FIRST AMENDMENT TO RIGHTS AGREEMENT
EXHIBIT 4.2
FIRST AMENDMENT TO RIGHTS AGREEMENT
THIS FIRST AMENDMENT TO RIGHTS AGREEMENT (the “Amendment”) is made as of June 15, 2006,
between The Allied Defense Group, Inc., formerly known as Allied Research Corporation, a Delaware
corporation (the “Company”), and Mellon Investor Services, LLC, a New Jersey limited liability
company (the “Rights Agent”).
WHEREAS, the Company and the Rights Agent are parties to that certain Rights Agreement dated
as of June 6, 2001 (the “Original Rights Agreement”);
WHEREAS, Section 26 of the Original Rights Agreement provides, in part, that for so long as
the Rights (as defined in the Agreement) are redeemable, the Agreement may be supplemented or
amended without the approval of holders of the Rights;
WHEREAS, the Rights are currently redeemable; and
WHEREAS, the Board of Directors of the Company has determined in good faith that the
amendments to the Agreement set forth herein are desirable and, pursuant to Section 26 of the
Agreement, has duly authorized such amendments to the Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Rights Agent hereby agree as follows:
1. DEFINITIONS. Except as otherwise set forth in this Amendment, each capitalized term used
in this Amendment shall have the meaning for such term set forth in the Original Rights Agreement.
2. DEFINITION OF AGREEMENT. From and after the date hereof, all references in the Original
Rights Agreement to the “Agreement” shall mean and refer to the Original Rights Agreement, as
modified by this Amendment.
3. DEFINITION OF ACQUIRING PERSON. Section 1(a) of the Original Rights Agreement is hereby
amended by deleting all references therein to “15%” and replacing them with “20%.”
4. REVIEW BY INDEPENDENT DIRECTORS. The Original Rights Agreement is hereby amended by adding
the following new Section 34:
Section 34. Review by Independent Directors. All members
of the Board of Directors of the Company who are deemed
“independent” under the rules of the AMEX shall review this
Agreement at least once every three (3) years, and prior to the
occurrence of any Distribution Date, to determine whether this
Agreement should be
continued, modified or terminated. Following each such
determination, the independent members of the Board of Directors of
the Company shall take such actions as they deem appropriate to
reflect their determination. The first such determination shall
take place no later than January 31, 2008.
5. COUNTERPARTS. This Amendment may be executed in one or more counterparts, each of which
shall constitute an original and all of which together shall constitute but one original;
provided, however, this Amendment shall not be effective unless and until signed by the Company and
the Rights Agent.
6. GOVERNING LAW. This Amendment 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 internal laws of Delaware applicable to contracts to be made and peformed entirely within
Delaware; provided, however, that all provisions regarding the rights, duties and obligations of
the Rights Agent shall be governed by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed entirely within such State.
7. SEVERABILITY. If any term, provision, covenant or restriction of this Amendment 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 Amendment shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
8. EFFECTIVE DATE. This Amendment shall become effective as of the date first written
above.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
attested as of the date first written above.
| THE ALLIED DEFENSE GROUP, INC. | ||||||
| By: | ||||||
| President and Chief Executive Officer | ||||||
| MELLON INVESTOR SERVICES, LLC, as Rights Agent | ||||||
| By: | ||||||
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