pre14a
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
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Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
Breeze-Eastern Corporation
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement)
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TABLE OF CONTENTS
PRELIMINARY
COPY
BREEZE-EASTERN
CORPORATION
Be Ready. Be
Suretm
August [ ], 2011
Dear Stockholder:
You are cordially invited to attend the 2011 Annual Meeting of
Stockholders of Breeze-Eastern Corporation on October 6,
2011, at 10:00 a.m., local time, at its principal
executive offices located at 35 Melanie Lane, Whippany, New
Jersey 07981.
The Notice of Annual Meeting and Proxy Statement on the
following pages describe the matters to be presented at the
meeting.
It is important that your shares be represented at this meeting.
Whether or not you plan to attend the meeting, we hope that you
will have your stock represented by signing, dating and
returning your proxy in the enclosed envelope as soon as
possible. Your stock will be voted in accordance with the
instructions you have given in your proxy.
Our Board of Directors and management look forward to seeing you
at the meeting. Thank you for your continued support.
Sincerely yours,
D. MICHAEL HARLAN, JR.
Chief Executive Officer
PRELIMINARY
COPY
BREEZE-EASTERN
CORPORATION
Be Ready. Be
Sure.tm
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
To Be Held October 6,
2011
To Our Stockholders:
The Annual Meeting of Stockholders (the Meeting) of
Breeze-Eastern Corporation (the Company) will be
held at 10:00 a.m., local time, on October 6,
2011, at its principal executive offices located at 35
Melanie Lane, Whippany, New Jersey 07981, to consider and act
upon the following matters:
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1.
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To elect seven (7) directors of the Company, to serve until
the 2012 annual meeting of stockholders and until their
successors have been duly elected and qualified;
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2.
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To ratify the Audit Committees selection of Marcum LLP as
the independent registered public accounting firm for the fiscal
year ending March 31, 2012;
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3.
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To approve, ratify and confirm the adoption of the stockholder
rights plan adopted by the Board of Directors pursuant to the
Rights Agreement dated as of July 18, 2011 between the
Company and Computershare Trust Company, N.A.;
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4.
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To approve an amendment to our Certificate of Incorporation to
increase the number of shares of common stock we are authorized
to issue from 14,700,000 to 100,000,000;
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5.
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To approve our 2012 Incentive Compensation Plan; and
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6.
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To transact such other business as may properly come before the
Meeting or any adjournments or postponements thereof.
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Only the stockholders of record at the close of business on
August 17, 2011 will be entitled to notice of and to vote
at the Meeting or any adjournments or postponements thereof. A
list of stockholders entitled to vote at the meeting will be
available for inspection at the meeting.
By Order of the Board of Directors
MARK D. MISHLER
Senior Vice President, Chief Financial Officer, Treasurer and
Secretary
Whippany, New Jersey
August [ ], 2011
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON, WE URGE YOU TO COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
RETURN ENVELOPE. THE PROMPT RETURN OF PROXIES WILL ENSURE A
QUORUM AND SAVE US THE EXPENSE OF FURTHER SOLICITATION. EACH
PROXY GRANTED MAY BE REVOKED BY THE STOCKHOLDER APPOINTING SUCH
PROXY AT ANY TIME BEFORE IT IS VOTED. IF YOU RECEIVE MORE THAN
ONE PROXY CARD BECAUSE YOUR SHARES ARE REGISTERED IN
DIFFERENT NAMES OR ADDRESSES, EACH SUCH PROXY CARD SHOULD BE
SIGNED AND RETURNED TO ASSURE THAT ALL OF YOUR SHARES ARE
VOTED.
PRELIMINARY
COPY
BREEZE-EASTERN
CORPORATION
Be Ready. Be
Sure.tm
35
Melanie Lane, Whippany, New Jersey 07981
GENERAL
INFORMATION
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors (the
Board) of Breeze-Eastern Corporation (the
Company) for use at the Annual Meeting of
Stockholders of the Company to be held on October 6,
2011, at 10:00 a.m., local time, at 35 Melanie Lane,
Whippany, New Jersey, and any adjournments or postponements
thereof (the Annual Meeting).
For purposes of this proxy statement, the fiscal year of the
Company ended March 31, 2011, may also be referred to as
fiscal year 2011 or fiscal 2011.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING TO BE HELD ON OCTOBER 6, 2011. THIS PROXY
STATEMENT, THE ACCOMPANYING FORM OF PROXY CARD, AND OUR
ANNUAL REPORT ON
FORM 10-K
FOR THE FISCAL YEAR ENDED MARCH 31, 2011, ARE AVAILABLE AT
HTTP://WWW.ENVISIONREPORTS.COM/BZC.
VOTING AT THE
ANNUAL MEETING
Who Can
Vote
Only stockholders of record at the close of business on
August 17, 2011, the record date, are entitled to notice of
and to vote at the meeting, and at any postponements or
adjournments thereof. As of the record date,
9,469,540 shares of our common stock, $0.01 par value
per share (Common Stock), were issued and
outstanding. Holders of our Common Stock are entitled to one
vote per share for each proposal presented at the Annual
Meeting. The Common Stock does not have cumulative voting rights.
How to Vote; How
Proxies Work
Our Board of Directors is asking for your proxy. Whether or not
you plan to attend the Annual Meeting, we urge you to vote by
proxy. Please complete, date and sign the enclosed proxy card
and return it at your earliest convenience. The cost of
soliciting proxies will be borne by the Company, including
expenses in connection with the preparation and mailing of the
proxy statement, form of proxy and any other material furnished
to the stockholders by the Company in connection with the Annual
Meeting. In addition to the solicitation of proxies by mail,
employees of the Company may also solicit proxies by telephone
or personal contact. These employees will not receive any
special compensation in connection therewith. We have retained
our transfer agent, Computershare, N.A. to assist in the mailing
of the proxy statement and collection of proxies by mail from
brokers and other nominees at an estimated cost of $7,500. In
addition, we may request banks and brokers to solicit their
customers who beneficially own Common Stock listed of record in
names of nominees, and will reimburse such banks and brokers for
their reasonable
out-of-pocket
1
expenses of such solicitation. Our Annual Report on
Form 10-K
for the year ended March 31, 2011, which includes the
Companys consolidated financial statements, is being
mailed to stockholders together with these proxy materials on or
about September 5, 2011.
Any proxy not specifying to the contrary, and not designated as
broker non-votes as described below, will be voted:
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FOR the election of the directors;
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FOR the ratification of the selection of Marcum LLP as the
Companys independent registered public accounting firm for
the 2012 fiscal year;
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FOR the approval of the stockholder rights plan;
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FOR the amendment to our certificate of incorporation to
increase the number of authorized shares of Common Stock from
14,700,000 shares to 100,000,000 shares;
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FOR the approval of the 2012 Incentive Compensation Plan.
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Should any matters not described above be properly presented at
the Annual Meeting, the persons named in the proxy form will
vote in accordance with their judgment. The proxy form
authorizes these persons, in their discretion, to vote upon such
matters as may properly be brought before the Annual Meeting or
any adjournments or postponements thereof.
What Constitutes
a Quorum
The presence at the Annual Meeting in person or by proxy of
holders of outstanding Common Stock entitled to cast a majority
of all the votes entitled to be cast at the Annual Meeting will
constitute a quorum.
What Vote is
Required
Directors are elected by a plurality of the votes cast with a
quorum present. The seven persons who receive the greatest
number of votes of the holders of Common Stock represented in
person or by proxy at the Annual Meeting will be elected
directors of the Company. The affirmative vote of a majority of
the votes cast at the Annual Meeting is required to approve
(i) the ratification of the selection of Marcum LLP as the
Companys independent auditor for the fiscal year ending
March 31, 2012, (ii) the adoption of the Stockholder
Rights Plan, and (iii) the adoption of our 2012 Incentive
Compensation Plan. The approval of the holders of a majority of
our outstanding shares of Common Stock is required to amend our
Certificate of Incorporation to increase the number of
authorized shares of Common Stock.
How Abstentions
and Broker Non-Votes Are Treated
Abstentions will be counted as shares that are present for
purposes of determining a quorum. For the election of directors,
abstentions are excluded entirely from the vote and do not have
any effect on the outcome. For the proposal to amend our
Certificate of Incorporation, abstentions will have the same
effect as a vote against the proposal. For all other proposals,
abstentions are not counted in determining the votes cast.
A broker non-vote occurs when the broker holding shares in
street name is unable to vote on a proposal because exchange
rules prohibit a broker from voting on the matter without owner
instructions. Relevant exchange rules provide that a broker
holding shares for an owner in street name may not vote for a
non-routine proposal or a stockholder proposal that is opposed
by management, without voting instructions, whereas a
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broker may vote on routine matters without owner instructions.
The election of directors, the proposal to approve our
Stockholder Rights Plan, the proposal to amend our Certificate
of Incorporation, and the proposal to adopt the 2012 Incentive
Compensation Plan are non-routine items. Except in the case of
the proposal to amend our Certificate of Incorporation, broker
non-votes, if any, will not be counted as having been entitled
to vote or as a vote cast and will have no effect on the outcome
of the vote on these proposals. Broker non-votes will have the
effect as a vote against the proposal to amend our Certificate
of Incorporation. The ratification of the appointment of Marcum
LLP is a routine item.
How to
Revoke
Any person giving a proxy in the form accompanying this proxy
statement has the power to revoke it at any time before its
exercise. The proxy may be revoked by filing with the Secretary
of the Company an instrument of revocation or a duly executed
proxy bearing a later date, or by electing to vote in person at
the Annual Meeting. A stockholder who attends the Annual Meeting
need not revoke the proxy and vote in person unless he or she
wishes to do so. The mere presence at the Annual Meeting of the
person appointing a proxy does not, however, revoke the
appointment. If you are a stockholder whose shares are not
registered in your own name, you will need additional
documentation from your record holder to vote personally at the
Annual Meeting.
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements
within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended (the Exchange Act).
All statements other than statements of historical facts
included or incorporated by reference in this report, including,
without limitation, statements regarding our future financial
position, business strategy, budgets, projected revenues,
projected costs and plans and objective of management for future
operations, are forward-looking statements. In addition,
forward-looking statements generally can be identified by the
use of forward-looking terminology such as may,
will, expects, intends,
plans, projects, estimates,
anticipates, or believes or the negative
thereof or any variation there on or similar terminology or
expressions.
We have based these forward-looking statements on our current
expectations and projections about future events. These
forward-looking statements are not guarantees and are subject to
known and unknown risks, uncertainties and assumptions about us
that may cause our actual results, levels of activity,
performance or achievements to be materially different from any
future results, levels of activity, performance or achievements
expressed or implied by such forward-looking statements.
Important factors that could cause actual results to differ
materially from our expectations include, but are not limited
to: changes in business conditions, changes in applicable laws,
rules and regulations affecting the Company in locations in
which it conducts its business, interest rate trends, a decline
or redirection of the U.S. defense budget, the termination
of any contracts with the U.S. Government, changes in our
sales strategy and product development plans, changes in the
marketplace, continued services of our executive management
team, competitive pricing pressures, market acceptance of our
products under development, delays in the development of
products, changes in spending allocation or the termination,
postponement, or failure to
3
fund one or more significant contracts by the United States
Government or other customers, determination by the Company to
dispose of or acquire additional assets, events impacting the
U.S. and world financial markets and economies, and
statements of assumption underlying any of the foregoing, as
well as other factors set forth under the caption Risk
Factors in our annual report on
Form 10-K
for the fiscal year ended March 31, 2011 filed with the
Securities and Exchange Commission.
All subsequent written and oral forward-looking statements
attributable to us, or persons acting on our behalf, are
expressly qualified in their entirety by the foregoing. Except
as required by law, we assume no duty to update or revise our
forward-looking statements based on changes in internal
estimates, expectations, or otherwise.
PROPOSAL 1
ELECTION OF DIRECTORS
Our Board of Directors is elected annually. The Certificate of
Incorporation, as amended, and Bylaws, as amended and restated,
of the Company provide that the number of directors of the
Company shall be not less than five nor more than fifteen, with
the exact number to be fixed by the Bylaws. The exact number of
directors is currently fixed at seven. In July 2011,
Mr. Charles Grigg informed us that he will not be standing
for re-election as a member of the Board of Directors at the
Annual Meeting. The Board has nominated Robert J. Kelly to serve
as a director of the Company in place of Mr. Grigg.
It is the intention of the persons named in the accompanying
form of proxy to vote for all of the nominees named below (the
Nominees), unless other instructions are given.
Although it is not anticipated that any of the Nominees will be
unable to serve, in the event any Nominee is unable or declines
to serve as a director at the time of the Annual Meeting,
proxies will be voted for the election of a substitute proposed
by the Board of Directors.
Approval by
Stockholders
The director nominees who receive the greatest number of votes
at the Annual Meeting will be elected to the Board. If you do
not wish your shares to be voted for a particular Nominee named
on the proxy form that accompanies this proxy statement, you may
withhold your vote as provided on the proxy form.
THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR EACH DIRECTOR NOMINEE
Information
Concerning Nominees to the Board of Directors
We believe that our Board should be composed of individuals with
sophistication and experience in many substantive areas that
impact our business. We believe that experience, qualifications,
or skills in the following areas are most important: experience
in the aerospace/defense industry; regulatory; accounting and
finance; capital markets; design, innovation and engineering;
strategic planning; human resources and development practices;
and board practices of other public corporations. These areas
are in addition to the personal qualifications described in this
section. We believe that all of our current Board members
possess the professional and personal qualifications necessary
for board service, and have highlighted particularly noteworthy
attributes for each Board member in the individual biographies
below. The principal
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occupation and business experience, for at least the past five
years, of each current director and the new nominee is as
follows:
Current
Directors
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Director
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Name
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Position with the Company
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Age
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Since
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William H. Alderman
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Director
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49
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2007
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William J. Recker
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Director
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68
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1997
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Russell M. Sarachek
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Director
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47
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2007
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William M. Shockley
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Director
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49
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2006
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Frederick Wasserman
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Director
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57
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2007
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D. Michael Harlan, Jr.
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Director, President and Chief Executive Officer
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54
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2010
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Mr. Alderman has been President of
Alderman & Company Capital, LLC and its affiliates
since 2001. Alderman & Company Capital, LLC is a
securities broker dealer specializing in the aerospace and
defense industries. He was Managing Director of the aviation
investment banking practice of Fieldstone Investments from 1999
to 2001. He was a registered Securities Representative and
Senior Associate at GE Capital from 1991 to 1995 and Senior Vice
President at Aviation Sales Company from 1996 to 1999. Since
2007, he has served as a director of Teamstaff, Inc., a
Nasdaq-traded logistics and services company. He is also
currently a director of UFC Aerospace and Supplier Excellence
Alliance. Mr. Alderman possesses particular knowledge,
experience, and contacts in the aerospace and defense industry
which make him a strong contributor to strategy and M&A
discussions and strengthens the Boards collective
qualifications, skills, and experience.
Mr. Recker is currently retired and has been for the
last six years. Mr. Recker was President, C.E.O., and
Chairman of Gretag Imaging AG from 1990 until 1998 and continued
as Chairman until 2000. He serves on the boards of directors of
several private high technology start up companies and
non-profit organizations. Mr. Reckers experience as a
business leader and general management executive make him a
strong contributor to Board discussions of people and strategy
and strengthens the Boards collective qualifications,
skills, and experience.
Mr. Sarachek has been Managing Director of Contra
Capital Management since 2002. From 1992 to 2002, he held
various positions, including Executive Vice President and
director of mergers and acquisitions with Groupe Schneider, a
global manufacturer and distributor of electrical equipment and
industrial controls. Mr. Sarachek has extensive knowledge
in corporate governance practices for public companies and has a
range of aerospace and defense industry contacts that help
strengthen the Boards collective qualifications, skills,
and experience.
Mr. Shockley has been a member of the general
partner of Tinicum Capital Partners II, L.P., a private equity
fund, since 2004. From May 2005 through June 2006 he was the
President and Chief Executive Officer of Penn
Engineering & Manufacturing Corporation, a leading
manufacturer of specialty fasteners and a portfolio company of
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Tinicum Capital Partners. Mr. Shockley was Chief Financial
Officer of SPS Technologies, Inc., a leading manufacturer of
specialty fasteners, materials and components for the aerospace,
industrial and automotive markets, from 1995 to 2003.
Mr. Shockleys financial sophistication and expertise,
extensive experience in handling complicated environmental
matters, and broad aerospace and defense industry exposure
strengthen the Boards collective qualifications, skills,
and experience.
Mr. Wasserman is currently a financial management
consultant. Until December 31, 2006, Mr. Wasserman was
the Chief Operating/Financial Officer of Mitchell &
Ness Nostalgia Co., a privately-held manufacturer and
distributor of licensed sportswear and authentic team apparel.
Prior to Mitchell & Ness, Mr. Wasserman served as
the President of Goebel of North America, a U.S. subsidiary
of the German specialty gift maker, from 2002 to 2005 and as its
Chief Financial Officer from 2001 to 2005. Mr. Wasserman
also serves as a director of Acme Communications, Inc.,
TeamStaff, Inc., Allied Defense Group, Inc., The Aftersoft
Group, Inc., Gilman Ciocia Inc., and Crown Crafts, Inc.
Mr. Wassermans financial expertise and experience in
serving on the board of directors of other public companies
strengthen the Boards collective qualifications, skills,
and experience.
Mr. Harlan has been the Companys President and
Chief Executive Officer since January 2010. Mr. Harlan
joined the Company in August 2009 as its Executive Vice
President and Chief Operating Officer. Prior to joining the
Company, from June 2007 to July 2008, Mr. Harlan served as
Chief Executive Officer of Nomad Innovations, LLC, a business
developing turnkey wireless broadband systems. Mr. Harlan
served as President and Chief Operating Officer of Conforma
Clad, Inc., a manufacturer of high performance industrial wear
protection from 2001 to 2006. Mr. Harlan was also
previously employed by AlliedSignal Inc., and
McKinsey & Company, Inc. and served in the
U.S. Navy. Mr. Harlan has a detailed understanding of
our operations, customers, and employees along with broad
aerospace and defense industry knowledge and mergers &
acquisitions experience, all of which strengthen the
Boards collective qualifications, skills, and experience.
Director
Nominee
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Name
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Age
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Robert J. Kelly
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51
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Mr. Kelly has been employed by Tinicum, the
management company of Tinicum Capital Partners II, L.P., since
1991. Mr. Kelly currently is an observer on the board of
X-Rite, Inc. and a Director of Penn Engineering and
Manufacturing Corp, a leading manufacturer of specialty
fasteners, and Accuride Corporation, a manufacturer and supplier
of commercial vehicle components. Mr. Kelly has in the past
served as a director of a number of Tinicum Capital Partners II,
L.P. portfolio companies. Prior to joining Tinicum,
Mr. Kelly held positions at Pacific Telesis and
Bain & Company. Mr. Kelly is a graduate of Yale
College and the Stanford University Graduate School of Business.
Mr. Kelly has extensive investment expertise and
considerable experience serving on the boards of public and
private companies, all of which will strengthen the Boards
collective qualifications, skills and experience.
THE BOARD OF
DIRECTORS
Meetings and
Remuneration
During fiscal 2011, the Board held eight meetings. Each
incumbent director attended at least 75% of the aggregate of
(i) the total number of meetings held by the Board during
fiscal 2011 (held during
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the period for which he has been a director) and (ii) the
total number of meetings held by all committees of the Board on
which he or she served during that period.
Director
Attendance at Annual Meetings
The policy of the Companys Board is that all directors
should attend annual meetings of stockholders and are not
separately compensated for their attendance, although
out-of-pocket
expenses are reimbursed. All members of the Board attended our
2010 Annual Meeting.
Security Holder
Recommendations of Director Candidates
The Governance & Nominating Committee currently has no
specific policy regarding recommendations for nominees to the
Board from security holders. Security holders are permitted to
nominate candidates for director in person at each annual
meeting of stockholders. The Governance & Nominating
Committee may consider nominees recommended by stockholders in
writing to the Secretary of the Company.
Director
Independence
The Board governance policies provide that all outside directors
should be independent. On August 14, 2006, the American
Stock Exchange (now known as NYSE Amex) listed our
Common Stock for trading. As a result of such listing, we
maintain compliance with the NYSE Amex Listing Standards and
have adopted the independence criteria of NYSE Amex for purposes
of determining director independence for the Board and its
committees.
The Board has affirmatively determined that none of the current
members of the Board, except for Mr. Harlan, has a material
relationship with the Company, and that each director, except
Mr. Harlan, qualifies as independent under the NYSE Amex
independence criteria.
Committees
The Board has a standing Audit Committee, Governance &
Nominating Committee, Incentive & Compensation
Committee, and Strategic Planning Committee.
Audit
Committee
The Audit Committee reviews with our independent auditing firm
the results of the firms annual examination, advises the
full Board regarding its findings and provides assistance to the
full Board in matters involving financial statements and
financial controls. The Audit Committee is comprised of
Messrs. Wasserman (Chair), Alderman and Recker. The Board
has determined that each member of the Audit Committee meets the
independence standards set forth in
Rule 10A-3
promulgated under the Exchange Act and the independence
standards set forth in the NYSE Amex Company Guide. The Board
has determined that Mr. Wasserman qualifies as an
audit committee financial expert, as defined in
Item 407(d)(5)(ii) of
Regulation S-K,
promulgated under the Exchange Act. The Audit Committee held
four formal meetings during fiscal 2011.
The Audit Committee operates under a written charter adopted by
the Board, which is reviewed annually. The charter is available
on our website at www.breeze-eastern.com under the heading
Corporate Governance, which can be accessed by
clicking on Company Information on the home page of
the site. Under the charter, the Audit Committee is required to
pre-approve the audit and non-audit services to be performed by
our independent registered public accounting firm.
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Governance &
Nominating Committee
The Governance & Nominating Committee establishes the
criteria for, and reviews the qualifications of individuals with
respect to, nomination to the Board and to committees of the
Board. In addition, the Governance & Nominating
Committee also presents recommendations for replacement
directors when vacancies occur on the Board or committees
thereof. The Governance & Nominating Committee may
consider nominees recommended by stockholders in writing to the
Secretary of the Company. The committee is comprised of
Messrs. Sarachek (Chair), Recker, Shockley and Wasserman,
each of whom satisfy the independence standards established by
NYSE Amex. This committee held three formal meetings during
fiscal 2011.
The Governance & Nominating Committee operates under a
written charter, which is reviewed annually. The charter is
available on our website at www.breeze-eastern.com under the
heading Corporate Governance, which can be accessed
by clicking on Company Information on the home page
of the site.
Director
Nomination Process
The Governance & Nominating Committee is comprised
entirely of directors who meet applicable independence
requirements of NYSE Amex and is responsible for overseeing the
process of nominating individuals to stand for election as
directors.
Our process of director nominations takes into consideration
individuals recommended by members of the Board as well as from
other sources. The Governance & Nominating Committee
Charter provides that the committee may retain a professional
search firm for such purpose if it is deemed necessary, and
further provides that the committee shall select such firm in
its sole discretion. The Company has no specific policy for
reviewing candidates recommended by security holders. The Board
of Directors believes that such a policy is not necessary
because the directors have access to a sufficient number of
excellent candidates from which to select a nominee when a
vacancy occurs on the Board. However, the Governance &
Nominating Committee may consider nominees recommended by
stockholders in writing to the Secretary of the Company.
The Governance & Nominating Committees process
for identifying and evaluating director candidates is as
follows: The Committee may retain a professional search firm to
assist the Committee in managing the overall process, including
the identification of director candidates who meet certain
criteria set from time to time by the Committee. All potential
candidates are reviewed by the Governance & Nominating
Committee, and by the search firm, if one has been engaged. In
the course of this review, some candidates are eliminated from
further consideration because of conflicts of interest,
unavailability to attend Board or committee meetings, or other
relevant reasons. The Governance & Nominating
Committee then decides which of the remaining candidates most
closely match the established criteria and are therefore
deserving of further consideration. The Governance &
Nominating Committee then discusses these candidates, decides
which of them, if any, should be pursued, gathers additional
information if desired, conducts interviews and decides whether
to recommend one or more candidates to the Board for nomination.
The Board discusses the Governance & Nominating
Committees recommended candidates, decides if any
additional interviews or further background information is
desirable and, if not, decides whether to nominate one or more
candidates. Those nominees are named in the proxy statement for
election by the stockholders at the Annual
8
Meeting (or, if between Annual Meetings, the nominees may be
appointed by the Board itself).
In order to be recommended by the Governance &
Nominating Committee, a candidate must meet the following
minimum qualifications: independence, personal ability,
integrity, intelligence, relevant business background, expertise
in areas of importance to our objectives, and a sensitivity to
our corporate responsibilities. For the purpose of determining a
candidates independence, the Governance &
Nominating Committee is guided by the criteria of the NYSE Amex.
We do not have a formal policy with regard to the consideration
of diversity in identifying director nominees, but the Board
strives to nominate directors with a variety of complementary
skills so that, as a group, the Board will possess the
appropriate talent, skills, and expertise to oversee our
businesses.
Incentive &
Compensation Committee
The Incentive & Compensation Committee oversees our
long term incentive plans and approves bonuses, grants stock
options and awards restricted stock under the terms of such
plans. Additional discussion of the Incentive &
Compensation Committees role is set forth in the
Compensation Discussion and Analysis section of this proxy
statement. This Committee is composed entirely of independent
Board members. The Incentive & Compensation Committee,
which currently consists of Messrs. Shockley (Chair),
Grigg, and Wasserman, held two formal meeting during fiscal 2011.
The Incentive & Compensation Committee operates under
a written charter adopted by the Board, which is reviewed
annually. The charter is available on our website at
www.breeze-eastern.com under the heading Corporate
Governance, which can be accessed by clicking on
Company Information on the home page of the site.
Strategic
Planning Committee
The Strategic Planning Committee reviews the strategies proposed
by management and provides guidance with respect to such
strategies. The committee also reviews achievement of key
milestones as determined by management and the committee. The
Strategic Planning Committee is comprised of Messrs. Recker
(Chair), Alderman, Sarachek and Shockley. The Strategic Planning
Committee held three formal meetings during fiscal 2011. The
Strategic Planning Committee does not operate under a written
charter.
Security Holder
Communications to the Board
The Board of Directors has established a process for
stockholders to send communications to it. Stockholders who wish
to communicate with the Board of Directors, or specific
individual directors, may do so by directing correspondence
addressed to such directors or director in care of Mark D.
Mishler, Secretary, at the principal executive offices of the
Company. Such correspondence shall prominently display the fact
that it is a stockholder-board communication and whether the
intended recipients are all or individual members of the Board
of Directors. The Secretary has been authorized to screen
commercial solicitations and materials which pose security
risks, are unrelated to the business or governance of the
Company or are otherwise inappropriate. The Secretary shall
promptly forward any and all such stockholder communications to
the entire Board of Directors or the individual director as
appropriate. In the alternative, stockholder correspondence can
be addressed to 35 Melanie Lane, Whippany, New Jersey 07981,
Attention: Mark D. Mishler.
9
Code of Business
Conduct
The Board has approved a Code of Business Conduct for the
Company that applies to our officers, directors and employees,
including our principal executive officer, principal financial
officer and principal accounting officer. We have provided
training for all employees on the Code of Business Conduct and
require that all directors, officers and employees abide by the
Code of Business Conduct, which is available under the heading
Corporate Governance on our website at
www.breeze-eastern.com, which can be accessed by clicking on
Company Information on the home page of the site. We
do not anticipate making amendments to or waivers from the
provisions of our Code of Business Conduct. If we make any
amendments to our Code of Business Conduct, or if our Board of
Directors grants any waiver from a provision thereof for our
principal executive officer, our principal financial officer or
our principal accounting officer, we will disclose the nature of
such amendment or waiver, the name of the person(s) to whom the
waiver was granted and the date of the amendment or waiver on
our internet website.
Board of
Directors Leadership Structure
The Board does not have a formal policy regarding the separation
of the roles of Chief Executive Officer and Chairman of the
Board as the Board believes it is in our best interest to make
that determination based on the position and direction of the
Company and the membership of the Board. The Board has
determined that having an independent director serve as Chairman
is in the best interest of our stockholders at this time. This
structure ensures a greater role for the independent directors
in Company oversight and active participation of the independent
directors in setting agendas and establishing Board priorities
and procedures. Further, this structure permits our Chief
Executive Officer to focus on the management of our
day-to-day
operations.
Risk
Management
Companies face a variety of risks, including credit risk,
liquidity risk, and operational risk. The Board believes an
effective risk management system will (i) timely identify
the material risks that we face, (ii) communicate necessary
information with respect to material risks to senior executives
and, as appropriate, to the Board or relevant Board committee,
(iii) implement appropriate and responsive risk management
strategies consistent with our risk profile, and
(iv) integrate risk management into our decision making.
The Board has designated the Audit Committee to take the lead in
overseeing risk management and the Audit Committee makes
periodic reports to the Board regarding briefings provided by
management and advisors as well as the Audit Committees
own analysis and conclusions regarding the adequacy of our risk
management processes.
In addition to the formal compliance program, the Board
encourages management to promote a corporate culture that
incorporates risk management into our corporate strategy and
day-to-day
business operations. The Board also continually works, with the
input of our executive officers, to assess and analyze the most
likely areas of future risk for the Company.
10
DIRECTOR
COMPENSATION
The following table sets forth the compensation for fiscal 2011
for those persons who served as members of our Board of
Directors during fiscal 2011:
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Fees
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Earned or
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Stock
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Paid in
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Awards
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Total
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Name (1)
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Cash ($)(2)
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($) (3)(4)
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($)
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William H. Alderman
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5,000
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30,000
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35,000
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Charles W. Grigg
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5,000
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30,000
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35,000
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Jay R. Harris(4)
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0
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30,000
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30,000
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William J. Recker
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5,000
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30,000
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35,000
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Russell M. Sarachek
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5,000
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30,000
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35,000
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William M. Shockley
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5,000
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30,000
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35,000
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Frederick Wasserman
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5,000
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30,000
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35,000
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(1) |
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Mr. Harlan has been omitted
from this table as he is a management member of the Board of
Directors and is not separately compensated for his service on
the Board of Directors. |
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(2) |
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Consists of the quarterly
portion of annual cash compensation of $20,000 payable to each
director, which was instituted on January 1,
2011. |
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(2) |
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Represents the grant date fair
value of the award, calculated in accordance with FASB
Accounting Standard Codification 718,
Compensation Stock Compensation, or
ASC 718. The assumptions used in calculating the grant date
fair value of the awards are set forth in Note 9 of our
Financial Statements set forth in our annual report on
Form 10-K
for the year ended March 31, 2011. |
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(3) |
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The stock awards granted to
directors during fiscal 2011 were granted as of
September 23, 2010, at which date the stock price was
$6.89, resulting in an award of 4,354 restricted shares to each
of Messrs. Alderman, Grigg, Harris, Recker, Sarachek,
Shockley and Wasserman. |
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(4) |
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Mr. Harris resigned from
the Board of Directors on November 14, 2010. |
Directors who are not employees of the Company or any of its
subsidiaries receive an annual retainer of $30,000 payable in
shares of our common stock in the form of a restricted stock
award. The number of shares awarded is determined by dividing
$30,000 by the closing price of our common stock on the date of
the annual meeting of stockholders each year. The stock is
awarded to the directors in advance for the balance of their
term within a reasonable time following election or re-election
to the Board. Such shares carry restrictions on transfer or
sale, but not as to dividend and voting rights, until six months
after the date of grant.
SECURITY
OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS, NOMINEES FOR
DIRECTOR AND EXECUTIVE
OFFICERS
The following table sets out certain information regarding the
beneficial ownership of our common stock as of August
[ ], 2011 (except as referenced in the
footnotes) by (i) each person who is known by the Company
to be the beneficial owner of 5% or more of our common stock,
(ii) each director and nominee for director of the Company,
individually, (iii) the Chief Executive Officer of the
Company, (iv) all executive officers named in our summary
compensation table, and (v) all
11
directors, nominees for director and executive officers as a
group. Except as otherwise indicated, the address of each person
is 35 Melanie Lane, Whippany, New Jersey 07981.
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Number of
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Shares of
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Percentage of
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Name
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Common Stock (1)
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Common Stock (1)
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Tinicum Capital Partners II, L.P.
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3,303,373
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(2)
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34.88
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%
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800 Third Avenue 40th Floor
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New York, NY 10022
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Wynnefield Partners Small Cap Value, L.P.
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2,117,911
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(3)
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22.37
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%
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450 Seventh Avenue, Suite 509
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New York, NY 10123
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T. Rowe Price Associates, Inc.
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892,830
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(4)
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9.43
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%
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100 E. Pratt Street
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Baltimore, MD 21202
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VN Capital Fund I, L.P.
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603,430
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(5)
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6.37
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%
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1133 Broadway, Suite 1609
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New York, NY 10010
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Directors, Nominees and Executive Officers
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William H. Alderman
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14,592
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*
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Charles W. Grigg
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14,592
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(6)
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*
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William J. Recker
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299,690
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3.16
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%
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Russell M. Sarachek
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165,134
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(7)
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1.74
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%
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William M. Shockley
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17,167
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(8)
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*
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Frederick Wasserman
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14,592
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*
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D. Michael Harlan, Jr.
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91,119
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(9)
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*
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Mark D. Mishler
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32,236
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(10)
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*
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Directors, nominees and executive officers as a group
(8 persons)
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649,122
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(11)
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6.79
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%
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*
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Less than 1%. |
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(1) |
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Except as set out in these
footnotes, the persons named in this table have sole voting
power and investment power with respect to all shares of our
common stock shown as beneficially owned by them, subject to
community property laws where applicable. References in these
footnotes to shares, unless otherwise specified, are
to shares of common stock. The percentages of common stock shown
are based upon the [9,469,540] shares of common
stock outstanding as of August [ ],
2011. |
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(2) |
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Based on a Form 4 and a
Schedule 13D/A filed with the SEC on June 15, 2011 by
Tinicum Capital Partners II, L.P. (TCP). For
purposes of the reporting requirements of the Securities
Exchange Act of 1934, TCP (and Tinicum Capital Partners II
Parallel Fund, L.P. (TCPP) with respect to
17,220 shares) is deemed to be a beneficial owner of such
securities; TCP and TCPP each disclaim beneficial ownership of
shares held by the other, respectively. If TCP and TCPP are each
deemed to beneficially own shares held by the other, TCP and
TCPPs aggregate beneficial ownership would be
3,303,373 shares or 34.93%. Messrs. Eric Ruttenberg
and Terence OToole are Co-Managing Members of Tinicum
Lantern II, L.L.C., the general partner of TCP and TCPP, and are
the control persons of TCP and TCPP. |
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(3) |
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Based on a Form 4 filed
with the SEC on June 20, 2011 and a Schedule 13D filed
with the SEC on June 21, 2011, by Wynnefield Partners Small
Cap Value, L.P., Wynnefield Partners Small Cap Value, L.P. I.;
Wynnefield Small Cap Value Offshore Fund, Ltd.; Channel
Partnership II, L.P.; Nelson Obus; Joshua Landes; Wynnefield
Capital Management, LLC; and Wynnefield Capital, Inc. Wynnefield
Capital Management, LLC reported that it holds an indirect
beneficial interest in 1,356,902 shares which are |
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directly beneficially owned by
Wynnefield Partners Small Cap Value, L.P. and Wynnefield
Partners Small Cap Value, L.P.I., Wynnefield Capital, Inc.
reported that it holds an indirect beneficial interest in the
722,609 shares which are directly beneficially |
12
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owned by Wynnefield Small Cap
Value Offshore Fund, Ltd. Nelson Obus reported that he holds an
indirect beneficial interest in 38,400 shares which are
directly beneficially owned by Channel Partnership II, L.P.
Nelson Obus and Joshua Landes are the control persons of each of
these entities. |
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(4) |
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Based on a Schedule 13G
filed with the SEC on February 10, 2011 jointly by T. Rowe
Price Associates, Inc. (Price Associates) and T.
Rowe Price Small Cap Value Fund, Inc. (Price
Small-Cap). These shares are owned by various individual
and institutional investors with respect to which Price
Associates or Price Small-Cap serves as investment advisor. For
purposes of the reporting requirements of the Securities
Exchange Act of 1934, Price Associates (and Price Small-Cap with
respect to 770,000 shares) is deemed to be a beneficial
owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such
securities. Mr. David Oestreicher is the control person of
each of these entities. |
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(5) |
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Based on a Schedule 13D/A
filed with the SEC on June 23, 2011, by VN Capital
Fund I, L.P., VN Capital Management, LLC, Joinville Capital
Management, LLC, James T. Vanasek, and Patrick Donnell Noone. As
the general partner of VN Capital Fund I, L.P., VN Capital
Management, LLC and Joinville Capital Management, LLC may be
deemed to indirectly beneficially own the 603,430 shares
which are directly beneficially owned by VN Capital Fund I,
L.P. As the managing members of VN Capital Management, LLC and
Joinville Capital Management, LLC, Mr. Vanasek and
Mr. Noone may be deemed to indirectly beneficially own the
603,430 shares which are directly beneficially owned by VN
Capital Fund I, L.P. |
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(6) |
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Mr. Grigg is a member of
Tinicum Lantern II, L.L.C., the general partner of Tinicum
Capital Partners II, L.P. and Tinicum Capital Partners II
Parallel Fund, L.P., and, as such, may have an indirect interest
in 3,303,373 shares owned by Tinicum Capital Partners II,
L.P. and Tinicum Capital Partners II Parallel Fund, L.P.,
as reported in the Form 4 and a Schedule 13D/A filed
with the SEC on June 15, 2011. |
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(7) |
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Includes 156,196 shares of
common stock in which Mr. Sarachek may be deemed to be the
indirect beneficial owner by virtue of his having investment
discretion and voting control over such shares in funds for
which he serves as the managing member. |
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(8) |
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Mr. Shockley is a member of
Tinicum Lantern II, L.L.C., the general partner of Tinicum
Capital Partners II, L.P. and Tinicum Capital Partners II
Parallel Fund, L.P., and, as such, may have an indirect interest
in 3,303,373 shares owned by Tinicum Capital Partners II,
L.P. and Tinicum Capital Partners II Parallel Fund, L.P.,
as reported in a Form 4 and a Schedule 13D/A filed
with the SEC on June 15, 2011. |
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(9) |
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Includes 75,000 shares
issuable upon exercise of options. Does not include
50,000 shares issuable upon exercise of options subject to
vesting. |
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(10) |
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Includes 14,665 shares
issuable upon exercise of options. Does not include
29,335 shares issuable upon exercise of options subject to
vesting. |
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(11) |
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Includes 89,665 shares
issuable upon exercise of options. |
COMPLIANCE WITH
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the
Act) requires the Companys directors,
executive officers, and persons who beneficially own more than
10 percent of our common stock, to file reports of
ownership and changes in ownership with the SEC. Directors,
executive officers, and greater than 10 percent
stockholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on our review of the copies of such forms received
by us or filed with the SEC, we believe that during fiscal 2011,
all persons subject to the reporting requirements of
Section 16(a) with respect to the Company filed the
required reports on a timely basis, except that
Messrs. Recker, Grigg, Alderman, Wasserman, Harris,
Shockley, Sarachek, Harlan and Mishler failed to timely file a
Form 4.
13
EXECUTIVE
OFFICERS, COMPENSATION AND OTHER INFORMATION
Executive
Officers
Set out in the table below are the names, ages and positions
held by executive officers of the Company.
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Executive
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Officer
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Name
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Position with the Company
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Age
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Since
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D. Michael Harlan, Jr.
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President and Chief Executive Officer
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54
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2009
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Mark D. Mishler
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Senior Vice President, Chief Financial Officer, Treasurer and
Secretary
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52
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2010
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Our executive officers are elected by and serve at the
discretion of the Board. No arrangement exists between any
executive officer and any other person or persons other than the
Company pursuant to which any executive officer was or is to be
selected as an executive officer. None of the executive officers
has any family relationship to any nominee for director or to
any other executive officer of the Company. Set out below is a
brief description of the business experience for the previous
five years of those executive officers who are not also
directors. For information concerning the business experience of
Mr. Harlan, see Information Concerning Nominees to
the Board of Directors, above.
Mr. Mishler has been Senior Vice President, Chief
Financial Officer and Treasurer of the Company since January
2010 and Secretary since March 2010. From October 2007 to
January 2010, Mr. Mishler served as Chief Financial Officer
of Vital Signs, Inc., a $400 million, NASDAQ-listed
manufacturer of medical devices that was acquired by General
Electric in 2008. From 2005 to 2007, Mr. Mishler was the
Corporate Controller and CIO at Fedders Corporation. Prior to
2005, Mr. Mishler was Corporate Controller and CIO of
Amcast Industrial Corporation. He is a Certified Public
Accountant and Certified Management Accountant. Mr. Mishler
is a graduate of Indiana University, and he earned a MBA from
the University of Michigan.
Incentive &
Compensation Committee Report
The Incentive & Compensation Committee has reviewed
the Compensation Discussion and Analysis set forth below and has
discussed the analysis with management. Based on its review and
discussions with management, the Committee recommended to our
Board that the Compensation Discussion and Analysis be included
in this proxy statement.
William M. Shockley, Chair
Charles W. Grigg
Frederick Wasserman
Incentive &
Compensation Committee Interlocks and Insider
Participation
None of our executive officers served as a member of the Board
or Compensation Committee of any entity that has one or more
executive officers serving as a member of our Board or our
Incentive & Compensation Committee. In addition, no
member of our Incentive & Compensation Committee has
at any time been an officer or employee of the Company.
Accordingly, there were no
14
interlocks with other companies within the meaning of the
SECs proxy rules during fiscal 2011.
Compensation
Discussion and Analysis
Role of the Incentive & Compensation
Committee. The Incentive & Compensation
Committee oversees our long term incentive plans and approves
bonuses, grants stock options and awards restricted stock under
the terms of such plans. The Committee also approves the
compensation of department heads reporting to the Chief
Executive Officer and of employees earning, or proposed to earn,
more than $125,000 per year. The Committee recommends for
approval by the Board the compensation of the Chief Executive
Officer and the Chief Financial Officer. All long term incentive
plans were approved by the stockholders. The Committee is
composed entirely of independent outside directors.
Determining Compensation. We rely upon our
judgment in making compensation decisions, after reviewing the
performance of the Company and carefully evaluating an
executives performance during the year against established
goals, leadership qualities, operational performance, business
responsibilities, career with the Company, current compensation
arrangements and long-term potential to enhance stockholder
value. Specific factors affecting compensation decisions for
executive officers include:
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achieving specific operational goals and key financial
measurements such as revenue, operating profit, EBITDA, earnings
per share, and operating margins, referring to the applicable
annual budget (the Annual Budget) of the Company for
each fiscal year as approved by the Board;
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promoting commercial excellence by being a leading market player
and attracting and retaining customers;
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achieving excellence in their organizational structure and among
their employees; and
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supporting Company values by promoting a culture of unyielding
integrity through compliance with law and our ethics policies,
as well as a commitment to community leadership.
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We do not attempt to maintain a certain target percentile within
a peer group. We incorporate flexibility into our compensation
programs and in the assessment process to respond to and adjust
to the evolving business environment. In addition, when
determining compensation, we attempt to carefully balance the
need to fairly compensate our executives with the need to keep
our costs and expenses under control.
We strive to achieve an appropriate mix between equity incentive
awards and cash payments in order to meet our objectives. Any
apportionment goal is not applied rigidly and does not control
our compensation decisions; we use it as another tool to assess
an executives total pay opportunities and whether we have
provided the appropriate incentives to accomplish our
compensation objectives. Our mix of compensation elements is
designed to reward recent results and motivate long-term
performance through a combination of cash and equity incentive
awards.
Role of Compensation Consultant. Neither the
Company nor the Committee presently has any contractual
arrangement, nor have the Company or the Committee had any
contractual arrangement during fiscal 2011, with any
compensation consultant who has a role in determining or
recommending the amount or form of senior
15
executive or director compensation. In the past, the Company and
the Committee have discussed with Towers Perrin the design of
programs that affect senior executive officer compensation. Our
named executive officers have not participated in the selection
of any particular compensation consultant. We have not used the
services of any other compensation consultant in matters
affecting senior executive or director compensation. In the
future, either the Company or the Committee may engage or seek
the advice of other compensation consultants.
Alignment. We seek to align the interests of
our executive officers with those of our investors by evaluating
executive performance on the basis of key financial measurements
referred to above, which measurements we believe closely
correlate to long-term stockholder value. The key element of
compensation that aligns the interests of our executives with
stockholders is equity incentive compensation, which links a
portion of compensation to stockholder value because the total
value of those awards corresponds to stock price appreciation.
Role of the Committee and CEO. The
Incentive & Compensation Committee has primary
responsibility for overseeing the development of executive
succession plans. As part of this responsibility, the Committee
oversees the design, development and implementation of the
compensation program for the CEO, the CFO and the other named
executive officers, if any. The Committee receives from the
Governance & Nominating Committee an evaluation of the
performance of the CEO and determines the CEOs
compensation in light of the goals and objectives of the
compensation program. The CEO and the Committee together assess
the performance of the other executives and determine their
compensation, based on initial recommendations from the CEO. The
other executive officers do not play a role in their own
compensation determination, other than discussing individual
performance objectives with the CEO.
Base salary. Base salaries for our executive
officers depend on the scope of their responsibilities, their
performance, and the period over which they have performed those
responsibilities. Base salaries are reviewed annually, but are
not automatically increased if the Committee believes that other
elements of compensation are more appropriate in light of our
stated objectives. This strategy is consistent with our primary
intent of offering compensation that is contingent on the
achievement of performance objectives.
Bonus. Our CEO reviews with the Committee our
full-year financial results against the financial, strategic and
operational goals established for the year and our financial
performance in prior periods. After reviewing the final full
year results, the Committee approves total bonuses to be awarded
from the maximum fund available. Bonuses are generally paid
within 60 days after the Boards approval of the
audited financial statements of the Company for the applicable
fiscal year., with the exact date of payment being determined by
the Board of Directors in its sole and absolute discretion.
The methodology for determining bonuses is set out in an
incentive compensation plan (Incentive Compensation
Plan) reviewed and approved by the Board and which is
consistent with the Committees philosophy regarding
executive compensation. The compensation reflected in this proxy
statement reflects the application of the Incentive Compensation
Plan to fiscal 2011.
The Incentive Compensation Plan has an annual bonus feature
which is an important tool in providing incentive both for
short-term and long-term
16
performance. Bonus awards are paid upon achieving or exceeding
target levels of quantitative performance measures. Such
performance measures are tied directly to the Companys
annual business plan. Executive officers earn no bonus unless
80% of the Annual Budgets profit goals are met. Thus, the
Incentive Compensation Plan effectively measures performance
against Board-approved targets for EBITDA, return on working
capital, and individual bonus objectives and performance metrics.
Stock options and restricted stock awards. Our
equity incentive compensation program, which principally
includes grants under the Breeze-Eastern Corporation 2006
Long-Term Incentive Plan (the Long-Term Incentive
Plan or the 2006 Plan) is designed to
recognize scope of responsibilities, reward demonstrated
performance and leadership, motivate future superior
performance, align the interests of the executives with our
stockholders and retain the executives through the term of the
awards. We consider the grant size and the appropriate
combination of stock options and restricted stock awards when
making award decisions. The amount of equity incentive
compensation granted in fiscal 2011 was based upon our
strategic, operational and financial performance overall and
reflects the executives expected contributions to our
future success.
We believe that providing combined grants of stock options and
restricted stock awards effectively balances our objective of
focusing the named executive officers on delivering long-term
value to our stockholders, with our objective of providing value
to the executives with the equity awards. Stock options only
have value to the extent the price of our stock on the date of
exercise exceeds the exercise price on grant date, and thus are
an effective compensation element only if the stock price grows
over the term of the award. In this sense, stock options are a
motivational tool. Restricted stock awards offer executives the
opportunity to sell or hold shares of Company stock on the date
the restriction lapses. In this regard, restricted stock awards
serve both to reward and retain executives, as the value of the
restricted stock awards is linked to the price of our stock as
the restrictions on the restricted stock awards lapse. Each of
the named executive officers received grants of stock options
and restricted stock in fiscal 2011. The stock options granted
become exercisable in three equal annual installments beginning
one year after the grant date and have a maximum ten-year term.
We believe that this vesting schedule aids us in retaining
executives and motivating longer-term performance. Provided the
executives continue employment, the restrictions on the
restricted stock awarded to our executives will lapse in three
equal annual installments beginning one year after the grant
date.
Equity Grant Practices. The exercise price of
each stock option awarded to our senior executives under our
Long-Term Incentive Plan is the closing price of our stock on
the date of the Incentive & Compensation Committee
meeting at which equity awards for senior executives are
determined. The calendar for setting meeting dates of the Board
and of the Committee to consider grants is generally reviewed at
the organization meeting of the Board following the annual
meeting of stockholders. Meeting dates are set without regard to
anticipated earnings or other major announcements by the
Company. Our long term incentive plans do not permit the
repricing of stock options.
Pension Plans. We do not offer a defined
benefit plan. All of our employees are eligible to participate
in our defined contribution plan, commonly known as a 401(k)
plan.
17
Other Compensation. Our named executive
officers are offered and may choose to participate in the same
benefit programs as all of our other employees, which include: a
Company match of $.50 for every $1.00 of compensation saved
under the Companys 401(k) plan up to a maximum of 3% of
compensation for plan purposes, and a 401(k) match paid
following the end of the fiscal year equal to 3% of eligible
earnings, premiums paid on life and disability policies, and
actual expenses paid on medical, dental and prescriptions net of
the named employees contribution. In addition,
Mr. Harlan was reimbursed for the costs of commuting to New
Jersey from his familys residence in Kentucky and the
associated income taxes. Other than this reimbursement, there
are no benefits that are offered solely to our named executive
officers. Payment for these benefits is reflected in the
All Other Compensation column of the Summary
Compensation Table below.
Potential Impact on Compensation from Executive
Misconduct. If the Board determines that an
executive officer has engaged in fraudulent or intentional
misconduct, the Board will take action to remedy the misconduct,
prevent its recurrence, and impose such discipline on the
wrongdoers as would be appropriate. Discipline may vary
depending on the facts and circumstances, and may include,
without limitation, (1) termination of employment,
(2) initiating an action for breach of fiduciary duty, and
(3) if the misconduct results in a significant restatement
of our financial results, seeking reimbursement of any portion
of performance-based or incentive compensation paid or awarded
to the executive that is greater than would have been paid or
awarded if calculated based on the restated financial results.
These remedies are in addition to, and not in lieu of, any
actions imposed by law enforcement agencies, regulators or other
authorities.
Dodd-Frank Clawback of Incentive
Compensation. Section 954 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act
(Dodd-Frank) requires that we adopt a policy to
disclose incentive-based compensation (which
Section 954 of Dodd-Frank does not define) that is based
upon financial information that is required to be reported under
the federal securities laws and a policy requiring us to recover
any amount of incentive based compensation paid to
any current or former executive that exceeds the amount which
would have been paid under an accounting restatement in the
three years prior to the date on which we were required to
prepare the restatement. The SEC has not yet issued interpretive
regulations with respect to either policy required under
Dodd-Frank. However, the clawback requirement applies
irrespective of any misconduct or fault on the part of any such
current or former executive. The Board is currently evaluating
the requirements under Dodd-Frank and how it affects the
Company, including analyzing both the disclosure policy and the
clawback policy required under Dodd-Frank.
Compensation for
the Named Executive Officers
The following table sets forth for each of the named executive
officers the compensation for fiscal 2011 and 2010 for services
provided to us in all capacities.
18
SUMMARY
COMPENSATION TABLE
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|
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|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
All Other
|
|
|
Name and
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
|
Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($) (1)
|
|
($) (1)
|
|
($) (2)
|
|
Total ($)
|
|
|
D. Michael Harlan, Jr.(3)
|
|
|
2011
|
|
|
|
301,154
|
|
|
|
247,212
|
(4)
|
|
|
64,889
|
(5)
|
|
|
172,250
|
|
|
|
74,561
|
(6)
|
|
|
860,066
|
|
President and Chief
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|
|
2010
|
|
|
|
172,692
|
|
|
|
66,300
|
|
|
|
11,700
|
|
|
|
255,000
|
|
|
|
28,415
|
(6)
|
|
|
534,107
|
|
Executive Officer
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|
|
|
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|
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|
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|
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Mark D. Mishler(3)
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2011
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|
|
|
230,885
|
|
|
|
125,071
|
(7)
|
|
|
20,311
|
(8)
|
|
|
188,760
|
|
|
|
18,205
|
|
|
|
583,232
|
|
Senior Vice President,
|
|
|
2010
|
|
|
|
53,962
|
|
|
|
50,400
|
|
|
|
3,600
|
|
|
|
86,800
|
|
|
|
476
|
|
|
|
191,638
|
|
Chief Financial Officer,
Treasurer and Secretary
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|
|
|
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|
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|
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents the grant date fair
value of the award, calculated in accordance with FASB
Accounting Standard Codification 718,
Compensation Stock Compensation, or
ASC 718. The assumptions used in calculating the grant date
fair value of the awards are set forth in Note 9 of our
Financial Statements set forth in our annual report on
Form 10-K
for the year ended March 31, 2011. |
|
(2) |
|
All Other
Compensation includes matching contributions paid pursuant
to the Companys 401(k) plan, which contributions are paid
to all participants in the plan, and payments made in connection
with the Companys health and welfare plan. |
|
(3) |
|
Mr. Harlan was appointed as
our President and Chief Executive Officer in January 2010.
Mr. Mishler was appointed as our Senior Vice President,
Chief Financial Officer and Treasurer in January 2010 and as our
Secretary in March 2010. The named executive officers of the
Company who served prior to Messrs. Harlan and Mishler are
not included in the foregoing table as they were not officers of
the Company during fiscal 2011. |
|
(4) |
|
Consists of a cash bonus earned
by Mr. Harlan in fiscal 2011 that was paid in fiscal
2012. |
|
(5) |
|
Includes 5,773 shares of
restricted stock earned as a bonus by Mr. Harlan in fiscal
2011 which was granted to him in fiscal 2012. |
|
(6) |
|
Includes reimbursement of
Mr. Harlans cost of commuting to New Jersey from his
familys residence in Kentucky and associated income
taxes. |
|
(7) |
|
Consists of a cash bonus
(including the $10,000 portion of his signing bonus payable in
fiscal 2012) earned by Mr. Mishler in fiscal 2011 that
was paid in fiscal 2012. |
|
(8) |
|
Includes 1,807 shares of
restricted stock earned as a bonus by Mr. Mishler in fiscal
2011 which was granted to him in fiscal 2012. |
19
GRANTS OF
PLAN-BASED AWARDS
The following table sets forth information regarding all
incentive plan awards that were made to the named executive
officers during fiscal 2011.
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All Other
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All Other
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|
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|
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|
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Stock
|
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Option
|
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Exercise
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|
|
|
|
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Awards:
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Awards:
|
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or Base
|
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Grant Date
|
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|
|
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Number of
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Number of
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Price
|
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Fair Value
|
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|
|
|
Shares of
|
|
Securities
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of Option
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Of Stock
|
|
|
Grant
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Stock or
|
|
Underlying
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Awards
|
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And Option
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Name
|
|
Date
|
|
Units (#)
|
|
Options (#)
|
|
($/Sh)
|
|
Awards(1)
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|
|
D. Michael Harlan, Jr.
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|
|
8/27/10
|
|
|
|
1,857
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|
|
|
|
|
|
|
|
|
|
|
11,700
|
|
|
|
|
9/23/10
|
|
|
|
|
|
|
|
25,000
|
|
|
|
6.89
|
|
|
|
172,250
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|
Mark D. Mishler
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4/1/10
|
|
|
|
|
|
|
|
26,000
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|
|
|
6.20
|
|
|
|
161,200
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|
|
|
|
8/27/10
|
|
|
|
571
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|
|
|
|
|
|
|
|
|
|
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3,600
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|
|
|
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9/23/10
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|
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|
|
|
|
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4,000
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|
|
|
6.89
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|
|
|
27,560
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|
|
|
|
|
(1) |
|
Represents the grant date fair
value of the award, calculated in accordance with FASB
Accounting Standard Codification 718,
Compensation Stock Compensation, or
ASC 718. The assumptions used in calculating the grant date
fair value of the awards are set forth in Note 9 of our
Financial Statements set forth in our annual report on
Form 10-K
for the year ended March 31, 2011. |
20
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth information on outstanding option
and stock awards held by the named executive officers at fiscal
year end, including the number of shares underlying both
exercisable and unexercisable portions of each stock option as
well as the exercise price and expiration date of each
outstanding option.
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Option Awards
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|
Stock Awards
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|
|
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|
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Equity
|
|
|
|
|
|
Number
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Market
|
|
|
|
|
|
|
|
|
Incentive
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|
|
|
|
of
|
|
Value of
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|
|
|
|
Plan
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|
|
|
|
Shares
|
|
Shares or
|
|
|
|
|
Number of
|
|
Number of
|
|
Awards
|
|
|
|
|
|
or Units
|
|
Units of
|
|
|
|
|
Securities
|
|
Securities
|
|
Number of
|
|
|
|
|
|
of Stock
|
|
Stock
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
That
|
|
That
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Underlying
|
|
Option
|
|
|
|
Have
|
|
Have
|
|
|
|
|
Options (#)
|
|
Options (#)
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
Not
|
|
Not
|
|
|
Grant
|
|
Exercisable
|
|
Unexercisable
|
|
Unearned
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
Name
|
|
Date
|
|
(1)
|
|
(1)
|
|
Options (#)
|
|
($)
|
|
Date
|
|
(#)
|
|
($)
|
|
|
D. Michael Harlan, Jr.
|
|
|
8/17/09
|
|
|
|
33,333
|
|
|
|
66,667
|
|
|
|
|
|
|
|
6.05
|
|
|
|
8/17/19
|
|
|
|
|
|
|
|
|
|
|
|
|
8/27/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,857
|
|
|
|
15,933
|
|
|
|
|
9/23/10
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
6.89
|
|
|
|
9/23/20
|
|
|
|
|
|
|
|
|
|
Mark D. Mishler
|
|
|
1/6/10
|
|
|
|
4,667
|
|
|
|
9,333
|
|
|
|
|
|
|
|
6.20
|
|
|
|
1/6/20
|
|
|
|
|
|
|
|
|
|
|
|
|
4/1/10
|
|
|
|
|
|
|
|
26,000
|
|
|
|
|
|
|
|
6.20
|
|
|
|
4/1/20
|
|
|
|
|
|
|
|
|
|
|
|
|
8/27/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
571
|
|
|
|
4,899
|
|
|
|
|
9/23/10
|
|
|
|
|
|
|
|
4,000
|
|
|
|
|
|
|
|
6.89
|
|
|
|
9/23/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Options become exercisable in
equal amounts on each of the three anniversaries following the
date of grant. |
|
(2) |
|
Market value at March 31,
2011, based on closing market price of the Companys common
stock on March 31, 2011 of $8.58 per share. |
NARRATIVE
DISCLOSURE TO EXECUTIVE COMPENSATION TABLES
Retirement
Plans
Our executive officers are participants in the Breeze-Eastern
Corporation Retirement Savings Plan (the Retirement
Savings Plan), a defined contribution plan under
Section 401(k) of the Internal Revenue Code which covers
employees who have been employed by the Company for more than
thirty (30) days. Approximately 161 employees
participated in the Retirement Savings Plan at March 31,
2011. Benefits are payable on retirement, disability, death, or
other separation from service. Participants in the Retirement
Savings Plan may defer receipt and taxation of up to 75% of
their compensation by contributing such compensation to the
Retirement Savings Plan. The Company contributes a minimum of 3%
and a maximum of 6% of employees compensation to the
Retirement Savings Plan, depending on the level of contribution
by each employee.
Employment
Agreements
Effective August 17, 2009, we entered into an employment
agreement with D. Michael Harlan, Jr., our Chief Executive
Officer. The agreement provides for an annual base salary of
$300,000, to be reviewed annually by the Board, and for a
minimum bonus of $78,000 in fiscal 2010. The agreement provides
that 15% of the bonus will be paid in shares of our common
stock. Mr. Harlans employment agreement provides that
if Mr. Harlans employment is terminated without cause
at any time within the first two years of employment, he will be
entitled to receive severance pay equal to one years base
salary, exclusive of bonuses, and the continuation of employee
benefits for a period of one year. Pursuant to the
21
employment agreement, we granted to Mr. Harlan an option to
purchase 100,000 shares of our common stock at an exercise
price equal to the closing price on the date immediately
preceding the effective date of his employment agreement. The
option vests in three equal annual installments and terminates
ten years from the date of grant, subject to earlier termination
in the event of certain conditions. Mr. Harlan is eligible
to participate in our incentive and benefit plans under the same
terms and conditions applicable to our other executives.
On January 6, 2010, we entered into an employment agreement
with Mark D. Mishler, our Senior Vice President, Chief Financial
Officer, Treasurer and Secretary. The agreement provides for an
annual base salary of $230,000, to be reviewed annually by the
board of directors, a minimum bonus of $24,000 in fiscal 2010,
and a one-time cash signing bonus of $40,000, paid in four equal
monthly installments of $10,000. Mr. Mishler participates
in the Companys incentive compensation plan with a target
award of 40% of his base salary for fiscal 2011. The employment
agreement provides that 15% of the bonus will be paid in shares
of our common stock. Pursuant to his employment agreement, we
granted to Mr. Mishler options to purchase 14,000 and
26,000 shares of our common stock, respectively, on
January 6, 2010 and April 1, 2010. The options have an
exercise price equal to the closing price on the date
immediately preceding the effective date of the employment
agreement. The foregoing options vest in three equal annual
installments and terminate ten years from the date of grant,
subject to earlier termination in the event of certain
conditions. Mr. Mishler is eligible to participate in the
Companys incentive and benefit plans under the same terms
and conditions applicable to other executives of the Company.
Potential
Payments Upon Termination or Change of Control
Our named executive officers have provisions in their employment
agreements that provide for payments in connection with
termination or a change in control.
In the event of a change in control and termination or
resignation for good reason in connection therewith within
24 months of the change in control, Mr. Harlan will be
entitled to receive a cash payment equal to two years base
salary and the average of any bonuses for two years. In
addition, the vesting of all stock options and restricted shares
granted would accelerate upon a change in control.
Mr. Mishlers employment agreement provides that in
the event of a change in control and termination or resignation
for good reason in connection therewith within 24 months of
such change in control, Mr. Mishler will be entitled to
receive a cash payment equal to one years base salary and
the average of any bonuses for the prior two years (or 40% of
Mr. Mishlers base salary if he has not yet received
two bonuses on the date of termination). In addition, the
vesting of all stock options and restricted shares granted would
accelerate upon a change in control.
22
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS
The following table provides certain information with respect to
all of the Companys equity compensation plans in effect as
of March 31, 2010.
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|
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|
|
|
|
|
|
|
|
|
|
|
Number of Securities to
|
|
|
Weighted Average
|
|
|
|
|
|
|
be Issued Upon Exercise
|
|
|
Exercise Price of
|
|
|
Number of Securities
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
for Future Issuance
|
|
|
|
|
Equity Compensation Plans Approved by Security Holders
|
|
|
674,911
|
|
|
$
|
8.03
|
|
|
|
80,308
|
|
Equity Compensation Plans Not Approved by Security Holders(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
674,911
|
|
|
$
|
8.03
|
|
|
|
80,308
|
|
|
|
|
|
(1) |
|
Each of the Companys
compensation plans has been previously approved by security
holders.
|
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Transactions with related parties presenting potential conflict
of interest situations, and all such transactions must be
approved by the Audit Committee or another independent body of
the Board. Our Code of Business Conduct specifically prohibits
various conflict of interest situations and imposes disclosure
requirements in connection with potential conflicts of interest.
We require that all directors, officers and employees abide by
the Code of Business Conduct, which is available under the
heading Corporate Governance on the Companys
website at www.breeze-eastern.com.
During fiscal 2011, there were no proceedings to which any of
our directors, executive officers, affiliates, holders of more
than five (5%) percent of our common stock, or any associate (as
defined in the Proxy Rules) of the foregoing were adverse to the
Company. During fiscal 2011, none of our directors, executive
officers, holders of more than five (5%) percent of our common
stock, or any members of their immediate family had a direct or
indirect material interest in any transactions or series of
transactions with the Company in which the amount involved
exceeded or exceeds $120,000.
We currently anticipate entering into a Standstill Agreement
prior to the date of our Annual Meeting with Tinicum Capital
Partners, II, L.P. (together with certain of its
affiliates, Tinicum) and Wynnefield Partners Small
Cap Value, L.P. (together with certain of its affiliates,
Wynnefield) (collectively, the Standstill
Agreements). Tinicum and Wynnefield collectively
beneficially own 57.25% of our outstanding Common Stock. We
expect that under the Standstill Agreements, Tinicum and
Wynnefield will each agree to, among other things, vote the
shares of Common Stock held or controlled by them in favor of
the slate of directors set forth Proposal 1 of this proxy
statement and the Rights Plan described in Proposal 3 of
this proxy statement. We also expect that Tinicum and Wynnefield
will each agree not to acquire beneficial ownership in any
additional shares of our Common Stock for a period of time after
the effective date of the Standstill Agreements.
23
PROPOSAL 2
RATIFICATION OF THE AUDIT COMMITTEES SELECTION OF MARCUM
LLP AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING MARCH 31,
2012
The Audit Committee and the full Board believe it appropriate to
submit for action by the stockholders of the Company the
ratification of the Audit Committees appointment of Marcum
LLP as our independent registered public accounting firm for
fiscal 2012. The firm has served as our independent registered
public accounting firm since July 3, 2007.
Before making its determination on appointment, the Audit
Committee carefully considered the qualifications and competence
of candidates for the independent registered public accounting
firm. For Marcum LLP, this has included a review of its
performance in prior years, its independence and processes for
maintaining independence, the key members of the audit
engagement team, the firms approach to resolving
significant accounting and auditing matters, as well as its
reputation for integrity and competence in the fields of
accounting and auditing. In the opinion of the Audit Committee,
the reputation, qualifications and experience of the firm make
appropriate its appointment for fiscal 2012.
A representative of Marcum LLP is expected to be present at the
Annual Meeting, with the opportunity to make a statement if such
representative desires to do so, and is expected to be available
to respond to appropriate questions. If the appointment of
Marcum LLP is not ratified by the stockholders, the Audit
Committee may appoint another independent registered public
accounting firm or may decide to maintain the appointment of
Marcum LLP. Notwithstanding the selection and ratification, the
Board, in its discretion, may direct the appointment of a new
independent registered public accounting firm at any time during
the year if the Board believes that such a change would be in
the best interest of the Company and its stockholders.
Vote Required for
Approval
The affirmative vote of a majority of the votes cast at the
Annual Meeting is required to ratify the Audit Committees
selection of Marcum LLP as our independent registered accounting
firm for fiscal 2012.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
APPROVAL OF THE PROPOSAL TO RATIFY THE SELECTION BY THE
AUDIT COMMITTEE OF MARCUM LLP AS THE COMPANYS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2011.
Report of the
Audit Committee
The Audit Committee has reviewed and discussed with our
management and our independent auditors, Marcum LLP, our audited
financial statements contained in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2010. The Audit
Committee has also discussed with Marcum LLP the matters
required to be discussed pursuant to Statement on Auditing
Standards No. 61, as amended, as adopted by the Public
Company Accounting Oversight Board in Rule 3200T.
The Audit Committee has received and reviewed the written
disclosures and the letter from our independent auditors
required by Independence Standards Board Standard No. 1
Independence Discussions with Audit
Committees, has discussed with our independent
auditors such independent auditors independence, and has
24
considered the compatibility of non-audit services with the
auditors independence.
Marcum LLP, formerly Margolis & Company P.C., has
served as our independent registered public accounting firm
since July 3, 2007 and its selection as our independent
registered public accounting firm for the fiscal year ended
March 31, 2011, was ratified by our stockholders at our
2010 annual meeting of stockholders. During fiscal 2011, we
engaged Deloitte & Touche LLP for corporate tax
services.
On September 1, 2009, we engaged Marcum LLP as our
independent registered public accountants. This engagement
occurred in connection with our prior independent registered
public accountants, Margolis & Company P.C., combining
its practice with Marcum LLP effective September 1, 2009.
The following table includes fees billed for professional audit
services rendered by Marcum LLP for the audit of our annual
consolidated financial statements for the fiscal year ended
March 31, 2011, the fiscal year ended March 31, 2010
and review of our
Form 10-Qs
during fiscal 2011 and for the quarters ended September 27,
2009 and December 27, 2009 in fiscal 2010. All other
services were rendered by Margolis & Company P.C.
except for corporate tax services which were provided by
Deloitte & Touche LLP. The fees for various types of
services provided to us were billed as shown below.
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2011
|
|
|
|
|
Marcum LLP
|
|
|
|
|
|
|
|
|
Audit Fees
|
|
$
|
259,000
|
|
|
$
|
243,000
|
|
Audit-Related Fees(1)
|
|
|
18,000
|
|
|
|
18,500
|
|
All Other Fees(2)
|
|
|
1,500
|
|
|
|
2,000
|
|
Deloitte & Touche LLP
|
|
|
|
|
|
|
|
|
Tax Fees(3)
|
|
$
|
76,793
|
|
|
$
|
128,715
|
|
|
|
|
|
(1) |
|
The amounts reflected are the
fees for the audit of the employee defined contribution
plan. |
|
(2) |
|
The amounts reflected are the
fees for the preparation of the Form 5500. |
|
(3) |
|
The amounts reflected were
billed in fiscal 2010 and fiscal 2011 in connection with our
engagement of Deloitte & Touche LLP for corporate tax
services during fiscal 2010 and fiscal 2011. |
The Audit Committee approved 100% of the services shown in the
above categories. No hours expended on the independent
auditors engagement to perform the audit for fiscal 2011
were attributed to work performed by persons other than
employees of Marcum LLP.
The Audit Committee has adopted a procedure to pre-approve audit
services and other services to be provided by our independent
auditors. In fiscal 2010 and fiscal 2011, all services provided
by our independent auditors were associated with our audit, and
all such services were pre-approved by the Audit Committee.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial
statements be included in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2011, as filed with the
SEC.
FREDERICK WASSERMAN, Chair
WILLIAM H. ALDERMAN
WILLIAM J. RECKER
25
PROPOSAL 3
RATIFICATION OF STOCKHOLDER RIGHTS PLAN
Introduction
On July 18, 2011, the Board of Directors adopted a
stockholder rights plan (the Rights Plan) to protect
the Company and its stockholders from unsolicited attempts or
inequitable offers to acquire the Company. The board of
directors is submitting the Rights Plan to the stockholders for
ratification at the annual meeting. If the stockholders do not
ratify the Rights Plan, prior to the first anniversary of the
record date with respect to the Rights Plan, the Rights Plan
will automatically terminate.
Purpose of the
Rights Plan
The Rights Plan is designed to protect our stockholders from
unfair, abusive or coercive take-over strategies, including the
acquisition of control of the Company by a bidder in a
transaction or series of transactions that does not treat all
stockholders equally or fairly or provide all stockholders an
equal opportunity to share in the premium paid on an acquisition
of control. The Rights Plan is not intended to prevent a
takeover or deter fair offers for securities of the Company. To
the contrary, it is designed to encourage anyone seeking to
acquire control of the Company to make an offer that represents
fair value to all holders of common stock and to provide the
board of directors with more time to fully consider an
unsolicited takeover bid, and, if appropriate, to explore other
alternatives that maximize stockholder value.
The Rights Plan was not adopted, and ratification is not being
recommended by the Board of Directors, in response to or in
anticipation of any specific takeover bid or proposed bid or
other transaction, however, the Board has recognized that there
are certain concentrations of ownership of our Common Stock and
deemed it to be in the best interests of the Companys
stockholders to take action which would protect the interests of
the minority stockholders of the Company in a transaction
involving a change in control of the Company. In addition, the
Rights Plan is intended to address the Boards concern
that, in the current business environment in which we operate, a
potential exists that we could be the subject of one or more
unsolicited takeover attempts. In response to this concern, the
Board considered various strategies to deter unfair or abusive
takeover practices and, in particular, whether a stockholder
rights plan would be in the best interests of the Company and
its stockholders and, if so, what characteristics of such a plan
would most appropriately serve those interests.
How the Rights
Plan Works
The Board of Directors authorized and declared a dividend of one
preferred stock purchase right (a Right) for each
share of the Companys common stock outstanding at the
close of business on August 1, 2011, and thereafter has
issued (and will continue to issue, as long as the Rights Plan
is in effect) a Right with each new share of common stock. In
general terms, the Rights impose a significant penalty upon any
person or group that acquires beneficial ownership of 10% or
more of our outstanding common stock without the prior approval
of the Board of Directors. Stockholders who beneficially own 10%
or more of our outstanding common stock as of the date of the
Rights Agreement, dated as of July 18, 2011, by and between
the Company and Computershare, N.A., as Rights Agent (the
Rights Agreement), are exempted from the ownership
threshold requirement so long as such stockholders
beneficial ownership of the Companys common stock does not
increase.
26
The Rights are issued pursuant to the Rights Agreement. The
following is a summary of the principal terms of the Rights
Agreement. The following summary is a general description only
and is qualified in its entirety by the full text of the Rights
Agreement which appears as Appendix A to this proxy
statement.
Summary of the
Rights Plan
The Rights. Currently, the Rights trade
with, and are inseparable from, the common stock. The Rights are
evidenced by the same stock certificates as the common stock
(or, in the case of uncertificated shares of common stock, the
same book-entry account that evidences record ownership of such
shares) and not by separate Rights certificates. Rights will
accompany all new shares of common stock we issue in the future,
as long as the Rights Plan remains in effect.
Each Right will entitle the holder to buy one one-thousandth of
a share of Series A Junior Participating Preferred Stock,
par value $.01 per share (the Preferred Stock) at a
purchase price of $14, subject to adjustment, once the Rights
become exercisable. Until a Right is exercised, however, it does
not give its holder any additional rights as a stockholder of
the Company.
Exercisability. The Rights become
exercisable and separate from the common stock on the
Distribution Date. The Distribution Date means the
earlier of:
|
|
|
|
|
The tenth business day after public announcement that any person
or group of affiliated or associated persons (an Acquiring
Person) has become the beneficial owner of 10% or more of
our common stock; or
|
|
|
|
The close of business on the date specified by the Board
following commencement of, or public announcement of the intent
of any person to commence, a tender or exchange offer that
would, if consummated, result in such person becoming the
beneficial owner of 10% or more of our common stock.
|
When calculating beneficial ownership to determine whether a
person or group has become an Acquiring Person, if the person or
any of that persons affiliates or associates holds any
option, warrant, convertible security, stock appreciation right
or other contractual right or derivative with an exercise or
conversion privilege or a settlement payment or mechanism at a
price related to, or a value determined in reference to, the
common stock and that increases in value as the value of the
common stock increases or that provides the holder with an
opportunity to profit from any increase in the value of the
common stock, then that person will be deemed to beneficially
own the shares of common stock in respect of such right or
derivative that (i) is disclosed pursuant to a
Schedule 13D under the Securities Exchange Act of 1934; or
(ii) the Board determines should be deemed to represent
beneficial ownership.
Issuance of Right Certificates. After
the Distribution Date, the Rights Agent will mail separate
certificates evidencing the Rights to each record holder of the
common stock (or, if the common stock is uncertificated, by
appropriate changes to the book-entry account that evidences
record ownership of such shares) at the close of business on the
Distribution Date. Thereafter, the Rights will be transferable
separately from the common stock. Any Rights held by an
Acquiring Person are null and void and may not be exercised.
27
Consequences of a Person or Group Becoming an Acquiring
Person.
|
|
|
|
|
Flip-In. If (i) any person becomes an
Acquiring Person, (ii) any Acquiring Person or any
affiliate or associates of such person merges into or combines
with the Company and the Company is the surviving corporation,
(iii) any Acquiring Person or any affiliate or associate of
such person effects certain other transactions with the Company,
or (iv) during such time as there is an Acquiring Person
the Company effects certain transactions, in each case as
described in the Rights Agreement, then each Right (other than
Rights beneficially owned by the Acquiring Person and certain
affiliated persons) will entitle the holder to purchase, for a
price equal to that number of shares of common stock of the
Company obtained by multiplying the then purchase price by the
then number of one-one thousandths of a share of Preferred Stock
and dividing the product by 75% of the market price per share on
such date.
|
|
|
|
Flip-Over. If, after any person has become an
Acquiring Person, (1) the Company is involved in a merger
or other business combination in which the Company is not the
surviving corporation or its common stock is exchanged for other
securities or assets or (2) the Company or one or more of
its subsidiaries sells or otherwise transfers assets or earning
power aggregating more than 50% of the assets or earning power
of the Company and its subsidiaries, taken as a whole, then each
Right (other than Rights beneficially owned by the Acquiring
Person and certain affiliated persons) will entitle the holder
to purchase that number of shares of common stock of the
surviving corporation obtained by multiplying the then purchase
price by the then number of one-one thousandths of a share of
Preferred Stock and dividing the product by 75% of the market
price per share on such date.
|
Preferred Stock Provisions. Each share
of Preferred Stock, if issued:
|
|
|
|
|
will not be redeemable;
|
|
|
|
will entitle holders to receive, when, as and if declared by the
Board of Directors, a preferential dividend payment equal to the
greater of (a) $1.00 per share, or (b) an amount equal
to 1,000 times the aggregate amount paid with respect to one
share of Common Stock;
|
|
|
|
will entitle holders upon liquidation to the greater of
(a) $1.00 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, or (b) an
amount equal to 1,000 times the liquidation made with respect to
one share of Common Stock; and
|
|
|
|
will entitle holders to 1,000 votes on all matters submitted to
a vote of the holders of the Common Stock of the Company.
|
The value of a one one-thousandth interest in a share of
Preferred Stock should approximate the value of one share of
common stock.
Expiration. The Rights will expire on
July 18, 2014, unless earlier exchanged, redeemed or
amended by the Company. In addition, the Rights Plan will
automatically terminate if not approved by the stockholders of
the Company within one year of the record date of the Rights
Plan.
Redemption. The Board of Directors may
redeem all of the Rights at a price of $0.01 per
28
Right, subject to adjustment, at any time before a person or
group has become an Acquiring Person.
Exchange. At any time on or after a
person or group has become an Acquiring Person (but before any
person or group becomes the beneficial owner of 50% or more of
the outstanding common stock), the Board of Directors may
exchange all or part of the Rights (other than the Rights
beneficially owned by the Acquiring Person and certain
affiliated and associated persons) for shares of common stock at
an exchange ratio of one share of common stock per Right.
Anti-Dilution Provisions. The Board of
Directors may adjust the purchase price of the Preferred Stock,
the number and kind of shares of Preferred Stock issuable and
the number of outstanding Rights to prevent dilution that may
occur from a stock dividend, stock split or reclassification of
the Preferred Stock.
Amendments. As long as the Rights
remain redeemable, the Board of Directors may amend the Rights
Agreement without the approval of the Rights holders. After a
person or group has become an Acquiring Person, the Board may
not amend the Rights Agreement in any way that adversely affects
the Rights holders without the approval of the Rights holders.
Vote Required for
Approval
The affirmative vote of a majority of the votes cast at the
Annual Meeting is required to ratify the adoption of the
Stockholder Rights Plan.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF
THE STOCKHOLDER RIGHTS PLAN.
PROPOSAL 4
APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE FOR
ISSUANCE
Our Board of Directors has approved a resolution to amend our
Certificate of Incorporation to increase the authorized number
of shares of common stock from 14,700,000 shares to
100,000,000 shares. The full text of the proposed amendment
is set forth in the Certificate of Amendment to the Certificate
of Incorporation, which is included herein as
Appendix B.
Reasons for the
Amendment
The primary purpose of this amendment to our Certificate of
Incorporation is to make additional shares of common stock
available for issuance by us. Our Board of Directors believes
that it is in our best interest to increase the number of
authorized shares of common stock from 14,700,000 to 100,000,000
in order to have additional shares available to meet our future
business needs as they arise. As of August 17, 2011, we had
9,469,540 issued and outstanding shares of common stock along
with 704,978 shares of Common Stock subject to outstanding
but unexercised options or otherwise reserved for issuance under
our existing equity compensation plans. Therefore, as of
August 17, 2011, we had 4,525,482 shares of Common
Stock available for issuance. Our Board believes that the
availability of additional shares will provide us with the
flexibility to issue common stock for a variety of purposes that
our Board of Directors may deem advisable in the future. These
purposes could include, among other things, stock splits, stock
dividends, grants under employee stock plans, financing
transactions such as public or private offerings of Common Stock
or convertible
29
securities, issuances under the stockholder rights plan,
potential strategic transactions (including mergers,
acquisitions, strategic partnerships, joint ventures,
divestitures, and business combinations), as well as other
general corporate transactions, although we have no present
plans to use them in any such regard.
The additional shares of common stock would have rights
identical to our common stock currently outstanding. Approval of
the proposed amendment and any issuance of common stock would
not affect the rights of the holders of our common stock
currently outstanding, except for the effects incidental to
increasing the outstanding number of shares of common stock,
such as dilution of earnings per share, if any, and voting
rights of current holders of our common stock.
If authorized, the additional shares of common stock may be
issued with approval of our board of directors, but without
further approval of our stockholders, unless stockholder
approval is required by applicable law, rule or regulation.
Under our Certificate of Incorporation, the holders of our
Common Stock do not have preemptive rights with respect to
future issuances of Common Stock. Thus, should our Board of
Directors elect to issue additional shares of Common Stock, our
existing stockholders will not have any preferential rights to
purchase such shares and such issuance could have a dilutive
effect on the voting power and percentage ownership of these
stockholders. The issuance of additional shares of Common Stock
could also have a dilutive effect on our earnings per share, if
any.
Potential
Anti-Takeover Effects
The increase in the number of shares of common stock authorized
for issuance could, under certain circumstances, be construed as
having an anti-takeover effect. For example, in the event a
person seeks to effect a change in the composition of our Board
of Directors or contemplates a tender offer or other transaction
involving the combination of our company with another company,
it may be possible for us to impede the attempt by issuing
additional shares of common stock, thereby diluting the voting
power of the other outstanding shares and increasing the
potential cost to acquire control of our company. By potentially
discouraging initiation of any such unsolicited takeover
attempt, our Certificate of Incorporation may limit the
opportunity for our stockholders to dispose of their shares at
the higher price generally available in takeover attempts or
that may be available under a merger proposal. The proposed
amendment may also have the effect of permitting our board of
directors to retain its position indefinitely and place it in a
better position to resist changes that our stockholders may wish
to make if they are dissatisfied with the conduct of our
business.
Our Board of Directors did not propose this amendment to our
Certificate of Incorporation in response to any effort known to
the board to accumulate Common Stock or to obtain control of our
Company by means of a merger, tender offer or solicitation in
opposition to management. In addition, this proposal is not part
of any plan by management to recommend a series of similar
amendments to our stockholders. Finally, except as described in
this proxy statement, our Board of Directors does not currently
contemplate recommending the adoption of any other amendments to
our Certificate of Incorporation that could be construed as
affecting the ability of third parties to take over or change
the control of our Company.
Vote Required for
Approval
The affirmative vote of the holders of a majority of our
outstanding shares of Common Stock is
30
required to approve the foregoing amendment to our Certificate
of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
PROPOSAL TO AMEND OUR CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK THAT WE ARE
AUTHORIZED TO ISSUE.
PROPOSAL 5
APPROVAL OF 2012 INCENTIVE COMPENSATION PLAN
The Board of Directors approved the Breeze-Eastern Corporation
2012 Incentive Compensation Plan (the 2012 Plan) on
August 17, 2011, subject to approval from our stockholders
at the Annual Meeting. We are asking our stockholders to approve
the 2012 Plan, as we believe that its approval is essential to
our continued success. The purpose of the 2012 Plan is to
provide eligible officers, directors, key employees and other
key individuals with an incentive to contribute to the success
of the Company and to operate and manage our business in a
manner that will provide for the Companys long term growth
and profitability and provide a means of obtaining, rewarding
and retaining key personnel. In the judgment of the Board,
awards under the 2012 Plan will be a valuable incentive and will
serve to the ultimate benefit of stockholders by aligning more
closely the interests of 2012 Plan participants with those of
our stockholders.
If our stockholders approve the 2012 Plan, the number of shares
of Common Stock reserved for issuance under the 2012 Plan will
be 750,000. If our stockholders approve the 2012 Plan, we will
issue further awards pursuant to the 2006 Plan until no
available shares remain under the 2006 Plan.
Summary of the
Plan
A description of the provisions of the 2012 Plan is set forth
below. This summary is qualified in its entirety by the detailed
provisions of the 2012 Plan, a copy of which is attached as
Appendix C to this proxy statement.
Administration
The 2012 Plan is administered by the Board of Directors or a
Committee of the Board of Directors, as determined by the Board.
The members of the Committee will qualify as outside
directors within the meaning of Section 162(m) of the
Internal Revenue Code, meet the requirements of
Rule 16b-3
of the Exchange Act and comply with the independence
requirements of NYSE Amex. Subject to the terms of the Plan, the
Committee may select participants to receive awards, determine
the types and amounts of awards and terms and conditions of
awards and interpret provisions of the Plan and related award
agreements. The Committee may be the Incentive &
Compensation Committee of the Board of Directors or a
subcommittee thereof.
Common Stock
Reserved for Issuance under the Plan
The Common Stock issued or to be issued under the 2012 Plan
consists of authorized but unissued shares or, to the extent
permitted by applicable law, issued shares that have been
reacquired by the Company. Awards will be counted against the
Plan limit as one share for every one share subject to an award
under the 2012 Plan. If any shares covered by an award are not
purchased or are forfeited, or if an award otherwise terminates
without delivery of any Common Stock, then the number of shares
of Common Stock counted against the aggregate number of shares
available under
31
the 2012 Plan with respect to the award will, to the extent of
any such forfeiture or termination, again be available for
making awards under the 2012 Plan. The number of shares of
Common Stock available for issuance under the 2012 Plan will be
increased by any shares tendered or withheld or award
surrendered in connection with the purchase of shares of Common
Stock upon exercise of an option or any shares of Common Stock
deducted from an award payment in connection with the
Companys tax withholding obligations.
Eligibility
Awards may be made under the 2012 to directors, officers,
employees of or consultants to the Company or any of our
affiliates, including any such employee who is an officer or
director of us or of any affiliate, and to any other individual
whose participation in the 2012 Plan is determined to be in the
best interests of the Company by the Board.
Amendment or
Termination of the Plan
The Board of Directors may terminate or amend the Plan at any
time and for any reason. The 2012 Plan shall terminate in any
event ten years after the date of Board approval of the Plan.
Amendments will be submitted for stockholder approval to the
extent required by the Internal Revenue Code or other applicable
laws, rules or regulations.
Options
The 2012 Plan permits the granting of options to purchase shares
of Common Stock intended to qualify as incentive stock options
under the Internal Revenue Code and stock options that do not
qualify as incentive stock options.
Exercise
Price
The exercise price of each stock option may not be less than
100% of the fair market value of our Common Stock on the date of
grant. The fair market value is generally determined as either
(i) the last reported sales price before the grant or the
closing price on the trading day of grant of the Common Stock,
if no sales were reported as quoted on such exchange or system
as reported in The Wall Street Journal or such other
source as the Committee deems reliable or (ii) the
arithmetic mean of the high and low prices on the trading day of
the grant, as determined by the Committee in its sole and
absolute discretion. In the case of certain 10% stockholders who
receive incentive stock options, the exercise price may not be
less than 110% of the fair market value of the Common Stock on
the date of grant. An exception to these requirements is made
for options that the Company grants in substitution for options
held by employees of companies that the Company acquires. In
such a case the exercise price is adjusted to preserve the
economic value of the employees stock option from his or
her former employer. The term of each stock option is fixed by
the Committee and may not exceed 10 years from the date of
grant (or five years from the date of grant in the case of
certain 10% stockholders who receive incentive stock options).
The Committee determines at what time or times each option may
be exercised and the period of time, if any, after retirement,
death, disability or termination of employment during which
options may be exercised. Options may be made exercisable in
installments. The exercisability of options may be accelerated
by the Committee. In general, an optionee may pay the exercise
price of an option by cash, certified check or, to the extent an
award agreement so provides, by tendering shares of
32
Common Stock, or by means of a broker-assisted cashless exercise.
Transfers
Awards made under the 2012 Plan may not be sold, transferred,
pledged or assigned other than by will or under applicable laws
of descent and distribution. However, the Company may permit
limited transfers of non-qualified options and restricted stock
awards for the benefit of immediate family members of grantees
to help with estate planning concerns.
Other Awards
The Committee may also award, without limitation:
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Restricted stock, which is shares of Common Stock subject to
restrictions.
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Restricted stock units (RSUs), which are uncertificated Common
Stock units subject to restrictions and deferral rules.
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Dividend equivalent rights with respect to RSUs, which are
rights entitling the recipient to receive credits for dividends
that would be paid if the recipient had held a specified number
of shares of Common Stock.
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Stock appreciation rights, which are a right to receive a number
of shares or, at the discretion of the Committee, an amount in
cash or a combination of shares and cash, based on the increase
in the fair market value of the shares underlying the right
during a stated period specified by the Committee.
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Performance-based awards, ultimately payable in Common Stock or
cash, as determined by the Committee. The Committee may grant
multi-year and annual incentive awards subject to achievement of
specified goals tied to business criteria (described below). The
Committee may specify the amount of the incentive award as a
percentage of these business criteria, a percentage in excess of
a threshold amount or as another amount which need not bear a
strictly mathematical relationship to these business criteria.
The Committee may modify, amend or adjust the terms of each
award and performance goal. Awards to individuals who are
covered under Section 162(m) of the Internal Revenue Code,
or who the Committee designates as likely to be covered in the
future, will comply with the requirement that payments to such
employees qualify as performance-based compensation under
Section 162(m) of the Internal Revenue Code to the extent
that the Committee so designates. Such employees include the
chief executive officer and the three highest compensated
executive officers (other than the chief financial officer)
determined at the end of each year (the Covered
Employees).
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Effect of Certain
Changes in Control
Unless an applicable award agreement provides otherwise, upon
the occurrence of certain change in control transactions
involving the Company, the Committee may, in its sole
discretion, (i) make appropriate provision for the
continuation or substitution of any awards granted under the
2012 Plan with the surviving or acquiring entity,
(ii) accelerate the vesting of any awards,
(iii) permit the exchange of any award for the right to
participate in any employee benefit plan of any successor
corporation, (iv) provide for the repurchase of
33
any awards for an amount equal to the difference of (a) the
consideration received per share for the securities underlying
the award in the change in control minus (b) the per share
exercise price of such securities, or (v) provide for the
termination of such awards upon consummation of the change in
control.
Adjustments for
Stock Dividends and Similar Events
The Committee will make appropriate adjustments in outstanding
awards and the number of shares available for issuance under the
2012 Plan, including the individual limitations on awards
(described below), to reflect stock splits and other similar
events.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code limits
publicly-held companies, such as the Company, to an annual
deduction for federal income tax purposes of $1 million for
compensation paid to their Covered Employees. However,
performance-based compensation is excluded from this limitation.
The 2012 Plan is designed to permit the Committee to grant
awards that qualify as performance-based for purposes of
satisfying the conditions of Section 162(m).
To qualify as performance-based: (i) the compensation must
be paid solely on account of the attainment of one or more
pre-established, objective performance goals; (ii) the
performance goal under which compensation is paid must be
established by a compensation committee comprised solely of two
or more directors who qualify as outside directors for purposes
of the exception; (iii) the material terms under which the
compensation is to be paid must be disclosed to, and
subsequently approved by, stockholders of the Company in a
separate vote before payment is made; and (iv) the
Incentive & Compensation Committee must certify in
writing before payment of the compensation that the performance
goals and any other material terms were, in fact, satisfied.
In the case of compensation attributable to stock options, the
performance goal requirement (summarized in (i) above) is
deemed satisfied, and the certification requirement (summarized
in (iv) above) is inapplicable, if the grant or award is
made by the Incentive & Compensation Committee; the
plan under which the option is granted states the maximum number
of shares with respect to which options may be granted during a
specified period to an employee; and under the terms of the
option, the amount of compensation is based solely on an
increase in the value of the common stock after the date of
grant.
Under Section 162(m) the Internal Revenue Code, a director
is an outside director of the Company if he or she
is not a current employee of the Company; is not a former
employee who receives compensation for prior services (other
than under a tax-qualified retirement plan); has not been an
officer of the Company; and does not receive, directly or
indirectly (including amounts paid to an entity that employs the
director or in which the director has at least a five percent
ownership interest), remuneration from the Company in any
capacity other than as a director.
The maximum number of shares of Common Stock subject to options
or stock appreciation rights that can be granted under the 2012
Plan in a fiscal year to any person is 150,000.
34
Federal Income
Tax Consequences
Incentive Stock
Options
The grant of an option will not be a taxable event for the
grantee or for the Company. A grantee will not recognize taxable
income upon exercise of an incentive stock option (except that
the alternative minimum tax may apply), and any gain realized
upon a disposition of our Common Stock received pursuant to the
exercise of an incentive stock option will be taxed as long-term
capital gain if the grantee holds the shares of Common Stock for
at least two years after the date of grant and for one year
after the date of exercise (the holding period
requirement). We will not be entitled to any business
expense deduction with respect to the exercise of an incentive
stock option, except as discussed below.
For the exercise of an option to qualify for the foregoing tax
treatment, the grantee generally must be our employee or an
employee of our subsidiary from the date the option is granted
through a date within three months before the date of exercise
of the option.
If all of the foregoing requirements are met except the holding
period requirement mentioned above, the grantee will recognize
ordinary income upon the disposition of the Common Stock in an
amount generally equal to the excess of the fair market value of
the Common Stock at the time the option was exercised over the
option exercise price (but not in excess of the gain realized on
the sale). The balance of the realized gain, if any, will be
capital gain. We will be allowed a business expense deduction to
the extent the grantee recognizes ordinary income, subject to
our compliance with Section 162(m) of the Internal Revenue
Code and to certain reporting requirements.
Non-Qualified
Options
The grant of an option will not be a taxable event for the
grantee or the Company. Upon exercising a non-qualified option,
a grantee will recognize ordinary income in an amount equal to
the difference between the exercise price and the fair market
value of the Common Stock on the date of exercise. Upon a
subsequent sale or exchange of shares acquired pursuant to the
exercise of a non-qualified option, the grantee will have
taxable capital gain or loss, measured by the difference between
the amount realized on the disposition and the tax basis of the
shares of Common Stock (generally, the amount paid for the
shares plus the amount treated as ordinary income at the time
the option was exercised).
If we comply with applicable reporting requirements and with the
restrictions of Section 162(m) of the Internal Revenue
Code, we will be entitled to a business expense deduction in the
same amount and generally at the same time as the grantee
recognizes ordinary income.
A grantee who has transferred a non-qualified stock option to a
family member by gift will realize taxable income at the time
the non-qualified stock option is exercised by the family
member. The grantee will be subject to withholding of income and
employment taxes at that time. The family members tax
basis in the shares of Common Stock will be the fair market
value of the shares of Common Stock on the date the option is
exercised. The transfer of vested non-qualified stock options
will be treated as a completed gift for gift and estate tax
purposes. Once the gift is completed, neither the transferred
options nor the shares acquired on exercise of the transferred
options will be includable in the grantees estate for
estate tax purposes.
35
In the event a grantee transfers a non-qualified stock option to
his or her ex-spouse incident to the grantees divorce,
neither the grantee nor the ex-spouse will recognize any taxable
income at the time of the transfer. In general, a transfer is
made incident to divorce if the transfer occurs
within one year after the marriage ends or if it is related to
the end of the marriage (for example, if the transfer is made
pursuant to a divorce order or settlement agreement). Upon the
subsequent exercise of such option by the ex-spouse, the
ex-spouse will recognize taxable income in an amount equal to
the difference between the exercise price and the fair market
value of the shares of Common Stock at the time of exercise. Any
distribution to the ex-spouse as a result of the exercise of the
option will be subject to employment and income tax withholding
at this time.
Restricted
Stock
A grantee who is awarded restricted stock will not recognize any
taxable income for federal income tax purposes in the year of
the award, provided that the shares of Common Stock are subject
to restrictions (that is, the restricted stock is
nontransferable and subject to a substantial risk of
forfeiture). However, the grantee may elect under
Section 83(b) of the Internal Revenue Code to recognize
compensation income in the year of the award in an amount equal
to the fair market value of the Common Stock on the date of the
award (less the purchase price, if any), determined without
regard to the restrictions. If the grantee does not make such a
Section 83(b) election, the fair market value of the Common
Stock on the date the restrictions lapse (less the purchase
price, if any) will be treated as compensation income to the
grantee and will be taxable in the year the restrictions lapse
and dividends paid while the Common Stock is subject to
restrictions will be subject to withholding taxes. If we comply
with applicable reporting requirements and with the restrictions
of Section 162(m) of the Internal Revenue Code, we will be
entitled to a business expense deduction in the same amount and
generally at the same time as the grantee recognizes ordinary
income.
Restricted Stock
Units
There are no immediate tax consequences of receiving an award of
RSUs under the 2012 Plan. A grantee who is awarded an RSU will
be required to recognize ordinary income in an amount equal to
the fair market value of shares issued to such grantee at the
end of the restriction period or, if later, the payment date. If
we comply with applicable reporting requirements and with the
restrictions of Section 162(m) of the Internal Revenue
Code, we will be entitled to a business expense deduction in the
same amount and generally at the same time as the grantee
recognizes ordinary income.
Dividend
Equivalent Rights
Participants who receive dividend equivalent rights with respect
to RSUs will be required to recognize ordinary income in an
amount distributed to the grantee pursuant to the award. If we
comply with applicable reporting requirements and with the
restrictions of Section 162(m) of the Internal Revenue
Code, we will be entitled to a business expense deduction in the
same amount and generally at the same time as the grantee
recognizes ordinary income.
Stock
Appreciation Rights
There are no immediate tax consequences of receiving an award of
stock appreciation rights under the 2012 Plan. Upon exercising a
stock appreciation right, a grantee will recognize
36
ordinary income in an amount equal to the difference between the
exercise price and the fair market value of the Common Stock on
the date of exercise. If we comply with applicable reporting
requirements and with the restrictions of Section 162(m) of
the Internal Revenue Code, we will be entitled to a business
expense deduction in the same amount and generally at the same
time as the grantee recognizes ordinary income.
Performance-Based
Awards
The award of a performance-based award will have no federal
income tax consequences for us or for the grantee. The payment
of the award is taxable to a grantee as ordinary income. If we
comply with applicable reporting requirements and with the
restrictions of Section 162(m) of the Internal Revenue
Code, we will be entitled to a business expense deduction in the
same amount and generally at the same time as the grantee
recognizes ordinary income.
Section 280G
To the extent payments that are contingent on a change in
control are determined to exceed certain Code limitations, they
may be subject to a 20% nondeductible excise tax, and the
Companys deduction with respect to the associated
compensation expense may be disallowed in whole or in part.
Section 409A
The Company intends for awards granted under the 2012 Plan
either to be exempt from, or to comply with, Section 409A
of the Internal Revenue Code.
New Plan Benefits
Because future awards of stock options, restricted stock or
other equity awards under the 2012 Plan will be made at the
discretion of the Committee, no data can be provided regarding
the benefits or amounts that will be received by any participant
or groups of participants if the 2012 Plan is approved.
Vote Required for
Approval
The affirmative vote of a majority of the votes cast at the
Annual Meeting is required to approve the adoption of the Plan.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL
OF THE ADOPTION OF THE 2012 INCENTIVE COMPENSATION PLAN.
PROPOSALS FOR
SUBMISSION AT NEXT ANNUAL MEETING
If a stockholder desires to submit a proposal to fellow
stockholders at the Companys annual meeting next year and
wishes to have it set forth in the corresponding proxy statement
and identified in the corresponding proxy form prepared by
management, in accordance with
Rule 14a-8
under the Securities Exchange Act of 1934, such stockholder must
notify the Company of such proposal in a writing received at its
executive offices no later than May 5, 2012.
Additionally, if requested timely and properly, a stockholder
may submit a proposal for consideration at the 2012 Annual
Meeting of Stockholders, but not for inclusion in the
Companys Proxy Statement and proxy for the 2012 Annual
Meeting of Stockholders. In order for proposals made outside of
Rule 14a-8
under the Exchange Act to be considered timely
within the meaning of
Rule 14a-4(c)(1)
under the Exchange Act, such
37
proposals must be received by the Company at its executive
offices not later than July 19, 2012.
ANNUAL
REPORTS
A copy of our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2011 is being mailed to
each stockholder of record together with this proxy statement.
The Annual Report on
Form 10-K
contains detailed information concerning the Company and its
operations, including financial information. A copy of this
report, without exhibits, will be furnished to stockholders
without charge upon request in writing to Mark D. Mishler,
Secretary of the Company, at Breeze-Eastern Corporation, 35
Melanie Lane, Whippany, New Jersey 07981.
If requested, we will also provide such persons with copies of
any exhibit to the Annual Report on
Form 10-K
upon the payment of a fee limited to our reasonable expenses in
furnishing such exhibits.
STOCKHOLDERS
SHARING AN ADDRESS
Stockholders sharing an address with another stockholder may
receive only one annual report or one set of proxy materials at
that address unless they have provided contrary instructions.
Any such stockholder who wishes to receive a separate copy of
the annual report or a separate set of proxy materials now or in
the future may write or call the Company to request a separate
copy of these materials from: Mark Mishler, 35 Melanie
Lane, Whippany, New Jersey 07981. We will promptly deliver a
copy of the requested materials.
Similarly, stockholders sharing an address with another
stockholder who have received multiple copies of the
Companys proxy materials may write to or call the above
address and phone number to request delivery of a single copy of
these materials.
OTHER
MATTERS
The Board does not know of any matter to be acted upon at the
Annual Meeting other than the matters described herein. If any
other matter properly comes before the Annual Meeting, the
holders of the proxies will vote thereon in accordance with
their best judgment.
38
Appendix A
BREEZE-EASTERN
CORPORATION
and
COMPUTERSHARE TRUST COMPANY, N.A.
as Rights Agent
RIGHTS AGREEMENT
effective as of July 18, 2011
TABLE OF
CONTENTS
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Page
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Section 1.
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Certain Definitions
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A-1
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Section 2.
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Appointment of Rights Agent
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A-6
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Section 3.
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Issue of Rights Certificates
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A-6
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Section 4.
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Form of Rights Certificate
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A-8
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Section 5.
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Countersignature and Registration
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A-9
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Section 6.
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Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates
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A-10
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Section 7.
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Exercise of Rights; Purchase Price; Expiration Date of Rights
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A-10
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Section 8.
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Cancellation and Destruction of Rights Certificates
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A-12
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Section 9.
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Reservation and Availability of Capital Stock
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A-12
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Section 10.
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Preferred Stock Record Date
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A-14
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Section 11.
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Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights
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A-15
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Section 12.
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Certificate of Adjusted Purchase Price or Number of Shares
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A-22
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Section 13.
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Consolidation, Merger or Sale or Transfer of Assets or Earning
Power
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A-22
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Section 14.
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Fractional Rights; Fractional Shares; Waiver
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A-26
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Section 15.
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Rights of Action
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A-27
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Section 16.
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Agreement of Rights Holders
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A-27
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Section 17.
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Rights Certificate Holder Not Deemed a Stockholder
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A-28
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Section 18.
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Duties of Rights Agent
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A-28
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Section 19.
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Concerning the Rights Agent
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A-30
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Section 20.
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Merger or Consolidation or Change of Name of Rights Agent
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A-31
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Section 21.
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Change of Rights Agent
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A-31
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Section 22.
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Issuance of New Rights Certificates
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A-32
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Section 23.
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Redemption
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A-33
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Section 24.
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Exchange
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A-33
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Section 25.
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Notice of Certain Events
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A-35
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Section 26.
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Notices
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A-36
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Section 27.
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Supplements and Amendments
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A-37
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Section 28.
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Successors
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A-37
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Section 29.
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Determinations and Actions by the Board
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A-37
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Section 30.
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Benefits of this Agreement
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A-38
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Section 31.
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Severability
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A-38
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Section 32.
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Governing Law
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A-38
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Section 33.
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Counterparts
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A-38
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Section 34.
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Descriptive Headings
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A-39
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A-i
EXHIBITS
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Exhibit A
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Certificate of Designation of Series A Junior Participating
Preferred Stock of Breeze-Eastern Corporation
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Exhibit B
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Summary of Rights
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Exhibit C
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Form of Rights Certificate
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A-ii
RIGHTS
AGREEMENT
RIGHTS AGREEMENT, dated as of July 19, 2011 and effective
as of July 18, 2011 (this Agreement), by
and between Breeze-Eastern Corporation, a Delaware corporation
(the Company), and Computershare
Trust Company, N.A., as rights agent (the Rights
Agent);
WHEREAS, on July 18, 2011 (the Rights Dividend
Declaration Date), the Board of Directors of the
Company authorized and declared a dividend of one preferred
share purchase right (a Right) for each share
of Common Stock (as hereinafter defined) of the Company
outstanding at the Close of Business (as hereinafter defined) on
the Record Date (as hereinafter defined), each Right initially
representing the right to purchase one one-thousandth (subject
to adjustment) of one share of Preferred Stock (as hereinafter
defined), upon the terms and subject to the conditions herein
set forth, and further authorized and directed the issuance of
one Right (subject to adjustment) with respect to each share of
Common Stock of the Company that shall become outstanding
between the Record Date and the earlier of the Distribution Date
and the Expiration Date (as such terms are hereinafter defined);
provided, however, that Rights may be issued with
respect to shares of Common Stock that shall become outstanding
after the Distribution Date and prior to the Expiration Date in
accordance with Section 22 hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain
Definitions.
For purposes of this Agreement, the following terms have the
meanings indicated:
(a) Acquiring Person shall mean
any Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 10%
or more of the shares of Common Stock of the Company then
outstanding, but shall not include (i) the Company,
(ii) any Subsidiary of the Company, (iii) any employee
benefit plan of the Company or any Subsidiary of the Company, or
any Person holding shares of Common Stock for or pursuant to the
terms of any such plan to the extent, and only to the extent, of
such shares of Common Stock so held, or (iv) an Exempted
Person. Notwithstanding anything in this definition of
Acquiring Person to the contrary:
(i) no Person shall become an Acquiring Person
as the result of an acquisition of shares of Common Stock by the
Company which, by reducing the number of shares of Common Stock
outstanding, increases the percentage of the shares of Common
Stock beneficially owned by such Person, together with all
Affiliates and Associates of such Person, to 10% or more of the
shares of Common Stock of the Company then outstanding;
provided, however, that if a Person, together with
all Affiliates and Associates of such Person, shall become the
Beneficial Owner of 10% or more of the shares of Common Stock of
the Company then outstanding by reason of share acquisitions by
the Company and shall, after such share acquisitions by the
Company, become the Beneficial Owner of any additional shares of
Common Stock of the Company (other than pursuant to a dividend
or distribution paid or made by the Company on the outstanding
Common Stock or pursuant to a split or subdivision of the
outstanding Common Stock), then such Person shall be deemed to
be an Acquiring Person unless, upon becoming the
Beneficial Owner of such additional shares of Common Stock, such
Person, together with all Affiliates and
A-1
Associates of such Person, does not beneficially own 10% or more
of the Common Stock then outstanding;
(ii) if the Board determines that a Person who would
otherwise be an Acquiring Person, as defined
pursuant to the foregoing provisions of this paragraph (a), has
become such inadvertently (including, without limitation,
because (A) such Person was unaware that it beneficially
owned a percentage of the then outstanding Common Stock that
would otherwise cause such Person to be an Acquiring
Person or (B) such Person was aware of the extent of
its Beneficial Ownership of Common Stock but had no actual
knowledge of the consequences of such Beneficial Ownership under
this Agreement), and such Person divests as promptly as
practicable a sufficient number of shares of Common Stock so
that such Person would no longer be an Acquiring
Person, as defined pursuant to the foregoing provisions of
this paragraph (a), then such Person shall not be deemed to be
or to have become an Acquiring Person for any
purposes of this Agreement as a result of such inadvertent
acquisition unless and until such Person shall again become an
Acquiring Person;
(iii) if, as of the date hereof or prior to the first
public announcement of the adoption of this Agreement, any
Person is or becomes the Beneficial Owner of 10% or more of the
shares of Common Stock outstanding, such Person shall not be
deemed to be or to become an Acquiring Person unless
and until such time as such Person shall, after the first public
announcement of the adoption of this Agreement, become the
Beneficial Owner of additional shares of Common Stock (other
than pursuant to a dividend or distribution paid or made by the
Company on the outstanding Common Stock or pursuant to a split
or subdivision of the outstanding Common Stock), unless upon
becoming the Beneficial Owner of such additional shares of
Common Stock, such Person is not then the Beneficial Owner of
10% or more of the shares of Common Stock then
outstanding; and
(iv) no Person shall become an Acquiring Person
solely as a result of any unilateral grant of any security by
the Company, or through the exercise of any options, warrants,
rights or similar interests (including restricted stock) granted
by the Company to its directors, officers and employees;
provided, however, that if a Person, who or which
together with all Affiliates and Associates, shall become the
Beneficial Owner of 10% or more of the shares of Common Stock of
the Company then outstanding by reason of a unilateral grant of
a security by the Company, or through the exercise of any
options, warrants, rights or similar interests (including
restricted stock) granted by the Company to its directors,
officers and employees, such Person shall nevertheless be deemed
to be an Acquiring Person if, subject to
Section 1(a)(ii), such Person, together with all Affiliates
and Associates, thereafter becomes the Beneficial Owner of any
additional shares of Common Stock (unless upon becoming the
Beneficial Owner of additional shares of Common Stock, such
Person, together with all Affiliates and Associates, does not
beneficially own 10% or more of the Common Stock then
outstanding), except as a result of (y) a dividend or
distribution paid or made by the Company on the outstanding
Common Stock or a split or subdivision of the outstanding Common
Stock; or (z) the unilateral grant of a security by the
Company, or through the exercise of any options, warrants,
rights or similar interest (including restricted stock) granted
by the Company to its directors, officers and employees.
A-2
(b) Affiliate and
Associate shall have the respective
meanings ascribed to such terms in
Rule 12b-2
of the Exchange Act Regulations, as in effect on the date of
this Agreement.
(c) A Person shall be deemed the Beneficial
Owner of and shall be deemed to beneficially
own and to have beneficial
ownership of any securities:
(i) that such Person or any of such Persons
Affiliates or Associates beneficially owns, directly or
indirectly (as determined pursuant to
Rule 13d-3
of the Exchange Act Regulations as in effect on the date of this
Agreement); provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to
beneficially own or to have beneficial
ownership of, any security under this subparagraph
(i) as a result of an agreement, arrangement or
understanding to vote such security that would otherwise render
such Person the Beneficial Owner of such security, if such
agreement, arrangement or understanding (A) arises solely
from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable provisions of the
Exchange Act Regulations and (B) is not also then
reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report);
(ii) that such Person or any of such Persons
Affiliates or Associates, directly or indirectly, 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 (whether or not in
writing), or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise;
provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to
beneficially own or to have beneficial
ownership of, (x) securities tendered pursuant to a
tender or exchange offer made in accordance with the Exchange
Act Regulations by or on behalf of such Person or any of such
Persons Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or
(y) securities issuable upon exercise of Rights at any time
prior to the occurrence of a Triggering Event, or
(z) securities issuable upon exercise of Rights from and
after the occurrence of a Triggering Event if such Rights were
acquired by such Person or any of such Persons Affiliates
or Associates prior to the Distribution Date or pursuant to
Section 3(a) or Section 22 hereof (the
Original Rights) or pursuant to
Section 11(a) hereof in connection with an adjustment made
with respect to any Original Rights; or (B) the right to
vote pursuant to any agreement, arrangement, or understanding
(except to the extent contemplated by the proviso to
subparagraph (i) of this paragraph (c)); or
(iii) that are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate of such
Person) with which such Person (or any of such Persons
Affiliates or Associates) has any agreement, arrangement, or
understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except to the extent contemplated by
the proviso to subparagraph (i) of this paragraph (c)) or
disposing of any such securities;
provided, however, that nothing in this paragraph
(c) shall cause a Person engaged in business as an
underwriter of securities to be the Beneficial Owner
of, or to beneficially own, or have beneficial
ownership of, any securities acquired through such
Persons participation in good faith in a firm commitment
underwriting until the expiration of forty (40) days after
the date of such acquisition;
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provided further, however, that no Person who is
an officer, director or employee of the Company or any
Subsidiary of the Company shall be deemed, solely by reason of
such Persons status or authority as such, to be the
Beneficial Owner of, or to beneficially
own, any securities that are beneficially
owned (as defined in this paragraph (c)), including,
without limitation, in a fiduciary capacity, by the Company or
any Subsidiary of the Company, or by any other such officer,
director or employee of the Company or any Subsidiary of the
Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase then
outstanding, when used with reference to a Persons
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 that such Person would be deemed to
beneficially own hereunder.
(d) Board shall mean the Board of
Directors of the Company or any duly authorized committee
thereof.
(e) Book Entry shall mean an
uncertificated book entry for the Common Stock.
(f) Business Day shall mean any
day other than a Saturday, a Sunday, or a day on which banking
or trust institutions in New York City, New York are authorized
or obligated by law or executive order to close.
(g) Certificate of Incorporation
shall mean the Certificate of Incorporation of the Company, as
amended, as filed with the Office of the Secretary of State of
the State of Delaware (the Secretary of
State), and together with the Certificate of
Designation of the Preferred Stock of the Company adopted
contemporaneously with the approval of this Agreement and
attached hereto as Exhibit A (the
Certificate of Designation), as the same may
hereafter be amended or restated.
(h) Close of Business on any
given date shall mean 5:00 P.M., New York City time, on
such date; provided, however, that if such date is
not a Business Day, it shall mean 5:00 P.M., New York City
time, on the next succeeding Business Day.
(i) Common Stock when used with
reference to the Company shall mean Common Stock, par value
$0.01 per share, of the Company. Common Stock when
used with reference to any Person other than the Company shall
mean the class or series of capital stock (or equity interest)
with the greatest voting power (in relation to any other classes
or series of capital stock (or equity interest)) of such other
Person or if such other Person is a Subsidiary of another
Person, the Person who ultimately controls such first mentioned
Person.
(j) Distribution Date shall mean
the earlier of (i) the Close of Business on the tenth
Business Day after the Stock Acquisition Date (or, if the tenth
Business Day after the Stock Acquisition Date occurs before the
Record Date, the Close of Business on the Record Date) and
(ii) the Close of Business on the tenth Business Day (or,
if such tenth Business Day occurs before the Record Date, the
Close of Business on the Record Date), or such later date as may
be determined by action of the Board prior to such time as any
Person becomes an Acquiring Person, after the date of the
commencement by any Person (other than the Company, any
Subsidiary of the Company or any employee benefit plan of the
Company or of any Subsidiary of the Company or any Person
holding
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shares of Common Stock for or pursuant to the terms of any such
plan) of, or of the first public announcement of the intention
of any Person (other than any of the Persons referred to in the
preceding parenthetical) to commence, a tender or exchange offer
the consummation of which would result in such Person becoming
the Beneficial Owner of 10% or more of the outstanding shares of
Common Stock.
(k) Exchange Act shall mean the
Securities Exchange Act of 1934, as amended.
(l) Exchange Act Regulations
shall mean the General Rules and Regulations under the Exchange
Act.
(m) Exchange Date shall have the
meaning set forth in Section 7(a) hereof.
(n) Exchange Ratio shall have the
meaning set forth in Section 24(a) hereof.
(o) Exempted Person shall mean
(i) the Company, (ii) any Subsidiary (as hereinafter
defined) of the Company, (iii) any employee benefit plan of
the Company or any of its Subsidiaries, or any entity holding
shares of Common Stock which was organized, appointed or
established by the Company or any Subsidiary of the Company for
or pursuant to the terms of any such plan; [provided,
however, that, after the date of this Agreement, any
Persons in clauses (i) (iii) above shall
cease to be an Exempted Person and shall become an Acquiring
Person if they, in the aggregate, acquire Beneficial Ownership
of an additional 2% or more of the outstanding Common
Stock of the Company in excess of the amount beneficially owned
as of the date hereof;
(p) Expiration Date shall have
the meaning set forth in Section 7(a) hereof.
(q) Final Expiration Date shall
have the meaning set forth in Section 7(a) hereof.
(r) Person shall mean any
individual, firm, corporation, partnership (general or limited),
limited liability company, limited liability partnership,
association, unincorporated organization, trust or other legal
entity and also (i) any syndicate or group deemed to be a
Person under Section 13(d)(3) of the Exchange Act and
Rule 13d-5(b)
thereunder and (iii) any successor (by merger or otherwise)
of any such firm, corporation, partnership (general or limited),
limited liability company, limited liability partnership,
association, unincorporated organization, trust, or other group
or entity.
(s) Preferred Stock shall mean
the Series A Junior Participating Preferred Stock, par
value $1.00 per share, of the Company, having the voting rights,
powers, designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations
and restrictions set forth in the Certificate of Designation.
(t) Principal Party shall have
the meaning set forth in Section 13(b) hereof.
(u) Purchase Price shall have the
meaning set forth in Sections 4(a), 11(a)(ii) and 13(a)
hereof.
(v) Record Date shall mean the
Close of Business on August 1, 2011.
(w) Redemption Date shall
have the meaning set forth in Section 7(a) hereof.
(x) Redemption Period shall
have the meaning set forth in Section 23(a) hereof.
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(y) Right and
Rights shall have the meaning set
forth in the Preamble hereof.
(z) Rights Certificate shall have
the meaning set forth in Section 3(d) hereof.
(aa) Rights Dividend Declaration
Date shall have the meaning set forth in the
Preamble hereof.
(bb) Section 11(a)(ii) Event
shall mean any event described in Section 11(a)(ii) hereof.
(cc) Section 13 Event shall
mean any event described in clause (x), (y) or (z) of
Section 13(a) hereof.
(dd) Securities Act shall mean
the Securities Act of 1933, as amended.
(ee) Stock Acquisition Date shall
mean the first date of public announcement (including, without
limitation, the filing of any report pursuant to
Section 13(d) of the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.
(ff) Subsidiary shall mean, with
reference to any Person, any other Person of which (1) a
majority of the voting power of the voting securities or equity
interests is beneficially owned, directly or indirectly, by such
first-mentioned Person or otherwise controlled by such
first-mentioned Person, or (2) an amount of voting
securities or equity interests sufficient to elect at least a
majority of the directors or equivalent governing body of such
other Person is beneficially owned, directly or indirectly, by
such first-mentioned Person, or otherwise controlled by such
first-mentioned Person.
(gg) Triggering Event shall mean
any Section 11(a)(ii) Event or any Section 13 Event.
(hh) Trust has the meaning set
forth in Section 24(d) hereof.
(ii) Trust Agreement has the
meaning set forth in Section 24(d) hereof.
Section 2. Appointment
of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for
the Company 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 shall in
no event be liable for, the acts or omissions of any such
co-Rights Agent.
Section 3. Issue
of Rights Certificates.
(a) As promptly as practicable following the Record Date,
the Company will send a copy of a Summary of Rights to Purchase
Preferred Stock, in substantially the form attached hereto as
Exhibit B and which may be appended to certificates
that represent shares of Common Stock (hereinafter referred to
as the Summary of Rights), to each record
holder of 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 representing shares of Common Stock
outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates for shares of
Common Stock registered in the names of the holders thereof, and
not by separate Rights Certificates, and with respect to Book
Entry shares of Common Stock outstanding as of the Record Date,
until the Distribution Date, the
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Rights will be evidenced by the balances indicated in the Book
Entry account system of the transfer agent for the Common Stock,
or in the case of certificated shares, by such certificates
registered in the names of the holders thereof. Until the
earlier of the Distribution Date or the Expiration Date, the
transfer of any shares of Common Stock outstanding on the Record
Date (whether represented by certificate(s) or evidenced by the
balances indicated in the Book Entry account system of the
transfer agent for the Common Stock, and, in either case,
regardless of whether a copy of the Summary of Rights is
submitted with the surrender or request for transfer), also
shall constitute the transfer of the Rights associated with such
shares of Common Stock.
(b) Rights shall be issued, without any further action, in
respect of all shares of Common Stock that become outstanding
(whether originally issued or delivered from the Companys
treasury) after the Record Date but prior to the earlier of the
Distribution Date and the Expiration Date; provided,
however, that Rights also shall be issued to the extent
provided in Section 22 hereof. Confirmation and account
statements sent to holders of Common Stock for Book Entry form
or, in the case of certificated shares, certificates,
representing such shares of Common Stock, issued after the
Record Date shall bear a legend substantially in the following
form:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement
between Breeze-Eastern Corporation (the
Company) and Computershare
Trust Company, N.A. (the Rights
Agent) dated as of July 18, 2011 as the same may
be amended from time to time (the Rights
Agreement), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights
shall be evidenced by separate certificates and will no longer
be evidenced by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights Agreement as in
effect on the date of mailing without charge after receipt of a
written request therefor.
Under certain circumstances, as set forth in the Rights
Agreement, Rights that are Beneficially Owned by any Person who
is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such capitalized terms are defined in the
Rights Agreement), or specified transferees of such Acquiring
Person (or Affiliate or Associate thereof) may become null and
void.
With respect to all certificates representing shares of Common
Stock containing the foregoing legend, until the earliest of the
Distribution Date, the Redemption Date and the Final
Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such
certificates alone and registered holders of Common Stock shall
also be the registered holders of the associated Rights, and the
transfer of any such certificate shall also constitute the
transfer of the Rights associated with the shares of Common
Stock represented by such certificates.
With respect to Common Stock in Book Entry form for which there
has been sent a confirmation or account statement containing the
foregoing legend, until the earliest of the Distribution Date,
the Redemption Date and the Expiration Date, the Rights
associated with the Common Stock shall be evidenced by such
Common Stock alone and registered holders of Common Stock shall
also be the registered holders of the associated Rights, and the
transfer of any such Common Stock shall also constitute the
transfer of the Rights associated with such shares of Common
Stock.
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Notwithstanding this paragraph (b), the omission of the legend
or the failure to send, deliver or provide the registered owner
of shares of Common Stock, a copy of the Summary of Rights shall
not affect the enforceability of any part of this Agreement or
the rights of any holder of the Rights.
In the event that the Company purchases or otherwise acquires
any shares of Common Stock after the Record Date but prior to
the Distribution Date, any Rights associated with such shares of
Common Stock shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated
with the shares of Common Stock that are no longer outstanding.
(c) Until the Distribution Date, the Rights shall be
transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the
Company).
(d) As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will
countersign and the Company will send or cause to be sent (and
the Rights Agent, if so requested, will send) by first-class,
insured, postage-prepaid mail, to each record holder of shares
of Common Stock as of the Close of Business on the Distribution
Date (other than any Acquiring Person or any Associate or
Affiliate of an Acquiring Person), at the address of such holder
shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit C
hereto (the Rights Certificate), evidencing
one Right for each share of Common Stock so held, subject to
adjustment as provided herein. In the event that an adjustment
in the number of Rights per share of Common Stock has been made
pursuant to Section 11 hereof, at the time of distribution
of the Rights Certificates, the Company shall make the necessary
and appropriate rounding adjustments (in accordance with
Section 14(a) hereof) so that Rights Certificates
representing only whole numbers of Rights are distributed and
cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights shall be evidenced solely by
such Rights Certificates.
Section 4. Form
of Rights Certificate.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment and the certificate to be printed on
the reverse thereof) shall be substantially in the form set
forth in Exhibit C hereto and may have such marks of
identification or designation and such legends, summaries, or
endorsements printed thereon as the Company may deem
appropriate, and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any
applicable law or any rule or regulation thereunder or with any
rule or regulation of any stock exchange upon which the Rights
may from time to time be listed, or to conform to usage. Subject
to the provisions of this Agreement, the Rights Certificates,
whenever distributed, shall be dated as of the Distribution 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 set forth therein
(such exercise price per one one-thousandth of a share, the
Purchase Price), but the amount and type of
securities, cash, or other assets that may be acquired upon the
exercise of each Right and the Purchase Price thereof shall be
subject to adjustment as provided herein.
(b) Any Rights 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) that becomes a transferee after the
Acquiring Person becomes such ,or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) that
A-8
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and that 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 any
such Associate or Affiliate) or to any Person with whom such
Acquiring Person (or any such Associate or Affiliate) has any
continuing written or oral plan, agreement, arrangement, or
understanding regarding the transferred Rights, shares of Common
Stock, or the Company or (B) a transfer that the Board has
determined in good faith to be part of a plan, agreement,
arrangement, or understanding that has as a primary purpose or
effect the avoidance of Section 7(e) hereof (and any Rights
Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence), shall
contain upon the written direction of the Board (to the extent
feasible) the following legend:
The Rights represented by this Rights Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement dated
as of July 18, 2011 by and between Breeze-Eastern
Corporation and Computershare Trust Company, N.A. (the
Rights Agreement)). Accordingly, this Rights
Certificate and the Rights represented hereby may become null
and void in the circumstances specified in Section 7(e) of
the Rights Agreement.
The Company shall instruct the Rights Agent in writing of the
Rights which should be so legended.
Section 5. Countersignature
and Registration.
(a) The Rights Certificates shall be executed on behalf of
the Company by its Chief Executive Officer, President, Chief
Financial Officer or any Senior Vice President and by its
Secretary or Assistant Secretary, shall have affixed thereto the
Companys corporate seal (or a facsimile thereof), and
shall be attested by the Companys Secretary or one of its
Assistant Secretaries. The signature of any of these officers on
the Rights Certificates may be manual or by facsimile. Rights
Certificates bearing the manual or facsimile signatures of the
individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices
prior to the countersigning of such Rights Certificates by the
Rights Agent or did not hold such offices at the date of such
Rights Certificates. No Rights Certificate shall be entitled to
any benefit under this Agreement or be valid for any purpose
unless there appears on such Rights Certificate a
countersignature duly executed by the Rights Agent by manual or
facsimile signature of an authorized officer, and such
countersignature upon any Rights Certificate shall be conclusive
evidence, and the only evidence, that such Rights Certificate
has been duly countersigned as required hereunder.
(b) Following the Distribution Date, the Rights Agent shall
keep or cause to be kept, at its office designated for surrender
of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the name and address of each
holder of the Rights Certificates, the number of Rights
evidenced on its face by each Rights Certificate, and the date
of each Rights Certificate.
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Section 6.
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Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
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(a) Subject to the provisions of Sections 4(b), 7(e)
and 14 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on
the Expiration Date, any Rights Certificate or Certificates
(other than Rights Certificates representing Rights that have
become null and void pursuant to Section 7(e) hereof, that
have been redeemed pursuant to Section 23 hereof, or that
have been exchanged pursuant to Section 24 hereof) may be
transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to
purchase a like number of one one-thousandths of a share of
Preferred Stock (or following a Triggering Event, Common Stock,
other securities, cash, or other assets, as the case may be) as
the Rights Certificate or Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate
or Certificates shall make such request in writing delivered to
the Rights Agent, and shall surrender the Rights Certificate or
Certificates to be transferred, split up, combined or exchanged
at the office of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any
such surrendered Rights Certificate until the registered holder
shall have properly completed and executed the certificate set
forth in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights represented by such Rights
Certificate or Affiliates or Associates thereof as the Company
shall reasonably request; whereupon the Rights Agent shall,
subject to the provisions of Sections 4(b), 7(e) and 14
hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be,
as so requested. The Company may require payment by the holder
of the Rights 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 Rights
Certificates.
(b) If a Rights Certificate shall be mutilated, lost,
stolen, or destroyed, upon request by the registered holder of
the Rights represented thereby and upon payment to the Company
and the Rights Agent of all reasonable expenses incident
thereto, there shall be issued, in exchange for and upon
cancellation of the mutilated Rights Certificate, or in
substitution for the lost, stolen, or destroyed Rights
Certificate, a new Rights Certificate, in substantially the form
of the prior Rights Certificate, of like tenor and representing
the equivalent number of Rights, but, in the case of loss,
theft, or destruction, only upon receipt of evidence
satisfactory to the Company and the Rights Agent of such loss,
theft or destruction of such Rights Certificate and, if
requested by the Company or the Rights Agent, indemnity also
satisfactory to it.
Section 7. Exercise
of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered
holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein
including, without limitation, in the restrictions on
exercisability set forth in Sections 9(c), 11(a)(iii) and
23(a) hereof) in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with
the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at the
office of the Rights Agent designated for such purpose, together
with payment of the Purchase Price for each one one-thousandth
of a share of Preferred Stock (or Common Stock, other
securities, cash or other assets, as the case may be) as to
which the Rights are exercised, at or prior to the earliest of
(i) the Close of Business
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on July 18, 2014 (the Final Expiration
Date), (ii) the time at which the Rights are
redeemed (the Redemption Date) as
provided in Section 23 hereof, (iii) the time at which
the Rights are exchanged (the Exchange Date)
as provided in Section 24 hereof, or (iv) the first
anniversary of the Record Date if this Rights Agreement has yet
to be approved by the stockholders of the Company (the earliest
of (i), (ii) and (iii) being herein referred to as the
Expiration Date).
(b) Each Right shall entitle the registered holder thereof
to purchase one one-thousandth of a share of Preferred Stock.
The Purchase Price for each one one-thousandth of a share of
Preferred Stock pursuant to the exercise of a Right shall
initially be $14.00, and 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 in
accordance with paragraph (c) of this Section 7.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and
the certificate duly and properly executed, accompanied by
payment, with respect to each Right so exercised, of the
Purchase Price per one one-thousandth of a share of Preferred
Stock (or Common Stock, other securities, cash or other assets,
as the case may be) to be purchased and an amount equal to any
applicable tax or charge in cash, or by certified check or
cashiers check payable to the order of the Company, the
Rights Agent shall, subject to Section 18(k) hereof,
thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Stock certificates representing such
number of one one-thousandths of a share of Preferred Stock (or
fractions of shares that are integral multiples of one
one-thousandth of a share of Preferred Stock) as are to be
purchased and the Company shall direct its transfer agent to
comply with all such requests, or (B) if the Company shall
have elected to deposit the total number of shares of Preferred
Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent
depositary receipts representing such number of one
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 shall direct the depositary to comply with all such
requests, (ii) requisition from the Company the amount of
cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt
of such certificates or such depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as may
be designated by such holder, and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. In the event that
the Company is obligated to issue Common Stock or other
securities of the Company, pay cash
and/or
distribute other property pursuant to Section 11(a) hereof,
the Company shall make all arrangements necessary so that such
Common Stock, other securities, cash
and/or other
property are available for distribution by the Rights Agent, if
and when necessary to comply with this Agreement. The payment of
the Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii) hereof) may be made in cash or by
certified or bank check or money order payable to the order of
the Company.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon
the order of, the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such
holder, subject to the provisions of Sections 6 and 14
hereof.
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(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a
Section 11(a)(ii) Event, any Rights beneficially owned by
(i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and who 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 any such Associate or Affiliate) or to any
Person with whom the Acquiring Person (or any such Associate or
Affiliate) has any continuing written or oral plan, agreement,
arrangement or understanding regarding the transferred Rights,
shares of Common Stock or the Company or (B) a transfer
that the Board has determined in good faith to be part of a
plan, agreement, arrangement or understanding that has as a
primary purpose or effect the avoidance of this
Section 7(e), shall be null and void without any further
action, and any holder of such Rights thereafter shall have no
rights or preferences whatsoever with respect to such Rights,
whether under any provision of this Agreement, the Rights
Certificates or otherwise (including, without limitation, rights
and preferences pursuant to Sections 7, 11, 13, 23 and
24 hereof). The Company shall use reasonable efforts to ensure
compliance with the provisions of this Section 7(e) and
Section 4(b) hereof, but neither the Company nor the Rights
Agent shall have any liability to any holder of Rights or any
other Person as a result of the Companys failure to make
any determination with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement or any
Rights Certificate 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 by such
registered holder unless such registered holder shall have
(i) properly completed and executed the certificate
following the form of election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such
exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) of
the Rights represented by such Rights Certificate or Affiliates
or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation
and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered
to the Rights Agent for cancellation or in cancelled form, or,
if surrendered to the Rights Agent, shall be cancelled by it,
and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by this Agreement. The Company
shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any
Rights Certificates acquired by the Company otherwise than upon
the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation
and Availability of Capital Stock.
(a) The Company shall cause to be reserved and kept
available out of its authorized and unissued shares of Preferred
Stock (and following the occurrence of a Triggering Event, out
of its authorized and
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unissued shares of Common Stock
and/or other
securities or out of its authorized and issued shares held in
its treasury), the number of shares of Preferred Stock (and,
following the occurrence of a Triggering Event, shares of Common
Stock and/or
other securities) that, as provided in this Agreement, including
Section 11(a)(iii) hereof, shall be sufficient to permit
the exercise in full of all outstanding Rights. Upon the
occurrence of any events resulting in an increase in the
aggregate number of shares of Preferred Stock (or Common Stock
and/or other
equity securities of the Company) issuable upon exercise of all
outstanding Rights above the number then reserved, the Company
shall make appropriate increases in the number of shares so
reserved.
(b) So long as the shares of Preferred Stock (and following
the occurrence of a Triggering Event, Common Stock
and/or other
securities) issuable upon the exercise of the Rights may be
listed or admitted to trading on any national securities
exchange, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed or admitted to trading
on such exchange upon official notice of issuance upon such
exercise.
(c) The Company shall use its reasonable best efforts to
(i) file, as soon as practicable following the earliest
date after the first occurrence of a Section 11(a)(ii)
Event on which the consideration to be delivered by the Company
upon exercise of the Rights has been determined in accordance
with this Agreement, or as soon as is required by law following
the Distribution Date, as the case may be, a registration
statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise of the
Rights; (ii) cause such registration statement to become
effective as soon as practicable after such filing; and
(iii) cause such registration statement to remain effective
(and to include a prospectus at all times complying with the
requirements of the Securities Act) until the earlier of
(A) the date as of which the Rights are no longer
exercisable for the securities covered by such registration
statement, and (B) the Expiration Date. The Company shall
also take such action as may be appropriate under, or to ensure
compliance with, the securities or blue sky laws of
the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of
time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to
become effective. Upon 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, in each case with simultaneous written notice to the
Rights Agent. Notwithstanding any provision of this Agreement to
the contrary, the Rights shall not be exercisable in any
jurisdiction (x) if the requisite qualification in such
jurisdiction shall not have been obtained and until a
registration statement has been declared effective or
(y) if the exercise thereof shall not be permitted under
applicable law.
(d) The Company shall take such action as may be necessary
to ensure that all one one-thousandths of a share of Preferred
Stock (and, following the occurrence of a Triggering Event,
Common Stock
and/or other
securities that may be delivered upon exercise of Rights) shall
be, at the time of delivery of the certificates or depositary
receipts for such securities (subject to payment of the Purchase
Price), duly and validly authorized and issued, fully paid and
non-assessable.
(e) The Company shall pay when due and payable any and all
documentary, stamp, or transfer tax, or other tax or charge,
that is payable in respect of the issuance and delivery of the
Rights Certificates or the
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issuance and delivery of any certificates or depository receipts
or entries in the Book Entry account system of the transfer
agent for the Preferred Stock for a number of one
one-thousandths of a share of Preferred Stock (or Common Stock
and/or other
equity securities of the Company that may be delivered upon
exercise of the Rights) upon the exercise of Rights;
provided, however, the Company shall not be
required to pay any such tax or charge that may be payable in
connection with the issuance or delivery of any of any
certificates or depositary receipts or entries in the Book Entry
account system of the transfer agent for the Preferred Stock for
a number of one one-thousandths of a share of Preferred Stock
(or Common Stock
and/or other
equity securities of the Company as the case may be) to any
Person other than the registered holder of the Rights
Certificates evidencing the Rights surrendered for exercise. The
Company shall not be required to issue or deliver any
certificates or depositary receipts or entries in the Book Entry
account system of the transfer agent for the Preferred Stock (or
Common Stock
and/or other
equity securities of the Company as the case may be) to, or in a
name other than that of, the registered holder upon the exercise
of any Rights until any such tax or charge shall have been paid
(any such tax or charge being payable by the holder of such
Rights Certificate at the time of surrender) or until it has
been established to the Companys satisfaction that no such
tax or charge is due.
Section 10. Preferred
Stock Record Date.
Each Person in whose name any certificate or entry in the Book
Entry account system of the transfer agent for the Preferred
Stock for a number of one one-thousandths of a share of
Preferred Stock (or Common Stock
and/or other
securities, as the case may be) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the
holder of record of such fractional shares of Preferred Stock
(or Common Stock
and/or other
securities, as the case may be) represented thereby on, and such
certificate or entry in the Book Entry account system of the
transfer agent for the Preferred Stock shall be dated, the date
upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes and charges) was made;
provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Stock
(or Common Stock
and/or other
securities as the case may be) transfer books of the Company are
closed, such Person shall be deemed to have become the record
holder of such securities (fractional or otherwise) on, and such
certificate or entry in the Book Entry account system of the
transfer agent for the Preferred Stock shall be dated, the next
succeeding Business Day on which the Preferred Stock (or Common
Stock and/or
other securities as the case may be) transfer books of the
Company are open and, provided further, that if delivery
of a number of one one-thousandths of a share of Preferred Stock
is delayed pursuant to Section 9(c) hereof, such Persons
shall be deemed to have become the record holders of such number
of one one-thousandths of a share of Preferred Stock only when
such Preferred Stock first become deliverable. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a stockholder
of the Company with respect to the securities 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.
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Section 11. Adjustment
of Purchase Price, Number and Kind of Shares or Number of
Rights.
The Purchase Price, the number and kind of securities covered by
each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the Rights Dividend Declaration Date (A) declare a
dividend on the Preferred Stock payable in shares of Preferred
Stock, (B) subdivide the outstanding Preferred Stock,
(C) combine the outstanding Preferred Stock into a smaller
number of shares or (D) issue any shares of its capital
stock in a reclassification of Preferred Stock (including any
such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this
Section 11(a), the Purchase Price in effect at the time of
the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the
number and kind of shares (or fractions thereof) of Preferred
Stock or capital stock, as the case may be, issuable on such
date upon exercise of the Rights, shall be proportionately
adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase
Price then in effect, the aggregate number and kind of shares
(or fractions thereof) of Preferred Stock or capital stock, as
the case may be, which, if such Right had been exercised
immediately prior to such date, such holder would have owned
upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares (or fractions
thereof) of capital stock of the Company issuable upon exercise
of one Right. If an event occurs that would require an
adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) Subject to Section 23 and Section 24 hereof,
in the event that any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person
organized, appointed or established by the Company for or
pursuant to the terms of any such plan), alone or together with
its Affiliates and Associates, shall become an Acquiring Person,
unless the event causing such Person to become an Acquiring
Person is a transaction set forth in Section 13(a) hereof,
then proper provision shall be made so that promptly following
the Redemption Period (as defined in Section 23(a)
hereof), each holder of a Right (except as provided below and in
Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof and payment of an amount equal to
the then current Purchase Price in accordance with the terms of
this Agreement, in lieu of a number of one one-thousandths of a
share of Preferred Stock, such number of shares of Common Stock
of the Company as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the then
number of one one-thousandths of a share of Preferred Stock for
which a Right was or would have been exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event,
whether or not such Right was then exercisable, and
(y) dividing that product (which, following such first
occurrence, shall thereafter be referred to as the
Purchase Price for each Right and for all
purposes of this Agreement except to the extent set forth in
Section 13 hereof) by 25% of the current per share market
price of Common Stock (as determined pursuant to
Section 11(d) hereof) on the date of such first occurrence
(such number of shares, the Adjustment
Shares).
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(iii) The Company at its option may substitute for a share
of Common Stock issuable upon the exercise of Rights in
accordance with the foregoing subparagraph (ii) such number
or fractions of shares of Preferred Stock having an aggregate
market value equal to the current per share market price of one
share of Common Stock. In the event that the number of shares of
Common Stock which is authorized by the Certificate of
Incorporation, but not outstanding, or reserved for issuance for
purposes other than upon exercise of the Rights, is not
sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Board
shall, to the extent permitted by applicable law and by any
agreements or instruments then in effect to which the Company is
a party, (A) determine the excess of (x) the value of
the Adjustment Shares issuable upon the exercise of a Right (the
Current Value) over (y) the Purchase
Price (such excess being the Spread), and
(B) with respect to each Right (subject to
Section 7(e) hereof), make adequate provision to substitute
for some or all of the Adjustment Shares, upon exercise of a
Right and payment of the applicable Purchase Price,
(1) cash, (2) a reduction in the Purchase Price,
(3) shares (or fractions of a share) of Preferred Stock or
other equity securities of the Company (including, without
limitation, shares, or units of shares, of Preferred Stock which
the Board has deemed to have the same value as shares of Common
Stock) (such shares of equity securities being herein called
common stock equivalents), (4) debt
securities of the Company, (5) other assets or (6) any
combination of the foregoing, having an aggregate value equal to
the Current Value, where such aggregate value has been
determined by the Board based upon the advice of an investment
banking firm selected by the Board; provided,
however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above
within thirty (30) days following the later of (x) the
first occurrence of a Section 11(a)(ii) Event and
(y) the date on which the Companys right of
redemption pursuant to Section 23(a) hereof expires (the
later of (x) and (y) being referred to herein as the
Section 11(a)(ii) Trigger Date), then
the Company shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent
available), and then, if necessary such number of fractions of
shares of Preferred Stock (to the extent available) and then, if
necessary, cash, which shares
and/or cash
have an aggregate value equal to the Spread.
If, upon the occurrence of a Section 11(a)(ii) Event, the
Board shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized
for issuance upon exercise in full of the Rights, then if the
Board so elects, the
thirty-day
period set forth above may be extended to the extent necessary,
but not more than (ninety) 90 days after the
Section 11(a)(ii) Trigger Date, in order that the Company
may seek stockholder approval for the authorization of such
additional shares (such period, as it may be extended, the
Substitution Period). To the extent that
action is to be taken pursuant to the preceding provisions of
this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and
(y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any
authorization of additional shares
and/or to
decide the appropriate form of distribution to be made pursuant
to the second sentence of this Section 11(a)(iii) 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, as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of
this Section 11(a)(iii), the value of the Common Stock
shall be the current market price (as determined pursuant to
Section 11(d) hereof) per share of the Common Stock on the
Section 11(a)(ii) Trigger Date and the value of any
common stock equivalent shall be deemed to have the
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same value as the Common Stock on such date. The Board may, but
shall not be required to, establish procedures to allocate the
right to receive shares of Common Stock upon the exercise of the
Rights among holders of Rights pursuant to this
Section 11(a)(iii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of
Preferred Stock entitling them (for a period expiring within
forty-five (45) days after such record date) to subscribe
for or purchase Preferred Stock (or shares having the same
rights, privileges and preferences as the shares of 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
price per share, if a security convertible into Preferred Stock
or equivalent preferred stock) less than the current per share
market price of the Preferred Stock (as determined pursuant to
Section 11(d) 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 record date by a fraction, the numerator of which shall be
the number of shares of Preferred Stock or equivalent preferred
stock outstanding on such record date, plus the number of shares
of Preferred Stock or equivalent preferred stock which the
aggregate offering price of the total number of shares of
Preferred Stock
and/or
equivalent preferred stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities
so to be offered) would purchase at such current market price,
and the denominator of which shall be the number of shares of
Preferred Stock or equivalent 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); provided,
however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate
par value of the shares of capital stock of the Company issuable
upon exercise of one Right. In case such subscription price may
be paid by delivery of consideration all or part of which may be
in a form other than cash, the value of such consideration shall
be as determined by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent and the holders of the Rights.
Shares of Preferred Stock or equivalent preferred stock owned by
or held for the account of the Company or any Subsidiary shall
not be deemed outstanding for the purpose of such computation.
Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights, options
or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price that would then be in effect
if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of shares 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), evidences of indebtedness, cash
(other than a regular quarterly cash dividend out of the
earnings or retained earnings of the Company), assets (other
than a dividend payable in shares of Preferred Stock, but
including any dividend payable in stock other than Preferred
Stock), or subscription rights, options or warrants (excluding
those referred to in Section 11(b) hereof), then, in each
case, 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 per share market price
(as determined pursuant to Section 11(d) hereof) of the
Preferred Stock on such record date minus the fair market value
(as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent
and shall be binding and
A-17
conclusive for all purposes on the Rights Agent and the holder
of the Rights) of the portion of the cash, assets or evidences
of indebtedness so to be distributed or of such subscription
rights or warrants distributable in respect of a share of
Preferred Stock, and the denominator of which shall be such
current per share market price (as determined pursuant to
Section 11(d) hereof) of the Preferred Stock on such record
date; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. 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 be adjusted to be the Purchase
Price that would have been in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation under this
Agreement, the current per share market price
of any security, including the Common Stock, on any date shall
be deemed to be the average of the daily closing prices per
share of such security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately
prior to, but not including, such date; provided,
however, that in the event that the current per share
market price of the security is determined during a period
following the announcement by the issuer of such security of
(i) a dividend or distribution on such security payable in
shares of such security or securities convertible into such
shares (other than the Rights), or (ii) any subdivision,
combination or reclassification of such security, and prior to
the expiration of the requisite 30 Trading Day period, as set
forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case,
the current per share market price shall be
appropriately adjusted to take into account ex-dividend trading.
The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated
transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange, NASDAQ
or, if the security is not listed or admitted to trading on the
New York Stock Exchange or NASDAQ, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the security is listed or admitted to trading or, if
the security is not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in
the
over-the-counter
market, as reported by any system then in use or, if not so
quoted, the average of the closing bid and asked price furnished
by a professional market maker making a market in the security
selected by the Board.
If on any such date no market maker is making a market in the
security, the fair value of such shares on such date as
determined in good faith by the Board shall be used. If the
security is not publicly held or not listed or traded,
current market price shall mean the fair value per
share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. The term
Trading Day shall mean, if the security is
listed or admitted to trading on any national securities
exchange, a day on which the principal national securities
exchange on which such security is listed or admitted to trading
is open for the transaction of business or, if such security is
not so listed or admitted, a Business Day.
(ii) For the purpose of any computation under this
Agreement, the current per share market price of the
Preferred Stock shall be determined in the same manner as set
forth above for the Common Stock in
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clause (i) of this Section 11(d) (other than the last
sentence thereof). If the current per share market price of the
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(d), the current per share market
price of the 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, reverse
stock splits, stock dividends or any similar transaction with
respect to the Common Stock occurring after the date of this
Agreement) multiplied by the current per share market price of
the Common Stock. If neither the Common Stock nor the Preferred
Stock is publicly held or so listed or traded, the current
per share market price of the Preferred Stock shall mean
the fair value per share as determined in good faith by the
Board, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. For all purposes of this
Agreement, the current per share market price of one
one-thousandth of a share of Preferred Stock shall be equal to
the current per share market price of one share of
Preferred Stock divided by 1,000.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one
percent (1%) in the Purchase Price; provided,
however, that any adjustments that by reason of this
Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the
nearest cent or to the nearest ten-thousandth of a share of
Common Stock or other share or one-millionth of a share of
Preferred Stock, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by
this Section 11 shall be made no later than the earlier of
(i) three years from the date of the transaction that
requires such adjustment or (ii) the Expiration Date.
(f) If, as a result of an adjustment made pursuant to
Sections 11(a)(ii) or 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares
of capital stock other than Preferred Stock, thereafter the
number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Preferred Stock contained in Sections 11(a), (b), (c), (d),
(e), (g), (h), (i), (j), (k), (l) and (m) hereof, and
the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the Preferred Stock shall apply on like terms to
any such other shares.
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the 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 securities or amount of cash or combination thereof)
that may be acquired from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the
Purchase Price as a result of the calculations made in
Sections 11(b) and (c) 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-millionth of a
share) obtained by (i) multiplying (x) the number of
one one-thousandths of a share covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing
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the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in lieu of any adjustment in the number of one one-thousandths
of a share of Preferred Stock that may be acquired upon the
exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the
number of one one-thousandths of a share of Preferred Stock for
which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth of a Right)
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 Rights Certificates have been issued, shall be at least ten
(10) days later than the date of such public announcement.
If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such
record date Rights 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 Rights
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Rights 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 Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-thousandths of a share
of Preferred Stock issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one-thousandth of
a share and the number of one one-thousandths of a share which
were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then-par value, if any, of
the number of one one-thousandths of a share of Preferred Stock
issuable upon exercise of the Rights, the Company shall take any
corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally
issue, such fully paid and non-assessable, number of one
one-thousandths of a share of Preferred Stock at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuance to the
holder of any Right exercised after such record date of that
number of one one-thousandths of a share of Preferred Stock and
shares of other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the number of
one one-thousandths of a share of Preferred Stock and shares of
other capital stock or securities of the Company, if any,
issuable
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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 holders right to
receive such additional shares (fractional or otherwise) or
securities upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, prior to the Distribution Date, the Company
shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this
Section 11, as and to the extent that the Board shall
determine that any (i) consolidation or subdivision of the
Preferred Stock, (ii) issuance wholly for cash of any
shares of Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred Stock
or securities that by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the
Company to holders of its Preferred Stock shall not be taxable
to such holders or shall reduce the taxes payable by such
holders.
(n) The Company shall not, at any time after the
Distribution Date, (i) consolidate with any other Person
(other than a direct or indirect, wholly-owned Subsidiary of the
Company in a transaction that complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other
than a direct or indirect, wholly-owned Subsidiary of the
Company in a transaction that complies with Section 11(o)
hereof) or (iii) sell or transfer (or permit any Subsidiary
to sell or transfer), in one transaction, or a series of
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 or Persons
(other than the Company
and/or any
of its direct or indirect, wholly-owned Subsidiaries in one or
more transactions, each of which complies with
Section 11(o) hereof), if (x) 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 that would substantially
diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with
or immediately after such consolidation, merger or sale, the
stockholders or other Persons holding an equity interest in such
Person that constitutes, or would constitute, the
Principal Party for purposes of Section 13(a)
hereof shall have received a distribution of, or otherwise have
transferred to them, the Rights previously owned by such Person
or any of its Affiliates and Associates; provided,
however, this Section 11(n) shall not affect the
ability of any Subsidiary of the Company to consolidate with,
merge with or into, or sell or transfer assets or earning power
to, any other Subsidiary of the Company.
(o) After the Distribution Date and so long as any Rights
shall then be outstanding (other than Rights that have become
null and void pursuant to Section 7(e) hereof), the Company
shall not, except as permitted by Sections 23, 24, and
27 hereof, take (or permit any Subsidiary of the Company to
take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company, at any time
after the Rights Dividend Declaration Date and prior to the
Distribution Date, shall (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide any outstanding shares of Common
Stock, (iii) combine any of the outstanding shares of
Common Stock into a smaller number of shares or (iv) issue
any shares of its capital stock in a reclassification of the
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Common Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the
continuing or surviving corporation) the number of Rights
associated with each share of Common Stock then outstanding, or
issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock
following any such event shall equal the result obtained by
multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of
shares of Common Stock outstanding immediately following the
occurrence of such event. 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 reclassification is effected. If an event occurs that would
require an adjustment under Section 11(a)(ii) and this
Section 11(p), the adjustments provided for in this
Section 11(p) shall be in addition and prior to any
adjustment required pursuant to Section 11(a)(ii).
Section 12. Certificate
of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or
Section 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment, and a brief
statement of the facts and computations accounting for such
adjustment, (b) promptly file with the Rights Agent, and
with each transfer agent for the Preferred Stock and the Common
Stock, a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, each registered holder of shares
of Common Stock) in accordance with Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment or statement therein contained
and shall not be deemed to have knowledge of any adjustment or
any such event unless and until it shall have received such a
certificate.
Section 13. Consolidation,
Merger or Sale or Transfer of Assets or Earning Power.
(a) Subject to Section 23 hereof, at any time after a
Person has become an Acquiring Person, in the event that,
directly or indirectly,
(x) the Company shall consolidate with, or merge with and
into, any other Person (other than a direct or indirect,
wholly-owned Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof), and the Company shall
not be the continuing or surviving entity of such consolidation
or merger,
(y) any Person (other than a direct or indirect,
wholly-owned Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof) shall consolidate with,
or merge with or into, the Company, and the Company shall be the
continuing or surviving entity of such consolidation or merger
and, in connection with such consolidation or merger, all or
part of the outstanding shares of Common Stock shall be
converted 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) to
any Person or Persons (other than the Company or any of its
direct or indirect, wholly-owned Subsidiaries in one or more
transactions, each of which complies with Section 11(o)
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hereof), 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),
(any such event described in (x), (y), or (z) being herein
referred to as a Section 13 Event),
then, and in each such case, proper provision shall be made so
that:
(i) each holder of a Right, except as provided in
Section 7(e) hereof, shall, upon the expiration of the
Redemption Period (as defined in Section 23(a)
hereof), thereafter have the right to receive, upon the exercise
of the Right at the then current Purchase Price in accordance
with the terms of this Agreement, and in lieu of a number of one
one-thousandth shares of Preferred Stock, such number of validly
authorized and issued, fully paid, non-assessable and freely
tradable shares of Common Stock of the Principal Party (as
hereinafter defined), which shares shall not be subject to any
liens, encumbrances, rights of first refusal, transfer
restrictions or other adverse claims, as shall be equal to the
result obtained by
(1) multiplying such then current Purchase Price by the
number of one one-thousandths of a share of Preferred Stock for
which such Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of
one one-thousandths of a share of Preferred Stock for which a
Right would be exercisable hereunder but for the first
occurrence of such Section 11(a)(ii) Event by the Purchase
Price that would be in effect hereunder but for such first
occurrence), and
(2) dividing that product (which, following the first
occurrence of a Section 13 Event, shall be the
Purchase Price for each Right and for all
purposes of this Agreement) by 50% of the then current per share
market price (as determined pursuant to Section 11(d)
hereof) of the shares of Common Stock of such Principal Party on
the date of consummation of such Section 13 Event (or the
fair market value on such date of other securities or property
of the Principal Party, as provided for herein);
(ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Section 13 Event, all
the obligations and duties of the Company pursuant to this
Agreement;
(iii) the term Company shall thereafter be
deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first
occurrence of a Section 13 Event;
(iv) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of
shares of its Common Stock) in connection with the consummation
of any such transaction as may be necessary to ensure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be possible, to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and
(v) the provisions of Section 11(a)(ii) hereof shall
be of no further effect following the first occurrence of any
Section 13 Event, and the Rights that have not theretofore
been exercised shall thereafter become exercisable in the manner
described in this Section 13.
A-23
(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, (A) the Person (including the
Company as successor thereto or as the surviving entity) that is
the issuer of any securities or other equity interests into
which shares of Common Stock of the Company are converted in
such merger or consolidation, or, if there is more than one such
issuer, the issuer of Common Stock that has the highest
aggregate current market price (as determined pursuant to
Section 11(d) hereof) and (B) if no securities or
other equity interests are so issued, the Person (including the
Company as successor thereto or as the surviving entity) that is
the other constituent party to such merger or consolidation, or,
if there is more than one such Person, the Person that is a
constituent party to such merger or consolidation, the Common
Stock of which has the highest aggregate current market price
(as determined pursuant to Section 11(d) hereof); 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 largest
portion of the assets or earning power transferred pursuant to
such transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same
portion of the assets or earning power transferred pursuant to
such transaction or transactions or if the Person receiving the
largest portion of the assets or earning power cannot be
determined, whichever Person that has received assets or earning
power pursuant to such transaction or transactions, the Common
Stock of which has the highest aggregate current market price
(as determined pursuant to Section 11(d) hereof);
provided, however, that in any such case:
(1) if the Common Stock of such Person is not at such time
and has not been continuously over the preceding twelve
(12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary
of another Person the Common Stock of which is and has been so
registered, Principal Party shall refer to such
other Person; (2) if the Common Stock of such Person is not
and has not been so registered and such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common
Stocks of two or more of which are and have been so registered,
Principal Party shall refer to whichever of such
Persons is the issuer of the Common Stock having the highest
aggregate market value; and (3) if the Common Stock of such
Person is not and has not been so registered and such Person is
owned, directly or indirectly, by a joint venture formed by two
or more Persons that are not owned, directly or indirectly, by
the same Person, the rules set forth in (1) and
(2) 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 Section 13
Event unless the Principal Party shall have a sufficient number
of authorized shares of its Common Stock that have not been
issued (or reserved for issuance) or that are held in its
treasury to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto
the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraphs
A-24
(a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any
such Section 13 Event, the Principal Party, at its own
expense, shall:
(i) (A) prepare and file on an appropriate form a
registration statement under the Securities Act, with respect to
the Rights and the securities that may be acquired upon exercise
of the Rights on an appropriate form, (B) use its best
efforts to cause such registration statement to become effective
as soon as practicable after such filing and remain effective
(and to include a prospectus at all times complying with the
requirements of the Securities Act) until the Expiration Date,
and (C) take such action as may be required to ensure that
any acquisition of such securities that may be acquired upon
exercise of the Rights complies with any applicable state
security or Blue Sky laws as soon as practicable
following the execution of such agreement;
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates
that comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the
Exchange Act;
(iii) use its best efforts to obtain any and all necessary
regulatory approvals as may be required with respect to the
securities that may be acquired upon exercise of the
Rights; and
(iv) use its best efforts, if such Common Stock of the
Principal Party shall be listed or admitted to trading on the
New York Stock Exchange, NASDAQ or on another national
securities exchange, to list or admit to trading (or continue
the listing of) the Rights and the securities that may be
acquired upon exercise of the Rights on the New York Stock
Exchange, NASDAQ or on such securities exchange, or if the
securities of the Principal Party that may be acquired upon
exercise of the Rights shall not be listed or admitted to
trading on the New York Stock Exchange, NASDAQ or a national
securities exchange, to cause the Rights and the securities that
may be acquired upon exercise of the Rights to be authorized for
quotation on any other system then in use.
(d) In case the Principal Party that is to be a party to a
transaction referred to in this Section 13 has at the time
of such transaction, or immediately following such transaction
shall have, a provision in any of its authorized securities or
in its certificate or articles of incorporation or by-laws or
other instrument governing its affairs, or any other agreements
or arrangements, which provision would have the effect of
(i) causing such Principal Party to issue, in connection
with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of Common Stock of
such Principal Party at less than the then current per share
market price (as determined pursuant to Section 11(d)
hereof) or securities exercisable for, or convertible into,
Common Stock of such Principal Party at less than such then
current per share market price (other than to holders of Rights
pursuant to this Section 13), (ii) providing for any
special payment, tax or similar provisions in connection with
the issuance of the Common Stock of such Principal Party
pursuant to the provisions of this Section 13 or
(iii) otherwise eliminating or substantially diminishing
the benefits intended to be afforded by the Rights in connection
with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, then, in such event, the
Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal Party
shall have been cancelled, waived or amended, or that the
authorized
A-25
securities shall be redeemed, so that the applicable provision
will have no effect in connection with, or as a consequence of,
the consummation of such transaction.
(e) 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(a)(ii)
Event, the Rights that have not theretofore been exercised shall
thereafter become exercisable in the manner described in
Section 13(a) hereof.
Section 14. Fractional
Rights; Fractional Shares; Waiver.
(a) The Company shall not be required to issue fractions of
Rights except prior to the Distribution Date as provided in
Section 11(p) hereof, or to distribute Rights Certificates
that evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the Persons to which such
fractional Rights would otherwise be issuable, an amount in cash
equal to such fraction of the market value of a whole Right. For
purposes of this Section 14(a), the market value of a whole
Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date that such fractional Rights
would have been otherwise issuable. The closing price of the
Rights for any day shall be the last sale price, or, in case no
such sale takes place on such day, the average of the high bid
and low asked prices, in either case as reported by the New York
Stock Exchange or, if the Rights are not listed or admitted to
trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect
to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading,
or such other system then in use or, if on any such date the
Rights are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the
Board. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date
as determined in good faith by the Board shall be used. In the
event the Rights are listed or admitted to trading on a national
securities exchange, 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 high bid and low asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to the
national securities exchange on which the Rights are listed or
admitted to trading.
(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). 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 Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one
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(d)(ii) hereof)
for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of one of the events specified
in Section 11 hereof giving rise to the right to receive
Common Stock, common stock equivalents or other securities upon
the exercise of a Right, the
A-26
Company shall not be required to issue fractions of shares of
Common Stock, common stock equivalents or other securities upon
exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock, common stock
equivalents or other securities. In lieu of fractional shares of
Common Stock, common stock equivalents or other securities, the
Company may pay to the registered holders of Rights Certificates
at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market
value of one share of Common Stock, common stock equivalents or
other securities. For purposes of this Section 14(c), the
current market value of one share of Common Stock shall be the
closing price of one share of Common Stock (as determined
pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(d) The holder of a Right, by the acceptance of the Right,
expressly waives such holders right to receive any
fractional Rights or any fractional shares upon exercise of a
Right, except as permitted by this Section 14.
Section 15. Rights
of Action.
All rights of action in respect of this Agreement, other than
the rights of action vested in the Rights Agent pursuant to
Sections 18 and 19 hereof, are vested in the respective
registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of shares of the
Common Stock); and any registered holder of a Rights Certificate
(or, prior to the Distribution Date, any registered holder of
shares of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or,
prior to the Distribution Date, any registered holder of shares
of the Common Stock), may, in such holders own behalf and
for such holders own benefit, enforce, and may institute
and maintain any suit, action or proceeding against the Company
or any other Person to enforce, or otherwise act in respect of,
such holders right to exercise the Rights evidenced by
such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would
not have an adequate remedy at law for any breach of this
Agreement and shall be entitled to specific performance of the
obligations hereunder, and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person
subject to this Agreement.
Section 16. Agreement
of Rights Holders.
Every holder of a Right, by accepting such Right, 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
evidenced by the balances indicated in the Book Entry account
system of the transfer agent for the Common Stock registered in
the names of the holders of Common Stock (which Common Stock
shall also be deemed to represent certificates for Rights) or,
in the case of certificated shares, the certificates for the
Common Stock registered in the names of the holders of the
Common Stock (which certificates for shares of Common Stock
shall also constitute certificates for Rights) and each Right
shall be transferable only in connection with the transfer of
the Common Stock;
(b) after the Distribution Date, the Rights Certificates
shall be transferable only on the registry books of the Rights
Agent if surrendered at the office of the Rights Agent
designated for such
A-27
purposes, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate forms and certificates duly
completed and executed;
(c) subject to Section 6(a) and Section 7(f)
hereof, the Company and the Rights Agent may deem and treat the
Person in whose name a Rights Certificate (or, prior to the
Distribution Date, the associated balance indicated in the Book
Entry account system of the transfer agent for the Common Stock,
or in the case of certificated shares, by 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 Rights Certificates or
the associated balance indicated in the Book Entry account
system of the transfer agent for the Common Stock, or in the
case of certificated shares, by 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, subject to the last sentence of
Section 7(e) hereof, shall be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have
any liability to any holder of a Right or any other Person as a
result of its inability to perform any of its obligations under
this Agreement by reason of any preliminary or permanent
injunction or other order, decree, judgment or ruling (whether
interlocutory or final) issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of
such obligation; provided, however, the Company
shall use its best efforts to have any such order, decree,
judgment or ruling lifted or otherwise overturned as promptly as
practicable.
Section 17. Rights
Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Rights Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the
holder of the shares of Preferred Stock or any other securities
of the Company that may at any time be issuable on the exercise
of the Rights represented thereby, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon
the holder of any Rights 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, except as provided in
Section 25 hereof, to receive notice of meetings or other
actions affecting stockholders, or to receive dividends or
subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised
in accordance with the provisions hereof.
Section 18. Duties
of Rights Agent.
The Rights Agent undertakes only the duties and obligations
imposed by this Agreement, upon the following terms and
conditions, by all of which the Company and the holders of
Rights 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 advice or opinion
of such counsel shall be full and complete authorization and
protection to the Rights Agent as to, and the Rights Agent shall
incur no liability for or in respect of, any
A-28
action taken, suffered or omitted by the Rights Agent in good
faith and in accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter (including, without limitation, the
identity of an Acquiring Person and the determination of
current per share market price) be proved or
established by the Company prior to the Rights Agent taking,
suffering or omitting to take any action hereunder, such fact or
matter (unless other evidence in respect thereof be specified
herein) may be deemed to be conclusively proved and established
by a certificate signed by any one of the Chief Executive
Officer, President, Chief Financial Officer or any Senior Vice
President of the Company and delivered to the Rights Agent, and
such certificate shall be full authorization to the Rights
Agent, and the Rights Agent shall incur no liability, for or in
respect of any action taken, suffered or omitted in good faith
by it under the provisions of this Agreement in reliance upon
such certificate.
(c) The Rights Agent shall be liable hereunder to the
Company or any other Person only for its own gross negligence,
bad faith, or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates or be required to verify
the same (except as to its countersignature thereof), 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 have any responsibility for
the validity of this Agreement or the execution and delivery
hereof (except the due execution and delivery hereof by the
Rights Agent) or for the validity or execution of any Rights
Certificate (except its countersignature thereon); nor shall it
be responsible for any breach by the Company of any covenant or
failure by the Company to satisfy conditions contained in this
Agreement or in any Rights Certificate; nor shall it be
responsible for any change in the exercisability of the Rights
(including Rights becoming void pursuant to Section 7(e)
hereof) or any adjustment in the terms of the Rights required
under the provisions of Sections 11, 13, 23, or 24
hereof or for the manner, method, or amount of any such change
or adjustment or the ascertaining of the existence of facts that
would require any such change or adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after
receipt by the Rights Agent of the certificate describing any
such adjustment contemplated by Section 12); 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
the Common Stock, the Preferred Stock or any other securities to
be issued pursuant to this Agreement or any Rights Certificate
or as to whether any shares of Preferred Stock or any other
securities will, when so issued, be validly authorized and
issued, fully paid and non-assessable.
(f) The Company shall perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and
delivered all such further acts, instruments and assurances as
may reasonably be required by the Rights Agent for the
performance by the Rights Agent of its duties under this
Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its
duties hereunder from any one of the Chief Executive Officer,
President, Chief Financial Officer or any Senior Vice President
of the Company, and to apply to such officers for advice
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or instructions in connection with its duties, and such
instructions shall be full authorization to the Rights Agent,
and the Rights Agent shall not be liable for or in respect of
any action taken, suffered, or omitted by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, affiliate,
director, officer or employee of the Rights Agent may buy, sell
or deal in any of the Rights or other securities of the Company
or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though the
Rights Agent were not the Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent or any such
stockholder, affiliate, director, officer or employee from
acting in any other capacity for the Company or for any other
Person.
(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, however, that the Rights Agent exercised
reasonable care in the selection and continued employment
thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of its rights hereunder if the
Rights Agent shall have 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 not been properly completed,
has not been signed or indicates an affirmative response to
clause 1
and/or 2
thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first
consulting with the Company.
Section 19. Concerning
the Rights Agent.
(a) The Company agrees to pay to the Rights Agent such
compensation as shall be agreed in writing between the Company
and the Rights Agent 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 expenses and other
disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights
Agent, its officers, employees, agents and directors for, and to
hold each of them harmless against, any loss, liability or
expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for any action
taken, suffered or omitted by the Rights Agent or such other
indemnified party in connection with the acceptance and
administration of this Agreement and the exercise of its duties
hereunder, including, but not limited to, the costs and expenses
of defending against any claim (whether asserted by the Company,
a holder of Rights, or any other Person) of liability hereunder.
The indemnity provided for hereunder shall survive the
expiration of the Rights and the termination of this Agreement.
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(b) The Rights Agent shall be authorized and protected and
shall incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration
of this Agreement or the exercise of its duties hereunder in
reliance upon any Rights Certificate or certificate for shares
of Preferred Stock or any balance indicated in the Book Entry
account system of the transfer agent 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 and executed by
the proper person or persons.
Section 20. 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 or
stockholder services businesses of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of
any document or any further act on the part of any of the
parties hereto; provided, however, 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 Agreement, any of the Rights Certificates shall
have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in
the name of the predecessor Rights Agent or in the name of the
successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall
be changed and at such time any of the Rights Certificates shall
have been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name;
and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this
Agreement.
Section 21. Change
of Rights Agent.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty
(30) days prior notice in writing mailed to the
Company, and, in the event that the Rights Agent or one of its
Affiliates is not also the transfer agent for the Company, to
each transfer agent of the Preferred Stock and the Common Stock,
by registered or certified mail, in which case the Company shall
give or cause to be given written notice to the registered
holders of the Rights 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 have resigned automatically and be discharged from
its duties under this Agreement as of the effective date of such
termination, and the Company shall be responsible for sending
any required notice. The Company may remove the Rights Agent or
any successor Rights Agent upon thirty (30) days
prior 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 the Preferred Stock by
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registered or certified mail, and to the registered holders of
the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable
of acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within
a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who
shall, with such notice, submit his Rights Certificate for
inspection by the Company), then any registered holder of any
Rights 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 Person organized and doing
business under the laws of the United States or any state of the
United States, in good standing, is authorized under such laws
to exercise corporate trust, stock transfer, or stockholder
services powers, is subject to supervision or examination by
federal or state authorities, and has at the time of its
appointment as Rights Agent a combined capital and surplus of at
least $50,000,000 or (b) an Affiliate of a Person described
in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock and the
Preferred Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates by first-class
mail. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of
the Rights Agent or the appointment of the successor Rights
Agent.
Section 22. Issuance
of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or the
Rights Certificates to the contrary, the Company may, at its
option, issue new Rights Certificates evidencing Rights in such
form as may be approved by the Board to reflect any adjustment
or change made in accordance with the provisions of this
Agreement in the Purchase Price or the number or kind or class
of shares or other securities or property that may be acquired
under the Rights Certificates. In addition, in connection with
the issuance or sale of shares of Common Stock following the
Distribution Date (other than upon exercise of a Right) and
prior to the redemption or the Expiration Date, the Company
(a) shall, with respect to shares of Common Stock so issued
or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion
or exchange of securities hereinafter issued by the Company, and
(b) may, in any other case, if deemed necessary or
appropriate by the Board, issue Rights Certificates representing
the appropriate number of Rights in connection with such
issuance or sale; provided, however, that
(i) no such Rights Certificate 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 Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.
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Section 23. Redemption.
(a) The Board may, within its sole discretion, at any time
during the period commencing on the Rights Dividend Declaration
Date and ending on the earlier of (i) the Close of Business
on the tenth Business Day following the Stock Acquisition Date
(or, if the Stock Acquisition Date shall have occurred prior to
the Record Date, the Close of Business on the tenth Business Day
following the Record Date), or (ii) the Close of Business
on the Final Expiration Date (the
Redemption Period), cause the Company to
redeem all, but not less than all, of the then outstanding
Rights at a redemption price of $[0.01] per Right, as
such amount may be appropriately adjusted to reflect any stock
split, reverse stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption
price, as adjusted, being hereinafter referred to as the
Redemption Price); provided,
however, that, if the Board authorizes redemption of the
Rights on or after the time a Person becomes an Acquiring
Person, then such authorization shall require the concurrence of
two-thirds of the authorized number of members of the Board.
Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first
occurrence of a Section 11(a)(ii) Event or a
Section 13 Event until such time as the Companys
right of redemption hereunder has expired. The redemption of the
Rights by the Board pursuant to this paragraph (a) may be
made effective at such time, on such basis and with such
conditions as the Board in its sole discretion may establish.
The Company may, at its option, pay the Redemption Price in
cash, shares of Common Stock (based on the current per share
market price (as determined pursuant to Section 11(d)
hereof) of the Common Stock at the time of redemption) or any
other form of consideration deemed appropriate by the Board.
(b) Immediately upon the action of the Board ordering the
redemption of the Rights, pursuant to paragraph (a) of this
Section 23 (or such later time as the Board may establish
for the effectiveness of such redemption), and without any
further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price
for each Right held. The Company shall promptly give
(i) written notice to the Rights Agent of any such
redemption and (ii) public notice of any such redemption;
provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity of
such redemption. Within ten (10) days after such action of
the Board ordering the redemption of the Rights, the Company
shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon
the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent
for the Common Stock. Any notice that is mailed in the manner
herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire, or purchase for value any Rights
at any time in any manner other than that specifically set forth
in this Section 23 or in Section 24 hereof, or other
than in connection with the purchase of shares of Common Stock
or the conversion or redemption of shares of Common Stock in
accordance with the applicable provisions of the Certificate of
Incorporation prior to the Distribution Date.
Section 24. Exchange.
(a) The Board 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 shares of Common Stock
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at an exchange ratio of one share of Common Stock per each
outstanding Right, as appropriately adjusted to reflect any
stock split, reverse stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio
being hereinafter referred to as the Exchange
Ratio). Notwithstanding the foregoing, the Board shall
not be empowered to effect such exchange at any time after any
Acquiring Person, together with all Affiliates and Associates of
such Acquiring Person, becomes the Beneficial Owner of 50% or
more of the shares of Common Stock then outstanding. The
exchange of the Rights by the Board may be made effective at
such time, on such basis and with such conditions as the Board
in its sole discretion may establish. From and after the
occurrence of an event specified in Section 13(a) hereof,
any Rights that theretofore have not been exchanged pursuant to
this Section 24(a) shall thereafter be exercisable only in
accordance with Section 13 and may not be exchanged
pursuant to this Section 24(a).
(b) Immediately upon the action of the Board 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 shall promptly give (i) written
notice to the Rights Agent of any such exchange and
(ii) 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
that is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange
of the shares of Common Stock for Rights will be effected and,
in the event of any partial exchange, the number of Rights that
will be exchanged. Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights that have
become null and void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
(c) If there are not sufficient shares of Common 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 for
issuance upon exchange of the Rights. If the Company, after good
faith effort, is unable to take all such action as may be
necessary to authorize such additional shares of Common Stock,
the Company shall substitute common stock equivalents (as
defined in Section 11(a)(iii) hereof) for shares of Common
Stock for Common Stock exchangeable for Rights, at the initial
rate of one common stock equivalent for each share of Common
Stock, as appropriately adjusted to reflect stock splits,
reverse stock splits, reverse stock split, stock dividends, and
other similar transactions after the date hereof.
(d) Upon declaring an exchange pursuant to this
Section 24, or as promptly as reasonably practicable
thereafter, the Company may implement such procedures as it
deems appropriate, in its sole discretion, for the purpose of
ensuring that the Common Stock (or such other consideration)
issuable upon an exchange pursuant to this Section 24 is
not received by holders of Rights that have become null and void
pursuant to Section 7(e). Before effecting an exchange
pursuant to this Section 24, the Board may direct the
Company to enter into a Trust Agreement in such form and
with such terms as the Board shall then approve (the
Trust Agreement). If the Board so
directs, the Company shall enter into the Trust Agreement
and the Company shall issue to the trust created by the
Trust Agreement (the Trust) all or a
portion (as designated
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by the Board) of the shares of Common Stock and other
securities, if any, distributable pursuant to the Exchange, and
all stockholders entitled to distribution of such shares or
other securities (and any dividends or distributions made
thereon after the date on which such shares or other securities
are deposited in the Trust) shall be entitled to receive a
distribution of such shares or other securities (and any
dividends or distributions made thereon after the date on which
such shares or other securities are deposited in the Trust) only
from the Trust and solely upon compliance with all relevant
terms and provisions of the Trust Agreement. Prior to
effecting an exchange and registering shares of Common Stock (or
other such securities) in any Persons name, including any
nominee or transferee of a Person, the Company may require (or
cause the trustee of the Trust to require), as a condition
thereof, that any holder of Rights provide evidence, including,
without limitation, the identity of the Beneficial Owners
thereof and their Affiliates and Associates (or former
Beneficial Owners thereof and their Affiliates and Associates)
as the Company shall reasonably request in order to determine if
such Rights are null and void. If any Person shall fail to
comply with such request, the Company shall be entitled
conclusively to deem the Rights formerly held by such Person to
be null and void pursuant to Section 7(e) and not
transferable or exerciseable or exchangeable in connection
herewith. Any shares of Common Stock or other securities issued
at the direction of the Board in connection herewith shall be
validly issued, fully paid, and nonassessable shares of Common
Stock or of such other securities (as the case may be), and the
Company shall be deemed to have received as consideration for
such issuance a benefit having a value that is at least equal to
the aggregate par value of the shares so issued.
Section 25. Notice
of Certain Events.
(a) In case the Company shall propose, at any time after
the Distribution Date, (i) to pay any dividend payable in
stock of any class or series to the holders of Preferred Stock
or to make any other distribution to the holders of Preferred
Stock (other than a regular quarterly cash dividend out of
earnings or retained earnings of the Company); (ii) to
offer to the holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred
Stock or shares of stock of any class or any other securities,
rights or options; (iii) to effect any reclassification of
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 any
other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or
to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in
one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company
and/or any
of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof); or (v) to effect
the liquidation, dissolution or winding up of the Company, then,
in each such case, the Company shall give to each registered
holder of a Rights Certificate, to the extent feasible, and to
the Rights Agent in accordance with Section 26 hereof, a
written notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the
date of participation therein by the holders of the shares of
Preferred Stock if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by
clause (i) or (ii) above at least ten (10) days
prior to the record date for determining holders of the shares
of Preferred Stock for purposes of such action and, in the case
of any such other action, at least ten (10) days prior to
the date of the taking of such proposed action or the date of
participation therein by
A-35
the holders of the shares of Preferred Stock, whichever shall be
the earlier; provided, however, that no such
action shall be taken pursuant to this Section 25(a) that
will or would conflict with any provision of the Certificate of
Incorporation; provided further, that no such
notice shall be required pursuant to this Section 25 if any
Subsidiary of the Company effects a consolidation or merger with
or into, or effects a sale or other transfer of assets or
earning power to, any other Subsidiary of the Company.
(b) In case any Section 11(a)(ii) Event shall occur,
then, in any such case, (i) the Company shall, as soon as
practicable thereafter, give to each registered holder of a
Rights Certificate, to the extent feasible, and to the Rights
Agent in accordance with Section 26 hereof, a written
notice of the occurrence of such event, which notice shall
describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) hereof, and
(ii) all references in paragraph (a) of this
Section 25 to Preferred Stock shall be deemed thereafter to
refer to Common Stock and/or, if appropriate, to any other
securities that may be acquired upon exercise of a Right.
(c) In case any Section 13 Event shall occur, then the
Company shall, as soon as practicable thereafter, give to each
registered holder of a Rights Certificate, to the extent
feasible, and to the Rights Agent in accordance with
Section 26 hereof, a written notice of the occurrence of
such event, which notice shall describe such event and the
consequences of such event to holders of Rights under
Section 13(a) hereof.
Section 26. Notices.
All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing and shall
be sufficiently given or made if sent by overnight delivery
service or first class mail, postage prepaid, addressed (until
another address is filed in writing with the other party), if to
the Company, at its address at:
Breeze-Eastern Corporation
35 Melanie Lane
Whippany, New Jersey 07981
Attention: Chief Executive Officer
With a copy to:
Fox Rothschild LLP
997 Lenox Drive, Building 3
Lawrenceville, NJ 08543
And if to the Rights Agent, at its address at:
Computershare Trust Company, N.A.
250 Royall Street
Canton, Massachusetts 02021
Attention: Client Services
A-36
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Rights Certificate (or, if prior to the Distribution Date, the
registered holder of any shares of Common Stock) shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company or the Rights
Agent, as the case may be.
Section 27. Supplements
and Amendments.
Except as otherwise provided in this Section 27, the
Company, by action of the Board, may from time to time and in
its sole and absolute discretion, and the Rights Agent shall if
the Company so directs, supplement or amend this Agreement in
any respect without the approval of any holders of Rights,
including, without limitation, in order to (a) cure any
ambiguity, (b) correct or supplement any provision
contained herein that may be defective or inconsistent with any
other provisions herein, (c) shorten or lengthen any time
period hereunder, (d) otherwise change, amend, or
supplement any provisions hereunder in any manner that the
Company may deem necessary or desirable; provided,
however, that from and after such time as any Person
becomes an Acquiring Person, this Agreement shall not be
supplemented or amended in any manner that would adversely
affect the interests of the holders of Rights (other than Rights
that have become null and void pursuant to Section 7(e)
hereof) as such or cause this Agreement to become amendable
other than in accordance with this Section 27. Without
limiting the foregoing, the Company, by action of the Board, may
at any time before any Person becomes an Acquiring Person amend
this Agreement to make the provisions of this Agreement
inapplicable to a particular transaction by which a Person might
otherwise become an Acquiring Person or to otherwise alter the
terms and conditions of this Agreement as they may apply with
respect to any such transaction. Upon the delivery of a
certificate from an appropriate officer of the Company that
states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights
Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the
contrary, the Rights Agent may, but shall not be obligated to,
enter into any supplement or amendment that affects the Rights
Agents own rights, duties, obligations or immunities under
this Agreement.
Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the
holders of Common Stock.
Section 28. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure
to the benefit of their respective successors and assigns
hereunder.
Section 29. Determinations
and Actions by the Board.
Except as otherwise specifically provided herein, the Board
shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company hereunder, or as may be
necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power (a) to
interpret the provisions of this Agreement, and (b) to make
all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation,
a determination to redeem or not redeem the Rights in
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accordance with Section 23, to exchange or not exchange the
rights in accordance with Section 24, to amend or not amend
this Agreement in accordance with Section 27). All such
actions, calculations, interpretations, and determinations
(including, for purposes of clause (ii) below, all
omissions with respect to the foregoing) that are done or made
by the Board shall (i) be final, conclusive, and binding on
the Company, the Rights Agent, the holders of the Rights, and
all other parties, and (ii) not subject the Board or any
member thereof to any liability to the holders of the Rights.
Section 30. Benefits
of this Agreement.
Nothing in this Agreement shall be construed to give to any
Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of shares of the
Common Stock of the Company) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, the registered holders of
shares of Common Stock of the Company).
Section 31. Severability.
If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement
to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid,
void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement
would materially and adversely affect the purpose or effect of
this Agreement, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not expire
until the Close of Business on the tenth Business Day following
the date of such determination by the Board.
Section 32. Governing
Law.
This Agreement, each Right, and each Rights 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 Agreement may be executed in one or more counterparts, and
by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original, but
all of which taken together shall constitute one and the same
instrument. A signature to this Agreement transmitted
electronically shall have the same authority, effect, and
enforceability as an original signature.
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Section 34. Descriptive
Headings.
The headings contained in this Agreement are for descriptive
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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.
[Signature
Page To Follow On Next Page]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the date first above
written.
Breeze-Eastern Corporation
Name:
COMPUTERSHARE TRUST COMPANY, N.A.
as Rights Agent
Name:
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Appendix B
CERTIFICATE OF
AMENDMENT TO
CERTIFICATE OF
INCORPORATION OF
BREEZE-EASTERN
CORPORATION
Breeze-Eastern Corporation, a Delaware corporation (the
Corporation), does hereby certify that:
FIRST: This Certificate of Amendment (this
Certificate of Amendment) amends the provisions of
the Corporations Certificate of Incorporation (the
Certificate of Incorporation).
SECOND: The terms and provisions of this
Certificate of Amendment have been duly adopted in accordance
with Section 242 of the General Corporation Law of the
State of Delaware and shall become effective upon filing with
the Delaware Secretary of State.
THIRD: The first sentence of
Article FOURTH of the Certificate of Incorporation is
hereby deleted in its entirety and replaced with the following:
FOURTH. The total number of the shares
of stock which the Corporation shall have authority to issue is
100,300,000, consisting of 100,000,000 shares of common
stock, $.01 par value per share, and 300,000 shares of
preferred stock, $1.00 par value per share (the
Preferred Stock).
IN WITNESS WHEREOF, this Certificate of Amendment to Certificate
of Incorporation has been executed by a duly authorized officer
of the Corporation this day
of ,
2011.
BREEZE-EASTERN CORPORATION
D. Michael Harlan, Jr.
Chief Executive Officer
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Appendix C
BREEZE-EASTERN
CORPORATION
2012 INCENTIVE
COMPENSATION PLAN
1. Purpose and Eligibility. The purpose
of this 2012 Incentive Compensation Plan (the
Plan) of Breeze-Eastern Corporation, a
Delaware corporation (the Company) is
to provide Options (as hereinafter defined), Restricted Stock
Awards (as hereinafter defined), Restricted Stock Units (as
hereinafter defined) and other equity interests in the Company
(each, an Award) to
(a) employees, officers, directors, consultants and
advisors of the Company and its Parents and Subsidiaries, and
(b) any other Person who is determined by the Board to have
made (or is expected to make) contributions to the Company. Any
person to whom an Award has been granted under the Plan is
called a Participant. Additional definitions
are contained in Section 11.
2. Administration.
a. Administration by Board of
Directors. The Plan will be administered by the
Board of Directors of the Company (the
Board). The Board, in its sole discretion,
shall have the authority to grant and amend Awards, to adopt,
amend and repeal rules relating to the Plan and to interpret and
correct the provisions of the Plan and any Award. The Board
shall have authority, subject to the express limitations of the
Plan, (i) to construe and determine the respective Award
Agreements (as hereinafter defined), Awards and the Plan,
(ii) to prescribe, amend and rescind rules and regulations
relating to the Plan and any Awards, (iii) to determine the
terms and provisions of the respective Award Agreements and
Awards, which need not be identical, (iv) to initiate an
Option Exchange Program as provided in Section 8(o) hereof,
and (v) to make all other determinations in the judgment of
the Board necessary or desirable for the administration and
interpretation of the Plan. The Board may correct any defect or
supply any omission or reconcile any inconsistency in the Plan
or in any Award Agreement or Award in the manner and to the
extent it shall deem expedient to carry the Plan, any Award
Agreement or Award into effect and it shall be the sole and
final judge of such expediency. All decisions by the Board shall
be final and binding on all interested persons. Neither the
Company nor any member of the Board shall be liable for any
action or determination relating to the Plan.
b. Appointment of
Committee. Notwithstanding any provision of this
Plan to the contrary, to the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan
to one or more committees or subcommittees of the Board (a
Committee). If so delegated, all references
in the Plan to the Board shall mean such
Committee or the Board.
c. Delegation to Executive
Officers. Notwithstanding any provision of this
Plan to the contrary, to the extent permitted by applicable law,
the Board may delegate to one or more executive officers of the
Company the power to grant Awards and exercise such other powers
under the Plan as the Board may determine, provided that the
Board shall fix the maximum number of Awards to be granted and
the maximum number of shares issuable to any one Participant
pursuant to Awards granted by such executive officers
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d. Applicability of
Rule 16b-3. Notwithstanding
any provision of this Plan to the contrary, if, or at such time
as, the Common Stock is or becomes registered under
Section 12 of the Exchange Act (as hereinafter
defined), or any successor statute, the Plan shall be
administered in a manner consistent with
Rule 16b-3
promulgated thereunder, as it may be amended from time to time,
or any successor rules
(Rule 16b-3),
such that all subsequent grants of Awards hereunder to Reporting
Persons (as hereinafter defined) shall be exempt under such
rule. The provisions of the Plan which make express reference to
Rule 16b-3
or which are required in order for certain option transactions
to qualify for exemption under
Rule 16b-3
shall apply only to such persons as are required to file reports
under Section 16(a) of the Exchange Act (a
Reporting Person).
e. Applicability of
Section 162(m). Those provisions of the Plan
which are required by or make express reference to
Section 162(m) of the Code or any regulations thereunder,
or any successor section of the Code or regulations thereunder
(Section 162(m)) shall apply only upon
the Companys becoming a company that is subject to
Section 162(m). Notwithstanding any provisions in this Plan
to the contrary, whenever the Board is authorized to exercise
its discretion in the administration or amendment of this Plan
or any Award hereunder or otherwise, the Board may not exercise
such discretion in a manner that would cause any outstanding
Award that would otherwise qualify as performance-based
compensation under Section 162(m) to fail to so qualify
under Section 162(m).
3. Stock Available for Awards.
a. Number of Shares. Subject to
adjustment under Section 3(c) and the applicable
provisions of Section 8, the aggregate number of
shares of Common Stock of the Company, par value per share of
$0.01 (the Common Stock) that may be issued
pursuant to the Plan is as follows: (i) all Awards:
750,000 shares of Common Stock; (ii) Incentive Stock
Options (as hereinafter defined): 30% of the number of shares of
Common Stock set forth in clause (i); and (iii) all other
Awards: 70% of the number of shares of Common Stock set forth in
clause (i). If any Award expires, or is terminated, surrendered
or forfeited, in whole or in part, the unissued Common Stock
covered by such Award shall again be available for the grant of
Awards of the same type under the Plan. If an Award granted
under the Plan shall expire or terminate for any reason without
having been exercised in full, the unpurchased shares subject to
such Award shall again be available for subsequent Awards under
the Plan, and if shares of Common Stock issued pursuant to the
Plan are repurchased by, or are surrendered or forfeited to, the
Company at no more than the price paid for such shares, such
shares of Common Stock shall again be available for the grant of
Awards under the Plan. Shares issued under the Plan may consist
in whole or in part of authorized but unissued shares or
treasury shares.
b. Per-Participant Limit. Subject to
adjustment under Section 3(c) and the applicable
provisions of Section 8, no Participant may be
granted Awards during any one Fiscal Year (as hereinafter
defined)to purchase more than 150,000 shares of Common
Stock.
c. Adjustment to Common Stock. Subject to
the applicable provisions of Section 8, in the event
of any stock split, reverse stock split, stock dividend,
extraordinary cash dividend, recapitalization, reorganization,
merger, consolidation, combination, exchange of shares,
liquidation, spin-off,
split-up, or
other similar change in capitalization or similar event,
(i) the number and class of shares available for issuance
under Section 3(a) hereof, (ii) the number and class
of securities, vesting schedule and exercise price per share
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subject to each outstanding Option, (iii) the repurchase
price per security subject to repurchase, and (iv) the
terms of each other outstanding Award shall be adjusted by the
Company (or substituted Awards may be made, if applicable) to
the extent the Board shall determine, in good faith, that such
an adjustment (or substitution) is necessary to prevent the
dilution of a Participants Award. Any such adjustment to
outstanding Awards will be effected in a manner that precludes
the enlargement of rights and benefits under such Awards, and,
in the case of an Incentive Stock Option, in a manner that
complies with the requirements of Treasury
Regulation Section 1.424-1(a)
and (e), if and as applicable.
4. Stock Options.
a. General. The Board may grant options
to purchase Common Stock (each, an Option)
and determine the number of shares of Common Stock to be covered
by each Option, the exercise price of each Option and the
conditions and limitations applicable to the exercise of each
Option and the shares of Common Stock issued upon the exercise
of each Option, including, but not limited to, vesting
provisions, repurchase provisions and restrictions relating to
applicable federal or state securities laws. Each Option will be
evidenced by a Stock Option Agreement, consisting of a Notice of
Stock Option Award and a Stock Option Award Agreement, in
substantially the form as Exhibit A attached hereto
(collectively, a Stock Option Agreement).
b. Incentive Stock Options. An Option
that the Board intends to be an incentive stock option (an
Incentive Stock Option) as defined in
Section 422 of the Code, as amended, or any successor
statute (Section 422), shall be granted
only to an employee of the Company or any Parent or Subsidiary
thereof and shall be subject to and shall be construed
consistently with the requirements of Section 422 and
regulations thereunder. The Board and the Company shall have no
liability if an Option or any part thereof that is intended to
be an Incentive Stock Option does not qualify as such. An Option
or any part thereof that does not qualify as an Incentive Stock
Option is referred to herein as a Nonstatutory Stock
Option or Nonqualified Stock
Option. For avoidance of doubt, all employees of the
Company or any Parent or Subsidiary thereof shall be eligible to
receive Awards of Incentive Stock Options.
c. Dollar Limitation. For so long as the
Code shall so provide, Options granted to any employee under the
Plan (and any other incentive stock option plans of the Company)
which are intended to qualify as Incentive Stock Options shall
not qualify as Incentive Stock Options to the extent that such
Options, in the aggregate, become exercisable for the first time
in any one calendar year for shares of Common Stock with an
aggregate Fair Market Value (as hereinafter defined) (determined
as of the respective date or dates of grant) of more than
$100,000. The amount of Incentive Stock Options which exceed
such $100,000 limitation shall be deemed to be Nonqualified
Stock Options. For the purpose of this limitation, unless
otherwise required by the Code or regulations of the Internal
Revenue Service or determined by the Board, Options shall be
taken into account in the order granted, and the Board may
designate that portion of any Incentive Stock Option that shall
be treated as Nonqualified Option in the event that the
provisions of this paragraph apply to a portion of any Option.
The designation described in the preceding sentence may be made
at such time as the Committee considers appropriate, including
after the issuance of the Option or at the time of its exercise.
d. Exercise Price. The Board shall
establish the exercise price (or determine the method by which
the exercise price shall be determined) at the time each Option
is granted and specify the exercise price in the
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applicable Stock Option Agreement; provided, however, that in no
event may the per share exercise price of an Option be less than
the Fair Market Value of the underlying shares of Common Stock
on the date such Option is granted; and provided further,
however, that, except as provided in Section 3(c) hereof,
in no event may the Board adjust the exercise price of an Option
such that it ever is less than the Fair Market Value of the
underlying shares of Common Stock on the date such Option is
granted. In the case of an Incentive Stock Option granted to a
Participant who, at the time of grant of such Option, owns stock
representing more than ten percent (10%) of the voting power of
all classes of stock of the Company or any Parent or Subsidiary,
then the exercise price shall be no less than 110% of the Fair
Market Value of the Common Stock on the date of grant. In the
case of a grant of an Incentive Stock Option to any other
Participant, the exercise price shall be no less than 100% of
the Fair Market Value of the Common Stock on the date of grant.
e. Duration of Options. Each Option shall
be exercisable at such times and subject to such terms and
conditions as the Board may specify in the applicable Stock
Option Agreement; provided, that the term of any Incentive Stock
Option may not be more than ten (10) years from the date of
grant. In the case of an Incentive Stock Option granted to a
Participant who, at the time of grant of such Option, owns stock
representing more than ten percent (10%) of the voting power of
all classes of stock of the Company or any Parent or Subsidiary,
the term of the Option shall be no longer than five
(5) years from the date of grant.
f. Exercise of Option. Options may be
exercised only by delivery to the Company of a written notice of
exercise signed by the proper person together with payment in
full as specified in Section 4(g) and the Stock Option
Agreement for the number of shares for which the Option is
exercised.
g. Payment Upon Exercise. Common Stock
purchased upon the exercise of an Option shall be paid for by
one or any combination of the following forms of payment as
permitted by the Board in its sole and absolute discretion:
i. by check payable to the order of the Company;
ii. only if the Common Stock is then publicly traded, by
delivery of an irrevocable and unconditional undertaking by a
creditworthy broker, selected by the Participant, to deliver
promptly to the Company sufficient funds to pay the exercise
price, or delivery by the Participant to the Company of a copy
of irrevocable and unconditional instructions to a creditworthy
broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price; or
iii. to the extent explicitly provided in the applicable
Stock Option Agreement, by delivery of shares of Common Stock
owned by the Participant valued at Fair Market Value; or
iv. payment of such other lawful consideration as the Board
may determine.
Except as otherwise expressly set forth in a Stock Option
Agreement, the Board shall have no obligation to accept
consideration other than cash and in particular, unless the
Board so expressly provides, in no event will the Company accept
the delivery of shares of Common Stock that have not been owned
by the Participant at least six months prior to the exercise.
The fair market value of any shares of the Companys Common
Stock or other non-cash consideration which may be delivered
upon exercise of an Option shall be determined in such manner as
may be prescribed by the Board.
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h. Acceleration, Extension, Etc. The
Board may, in its sole discretion, and in all instances subject
to any relevant tax and accounting considerations which may
adversely impact or impair the Company, (i) accelerate the
date or dates on which all or any particular Options or Awards
granted under the Plan may be exercised, or (ii) extend the
dates during which all or any particular Options or Awards
granted under the Plan may be exercised or vest.
5. Restricted Stock Awards.
a. Grants. The Board may grant Awards to
Participants of restricted shares of Common Stock, subject to
the right of the Company to repurchase all or part of such
shares at their issue price or other stated or formula price
from the Participant in the event that conditions specified by
the Board in the applicable Award are not satisfied prior to the
end of the applicable restriction period or periods established
by the Board for such Award (each, a Restricted Stock
Award).
b. Terms and Conditions. The Board shall
determine the terms and conditions of any such Restricted Stock
Award. Any stock certificates issued in respect of a Restricted
Stock Award shall be registered in the name of the Participant
and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with
the Company (or its designee). As soon as reasonably practicable
after the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no
longer subject to such restrictions to the Participant or, if
the Participant has died, to the beneficiary designated by a
Participant, in a manner determined by the Board, to receive
amounts due or exercise rights of the Participant in the event
of the Participants death (the Designated
Beneficiary). In the absence of an effective
designation by a Participant, Designated Beneficiary shall mean
the Participants estate. Each Restricted Stock Award shall
be evidenced by a Restricted Stock Award Agreement in
substantially the form approved by the Board
(Restricted Stock Award Agreement).
c. Section 83(b) Election. Each
Restricted Stock Award Agreement shall be accompanied by a Code
Section 83(b) election form in substantially the form
approved by the Board (Section 83(b) Election
Form). Nothing contained herein shall be construed by
any party as a recommendation or any advice whatsoever by the
Company, or any Parent or Subsidiary thereof, the Board or the
Committee regarding the tax treatment of any Restricted Stock
Award under the Plan. Without in any way limiting the generality
of the foregoing, the decision as to whether to make an election
under Code Section 83(b) shall be the sole responsibility
of the Participant.
6. Restricted Stock Units.
a. Grants. The Board may grant an Award
to any Participant of a right to a fully vested share of Common
Stock (each, an RSU Share) and, if
applicable, notional cash dividends with respect thereto, at
such future time and upon such terms as specified by the Board
in the agreement (RSU Agreement) evidencing
such Award (each, a Restricted Stock Unit).
b. Terms and Conditions. Restricted Stock
Units issued under the Plan may have restrictions which lapse
based upon the service of a Participant, or based upon such
other criteria, including, without limitation, performance
criteria, that the Board or Committee may determine to be
appropriate. Until distribution of the RSU Share and, if
applicable, notional dividends with respect thereto, in
accordance with the terms of the RSU Agreement, the right, under
an applicable RSU Agreement, to receive such RSU
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Share and, if applicable, notional dividends with respect
thereto shall constitute either (i) an unfunded promise to
pay a future benefit that constitutes deferred compensation
under Section 409A of the Code and the 409A Regulations or
(ii) an arrangement exempt from Section 409A of the
Code and the 409A Regulations, as the Participant elects.
Distribution of an RSU Share underlying a Restricted Stock Unit
shall take the form of a stock certificate issued to the
Participant or, if the Participant has died, to the Designated
Beneficiary. For avoidance of doubt, (i) the grant of a
Restricted Stock Unit shall not result in the issuance of a
stock certificate to, or in the name of, or for the benefit of,
a Participant; and (ii) a Participant who has been granted
a Restricted Stock Unit shall not be entitled to vote or receive
actual dividends (if any) on the RSU Shares underlying such
Restricted Stock Units until certificates for such RSU Shares
are issued. In the absence of an effective designation by a
Participant, Designated Beneficiary shall mean the
Participants estate. Until an RSU Share vests, in
accordance with the vesting schedule established by the Board or
Committee, it shall remain subject to forfeiture.
7. Other Stock-Based Awards. The Board
shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may
determine, including, without limitation, the grant of shares
based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock
appreciation rights, phantom stock awards or stock units. Any
grant of stock appreciation rights or similar awards requiring
an exercise event shall be subject to the rules regarding
issuance at Fair Market Value applicable to grants of Options
set forth in the first sentence of Section 4d hereof.
8. General Provisions Applicable to Awards.
a. Transferability of Awards. Except as
the Board may otherwise determine or provide in an Award, Awards
shall not be sold, assigned, transferred, pledged or otherwise
encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the
Participant, shall be exercisable only by the Participant;
provided, however, except as the Board may otherwise determine
or provide in an Award, that Nonstatutory Stock Options and
Restricted Stock Awards may be transferred pursuant to a
qualified domestic relations order (as defined in Employee
Retirement Income Security Act of 1974, as amended) or to a
grantor-retained annuity trust or a similar estate-planning
vehicle in which the trust is bound by all provisions of the
Stock Option Agreement and Restricted Stock Award, which are
applicable to the Participant. References to a Participant, to
the extent relevant in the context, shall include references to
authorized transferees.
b. Documentation. Each Award under the
Plan shall be evidenced by a written instrument in such form as
the Board shall determine or as executed by an officer of the
Company pursuant to authority delegated by the Board. For
purposes of this Plan, a Stock Option Agreement, a Restricted
Stock Award Agreement and an RSU Agreement each constitute an
Award Agreement. Each Award may contain terms and conditions in
addition to those set forth in the Plan, provided that such
terms and conditions do not contravene the provisions of the
Plan or applicable law.
c. Board Discretion. The terms of each
type of Award need not be identical, and the Board need not
treat Participants uniformly.
d. Additional Award Provisions. The Board
may, in its sole discretion, include additional provisions in
any Award Agreement under the Plan, including without limitation
restrictions on transfer, repurchase rights,
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commitments to pay cash bonuses, to make, arrange for or
guaranty loans or to transfer other property to Participants
upon exercise of Awards, or transfer other property to
Participants upon exercise of Awards, or such other provisions
as shall be determined by the Board; provided that such
additional provisions shall not be inconsistent with any other
term or condition of the Plan or applicable law.
e. Termination of Status. The Board
shall determine the effect on an Award of the disability (as
defined in Code Section 22(e)(3)), death, retirement,
authorized leave of absence or other change in the employment or
other status of a Participant and the extent to which, and the
period during which, the Participant, or the Participants
legal representative, conservator, guardian or Designated
Beneficiary, may exercise rights under the Award, subject to
applicable law and the provisions of the Code related to
Incentive Stock Options.
f. Change of Control of the Company.
i. Unless otherwise expressly provided in the applicable
Award Agreement, in connection with the occurrence of a Change
Control (as defined below), the Board shall, in its sole
discretion as to any outstanding Award (including any portion
thereof; on the same basis or on different bases, as the Board
shall specify), take one or any combination of the following
actions:
A. make appropriate provision for the continuation of such
Award by the Company or the assumption of such Award by the
surviving or acquiring entity and by substituting on an
equitable basis for the shares then subject to such Award either
(x) the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Change
of Control, (y) shares of stock of the surviving or
acquiring corporation or (z) such other securities as the
Board deems appropriate, the Fair Market Value of which shall
not materially differ from the Fair Market Value of the shares
of Common Stock subject to such Award immediately preceding the
Change of Control (as determined by the Board in its sole
discretion);
B. accelerate the date of exercise or vesting of such Award;
C. permit the exchange of such Award for the right to
participate in any stock option or other employee benefit plan
of any successor corporation;
D. provide for the repurchase of the Award for an amount
equal to the difference of (i) the consideration received
per share for the securities underlying the Award in the Change
of Control minus (ii) the per share exercise price of such
securities. Such amount shall be payable in cash or the property
payable in respect of such securities in connection with the
Change of Control. The value of any such property shall be
determined by the Board in its discretion; or
E. provide for the termination of such Award immediately
prior to the consummation of the Change of Control; provided
that no such termination will be effective if the Change of
Control is not consummated.
F. For the purpose of this Agreement, a Change of
Control shall mean:
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of
Rule 13d-3
promulgated under the Exchange Act) of more than 50% of the then
outstanding shares of voting
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stock of the Company (the Voting Stock);
provided, however, that any acquisition by the Company or its
subsidiaries, or any employee benefit plan (or related trust) of
the Company or its subsidiaries of more than 50% of the Voting
Stock shall not constitute a Change of Control; and provided,
further, that any acquisition by a corporation with respect to
which, following such acquisition, more than 50% of the then
outstanding shares of common stock of such corporation, is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners of the Voting Stock immediately prior to such
acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the Voting
Stock, shall not constitute a Change of Control; and provided,
further, that the acquisition of more than 50% of the Voting
Stock pursuant to a transaction, the primary purpose of which
was to effect an equity financing of the Company, shall not
constitute a Change of Control; or
(b) Individuals who, as of the Effective Date, constitute
the Board (the Incumbent Directors) cease for
any reason to constitute a majority of the members of the Board;
provided that any individual who becomes a director after the
Effective Date whose election or nomination for election by the
Companys Shareholders was approved by a majority of the
members of the Incumbent Directors (other than an election or
nomination of an individual whose initial assumption of office
is in connection with an actual or threatened election
contest relating to the election of the Directors of the
Company (as such terms are used in Rule 14a11 under the
Exchange Act), tender offer (as such term is
used in Section 14(d) of the Exchange Act) or a proposed
Merger (as defined below) shall be deemed to be members of the
Incumbent Directors; or
(c) The consummation of (i) a reorganization, merger
or consolidation (any of the foregoing, a
Merger), in each case, with respect to which
the individuals and entities who were the beneficial owners of
the Voting Stock immediately prior to such Merger do not,
following such Merger, beneficially own, directly or indirectly,
more than 50% of the then outstanding shares of common stock of
the corporation resulting from the Merger (the
Resulting Corporation) as a result of the
individuals and entities shareholdings in the
Company immediately prior to the consummation of the Merger and
without regard to any of the individuals and
entities shareholdings in the Resulting Corporation
immediately prior to the consummation of the Merger, (ii) a
complete liquidation or dissolution of the Company or
(iii) the sale or other disposition of all or substantially
all of the assets of the Company, excluding a sale or other
disposition of assets to a subsidiary of the Company.
Notwithstanding the foregoing, any Award Agreement may provide
for a different definition of Change of Control, including,
without limitation, one necessary to comply with the 409A
Regulations, if applicable.
g. Dissolution or Liquidation. In the
event of the proposed dissolution or liquidation of the Company,
the Board shall notify each Participant as soon as practicable
prior to the effective date of such proposed transaction. The
Board in its sole discretion may provide for a Participant to
have the right to exercise his or her Award until fifteen
(15) days prior to such transaction as to all of the shares
of Common Stock covered by the Option or Award, including shares
as to which the Option or Award would not otherwise be
exercisable, which exercise may in the sole discretion of the
Board, be made subject to and conditioned upon the consummation
of such proposed transaction. In addition, the Board may provide
that any
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Company repurchase option applicable to any shares of Common
Stock purchased upon exercise of an Option or Award shall lapse
as to all such shares of Common Stock, provided the proposed
dissolution and liquidation takes place at the time and in the
manner contemplated. To the extent it has not been previously
exercised, an Award will terminate upon the consummation of such
proposed action.
h. Assumption of Options Upon Certain
Events. In connection with a merger or
consolidation of an entity with the Company or the acquisition
by the Company of property or stock of an entity, the Board may
grant Awards under the Plan in substitution for stock and
stock-based awards issued by such entity or an affiliate
thereof. The substitute Awards shall be granted on such terms
and conditions as the Board considers appropriate in the
circumstances.
i. Parachute Payments and Parachute
Awards. Notwithstanding the provisions of
Section 8(f), if, in connection with a Change of Control
described therein, a tax under Section 4999 of the Code
would be imposed on the Participant (after taking into account
the exceptions set forth in Sections 280G(b)(4) and
280G(b)(5) of the Code), then the number of Awards which shall
become exercisable, realizable or vested as provided in such
Section shall be reduced (or delayed), to the minimum extent
necessary, so that no such tax would be imposed on the
Participant (the Awards not becoming so accelerated, realizable
or vested, the Parachute Awards); provided,
however, that if the aggregate present value of the
Parachute Awards would exceed the tax that, but for this
sentence, would be imposed on the Participant under
Section 4999 of the Code in connection with the Change of
Control, then the Awards shall become immediately exercisable,
realizable and vested without regard to the provisions of this
sentence. For purposes of the preceding sentence, the
aggregate present value of an Award shall be
calculated on an after-tax basis (other than taxes imposed by
Section 4999 of the Code) and shall be based on economic
principles rather than the principles set forth under
Section 280G of the Code and the regulations promulgated
thereunder. All determinations required to be made under this
Section 8(i) shall be made by the Company.
j. Amendment of Awards. The Board may
amend, modify or terminate any outstanding Award including, but
not limited to, substituting therefor another Award of the same
or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a
Nonstatutory Stock Option, provided that the Participants
consent to such action shall be required unless the Board
determines that the action, taking into account any related
action, would not materially and adversely affect the
Participant.
k. Conditions on Delivery of Stock. The
Company will not be obligated to deliver any shares of Common
Stock pursuant to the Plan or to remove restrictions from shares
previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the
satisfaction of the Company, (ii) in the opinion of the
Companys counsel, all other legal matters in connection
with the issuance and delivery of such shares have been
satisfied, including any applicable securities laws and any
applicable stock exchange or stock market rules and regulations,
and (iii) the Participant has executed and delivered to the
Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any
applicable laws, rules or regulations.
l. Acceleration. The Board may at any
time provide that any Options shall become immediately
exercisable in full or in part, that any Restricted Stock Awards
or Restricted Stock Units shall be free of some or all
restrictions, or that any other stock-based Awards may become
exercisable in full or in part or free of
C-9
some or all restrictions or conditions, or otherwise realizable
in full or in part, as the case may be, despite the fact that
the foregoing actions may (i) cause the application of
Sections 280G and 4999 of the Code if a Change of Control
of the Company occurs, or (ii) disqualify all or part of
the Option as an Incentive Stock Option.
m. Time of Granting Awards. The grant of
an Award shall, for all purposes, be the date on which the
Company completes the corporate action relating to the grant of
such Award and all conditions to the grant have been satisfied,
provided that, except as provided in the Treasury Regulations
applicable to Incentive Stock Options, conditions to the grant,
exercise or vesting of an Award shall not defer the date of
grant. Notice of a grant shall be given to each Participant to
whom an Award is so granted within a reasonable time after the
determination has been made.
n. Participation in Foreign
Countries. The Board shall have the authority to
adopt such modifications, procedures, and subplans as may be
necessary or desirable to comply with provisions of the laws of
foreign countries in which the Company or its Subsidiaries may
operate to assure the viability of the benefits from Awards
granted to Participants performing services in such countries
and to meet the objectives of the Plan.
9. Withholding. The Company shall have
the right to deduct from payments of any kind otherwise due to
the optionee or recipient of an Award any federal, state or
local taxes of any kind required by law to be withheld with
respect to any shares issued upon exercise of Options under the
Plan or the purchase of shares subject to the Award. Subject to
the prior approval of the Company, which may be withheld by the
Company in its sole discretion, the optionee or recipient of an
Award may elect to satisfy such obligation, in whole or in part,
(a) by causing the Company to withhold shares of Common
Stock otherwise issuable pursuant to the exercise of an Option
(subject to any tax considerations applicable to Incentive Stock
Options) or the purchase of shares subject to an Award or
(b) by delivering to the Company shares of Common Stock
already owned by the optionee or Award recipient of an Award.
The shares so delivered or withheld shall have a Fair Market
Value of the shares used to satisfy such withholding obligation
as shall be determined by the Company as of the date that the
amount of tax to be withheld is to be determined. An optionee or
recipient of an Award who has made an election pursuant to this
Section may only satisfy his or her withholding obligation with
shares of Common Stock which are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements.
10. Forfeiture if Engagement or Employment Terminated
for Cause. If the employment or engagement of any
Participant is terminated for Cause, the Award may
terminate, upon a determination of the Board, on the date of
such termination and the Option shall thereupon not be
exercisable to any extent whatsoever, the Company shall have the
right to repurchase any shares of Common Stock subject to a
Restricted Stock Award whether or not such shares have vested
and any Restricted Stock Units shall be forfeited, as
applicable. For purposes of this Section 10,
for Cause shall be defined as follows:
(i) if the Participant has executed an employment
agreement, the definition of cause contained
therein, if any, shall govern, or (ii) conduct, as
determined by the Board, involving one or more of the following:
(a) gross misconduct or inadequate performance by the
Participant which is injurious to the Company; or (b) the
commission of an act of embezzlement, fraud or theft, which
results in economic loss, damage or injury to the Company; or
(c) the unauthorized disclosure of any trade secret or
confidential information of the Company (or any client,
customer, supplier or other third party who has a business
relationship with the
C-10
Company) or the violation of any noncompetition or
nonsolicitation covenant or assignment of inventions obligation
with the Company; or (d) the commission of an act which
constitutes unfair competition with the Company or which induces
any customer or prospective customer of the Company to breach a
contract with the Company or to decline to do business with the
Company; or (e) the indictment of the Participant for a
felony or serious misdemeanor offense, either in connection with
the performance of his or her obligations to the Company or
which shall adversely affect the Participants ability to
perform such obligations; or (f) the commission of an act
of fraud or breach of fiduciary duty which results in loss,
damage or injury to the Company; or (g) the failure of the
Participant to perform in a material respect his or her
employment, consulting or advisory obligations without proper
cause. In making such determination, the Board shall act fairly
and in utmost good faith. The Board may in its discretion waive
or modify the provisions of this Section at a meeting of the
Board with respect to any individual Participant with regard to
the facts and circumstances of any particular situation
involving a determination under this Section.
11. Miscellaneous.
a. Definitions.
i. Company, for purposes of eligibility
under the Plan, shall include any present or future subsidiary
corporations of Breeze-Eastern Corporation, as defined in
Section 424(f) of the Code (a Subsidiary),
and any present or future parent corporation of Breeze-Eastern
Corporation, as defined in Section 424(e) of the Code. For
purposes of Awards other than Incentive Stock Options, the term
Company shall include any other business venture in
which the Company has a direct or indirect significant interest,
as determined by the Board in its sole discretion.
ii. Code means the Internal Revenue Code
of 1986, as amended, and any regulations promulgated thereunder.
iii. Effective Date means the date the
Plan is adopted by the Board.
iv. Employee for purposes of eligibility
under the Plan shall include a person to whom an offer of
employment has been extended by the Company.
v. Exchange Act means the Securities
Exchange Act of 1934, as amended.
vi. Fair Market Value means (A) if,
at the time an Award is granted under the Plan, the
Companys Common Stock is readily tradable on an
established securities market, Fair Market
Value shall mean either the last reported sales price
for such stock before the grant or the closing price on the
trading day of the grant, if no sales were reported as quoted on
such exchange or system as reported in The Wall Street
Journal or such other source as the Board deems reliable, or
(ii) the arithmetic mean of the high and low prices for
such stock on the trading day of the grant, as determined by the
Board at the time of the grant; and (B) if, at the time an
Award is granted under the Plan, the Companys Common Stock
is not readily tradable on an established securities market, the
Fair Market Value of a share of Common Stock shall be the fair
market value as determined in accordance with the reasonable
valuation factors set forth in the 409A Regulations, without
regard to any lapse restrictions as defined in Treasury
C-11
Regulation Section 1.83-3(i),
taking into account all available information material to the
value of the Company. Such factors shall include, but not be
limited to, as applicable, the following:
A. the value of tangible and intangible assets of the
Company;
B. the present value of anticipated future cash flows of
the Company;
C. the market value of stock or equity interests in similar
corporations and other entities engaged in trades or businesses
similar to those engaged in by the Company (which market value
can be readily determined through nondiscretionary, objective
means);
D. recent arms length transactions involving the sale
or transfer of the Companys Common stock;
E. control premiums;
F. discounts for lack of marketability;
G. whether the valuation method is used for other purposes
that have a material effect on the Company, its stockholders or
its creditors; and
H. consistent use of a valuation method to determine the
value of the Companys stock or assets for other purposes.
A calculated value shall be deemed unreasonable if it is based
upon a valuation that occurred more than twelve (12) months
prior to such date or if it fails to reflect information
available after the date of the calculation that may materially
affect the value of the Company.
The same valuation method shall apply to all Awards of the same
type granted under the Plan on a particular grant date.
vii. Fiscal Year means the
12-consecutive-month period beginning on April 1 and ending on
the immediately following March 31.
viii. Option Exchange Program means a
program whereby an outstanding Option whose Fair Market Value as
of a given date is less than the exercise price thereof as of
its grant date (an Underwater Option) is
exchanged for an Option of equivalent economic value, determined
as of the date of the exchange (the Exchange
Date), to the value of the Underwater Option, with
such determination to be based upon the Fair Market Value of the
underlying shares of Common Stock of such new Option as of the
Exchange Date.
ix. Person shall have the meaning
ascribed thereto in Section 13(d) and 14(d) of the Exchange
Act.
x. 409A Regulations means the final
United States Department of Treasury regulations issued under
Section 409A on April 17, 2007, as modified from time
to time.
xi. Securities Act means the Securities
Act of 1933, as amended.
b. No Right To Employment or Other
Status. No person shall have any claim or right
to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued
employment or any other relationship with the Company. The
Company expressly reserves the right at any
C-12
time to dismiss or otherwise terminate its relationship with a
Participant free from any liability or claim under the Plan.
c. No Rights As Stockholder. Subject to
the provisions of the applicable Award, no Participant or
Designated Beneficiary shall have any rights as a stockholder
with respect to any shares of Common Stock to be distributed
with respect to an Award until becoming the record holder
thereof; provided, however, that unless otherwise provided in
the applicable Restricted Stock Award Agreement, the Participant
shall have the right to vote and receive dividends or other
distributions paid on Restricted Stock Award shares, subject to
any restrictions deemed appropriate by the Board, including,
without limitation, the achievement of specific performance
goals.
d. Compliance with Law. The Company shall
not be required to sell or issue any shares of Common Stock
under any Award if the sale or issuance of such shares would
constitute a violation by the Participant, any other individual
exercising an Option, or the Company of any provision of any law
or regulation of any governmental authority, including, without
limitation, any federal or state securities laws or regulation.
If at any time the Company shall determine, in its discretion,
that the listing, registration or qualification of any share
subject to an Award up on any security exchange or under any
governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the issuance or purchase of
shares hereunder, no shares of Common Stock may be issued or
sold to the Participant or any other individual exercising an
Option pursuant to such Award unless such listing, registration,
qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Company,
and any delay caused thereby shall in no way effect the date of
termination of the Award. Any determination in this connection
by the Board shall be final, binding and conclusive. The Company
may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act. The
Company shall not be obligated to take any affirmative action in
order to cause the exercise of an Option or the issuance of
shares of Common Stock pursuant to the Plan to comply with any
law or regulation of any governmental authority. As to any
jurisdiction that expressly imposes that a Option shall not be
exercised until the shares of Common Stock covered by such
Option are registered or exempt from registration, the exercise
of such Option (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned up on the
effectiveness of such registration or availability of such an
exemption. It is the intent of the Company that (i) the
Plan and any Award made thereunder be exempt from the
requirements of Section 409A of the Code by virtue of any
applicable exemption under the 409A Regulations, including,
without limitation, the exemption for Incentive Stock Options
set forth in Treasury
Regulation Section 1.409A-1(b)(5)(ii),
the exemption for Nonstatutory Options set forth in Treasury
Regulation Section 1.409A-1(b)(5)(i)(A),
the exemption for stock appreciation rights set forth in
Treasury
Regulation Section 1.409A-1(b)(5)(i)(B)
and the exemption for Restricted Stock Awards set forth in
Treasury
Regulation Section 1.409A-1(b)(6),
and shall be construed by all parties accordingly. If, at any
time, an Award is subject to Section 409A of the Code, the
applicable Award Agreement shall comply with all applicable
requirements thereof.
e. Effective Date and Term of Plan. The
Plan shall become effective on the date on which it is adopted
by the Board. No Awards shall be granted under the Plan after
the completion of ten years from the date on which the Plan was
adopted by the Board, but Awards previously granted may extend
beyond that date.
f. Amendment of Plan. The Board may
amend, suspend or terminate the Plan or any portion thereof at
any time.
C-13
g. No Trust or ERISA Plan
Created. Nothing contained herein shall be deemed
to create a trust of any kind or create any fiduciary
relationship. To the extent that any Person acquires a right to
receive payments from the Company under this Plan that
constitute deferred compensation under the 409A Regulations,
such right shall be no greater than the right of any unsecured
general creditor of the Company. Further, no provision of this
Plan shall be construed as subjecting the Plan, or any portion
thereof, to any provisions of the Employee Retirement Income
Security Act of 1974, as amended (ERISA), it being
the express intention of the Company that this Plan be so
construed.
h. Governing Law. The provisions of the
Plan and all Awards made hereunder shall be governed by and
interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law
principles.
Approvals
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Adopted by the Board of Directors on:
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Approved by the Stockholders on:
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C-14
EXHIBIT A
BREEZE-EASTERN CORPORATION 2012 EQUITY INCENTIVE PLAN
NOTICE OF STOCK OPTION AWARD
Unless otherwise defined herein, the terms defined in the
Breeze-Eastern Corporation 2012 Equity Incentive Plan shall have
the same defined meanings in this Notice of Stock Option Award
and the attached Stock Option Award Terms, which is incorporated
herein by reference (together, the Stock Option Award
Agreement). Terms not defined herein shall have their
respective meanings in the Plan.
Participant (the Participant)
«Name»
Grant
The undersigned Participant has been granted an Option to
purchase Common Stock of Breeze-Eastern Corporation (the
Company), subject to the terms and conditions of the
Plan and this Stock Option Award Agreement, as follows:
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Date of Grant
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«Grant_Date»
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Total Number of
Shares Granted
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«Shares_Granted»
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Vesting
Commencement
Date
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«Vesting_Date»
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Type of Option
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o Incentive
Stock
Option
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Exercise Price per Share
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$«Exercise_Price»
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o Non-Statutory
Option
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Total Exercise Price
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$«Total_Exercise_Price»
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Term/Expiration
Date
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«Expiration_Date»
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Vesting Schedule:
This Option shall be exercisable, in whole or in part, according
to the following vesting schedule:
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Number of Months (or years) of Service
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% of Grant (or # of Shares) Vested
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Vesting of this Option shall cease upon termination of service,
employment or otherwise (the Relationship) of the
Participant with the Company.
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Participant
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Company
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Signature
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By:
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Print Name
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Title
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2
BREEZE-EASTERN
CORPORATION 2012 EQUITY INCENTIVE PLAN
STOCK OPTION AWARD TERMS
1. Grant of Option. The Board hereby
grants to the Participant named in the Notice of Stock Option
Grant an option (the Option) to purchase the number
of Shares set forth in the Notice of Stock Option Award, at the
exercise price per Share set forth in the Notice of Stock Option
Grant (the Exercise Price), and subject to the terms
and conditions of the 2012 Equity Incentive Plan (the
Plan), which is incorporated herein by reference. In
the event of a conflict between the terms and conditions of the
Plan and this Stock Option Award Agreement, the terms and
conditions of the Plan shall prevail. For avoidance of doubt,
any reference in the Plan to an exception under a Stock Option
Award Agreement to any provision of the Plan, including, without
limitation, any provision of the Plan relating to a Change of
Control, shall be deemed not to be in conflict with any such
exception under a Stock Option Award Agreement.
If designated in the Notice of Stock Option Grant as an
Incentive Stock Option (ISO), this Option is
intended to qualify as an Incentive Stock Option as defined in
Section 422 of the Code. Nevertheless, to the extent that
it exceeds the $100,000 limitation rule of Code
Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option (NSO).
2. Exercise of Option.
a. Right to Exercise. This Option may be
exercised during its term in accordance with the Vesting
Schedule set out in the Notice of Stock Option Award and with
the applicable provisions of the Plan and this Award Agreement.
b. Method of Exercise. This Option shall
be exercisable by delivery of an exercise notice in the form
attached as Annex A (the Exercise
Notice) which shall state the election to exercise the
Option, the number of Shares with respect to which the Option is
being exercised, the Participants agreement to such other
representations and agreements as may be required by the
Company. The Exercise Notice shall be accompanied by payment of
the aggregate Exercise Price as to all Shares being exercised.
This Option shall be deemed to be exercised upon receipt by the
Company of such fully executed Exercise Notice accompanied by
payment of the aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of an Option
unless such issuance and such exercise complies with applicable
laws. Assuming such compliance, for income tax purposes the
Shares shall be considered transferred to the Participant on the
date on which the Option is exercised with respect to such
Shares.
3. Termination. This Option shall be
exercisable for three months after Participant ceases to be an
employee; provided, however, if the Relationship is
terminated by the Company for Cause, the Option shall terminate
immediately. Upon Participants death or Disability, this
Option may be exercised for twelve (12) months after the
Relationship ceases. In no event may Participant exercise this
Option after the Term/Expiration Date as provided above.
4. Restrictions on Exercise. This Option
may not be exercised until such time as the Plan has been
approved by the stockholders of the Company, or if the issuance
of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of
any applicable law.
1
5. Non-Transferability of Option. This
Option may not be transferred in any manner otherwise than by
will or by the laws of descent or distribution and may be
exercised during the lifetime of Participant only by
Participant. The terms of the Plan and this Stock Option Award
Agreement shall be binding upon the executors, committees,
heirs, successors and assigns of the Participant.
6. Term of Option. This Option may be
exercised only within the Term set out in the Notice of Stock
Option Award which Term may not exceed ten (10) years from
the Date of Grant, and may be exercised during such Term only in
accordance with the Plan and the terms of this Stock Option
Award Agreement.
7. United States Tax Consequences. Set
forth below is a brief summary as of the date of this Option of
some of the United States federal tax consequences of exercise
of this Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT A TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
a. Exercise of ISO. If this Option
qualifies as an Incentive Stock Option, there will be no regular
federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price will be
treated as an adjustment to the alternative minimum tax for
federal income tax purposes and may subject the Participant to
the alternative minimum tax in the year of exercise.
b. Exercise of Nonstatutory Stock
Option. There may be a regular federal income tax
liability upon the exercise of a Nonstatutory Stock Option. The
Participant will be treated as having received compensation
income (taxable at ordinary income tax rates) equal to the
excess, if any, of the Fair Market Value of the Shares on the
date of exercise over the Exercise Price. If the Participant is
an employee or a former employee, the Company will be required
to withhold from the Participants compensation or collect
from the Participant and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to
honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise.
c. Disposition of Shares. In the case of
a Nonstatutory Stock Option, if Shares are held for at least one
year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax
purposes. In the case of an Incentive Stock Option, if Shares
transferred pursuant to the Option are held for at least one
year after exercise and for at least two years after the Date of
Grant, any gain realized on disposition of the Shares will also
be treated as long-term capital gain for federal income tax
purposes. If Shares purchased under an Incentive Stock Option
are disposed of within one year after exercise or two years
after the Date of Grant, any gain realized on such disposition
will be treated as compensation income (taxable at ordinary
income rates) to the extent of the difference between the
Exercise Price and the lesser of (1) the Fair Market Value
of the Shares on the date of exercise, or (2) the sale
price of the Shares. Any additional gain will be taxed as
capital gain, short-term or long-term depending on the period
that the Incentive Stock Option Shares were held.
d. Notice of Disqualifying Disposition of Incentive
Stock Option Shares. If this Option is an
Incentive Stock Option, and if the Participant sells or
otherwise disposes of any of the Shares acquired pursuant to the
Incentive Stock Option on or before the later of (1) the
date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Participant shall
immediately notify the Company in writing of
2
such disposition. The Participant agrees that the Participant
may be subject to income tax withholding by the Company on the
compensation income recognized by the Participant.
e. Withholding. Pursuant to applicable
federal, state, local or foreign laws, the Company may be
required to collect income or other taxes on the grant of this
Option, the exercise of this Option, the lapse of a restriction
placed on this Option or the Shares issued upon exercise of this
Option, or at other times. The Company may require, at such time
as it considers appropriate, that the Participant pay the
Company the amount of any taxes which the Company may determine
is required to be withheld or collected, and the Participant
shall comply with the requirement or demand of the Company. In
its discretion, the Company may withhold Shares to be received
upon exercise of this Option or offset against any amount owed
by the Company to the Participant, including compensation
amounts, if in its sole discretion it deems this to be an
appropriate method for withholding or collecting taxes.
8. Entire Agreement; Governing Law. The
Plan is incorporated herein by reference. The Plan and this
Stock Option Award Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and
agreements of the Company and Participant with respect to the
subject matter hereof, and may not be modified (except as
provided herein and in the Plan) adversely to the
Participants interest except by means of a writing signed
by the Company and Participant. This agreement is governed by
the internal substantive laws but not the choice of law rules of
the State of Delaware.
9. No Guarantee of Continued
Service. PARTICIPANT ACKNOWLEDGES AND AGREES THAT
THE VESTING OF SHARES PURSUANT TO THE VESTING
SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING IN THE
RELATIONSHIP AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF
BEING ENGAGED, BEING GRANTED THIS OPTION OR ACQUIRING
SHARES HEREUNDER). PARTICIPANT FURTHER ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT
FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE IN ANY WAY WITH PARTICIPANTS RIGHT OR THE
COMPANYS RIGHT TO TERMINATE THE RELATIONSHIP AT ANY TIME,
WITH OR WITHOUT CAUSE.
Participant acknowledges receipt of a copy of the Plan and
represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to
all of the terms and provisions thereof. Participant has
reviewed the Plan and this Option in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing
this Option and fully understands all provisions of the Option.
Participant hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Committee upon any
questions arising under the Plan or this Option. Participant
further agrees to notify the Company upon any change in the
residence address indicated below.
3
ANNEX A
BREEZE EASTERN
CORPORATION. 2012 EQUITY INCENTIVE PLAN
EXERCISE/NOTICE
Breeze-Eastern Corporation
[Insert Address]
Attention: [President]
1. Exercise of Option. Effective as of
today, ,
201 , the undersigned (Participant)
hereby elects to exercise Participants option to
purchase shares
of the Common Stock (the Shares) of Breeze-Eastern
Corporation (the Company) under and pursuant to the
2012 Equity Incentive Plan (the Plan) and the Stock
Option Award Agreement
dated ,
201 (the Award Agreement).
2. Delivery of Payment. Purchaser
herewith delivers to the Company the full purchase price of the
Shares, as set forth in the Award Agreement, which purchase
price is as follows:
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Shares Exercised
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Per Share Exercise Price
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Aggregate Exercise Price
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3. Representations of
Participant. Participant acknowledges that
Participant has received, read and understood the Plan and the
Award Agreement and agrees to abide by and be bound by their
terms and conditions.
4. Rights as Stockholder. Until the
issuance of the Shares (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent
of the Company), no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the
Shares, notwithstanding the exercise of the Option. The Shares
shall be issued to the Participant as soon as practicable after
the Option is exercised. No adjustment shall be made for a
dividend or other right for which the record date is prior to
the date of issuance except as provided in Section 3(c) of
the Plan.
5. Tax Consultation. Participant
understands that Participant may suffer adverse tax consequences
as a result of Participants purchase or disposition of the
Shares. Participant represents that Participant has consulted
with any tax consultants Participant deems advisable in
connection with the purchase or disposition of the Shares and
that Participant is not relying on the Company for any tax
advice.
6. Successors and Assigns. The Company
may assign any of its rights under this Agreement to single or
multiple assignees, and this Agreement shall inure to the
benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement
shall be binding upon Participant and his or her heirs,
executors, Committees, successors and assigns.
7. Interpretation. Any dispute regarding
the interpretation of this Agreement shall be submitted by
Participant or by the Company forthwith to the Committee which
shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Committee shall be final and
binding on all parties.
1
8. Governing Law; Severability. This
Agreement is governed by the laws of the state of Delaware
without regard to any principles in respect of conflicts of laws.
9. Entire Agreement. The Plan and Award
Agreement are incorporated herein by reference. This Agreement,
the Plan, the Award Agreement (including all exhibits) and the
Investment Representation Statement constitute the entire
agreement of the parties with respect to the subject matter
hereof and supersede in their entirety all prior undertakings
and agreements of the Company and Participant with respect to
the subject matter hereof, and may not be modified adversely to
the Participants interest except by means of a writing
signed by the Company and Participant.
[Signatures appear on next page.]
2
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Submitted by:
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Accepted by:
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PARTICIPANT
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COMPANY
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Signature
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By
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Print Name
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Title
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Address:
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Address:
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Date Received
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BREEZE-EASTERN CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF BREEZE-EASTERN CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned revokes all previous proxies and constitutes and appoints D. Michael Harlan
and Mark D. Mishler, and each of them, his or her true and lawful agent and proxy with full power
of substitution in each, to represent and to vote on behalf of the undersigned all of the shares of
common stock of Breeze-Eastern Corporation (the Company) which the undersigned is entitled to
vote at the Annual Meeting of Stockholders of the Company to be held at 35 Melanie Lane, Whippany,
New Jersey 07981, at 10:00 a.m., local time, on October 6,
2011, and at any adjournment(s) or
postponement(s) thereof, upon the following proposals more fully described in the Notice of Annual
Meeting of Stockholders and Proxy Statement for the Annual Meeting (receipt of which is hereby
acknowledged).
This proxy when properly executed will be voted in the manner directed herein by the
undersigned stockholder. If no direction is made, this proxy will be voted FOR proposals 1, 2, 3, 4
and 5 which have been proposed by our Board of Directors, and in the proxies discretion, upon
other matters as may properly come before the Annual Meeting.
(continued and to be signed on reverse side)
Please Detach and Mail In the Envelope Provided
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1.
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x Please mark your votes as indicated in this example.
ELECTION OF DIRECTORS. |
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FOR
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WITHHELD |
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Nominees: |
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VOTE FOR all the nominees listed;
except vote withheld from the
following nominee(s)
(if any):
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01 William H. Alderman |
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02 Robert J. Kelly |
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03 William J. Recker |
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04 Russell M. Sarachek |
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05 William M. Shockley |
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06 Frederick Wasserman |
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07 D. Michael Harlan, Jr |
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FOR
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AGAINST
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ABSTAIN |
2.
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RATIFYING THE APPOINTMENT OF
MARCUM LLP AS THE COMPANYS
INDEPENDENT AUDITOR FOR THE FISCAL
YEAR ENDING MARCH 31, 2012 |
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FOR
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AGAINST
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ABSTAIN |
3.
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APPROVING THE ADOPTION OF THE
STOCKHOLDER RIGHTS PLAN ADOPTED BY
THE BOARD OF DIRECTORS
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FOR
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AGAINST
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ABSTAIN |
4.
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APPROVING THE AMENDMENT TO OUR
CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF SHARES OF
COMMON STOCK AUTHORIZED FOR ISSUANCE
TO 100,000,000 SHARES
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FOR
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AGAINST
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ABSTAIN |
5.
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APPROVING OUR 2012 INCENTIVE
COMPENSATION PLAN
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IN HIS OR HER DISCRETION, THE PROXY IS AUTHORIZED TO VOTE UPON OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE ANNUAL MEETING.
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I WILL ATTEND THE ANNUAL MEETING. |
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE.
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Signature of Stockholder
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Signature of Stockholder
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Dated:
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2011 |
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IF HELD JOINTLY |
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Note: This proxy must be signed exactly as the name appears hereon. When shares are held
by joint tenants, both should sign. If the signer is a corporation, please sign full corporate name
by duly authorized officer, giving full title as such. If the signer is a partnership, please sign
in partnership name by authorized person.