UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM l0-Q
(Mark One)
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1997
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For transition period from
--------------------
to
--------------------
Commission File Number 1-4801
BARNES GROUP INC.
(a Delaware Corporation)
I.R.S. Employer Identification No. 06-0247840
123 Main Street, Bristol, Connecticut 06010
Telephone Number (860) 583-7070
Number of common shares outstanding at
May 12, 1997 - 20,297,575
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
--- ---
-1-
<PAGE>
<TABLE>
BARNES GROUP INC.
FORM 10-Q INDEX
For the Quarterly period ended March 31, 1997
<CAPTION>
DESCRIPTION PAGES
----------- -----
<S> <S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Statements
of Income for the three months ended
March 31, 1997 and 1996 3
Consolidated Balance Sheets as
of March 31, 1997 and December 31, 1996 4-5
Consolidated Statements of Cash Flows
for the three months ended March 31,
1997 and 1996 6
Notes to Consolidated Financial
Statements 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-10
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to Vote of
Security Holders 11
ITEM 6. Exhibits and Reports on Form 8-K 11-12
Signatures 12
-2-
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF INCOME
Three months ended March 31, 1997 and 1996
(Dollars in thousands, except per share data)
(Unaudited)
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Net sales $158,133 $150,091
Cost of sales 102,946 97,173
Selling and administrative expenses 38,383 41,664
-------- --------
141,329 138,837
-------- --------
Operating income 16,804 11,254
Other income 920 950
Interest expense 1,288 1,288
Other expenses 247 381
-------- --------
Income before income taxes 16,189 10,535
Income taxes 6,071 3,898
-------- --------
Net income $ 10,118 $ 6,637
======== ========
Per common share:
Net Income $ .50 $ .34
Dividends .15 .15
Average common shares outstanding 20,085,390 19,747,905
<FN>
See accompanying notes.
</TABLE>
-3-
<PAGE>
<TABLE>
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
ASSETS March 31, December 31,
1997 1996
-------- -----------
(Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 21,132 $ 23,986
Accounts receivable, less allowances
(1997-$3,107; 1996-$3,158) 101,296 88,060
Inventories
Finished goods 30,177 30,285
Work-in-process 20,202 17,730
Raw materials and supplies 15,839 16,927
-------- --------
66,218 64,942
Deferred income taxes and prepaid
expenses 14,275 13,310
-------- --------
Total current assets 202,921 190,298
Deferred income taxes 23,189 23,575
Property, plant and equipment 325,230 320,604
Less accumulated depreciation 192,919 189,533
-------- --------
132,311 131,071
Goodwill 19,294 19,441
Other assets 25,512 25,571
-------- --------
Total assets $403,227 $389,956
======== ========
<FN>
See accompanying notes.
</TABLE>
-4-
<PAGE>
<TABLE>
BARNES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY March 31, December 31,
1997 1996
--------- -----------
(Unaudited)
<S> <C> <C>
Current liabilities
Notes payable $ 3,772 $ 1,767
Accounts payable 35,935 30,363
Accrued liabilities 43,205 46,152
Guaranteed ESOP obligation-current 2,590 2,540
-------- --------
Total current liabilities 85,502 80,822
Long-term debt 70,000 70,000
Guaranteed ESOP obligation 4,285 4,951
Accrued retirement benefits 68,968 69,085
Other liabilities 7,126 7,934
Stockholders' equity
Common stock-par value $.01 per share
Authorized: 60,000,000 shares
Issued: 22,037,769 shares stated at 220 15,737
Additional paid-in capital 44,744 28,347
Retained earnings 163,783 156,698
Foreign currency translation
adjustments (11,785) (10,087)
Treasury stock at cost,
1997-1,789,536 shares
1996-2,046,009 shares (22,741) (26,040)
Guaranteed ESOP obligation (6,875) (7,491)
-------- --------
Total stockholders' equity 167,346 157,164
-------- --------
Total liabilities and stockholders'
equity $403,227 $389,956
======== ========
<FN>
See accompanying notes.
</TABLE>
-5-
<PAGE>
<TABLE>
BARNES GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 1997 and 1996
(Dollars in thousands)
(Unaudited)
<CAPTION>
1997 1996
Operating Activities: ------- -------
<S> <C> <C>
Net income $10,118 $ 6,637
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 6,785 6,867
Gain on sale of property, plant and
equipment (137) (108)
Translation losses 77 73
Changes in assets and liabilities:
Accounts receivable (13,825) (7,299)
Inventories (1,766) (5,549)
Accounts payable 5,803 2,338
Accrued liabilities (2,779) 1,759
Deferred income taxes 411 152
Other liabilities and assets (1,425) (2,369)
------- -------
Net Cash Provided by Operating Activities 3,262 2,501
Investing Activities:
Proceeds from sale of property, plant
and equipment 766 710
Capital expenditures (9,161) (7,443)
Other (506) (449)
------- -------
Net Cash Used by Investing Activities (8,901) (7,182)
Financing Activities:
Net increase in notes payable 2,056 3,723
Proceeds from the issuance of common stock 3,848 2,517
Dividends paid (3,020) (2,969)
------- -------
Net Cash Provided by Financing Activities 2,884 3,271
Effect of exchange rate changes on cash flows (99) (678)
------- -------
Decrease in cash and cash equivalents (2,854) (2,088)
Cash and cash equivalents at beginning of period 23,986 17,868
------- -------
Cash and cash equivalents at end of period $21,132 $15,780
======= =======
<FN>
See accompanying notes.
</TABLE>
-6-
<PAGE>
Notes to Consolidated Financial Statements:
1. Summary of Significant Accounting Policies
------------------------------------------
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information and
with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. They do not include all information and
footnotes required by generally accepted accounting principles
for complete financial statements. For additional
information, please refer to the consolidated financial
statements and footnotes included in the company's Annual
Report on Form 10-K for the year ended December 31, 1996. In
the opinion of management, all adjustments, including normal
recurring accruals considered necessary for a fair
presentation, have been included. Operating results for the
three-month period ended March 31, 1997 are not necessarily
indicative of the results that may be expected for the year
ending December 31, 1997.
2. Subsequent Event
----------------
On April 2, 1997, the stockholders approved an amendment to
the company's Restated Certificate of Incorporation providing
for an increase in the number of authorized common shares from
20 million to 60 million and a reduction in the par value of
common and preferred stock from $1.00 to $.01 per share. This
allowed the company to effect a three-for-one stock split for
stockholders of record on April 3, 1997, previously authorized
by the Board of Directors.
All references to shares and per share amounts in the
consolidated financial statements and accompanying notes have
been adjusted retroactively for the three-for-one stock split,
unless otherwise noted. In addition, stockholders' equity at
March 31, 1997 reflects the effect of the stock split and
change in par value per share. These changes reduced the
common stock account by $15.5 million and increased the
additional paid-in capital account by a like amount.
-7-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
---------------------
The company's first quarter 1997 consolidated sales were $158.1
million, up 5.4% from last year's results of $150.1 million.
Operating income increased 49.3% in 1997 to $16.8 million compared
to $11.3 million in 1996. Operating income margin in 1997 was
10.6%, compared to 7.5% in the prior year's first quarter. These
results reflect period-over-period profit growth in all three
business segments and strong sales gains at Barnes Aerospace.
Consolidated cost of sales as a percentage of sales was 65.1% in
1997 versus 64.7% in 1996. Selling and administrative expenses
were 24.3% of sales compared to 27.8% in 1996's first quarter.
Segment Review - Sales and Operating Income
------------------------------------------
Associated Spring segment sales for the first quarter 1997 rose
2.6% over last year's comparable period buoyed in large part by the
continued strength of the U.S. automotive and durable goods
markets. Sales for 1997 were $73.7 million compared to $71.8
million in 1996. Operating income was in line with sales.
Internationally, sales as well as operating income declined overall
compared to last year, primarily due to a softening in its
Singapore and Mexican businesses. This was partially offset by
sales and operating income gains reported by its Brazil unit.
Bowman Distribution segment sales were $54.8 million in the first
three months of 1997 versus $55.0 million in 1996. The daily sales
rate was higher than 1996, but not enough to offset two fewer
selling days in 1997. Operating income, however, increased
substantially over the prior year's first quarter. This
improvement was a result of reducing operating costs and improving
productivity, primarily in the U.S. Also contributing to the year-
over-year operating income improvement was a pre-tax charge of $0.8
million for a workforce reduction in the first quarter of 1996.
Barnes Aerospace segment sales for the first quarter 1997 improved
27.9% over 1996, increasing to $30.0 million from $23.5 million in
the prior year. Significant sales gains were reported by all three
business units. Operating income for the segment also improved
substantially on the strength of the higher sales volume as well as
productivity improvements.
-8-
<PAGE>
Non-Operating Income/Expense
----------------------------
Other expenses in 1996 included a foreign exchange loss, compared
to a small gain in 1997. The 1997 gain is included in other
income.
Income Taxes
-------------
The company's first quarter 1997 effective tax rate of 37.5%
compared to 37.0% at the first quarter of 1996, was higher because
U.S. income, with tax rates higher than the foreign tax rates,
comprised a larger percentage of consolidated income before income
taxes in 1997 versus 1996.
Net Income and Net Income Per Share
-----------------------------------
Consolidated net income was $10.1 million, or 50 cents per share,
for the first quarter of 1997, compared to 1996's first quarter net
income of $6.6 million, or 34 cents per share. The first quarter
of 1997 is the company's best quarter ever in terms of earnings.
The pre-tax workforce reduction charge of $1.3 million reduced 1996
first quarter earnings by 4 cents per share.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128 ("FAS 128"), "Earnings Per Share", requiring
the dual presentation of basic and diluted earnings per share. The
company is required to adopt the provisions of the Statement in the
fourth quarter of 1997. If earnings per share for the quarters had
been computed under the provisions of FAS 128 the results would be:
<TABLE>
<CAPTION>
Three months
ended March 31,
Earnings per share 1997 1996
---- ----
<S> <C> <C>
As reported $.50 $.34
Pro forma:
Basic .50 .34
Diluted .49 .33
</TABLE>
-9-
<PAGE>
Financial Condition
-------------------
Cash Flows
----------
Operating activities provided cash of $3.3 million in the first
quarter of 1997, compared to $2.5 million in 1996. Strong earnings
in both years, after adjustments for the non-cash charges for
depreciation and amortization, more than offset the net change in
operating assets and liabilities.
Investing activities used cash of $8.9 million in the first quarter
of 1997, an increase of $1.7 million over the first three months of
1996. The increase was a result of higher levels of capital
expenditures as all three segments continue to invest in new
equipment to improve productivity, quality and customer service.
Financing activities provided cash of $2.9 million in the first
quarter of 1997 and $3.3 million in 1996's first quarter. Proceeds
from borrowings and from the issuance of common stock, largely due
to the exercise of stock options, more than offset dividend
payments.
Liquidity and Capital Resources
-------------------------------
During 1997 and 1996, the company maintained long-term debt of
$70.0 million comprised, in part, of borrowings under its short-
term bank credit lines backed by its long-term revolving credit
agreement. At March 31, 1997, the company classified as long-term
debt $10.3 million of borrowings under its lines of credit and $6.2
million of the current portion of its long-term debt. The company
has both the intent and the ability, through its revolving credit
agreement, to refinance these amounts on a long-term basis. The
company considers this a cost effective way to manage its long-term
financing needs.
The company maintains substantial bank borrowing facilities to
supplement internal cash generation. At March 31, 1997, the
company had $150.0 million of borrowing capacity under its long-
term revolving credit agreement of which none was borrowed. In
addition, the company had approximately $130.0 million in
uncommitted short-term bank credit lines, of which $11.0 million
was in use at March 31, 1997. The interest rate on this borrowing
was 5.62%. The company believes these credit facilities coupled
with cash generated from operations are adequate for its
anticipated future requirements.
-10-
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
-------------------------------------------------
(a) The Annual Meeting of the registrant's stockholders was
held on April 2, 1997. Proxies for the meeting were
solicited pursuant to Regulation 14 A.
(c) (1) The following directors were elected:
<TABLE>
<CAPTION>
Votes in Votes For Terms
Director Favor Withheld Expiring
-------- ------- -------- ---------
<S> <C> <C> <C>
Thomas O. Barnes 5,957,589 75,488 2000
Gary G. Benanav 5,952,683 80,394 2000
Marcel. P. Joseph 5,961,489 71,588 2000
Frank E. Grzelecki 5,903,746 129,331 1998
</TABLE>
(2)The stockholders approved the selection of Price
Waterhouse LLP as the company's independent accountants
for 1997. The proposal was adopted as 5,933,049 shares
voted for, 48,848 shares voted against, 51,180 shares
abstained and there were no non-votes. The share amounts
are prior to the stock split.
(3)The stockholders acted upon a proposal to amend the
company's Restated Certificate of Incorporation to
increase the number of authorized shares of common stock
from 20 million shares to 60 million and reduce the par
value of common and preferred stock from $1.00 to $.01 per
share. The proposal was adopted as 5,279,618 shares voted
for, 687,885 shares voted against, 50,015 shares abstained
and there were 15,559 non-votes. The share amounts are
prior to the stock split.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Exhibit 3.1 Restated Certificate of Incorporation, as
amended
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K, Item 5, Other Events, were filed
during the quarter ended March 31, 1997. However, one
report dated April 8, 1997, was filed. It addressed the
proposal to stockholders to approve the amendment of the
company's Restated Certificate of Incorporation.
-11-
<PAGE>
The amendment, as approved, increased the authorized
number of common shares from 20 million to 60 million and
reduced the par value of common and preferred stock from
$1.00 to $.01 per share. The stockholder approval of the
amendment was a condition to the three-for-one common
stock split approved by the Board of Directors on February
21, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Barnes Group Inc.
(Registrant)
Date May 15, 1997 By /s/ John J. Locher
------------ -------------------------------------
John J. Locher
Vice President, Treasurer
(the principal financial officer)
Date May 15, 1997 By /s/ Francis C. Boyle, Jr.
------------ -------------------------------------
Francis C. Boyle, Jr.
Vice President, Controller
(the principal accounting officer)
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of Barnes Group Inc. at March 31, 1997, and the
related consolidated statement of income for the three months ended March
31, 1997 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 21,132
<SECURITIES> 0
<RECEIVABLES> 104,403
<ALLOWANCES> 3,107
<INVENTORY> 66,218
<CURRENT-ASSETS> 202,921
<PP&E> 325,230
<DEPRECIATION> 192,919
<TOTAL-ASSETS> 403,227
<CURRENT-LIABILITIES> 85,502
<BONDS> 74,285
<COMMON> 220
0
0
<OTHER-SE> 167,126
<TOTAL-LIABILITY-AND-EQUITY> 403,227
<SALES> 158,133
<TOTAL-REVENUES> 158,133
<CGS> 102,946
<TOTAL-COSTS> 102,946
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 123
<INTEREST-EXPENSE> 1,288
<INCOME-PRETAX> 16,189
<INCOME-TAX> 6,071
<INCOME-CONTINUING> 10,118
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,118
<EPS-PRIMARY> .50
<EPS-DILUTED> .50
</TABLE>
Exhibit 3.1
[NOTE:THE FOLLOWING RESTATED CERTIFICATE OF INCORPORATION
HAS BEEN FURTHER RESTATED, FOR PURPOSES OF FILING THE SAME
WITH THE SECURITIES AND EXCHANGE COMMISSION ONLY, TO GIVE
EFFECT TO ALL AMENDMENTS OF AND ADDITIONS TO THE RESTATED
CERTIFICATE OF INCORPORATION OF BARNES GROUP INC. FILED
WITH THE SECRETARY OF STATE OF THE STATE OF DELAWARE PRIOR
TO THE DATE THIS RESTATED CERTIFICTAE OF INCORPORATION IS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
SIGNATURES FROM THE ORIGINAL HAVE BEEN OMITTED.]
RESTATED
CERTIFICATE OF INCORPORATION
OF
BARNES GROUP INC.
-----------------
Barnes Group Inc., having filed its original
Certificate of Incorporation with the Secretary of State of
the State of Delaware on January 30, 1925 under the name of
Associated Spring Corporation of Delaware, thereby forming a
corporation under and pursuant to the provisions of the
General Corporation Law of the State of Delaware, does hereby
restate its Certificate of Incorporation and certify as
follows:
FIRST: The name of this corporation is
BARNES GROUP INC.
SECOND: Its principal office in the State of
Delaware is located at No. 100 West Tenth Street, in the City
of Wilmington, County of New Castle. The name and address of
its resident agent is The Corporation Trust Company, No. 100
West Tenth Street, Wilmington, Delaware.
THIRD: The nature of the business or objects
or purposes proposed to be transacted, promoted or carried on
are:-
<PAGE>
(a) To deal in, purchase, manufacture, hold, own,
sell or otherwise dispose of, repair, exchange, import
and export, all kinds and varieties of springs and
spring beds, wire and wire rope, rivets, screws, bolts,
nuts, shanks, and other wares manufactured from metals
or alloys, either alone or in combination with leather,
paper, wood or other substance; all kinds and varieties
of articles composed wholly or in part of metal,
leather, paper, wood or other substance; plates made of
any kind of metal or alloy by rolling or otherwise
manufacturing the same;
(b) To purchase, produce, manufacture, lease, and
sell all kinds of stock, tools, machinery, machine
supplies, engineering appliances, engineering
accessories, goods, wares, and merchandise, necessary or
incidental to the manufacture, purchase, sale, storage
or repair of the articles hereinbefore mentioned in
clause (a);
(c) To produce, manufacture, purchase, sell and deal
in manufacturers' and mill supplies, engines, boilers,
machinery, tools, machine shops, electrical supplies and
appliances, foundry and factory supplies and hardware of
all kinds; and generally to produce, manufacture, buy,
sell, exchange and deal in all or any of the above
specified products or by products thereof, and all
materials used in the production thereof;
(d) To acquire, buy, hold, mortgage, lease, sell,
exchange and convey, for the purpose of carrying on the
business of the corporation, any and all property, both
real and personal and any interest therein;
(e) To purchase or otherwise acquire, hold, operate
under, own, sell, give and receive licenses under, and
otherwise deal in patents, patent rights or privileges,
inventions, improvements or secret processes, trade
marks and trade names, whether or not in any way
relating to any of the business aforesaid;
(f) To purchase, subscribe for, or otherwise acquire
and hold for investment, or otherwise, or to use, sell,
assign, transfer, mortgage, pledge, or otherwise dispose
of, any shares of stock, bonds, securities, or other
obligations or evidences of indebtedness of this
corporation or of any other corporation or associa-
2
<PAGE>
tion, firm, or individual, or of any government, or of
any subdivision thereof, and to aid in any manner any
such corporation, association, firm, individual,
government or any subdivision thereof, whose shares of
stock, bonds, or other obligations are held by this
corporation, and to do any other act or thing permitted
by law for the preservation, protection, improvement, or
enhancement of the value of such shares of stock, bonds,
securities, or other obligations, and while the owner
thereof to exercise all the rights, powers and
privileges of ownership, including the right to vote
thereon, so far as the same may be permitted by law;
(g) To borrow money and from time to time to make and
issue promissory notes, bills of exchange, bonds,
debentures, and other obligations and evidences of
indebtedness of all kinds, secured or unsecured, of the
corporation for moneys borrowed or in payment for
property acquired, or for any of the other objects or
purposes of the corporation, or for any of the objects
of its business; to secure the same by mortgage or
mortgages, or deed or deeds of trust, or pledge, or
other lien upon any or all of the property, rights,
privileges, or franchises of the corporation wheresoever
situated, acquired, or to be acquired; to sell, pledge,
or otherwise dispose of any or all debentures, or other
bonds, notes and other obligations, in such manner and
upon such terms as the Board of Directors may deem
judicious, and to guarantee the payment of any dividends
upon stocks, or the principal or interest upon bonds, or
the contracts or other obligations of any corporation,
association, firm, or individual, so far as the same may
be permitted by law;
(h) To conduct its business, so far as permitted by
law, in the State of Delaware and other states of the
United States and in the territories and District of
Columbia, and all dependencies and colonies or
possessions of the United States and in foreign
countries, and for and in connection with such business
to acquire, hold, possess, purchase, lease, sell,
mortgage and convey real and personal property, or any
interest therein, and to maintain offices and agencies
either within or anywhere without the State of Delaware;
(i) To carry on all or any part of the foregoing
objects as principal, factor, agent, contractor or
3
<PAGE>
otherwise, either alone or in connection with, any
person, firm, association, or corporation, in any part
of the world, and in general to do any and all things
and to exercise any and all such powers as may be
incidental to the conduct of the business of the
corporation, and in pursuance thereof to exercise all
the powers conferred upon the corporation by the General
Corporation Law of the State of Delaware, or any other
law that may be now or hereinafter applicable to the
corporation.
The foregoing clauses shall be construed both as
objects and powers, and it is hereby expressly provided that
the foregoing enumeration of specific powers shall not be
held to limit or restrict in any manner the powers of this
corporation.
FOURTH: The total number of shares of all
classes of stock which the corporation shall have authority
to issue is 63,000,000 shares, consisting of 3,000,000 shares
of preferred stock of the par value of $.01 per share and
60,000,000 shares of common stock of the par value of $.01
per share.
Shares of preferred stock may be issued from time
to time in one or more series, as may be determined from time
to time by the Board of Directors, each of said series to be
distinctly designated. All shares of any one series of
preferred stock shall be alike in every part-icular, except
that shares of any one series issued at different times may
differ as to the dates from which dividends thereon shall be
cumulative. The Board of Directors is hereby authorized to
fix the dividend rights, dividend rate, conversion rights,
voting rights, rights and terms of redemption (including
sinking fund provisions), the redemption price or prices, and
the liquidation preferences of any wholly unissued series of
preferred shares, and any other powers, designations, prefer-
ences and relative, participating, optional or other rights
of such series, and any qualifications, limitations, or
restrictions on any of the rights of such series, and the
number of shares constituting any such series and the
designation thereof, or any of them; and to increase or
decrease the number of shares of any series subsequent to the
issue of shares of that series, but not below the number of
shares of such series then outstanding. In case the number
of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they
had prior to
4
<PAGE>
the adoption of the resolution originally fixing the number
of shares of such series.
Subject to any rights and privileges granted to
the holders of preferred stock by resolution of the Board of
Directors pursuant to the provisions of this Article FOURTH,
the holders of common stock shall exercise one vote in re-
spect of each share of stock held by them on all matters
voted upon by the stockholders; shall be entitled to receive
such dividends as may be declared from time to time by the
Board of Directors; shall be entitled, upon liquidation or
dissolution, to receive all the assets of the corporation,
tangible and intangible, of whatever kind available for
distribution, remaining after payment of the liquidation
preferences granted to any shares of preferred stock, ratably
in proportion to the number of shares of common stock held by
them; and shall have such other rights and privileges as may
be allowed to them by the laws of the State of Delaware.
The amount of the authorized stock of the
corporation of any class or classes may be increased or
decreased by the affirmative vote of the holders of a
majority of the stock of the corporation entitled to vote.
No holder or owner of any shares of stock of the
corporation of any class, now or hereafter authorized, at any
time shall be entitled as of right, by reason of the holding
or ownership of such stock, to subscribe to additional shares
of stock (or to obligations convertible into stock) of any
class, now or hereafter authorized, which may at any time be
issued and disposed of by the corporation. The corporation,
from time to time, may issue and dispose of the shares of its
stock of any class, now or hereafter authorized, and for such
purpose may grant rights or options to subscribe for, pur-
chase or otherwise acquire any shares of such stock, to such
person or persons, in such amounts, for such consideration,
and on such terms, as the Board of Directors lawfully may
determine.
At the discretion of the Board of Directors, any
distribution to the stockholders upon the liquidation, disso-
lution or winding up of the corporation may be in whole or in
part in securities or property and the determination of the
Board of Directors as to the value of such securities or
other property shall be conclusive.
5
<PAGE>
So far as permitted by law, the corporation may
acquire or purchase, out of surplus, shares of any class of
the outstanding stock of the corporation in such amounts and
for such consideration as the Board of Directors may deter-
mine. The corporation from time to time may sell or other-
wise dispose of treasury stock held by the corporation (that
is to say, stock issued and thereafter acquired by the corpo-
ration) to such person or persons and in such amounts and for
such consideration as the Board of Directors may determine,
and no holder or owner of shares of the stock of the corpora-
tion at any time shall be entitled as of right, by reason of
the holding or ownership of such stock, to acquire any part
thereof.
In accordance with this Article FOURTH, the
Board of Directors has designated certain shares of Preferred
Stock into series with the voting powers, preferences,
rights, qualifications, limitations and restrictions set
forth in (i) the Certificate of Designation, Preferences and
Rights of Series A Junior Participating Preferred Stock of
the corporation filed with the Secretary of State of the
State of Delaware on July 25, 1986 which is attached hereto
as Exhibit A and is hereby incorporated herein by reference
and (ii) the Certificate of Designation of Series B
Cumulative Convertible Preferred Stock of the corporation
filed with the Secretary of State of the State of Delaware on
December 7, 1987 which is attached hereto as Exhibit B and is
hereby incorporated herein by reference.
FIFTH: The number of shares with which the
corporation will commence business is ten (10) shares of
capital stock, which shares are without nominal or par value.
SIXTH: The corporation is to have perpetual
existence.
SEVENTH: The private property of the
stockholders shall not be subject to the payment of corporate
debts to any extent whatever.
EIGHTH: The Directors of the corporation need
not be stockholders thereof.
NINTH: In furtherance, and not in limitation
of the powers conferred by statute, the Board of Directors,
subject to the provisions of this Certificate of Incorpora-
tion, is expressly authorized:
6
<PAGE>
(a) To make and alter the by-laws of the corporation.
(b) To fix the amount to be reserved as working
capital over and above its capital stock paid in.
(c) From time to time to determine whether and to
what extent, and at what times and places, and under
what conditions and regulations, the accounts and books
of the corporation (other than the stock ledger), or any
of them, shall be open to inspection of stockholders;
and no stockholder shall have any right of inspecting
any account, book or document of the corporation except
as conferred by statute, unless authorized by a
resolution of the stockholders or the Board of
Directors.
(d) If the by-laws so provide, to designate three or
more of its number to constitute an executive committee,
which committee shall, to the extent provided in the by-
laws of the corporation, have and exercise any or all of
the powers of the Board of Directors in the management
of the business and affairs of the corporation and have
power to cause the seal of the corporation to be affixed
to all papers which may require it.
(e) Pursuant to the affirmative vote of the holders
of at least two-thirds of the shares of capital stock
then issued and outstanding, given at a stockholders'
meeting duly called for that purpose, the Board of
Directors shall have power and authority to mortgage,
sell, lease or exchange all of the property and assets
of the corporation, including its good will and its
corporate franchises, upon such terms and conditions as
the Board of Directors deem expedient and for the best
interests of the corporation.
(f) Both stockholders and directors shall have power,
if the by-laws so provide, to hold their meetings, and
to have one or more offices within or without the State
of Delaware, and to keep the books of the corporation
(subject to the provisions of the statutes), outside of
the State of Delaware at such places as may be from time
to time designated by the Board of Directors.
(g) Subject to the provisions of this Certificate of
Incorporation, the corporation may in its by-laws
7
<PAGE>
confer powers upon its directors in addition to the
foregoing, and in addition to the powers and authorities
expressly conferred upon them by statute.
TENTH: In so far as the same is not contrary
to the laws of the State of Delaware, in case the
corporation enters into contracts or transacts business
with one or more of its Directors, or with any firm of
which one or more of its Directors are members, or with any
association or other corporation of which one or more of
its Directors are directors or officers, such contract or
transaction shall not be invalidated or in any wise
affected by the fact that such Director or Directors were
or may be adversely interested therein, even though the
vote of the Director or Directors having such adverse
interest shall have been necessary to obligate the
corporation upon such contract or transaction, and even
though the fact of such adverse interest may not have been
disclosed prior to the time when the corporation became
obligated thereon; no such Director or Directors shall be
liable to the corporation or to any stockholder or creditor
thereof or by reason of any such contract or transaction,
nor shall such Director or Directors be accountable for any
gains or profits realized thereon.
ELEVENTH: Notwithstanding the provisions of para-
graph (a) of Article NINTH of this Certificate of
Incorporation and any provision of the By-Laws of the
corporation, no amendment to this Certificate of
Incorporation or to the By-Laws shall amend, alter, change
or repeal any of the provisions of Sections 2, 3, 8 or 9 of
Article II of the By-Laws or of this Article ELEVENTH
unless adopted by the affirmative vote of the holders of
not less than two-thirds of the outstanding shares of stock
of the corporation entitled to vote in elections of
directors, considered for purposes of this Article ELEVENTH
as one class.
TWELFTH: 1. In addition to the affirmative
vote required by law, the terms of any other Article of
this Restated Certificate of Incorporation or otherwise,
the approval or authorization of any Business Combination
(as hereinafter defined) with any Interested Person (as
hereinafter defined) shall require the affirmative vote of
the holders of not less than 70 percent of the
corporation's Voting Stock (as hereinafter defined);
provided that such 70 percent voting requirement shall not
be applicable if both of the following conditions are met:
8
<PAGE>
(a) The cash per share, if any, plus the fair market
value (as determined by a majority of the Continuing
Directors) of any other consideration to be received per
share by the holders of shares of any class of the
corporation's capital stock in conjunction with a
Business Combination is not less than the greater of
(with appropriate adjustments for any recapitalizations,
stock splits, stock dividends and like distributions):
(i) the highest price per share (including any
and all brokerage, soliciting dealer's or other fees or
taxes) paid by the Interested Person to acquire any such
shares of the corporation's capital stock during the
period beginning two years prior to such Interested
Person's acquisition of sufficient shares to become an
Interested Person and ending immediately prior to the
vote of the stockholders upon such Business Combination
involving such Interested Person; or
(ii) an amount per share at least equal to the
Market Price per share of such shares of the
corporation's capital stock immediately prior to the
announcement of such Business Combination involving such
Interested Person plus a percentage of such Market Price
equal to the highest percentage of premium over the then
Market Price paid by the Interested Person (including
any and all brokerage, soliciting dealer's or other fees
or taxes) to acquire any such shares of capital stock
during the period beginning two years prior to such
Interested Person's acquisition of sufficient shares to
become an Interested Person and ending immediately prior
to the vote by stockholders upon such Business Combina-
tion.
(b) After such Interested Person's acquisition of
such shares which caused it to become an Interested
Person but before the consummation of any Business
Combination:
(i) such Interested Person has received no
benefit directly or indirectly (except proportionately
as a stockholder) of any loans, advances, guarantees,
pledges or other financial assistance or tax credits or
other tax advantages provided by the corporation; and
9
<PAGE>
(ii) such Interested Person has made no major
changes in the corporation's business or capital struc-
ture; and
(iii) there has been no reduction in the rate of
dividends payable on any class of the corporation's
capital stock except as may have been approved by a
majority of the Continuing Directors; and
(iv) such Interested Person has not acquired
directly or indirectly any additional newly issued or
treasury shares of the corporation's capital stock from
the corporation except as a result of a pro rata stock
dividend or stock split; and
(v) unless otherwise decided by a majority of
Continuing Directors, a proxy statement responsive to
the requirements of the Securities Exchange Act of 1934,
as amended, is mailed to all holders of Voting Stock at
least thirty days prior to the vote by stockholders upon
such Business Combination for the purpose of soliciting
stockholder approval of such Business Combination. Such
proxy statement shall contain recommendations in a
prominent place, if any have been furnished in writing
by the Continuing Directors or any of them, as to the
advisability (or inadvisability)of the Business Combina-
tion and, if deemed advisable by a majority of the
Continuing Directors, an opinion of a reputable invest-
ment banking firm as to the fairness (or lack of fair-
ness) of the terms of such Business Combination from the
point of view of the holders of Voting Stock other than
the Interested Person (such investment banking firm is
to be selected by a majority of the Continuing Direc-
tors, furnished with all information it reasonably re-
quests and paid a reasonable fee for its services upon
receipt by the corporation of such opinion); and
(vi) the consideration offered to the
corporation's stockholders for the consummation of the
Business Combination shall be consideration of the same
type and kind paid by the Interested Person in the
acquisition of Voting Stock by the Interested Person
which caused it to become an Interested Person.
2. Notwithstanding any other provisions of this Arti-
cle, the 70 percent voting requirement shall not apply
if the Continuing Directors have by an affirmative vote
10
<PAGE>
of at least 66 2/3 percent approved the Business Combi-
nation.
3. As used in this Article:
(a) Business Combination means (i) any merger or
consolidation of the corporation or any subsidiary (for
the purposes of this section 3, subsidiary means any
company in which the corporation owns directly or indi-
rectly a majority of any class of equity security) with
or into an Interested Person, (ii) any merger or consol-
idation of an Interested Person with or into the corpo-
ration or any subsidiary, (iii) any sale, lease, ex-
change, transfer or other disposition, including without
limitation a mortgage or any other security device, in
one transaction or a series of transactions, of all or
any Substantial Part (as hereinafter defined) of the
assets either of the corporation or of any subsidiary
(including without limitation any voting securities of a
subsidiary) to an Interested Person, (iv) any sale,
lease, exchange, transfer or other disposition in one
transaction or a series of transactions, of all or any
Substantial Part of the assets of an Interested Person
to the corporation or a subsidiary, (v) the issuance or
transfer of any securities (other than by way of pro
rata distribution to all stockholders) of the
corporation or a subsidiary to an Interested Person,
(vi) any reclassification of securities (including
without limitation a reverse stock split), recapital-
ization, reorganization, merger or consolidation that
would have the effect of increasing the voting power of
an Interested Person, (vii) any liquidation or dissolu-
tion of the corporation or any subsidiary, and (viii)
any agreement, contract or other arrangement providing
for any of the transactions described in this definition
of Business Combination.
(b) Continuing Director means a person who
(i) has been a member of the corporation's Board
of Directors since January 1, 1983; or
(ii) was a director of the corporation prior to
the time that such Interested Person acquired ownership
of sufficient Voting Stock to become an Interested
Person and who continues to serve as a director after
such Interested Person became an Interested Person; or
11
<PAGE>
(iii) was a director who has been recommended to
directly succeed a Continuing Director or to join the
Board of Directors by a majority of the remaining Con-
tinuing Directors.
(c) Interested Person means any individual, corpo-
ration, partnership or other person or entity (including
any group composed of persons and any of their Affili-
ates or Associates acting pursuant to an agreement,
arrangement or understanding to acquire, hold, vote or
dispose of any of the corporation's Voting Stock) which,
together with its Affiliates and Associates, at any time
Beneficially Owns in the aggregate 5 percent or more of
the Voting Stock of the corporation or any subsidiary,
and any Affiliate or Associate of any such individual,
corporation, partnership or other person or entity.
Further and without limitation, any shares of Voting
Stock of the corporation or a subsidiary that any Inter-
ested Person has the right to acquire pursuant to any
agreement, or upon exercise of conversion rights, war-
rants or options, or otherwise, shall be deemed benefi-
cially owned by such Interested Person. The terms
Affiliates, Associates, and Beneficially Owns as used
herein have the meanings set forth as of January 1, 1983
in Regulations 12B and 13D under the Securities Exchange
Act of 1934.
(d) Market Price means (i) the last sale price of the
relevant class of the corporation's capital stock as
reported on the composite tape of a national securities
exchange on the relevant date, or (ii) if such class of
capital stock is not so listed and reported on a nation-
al securities exchange, the highest closing asked quota-
tion with respect to a share of such stock during the 30
day period preceding the date in question on the National
Association of Securities Dealers, Inc. Automated
Quotation System or any system then in use, or (iii) if
such class of capital stock is not so listed or quoted,
that fair market value determined in good faith by a
majority of the Continuing Directors.
(e) Substantial Part means the lesser of (i)
$10,000,000 or (ii) 10 percent or more of the book value
of the total assets of the corporation in question as of
the end of its most recent fiscal year ending prior to
the time the determination is being made.
12
<PAGE>
(f) Voting Stock means all outstanding shares of
capital stock of the corporation or another corporation
entitled to vote generally in the election of directors
and each reference to a proportion of shares of Voting
Stock shall refer to such proportion of the votes enti-
tled to be cast by holders of shares of Voting Stock.
4. The provisions of this Article TWELFTH shall also
apply to a Business Combination with any individual,
corporation, partnership or other person or entity which
had been an Interested Person, notwithstanding that such
individual, corporation, partnership or other person or
entity has reduced its stockholdings below 5 percent of
the Voting Stock of the corporation.
5. A majority of the Continuing Directors shall have
the power and authority to construe and apply any and
all of the terms and provisions of this Article TWELFTH
on the basis of information known to them after reason-
able inquiry.
6. No amendment to this Restated Certificate of Incor-
poration shall amend, alter, change or repeal any of the
provisions of this Article TWELFTH, unless such amend-
ment shall receive the affirmative vote of the holders
of not less than 70 percent of the corporation's Voting
Stock; provided that if two-thirds of the Continuing
Directors vote to recommend the amendment to the stock-
holders, such amendment shall only require the affirma-
tive vote of the holders of a majority of the
corporation's Voting Stock.
7. Nothing in this Article TWELFTH shall be deemed or
construed to relieve any Interested Person from any
fiduciary or other obligation imposed by law.
THIRTEENTH: No action required to be taken or
which may be taken at any annual or special meeting of
stockholders may be taken by consent in writing without a
meeting of stockholders. No amendment to this Certificate
of Incorporation or to the By-Laws shall amend, alter,
change or repeal any provision of this Article THIRTEENTH
unless adopted by the affirmative vote of the holders of
not less than two-thirds of the outstanding shares of stock
of the corporation entitled to vote in elections of
directors, considered for purposes of this Article
THIRTEENTH as one class.
13
<PAGE>
FOURTEENTH: A director of the Corporation shall
not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper
personal benefit.
If the General Corporation Law of the State of
Delaware is amended to authorize the further elimination or
limitation of the liability of directors, then the
liability of a director of the Corporation shall be
eliminated or limited to the fullest extent authorized by
the General Corporation Law of the State of Delaware, as so
amended.
Any repeal or modification of this Article shall
not adversely affect any right or protection of a director
of the Corporation existing hereunder with respect to any
act or omission occurring prior to or at the time of such
repeal or modification.
This Restated Certificate of Incorporation was
duly adopted by the Board of Directors of the corporation
in accordance with the provisions of Section 245 of the
General Corporation Law of the State of Delaware. It only
restates and integrates and does not further amend the
provisions of the corporation's Certificate of
Incorporation as heretofore amended or supplemented. There
is no discrepancy between those provisions and the
provisions of this restated Certificate of Incorporation.
IN WITNESS WHEREOF, Barnes Group Inc. has caused
this restated Certificate of Incorporation to be signed in
its corporate name by its Chairman of the Board and its
Chairman of the Executive Committee and its corporate seal
to be affixed hereto and attested by its Secretary this 6th
day of April, 1977.
14
EXHIBIT A
---------
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
BARNES GROUP INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Wallace Barnes, Chairman of the Board, and
John E. Besser, Secretary, of Barnes Group Inc., a
corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with
the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the
Board of Directors by the Restated Certificate of
Incorporation of the said Corporation, the said Board of
Directors on July 16, 1986, adopted a resolution creating a
series of 65,000 shares of Preferred Stock designated as
Series A Junior Participating Preferred Stock and containing
the following voting powers, preferences and relative,
participating, optional and other special rights:
Section 1. Designation and Amount. The shares of
----------------------
such series shall be designated as "Series A Junior
Participating Preferred Stock" and the number of shares
constituting such series shall initially be 65,000, par
value $1.00 per share, such number of shares to be subject
to increase or decrease by action of the Board of Directors
as evidenced by a certificate of designation.
Section 2. Dividends and Distributions.
---------------------------
(A) Subject to the prior and superior rights of
the holders of any shares of any series of Preferred Stock
ranking prior and superior to the shares of Series A Junior
Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred
Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the 15th
day of March, June, September, and December in each year
(each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating
Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $5.00 or (b)
<PAGE>
subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on
the Common Stock, par value $1.00 per share, of the
Corporation (the "Common Stock") since the immediately
preceding Quarterly Dividend Payment Date, or, with respect
to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series
A Junior Participating Preferred Stock. In the event the
Corporation shall at any time after July 16, 1986 (the
"Rights Declaration Date") (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares,
then in each such case the amount to which holders of shares
of Series A Junior Participating Preferred Stock were
entitled immediately prior to such event under clause (b) of
the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Junior Participating Preferred
Stock as provided in paragraph (A) above immediately after
it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution
shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend
of $5.00 per share on the Series A Junior Participating
Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Junior
Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock, unless the
date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of
2
<PAGE>
Series A Junior Participating Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the
shares of Series A Junior Participating Preferred Stock in
an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may
fix a record date for the determination of holders of shares
of Series A Junior Participating 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.
Section 3. Voting Rights. The holders of shares
-------------
of Series A Junior Participating Preferred Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Junior
Participating Preferred Stock shall entitle the holder
thereof to 100 votes 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 Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the
number of votes per share to which holders of shares of
Series A Junior Participating Preferred Stock were entitled
immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which
is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein or by
law, the holders of shares of Series A Junior Participating
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 Series A
Junior Participating Preferred Stock shall be in arrears in
an amount equal to six (6) quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a
period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for
3
<PAGE>
all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A Junior
Participating Preferred Stock then outstanding shall have
been declared and paid or set apart for payment. During
each default period, all holders of Preferred Stock
(including holders of the Series A Junior Participating
Preferred Stock) with dividends in arrears in an amount
equal to six (6) quarterly dividends thereon, voting as a
class, irrespective of series, shall have the right to elect
two (2) Directors.
(ii) During any default period, such voting right
of the holders of Series A Junior Participating 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
right nor the right of the holders of any other series of
Preferred Stock, if any, to increase, in certain cases, the
authorized number of Directors shall be exercised unless the
holders of ten percent (10%) in number of shares of
Preferred Stock outstanding shall be present 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
Preferred Stock of such voting right. At any meeting at
which the holders of Preferred Stock shall exercise such
voting right initially during an existing default period,
they shall have the right, voting as a class, to elect
Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two (2) Directors or, if
such right is exercised at an annual meeting, to elect two
(2) Directors. If the number which may be so elected at any
special meeting does not amount to the required number, the
holders of the Preferred Stock shall have the right to make
such increase in the number of Directors as shall be
necessary to permit the election by them of the required
number. After the holders of the Preferred Stock shall have
exercised their right to elect Directors in any default
period and during the continuance of such period, the number
of Directors shall not be increased or decreased except by
vote of the holders of Preferred Stock as herein provided or
pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series A Junior
---- -----
Participating Preferred Stock.
(iii) Unless the holders of 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 ten percent (10%) of
the total number of shares of Preferred Stock outstanding,
irrespective of series, may request, the calling of special
4
<PAGE>
meeting of the holders of Preferred Stock, which meeting
shall thereupon be called by the President, a Vice-President
or the Secretary of the Corporation. Notice of such meeting
and of any annual meeting at which holders of Preferred
Stock are entitled to vote pursuant to this paragraph (C)
(iii) shall be given to each holder of record of 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 than 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 ten percent (10%) of the total
number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii),
no such special meeting shall be called during the period
within 60 days immediately preceding the date fixed for the
next annual meeting of the stockholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if
applicable, shall continue to be entitled to elect the whole
number of Directors until the holders of Preferred Stock
shall have exercised their right to elect two (2) Directors
voting as a class, after the exercise of which right (x) the
Directors so elected by the holders of 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 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
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 Preferred Stock as a
class to elect Directors shall cease, (y) the term of any
Directors elected by the holders of Preferred Stock as a
class shall terminate, and (z) the number of Directors shall
be such number as may be provided for in the certificate of
incorporation 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 of incorporation or by-laws). Any vacancies in
the Board of Directors effected by the provisions of clauses
5
<PAGE>
(y) and (z) in the preceding sentence may be filled by a
majority of the remaining Directors.
(D) Except as set forth herein, holders of Series
A Junior Participating Preferred Stock shall have no special
voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders
of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Junior
Participating Preferred Stock as provided in Section 2 are
in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on
shares of Series A Junior Participating Preferred Stock
outstanding 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 stock ranking
junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make any
other distributions on any shares of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid
ratably on the Series A Junior Participating Preferred
Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total
amounts to which the holders of all such shares are
then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Junior
Participating Preferred Stock, provided that the
Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A
Junior Participating Preferred Stock;
(iv) purchase or otherwise acquire for
6
<PAGE>
consideration any shares of Series A Junior
Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series A Junior
Participating Preferred Stock, except in accordance
with a purchase offer made in writing or by publication
(as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and
equitable treatment among the respective series or
classes.
(B) The 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.
Section 5. Reacquired Shares. Any shares of
-----------------
Series A Junior Participating 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 shares shall upon their
cancellation become authorized but unissued shares 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.
Section 6. Liquidation, Dissolution or Winding
-----------------------------------
Up. (A) Upon any liquidation (voluntary or otherwise),
--
dissolution or winding up of the Corporation, no
distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the
holders of shares of Series A Junior Participating Preferred
Stock shall have received $100 per share, plus an amount
equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such
payment (the "Series A Liquidation Preference"). Following
the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the
holders of shares of Series A Junior Participating Preferred
Stock unless, prior thereto, the holders of shares of Common
Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i)
the Series A Liquidation Preference by (ii) 100 (as
appropriately adjusted as set forth in subparagraph C below
7
<PAGE>
to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such
number in clause (ii), the "Adjustment Number"). Following
the payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all
outstanding shares of Series A Junior Participating
Preferred Stock and Common Stock, respectively, holders of
Series A Junior Participating Preferred Stock and holders of
shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with
respect to such Preferred Stock and Common Stock, on a per
share basis, respectively.
(B) In the event, however, that there are not
sufficient assets available to permit payment in full of the
Series A Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Junior
Participating Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation
preferences. In the event, however, that there are not
sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number
of shares, then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case
--------------------------
the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any
such case the shares of Series A Junior Participating
Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100
times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is
8
<PAGE>
changed or exchanged. In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number
of shares, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred
Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A
-------------
Junior Participating Preferred Stock shall not be
redeemable.
Section 9. Ranking. The Series A Junior
-------
Participating Preferred Stock shall rank junior to all other
series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless
the terms of any such series shall provide otherwise.
Section 10. Amendment. The Restated Certificate
---------
of Incorporation of the Corporation shall not be further
amended in any manner which would materially alter or change
the powers, preferences or special rights of the Series A
Junior Participating Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of
two-thirds (2/3) or more of the outstanding shares of Series
A Junior Participating Preferred Stock, voting separately as
a class.
Section 11. Fractional Shares. Series A Junior
-----------------
Participating Preferred Stock may be issued in fractions of
a share which shall entitle the holder, in proportion to
such holders 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
Junior Participating Preferred Stock.
9
<PAGE>
IN WITNESS WHEREOF, we have executed and
subscribed this Certificate and do affirm the foregoing as
true under the penalties of perjury this 24th day of July,
1986.
/s/ Wallace Barnes
------------------------------
Wallace Barnes
Chairman of the Board
Attest:
/s/ John E. Besser
---------------------------
John E. Besser
Secretary
10
EXHIBIT B
---------
CERTIFICATE OF DESIGNATION
OF
SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
BARNES GROUP INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Barnes Group Inc., a Delaware corporation (the
"Corporation"), certifies that pursuant to the authority
contained in Article FOURTH of its Certificate of Incorporation,
as amended, and in accordance with the provisions of Section 151
of the General Corporation Law of the State of Delaware, its
Board of Directors has adopted the following resolution creating
a series of its Preferred Stock, par value $1 per share,
designated as Series B Cumulative Convertible Preferred Stock:
RESOLVED, that a series of the class of authorized
Preferred Stock, par value $1 per share, of the Corporation be
hereby created, and that the designation and amount thereof and
the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof, are
as follows:
SECTION 1. Designation, Amount and Stated
------------------------------
Value. The shares of such series shall be designated as the
-----
"Series B Cumulative Convertible Preferred Stock" (the "Series B
Preferred Stock") and the number of shares constituting such
series shall be 84,000 which number may be decreased (but not
increased) by the Board of Directors without a vote of
stockholders; provided, however, that such number may not be
-------- -------
decreased below the number of then currently outstanding shares
of Series B Preferred Stock. The Series B Preferred Stock shall
have a stated value of $250 per share (the "Stated Value").
<PAGE>
SECTION 2. Dividends and Distributions.
---------------------------
(a) The holders of shares of Series B Preferred
Stock, in preference to the holders of shares of the Common
Stock, par value $1 per share (the "Common Stock"), of the
Corporation and of any other capital stock of the Corporation
ranking junior to the Series B Preferred Stock as to payment of
dividends, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the
purpose, cumulative cash dividends in equal quarterly payments on
the 15th day of March, June, September and December in each year
(each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
Payment Date which is at least 15 days after the date of original
issue of the Series B Preferred Stock, at an annual rate per
share calculated as the following percentages of the Stated Value
during each 12-month period beginning December 1:
1987 . . . . . . 9 3/4%
1988 . . . . . . 10%
1989 . . . . . . 10 1/4%
1990 . . . . . . 10 3/4%
1991 . . . . . . 11 1/4%
(b) Dividends payable pursuant to paragraph (a)
of this Section 2 shall begin to accrue on a daily basis and be
cumulative from the date of original issue of the Series B
Preferred Stock. The amount of dividends so payable shall be
determined on the basis of twelve 30-day months and a 360-day
year. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series B Preferred Stock in an
amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on
a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series B Preferred
Stock entitled to receive payment of a dividend declared thereon,
which record date shall be no more than sixty days prior to the
date fixed for the payment thereof.
2
<PAGE>
SECTION 3. Voting Rights. In addition to any voting
-------------
rights provided elsewhere in this Certificate of Designation and
the Corporation's Restated Certificate of Incorporation as it may
be amended or restated from time to time (the "Certificate of
Incorporation"), and any voting rights provided by law, the
holders of shares of Series B Preferred Stock shall have the
following voting rights:
(a) Each share of Series B Preferred Stock shall be
entitled to such number of votes as shall equal the number
of whole shares of Common Stock into which such share is
then convertible (disregarding for purposes of this clause
(a) any restriction set forth in Section 7 hereof on the
ability of the holder thereof to convert such share);
provided, however, that the right to exercise any vote
-------- -------
pursuant to this clause (a) shall be subject to satisfaction
of any applicable waiting period with respect to any
acquisition of shares of Series B Preferred Stock under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), including any extensions thereof.
Except as otherwise provided by paragraphs (b) and (c) of
this Section 3, by the Restated Certificate of Incorporation
of the Corporation, as amended, or by law, the shares of
Series B Preferred Stock and the shares of Common Stock (and
any other shares of capital stock of the Corporation at the
time entitled thereto) shall vote together as one class on
all matters submitted to a vote of stockholders of the
Corporation.
(b) (i) If at any time (x) dividends on any Series B
Preferred Stock shall be in arrears in an amount equal to
two quarterly dividends thereon, or (y) a breach by the
Company of either of the covenants set forth in paragraphs
5C, 5D, 5F or 9A of the Preferred Stock Purchase Agreement
dated as of December 7, 1987 between the Corporation and
General Electric Credit Corporation ("GECC"), as it may be
amended from time to time (the "Stock Purchase Agreement"),
or upon a breach of the material obligations of the
Corporation under the Registration Rights Agreement between
the Corporation and GECC, any which breach continues in
effect for a period of 45 days, the occurrence of
3
<PAGE>
either such contingency (a "Default") shall mark the
beginning of a period (herein called a "default period")
which shall extend until such time when, in the case of (x)
above, all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly
dividend period on all shares of Series B Preferred Stock
then outstanding shall have been declared and paid or set
apart for payment, and in the case of (y) above, less than
28,000 shares of Series B Preferred Stock are issued and
outstanding. Upon a Default, the holders of the Series B
Preferred Stock voting separately as a class shall have the
right to elect two Directors beginning at the time indicated
in clause (b)(ii) below; except if dividends on the Series A
Preferred Stock shall be in arrears in an amount equal to
six or more quarterly dividends thereon and a Default
exists, the holders of the Series B Preferred Stock, voting
as a class with the holders of the Series A Junior
Participating Preferred Stock of the Corporation (the
"Series A Preferred Stock"), shall have the right to elect
two Directors beginning at the next annual meeting of the
stockholders of the Corporation following such event or in
any other manner required by the terms of the Series A
Preferred Stock.
(ii) During any default period, such voting right of
the holders of Series B Preferred Stock may be exercised
initially at a special meeting called pursuant to clause
(b)(iii) of this Section 3 or at any annual meeting of
stockholders, and thereafter at annual meetings of
stockholders; provided that neither such voting right nor
--------
the right of the holders of Series B Preferred Stock to
increase, in certain cases, the authorized number of
Directors shall be exercised unless the holders of one-third
in number of shares of Series B Preferred Stock outstanding
shall be present in person or by proxy. The absence of a
quorum of the holders of Common Stock or any of the series
of Preferred Stock shall not affect the exercise by the
holders of Series B Preferred Stock of such voting right.
At any meeting at which the holders of Series B Preferred
Stock shall exercise such voting right initially during an
existing default period, they shall have the right, voting
as a class, to elect
4
<PAGE>
Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two Directors or, if such
right is exercised at an annual meeting, to elect two
Directors. If the number which may be so elected at any
special meeting does not amount to the required number, the
holders of the Series B Preferred Stock shall have the right
to make such increase in the number of Directors effective
until the date of the next annual meeting as shall be
necessary to permit the election by them of the required
number. After the holders of the Series B Preferred Stock
shall have exercised their right to elect Directors in any
default period and during the continuance of such period,
the number of Directors shall not be increased or decreased
except by vote of the holders of Series B Preferred Stock as
herein provided or pursuant to the rights of any equity
securities ranking senior to the Series B Preferred Stock.
(iii) Unless the holders of Series B 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 ten percent of the
total number of shares of Series B Preferred Stock
outstanding, may request, the calling of a special meeting
of the holders of Series B Preferred Stock, which meeting
shall thereupon be called by the President, a Vice President
or the Secretary of the Corporation. Notice of such meeting
and of any annual meeting at which holders of Series B
Preferred Stock are entitled to vote pursuant to this clause
(b)(iii) shall be given to each holder of record of Series B
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 than 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 ten
percent of the total number of shares of Series B Preferred
Stock outstanding. Notwithstanding the provisions of this
5
<PAGE>
clause (b)(iii), no such special meeting shall be called
during the period within 60 days immediately preceding the
date fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if
applicable, shall continue to be entitled to elect the whole
number of Directors until the holders of Series B Preferred
Stock shall have exercised their right to elect two
Directors voting as a class, after the exercise of which
right (x) the Directors so elected by the holders of Series
B 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 clause
(b)(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 stock which elected the Director
whose office shall have become vacant. References in this
paragraph (b) to Directors elected by the holders of a
particular class of 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 Series B Preferred
Stock as a class to elect Directors shall cease, (y) the
term of any Directors elected by the holders of Series B
Preferred Stock as a class shall terminate, and (z) the
number of Directors shall be such number as may be provided
for in the Restated Certificate of Incorporation or By-laws
irrespective of any increase made pursuant to the provisions
of clause (b)(ii) of this Section 3 (such number being
subject, however, to change thereafter in any manner
provided by law or in the Restated Certificate of
Incorporation 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.
6
<PAGE>
(c) The affirmative vote of the holders of a majority
of the outstanding shares of Series B Preferred Stock,
voting separately as a single series, in person or by proxy,
at a special or annual meeting of stockholders called for
the purpose, shall be necessary to (i) authorize, or to
increase the authorized number of shares of, or to issue,
any class or series of the Corporation's capital stock
ranking prior (either as to dividends or upon liquidation,
dissolution or winding up) to or on a parity with the Series
B Preferred Stock ("Senior Stock"), (ii) reclassify any
share of stock into shares of Senior Stock, (iii) amend,
repeal or change any of the provisions of the Certificate of
Incorporation of the Corporation, as amended through the
date hereof, or the provisions of the Certificate of
Designation of Series B Cumulative Convertible Preferred
Stock which embodies this resolution, in any manner which
would alter or change the powers, preferences or special
rights of the shares of Series B Preferred Stock so as to
affect them adversely as a series, (iv) authorize or issue
any security exchangeable for, convertible into or
evidencing the right to purchase any shares of Senior Stock.
(d) Except as provided herein (including without
limitation the right to vote with the Common Stock on all
matters submitted to a vote of stockholders of the
Corporation as set forth in paragraph (a) of this Section 3)
or in the Certificate of Incorporation of the Corporation,
as amended, or as required by law, the holders of shares of
Series B Preferred Stock shall have no voting rights, and
their consent shall not be required for the taking of any
corporate action.
SECTION 4. Redemption.
----------
(a) The Corporation shall have the right, at its sole
option and election, to redeem shares of Series B Preferred
Stock, in whole or in part, at any time and from time to
time, by paying therefor in cash the Stated Value per share
plus an amount per share equal to all unpaid dividends
thereon, including accrued dividends, whether or not
declared ("Accrued Dividends"), to the date of redemption.
7
<PAGE>
(b) On the earliest of (i) December 1, 1992, (ii) if
the shares of Common Stock issuable upon conversion of the
Series B Preferred Shares are not then approved for listing
on the New York Stock Exchange, April 1, 1988 or (iii) the
Corporation's violation of the provisions of paragraph 5G of
the Stock Purchase Agreement (such earliest date, the "Final
Redemption Date"), the Corporation shall redeem all of the
shares of Series B Preferred Stock then outstanding by
paying therefor in cash the Stated Value per share plus
Accrued Dividends to the Final Redemption Date.
(c) If less than all shares of Series B Preferred
Stock at the time outstanding are to be redeemed, the shares
to be redeemed shall be selected pro rata.
(d) Except for a redemption made pursuant to paragraph
(b) of this Section 4, notice of any redemption of shares of
Series B Preferred Stock shall be mailed at least thirty,
but not more than sixty, days prior to the date fixed for
redemption to each holder of shares of Series B Preferred
Stock to be redeemed, at such holder's address as it appears
on the transfer books of the Corporation. In order to
facilitate the redemption of shares of Series B Preferred
Stock, the Board of Directors may fix a record date for the
determination of shares of Series B Preferred Stock to be
redeemed, not more than sixty days or less than thirty days
prior to the date fixed for such redemption.
(e) On the date of any redemption being made pursuant
to paragraph (a) of this Section 4 which is specified in the
notice given pursuant to paragraph (d), the Corporation
shall, and at any time after such notice shall have been
mailed and before such date of redemption the Corporation
may, deposit for the benefit of the holders of shares of
Series B Preferred Stock called for redemption the funds
necessary for such redemption with a bank or trust company
in the Borough of Manhattan, the City of New York, having a
capital and surplus of at least $500,000,000. Any monies so
deposited by the Corporation and unclaimed at the end of two
years from the date designated for such redemption shall
8
<PAGE>
revert to the general funds of the Corporation. After such
reversion, any such bank or trust company shall, upon
demand, pay over to the Corporation such unclaimed amounts
and thereupon such bank or trust company shall be relieved
of all responsibility in respect thereof, and any holder of
shares of Series B Preferred Stock so called for redemption
shall look only to the Corporation for the payment of the
redemption price. In the event that monies are deposited
pursuant to this paragraph (e) in respect of shares of
Series B Preferred Stock that are converted in accordance
with the provisions of Section 7 hereof, such monies shall,
upon such conversion, revert to the general funds of the
Corporation and, upon demand, such bank or trust company
shall pay over to the Corporation such monies and shall be
relieved of all responsibility to the holders of such
converted shares in respect thereof. Any interest accrued
on funds deposited pursuant to this paragraph (e) shall be
paid from time to time to the Corporation for its own
account.
(f) Upon the deposit of funds pursuant to paragraph
(e) in respect of shares of Series B Preferred Stock called
for redemption pursuant to paragraph (a) or (b) of this
Section 4, notwithstanding that any certificates for such
shares shall not have been surrendered for cancellation, the
shares represented thereby shall no longer be deemed
outstanding, the rights to receive dividends thereon shall
cease to accrue from and after the date of redemption
designated in the notice of redemption and all rights of the
holders of shares of Series B Preferred Stock called for
redemption shall cease and terminate, excepting only the
right to receive the redemption price therefor (including
any Accrued Dividend to the redemption date) and the right
to convert such shares into shares of Common Stock until the
close of business on the Business Day (as defined in Section
9 hereof) preceding the date of redemption, in accordance
with Section 7 hereof.
9
<PAGE>
(g) The foregoing shall not limit the right of the
Corporation to reacquire shares of Series B Preferred Stock
in accordance with paragraphs 5H and 7D of the Stock
Purchase Agreement.
SECTION 5. Reacquired Shares. Any shares of Series B
-----------------
Preferred Stock converted, redeemed, purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized
but unissued shares of Preferred Stock, par value $1 per share,
of the Corporation and may be reissued as part of another series
of Preferred Stock, par value $1 per share, of the Corporation
subject to the conditions or restrictions on issuance set forth
herein.
SECTION 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(a) Upon any liquidation, dissolution or winding up of
the Corporation, or if the Corporation shall commence a
voluntary case under the Federal bankruptcy laws or any
other applicable Federal or State bankruptcy, insolvency or
similar law, or consent to the entry of an order for relief
in an involuntary case under any such law or to the
appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the
Corporation or of any substantial part of its property, or
make an assignment for the benefit of its creditors, or
admit in writing its inability to pay its debts generally as
they become due, or if a decree or order for relief in
respect of the Corporation shall be entered by a court
having jurisdiction in the premises in an involuntary case
under the Federal bankruptcy laws or any other applicable
Federal or State bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the
Corporation or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and
any such decree or order shall be unstayed and in effect for
a period of 90 consecutive days and on account of any such
event
10
<PAGE>
the Corporation shall liquidate, dissolve or wind up, no
distribution shall be made (i) to the holders of shares of
capital stock of the Corporation ranking junior (upon
liquidation, dissolution or winding up) to the Series B
Preferred Stock unless, prior thereto, the holders of shares
of Series B Preferred Stock shall have received the Stated
Value per share, plus Accrued Dividends to the date of such
payment or (ii) to the holders of shares of capital stock
ranking on a parity (upon liquidation, dissolution or
winding up) with the Series B Preferred Stock, except
distributions made ratably on the Series B Preferred Stock
and all such parity stock in proportion to the total amounts
to which the holders of all such shares are entitled upon
such liquidation, dissolution or winding up.
(b) Neither the consolidation, merger or other
business combination of the Corporation with or into any
other Person or Persons nor the sale of all or substantially
all of the assets of the Corporation shall be deemed to be a
liquidation, dissolution or winding up of the Corporation
for purposes of this Section 6.
SECTION 7. Conversion. Following the later of (i) the
----------
expiration or termination of applicable waiting periods under the
HSR Act, including any extensions thereof, and (ii) the approval
of the shares of Common Stock issuable pursuant to this Section 7
upon conversion of shares of Series B Preferred Stock for listing
on the New York Stock Exchange upon official notice of issuance,
each share of Series B Preferred Stock may be converted at any
time, at the option of the holder thereof, into shares of Common
Stock, on the terms and conditions set forth in this Section 7;
provided notwithstanding such conditions, the provisions of
clause (b)(iv) of this Section 7 shall apply to any Transaction
(as hereinafter defined) with a Consummation Date (as hereinafter
defined) on or after the initial date of issuance of the Series B
Preferred Stock.
(a) Subject to the provisions for adjustment
hereinafter set forth, each share of Series B Preferred
Stock shall be convertible in the manner hereinafter set
forth into a number of fully paid and nonassessable shares
of Common Stock
11
<PAGE>
calculated by dividing the Stated Value by an amount (the
"Conversion Price") equal to 115% of the Current Market
Price of the Common Stock on the earlier of (i) the date
twenty consecutive Trading Days after the date of the
expiration of a self-tender offer first occurring after
December 1, 1987 and (ii) February 1, 1988 (such earlier
date, the "Price Determination Date"); provided, however
that the Conversion Price shall in no event exceed $36 or be
less than $31 and provided further that prior to the Price
Determination Date, the Conversion Price shall be $33.50.
(b) The number of shares of Common Stock into which
each share of Series B Preferred Stock is convertible shall
be subject to adjustment from time to time as follows:
(i) In case the Corporation shall at any time or from
time to time declare a dividend, or make a distribution, on
the outstanding shares of Common Stock in shares of Common
Stock or subdivide or reclassify the outstanding shares of
Common Stock into a greater number of shares or combine or
reclassify the outstanding shares of Common Stock into a
smaller number of shares of Common Stock, then, and in each
such case, the number of shares of Common Stock into which
each share of Series B Preferred Stock is convertible shall
be adjusted so that the holder of each share thereof shall
be entitled to receive, upon the conversion thereof, the
number of shares of Common Stock which the holder of a share
of Series B Preferred Stock would have been entitled to
receive after the happening of any of the events described
above had such share been converted immediately prior to the
happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this
clause (i) shall become effective (A) in the case of any
such dividend or distribution, immediately after the close
of business on the record date for the determination of
holders of shares of Common Stock entitled to receive such
dividend or distribution, or (B) in the case of any such
subdivision, reclassification or combination, at the close
of business on the day upon which such corporate action
becomes effective.
12
<PAGE>
(ii) In case the Corporation shall at any time or from
time to time issue rights or warrants to subscribe for or
purchase shares of Common Stock (or securities convertible
into Common Stock) or issue shares of Common Stock (or
securities convertible into shares of Common Stock) (other
than shares with respect to which proper adjustment has
previously been made pursuant to this clause (b)(ii) of
Section 7) at a price per share (or having a conversion
price per share) less than the Current Market Price as of
the date of issuance of such rights, warrants, shares or
convertible securities, then, and in each such case, the
number of shares of Common Stock into which each share of
Series B Preferred Stock is convertible shall be adjusted so
that the holder of each share thereof shall be entitled to
receive, upon the conversion thereof, the number of shares
of Common Stock determined by multiplying (A) the number of
shares of Common Stock into which such share was convertible
on the day immediately prior to such date by (B) a fraction,
the numerator of which shall be the sum of (1) the number of
shares of Common Stock outstanding on such date and (2) the
number of additional shares of Common Stock issued (or
issuable upon exercise of such rights or warrants or into
which the convertible securities may convert), and the
denominator of which shall be the sum of (1) the number of
shares of Common Stock outstanding on such date and (2) the
number of shares of Common Stock which the aggregate
consideration receivable by the Corporation for the total
number of shares of Common Stock so issued (or issuable upon
exercise of such rights or warrants or into which the
convertible securities may convert) would purchase at such
Current Market Price on such date. An adjustment made
pursuant to this clause (ii) shall be made on the next
Business Day following the date on which any such issuance
is made and shall be effective retroactively immediately
after the close of business on such date. For purposes of
this clause (ii), the aggregate consideration receivable by
the Corporation in connection with the issuance of such
rights or warrants, of shares of Common Stock or of
securities convertible into shares of Common Stock shall be
deemed to be equal to the sum of the aggregate offering
price (before deduction of
13
<PAGE>
reasonable underwriting discounts or commissions and
expenses) of all such securities plus the minimum aggregate
amount, if any, payable upon exercise of such rights or
warrants or conversion of any such convertible securities
into shares of Common Stock. The issuance of any rights or
warrants or shares of Common Stock (whether treasury shares
or newly issued shares) pursuant to a dividend or
distribution on, or subdivision, combination or
reclassification of, the outstanding shares of Common Stock
requiring an adjustment in the conversion ratio pursuant to
clause (i) of this paragraph (b), pursuant to any dividend
reinvestment plan or employee benefit plan of the
Corporation, or pursuant to any option, warrant, right, or
convertible security outstanding as of the date hereof
(including but not limited to the Preferred Stock Purchase
Rights issued pursuant to the Rights Agreement between the
Corporation and The Connecticut Bank & Trust Company,
National Association dated as of July 16, 1986, and as it
may be further amended from time to time (the "Rights
Agreement") or any similar agreement), shall not be deemed
to constitute an issuance of Common Stock or convertible
securities by the Corporation to which this clause (ii)
applies. Upon the expiration of any rights or warrants or
the termination of any rights to convert any convertible
securities for which an adjustment has been made pursuant to
this clause (ii) (without exercise of such warrants, rights
or convertible securities), the adjustments shall forthwith
be reversed to effect such rate of conversion as would have
been in effect at the time of such expiration or termination
had such rights, warrants or convertible securities, to the
extent outstanding immediately prior to such expiration or
termination, never been issued.
(iii) In case the Corporation shall at any time or
from time to time declare, order, pay or make a dividend or
other distribution (including without limitation any
distribution of stock or other securities or property or
rights or warrants to subscribe for securities of the
Corporation or any of its Subsidiaries by way of dividend or
spinoff, except pursuant to the Rights Agreement) on its
Common Stock, other than (A) regular quarterly
14
<PAGE>
dividends payable in cash or (B) shares of Common Stock
which are referred to in clause (i) of this paragraph (b),
then, and in each such case, the number of shares of Common
Stock into which each share of Series B Preferred Stock is
convertible shall be adjusted so that the holder of each
share thereof shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock
determined by multiplying (1) the number of shares of Common
Stock into which such share was convertible on the day
immediately prior to the record date fixed for the
determination of stockholders entitled to receive such
dividend or distribution by (2) a fraction, the numerator of
which shall be the Current Market Price per share of Common
Stock as of such record date, and the denominator of which
shall be such Current Market Price per share of Common Stock
less the Fair Market Value per share of Common Stock (as
determined in good faith by the Board of Directors of the
Corporation, a certified resolution with respect to which
shall be mailed to each holder of shares of Series B
Preferred Stock) of such dividend or distribution;
provided, however, that in the event of a distribution of
-------- -------
shares of capital stock of a Subsidiary of the Corporation
(a "Spin-Off") made to holders of shares of Common Stock,
the numerator of such fraction shall be the sum of the
Current Market Price per share of Common Stock as of the
35th Trading Day after the effective date of such Spin-Off
and the Current Market Price of the number of shares (or the
fraction of a share) of capital stock of the Subsidiary
which is distributed in such Spin-Off in respect of one
share of Common Stock as of such 35th Trading Day and the
denominator of which shall be the Current Market Price per
share of Common Stock as of such 35th Trading Day. An
adjustment made pursuant to this clause (iii) shall be made
upon the opening of business on the next Business Day
following the date on which any such dividend or
distribution is made and shall be effective retroactively
immediately after the close of business on the record date
fixed for the determination of stockholders entitled to
receive such dividend or distribution; provided, however, if
-------- -------
the proviso to the preceding sentence applies, then such
adjustment shall be made and be effective as of
15
<PAGE>
such 35th Trading Day after the effective date of such
Spin-Off.
(iv) In case at any time the Corporation shall be a
party to any such transaction (including without limitation
a merger, consolidation, sale of all or substantially all of
the Corporation's assets, liquidation or recapitalization of
the Common Stock and excluding any transaction to which
clause (i), (ii) or (iii) of this paragraph (b) applies) in
which the previously outstanding Common Stock shall be
changed into or exchanged for different securities of the
Corporation or common stock or other securities of another
corporation or interests in a noncorporate entity or other
property (including cash) or any combination of any of the
foregoing (each such transaction being herein called the
"Transaction;" the date of consummation of the Transaction
being herein called the "Consummation Date"); the
Corporation (in the case of a recapitalization of the Common
Stock to which this clause (iv) applies or any other such
transaction in which the Corporation retains substantially
all of its assets and survives as a corporation) or such
other corporation or entity (in each other case) being
herein called the "Acquiring Company;" and the common stock
(or equivalent equity interests) of the Acquiring Company
being herein called the "Acquirer's Common Stock"), then, as
a condition of the consummation of the Transaction, lawful
and adequate provisions shall be made so that each holder of
shares of Series B Preferred Stock shall be entitled, at the
election of the Series B Preferred Stock as provided in the
following sentence, to the treatment accorded pursuant to
sub-clause (A) or (B) and, to the extent applicable, (C).
The selection by the holders of shares of Series B Preferred
Stock of the treatment to be accorded such shares from among
the alternatives specified in the preceding sentence shall
require the affirmative vote of the holders of at least
66-2/3% of the outstanding shares of Series B Preferred
Stock, voting in person or by proxy, at a meeting of such
stockholders or by written consent without a meeting, which
vote shall be taken, or consent shall be effective, on or
before the later of (1) the 30th day following the
Consummation Date,
16
<PAGE>
and (2) the 60th day following the date of delivery or
mailing to such holders of the last proxy statement relating
to the vote on the Transaction by the holders of the Common
Stock, and which vote shall bind all holders of shares of
Series B Preferred Stock and their transferees; if the
holders of shares of Series B Preferred Stock are unable to
or for any other reason do not make a selection, then the
Board of Directors of the Corporation shall make such
selection, in accordance with this clause (iv), from among
the alternatives specified in this clause (iv).
Notwithstanding the foregoing, any holder of Series B
Preferred Stock shall in all events be entitled to the
treatment accorded pursuant to sub-clause (C) in the event
the circumstances specified therein shall occur. Any
selection made by the holders of shares of Series B
Preferred Stock in accordance with the preceding provisions
shall be communicated in writing to the Corporation as
promptly as practicable after the vote referred to above
shall have been taken.
In case of any Transaction, each share of Series B
Preferred Stock shall continue to remain outstanding and shall be
subject to all the provisions of the Certificate of Designation
of Series B Cumulative Convertible Preferred Stock which embodies
this resolution, as in effect prior to such Transaction, except
that:
(A) each share of Series B Preferred Stock shall
thereafter be convertible (subject to the limitations on
conversion set forth in the first sentence of this Section
7) into, in lieu of the Common Stock issuable be upon such
conversion prior to the Consummation Date, shares of the
Acquirer's Common Stock, unless the Acquiring Company fails
to meet the requirements set forth in (1), (2) and (3)
below, in which case shares of the common stock of the
corporation (herein called a "Parent") which directly or
indirectly controls the Acquiring Company if it meets the
requirements set forth in (1), (2) and (3) below, at a
conversion price per share equal to the Conversion Price in
effect immediately prior to the Consummation Date multiplied
by a fraction
17
<PAGE>
the numerator of which is the market price per share
(determined in the same manner as provided in the definition
of Current Market Price) of the Acquirer's Common Stock or
the Parent's common stock, as the case may be, immediately
prior to the Consummation Date and the denominator of which
is the Current Market Price per share of Common Stock
immediately prior to the Consummation Date (subject in each
case to adjustments from and after the Consummation Date as
nearly equivalent as possible to the adjustments provided
for in this paragraph (b) of this Section 7), or
(B) each share of Series B Preferred Stock shall
thereafter be convertible (subject to the limitations on
conversion set forth in the first sentence of this Section
7) into, in lieu of the Common Stock issuable upon such
conversion prior to the Consummation Date, the amount of
securities or other property to which such holder would
actually have been entitled as a holder of shares of Common
Stock upon the consummation of the Transaction if such
holder had converted such shares of Series B Preferred Stock
immediately prior to such Transaction (subject to
adjustments from and after the Consummation Date as nearly
equivalent as possible to the adjustments provided for in
this paragraph (b) of this Section 7); provided that if in
--------
connection with the Transaction a tender or exchange offer
shall have been made and there shall have been acquired
pursuant thereto more than 50% of the outstanding shares of
Common Stock, and if the holders of shares of Series B
Preferred Stock so designate in the notice given to the
Corporation which specifies their selection of this
alternative (B), each holder of such shares shall be
entitled to receive, upon conversion thereof, the amount of
securities or other property to which such holder would
actually have been entitled as a holder of shares of Common
Stock if such holder had converted such shares of Series B
Preferred Stock prior to the expiration of such tender or
exchange offer and accepted such offer and had sold therein
the percentage of all the shares
18
<PAGE>
of Common Stock issuable upon conversion of its shares of
Series B Preferred Stock equal to the percentage of shares
of the then outstanding Common Stock so purchased in the
tender or exchange offer, with the remaining portion of its
shares of Series B Preferred Stock thereafter being
convertible into the amount of securities or other property
to which such holder would actually have been entitled upon
the consummation of the Transaction as a holder of shares of
Common Stock if such holder had converted such shares of
Series B Preferred Stock immediately prior to such
Transaction (subject to adjustments from and after the
Consummation Date as nearly equivalent as possible to the
adjustments provided for in this paragraph (b) of this
Section 7), or
(C) if neither the Acquiring Company nor the Parent
meets the requirements set forth in (1), (2) and (3) below,
each share of Series B Preferred Stock shall thereafter be
convertible into, in lieu of the Common Stock issuable upon
such conversion prior to the Consummation Date (and subject
to the limitations on conversion set forth in the first
sentence of this Section 7), an amount in cash equal to the
greater of (x) the Stated Value per share plus Accrued
Dividends to the Consummation Date and (y) the Fair Market
Value in cash, as of the Consummation Date (computed without
interest), of the shares of capital stock or other
securities or property (other than cash) to which the holder
of shares of Series B Preferred Stock would be entitled,
pursuant to (B) above (including the proviso thereof, if
applicable), upon conversion of each such share, as
determined by an independent investment and banking firm
(with an established national reputation as a valuer of
equity securities) selected by the Corporation, plus the
cash, if any, into which each such share of Series B
Preferred Stock would be convertible pursuant to (B) above.
The Corporation agrees to obtain, and deliver to each holder of
shares of Series B Preferred Stock, a copy of
19
<PAGE>
the determination of such an independent investment and banking
firm within 15 days after the Consummation Date of any
Transaction to which (C) is applicable.
The requirements referred to above in the case of the
Acquiring Company or its Parent are that immediately after the
Consummation Date:
(1) it is a solvent corporation or other
entity organized under the laws of any State of the United
States of America having its common stock or, in the case of
an entity other than a corporation, equivalent equity
securities, listed on the New York Stock Exchange or the
American Stock Exchange or quoted by the National
Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or any successor thereto or
comparable system, and such common stock or equivalent
equity security continues to meet the requirements for such
listing or quotation,
(2) it is required to file, and in each of
its three fiscal years immediately preceding the
Consummation Date (or since its inception) has filed,
reports with the Securities and Exchange Commission (the
"Commission") pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, and
(3) in the case of the Parent, such Parent
is required to include the Acquiring Company in the
consolidated financial statements contained in the Parent's
Annual Report on Form 10-K as filed with the Commission and
is not itself included in the consolidated financial
statements of any other Person (other than its consolidated
subsidiaries).
Notwithstanding anything contained herein to the contrary, the
Corporation shall not effect any Transaction unless prior to the
consummation thereof each corporation or entity (other than the
Corporation) which may be required to deliver any securities or
other property upon the conversion of shares of Series B
Preferred Stock, or the satisfaction of conversion rights as
provided herein, shall assume, by written instrument delivered
to each holder of shares of Series B Preferred
20
<PAGE>
Stock, the obligation to deliver to such holder such securities
or other property to which, in accordance with the foregoing
provisions, such holder may be entitled, and such corporation or
entity shall have similarly delivered to each holder of shares of
Series B Preferred Stock an opinion of counsel for such corporation
or entity, which opinion shall state that the rights, powers and
privileges of the outstanding shares of Series B Preferred Stock,
including without limitation the conversion provisions applicable
thereto, if any, shall thereafter continue in full force and
effect and shall be enforceable against such corporation or
entity in accordance with the terms hereof and thereof.
All calculations under this paragraph (b) shall be made to the
nearest one one-hundredth of a share.
(c) If any adjustment in the number of shares of
Common Stock into which each share of Series B Preferred
Stock may be converted required pursuant to this Section 7
would result in an increase or decrease of less than 1% in
the number of shares of Common Stock into which each share
of Series B Preferred Stock is then convertible, the amount
of any such adjustment shall be carried forward and
adjustment with respect thereto shall be made at the earlier
of (i) the time of and together with any subsequent
adjustment, which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at
least 1% of the number of shares of Common Stock into which
each share of Series B Preferred Stock is then convertible
or (ii) three years after the date on which such adjustment
otherwise would have been made.
(d) The Board of Directors may increase the number of
shares of Common Stock into which each share of Series B
Preferred Stock may be converted, in addition to the
adjustments required by this Section 7, as shall be
determined by it (as evidenced by a resolution of the Board
of Directors) to be advisable in order to avoid or diminish
any income deemed to be received by any holder for federal
income tax purposes of shares of Common Stock or Series B
Preferred Stock resulting from any events or occurrences
giving rise to adjustments
21
<PAGE>
pursuant to this Section 7 or from any other similar event.
(e) The holder of any shares of Series B Preferred
Stock may exercise his right to convert such shares into
shares of Common Stock by surrendering for such purpose to
the Corporation, at its principal office or at such other
office or agency maintained by the Corporation for that
purpose, a certificate or certificates representing the
shares of Series B Preferred Stock to be converted
accompanied by a written notice stating that such holder
elects to convert all or a specified whole number of such
shares in accordance with the provisions of this Section 7
and specifying the name or names in which such holder wishes
the certificate or certificates for shares of Common Stock
to be issued. In case such notice shall specify a name or
names other than that of such holder, such notice shall be
accompanied by payment of all transfer taxes payable upon
the issuance of shares of Common Stock in such name or
names. Other than such taxes, the Corporation will pay any
and all issue and other taxes (other than taxes based on
income) that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of Series B
Preferred Stock pursuant hereto. As promptly as
practicable, and in any event within five business days
after the surrender of such certificate or certificates and
the receipt of such notice relating thereto and, if
applicable, payment of all transfer taxes (or the
demonstration to the satisfaction of the Corporation that
such taxes have been paid), the Corporation shall deliver or
cause to be delivered (i) certificates representing the
number of validly issued, fully paid and nonassessable full
shares of Common Stock to which the holder of shares of
Series B Preferred Stock so converted shall be entitled and
(ii) if less than the full number of shares of Series B
Preferred Stock evidenced by the surrendered certificate or
certificates are being converted, a new certificate or
certificates, of like tenor, for the number of shares
evidenced by such surrendered certificate or certificates
less the number of shares converted. Such conversion shall
be deemed to have been made at the close of business on the
date of giving of such
22
<PAGE>
notice and of such surrender of the certificate or
certificates representing the shares of Series B Preferred
Stock to be converted so that the rights of the holder
thereof as to the shares being converted shall cease except
for the right to receive shares of Common Stock in
accordance herewith, and the person entitled to receive the
shares of Common Stock shall be treated for all purposes as
having become the record holder of such shares of Common
Stock at such time. The Corporation shall not be required
to convert, and no surrender of shares of Series B Preferred
Stock shall be effective for that purpose, while the
transfer books of the Corporation for the Common Stock are
closed for any purpose (but not for any period in excess of
15 days); but the surrender of shares of Series B Preferred
Stock for conversion during any period while such books are
so closed shall become effective for conversion immediately
upon the reopening of such books, as if the conversion had
been made on the date such shares of Series B Preferred
Stock were surrendered, and at the conversion rate in effect
at the date of such surrender.
(f) Subject to the limitations on conversion set
forth in the first sentence of Section 7 hereof, shares of
Series B Preferred Stock may be converted at any time up to
the close of business on the Business Day preceding the date
fixed for redemption of such shares pursuant to Section 4
hereof.
(g) Upon conversion of any shares of Series B
Preferred Stock, the holder thereof shall be entitled to
receive Accrued Dividends to the date of conversion.
(h) In connection with the conversion of any shares of
Series B Preferred Stock which could result in the issuance
of fractional shares of Common Stock, the Corporation may in
its sole discretion either issue such fractional shares of
Common Stock or in lieu thereof pay a cash adjustment in
respect of such fractional interest in an amount equal to
such fractional interest multiplied by the Current Market
Price per share of
23
<PAGE>
Common Stock on the day on which such shares of Series B
Preferred Stock are deemed to have been converted.
(i) The Corporation shall at all times reserve and
keep available out of its authorized and unissued Common
Stock, solely for the purpose of effecting the conversion of
the Series B Preferred Stock, such number of shares of
Common Stock as shall from time to time be sufficient to
effect the conversion of all then outstanding shares of
Series B Preferred Stock. The Corporation shall from time
to time, subject to and in accordance with the laws of
Delaware, increase the authorized amount of Common Stock if
at any time the number of authorized shares of Common Stock
remaining unissued shall not be sufficient to permit the
conversion at such time of all then outstanding shares of
Series B Preferred Stock.
SECTION 8. Reports as to Adjustments. Whenever the
-------------------------
number of shares of Common Stock into which each share of Series
B Preferred Stock is convertible is adjusted as provided in
Section 7 hereof, the Corporation shall promptly mail to the
holders of record of the outstanding shares of Series B Preferred
Stock at their respective addresses as the same shall appear in
the Corporation's stock records a notice stating that the number
of shares of Common Stock into which the shares of Series B
Preferred Stock are convertible has been adjusted and setting
forth the new number of shares of Common Stock (or describing the
new stock, securities, cash or other property) into which each
share of Series B Preferred Stock is convertible as a result of
such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof, and when such adjustment
became effective.
SECTION 9. Definitions. For the purposes of the
-----------
Certificate of Designation of Series B Cumulative Convertible
Preferred Stock which embodies this resolution:
"Business Day" means any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of
New York are authorized or obligated by law or executive order to
close.
24
<PAGE>
"Closing Price" per share of Common Stock on any date
shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Stock is not listed or admitted to
trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect
to securities listed on the principal national securities
exchange on which the Common Stock is listed or admitted to
trading or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last quoted sale
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 Common Stock is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock
selected by the Board of Directors. If the Common Stock is not
publicly held or so listed or publicly traded, "Closing Price"
shall mean the Fair Market Value per share as determined in good
faith by the Board of Directors of the Corporation.
"Current Market Price" per share of Common Stock on any
date shall be deemed to be the average of the daily Closing
Prices per share of Common Stock for the 20 consecutive Trading
Days immediately prior to such date.
"Fair Market Value" means the amount which a willing
buyer would pay a willing seller in an arm's-length transaction.
"Person" shall mean any individual, firm, corporation
or other entity, and shall include any successor (by merger or
otherwise) of such entity.
"Subsidiary" of any Person means any corporation or
other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or
indirectly, by such Person.
25
<PAGE>
"Trading Day" means a day on which the principal
national securities exchange on which the Common Stock is listed
or admitted to trading is open for the transaction of business
or, if the Common Stock is not listed or admitted to trading on
any national securities exchange, any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of
New York are authorized or obligated by law or executive order to
close.
"Trading Value" per share of Series B Preferred Stock
on any particular date is the product of (i) the number of shares
of Common Stock into which one share of Series B Preferred Stock
is convertible on such date (disregarding for the purposes of
this definition any limitations on conversion set forth in
Section 7 hereof) and (ii) the Current Market Price per share of
Common Stock as of such date; provided, however, that in the
-------- -------
event that the Series B Preferred Stock is publicly held and
listed or publicly traded, "Trading Value" per share of Series B
Preferred Stock on any particular date shall be deemed to be the
average of the daily Closing Prices (determined in the same
manner as for the Common Stock) per share of Series B Preferred
Stock for the 20 consecutive Trading Days immediately prior to
such date.
"Voting Stock" means the outstanding shares of capital
stock of the Corporation entitled to vote generally in the
election of directors.
SECTION 10. Rank. The Series B Preferred Stock shall
----
rank senior to the authorized shares of the Corporation's Series
A Preferred Stock and the Common Stock as to the payment of
dividends and upon the liquidation, dissolution or winding up of
the Corporation.
26
<PAGE>
IN WITNESS WHEREOF, said Barnes Group Inc. has caused
this Certificate of Designation of Series B Cumulative
Convertible Preferred Stock to be duly executed by its Vice
President and attested to by its Secretary and has caused its
corporate seal to be affixed hereto, as of this 7th day of
December, 1987.
BARNES GROUP INC.
By: /s/ A. Stanton Wells
-------------------------
Executive Vice President
ATTEST:
/s/ John E. Besser
---------------------------
Secretary
27
