covered by clauses (i) or
(ii) above at least ten days prior to the record date for determining holders of
the Preferred Stock for purposes of such action, and in the case of any such
other action, at least ten days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of Preferred Stock,
whichever shall be the earlier. The failure to give notice required by this
Section 25 or any defect therein shall not affect the legality or validity of
the action taken by the Company or the vote upon any such action.
(b) In case a Section 11(b) Event shall occur, then the
Company shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the occurrence of
such event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(b) hereof.
Section 26. NOTICES. Notices or demands authorized by this
Rights 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:
DHB Industries, Inc.
2102 Southwest Second Street
Pompano Beach, Florida 33069
Attention: General Counsel
30
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights 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:
American Stock Transfer & Trust Company
59 Maiden Lane, Plaza Level
New York, New York 10038
Attention: Executive Vice President
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate 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. The Company may from
time to time supplement or amend this Rights Agreement without the approval of
any holders of Right Certificates in order (a) to cure any ambiguity, (b) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (c) to shorten or lengthen any
time period hereunder (including without limitation to extend the Final
Expiration Date), (d) increase or decrease the Purchase Price, or (e) to change
or supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable; PROVIDED, HOWEVER, that from and after such time as any
Person becomes an Acquiring Person, this Rights Agreement shall not be amended
in any manner which would adversely affect the interests of the holders of
Rights; PROVIDED FURTHER that this Rights Agreement may not be supplemented or
amended to lengthen pursuant to clause (c) of this sentence, (A) the 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/or the
benefits to, the holders of the Rights; PROVIDED FURTHER that the Company shall
have the right to make unilaterally any changes necessary to facilitate the
appointment of a successor Rights Agent, which such changes shall be set forth
in a writing by the Company or by the Company and such successor Rights Agent.
Without limiting the foregoing, the Company may at any time prior to such time
as any Person becomes an Acquiring Person amend this Rights Agreement to lower
the thresholds set forth in Sections 1(a) and 3(a) hereof from 15% to not less
than the greater of (i) any percentage greater than the largest percentage of
the Voting Power of the Company then known by the Company to be beneficially
owned by any Person (other than the Company, any Subsidiary of the Company, or
any employee benefit plan or compensation arrangement of the Company or any
Subsidiary of the Company, and any entity holding securities of the Company to
the extent organized, appointed or established by the Company or any such
Subsidiary for or pursuant to the terms of any such employee benefit plan or
compensation arrangement) together with all Affiliates and Associates of such
Person and (ii) 10%. Upon the delivery of a 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.
Section 28. PERIODIC REVIEW AND EVALUATION. It is understood
that the TIDE Committee (as provided below) of the Board of Directors shall
review and evaluate this Rights Agreement to determine whether the maintenance
of this Rights Agreement continues to be in the interests of the Company, its
stockholders and any other relevant constituencies of the Company, at least once
31
every three years, or sooner than that if any Person shall have made a proposal
to the Company or its stockholders, or taken any other action that, if
effective, could cause such Person to become an Acquiring Person hereunder,
unless a majority of the members of the TIDE Committee shall determine that such
review and evaluation are not appropriate after giving due regard to all
relevant circumstances. Following each such review, the TIDE Committee will
communicate its conclusions to the full Board of Directors, including any
recommendation in light thereof as to whether this Rights Agreement should be
modified or the Rights should be terminated. The TIDE Committee shall be
comprised of Independent Directors (as defined below) selected by the Board of
Directors. The TIDE Committee shall have the power to set its own agenda and to
retain at the expense of the Company its choice of legal counsel, investment
banker and/or other advisors. The TIDE Committee shall have the authority to
review all information of the Company and to consider any and all factors it
deems relevant to an evaluation of whether to maintain or modify this Rights
Agreement or to terminate the Rights. As used herein, "Independent Director"
means a member of the Board of Directors of the Company (i) who is not (A) an
Acquiring Person or an Affiliate or Associate of an Acquiring Person or (B) a
Person who shall have made a proposal to the Company or its stockholders, or
taken any other action that, if effective, could cause such Person to become an
Acquiring Person hereunder, or an Affiliate or Associate of any such Person, and
(ii) who is not, and during the past three years has not been, an officer or
employee of the Company or any Subsidiary of the Company.
Section 29. SUCCESSORS. All the covenants and provisions of
this Rights Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 30. BENEFITS OF THIS RIGHTS AGREEMENT. Nothing in this
Rights Agreement shall be construed to give to any Person 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 Rights Agreement; but this Rights Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock).
Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated. It is the intent of the parties hereto to enforce the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement to the maximum extent permitted by law.
Section 32. GOVERNING LAW. This Rights Agreement and each
Right Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 33. COUNTERPARTS. This Rights 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.
32
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Section 35. FORCE MAJEURE. Notwithstanding anything to the contrary contained
herein, the Rights Agent shall not be liable for any delays or failures in
performance resulting from acts beyond its reasonable control including, without
limitation, acts of God, terrorist acts, shortage of supply, breakdowns or
malfunctions, interruptions or malfunction of computer facilities, or loss of
data due to power failures or mechanical difficulties with information storage
or retrieval systems, labor difficulties, war, or civil unrest to the extent
such acts or events are actually beyond the Rights Agent's reasonable control.
[Signature page to follow.]
33
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to be
duly executed, all as of the day and year first above written.
Attest: DHB INDUSTRIES, INC.
By______________________________ By____________________________________
Name:___________________________ Name:_________________________________
Title:__________________________ Title:________________________________
Attest: AMERICAN STOCK TRANSFER &
TRUST COMPANY
By______________________________ By____________________________________
Name:___________________________ Name:_________________________________
Title:__________________________ Title:________________________________
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES B
JUNIOR PARTICIPATING PREFERRED STOCK
OF
DHB INDUSTRIES, INC.
PURSUANT TO SECTION 151(G) OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
The undersigned, officers of DHB Industries, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Company"), in accordance with the provisions of Section 151(g) thereof, and
being duly authorized, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation, as amended (the "Certificate"),
of the Company, the said Board of Directors on October 6, 2006, adopted the
following resolution creating a series of seventy thousand (70,000) shares of
Preferred Stock designated as Series B Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of the Company in accordance with the provisions of its
Certificate, a series of Preferred Stock of the Company be and it hereby is
created, and that the designation and amount thereof and the 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.
There shall be a series of the Preferred Stock which shall be
designated as the "Series B Junior Participating Preferred Stock," par value
$0.001 per share, and the number of shares constituting such series shall be
70,000. Such number of shares may be increased or decreased by resolution of the
Board of Directors; provided, that no decrease shall reduce the number of shares
of Series B Junior Participating Preferred Stock to a number less than that of
the shares then outstanding plus the number of shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Company.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any shares of any
series of preferred stock of the Company ranking prior and superior to the
Series B Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series B Junior Participating Preferred Stock, in
preference to the holders of shares of Common Stock, par value $0.001 per share
of the Company (the "Common Stock"), and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
any regular quarterly dividend payment date as shall be established by the Board
of Directors (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 B Junior
Participating Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1.00 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series B Junior Participating Preferred Stock.
In the event the Company shall at any time after October 10, 2006 (the "Rights
Declaration Date") declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series B Junior Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on
the Series B Junior Participating Preferred Stock as provided in paragraph (A)
of this Section immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per
share on the Series B Junior Participating Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series B Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the date
of issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series B Junior Participating
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 B Junior Participating 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, in accordance with
applicable law, fix a record date for the determination of holders of shares of
Series B Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not more
than such number of days prior to the date fixed for the payment thereof as may
be allowed by applicable law.
2
Section 3. VOTING RIGHTS.
The holders of shares of Series B Junior Participating
Preferred Stock shall have the following voting rights:
(A) Each share of Series B Junior Participating Preferred
Stock shall entitle the holder thereof to 1,000 votes on all matters submitted
to a vote of the stockholders of the Company. In the event the Company shall at
any time after the Rights Declaration Date declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes to which holders of shares of Series B Junior
Participating Preferred Stock were entitled immediately prior to such event
under the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein, in the Company's
Certificate or by law, the holders of shares of Series B Junior Participating
Preferred Stock, the holders of shares of Common Stock, and the holders of
shares of any other capital stock of the Company having general voting rights,
shall vote together as one class on all matters submitted to a vote of
stockholders of the Company.
(C) Except as otherwise set forth herein or in the Company's
Certificate, and except as otherwise provided by law, holders of Series B Junior
Participating 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 dividends or distributions payable on the Series
B Junior Participating 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 B Junior Participating Preferred Stock
outstanding shall have been paid in full, the Company 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
B Junior Participating 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 B Junior Participating Preferred Stock, except dividends paid
ratably on the Series B Junior Participating 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;
3
(iii) except as permitted in Section 4(A)(iv) below,
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 B Junior Participating
Preferred Stock, provided that the Company may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Company ranking junior (either
as to dividends or upon dissolution, liquidation or winding up) to the
Series B Junior Participating Preferred Stock; and
(iv) purchase or otherwise acquire for consideration
any shares of Series B Junior Participating Preferred Stock, or any
shares of stock ranking on a parity with the Series B Junior
Participating 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 Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company 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 B Junior Participating Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. The Company shall
cause all such shares upon their cancellation to be authorized but unissued
shares of Preferred Stock which may be reissued as part of a new series of
Preferred Stock, subject to the conditions and restrictions on issuance set
forth herein.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock of the Company ranking prior and superior to the
Series B Junior Participating Preferred Stock with respect to liquidation, upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Company, no distribution shall be made to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series B Junior Participating Preferred Stock unless, prior thereto, the
holders of shares of Series B Junior Participating Preferred Stock shall have
received $1,000.00 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series A Liquidation Preference"). Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series B Junior
Participating Preferred Stock, unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph
C below to reflect such events as stock dividends, and subdivisions,
combinations and consolidations with respect to the Common Stock) (such number
in clause (ii) being referred to as the "Adjustment Number"). Following the
payment of the full amount of the Series A Liquidation Preference and the Common
4
Adjustment in respect of all outstanding shares of Series B Junior Participating
Preferred Stock and Common Stock, respectively, holders of Series B Junior
Participating Preferred Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with respect to such
Series B Junior Participating Preferred Stock and Common Stock, on a per share
basis, respectively.
(B) In the event there are not sufficient assets available to
permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any, which
rank on a parity with the Series B Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event
there are not sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
(C) In the event the Company shall at any time after 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 Adjustment Number
in effect immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 7. CONSOLIDATION, MERGER, ETC.
In case the Company shall enter into any consolidation,
merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of Series B Junior Participating
Preferred Stock shall at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 1,000 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Company
shall at any time after 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 amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series B Junior Participating 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
are outstanding immediately prior to such event.
Section 8. REDEMPTION.
The shares of Series B Junior Participating Preferred Stock
shall not be redeemable.
5
Section 9. RANKING.
The Series B Junior Participating Preferred Stock shall rank
junior to all other series of the Company's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
Section 10. FRACTIONAL SHARES.
Series B Junior Participating 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 B Junior Participating Preferred Stock."
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
this 12th day of October, 2006.
By __________________________
Name:
Title:
By ____________________________
Name:
Title:
6
EXHIBIT B
[FORM OF RIGHT CERTIFICATE]
Certificate No. R __________________________ _____________Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE. AT THE OPTION OF THE COMPANY, THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT OR EXCHANGE FOR COMMON
STOCK, UNDER THE CIRCUMSTANCES AND ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHT CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN
ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON.
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY ARE VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(E) OF THE RIGHTS AGREEMENT.][(1) ]
Right Certificate
DHB INDUSTRIES, INC.
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 Rights Agreement dated as of October 6, 2006 (the "Rights Agreement")
between DHB Industries, Inc., a Delaware corporation (the "Company"), and
American Stock Transfer & Trust Company, a New York corporation (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 p.m. Pompano
Beach, Florida time on the Expiration Date, as that term is defined in the
Rights Agreement, at the stockholder services office (or such office designated
for such purpose) of the Rights Agent, or its successor as Rights Agent, one
one-thousandth of a fully paid, nonassessable share of the Series B Junior
Participating Preferred Stock, par value $0.001 per share ("Preferred Stock"),
of the Company, at a purchase price of $_______ per one one-thousandth of a
share (the "Purchase Price") upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of shares which may
be purchased upon exercise of each Right) and the Purchase Price set forth
above, are the number and Purchase Price as of _______________ based on the
shares of Preferred Stock of the Company as constituted at such date.
_____________________________________
[" THE PORTION OF THE LEGEND IN BRACKETS SHALL BE INSERTED ONLY IF APPLICABLE.}
The Purchase Price and the number of shares of Preferred Stock
which may be purchased upon the exercise of each of the Rights evidenced by this
Right Certificate are subject to modification and adjustment upon the happening
of certain events as provided in the Rights Agreement.
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.
Copies of the Rights Agreement are on file at the Company and the
above-mentioned office of the Rights Agent and are also available upon written
request to the Company.
This Right Certificate, with or without other Right
Certificates, upon surrender at the stockholder services office (or such office
designated for such purpose) of the Rights Agent, may be exchanged for another
Right Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of shares of Preferred
Stock as the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this Right
Certificate shall be exercised in part, the holder shall be entitled to receive,
upon surrender hereof, another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $0.01 per Right on or prior to the Stock Acquisition Date
(as defined in the Rights Agreement). In addition, subject to the provisions of
the Rights Agreement, each Right evidenced by this Certificate may be exchanged
by the Company at its option for one-half of a share of Common Stock following
the Stock Acquisition Date and prior to the time an Acquiring Person, as that
term is defined in the Rights Agreement, owns 50% or more of the Voting Power,
as that term is defined in the Rights Agreement, of the Company.
No fractional shares of Preferred Stock will be issued upon
the exercise of any Rights evidenced hereby (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts). In
lieu of fractions of a share, 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 or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
2
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.
Dated as of ________________.
Attest: DHB INDUSTRIES, INC.
By________________________________ By____________________________________
Name:_____________________________ Name:_________________________________
Title:____________________________ Title:________________________________
Countersigned:
[_________________].
By:______________________________________________
Authorized signature
3
[FORM OF REVERSE SIDE OF RIGHT CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED____________________________________________
hereby sells, assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _____________ Attorney to
transfer the within Right Certificate on the books of the within named Company,
with full power of substitution.
Dated:
__________________________
____________________________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant in
the Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.
4
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated:______________________________ _______________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
5
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To DHB INDUSTRIES, INC.:
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 such Rights and requests
that certificates for such shares be issued in the name of:
Name:
Address:_____________________________
_____________________________
Social security
or taxpayer identification
number:______________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Name:
Address:_____________________________
_____________________________
Social security
or taxpayer identification
number:______________________________
Dated:
_______________________________
______________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant in
the Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.
6
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(3) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not 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 an Acquiring Person.
Dated:
_______________________________
_________________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
NOTICE
The signature in the foregoing Forms of Assignment and
Election must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the form of
Assignment or the form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored as described in Section
7(e) of the Rights Agreement.
7
EXHIBIT C
DHB INDUSTRIES, INC.
SUMMARY OF PREFERRED STOCK
PURCHASE RIGHTS
On October 6, 2006, the Board of Directors of DHB Industries,
Inc. (the "Company") declared a dividend of one preferred share purchase right
(a "Right") for each outstanding share of Common Stock, par value $0.001 per
share, of the Company (the "Common Stock"). The dividend distribution is payable
on October 10, 2006 (the "Record Date") to the stockholders of record at the
close of business on that date. Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series B Junior
Participating Preferred Stock, par value $0.001 per share (the "Preferred
Stock") of the Company at a price of $15.00 per one one-thousandth of a share of
Preferred Stock (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement dated as of October
6, 2006, as the same may be amended from time to time (the "Rights Agreement"),
between the Company and American Stock Transfer & Trust Company, as Rights Agent
(the "Rights Agent").
Until the earlier to occur of (i) the close of business on the
tenth business day following the date of public announcement or the date on
which the Company first has notice or determines that a person or group of
affiliated or associated persons (other than the Company, any subsidiary of the
Company or any employee benefit plan of the Company, or certain "grandfathered
persons" described below) (an "Acquiring Person") has acquired, or obtained the
right to acquire, 15% or more of the outstanding shares of voting stock of the
Company without the prior written consent of the Company executed on behalf of
the Company by a duly authorized officer of the Company following express
approval by action of at least a majority of the members of the Board of
Directors then in office (the "Stock Acquisition Date") or (ii) the close of
business on the tenth business day (or such later date as may be determined by
action of the Board of Directors but not later than the Stock Acquisition Date)
following the commencement of a tender offer or exchange offer, without the
prior written consent of the Company, by a person (other than the Company, any
subsidiary of the Company or an employee benefit plan of the Company) which,
upon consummation, would result in such party's control of 15% or more of the
Company's voting stock (the earlier of the dates in clause (i) or (ii) above
being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Stock certificates outstanding as of the Record
Date, by such Common Stock certificates. For purposes of the Rights Agreement, a
"grandfathered person" is a person who, as of the close of business on October
10, 2006, together with all affiliates and associates, was the beneficial owner
of more than 15% of the outstanding shares of voting stock of the Company;
provided, that such person together with all affiliates and associates does not
increase its or their percentage ownership of the outstanding shares of voting
stock of the Company by more than one (1) percentage point without the prior
written consent of the Company.
The Rights Agreement provides that, until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Company's Common Stock. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
new Common Stock certificates issued after the Record Date upon transfer or new
issuances of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption,
exchange or expiration of the Rights), the surrender for transfer of any
certificates for shares of Common Stock outstanding as of the Record Date, even
without such notation or a copy of this Summary of Rights, will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate certificates alone will then evidence the
Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire, if not previously exercised, on October 10, 2016 (the
"Final Expiration Date"), unless the Final Expiration Date is extended or unless
the Rights are earlier redeemed or exchanged by the Company.
The Purchase Price payable, and the number of shares 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) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for or purchase
Preferred Stock at a price, or securities convertible into Preferred Stock with
a conversion price, less than the then-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 periodic cash dividends
or dividends payable in Preferred Stock) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of each
Right are also subject to adjustment in the event of a stock split of the Common
Stock or a stock dividend on the Common Stock payable in shares of Common Stock
or subdivisions, consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the
Rights will not be redeemable and will be junior to any other series of
preferred stock the Company may issue (unless otherwise provided in the terms of
such stock). Each share of Preferred Stock will have a preferential dividend in
an amount equal to 1,000 times any dividend declared on each share of Common
Stock. In the event of liquidation, the holders of the Preferred Stock will
receive a preferred liquidation payment of equal to the greater of $1,000 and
1,000 times the payment made per share of Common Stock. Each share of Preferred
Stock will have 1,000 votes, voting together with the Common Stock. In the event
of any merger, consolidation or other transaction in which shares of Common
Stock are converted or exchanged, each share of Preferred Stock will be entitled
to receive 1,000 times the amount and type of consideration received per share
of Common Stock. The rights of the Preferred Stock as to dividends, liquidation
and voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-thousandth interest in a
share of Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
2
If any person or group (other than the Company, any subsidiary
of the Company or any employee benefit plan of the Company or certain
grandfathered persons) acquires 15% or more of the Company's outstanding voting
stock without the prior written consent of the Board of Directors, each Right,
except those held by such persons, would entitle each holder of a Right to
acquire such number of shares of the Company's Common Stock as shall equal the
result obtained by multiplying the then current Purchase Price by the number of
one one-thousandths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by 50% of the then current per share
market price of Company Common Stock. The exercise of the Rights is also subject
to suspension under certain circumstances to enable the Company to register the
shares being issued upon exercise under the Securities Act of 1933, as amended.
The Company is not currently able to file a registration statement as it is not
in compliance with its periodic filing requirements under Securities and
Exchange Commission rules and regulations.
If any person or group (other than the Company, any subsidiary
of the Company or any employee benefit plan of the Company or certain
grandfathered persons) acquires more than 15% but less than 50% of the
outstanding Company Common Stock without prior written consent of the Board of
Directors, each Right, except those held by such persons, may be exchanged by
the Board of Directors for one-half of a share of Company Common Stock.
If the Company were acquired in a merger or other business
combination transaction where the Company is not the surviving corporation or
where Company Common Stock is exchanged or changed or 50% or more of the
Company's assets or earnings power is sold in one or several transactions
without the prior written consent of the Board of Directors, each Right would
entitle the holders thereof (except for the Acquiring Person) to receive such
number of shares of the acquiring company's common stock as shall be equal to
the result obtained by multiplying the then current Purchase Price by the number
one one-thousandths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by 50% of the then current market price
per share of the common stock of the acquiring company on the date of such
merger or other business combination transaction.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional shares of Preferred Stock will be
issued (other than fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), and in lieu thereof an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes
such, the Board of Directors of the Company may redeem the Rights in whole, but
not in part, at a price of $0.01 per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
including, but not limited to, an amendment to lower certain thresholds
described above to not less than the greater of (i) any percentage greater than
the largest percentage of the voting power of all securities of the Company then
3
known to the Company to be beneficially owned by any person or group of
affiliated or associated persons (other than an excepted person) and (ii) 10%,
except that from and after such time as any person or group of affiliated or
associated persons becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights.
A committee of independent directors will review the Rights
Agreement at least every three years and, if a majority of the members of the
committee deems it appropriate, may recommend a modification or termination of
the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, as the
same may be amended from time to time, which is hereby incorporated herein by
reference.
4