SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Hardinge Inc.
(Exact name of registrant as specified in its charter)
New York 16-047270
(State of incorporation or organization) (I.R.S. Employer Identification No.)
One Hardinge Drive, Elmira, NY 14902-1507
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Stock Purchase Rights
(Title of class)
An Exhibit Index Appears on Page 8
Page 1 of 84 Pages
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Item 1. Description of Registrant's Securities to Be Registered.
On May 16, 1995, the Board of Directors of Hardinge Inc. (the
"Company") declared a distribution of one Right for each outstanding share of
Common Stock, par value $.01 per share (the "Company Common Stock"), to
stockholders of record at the close of business on May 30, 1995 and for each
share of Company Common Stock issued (including shares distributed from
Treasury) by the Company thereafter and prior to the Distribution Date. Each
Right entitles the registered holder, subject to the terms of the Rights
Agreement, to purchase from the Company one one-hundredth of a share (a "Unit")
of Series A Preferred Stock, par value $.01 per share (the "Preferred Stock"),
at a Purchase Price of $80.00 per Unit, subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement between the Company
and American Stock Transfer and Trust Company as Rights Agent (the "Rights
Agreement").
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the Distribution Date will occur upon the earlier of (i) 10 business days
following a public announcement (the date of such announcement being the "Stock
Acquisition Date") that a person or group of affiliated or associated persons
(other than the Company, any Subsidiary of the Company or any employee benefit
plan of the Company or such Subsidiary) (an "Acquiring Person") has acquired,
obtained the right to acquire or otherwise obtained beneficial ownership of 20%
or more of the then outstanding shares of Company Common Stock, and (ii) 10
business days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person becomes an Acquiring Person)
following the commencement of a tender offer or exchange offer that would result
in a person or group beneficially owning 30% or more of the then outstanding
shares of Company Common Stock. Until the Distribution Date, (i) the Rights will
be evidenced by Company Common Stock certificates and will be transferred with
and only with such Company Common Stock certificates, (ii) new Company Common
Stock certificates issued after May 29, 1995 (also including shares distributed
from Treasury) will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates representing
outstanding Company Common Stock will also constitute the transfer of the Rights
associated with the Company Common Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on the tenth anniversary of the Rights Agreement
unless earlier redeemed by the Company as described below.
As soon as practicable after any Distribution Date, Rights
Certificates will be mailed to holders of record of Company Common Stock as of
the close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
Page 2 of 84 Pages
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In the event that (i) the Company is the surviving corporation in a
merger with an Acquiring Person and shares of Company Common Stock shall remain
outstanding, (ii) a Person becomes the beneficial owner of 20% or more of the
then outstanding shares of Company Common Stock, (iii) an Acquiring Person
engages in one or more "self-dealing" transactions as set forth in the Rights
Agreement, or (iv) during such time as there is an Acquiring Person, an event
occurs which results in such Acquiring Person's ownership interest being
increased by more than 1% by means of a reverse stock split or
recapitalization), then, in each such case, each holder of a Right will
thereafter have the right to receive, upon exercise, Units of Preferred Stock
(or, in certain circumstances, Company Common Stock, cash, property or other
securities of the Company) having a value equal to two times the exercise price
of the Right. The exercise price is the Purchase Price multiplied by the number
of Units of Preferred Stock issuable upon exercise of a Right prior to the
events described in this paragraph. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in this paragraph, all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be null and
void.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction and the Company is not the surviving corporation, (ii) any Person
consolidates or merges with the Company and all or part of the Company Common
Stock is converted or exchanged for securities, cash or property of any other
Person or (iii) 50% or more of the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have been
voided as described above) shall thereafter have the right to receive, upon
exercise, common stock of the Acquiring Person having a value equal to two times
the exercise price of the Right.
The Purchase Price payable, and the number of Units of Preferred
Stock issuable, upon exercise of the Rights are subject to adjustment from time
to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to the
holders of the Preferred Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or warrants (other
than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units. In lieu thereof,
an adjustment in cash may be made based on the market price of the Preferred
Stock prior to the date of exercise.
At any time until ten business days following the Stock Acquisition
Date, the Company's Board of Directors may redeem the Rights in whole, but not
in part, at a price of
Page 3 of 86 Pages
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$.01 per Right (the "Redemption Price"), payable, at the election of the Board,
in cash or shares of Company Common Stock. Immediately upon the action of the
Company's Board of Directors ordering the redemption of the Rights, the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Units of Preferred Stock (or other consideration).
Any of the provisions of the Rights Agreement may be amended at any
time prior to the Distribution Date. After the Distribution Date, the provisions
of the Rights Agreement may be amended in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption shall
be made at such time as the Rights are not redeemable.
A total of 250,000 shares of Preferred Stock will be reserved for
issuance upon exercise of the Rights. The Units of Preferred Stock that may be
acquired upon exercise of the Rights will be nonredeemable and will be junior to
any other series or class of preferred stock that may be issued by the Company
unless the terms of any such series or class shall provide otherwise.
Each Unit of Preferred Stock will have a minimum preferential
quarterly dividend rate of $.01 per Unit but will, in any event, be entitled to
a dividend equal to the per share dividend declared on the Company Common Stock.
In the event of liquidation, the holder of a Unit of Preferred Stock
will receive a preferred liquidation payment equal to the greater of per Unit
and the per share amount paid in respect of a share of Company Common Stock.
Each Unit of Preferred Stock will have one vote, voting together with
the Company Common Stock. In addition, the holders of Units of Preferred Stock,
voting as a separate class, shall be entitled to elect two directors if
dividends on the Preferred Stock are in arrears for six fiscal quarters. Holders
of Units of Preferred Stock shall retain such additional voting rights until
such time as all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current period on all Units of Preferred Stock have
been declared and paid or set aside for payment.
Page 4 of 84 Pages
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In the event of any merger, consolidation or other transaction in
which shares of Company Common Stock are exchanged, each Unit of Preferred Stock
will be entitled to receive the per share amount paid in respect of each share
of Company Common Stock.
The rights of holders of the Preferred Stock to dividends,
liquidation and voting, and in the event of mergers and consolidations, are
protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Unit of Preferred Stock should
approximate the economic value of one share of Company Common Stock.
The Rights may have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Company's Board of Directors unless the
offer is conditioned on a substantial number of Rights being acquired. However,
the Rights should not interfere with any merger or other business combination
approved by the Company's Board of Directors because the Rights may be redeemed
by the Company at $.01 per Right at any time on or prior to the tenth business
day following the Stock Acquisition Date (subject to extension by the Company's
Board of Directors). Thus, the Rights are intended to encourage persons who may
seek to acquire control of the Company to initiate such an acquisition through
negotiations with the Board of Directors. However, the effect of the Rights may
be to discourage a third party from making a partial tender offer or otherwise
attempting to obtain a substantial equity position in the equity securities of,
or seeking to obtain control of, the Company. To the extent any potential
acquirors are deterred by the Rights, the Rights may have the effect of
preserving incumbent management in office.
The Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit A the Form of
Rights Certificate, is attached hereto as Exhibit 1 and is incorporated herein
by reference. The foregoing description of the Rights does not purport to be
complete and is qualified in its entirety by reference to such Exhibit 1.
Item 2. Exhibits.
1. Form of Rights Agreement, dated as of May 16, 1995, between
Hardinge Inc. and American Stock Transfer and Trust Company which includes the
Form of Rights Certificate as Exhibit A, the Summary of Rights to Purchase
Preferred Stock as Exhibit B and the Form of Certificate of Designation for the
Preferred Stock as Exhibit C. Pursuant to the Rights Agreement, the Rights
Certificates will not be mailed until after (i) 10 business days following a
public announcement that a person or group of affiliated or associated persons
has acquired, or obtained the right to acquire, beneficial ownership of 20% or
more of the outstanding shares of Company Common Stock or (ii) 10 business days
following the commencement of, or the announcement of the intention to commence,
a tender offer that
Page 5 of 84 Pages
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would result in a person or group beneficially owning 30% or
more of the then outstanding shares of Company Common Stock.
2. Form of Press Release dated May 16, 1995.
3. Form of Letter to Stockholders of Hardinge Inc. regarding the
adoption of the Rights Plan pursuant to the Rights Agreement.
Page 6 of 84 Pages
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
By /s/Malcom L. Gibson
Malcom L. Gibson
Senior Vice President and
Chief Financial Officer
Date: May 23, 1995
Page 7 of 84 Pages
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EXHIBIT INDEX
Exhibit Page
No. Description No.
1 Form of Rights Agreement dated as of 10
May 16, 1995, between Hardinge Inc. and American Stock
Transfer and Trust Company, which includes the Form of
Rights Certificate as Exhibit A, the Summary of Rights to
Purchase Preferred Stock as Exhibit B and the Form of
Certificate of Amendment of the Certificate of Incorporation as
Exhibit C.
2 Form of Press Release dated May 16, 1995. 82
3 Form of Letter to Stockholders of Hardinge Inc. 83
regarding the adoption of the Rights Plan pursuant to the Rights
Agreement.
Page 8 of 84 Pages
EXHIBIT 1
---------
HARDINGE INC.
and
AMERICAN STOCK TRANSFER
AND TRUST COMPANY
Rights Agent
-------------------------
Rights Agreement
Dated as of May 16, 1995
Page 9 of 84 Pages
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TABLE OF CONTENTS
Page
SECTION 1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Appointment of Rights Agent. . . . . . . . . . . . . . . . . . . 5
SECTION 3. Issue of Rights Certificates . . . . . . . . . . . . . . . . . . 5
SECTION 4. Form of Rights Certificates. . . . . . . . . . . . . . . . . . . 7
SECTION 5. Countersignature and Registration. . . . . . . . . . . . . . . . 7
SECTION 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 8. Cancellation and Destruction of Rights Certificates. . . . . . . 11
SECTION 9. Reservation and Availability of Capital Stock. . . . . . . . . . 11
SECTION 10. Preferred Stock Record Date. . . . . . . . . . . . . . . . . . . 12
SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 12. Certificate of Adjusted Purchase Price or Number of
Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 14. Fractional Rights and Fractional Shares . . . . . . . . . . . . 26
SECTION 15. Rights of Action. . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 16. Agreement of Rights Holders . . . . . . . . . . . . . . . . . . 27
Page 10 of 84 Pages
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ii
SECTION 17. Rights Certificate Holder Not Deemed a Shareholder. . . . . . . 28
SECTION 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . 28
SECTION 19. Merger or Consolidation or Change of Name of Rights
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . . . . 29
SECTION 21. Change of Rights Agent. . . . . . . . . . . . . . . . . . . . . 32
SECTION 22. Issuance of New Rights Certificates . . . . . . . . . . . . . . 33
SECTION 23. Redemption and Termination. . . . . . . . . . . . . . . . . . . 33
SECTION 24. Notice of Certain Events. . . . . . . . . . . . . . . . . . . . 34
SECTION 25. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 26. Supplements and Amendments. . . . . . . . . . . . . . . . . . . 36
SECTION 27. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 28. Determinations and Actions by the Board of Directors, etc.. . . 36
SECTION 29. Benefits of this Agreement. . . . . . . . . . . . . . . . . . . 37
SECTION 30. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 31. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 32. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 33. Descriptive Headings. . . . . . . . . . . . . . . . . . . . . . 38
SECTION 34. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Page 11 of 84 Pages
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1
RIGHTS AGREEMENT
----------------
RIGHTS AGREEMENT, dated as of May 16, 1995 (the "Agreement"), between
Hardinge Inc., a New York corporation (the "Company"), and American Stock
Transfer and Trust Company, a New York corporation (the "Rights Agent").
WHEREAS, effective May 16, 1995 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized and declared a
distribution of one Right for each share of the Class A Common Stock, par value
$5.00 per share, and the Class B Common Stock, par value $5.00 per share, of the
Company (each such share, a share of "Company Common Stock") outstanding at the
Close of Business on May 30, 1995 (the "Record Date"), and has authorized the
issuance of one Right (as such number may hereinafter be adjusted pursuant
hereto) for each share of Company Common Stock issued between the Record Date
(whether originally issued or delivered from the Company's treasury) and, except
as otherwise provided in Section 22, the Distribution Date, each Right initially
representing the right to purchase upon the terms and subject to the conditions
hereinafter set forth one Unit of Series A Preferred Stock (the "Rights");
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 (other than the
Company, any Subsidiary of the Company, any employee benefit plan
maintained by the Company or any of its Subsidiaries or any trustee or
fiduciary with respect to such plan acting in such capacity) which shall
be the Beneficial Owner of 20% or more of the shares of Company Common
Stock then outstanding.
Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" solely as the result of an acquisition of Company
Common Stock by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially
owned by such Person to or above 20% of the shares of Company Common Stock
then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of the 20% or more of the Company Common Stock then
outstanding by reason of share purchases by the Company and shall, after
such share purchases by the Company and at a time when such Person is the
Beneficial Owner of 20% or more of the Company Common Stock then
outstanding, become the Beneficial Owner of any additional shares (other
than pursuant to a stock split, stock dividend, or similar transaction) of
Company Common Stock, then such Person shall be deemed to be an "Acquiring
Person".
Page 12 of 84 Pages
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2
Notwithstanding the foregoing, "Acquiring Person" shall not
include the Chemung Canal Trust Company ("CCT") unless and until CCT,
together with its Affiliates and Associates, becomes, after the Close of
Business on the Rights Dividend Declaration Date, the Beneficial Owner of
more than the Grandfathered Percentage of the shares of Company Common
Stock then outstanding; provided, however, that if CCT shall, solely as a
result of acting as trustee or fiduciary with respect to a testamentary
trust or with respect to any other trust or fiduciary arrangement which
the Board of Directors of the Company shall approve in advance (but only
to the extent of Beneficial Ownership which is so approved with respect
thereto), become the Beneficial Owner of more than the Grandfathered
Percentage of Company Common Stock then outstanding, then CCT shall not be
deemed to be an "Acquiring Person."
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own", any securities:
(i) of which such Person or any of such Person's
Affiliates or Associates is considered to be a "beneficial owner"
under Rule 13d-3 of the General Rules and Regulations under the
Exchange Act (the "Exchange Act Regulations") as in effect on the
date hereof; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own", any securities
under this subparagraph (i) as a result of an agreement, arrangement
or understanding to vote such securities if such agreement,
arrangement or understanding (A) arises solely from a revocable
proxy given in response to a proxy or consent solicitation made
pursuant to, and in accordance with, the applicable provisions of
the Exchange Act and the Exchange Act Regulations, and (B) is not
reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report);
(ii) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate of such other
Person) with which such Person (or any of such Person's Affiliates
or Associates) has any agreement, arrangement or understanding
(whether or not in writing), for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (i) of this definition) or disposing of such
securities; or
Page 13 of 84 Pages
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3
(iii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time or upon the satisfaction of conditions) 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
under this definition a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own", (A) securities tendered
pursuant to a tender or exchange offer made in accordance with
Exchange Act Regulations by such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for purchase or exchange, (B) securities that may be issued upon
exercise of Rights at any time prior to the occurrence of a
Triggering Event, or (C) securities that may be issued upon exercise
of Rights from and after the occurrence of a Triggering Event, which
Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or pursuant
to Section 3(c) or Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) hereof in connection with an adjustment
made with respect to any Original Rights.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in New York City are
authorized or obligated by law or executive order to close.
(e) "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.
(f) "Common Stock" of any Person other than the Company shall
mean the capital stock of such Person with the greatest voting power, or,
if such Person shall have no capital stock, the equity securities or other
equity interest having power to control or direct the management of such
Person.
(g) "Company Common Stock" has the meaning set forth in the
Whereas Clause.
(h) "Distribution Date" has the meaning set forth in Section
3(a).
(i) "Expiration Date" has the meaning set forth in Section
7(a).
Page 14 of 84 Pages
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4
(j) "Grandfathered Percentage" shall mean, with respect to CCT,
the percentage of the outstanding Company Common Stock that CCT
Beneficially Owned on the Rights Dividend Declaration Date, plus five
percentage points.
(k) "Person" shall mean any individual, partnership, firm,
corporation, association, trust, unincorporated organization or other
entity, as well as any syndicate or group deemed to be a person under
Section 14(d)(2) of the Exchange Act.
(l) "Preferred Stock" shall mean the Series A Preferred Stock,
par value $.01 per share, of the Company having the voting powers,
designation, preferences and relative, participating, optional or other
special rights and qualifications, limitations and restrictions described
in the Certificate of Amendment of Certificate of Incorporation set forth
as Exhibit C hereto.
(m) "Purchase Price" has the meaning set forth in Section 7(b).
(n) "Record Date" has the meaning set forth in the Whereas
Clause.
(o) "Right" has the meaning set forth in the Whereas Clause.
(p) "Rights Certificate" has the meaning set forth in Section
3(a).
(q) "Rights Dividend Declaration Date" has the meaning set
forth in the Whereas Clause.
(r) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii)(A), (B) or (C) hereof.
(s) "Section 13 Event" shall mean any event described in clause
(x), (y) or (z) of Section 13(a) hereof.
(t) "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.
(u) "Subsidiary" shall mean, with reference to any Person, any
other Person of which 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 Person, or otherwise controlled by such
first-mentioned Person.
Page 15 of 84 Pages
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5
(v) "Summary of Rights" has the meaning set forth in Section
3(b).
(w) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
(x) "Unit" has the meaning set forth in Section 7(b).
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.
With the consent of the Rights Agent, the Company may from time to time appoint
such Co-Rights Agents as it may deem necessary or desirable.
SECTION 3. Issue of Rights Certificates. (a) Until the earlier of (i)
the Close of Business on the tenth Business Day after the Stock Acquisition
Date, and (ii) the Close of Business on the tenth Business Day (or such later
date as may be determined by action of a majority of the Company's Board of
Directors prior to such time and of which the Company will give the Rights Agent
prompt written notice) after the date that a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan maintained by the Company or any of its Subsidiaries or any trustee
or fiduciary with respect to such plan acting in such capacity) is first
published or sent or given within the meaning of Rule 14d-4(a) of the Exchange
Act Regulations or any successor rule, if upon consummation thereof such Person
would be the Beneficial Owner of 30% or more of the shares of Company Common
Stock then outstanding (the earlier of (i) and (ii) above being the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for shares of
Company Common Stock registered in the names of the holders of shares of Company
Common Stock as of and subsequent to the Record Date (which certificates for
shares of Company Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Company Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of shares of
Company Common Stock as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each share of Company Common Stock so
held, subject to adjustment as provided herein. In the event that an adjustment
in the number of Rights per share of Company Common Stock has been made pursuant
to Section 11(p) hereof, at the time of distribution of the Rights Certificates,
the Company may 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
Page 16 of 84 Pages
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6
paid in lieu of any fractional Rights. As of and after the Distribution Date,
the Rights will be evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights to Purchase Preferred Stock, in a form
which may be appended to certificates that represent shares of Company Common
Stock, in substantially the form attached hereto as Exhibit B (the "Summary of
Rights"), by first-class, postage prepaid mail, to each record holder of shares
of Company 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.
(c) Rights shall, without any further action, be issued in respect of
all shares of Company Common Stock which are issued (including any shares of
Company Common Stock held in treasury) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date. Certificates,
representing such shares of Company Common Stock, issued after the Record Date
shall bear the following legend:
"This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Hardinge, Inc.
(the "Company") and American Stock Transfer and Trust Company (the "Rights
Agent") dated as of May 16, 1995 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy of which is
on file at the principal office of the stock transfer administration
office of the Rights Agent. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. 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 promptly
after receipt of a written request therefor. Under certain circumstances
set forth in the Rights Agreement, Rights issued to, or held by, any
Person who is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement),
whether currently held by or on behalf of such Person or by any subsequent
holder, may become null and void."
With respect to certificates representing shares of Company Common Stock
(whether or not such certificates include the foregoing legend or have appended
to them the Summary of Rights), until the earlier of the Distribution Date and
the Expiration Date, the Rights associated with the shares of Company Common
Stock represented by such certificates shall be evidenced by such certificates
alone and registered holders of the shares of Company Common Stock shall also be
the registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the shares of Company Common Stock represented by such certificates.
Page 17 of 84 Pages
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7
SECTION 4. Form of Rights Certificates. (a) The Rights Certificates
(and the forms of election to purchase, assignment and certificate to be printed
on the reverse thereof) shall each be substantially in the form set forth in
Exhibit A 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 on
which the Rights may from time to time be listed or to conform to usage. Subject
to the provisions of Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of Units of Preferred
Stock as shall be set forth therein at the price set forth therein, 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) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or such Associate or Affiliate) or to any
Person with whom such Acquiring Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding either the
transferred Rights, shares of Company Common Stock or the Company or (B) a
transfer which a majority of the Company's Board of Directors has determined to
be part of a plan, arrangement or understanding which has as a primary purpose
or effect the avoidance of Section 7(e) hereof shall, upon the written direction
of a majority of the Company's Board of Directors, contain (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). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the circumstances
specified in Section 7(e) of such Agreement.
SECTION 5. Countersignature and Registration. (a) Rights Certificates
shall be executed on behalf of the Company by its Chairman of the Board, the
President or one of its Senior Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the
Page 18 of 84 Pages
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8
Rights Certificates may be manual or 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
countersignature of such Rights Certificates 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 signature of an authorized signatory, 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 will 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.
SECTION 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (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
may be transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to purchase a like
number of Units of Preferred Stock (or, following a Triggering Event, 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 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 Section 4(b), Section 7(e) and Section 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 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.
Page 19 of 84 Pages
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9
(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) Prior to the earlier of (i) the Close of Business on the tenth
anniversary hereof (the "Final Expiration Date"), and (ii) the time at which the
Company's Board of Directors orders the redemption of the Rights as provided in
Section 23 hereof (the earlier of (i) and (ii) being the "Expiration Date"), the
registered holder of any Rights Certificate may, subject to the provisions of
Sections 7(e) and 9(c) hereof, exercise the Rights evidenced thereby 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 aggregate
Purchase Price (as hereinafter defined) for the number of Units of Preferred
Stock (or, following a Triggering Event, other securities, cash or other assets,
as the case may be) for which such surrendered Rights are then exercisable.
(b) The purchase price for each one one-hundredth of a share (each
such one one-hundredth of a share being a "Unit") of Preferred Stock upon
exercise of Rights shall be $80.00, subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof (such purchase price, as so adjusted,
being the "Purchase Price"), and shall be payable in accordance with paragraph
(c) below.
(c) As promptly as practicable following the occurrence of the
Distribution Date, the Company shall deposit with a corporation in good standing
organized under the laws of the United States or any State of the United States,
which is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or state
authority (such institution being the "Depositary Agent"), certificates
representing the shares of Preferred Stock that may be acquired upon exercise of
the Rights and shall cause such Depositary Agent to enter into an agreement
pursuant to which the Depositary Agent shall issue receipts representing
interests in the shares of Preferred Stock so deposited. Upon receipt of a
Rights Certificate representing exercisable Rights, with the form of election to
purchase and the certificate duly executed, accompanied by payment, with respect
to each Right so exercised, of the Purchase Price for the Units of Preferred
Stock (or, following a Triggering Event, other securities, cash or other assets,
as
Page 20 of 84 Pages
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10
the case may be) to be purchased thereby as set forth below and an amount equal
to any applicable transfer tax or evidence satisfactory to the Company of
payment of such tax, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) requisition from the Depositary Agent depositary receipts
representing such number of Units of Preferred Stock as are to be purchased and
the Company will direct the Depositary Agent to comply with such request, (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 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 Company
Common Stock, other securities of the Company, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such Company Common Stock, other securities, cash
and/or other property are available for distribution by the Rights Agent, if and
when appropriate. 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 Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of any 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) which becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and which receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or any such Associate or Affiliate) or to any Person with
whom the Acquiring Person (or such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding the transferred Rights, shares
of Company Common Stock or the Company or (B) a transfer which a majority of the
Company's Board of Directors has determined to be part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall be null and void without any further action, and no holder
of such Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company shall
use all reasonable efforts to ensure that the
Page 21 of 84 Pages
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11
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights or any other Person as a result
of its failure to make any determination under this Section 7(e) or such Section
4(b) with respect to an Acquiring Person or its Affiliates, Associates or
transferees.
(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 by such registered holder unless such
registered holder shall have (i) 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 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 at all times prior to the Expiration Date cause to be reserved and
kept available, out of its authorized and unissued shares of Preferred Stock,
the number of shares of Preferred Stock that, as provided in this Agreement,
will 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 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) If the shares of Preferred Stock to be issued and delivered upon
the exercise of the Rights may be listed on any national securities exchange,
the Company shall during the period from the Distribution Date through the
Expiration Date use its best efforts to cause all securities reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
Page 22 of 84 Pages
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12
(c) The Company shall use its best efforts (i) as soon as practicable
following the occurrence of a Section 11(a)(ii) Event and a determination by the
Company in accordance with Section 11(a)(iii) hereof of the consideration to be
delivered by the Company upon exercise of the Rights or, if so required by law,
as soon as practicable following the Distribution Date (such date being the
"Registration Date"), to file a registration statement on an appropriate form
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities that may be acquired upon exercise of the Rights (the
"Registration Statement"), (ii) to cause the Registration Statement to become
effective as soon as practicable after such filing, (iii) to cause the
Registration Statement to continue to be effective (and to include a prospectus
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 the Registration Statement, and (B) the Expiration Date and (iv) to
take as soon as practicable following the Registration Date such action as may
be required to ensure that any acquisition of securities upon exercise of the
Rights complies with any applicable state securities or "blue sky" laws.
(d) The Company shall take such action as may be necessary to ensure
that all shares of Preferred Stock (and, following the occurrence of a
Triggering Event, any 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, duly and validly authorized and issued and fully
paid and non-assessable.
(e) The Company shall pay any documentary, stamp or transfer tax
imposed in connection with the issuance or delivery of the Rights Certificates
or upon the exercise of Rights; provided, however, the Company shall not be
required to pay any such tax imposed in connection with the issuance or delivery
of Units of Preferred Stock, or any certificates or depositary receipts for such
Units of Preferred Stock (or, following the occurrence of a Triggering Event,
any other securities, cash or assets, 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 for Units of Preferred Stock (or,
following the occurrence of a Triggering Event, any other securities, cash or
assets, 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 shall have been paid
(any such tax being payable by the holder of such Rights Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
SECTION 10. Preferred Stock Record Date. Each Person in whose name
any certificate for Units of Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Units of
Preferred Stock (or, following the occurrence of a Triggering Event, other
securities) represented thereby on, and such
Page 23 of 84 Pages
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13
certificate 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) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or,
following the occurrence of a Triggering Event, other securities) transfer books
of the Company are closed, such Person shall be deemed to have become the record
holder of such securities on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock (or, following the
occurrence of a Triggering Event, other securities) transfer books of the
Company are open and, further provided, however, that if delivery of Units of
Preferred Stock is delayed pursuant to Section 9(c) hereof, such Persons shall
be deemed to have become the record holders of such Units of Preferred Stock
only when such Units 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 shareholder of the Company with respect to
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.
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 date of
this Agreement (A) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock into a smaller number of shares, or (D) issue
any shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a), 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
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 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. If an event occurs which
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.
Page 24 of 84 Pages
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(ii) In the event:
(A) any Acquiring Person or any Associate or Affiliate of
any Acquiring Person, at any time after the date of this Agreement,
directly or indirectly, (1) shall merge into the Company or otherwise
combine with the Company and the Company shall be the continuing or
surviving corporation of such merger or combination and Company
Common Stock shall remain outstanding and unchanged, (2) shall, in
one transaction or a series of transactions, transfer any assets to
the Company or to any of its Subsidiaries in exchange (in whole or in
part) for shares of Company Common Stock, for other equity securities
of the Company or any such Subsidiary, or for securities exercisable
for or convertible into shares of equity securities of the Company or
any of its Subsidiaries (whether Company Common Stock or otherwise)
or otherwise obtain from the Company or any of its Subsidiaries, with
or without consideration, any additional shares of such equity
securities or securities exercisable for or convertible into such
equity securities (other than pursuant to a pro rata distribution to
all holders of Company Common Stock), (3) shall sell, purchase,
lease, exchange, mortgage, pledge, transfer or otherwise acquire or
dispose of, in one transaction or a series of transactions, to, from
or with the Company or any of its Subsidiaries or any employee
benefit plan maintained by the Company or any of its Subsidiaries or
any trustee or fiduciary with respect to such plan acting in such
capacity, assets (including securities) on terms and conditions less
favorable to the Company or such Subsidiary or plan than those that
could have been obtained in arm's-length negotiations with an
unaffiliated third party, other than pursuant to a transaction set
forth in Section 13(a) hereof, (4) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or dispose
of, in one transaction or a series of transactions, to, from or with
the Company or any of the Company's Subsidiaries or any employee
benefit plan maintained by the Company or any of its Subsidiaries or
any trustee or fiduciary with respect to such plan acting in such
capacity (other than transactions, if any, consistent with those
engaged in, as of the date hereof, by the Company and such Acquiring
Person or such Associate or Affiliate), assets (including securities)
having an aggregate fair market value of more than $5,000,000, other
than pursuant to a transaction set forth in Section 13(a) hereof, (5)
shall sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire or dispose of, in one transaction or a series of
transactions, to, from or with the Company or any of its Subsidiaries
or any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan
acting in such capacity, any material trademark or material service
mark, other than pursuant to a transaction set forth in Section 13(a)
hereof, (6) shall receive, or any designee, agent or representative
Page 25 of 84 Pages
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15
of such Acquiring Person or any Affiliate or Associate of such
Acquiring Person shall receive, any compensation from the Company or
any of its Subsidiaries other than compensation for full-time
employment as a regular employee at rates in accordance with the
Company's (or its Subsidiaries') past practices, or (7) shall receive
the benefit, directly or indirectly (except proportionately as a
holder of Company Common Stock or as required by law or governmental
regulation), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantage
provided by the Company or any of its Subsidiaries or any employee
benefit plan maintained by the Company or any of its Subsidiaries or
any trustee or fiduciary with respect to such plan acting in such
capacity; or
(B) any Person shall become an Acquiring Person, other
than pursuant to any transaction set forth in Section 13(a) hereof;
or
(C) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including any
reverse stock split), or recapitalization of the Company, or any
merger or consolidation of the Company with any of its Subsidiaries
or any other transaction or series of transactions involving the
Company or any of its Subsidiaries, other than a transaction or
transactions to which the provisions of Section 13(a) apply (whether
or not with or into or otherwise involving an Acquiring Person),
which has the effect, directly or indirectly, of increasing by more
than 1% the proportionate share of the outstanding shares of any
class of equity securities of the Company or any of its Subsidiaries
that is directly or indirectly beneficially owned by any Acquiring
Person or any Associate or Affiliate of any Acquiring Person; then,
immediately upon the date of the occurrence of an event described in
Section 11(a)(ii)(A)-(C) hereof (a "Section 11(a)(ii) Event"), proper
provision shall be made so that 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 at the then current Purchase
Price in accordance with the terms of this Agreement, in lieu of the
number of Units of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii)
Event, such number of Units of Preferred Stock as shall equal the
result obtained by (x) multiplying the then current Purchase Price by
the then number of Units of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event (such product thereafter being, for all purposes of
this Agreement other than Section 13 hereof, the "Purchase Price"),
and (y) dividing that product by 50% of the then current market price
(determined pursuant to Section 11(d) hereof) per Unit of Preferred
Stock on the date of
Page 26 of 84 Pages
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16
such first occurrence (such Units of Preferred Stock being the
"Adjustment Shares").
(iii) In the event that the number of shares of Preferred Stock
which are authorized by the Company's Articles 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) of this Section
11(a), the Company, by the vote of a majority of the Company's Board of
Directors, shall: (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price (such excess being the "Spread"), and
(B) with respect to each Right, make adequate provision to substitute for
such Adjustment Shares, upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) Company Common Stock or
other equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock (such other shares being
"preferred 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 a majority of the Company's Board of Directors, after
receiving advice from a nationally recognized investment banking firm;
provided, however, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty days
following the later of (x) the first occurrence of a Section 11(a)(ii)
Event and (y) the date on which the Company's right of redemption pursuant
to Section 23(a) expires (the later of (x) and (y) being referred to
herein as the "Section 11(a)(iii) 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, Units of Preferred Stock
(to the extent available) and then, if necessary, cash, which Units of
Preferred Stock and/or cash shall have an aggregate value equal to the
Spread. To the extent that the Company determines that some action need be
taken pursuant to the first sentence of this Section 11(a)(iii), the
Company shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights. For purposes of this
Section 11(a)(iii), the value of a Unit of Preferred Stock shall be the
current market price (as determined pursuant to Section 11(d) hereof) per
Unit of Preferred Stock on the Section 11(a)(iii) Trigger Date and the
value of any preferred stock equivalent shall be deemed to have the same
value as the Preferred Stock on such date.
(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 to
subscribe for or purchase (for a period expiring within forty-five calendar days
after such record date) shares of Preferred Stock (or shares having
substantially the same rights, privileges and preferences as shares of Preferred
Stock ("Equivalent Preferred Stock")) or securities convertible into
Page 27 of 84 Pages
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17
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 market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock 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 sum of the number of shares
of Preferred Stock outstanding on such record date plus the number of shares of
Preferred Stock which the aggregate offering price of the total number of shares
of Preferred Stock 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 outstanding on such
record date plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible). In
case such subscription price may be paid by delivery of consideration part or
all of which may be in a form other than cash, the value of such consideration
shall be as determined in good faith by a majority of the Company's Board of
Directors, 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 owned by or held for the account of the
Company or any Subsidiary shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(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 corporation) of 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 or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the current market
price (as determined pursuant to Section 11(d) hereof) per share of Preferred
Stock on such record date less the fair market value (as determined in good
faith by a majority of the Company's Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holder of the Rights) 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 market price (as determined pursuant
to Section 11(d) hereof) per share of Preferred Stock. Such adjustments
Page 28 of 84 Pages
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18
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 which would have been in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
market price" per share of Company Common Stock or Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of such
shares for the ten consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, if prior to the
expiration of such requisite ten Trading Day period the issuer announces either
(A) a dividend or distribution on such shares payable in such shares or
securities convertible into such shares (other than the Rights), or (B) any
subdivision, combination or reclassification of such shares, then, following the
ex-dividend date for such dividend or the record date for such subdivision, as
the case may be, the "current market price" shall be properly adjusted to take
into account such event. The closing price for each day shall be, if the shares
are listed and admitted to trading on a national securities exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which such
shares are listed or admitted to trading or, if such shares are 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 the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in
use, or, if on any such date such shares 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 such shares selected by a majority
of the Company's Board of Directors. If on any such date no market maker is
making a market in such shares, the fair value of such shares on such date as
determined in good faith by a majority of the Company's Board of Directors shall
be used. If such shares are not publicly held or not so listed or traded,
"current market price" per share shall mean the fair value per share as
determined in good faith by a majority of the Company's Board of Directors,
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 such shares are listed or admitted to trading on any national
securities exchange, a day on which the principal national securities exchange
on which such shares are listed or admitted to trading is open for the
transaction of business or, if such shares are not so listed or admitted, a
Business Day.
(ii) For the purpose of any computation hereunder, the "current
market price" per share of Preferred Stock shall be determined in the same
manner as set forth above for Company Common Stock in clause (i) of this
Section 11(d) (other than the fourth sentence thereof). If the current
market price per share of Preferred Stock cannot be determined in the
manner provided above or if the Preferred Stock is not publicly held or
listed or traded in a manner described in clause (i) of this Section
11(d), the "current market price" per share of Preferred Stock shall be
Page 29 of 84 Pages
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19
conclusively deemed to be an amount equal to 100 (as such amount may be
appropriately adjusted for such events as stock splits, stock dividends
and recapitalizations with respect to Company Common Stock occurring after
the date of this Agreement) multiplied by the current market price per
share of Company Common Stock. If neither Company Common Stock nor
Preferred Stock is publicly held or so listed or traded, "current market
price" per share of the Preferred Stock shall mean the fair value per
share as determined in good faith by a majority of the Company's Board of
Directors 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 market
price" of a Unit of Preferred Stock shall be equal to the "current market
price" of one share of Preferred Stock divided by 100.
(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 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one-hundredth of a share of Company Common Stock or
Common Stock or other share or ten-thousandth 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 which mandates such
adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
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), 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 Units 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
Page 30 of 84 Pages
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20
in Sections 11(b) and (c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase, at
the adjusted Purchase Price, that number of Units of Preferred Stock (calculated
to the nearest one ten-thousandth of a Unit) obtained by (i) multiplying (x) the
number of Units of Preferred Stock 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 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 Units 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 Units 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 ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least ten 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 to be so
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 Units 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 Unit and the number of Units of Preferred Stock
which were expressed in the Initial Rights Certificates issued hereunder.
Page 31 of 84 Pages
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(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value of the number of Units of Preferred
Stock issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue such fully paid and non-assessable number
of Units 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 Units 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 Units of Preferred Stock and shares of other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment a majority of the Company's Board
of Directors shall determine to be advisable in order that any (i) consolidation
or subdivision of the Preferred Stock, (ii) issuance wholly for cash of any
shares of Preferred Stock at less than the current market price, (iii) issuance
wholly for cash of shares of Preferred Stock or securities which by their terms
are convertible into or exchangeable for shares of Preferred Stock, (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 Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), (ii) merge with or into
any other Person (other than a Subsidiary of the Company in a transaction which
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 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 which would substantially
Page 32 of 84 Pages
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22
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 Person which constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) hereof shall
have distributed or otherwise transferred to its shareholders or other persons
holding an equity interest in such Person 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, the Company shall not, except as
permitted by Section 23 or Section 26 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will 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 shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend on
the outstanding shares of Company Common Stock payable in shares of Company
Common Stock, (ii) subdivide the outstanding shares of Company Common Stock,
(iii) combine the outstanding shares of Company Common Stock into a smaller
number of shares, or (iv) issue any shares of its capital stock in a
reclassification of Company 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
Company 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 Company Common Stock
following any such event shall equal the result obtained by multiplying the
number of Rights associated with each share of Company Common Stock immediately
prior to such event by a fraction the numerator of which shall be the total
number of shares of Company Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total number
of shares of Company Common Stock outstanding immediately following the
occurrence of such event.
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 accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Company 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, to each holder of a certificate representing
shares of Company Common Stock) in accordance with Section 25 hereof. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment
Page 33 of 84 Pages
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23
therein contained and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such certificate.
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, following the Stock Acquisition Date,
directly or indirectly, either (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), and the Company shall not
be the continuing or surviving corporation of such consolidation or merger, (y)
any Person (other than a Subsidiary of the Company in a transaction which
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
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Company Common
Stock shall be converted into or exchanged for stock or other securities of any
other Person 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
Subsidiaries in one or more transactions each of which complies with Section
11(o) hereof), in one or more transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) (any such event being 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 thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price,
such number of validly authorized and issued, fully paid and non-assessable
shares of Common Stock of the Principal Party (as such term is 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 the then current Purchase Price
by the number of Units of Preferred Stock for which a 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 such Units for which a Right would be
exercisable hereunder but for the occurrence of such Section 11(a)(ii) Event by
the Purchase Price which 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 all purposes of this
Agreement) by 50% of the current market price (determined pursuant to Section
11(d) hereof) per share of the Common Stock of such Principal Party on the date
of consummation of such Section 13 Event; (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
Page 34 of 84 Pages
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the consummation of any such transaction as may be necessary to ensure that the
provisions of this Agreement shall thereafter be applicable 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.
(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), (A) the Person that is the
issuer of any securities into which shares of Company Common Stock 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 (determined pursuant to Section 11(d) hereof) and (B)
if no securities are so issued, the Person that is the other party to such
merger or consolidation, or, if there is more than one such Person, the
Person the Common Stock of which has the highest aggregate current market
price (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), 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 the Common Stock
of which has the highest aggregate current market price (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-month period registered
under Section 12 of the Exchange Act ("Registered Common Stock"), or such
Person is not a corporation, and such Person is a direct or indirect
Subsidiary of another Person that has Registered Common Stock outstanding,
"Principal Party" shall refer to such other Person; (2) if the Common
Stock of such Person is not Registered Common Stock or such Person is not
a corporation, and such Person is a direct or indirect Subsidiary of
another Person but is not a direct or indirect Subsidiary of another
Person which has Registered Common Stock outstanding, "Principal Party"
shall refer to the ultimate parent entity of such first-mentioned Person;
(3) if the Common Stock of such Person is not Registered Common Stock or
such Person is not a corporation, and such Person is directly or
indirectly controlled by more than one Person, and one or more of such
other Persons has Registered Common Stock outstanding, "Principal Party"
shall refer to whichever of such other Persons is the issuer of the
Registered Common Stock having the highest aggregate current market price
(determined pursuant to Section 11(d) hereof); and (4) if the Common Stock
of such Person is not Registered Common Stock or such
Page 35 of 84 Pages
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Person is not a corporation, and such Person is directly or indirectly
controlled by more than one Person, and none of such other Persons have
Registered Common Stock outstanding, "Principal Party" shall refer to
whichever ultimate parent entity is the corporation having the greatest
shareholders equity or, if no such ultimate parent entity is a
corporation, shall refer to whichever ultimate parent entity is the
entity having the greatest net assets.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13, and 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) and (b) of this Section 13
and further providing that the Principal Party will:
(i) (A) file on an appropriate form, as soon as practicable
following the execution of such agreement, a registration statement under
the Securities Act with respect to the Common Stock that may be acquired
upon exercise of the Rights, (B) cause such registration statement to
remain effective (and to include a prospectus complying with the
requirements of the Securities Act) until the Expiration Date, and (C) as
soon as practicable following the execution of such agreement, take such
action as may be required to ensure that any acquisition of such Common
Stock upon the exercise of the Rights complies with any applicable state
security or "blue sky" laws; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under
the Exchange Act.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, 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
market price per share (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 market price (other than to holders of
Rights pursuant to this Section 13) or (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; 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
Page 36 of 84 Pages
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26
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed 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 which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a).
SECTION 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Rights
Certificates which 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 on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be, if the
Rights are listed or admitted to trading on a national securities 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, if the Rights are 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 NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by a majority of the
Company's Board of Directors. If on any such date no such market maker is making
a market in the Rights, the fair value of the Rights on such date as determined
in good faith by a majority of the Company's Board of Directors shall be used
and such determination shall be described in a statement filed with the Rights
Agent and the holders of the Rights.
(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-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence such fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of such fractional shares of Preferred Stock
that are not integral multiples of one one-hundredth of a share, 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
then current
Page 37 of 84 Pages
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27
market price of a share of Preferred Stock on the day of exercise, determined in
accordance with Section 11(d) hereof.
(c) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
SECTION 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing shares of Company Common Stock); and any registered
holder of a Rights Certificate (or, prior to the Distribution Date, of a
certificate representing shares of Company Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of a certificate representing shares of Company Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company or any
other Person to enforce, or otherwise act in respect of, his 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 the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Company Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates duly 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
Company Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced
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thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Company 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 or ruling
issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to
have any such order, decree or ruling lifted or otherwise overturned as
promptly as practicable.
SECTION 17. Rights Certificate Holder Not Deemed a Shareholder. 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 number of shares of
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or, except as provided in Section 24 hereof, to
receive notice of meetings or other actions affecting shareholders, 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. Concerning the Rights Agent. (a) The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses, including reasonable fees and disbursements of its counsel, incurred
in connection with the execution and administration of this Agreement and the
exercise and performance of its duties hereunder. The Company shall indemnify
the Rights Agent for, and hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability hereunder.
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(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Preferred Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to have been signed, executed
and, where necessary, verified or acknowledged by the proper Person or Persons.
SECTION 19. Merger or Consolidation or Change of Name of Rights
Agent. (a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or shareholder services 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 corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the 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 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 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of 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 opinion of such counsel shall be
full and
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30
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of "current market price") be
proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be specified herein) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the
President, or any Senior Vice President of the Company and delivered to
the Rights Agent; provided, however, that so long as any Person is an
Acquiring Person hereunder, such certificate shall be signed and delivered
by a majority of the Company's Board of Directors; and such certificate
shall be full authorization to the Rights Agent for any action taken or
suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or
in the Rights Certificates or be required to verify the same (except as to
its countersignature on such Rights Certificates), 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 hereof by the Rights Agent) or for the validity or
execution of any Rights Certificate (except its countersignature thereof);
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 adjustment required under the provisions of Section 11 or Section 13
hereof or for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by
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 Preferred Stock or
any other securities to be issued pursuant to this Agreement or any Rights
Certificate
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31
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 the Chairman of the Board, the President, or any Senior
Vice President of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer; provided, however, that so long as
any Person is an Acquiring Person hereunder, the Rights Agent shall accept
such instructions and advice only from a majority of the Company's Board
of Directors and shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with such instructions of the
majority of the Company's Board of Directors. Any application by the
Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to be taken
or omitted by the Rights Agent under this Rights Agreement and the date on
and/or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable for any action taken by,
or omission of, the Rights Agent in accordance with a proposal included in
any such application on or after the date specified in such application
(which date shall not be less than five Business Days after the date any
such officer of the Company actually receives such application, unless any
such officer shall have consented in writing to an earlier date) unless,
prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
Page 42 of 84 Pages
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32
(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.
(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 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 either not been completed, not 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. If such certificate has been completed
and signed and shows a negative response to clauses 1 and 2 of such
certificate, unless previously instructed otherwise in writing by the
Company (which instructions may impose on the Rights Agent additional
ministerial responsibilities, but no discretionary responsibilities), the
Rights Agent may assume without further inquiry that the Rights
Certificate is not owned by a person described in Section 4(b) or Section
7(e) hereof and shall not be charged with any knowledge to the contrary.
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 not less than thirty days' prior notice in writing mailed to the Company,
and to each transfer agent of the Preferred Stock and the Company Common Stock,
by registered or certified mail, and to the holders of the Rights Certificates
by first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon not less than thirty 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 Preferred Stock and the Company Common Stock, by
registered or certified mail, and to the 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 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 corporation organized and doing business under
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33
the laws of the United States or any state of the United States in good
standing, shall be authorized to do business as a banking institution in the
State of New York, shall be authorized under such laws to exercise corporate
trust or stock transfer powers, shall be subject to supervision or examination
by federal or state authorities and shall have at the time of its appointment as
Rights Agent a combined capital and surplus of at least $100,000,000 or (b) an
Affiliate of a corporation described in clause (a). 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 Preferred Stock and the Company Common Stock, and
mail a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent.
SECTION 22. Issuance of New Rights Certificates. Notwithstanding any
of the provisions of this Agreement or the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by a majority of the Company's Board of Directors 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 Company Common
Stock following the Distribution Date and prior to the Expiration Date, the
Company (a) shall, with respect to shares of Company 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 a majority of the Company's Board of Directors,
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.
SECTION 23. Redemption and Termination. (a) Subject to Section 30
hereof, the Company may, at its option, by action of a majority of the Company's
Board of Directors, at any time prior to the earlier of (i) the Close of
Business on the tenth Business Day following the Stock Acquisition Date or (ii)
the Final Expiration Date, redeem all but
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34
not less than all of the then outstanding Rights at a redemption price of $.01
per Right, as such amount may be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being the "Redemption Price"), and the Company may, at
its option, by action of a majority of the Company's Board of Directors, pay the
Redemption Price either in shares of Company Common Stock (based on the "current
market price", as defined in Section 11(d) hereof, of the shares of Company
Common Stock at the time of redemption) or cash.
(b) Immediately upon the action of a majority of the Company's Board
of Directors ordering the redemption of the Rights, evidence of which shall be
filed with the Rights Agent, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of a majority of the Company's
Board of Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to all such holders at each holder's
last address as it appears upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for
Company Common Stock. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made.
SECTION 24. Notice of Certain Events. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
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 its 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 holder of a Rights Certificate, to the extent feasible and in
accordance with Section 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or
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35
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 twenty (20) 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 twenty (20) days prior to the date of the taking
of such proposed action or the date of participation therein by the holders of
the shares of Preferred Stock whichever shall be the earlier; provided, however,
no such notice shall be required pursuant to this Section 24, if any Subsidiary
of the Company effects a consolidation or merger with or into, or effects a sale
or other transfer of assets or earnings power to, any other Subsidiary of the
Company.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 25 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof.
SECTION 25. Notices. All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (including by
telex, telegram or cable) and mailed or sent or delivered, if to the Company, at
its address at:
Hardinge Inc.
One Hardinge Drive
Elmira, New York 14902-1507
Attention: Malcom L. Gibson
Fax: (607) 734-2353
and if to the Rights Agent, at its address at:
American Stock Transfer
and Trust Company
40 Wall Street
New York, New York 10005
Attention: Herbert J. Lemmer
Fax: (718) 236-4588
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, to the holder of certificates representing
shares of Company 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.
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36
SECTION 26. Supplements and Amendments. Prior to the Distribution
Date and subject to the penultimate sentence of this Section 26, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of certificates
representing shares of Company Common Stock. From and after the Distribution
Date and subject to the penultimate sentence of this Section 26, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person); provided, however, that this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) subject to Section 30 hereof, a time period relating to when the
Rights may be redeemed at such time as the Rights are not then redeemable, or
(B) any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights. Upon the delivery of a certificate from an appropriate
officer of the Company or, so long as any Person is an Acquiring Person
hereunder, from the majority of the Company's Board of Directors which states
that the proposed supplement or amendment is in compliance with the terms of
this Section 26, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price, the
Purchase Price, the Expiration Date or the number of Units of Preferred Stock
for which a Right is exercisable without the approval of a majority of the
Company's Board of Directors. Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of Company Common Stock.
SECTION 27. 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 28. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Agreement, any calculation of the number of shares
of Company Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Company Common Stock of which any Person is the Beneficial Owner, shall be made
in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act
Regulations as in effect on the date hereof. Except as otherwise specifically
provided herein, the Board of Directors of the Company 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, or as may be
necessary or
Page 47 of 84 Pages
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37
advisable in the administration of this Agreement, including, without
limitation, the right and power (i) to interpret the provisions of this
Agreement, and (ii) to make all determinations deemed necessary or advisable for
the administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in good faith shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board or any member thereof to any liability to the holders of the
Rights.
SECTION 29. 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, registered holders of shares of Company Common Stock) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock).
SECTION 30. 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 a majority of the
Company's Board of Directors determines in its good faith judgment that severing
the invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement and the Rights shall not then be redeemable, 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 a majority of the Company's Board of Directors.
SECTION 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts executed in and
to be performed entirely in such State.
SECTION 32. Counterparts. This Agreement may be executed (including
by facsimile) 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.
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SECTION 33. 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 34. Exchange. (a) The Company may at any time on or after the
Distribution Date, upon resolution of a majority of the Company's Board of
Directors, exchange all or part of the then outstanding and exerciseable Rights
(which shall not include Rights that have become void pursuant to Section 7(e)
hereof) for Units of Preferred Stock at an exchange ratio specified in the
following sentence, as appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof. Subject to such
adjustment, each Right may be exchanged for that number of Units of Preferred
Stock obtained by dividing the Adjustment Spread (as defined below) by the then
current market price (determined pursuant to Section 11(d) hereof) per Unit of
Preferred Stock on the earlier of (i) the date on which any Person becomes an
Acquiring Person and (ii) the date on which a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan maintained by the Company or any of its Subsidiaries or any trustee
or fiduciary with respect to such plan acting in such capacity) is first
published or sent or given within the meaning of Rule 14d-4(a) of the Exchange
Act Regulations or any successor rule, if upon consummation thereof such Person
would be the Beneficial Owner of 30% or more of the shares of Company Common
Stock then outstanding (such exchange ratio being the "Exchange Ratio"). The
"Adjustment Spread" shall equal (x) the aggregate market price on the date of
such event of the number of Adjustment Shares determined pursuant to Section
11(a)(ii), minus (y) the Purchase Price.
(b) Immediately upon the action of a majority of the Company's
Board of Directors ordering the exchange of any Rights pursuant to Section
34(a) 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 Units of Preferred Stock
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of exchange shall state the method by which the exchange of Units of Preferred
Stock for Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 7(e) hereof) held by each
holder of Rights.
Page 49 of 84 Pages
<PAGE>
39
(c) In the event that the number of shares of Preferred Stock which
are authorized by the Company's Certificate of Incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit any exchange of Rights as contemplated in accordance
with this Section 34, the Company shall take all such action as may be necessary
to authorize additional shares of Preferred Stock for issuance upon exchange of
the Rights or make adequate provision to substitute (1) cash, (2) Company Common
Stock or other equity securities of the Company, (3) debt securities of the
Company, (4) other assets, or (5) any combination of the foregoing, having an
aggregate value equal to the Adjustment Spread, where such aggregate value has
been determined by a majority of the Company's Board of Directors.
(d) The Company shall not be required to issue fractions of Units of
Preferred Stock or to distribute certificates which evidence fractional Units.
In lieu of fractional Units, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exchanged as herein provided an
amount in cash equal to the same fraction of the current market price
(determined pursuant to Section 11(d) hereof) of one Unit of Preferred Stock.
Page 50 of 84 Pages
<PAGE>
40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first above written.
ATTEST: HARDINGE INC.
By /s/ Richard L. Simons By /s/Robert E. Agan
Name: Richard L. Simons Name: Robert E. Agan
Title: Controller Title: President and Chief
Executive Officer
ATTEST: AMERICAN STOCK TRANSFER
AND TRUST COMPANY
By /s/Susan Silber By /s/Herbert J. Lemmer
Name: Susan Silber Name: Herbert J. Lemmer
Title: Assistant Secretary Title: Vice President
Page 51 of 84 Pages
<PAGE>
EXHIBIT A
---------
[Form of Face of Rights Certificate]
Certificate No. ________ ________ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT
REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES (SPECIFIED IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY
ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER
OF SUCH RIGHTS MAY BECOME NULL AND VOID. [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 REFERRED TO BELOW). 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.]
Rights Certificate
HARDINGE INC.
This certifies that __________________, or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Rights Agreement dated as of May 16, 1995 (the "Rights Agreement"; terms
defined therein are used herein with the same meaning unless otherwise defined
herein) between Hardinge Inc., a New York corporation (the "Company"), and
American Stock Transfer and Trust Company, as Rights Agent (which term shall
include any successor Rights Agent under the Rights Agreement), to purchase from
the Company at any time after the Distribution Date and prior to the Expiration
Date at the office of the Rights Agent, one one-hundredth of a fully paid and
non-assessable share of Series A Preferred Stock, par value $.01 per share (the
"Preferred Stock"), of the Company at the Purchase Price initially of $80.00 per
one one-hundredth share (each such one one-hundredth of a share being a "Unit")
of Preferred Stock, upon presentation and surrender of this Rights Certificate
with the Election to Purchase and related certificate duly executed. The number
of Rights evidenced by this Rights Certificate (and the number of Units which
may be purchased upon exercise thereof) set forth above, and the Purchase Price
per Unit set forth above shall be subject to adjustment in certain events as
provided in the Rights Agreement.
--------------
* The portion of the legend in brackets shall be inserted only if applicable and
shall replace the preceding sentence.
Page 52 of 84 Pages
<PAGE>
A-2
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights
evidenced by this Rights Certificate are beneficially owned by an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person or, under
certain circumstances described in the Rights Agreement, a transferee of any
such Acquiring Person, Associate or Affiliate, such Rights shall become null and
void and no holder hereof shall have any right with respect to such Rights from
and after the occurrence of such Section 11(a)(ii) Event.
In certain circumstances described in the Rights Agreement, the
rights evidenced hereby may entitle the registered holder thereof to purchase
capital stock of an entity other than the Company or receive common stock, cash
or other assets, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms and conditions
of the Rights Agreement, which terms and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates. Copies of the Rights
Agreement are on file at the principal office of the Company and are available
from the Company upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company under certain
circumstances at its option at a redemption price of $.01 per Right, payable at
the Company's option in cash or in common stock of the Company, subject to
adjustment in certain events as provided in the Rights Agreement.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock), but in
lieu thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Stock or of any other securities which may at any time be issuable on the
exercise hereof, nor shall anything contained in the
Page 53 of 84 Pages
<PAGE>
A-3
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ______________ __, 199_.
ATTEST: HARDINGE INC.
By __________________________ By ___________________________
Name: Name:
Title: Title:
Countersigned:
AMERICAN STOCK TRANSFER AND
TRUST COMPANY, as
Rights Agent
By ___________________________
Name:
Title:
Page 54 of 84 Pages
<PAGE>
A-4
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the
Rights Certificate.)
FOR VALUE RECEIVED ____________________________________________________________
hereby sells, assigns and transfers unto ______________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ______________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _______________, 199
_____________________________________
Signature
Signature Guaranteed:
Page 55 of 84 Pages
<PAGE>
A-5
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: , 199
Signature
Signature Guaranteed:
--------------------------------------------------------------
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by an approved eligible financial
institution acceptable to the Rights Agent in its sole discretion or by a
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
Page 56 of 84 Pages
<PAGE>
A-6
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder
desires to exercise Rights represented
by the Rights Certificate.)
To: HARDINGE INC.
The undersigned hereby irrevocably elects to exercise ________ Rights
represented by this Rights Certificate to purchase the Units of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person or other property which may be issuable upon the
exercise of the Rights) and requests that certificates for such Units be issued
in the name of and delivered to:
(Please print name and address)
Please insert social security or other identifying number:
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
(Please print name and address)
Please insert social security or other identifying number:
Dated: , 199
Signature
Signature Guaranteed:
Page 57 of 84 Pages
<PAGE>
A-7
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated: _____________, 199
Signature __________________
Signature Guaranteed:
--------------------------------------------------------------
NOTICE
------
The signature in the foregoing Election to Purchase and Certificate
must conform to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by an approved eligible financial
institution acceptable to the Rights Agent in its sole discretion or by a
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
Page 58 of 84 Pages
<PAGE>
EXHIBIT B
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On May 16, 1995, the Board of Directors of Hardinge Inc. (the
"Company") declared a distribution of one Right for each outstanding share of
the Class A Common Stock, par value $5.00 per share and the Class B Common
Stock, par value $5.00 per share, of the Company (each such share a share of
"Company Common Stock"), to stockholders of record at the close of business on
May 30, 1995 (the "Record Date") and for each share of Company Common Stock
issued (including shares distributed from Treasury) by the Company thereafter
and prior to the Distribution Date. Each Right entitles the registered holder,
subject to the terms of the Rights Agreement (as defined below), to purchase
from the Company one one-hundredth of a share (a "Unit") of Series A Preferred
Stock, par value $.01 per share (the "Preferred Stock"), at a Purchase Price of
$80.00 per Unit, subject to adjustment. The Purchase Price is payable in cash or
by certified or bank check or money order payable to the order of the Company.
The description and terms of the Rights are set forth in a Rights Agreement
between the Company and the American Stock Transfer and Trust Company as Rights
Agent (the "Rights Agreement").
Copies of the Rights Agreement and the Certificate of Designation for
the Preferred Stock have been filed with the Securities and Exchange Commission
as exhibits to a Registration Statement on Form 8-A dated May __, 1995 (the
"Form 8-A"). Copies of the Rights Agreement and the Certificate of Designation
are available free of charge from the Company. This summary description of the
Rights and the Preferred Stock does not purport to be complete and is qualified
in its entirety by reference to all the provisions of the Rights Agreement and
the Certificate of Designation, including the definitions therein of certain
terms, which Rights Agreement and Certificate of Designation are incorporated
herein by reference.
The Rights Agreement
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the "Distribution Date" will occur upon the earlier of (i) 10 business days
following a public announcement (the date of such announcement being the "Stock
Acquisition Date") that a person or group of affiliated or associated persons
(other than the Company, any subsidiary of the Company or any employee benefit
plan of the Company or such subsidiary) (an "Acquiring Person") has acquired,
obtained the right to acquire, or otherwise obtained beneficial ownership of 20%
or more of the then outstanding shares of Company Common Stock, and (ii) 10
business days (or such later date as may be determined by action of the Board of
Directors prior to such
Page 59 of 84 Pages
<PAGE>
B-2
time as any person becomes an Acquiring Person) following the commencement of a
tender offer or exchange offer that would result in a person or group
beneficially owning 30% or more of the then outstanding shares of Company Common
Stock. Until the Distribution Date, (i) the Rights will be evidenced by Company
Common Stock certificates and will be transferred with and only with such
Company Common Stock certificates, (ii) new Company Common Stock certificates
issued after the Record Date (also including shares distributed from Treasury)
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates representing outstanding
Company Common Stock will also constitute the transfer of the Rights associated
with the Company Common Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on the tenth anniversary of the Rights Agreement
unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of Company Common Stock as of
the close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
In the event that (i) the Company is the surviving corporation in a
merger with an Acquiring Person and shares of Company Common Stock shall remain
outstanding, (ii) a Person becomes the beneficial owner of 20% or more of the
then outstanding shares of Company Common Stock, (iii) an Acquiring Person
engages in one or more "self-dealing" transactions as set forth in the Rights
Agreement, or (iv) during such time as there is an Acquiring Person, an event
occurs which results in such Acquiring Person's ownership interest being
increased by more than 1% (e.g., by means of a reverse stock split or
recapitalization), then, in each such case, each holder of a Right will
thereafter have the right to receive, upon exercise, Units of Preferred Stock
(or, in certain circumstances, Company Common Stock, cash, property or other
securities of the Company) having a value equal to two times the exercise price
of the Right. The exercise price is the Purchase Price multiplied by the number
of Units of Preferred Stock issuable upon exercise of a Right prior to the
events described in this paragraph. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in this paragraph, all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be null and
void.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction and the Company is not the surviving corporation (other than a
merger described in the preceding paragraph), (ii) any Person consolidates or
merges with the Company and all or part of the Company Common Stock is converted
or exchanged for securities, cash or property of any other
Page 60 of 84 Pages
<PAGE>
B-3
Person or (iii) 50% or more of the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have been
voided as described above) shall thereafter have the right to receive, upon
exercise, common stock of the Acquiring Person having a value equal to two times
the exercise price of the Right.
The Purchase Price payable, and the number of Units of Preferred
Stock issuable, upon exercise of the Rights are subject to adjustment from time
to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to the
holders of the Preferred Stock of evidences of indebtedness, cash or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units. In lieu thereof,
an adjustment in cash may be made based on the market price of the Preferred
Stock prior to the date of exercise.
At any time until ten business days following the Stock Acquisition
Date, a majority of the Company's Board of Directors may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (subject to adjustment in
certain events) (the "Redemption Price"), payable, at the election of such
majority of the Company's Board of Directors, in cash or shares of Company
Common Stock. Immediately upon the action of a majority of the Company's Board
of Directors ordering the redemption of the Rights, the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Units of Preferred Stock (or other consideration).
Any of the provisions of the Rights Agreement may be amended without
the approval of the holders of Company Common Stock at any time prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
Page 61 of 84 Pages
<PAGE>
B-4
however, that no amendment to adjust the time period governing redemption shall
be made at such time as the Rights are not redeemable.
Description of Preferred Stock
The Units of Preferred Stock that may be acquired upon exercise of
the Rights will be nonredeemable and will be junior to any other series or class
of preferred stock that may be issued by the Company unless the terms of any
such series or class shall provide otherwise.
Each Unit of Preferred Stock will have a minimum preferential
quarterly dividend of $.01 per Unit or any higher per share dividend declared on
the Company Common Stock.
In the event of liquidation, the holder of a Unit of Preferred Stock
will receive a preferred liquidation payment equal to the greater of $.01 per
Unit and the per share amount paid in respect of a share of Company Common
Stock.
Each Unit of Preferred Stock will have one vote, voting together with
the Company Common Stock. In addition, the holders of Units of Preferred Stock,
voting as a separate class, shall be entitled to elect two directors if
dividends on the Preferred Stock are in arrears for six fiscal quarters. Holders
of Units of Preferred Stock shall retain such additional voting rights until
such time as all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current period on all Units of Preferred Stock have
been declared and paid or set aside for payment.
In the event of any merger, consolidation or other transaction in
which shares of Company Common Stock are exchanged, each Unit of Preferred Stock
will be entitled to receive the per share amount paid in respect of each share
of Company Common Stock.
The rights of holders of the Preferred Stock to dividends,
liquidation and voting, and in the event of mergers and consolidations, are
protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Unit of Preferred Stock should
approximate the economic value of one share of Company Common Stock.
Page 62 of 84 Pages
<PAGE>
EXHIBIT C
---------
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
HARDINGE BROTHERS, INC.
------------------------
Under Section 805 of the
Business Corporation Law
------------------------
We, Robert E. Agan and J. Philip Hunter, President and Chief
Executive Officer and Secretary, respectively, of Hardinge Brothers, Inc., a
corporation organized and existing under the Business Corporation Law of the
State of New York (the "Corporation"), DO HEREBY CERTIFY:
1. The name of the Corporation is Hardinge Brothers, Inc.
2. The Corporation is a consolidation of Morrison Machine Products,
Inc., whose Certificate of Incorporation was filed in the Office of the
Secretary of State of the State of New York on December 14, 1925, and Hardinge
Brothers, Inc., whose Certificate of Incorporation was filed in the Office of
the Secretary of State of the State of New York on March 3, 1931. The
Certificate of Consolidation, pursuant to Section 86 of the New York Stock
Corporation Law, was filed in the Office of the Secretary of State of the State
of New York on December 24, 1937. A Restated Certificate of Incorporation of the
Corporation was filed in the Office of the Secretary of State of the State of
New York on May 19, 1987. A Certificate of Amendment of the Certificate of
Incorporation of the Corporation was filed by the Department of State of the
State of New York on June 21, 1988.
3. The Certificate of Incorporation of the Corporation is hereby
amended to effect a change in the name of the Corporation.
4. To effect the foregoing, Article 1 thereof, relating to the name
of the Corporation, is hereby amended and restated to read in its entirety as
follows:
"1. The name of the corporation is Hardinge Inc."
Page 63 of 84 Pages
<PAGE>
C-2
5. The manner amendment to the Certificate of Incorporation of the
Corporation was authorized by a vote of the Board of Directors of the
Corporation followed by vote of the holders of a majority of the Class A
Common Stock and the Class B Common Stock, voting as a single class, entitled
to vote thereon at a meeting of shareholders.
6. The Certificate of Incorporation of the Corporation is hereby
amended to reclassify the Board of Directors of the Corporation to consist of
three classes rather than the present two classes.
7. To effect the foregoing, Article 7 thereof, relating to the
classification of the Board of Directors of the Corporation, is hereby amended
and restated to read in its entirety as follows:
"7. Subject to the other provisions of this Certificate of
Incorporation, the business of the Corporation shall be managed under the
direction of its Board of Directors. The number of Directors constituting
the Board shall be nine subject to increase or decrease from time to time
as provided in the By-laws of the Corporation. The By-laws may be amended
only by the affirmative vote of at least 75% of the entire Board of
Directors or by the affirmative vote of the holder of at least 75% of the
outstanding shares of stock of the Corporation entitled to vote generally
in the election of directors, voting together as a single class. The
Directors shall be classified, with respect to the period for which they
shall severally hold office into three classes as nearly equal in number
as possible each holding office, subject to the transitional provisions
described below, for a period expiring at the third annual meeting of
stockholders following the first annual meeting of stockholders of the
Corporation at which Directors of such class have been elected. For
transitional purposes the Directorships held by the 9 Directors holding
office following the 1995 Annual Meeting shall be classified as follows:
Class I Directorships.- Messrs. Agan, Cole and Gibson will be
considered to hold Class I
Directorships. The Class I
Directorships held by Messrs. Agan and
Cole will expire at the Annual Meeting
of Stockholders in 1996 and 1998 and
at the Annual Meetings held in every
third year thereafter and the Class I
Directorship held by Mr. Gibson will
expire at the Annual Meeting of
Stockholders in 1995, 1997 and 1998
and
Page 64 of 84 Pages
<PAGE>
C-3
at the Annual Meetings held in every
third year thereafter;
Class II Directorships.- Dr. Menger and Messrs. Powers and
Hunter will be considered to hold
Class II Directorships. The Class II
Directorships held by Dr. Menger and
Mr. Hunter will expire at the Annual
Meeting of Stockholders in 1995, 1997
and 1999 and at the Annual Meetings
held in every third year thereafter
and the Class II Directorship held by
Mr. Powers will expire at the Annual
Meeting of Stockholders held in 1996,
1997 and 1999 and at the Annual
Meetings held in every third year
thereafter; and
Class III Directorships.-Messrs. Bennett, Flynn and Greenlee
will be considered to hold Class III
Directorships. The Class III
Directorships held by Messrs. Bennett
and Flynn will expire at the Annual
Meeting of Stockholders in 1995 and
1997 and at the Annual Meetings of
Stockholders held in every third year
thereafter and the Class III
Directorship held by Mr. Greenlee will
expire at the Annual Meeting of
Stockholders held in 1996 and 1997 and
at the Annual Meetings held in every
third year thereafter.
Newly created Directorships resulting from any increase in the
number of directors and any vacancies on the Board of Directors resulting
from death, resignation, retirement, disqualification, removal or other
cause shall be filled only by the affirmative vote of a majority of the
remaining Directors then in office, even though less than a quorum of the
Board of Directors. Any Director elected in accordance with the preceding
sentence shall hold office until the next meeting of stockholders at which
the election of Directors is in the regular order of business and until
such Director's successor shall have been elected and qualified. No
decrease in the number of directors constituting the Board of Directors or
change in the restrictions and qualifications for Directors shall shorten
the term of any incumbent director.
Page 65 of 84 Pages
<PAGE>
C-4
Any Director, an entire class of Directors or the entire Board
of Directors may be removed from office, only for cause, and only by the
affirmative vote of the holders of at least 75% of the outstanding shares
of stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class.
Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at
least 75% of the outstanding shares of stock of the Corporation entitled
to vote generally in the election of directors, voting together as a
single class, shall be required to alter, amend, or adopt any provision
inconsistent with or to repeal this Article 7, provided, however, that the
vote of only a majority of the outstanding shares of stock of the
Corporation entitled to vote generally in the election of directors voting
together as a single class shall be required if such alteration,
amendment, inconsistent provision or repeal was approved by at least 75%
of the entire Board of Directors."
8. The amendment to the Certificate of Incorporation of the
Corporation relating to the reclassification of the Directorships of the
Corporation was authorized by a vote of the Board of Directors of the
Corporation, followed by vote of the holders of a majority of the Class A
Common Stock and the Class B Common Stock, voting as a single class, entitled
to vote thereon at a meeting of shareholders.
9. The Certificate of Incorporation of the Corporation is hereby
amended to authorize the issuance of Preferred Stock.
10. To effect the foregoing, Articles 3 and 4 thereof, relating to
the capitalization of the Corporation, are amended and restated to read in their
entirety as follows:
"3. The total number of shares which the Corporation may
henceforth have is 8,000,000, which shares shall be classified as follows:
2,000,000 shares of the par value of $0.01 each are to be
Preferred Stock; and
6,000,000 shares of the par value of $5.00 each are to be
Common Stock.
Page 66 of 84 Pages
<PAGE>
C-5
The Common Stock shall be divided into two classes, one to be
known as "Class A Common" and to consist of 3,000,000 shares and the other
to be known as "Class B Common" and to consist of 3,000,000 shares.
4. The relative voting, dividend, liquidation and other rights,
preferences and limitations of the shares of each class are as follows:
I. The Preferred Stock may be issued from time to time in one
or more series, each such series to have the number of shares and
designation, and the shares of each such series to have such relative
rights, preferences or limitations, as the Board of Directors,
subject to the limitations prescribed by law or provided herein, may
from time to time fix, before issuance, by delivering an appropriate
certificate of amendment to the Department of State pursuant to the
Business Corporation Law of the State of New York. The authority of
the Board of Directors with respect to each series shall include, but
not be limited to, the fixing of the following:
(a) The number of shares to constitute the series and the
distinctive designation thereof;
(b) The dividend rate on the shares of the series; whether
dividends shall be cumulative, and, if so, from what date or
dates;
(c) Whether or not the shares of the series shall be
redeemable and, if redeemable, the terms upon which the shares
of the series may be redeemed and the premium, if any, over and
above the par value thereof and any dividends accrued thereon
which the shares of the series shall be entitled to receive
upon the redemption thereof;
(d) Whether or not the shares of the series shall be
subject to the operation of a retirement or sinking fund to be
applied to the purchase or redemption of such shares for
retirement and, if such retirement or sinking fund be
established, the annual amount thereof and the terms and
provisions relative to the operation thereof;
(e) Whether or not the shares of the series shall be
convertible into shares of any class or classes of stock of the
Corporation, with or without par value, or of any other series
of the same class and, if convertible, the conversion price or
prices or the rate at which such conversion may be made and the
method, if any, of adjusting the same;
Page 67 of 84 Pages
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C-6
(f) The rights of the shares of the series in the event of
voluntary or involuntary liquidation, dissolution or winding-up
of the Corporation;
(g) The restrictions, if any, on the payment of dividends
upon, and the making of the distributions to any class of stock
ranking junior to the shares of the series, and the
restrictions, if any, on the purchase or redemption of the
shares of any such junior class;
(h) Whether the series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the
terms of such voting rights; and
(i) Any other relative rights, preferences and limitations
of the series.
II. Holders of shares of Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of funds
legally available for the payment of dividends, dividends at the
rates fixed by the Board of Directors for the respective series,
before any dividends shall be declared and paid, or set apart for
payment, on any other class of stock of the Corporation ranking
junior to the Preferred Stock either as to dividends or assets, with
respect to the same dividend period.
III. Whenever, at any time, dividends on the then outstanding
Preferred Stock as may be required by the terms of the certificate
creating the series representing the shares outstanding shall have
been paid or declared and set apart for payment on the then
outstanding Preferred Stock and after complying with all the
provisions with respect to any retirement or sinking fund or funds
for any series of Preferred Stock, the Board of Directors may,
subject to the provisions of any certificate creating any series of
Preferred Stock with respect to the payment of dividends on any other
class or classes of stock, declare and pay dividends on the Common
Stock, and the Preferred Stock shall not be entitled to share
therein.
IV. Upon any liquidation, dissolution or winding-up of the
Corporation, after payment, if any is required, shall have been made
in full to the Preferred Stock as provided in any certificate
creating any series thereof, but not prior thereto, the Common Stock
shall, subject to the respective terms and provisions, if any, of any
such certificate, be entitled to receive any and all assets remaining
to be paid or distributed, and the Preferred Stock shall not be
entitled to share therein.
Page 68 of 84 Pages
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C-7
V. No holder of Common Stock or any series of Preferred Stock
shall, as such holder, have any preemptive or preferential right of
subscription to any stock of any class of the Corporation or to any
obligations convertible into any such stock or to any right of
subscription to, or to any warrant or option for, the purchase of any
stock, other than such, if any, as the Board of Directors of the
Corporation in its discretion may determine from time to time.
VI. The holders of the Common Stock shall have the right to
vote on all questions to the exclusion of all other classes of stock,
except as by law expressly provided or as otherwise expressly
provided with respect to the holders of any other class or classes of
stock.
4A. The designations, privileges, voting powers or restrictions
or qualifications of the Common Stock are as follows:
(a) The entire voting powers for the election of Directors of
the corporation shall be vested in the Class B Common
stock. On all other matters except as otherwise provided
by law or this Certificate of Incorporation, each holder
of Class A Common stock and Class B Common stock shall
have equal voting powers of one vote for each share then
standing in his name on the books of the Corporation and
shall vote together as a single class.
(b) Both classes of Common stock shall share equally in all
dividends and each share of Class A and Class B Common
stock outstanding at the time of dissolution shall share
equally in the distribution of the assets.
(c) No holder of stock of the corporation, of whatever class,
shall have any preferential or prescriptive right of
subscription to any shares of the capital stock of the
corporation, of any class issued or sold, nor any right of
subscription to any thereof other than such, if any, as
the Board of Directors in its discretion may determine."
11. The amendment to the Certificate of Incorporation of the
Corporation relating to the authorization of the Preferred Stock was
authorized by a vote of the Board of Directors of the Corporation followed by
vote of the holders of a majority of the Class A Common Stock and the Class B
Common Stock, voting as
Page 69 of 84 Pages
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C-8
separate classes, entitled to vote thereon at a meeting of
shareholders.
12. The Certificate of Incorporation of the Corporation is hereby
amended by the addition of the following provisions stating the number,
designation, relative rights, preferences, and limitations of a series of
preferred stock of the Corporation designated as "Series A Preferred Stock".
13. To effect the foregoing, a new subdivision VII is hereby added to
Article 4 thereof, which subdivision VII reads in its entirety as follows:
"VII. Series A Preferred Stock. The designation and amount,
relative rights, preferences and limitations of the shares of Series
A Preferred Stock, par value $.01 per share, as fixed by the Board of
Directors of the Corporation, are as follows:
(1) Designation and Amount. The shares of such series
shall be designated as "Series A Preferred Stock" and the
number of shares constituting such series shall be 250,000.
Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, however, that
no decrease shall reduce the number of shares of Series A
Preferred Stock to a number less than that of the shares then
outstanding plus the number of shares issuable upon exercise of
outstanding rights, options, or warrants or upon conversion of
outstanding securities issued by the Company.
(2) Dividends and Distributions. (A) Subject to the prior
and superior rights of the holders of any shares of any other
series of Preferred Stock or any other shares of preferred
stock of the Corporation ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends,
each holder of one one-hundredth (1/100) of a share (a "Unit")
of Series A Preferred Stock shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds
legally available for that purpose, (i) quarterly dividends
payable in cash on the last day of March, June, September and
December in each year (each such date being a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of such Unit of
Series A Preferred Stock, in an amount per Unit (rounded to the
nearest cent) equal to the greater of (a) $.01 or (b) subject
to the
Page 70 of 84 Pages
<PAGE>
C-9
provision for adjustment hereinafter set forth, the aggregate
per share amount of all cash dividends declared on shares of
the Common Stock since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of a Unit of
Series A Preferred Stock, and (ii) subject to the provision for
adjustment hereinafter set forth, quarterly distributions
(payable in kind) on each Quarterly Dividend Payment Date in an
amount per Unit equal to the aggregate per share amount of all
non-cash dividends or other distributions (other than a
dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock, by reclassification or
otherwise) declared on shares of Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or with
respect to the first Quarterly Dividend Payment Date, since the
first issuance of a Unit of Series A Preferred Stock. In the
event that the Corporation shall at any time after May 16, 1995
(the "Rights Declaration Date") (i) declare any dividend on
outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide outstanding shares of Common Stock or
(iii) combine outstanding shares of Common Stock into a smaller
number of shares, then in each such case the amount to which
the holder of a Unit of Series A Preferred Stock was entitled
immediately prior to such event pursuant to the preceding
sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which shall be the number of shares
of Common Stock that are outstanding immediately after such
event and the denominator of which shall be the number of
shares of Common Stock that were outstanding immediately prior
to such event.
(B) The Corporation shall declare a dividend or
distribution on Units of Series A Preferred Stock as provided
in paragraph (A) above immediately after it declares a dividend
or distribution on the shares of Common Stock (other than a
dividend payable in shares of Common Stock); provided, however,
that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $.01 per Unit on
the Series A Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
Page 71 of 84 Pages
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C-10
(C) Dividends shall begin to accrue and shall be
cumulative on each outstanding Unit of Series A Preferred Stock
from the Quarterly Dividend Payment Date next preceding the
date of issuance of such Unit of Series A Preferred Stock,
unless the date of issuance of such Unit is prior to the record
date for the first Quarterly Dividend Payment Date, in which
case, dividends on such Unit shall begin to accrue from the
date of issuance of such Unit, or unless the date of issuance
is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of Units of Series
A Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on Units of
Series A Preferred Stock in an amount less than the aggregate
amount of all such dividends at the time accrued and payable on
such Units shall be allocated pro rata on a unit-by-unit basis
among all Units of Series A Preferred Stock at the time
outstanding. The Board of Directors may fix a record date for
the determination of holders of Units of Series A Preferred
Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 30
days prior to the date fixed for the payment thereof.
(3) Voting Rights. The holders of Units of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each Unit of Series A Preferred Stock shall entitle
the holder thereof to one vote on all matters submitted to a
vote of the stockholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide outstanding
shares of Common Stock or (iii) combine the outstanding shares
of Common Stock into a smaller number of shares, then in each
such case the number of votes per Unit to which holders of
Units of Series A Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which shall be the number
of
Page 72 of 84 Pages
<PAGE>
C-11
shares of Common Stock outstanding immediately after such event
and the denominator of which shall be the number of shares of
Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein or by law, the
holders of Units of Series A Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Units of Series A
Preferred Stock shall be in arrears in an amount equal to six
quarterly dividends thereon, then during the period (a "default
period") from the occurrence of such event until such time as
all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period
on all Units of Series A Preferred Stock then outstanding shall
have been declared and paid or set apart for payment, all
holders of Units of Series A Preferred Stock, voting separately
as a class, shall have the right to elect two Directors.
(ii) During any default period, such voting rights of the
holders of Units of Series A Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph
(iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting rights nor any
right of the holders of Units of Series A Preferred Stock to
increase, in certain cases, the authorized number of Directors
may be exercised at any meeting unless one-third or more of the
outstanding Units of Preferred Stock shall be present at such
meeting in person or by proxy. The absence of a quorum of the
holders of Common Stock shall not affect the exercise by the
holders of Units of Series A Preferred Stock of such rights. At
any meeting at which the holders of Units of Series A Preferred
Stock shall exercise such voting rights initially during an
existing default period, they shall have the right, voting
separately as a class, to elect Directors to fill up to two
vacancies in the Board of Directors, if any such vacancies may
then exist, or, if such right is exercised at an annual
meeting, to elect two Directors. If the number which may be so
elected to
Page 73 of 84 Pages
<PAGE>
C-12
fill vacancies at any special meeting does not amount to the
required number, proper provision shall be made so that the
number of Directors constituting the entire Board of Directors
shall be increased by that number of Directors necessary to
permit the election by the holders of the Series A Preferred
Stock of the required number. After the holders of Units of
Series A Preferred Stock shall have exercised their right to
elect Directors during any default period, the number of
Directors shall not be increased or decreased except as
approved by a vote of the holders of Units of Series A
Preferred Stock as herein provided or pursuant to the rights of
any equity securities ranking senior to the Series A Preferred
Stock.
(iii) Unless the holders of Series A Preferred Stock
shall, during an existing default period, have previously
exercised their right to elect Directors, the Board of
Directors may order, or any stockholder or stockholders owning
in the aggregate not less than 25% of the total number of the
Units of Series A Preferred Stock outstanding may request, the
calling of a special meeting of the holders of Units of Series
A Preferred Stock, which meeting shall thereupon be called by
the Secretary of the Corporation. Notice of such meeting and of
any annual meeting at which holders of Units of Series A
Preferred Stock are entitled to vote pursuant to this paragraph
(C)(iii) shall be given to each holder of record of Units of
Series A Preferred Stock by mailing a copy of such notice to
him at his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not
earlier than 20 days and not later then 60 days after such
order or request or in default of the calling of such meeting
within 60 days after such order or request, such meeting may be
called on similar notice by any stockholder or stockholders
owning in the aggregate not less than 25% of the total number
of outstanding Units of Series A Preferred Stock.
Notwithstanding the provisions of this paragraph (C)(iii), no
such special meeting shall be called during the 60 days
immediately preceding the date fixed for the next annual
meeting of the stockholders.
(iv) During any default period, the holders of shares of
Common Stock and Units of Series A Preferred Stock, and other
classes or series of stock of the Corporation, if applicable,
shall continue to be entitled to elect all the Directors until
Page 74 of 84 Pages
<PAGE>
C-13
holders of the Units of Series A Preferred Stock shall have
exercised their right to elect two Directors voting as a
separate class, after the exercise of which right (x) the
Directors so elected by the holders of Units of Series A
Preferred Stock shall continue in office until their successors
shall have been elected by such holders or until the expiration
of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in paragraph (C)(ii) of this
Section 3) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class of
capital stock which elected the Director whose office shall
have become vacant. References in this paragraph (C) to
Directors elected by the holders of a particular class of
capital stock shall include Directors elected by such Directors
to fill vacancies as provided in clause (y) of the foregoing
sentence.
(v) Immediately upon the expiration of a default period,
(x) the right of the holders of Units of Series A Preferred
Stock as a separate class to elect Directors shall cease, (y)
the term of any Directors elected by the holders of Units of
Series A Preferred Stock as a separate class shall terminate,
and (z) the number of Directors shall be such number as may be
provided for in the Certificate or by-laws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii)
of this Section 3 (such number being subject, however, to
change thereafter in any manner provided by law or in the
Certificate or by-laws). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in
the preceding sentence may be filled by a majority of the
remaining Directors.
(vi) The provisions of this paragraph (C) shall govern the
election of Directors by holders of Units of Preferred Stock
during any default period notwithstanding any provisions of the
Certificate to the contrary.
(D) Except as set forth herein, holders of Units of Series
A Preferred Stock shall have no special voting rights and their
consents shall not be required (except to the extent they are
entitled to vote with holders of shares of Common Stock as set
forth herein) for taking any corporate action.
Page 75 of 84 Pages
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C-14
(4) Certain Restrictions. (A) Whenever quarterly dividends
or other dividends or distributions payable on Units of Series
A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on outstanding Units of
Series A Preferred Stock shall have been paid in full, the
Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of junior stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of parity stock, except dividends
paid ratably on Units of Series A Preferred Stock and shares of
all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders
of such Units and all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any parity stock, provided, however,
that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange
for shares of any junior stock;
(iv) purchase or otherwise acquire for consideration any
Units of Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such Units.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
(5) Reacquired Shares. Any Units of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled promptly after
the acquisition thereof. All such Units
Page 76 of 84 Pages
<PAGE>
C-15
shall, upon their cancellation, become authorized but unissued
Units of Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
(6) Liquidation, Dissolution or Winding Up. (A) Upon any
voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, no distribution shall be made (i) to the
holders of shares of junior stock unless the holders of Units
of Series A Preferred Stock shall have received, subject to
adjustment as hereinafter provided in paragraph (B), the
greater of either (a) $.01 per Unit plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether
or not earned or declared, to the date of such payment, or (b)
the amount equal to the aggregate per share amount to be
distributed to holders of shares of Common Stock, or (ii) to
the holders of shares of parity stock, unless simultaneously
therewith distributions are made ratably on Units of Series A
Preferred Stock and all other shares of such parity stock in
proportion to the total amounts to which the holders of Units
of Series A Preferred Stock are entitled under clause (i)(a) of
this sentence and to which the holders of shares of such parity
stock are entitled, in each case upon such liquidation,
dissolution or winding up.
(B) In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on
outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide outstanding shares of Common Stock, or
(iii) combine outstanding shares of Common Stock into a smaller
number of shares, then in each such case the aggregate amount
to which holders of Units of Series A Preferred Stock were
entitled immediately prior to such event pursuant to clause
(i)(b) of paragraph (A) of this Section 6 shall be adjusted by
multiplying such amount by a fraction the numerator of which
shall be the number of shares of Common Stock that are
outstanding immediately after such event and the denominator of
which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event.
Page 77 of 84 Pages
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C-16
(7) Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or
other transaction in which the shares of common stock are
exchanged for or converted into other stock or securities, cash
and/or any other property, then in any such case Units of
Series A Preferred Stock shall at the same time be similarly
exchanged for or converted into an amount per Unit (subject to
the provision for adjustment hereinafter set forth) equal to
the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into
which or for which each share of Common Stock is converted or
exchanged. In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on
outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide outstanding shares of Common Stock, or
(iii) combine outstanding Common Stock into a smaller number of
shares, then in each such case the amount set forth in the
immediately preceding sentence with respect to the exchange or
conversion of Units of Series A Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator
of which shall be the number of shares of Common Stock that are
outstanding immediately after such event and the denominator of
which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event.
(8) Redemption. The Units of Series A Preferred Stock
shall not be redeemable.
(9) Ranking. The Units of Series A Preferred Stock shall
rank junior to all other series of the Preferred Stock and to
any other class of preferred stock that hereafter may be issued
by the Corporation as to the payment of dividends and the
distribution of assets, unless the terms of any such series or
class shall provide otherwise.
(10) Amendment. The Certificate, including, without
limitation, this resolution, shall not hereafter be amended,
either directly or indirectly, or through merger or
consolidation with another corporation in any manner that would
alter or change the powers, preferences or special rights of
the Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or
more of the
Page 78 of 84 Pages
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C-17
outstanding Units of Series A Preferred Stock, voting
separately as a class.
(11) Fractional Shares. The Series A Preferred Stock may
be issued in Units or other fractions of a share, which Units
or fractions shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Preferred Stock.
(12) Certain Definitions. As used herein with respect to
the Series A Preferred Stock, the following terms shall have
the following meanings:
(A) The term "Common Stock" shall mean the class of stock
designated as the Series Common Stock, par value $.01 per
share, of the Corporation at the date hereof or any other class
of stock resulting from successive changes or reclassification
of the common stock.
(B) The term "junior stock" (i) as used in Section 4 shall
mean the Common Stock and any other class or series of capital
stock of the Corporation hereafter authorized or issued over
which the Series A Preferred Stock has preference or priority
as to the payment of dividends and (ii) as used in Section 6,
shall mean the Common Stock and any other class or series of
capital stock of the Corporation over which the Series A
Preferred Stock has preference or priority in the distribution
of assets on any liquidation, dissolution or winding up of the
Corporation.
(C) The term "parity stock" (i) as used in Section 4,
shall mean any class or series of stock of the Corporation
hereafter authorized or issued ranking pari passu with the
Series A Preferred Stock as to dividends and (ii) as used in
Section 6, shall mean any class or series of capital stock
ranking pari passu with the Series A Preferred Stock in the
distribution of assets on any liquidation, dissolution or
winding up."
Page 79 of 84 Pages
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14. The amendment to the Certificate of Incorporation of the
Corporation was authorized by vote of the Board of Directors of the
Corporation under the authority vested in the Board under the Certificate of
Incorporation of the Corporation and Section 502 of the Business Corporation
Law.
Page 80 of 84 Pages
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C-19
IN WITNESS WHEREOF, we have subscribed this document on the date
hereof and do hereby affirm, under the penalties of perjury, that the statements
contained herein have been examined by us and are true and correct.
DATE: May __, 1995
--------------------------------------
Robert E. Agan
President and Chief Executive Officer
--------------------------------------
J. Philip Hunter
Secretary
Page 81 of 84 Pages
EXHIBIT 2
---------
FOR IMMEDIATE RELEASE
Contact: Malcolm L. Gibson
Chief Financial Officer
Hardinge Inc.
One Hardinge Drive
Elmira, New York 14902-1507
(607) 734-2281
ELMIRA, N.Y. (MAY 16, 1995) -- Hardinge Brothers, Inc. announced today that at
its 1995 Annual Meeting today its stockholders had reelected John W. Bennett,
James L. Flynn, E. Martin Gibson, J. Philip Hunter and Dr. Eve L. Menger to its
Board of Directors and had approved a change in the Company's name from
"Hardinge Brothers, Inc." to "Hardinge Inc." The stockholders also approved a
reclassification of the Company's Board to consist of three classes of Directors
with staggered three year terms and authorized a new class of Preferred Stock
consisting of 2,000,000 shares, the terms of which would be fixed from time to
time upon issuance by the Company's Board. The stockholders also approved,
subject to the approval by the Board of Directors, or a committee thereof, of
the final terms of an underwriting agreement with respect to a public offering
of the Company's Common Stock, a reclassification of the two classes of Common
Stock, $5.00 par value, into a single class of Common Stock, $0.01 par value,
and an increase in the total authorized shares of Common Stock from 6,000,000
shares to 20,000,000 shares.
The Company also announced today that following the Annual Meeting, its Board of
Directors had adopted a Stockholders' Rights Plan pursuant to which preferred
stock purchase rights will be distributed to stockholders as a dividend at the
rate of one Right for each share of Common Stock held of record as of the close
of business on May 30, 1995. The Plan is being adopted to enable the Board to
protect the Company against any takeover attempt that the Board considers
abusive and not in the best interests of stockholders.
Each Right, when exercisable, will entitle stockholders to buy one Unit
consisting of one one-hundredth of a share of a newly created Series A Preferred
Stock of the Company at a purchase price of $80.00 per Unit. Under certain
circumstances the Rights would entitle holders thereof to acquire securities of
the Company or another person with a market value equal to twice the value of
the exercise price. The Rights will be exercisable ten days after a person or
group (except for certain excluded persons) acquires beneficial ownership of 20%
or more of the Company's outstanding Common Stock or commences a tender or
exchange offer upon consummation of which such person or group would
beneficially own 30% or more of the Company's outstanding Common Stock and will
be redeemable by the Board, at any time prior to the time they become
exercisable, at a redemption price of $0.01 per Right.
###
Page 82 of 84 Pages
EXHIBIT 3
---------
[Form of Letter to Stockholders]
May 30, 1995
To Our Stockholders:
Your Board of Directors has announced the adoption of a Stockholder
Rights Plan. We are enclosing a document entitled "Summary of Rights to Purchase
Preferred Stock" which provides certain information about the Plan, and we urge
you to read it carefully. This letter explains some of the Board's reasons for
adopting the Plan.
The Plan is intended to protect your interests in the event the
Company is confronted with coercive or unfair tactics. The Plan, together with
certain charter and by-law provisions and certain provisions of the New York
Business Corporation Law, is designed to enable your Board to protect the
Company against any takeover attempt that the Board considers abusive and not in
the best interests of the Company's stockholders.
A number of other major corporations have adopted similar to the one
we have adopted. We consider these Rights Plans to be valuable in protecting
your right to retain your equity investment in Hardinge and to realize the full
value of that investment, while not foreclosing a fair acquisition bid for the
Company.
The Plan is not intended to prevent any possible takeover of the
Company and will not do so. The Plan is designed to deal with the potentially
serious problem of unilateral actions by hostile acquirors which are calculated
to deprive the Company's Board and its stockholders of their ability to
determine the destiny of the Company. However, the mere establishment of the
Rights Plan should not affect any prospective offeror willing to negotiate with
your Board of Directors about any possible acquisition of the Company. The
Rights issued under the Plan may generally be redeemed by the Company at a price
of $.01 per Right up to the tenth business day after any person or group has
acquired 20% or more of the Company's common stock, and thus they should not
interfere with any merger or other business combination approved by the Board.
The Rights Plan is not being adopted in response to any effort to
acquire the Company, and the Board is not aware of any such effort. Rather, the
Plan has been adopted in order to assure the ability of the Board to protect
interests.
Issuance of the Rights under the Plan does not in any way weaken the
financial strength of the Company or interfere with its business plans. The
issuance of the Rights has no dilutive effect, will not affect reported earnings
per share, is not taxable to the Company or to you, and will not change the way
in which you can currently trade the Company's shares. As explained in the
enclosed Summary of Rights to Purchase Preferred Stock, the
Page 83 of 84 Pages
<PAGE>
2
Rights will only be exercisable if and when a takeover arises which triggers
their effectiveness. They will then operate to enable your Board to protect you
from being deprived of your right to share in the full measure of your Company's
long-term potential.
Your Board of Directors believes the Rights Plan can serve an
important role in protecting the value of your shares.
Sincerely,
Robert E. Agan
President and Chief Executive Officer
Page 84 of 84 Pages
