Exhibit
4.1


 


EXECUTION VERSION


 






 


HARDINGE INC.


 


And


 


COMPUTERSHARE


 


TRUST COMPANY,


 


N.A.


 






 


Rights Agreement


 


Dated as of
February 18, 2010


 






 

















 


TABLE
OF CONTENTS


 


	
   

  	
   

  	
  Page

  Number

  
	
   

  	
   

  	
   

  
	
  Section 1.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Appointment of Rights
  Agent

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Issue of Right
  Certificates

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Form of Right
  Certificates

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Countersignature and
  Registration

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 6.

  	
  Transfer, Split Up,
  Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or
  Stolen Right Certificates

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Exercise of Rights;
  Purchase Price; Expiration Date of Rights

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Cancellation and
  Destruction of Right Certificates

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Availability of
  Preferred Shares

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Preferred Shares Record
  Date

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 11.

  	
  Adjustment of Purchase
  Price, Number of Shares or Number of Rights

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 12.

  	
  Certificate of Adjusted
  Purchase Price or Number of Shares

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 13.

  	
  Consolidation, Merger
  or Sale or Transfer of Assets or Earning Power

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 14.

  	
  Fractional Rights and
  Fractional Shares

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 15.

  	
  Rights of Action

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section 16.

  	
  Agreement of Right
  Holders

  	
  30

  
	
   

  	
   

  	
   

  
	
  Section 17.

  	
  Right Certificate
  Holder Not Deemed a Stockholder

  	
  30

  
	
   

  	
   

  	
   

  
	
  Section 18.

  	
  Concerning the Rights
  Agent

  	
  31

  
	
   

  	
   

  	
   

  
	
  Section 19.

  	
  Merger or Consolidation
  or Change of Name of Rights Agent

  	
  32

  



 


i

















 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
  Number

  
	
   

  	
   

  	
   

  
	
  Section 20.

  	
  Duties of Rights Agent

  	
  33

  
	
   

  	
   

  	
   

  
	
  Section 21.

  	
  Change of Rights Agent

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 22.

  	
  Issuance of New Right
  Certificates

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 23.

  	
  Redemption

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 24.

  	
  Exchange

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 25.

  	
  Notice of Certain
  Events

  	
  40

  
	
   

  	
   

  	
   

  
	
  Section 26.

  	
  Notices

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 27.

  	
  Supplements and
  Amendments

  	
  43

  
	
   

  	
   

  	
   

  
	
  Section 28.

  	
  Successors

  	
  43

  
	
   

  	
   

  	
   

  
	
  Section 29.

  	
  Benefits of this
  Agreement

  	
  43

  
	
   

  	
   

  	
   

  
	
  Section 30.

  	
  Severability

  	
  44

  
	
   

  	
   

  	
   

  
	
  Section 31.

  	
  Governing Law

  	
  44

  
	
   

  	
   

  	
   

  
	
  Section 32.

  	
  Counterparts

  	
  44

  
	
   

  	
   

  	
   

  
	
  Section 33.

  	
  Descriptive Headings

  	
  44

  
	
   

  	
   

  	
   

  
	
  Section 34.

  	
  Force Majeure

  	
  44

  
	
   

  	
   

  	
   

  
	
  Signatures

  	
   

  	
  46

  



 


 


	
  Exhibit A

  	
  -

  	
  Form of
  Certificate of Amendment

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
  -

  	
  Form of Right
  Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
  -

  	
  Summary of Rights to
  Purchase Preferred Shares

  



 


ii

















 


Agreement, dated as of
February 18, 2010, between Hardinge Inc., a New York corporation (the “Company”),
and Computershare Trust Company, N.A., a federally chartered trust company, as
rights agent (the “Rights Agent”).


 


The Board of Directors of
the Company has authorized and declared a dividend of one Series B
preferred share purchase right (a “Right”) for each Common Share (as
hereinafter defined) of the Company outstanding on March 1, 2010 (the “Record
Date”), each Right representing the right to purchase one one-hundredth of
a Preferred Share (as hereinafter defined), upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the
issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined).


 


Accordingly, in
consideration of the premises and the mutual agreements herein set forth, the
parties hereby agree as follows:


 


Section 1.              Definitions. 
For purposes of this Agreement, the following terms have the meanings
indicated:


 


(a)           “Acquiring Person” shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 20% or more of the Common Shares of the Company then outstanding, but
shall not include the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, or any entity
holding Common Shares for or pursuant to the terms of any such plan.  Notwithstanding the foregoing, no Person
shall become an “Acquiring Person” as the result of an acquisition of Common
Shares by the Company which, by reducing the number of Common 


 

















 


Shares of the Company outstanding, increases the proportionate number
of Common Shares of the Company Beneficially Owned by such Person to 20% or
more of the Common Shares of the Company then outstanding; provided, however,
that, if a Person shall become the Beneficial Owner of 20% or more of the
Common Shares of the Company then outstanding by reason of share purchases by
the Company and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Shares of the Company, then such
Person shall be deemed to be an “Acquiring Person.”  Notwithstanding the foregoing, if the Board
of Directors of the Company determines in good faith that a Person who would
otherwise be an “Acquiring Person,” as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such
Person divests as promptly as practicable a sufficient number of Common Shares
so that such Person would no longer be an “Acquiring Person,” as defined
pursuant to the foregoing provisions of this paragraph (a), then such Person
shall not be deemed to be an “Acquiring Person” for any purposes of this
Agreement.


 


(b)           “Affiliate” shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange
Act as in effect on the date of this Agreement.


 


(c)           “Associate” shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange
Act as in effect on the date of this Agreement.


 


(d)           A Person shall be deemed the “Beneficial Owner” of and shall be deemed
to “Beneficially Own” any securities:


 


2

















 


(i)            which such Person or any of such Person’s
Affiliates or Associates beneficially owns, directly or indirectly;


 


(ii)           which such Person or any of such Person’s
Affiliates or Associates has (A) the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a bona
fide public offering of securities), or upon the exercise of conversion
rights, exchange rights, rights (other than these Rights), warrants or options,
or otherwise; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to Beneficially Own, securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person’s Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote pursuant
to any agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to Beneficially
Own, any security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or successor report); or


 


(iii)          which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person’s
Affiliates or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) 


 


3

















 


for the purpose of
acquiring, holding, voting (except to the extent contemplated by the proviso to
Section 1(d)(ii)(B) hereof) or disposing of any securities of the
Company.


 


Notwithstanding anything
in this definition of Beneficial Ownership to the contrary, the phrase “then
outstanding,” when used with reference to a Person’s Beneficial Ownership of
securities of the Company, shall mean the number of such securities then issued
and outstanding together with the number of such securities not then actually
issued and outstanding which such Person would be deemed to Beneficially Own
hereunder.


 


(e)           “Business Day” shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in New York City are authorized
or obligated by law or executive order to close.


 


(f)            “Close of Business” on any given date shall mean 5:00 P.M.,
New York City time, on such date; provided, however, that, if
such date is not a Business Day, it shall mean 5:00 P.M., New York City
time, on the next succeeding Business Day.


 


(g)           “Common Shares” when used with reference to the Company shall
mean the shares of common stock, par value $0.01 per share, of the
Company.  “Common Shares” when used with
reference to any Person other than the Company shall mean the capital stock (or
equity interest) with the greatest voting power of such other Person or, if
such other Person is a Subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person.


 


4

















 


(h)           “Distribution Date” shall have the meaning set forth in
Section 3(a) hereof.


 


(i)            “Exchange Act” shall mean the Securities Exchange Act of 1934,
as amended.


 


(j)            “Exchange Ratio” shall have the meaning set forth in
Section 24(a) hereof.


 


(k)           “Final Expiration Date” shall have the meaning set forth in
Section 7(a) hereof.


 


(l)            “NASDAQ” shall mean the NASDAQ Stock Market.


 


(m)          “Person” shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such
entity.


 


(n)           “Preferred Shares” shall mean shares of Series B Preferred
Stock, par value $0.01 per share, of the Company having the rights and
preferences set forth in the Form of Certificate of Amendment attached to
this Agreement as Exhibit A.


 


(o)           “Purchase Price” shall have the meaning set forth in
Section 4 hereof.


 


(p)           “Record Date” shall have the meaning set forth in the second
paragraph hereof.


 


(q)           “Redemption Date” shall have the meaning set forth in
Section 7(a) hereof.


 


5

















 


(r)            “Redemption Price” shall have the meaning set forth in
Section 23(a) hereof.


 


(s)            “Right” shall have the meaning set forth in the second paragraph
hereof.


 


(t)            “Right Certificate” shall have the meaning set forth in
Section 3(a) hereof.


 


(u)           “Shares Acquisition Date” shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.


 


(v)           “Subsidiary” of any Person shall mean 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.


 


(w)          “Summary of Rights” shall have the meaning set forth in Section 3(b) hereof.


 


(x)           “Trading Day” shall have the meaning set forth in
Section 11(d) hereof.


 


Section 2.              Appointment of Rights Agent. 
The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. 
The Company may from time to time appoint such co-Rights Agents as it
may deem necessary or desirable, upon five (5) business days prior written
notice to the Rights Agent; provided, however, that no such advance notice
shall be required in the event of any “force majeure” development as addressed
in Section 34 hereof.  The Rights
Agent shall have no duty to supervise, and shall in no event be liable for, the
acts or omissions of any such co-Rights Agent.


 


6

















 


Section 3.              Issue of Right Certificates. 
(a)  Until the tenth day after the Shares Acquisition Date
(including any such date which is after the date of this Agreement and prior to
the issuance of the Rights; the “Distribution Date”), (i) the
Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for Common Shares of the
Company registered in the names of the holders thereof (which certificates
shall also be deemed to be Right Certificates) and not by separate Right
Certificates, and (ii) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Shares of the
Company.  As soon as practicable after
the Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, insured, postage-prepaid mail,
to each record holder of Common Shares of the Company as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate, in substantially the form of
Exhibit B hereto (a “Right Certificate”), evidencing one Right for
each Common Share so held.  As of the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.


 


(b)           On the Record Date, or as soon as practicable thereafter, the Company
will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the “Summary of Rights”),
by first-class, postage-prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Record Date, at the address of such holder
shown on the records of the Company. 
With respect to certificates for Common Shares of the Company
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders
thereof together with a copy of the Summary of Rights attached thereto.  Until the Distribution Date (or the earlier
of the


 


7






 












 


Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares of the Company
outstanding on the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the Rights associated
with the Common Shares of the Company represented thereby.


 


(c)                                  Certificates for Common Shares
which become outstanding (including, without limitation, reacquired Common
Shares referred to in the last sentence of this paragraph (c)) after the Record
Date but prior to the earliest of the Distribution Date, the Redemption Date or
the Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:


 


This certificate also evidences and entitles the
holder hereof to certain rights as set forth in an Agreement between Hardinge
Inc. and Computershare Trust Company, N.A., dated as of February 18, 2010,
as it may be amended from time to time (the “Agreement”), the terms of which
are hereby incorporated herein by reference and a copy of which is on file at
the principal executive offices of Hardinge Inc.  Under certain circumstances, as set forth in
the Agreement, such Rights (as defined in the Agreement) will be evidenced by
separate certificates and will no longer be evidenced by this certificate.  Hardinge Inc. will mail to the holder of this
certificate a copy of the Agreement without charge after receipt of a written
request therefor.  As set forth in the
Agreement, Rights Beneficially Owned by any Person (as defined in the
Agreement) who becomes an Acquiring Person (as defined in the Agreement) become
null and void.


 


With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common Shares of
the Company represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any such certificate
shall also constitute the transfer of the Rights associated with the Common Shares
of the Company represented thereby.  In
the event that the Company purchases or acquires any Common Shares of the
Company after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares of the Company shall be deemed cancelled and
retired so


 


8

















 


that the Company shall not be entitled to exercise any Rights
associated with the Common Shares of the Company which are no longer
outstanding.


 


Section 4.                                            Form of
Right Certificates.  The Right Certificates (and the forms of
election to purchase Preferred Shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit B hereto, and
may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any applicable rule or
regulation made pursuant thereto or with any applicable rule or regulation
of any stock exchange or the Financial Industry Regulatory Authority, or to
conform to usage.  Subject to the
provisions of Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one one-hundredths of a Preferred
Share as shall be set forth therein at the price per one one-hundredth of a
Preferred Share set forth therein (the “Purchase Price”), but the number
of such one one-hundredths of a Preferred Share and the Purchase Price shall be
subject to adjustment as provided herein.


 


Section 5.                                            Countersignature
and Registration.  The Right Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its Chief Executive Officer,
its President, any of its Vice Presidents or its Treasurer, either manually or
by facsimile signature, shall have affixed thereto the Company’s seal or a
facsimile thereof, and shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature.  The Right Certificates shall be countersigned
either manually or by facsimile signature by the Rights Agent and shall not be
valid for any purpose unless countersigned. 
In case any officer of the Company who shall have signed any of the
Right Certificates shall cease to be such officer of


 


9

















 


the
Company before countersignature by the Rights Agent and issuance and delivery
by the Company, such Right Certificates, nevertheless, may be countersigned by
the Rights Agent and issued and delivered by the Company with the same force
and effect as though the individual who signed such Right Certificates had not
ceased to be such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any individual who, at the actual date of
the execution of such Right Certificate, shall be a proper officer of the
Company to sign such Right Certificate, although at the date of the execution
of this Agreement any such individual was not such an officer.


 


Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office, books for registration and
transfer of the Right Certificates issued hereunder.  Such books shall show the names and addresses
of the respective holders of the Right Certificates, the number of Rights
evidenced on its face by each of the Right Certificates and the date of each of
the Right Certificates.


 


Section 6.                                            Transfer,
Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates.  Subject to the provisions of Section 14
hereof, at any time after the Close of Business on the Distribution Date, and
at or prior to the Close of Business on the earlier of the Redemption Date or
the Final Expiration Date, any Right Certificate or Right Certificates (other
than Right Certificates representing Rights that have become void pursuant to
Section 11(a)(ii) hereof or that have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates entitling the registered holder
to purchase a like number of one one-hundredths of a Preferred Share as the
Right Certificate or Right Certificates surrendered then entitled such holder
to purchase.  Any registered holder
desiring to transfer, split up,


 


10

















 


combine
or exchange any Right Certificate or Right Certificates shall make such request
in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent.  Thereupon the Rights Agent shall countersign
and deliver to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested.  The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.


 


Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, at the Company’s
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make and
deliver a new Right Certificate of like tenor to the Rights Agent for delivery
to the registered holder in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.


 


Section 7.                                            Exercise
of Rights; Purchase Price; Expiration Date of Rights.
(a)  The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein), in whole or in
part, at any time after the Distribution Date, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-hundredth of a
Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the Close of Business on March 1, 2011 (the “Final
Expiration Date”), (ii) the time at which the Rights are redeemed as
provided in Section


 


11

















 


23
hereof (the “Redemption Date”), or (iii) the time at which such
Rights are exchanged as provided in Section 24 hereof.


 


(b)                                 The Purchase Price for each one
one-hundredth of a Preferred Share purchasable pursuant to the exercise of a
Right shall initially be $35.00, and shall be subject to adjustment from time
to time as provided in Section 11 or 13 hereof, and shall be payable in
lawful money of the United States of America in accordance with paragraph
(c) below.


 


(c)                                  Upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the Purchase Price for the
shares to be purchased and an amount equal to any applicable transfer tax
required to be paid by the holder of such Right Certificate in accordance with
Section 9 hereof by certified check, cashier’s check or money order
payable to the order of the Company, the Rights Agent shall thereupon promptly
(i) (A) requisition from any transfer agent of the Preferred Shares
certificates for the number of Preferred Shares to be purchased and the Company
hereby irrevocably authorizes any such transfer agent to comply with all such
requests, or (B) requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Preferred Share as are to
be purchased (in which case certificates for the Preferred Shares represented
by such receipts shall be deposited by the transfer agent of the Preferred
Shares with such depositary agent) and the Company hereby directs such
depositary agent to comply with such request; (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14 hereof;
(iii) after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated


 


12

















 


by such holder; and (iv) when appropriate,
after receipt, deliver such cash to or upon the order of the registered holder
of such Right Certificate.


 


(d)                                 In case the registered holder of
any Right Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to the registered
holder of such Right Certificate or to such holder’s duly authorized assigns,
subject to the provisions of Section 14 hereof.


 


Section 8.                                            Cancellation
and Destruction of Right Certificates.  All Right Certificates surrendered for the
purpose of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in cancelled form, or, if surrendered to the Rights
Agent, shall be cancelled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Agreement.  The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof.  The Rights Agent shall deliver all cancelled
Right Certificates to the Company, or shall, at the written request of the
Company, destroy such cancelled Right Certificates, and, in such case, shall
deliver a certificate of destruction thereof to the Company.


 


Section 9.                                            Availability
of Preferred Shares.  The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and unissued
Preferred Shares or any Preferred Shares held in its treasury the number of
Preferred Shares that will be sufficient to permit the exercise in full of all
outstanding Rights in accordance with Section 7


 


13

















 


hereof.  The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all Preferred Shares
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.


 


The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the Right
Certificates or of any Preferred Shares upon the exercise of Rights.  The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or the issuance or
delivery of certificates or depositary receipts for the Preferred Shares in a
name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or to deliver any
certificates or depositary receipts for Preferred Shares upon the exercise of
any Rights until any such tax shall have been paid (any such tax being payable
by the holder of such Right Certificate at the time of surrender) or until it
has been established to the Company’s reasonable satisfaction that no such tax
is due.


 


Section 10.                                      Preferred
Shares Record Date.  Each Person in whose name any certificate for
Preferred Shares is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of the Preferred Shares
represented thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that, if the date of such surrender and payment is a date upon
which the Preferred Shares transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next


 


14

















 


succeeding
Business Day on which the Preferred Shares transfer books of the Company are
open.  Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.


 


Section 11.                                      Adjustment
of Purchase Price, Number of Shares or Number of Rights.  The Purchase Price, the number of Preferred
Shares covered by each Right and the number of Rights outstanding are subject
to adjustment from time to time as provided in this Section 11.


 


(a)                                  (i)                                     In the event the Company shall at
any time after the date of this Agreement (A) declare a dividend on the
Preferred Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding Preferred Shares
into a smaller number of Preferred Shares or (D) issue any shares of its
capital stock in a reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of capital stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to


 


15

















 


receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.


 


(ii)                                  Subject
to Section 24 hereof, in the event any Person becomes an Acquiring Person,
each holder of a Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of the Company as shall equal
the result obtained by (A) multiplying the then current Purchase Price by
the number of one one-hundredths of a Preferred Share for which a Right is then
exercisable and dividing that product by (B) 50% of the then current per
share market price of the Common Shares of the Company (determined pursuant to
Section 11(d) hereof) on the date of the occurrence of such event.  In the event that any Person shall become an
Acquiring Person and the Rights shall then be outstanding, the Company shall
not take any action which would eliminate or diminish the benefits intended to
be afforded by the Rights.


 


From and after the occurrence of such event, any
Rights that are or were acquired or Beneficially Owned by any Acquiring Person
shall be void, and any holder of such Rights shall thereafter have no right to
exercise such Rights under any provision of this Agreement.  No Right Certificate shall be issued pursuant
to Section 3 hereof that represents Rights Beneficially Owned by an
Acquiring Person whose Rights would be void pursuant to the


 


16

















 


preceding sentence or any Associate or Affiliate thereof; no Right
Certificate shall be issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate or with respect to any Common Shares otherwise
deemed to be Beneficially Owned by any of the foregoing; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
or other Person whose Rights would be void pursuant to the preceding sentence
shall be cancelled.


 


(iii)                               In the
event that there shall not be sufficient Common Shares issued but not
outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with subparagraph (ii) above, the Company shall take
all such action as may be necessary to authorize additional Common Shares for
issuance upon exercise of the Rights.  In
the event the Company shall, after good faith effort, be unable to take all such
action as may be necessary to authorize such additional Common Shares, the
Company shall substitute, for each Common Share that would otherwise be
issuable upon exercise of a Right, a number of Preferred Shares or fraction
thereof such that the current per share market price of one Preferred Share
multiplied by such number or fraction is equal to the current per share market
price of one Common Share as of the date of issuance of such Preferred Shares
or fraction thereof.


 


(b)                                 In case the Company shall fix a
record date for the issuance of rights, options or warrants to all holders of
Preferred Shares entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Shares (or
shares having the same rights, privileges and preferences as the Preferred
Shares (“equivalent preferred shares”)) or securities convertible into
Preferred Shares or equivalent preferred shares at a price per Preferred Share
or equivalent preferred share (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent preferred shares) less
than the then current per share market price of the Preferred Shares (as
defined in Section 11(d)) on such record date,


 


17






 












 


the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number
of Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares to be offered
for subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.  In
case such subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and holders of the Rights.  Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation.  Such adjustment shall be
made successively whenever such a record date is fixed; and, in the event that
such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.


 


(c)           In case the Company shall fix a
record date for the making of a distribution to all holders of the Preferred
Shares (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation)


 


18

















 


of
evidences of indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the then-current per share
market price of the Preferred Shares on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and holders of the Rights) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to one Preferred Share and
the denominator of which shall be such then-current per share market price of
the Preferred Shares on such record date; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of the
Company to be issued upon exercise of one Right.  Such adjustments shall be made successively
whenever such a record date is fixed; and, in the event that such distribution
is not so made, the Purchase Price shall again be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.


 


(d)           (i)   For the purpose of any computation hereunder,
the “current per share market price” of any security (a “Security” for
the purpose of this Section 11(d)(i)) on any date shall be deemed to be
the average of the daily closing prices per share of such Security for the 30
consecutive Trading Days immediately prior to such date; provided, however,
that, in the event that the current per share market price of the Security is
determined during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in
shares of such Security or Securities convertible into such shares, or (B) any
subdivision,


 


19

















 


combination
or reclassification of such Security and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the current per share market price shall be appropriately
adjusted to reflect the current market price per share equivalent of such
Security.  The closing price for each day
shall be the last sale price, regular way, reported at or prior to 4:00 P.M.
Eastern time or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, reported as of 4:00 P.M.
Eastern time, in either case, as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is
listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price reported at
or prior to 4:00 P.M. Eastern time or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported
as of 4:00 P.M. Eastern time by NASDAQ or such other system then in use,
or, if on any such date the Security is not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the Board of Directors
of the Company.  The term “Trading Day”
shall mean a day on which the principal national securities exchange on which
the Security is listed or admitted to trading is open for the transaction of
business, or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.


 


20

















 


(ii)           For the purpose of any computation
hereunder, the “current per share market price” of the Preferred Shares shall
be determined in accordance with the method set forth in Section 11(d)(i).  If the Preferred Shares are not publicly
traded, the “current per share market price” of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the Common
Shares as determined pursuant to Section 11(d)(i) hereof (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one hundred.  If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded, “current per share
market price” shall mean the fair value per share as determined in good faith
by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent.


 


(e)           No adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this Section 11
shall be made to the nearest cent or to the nearest one one-millionth of a
Preferred Share or one ten-thousandth of any other share or security as the
case may be.  Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date
of the transaction which requires such adjustment or (ii) the date of the
expiration of the right to exercise any Rights.


 


(f)            If, as a result of an adjustment
made pursuant to Section 11(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of  capital stock of the Company other than
Preferred Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a manner


 


21

















 


and
on terms as nearly equivalent as practicable to the provisions with respect to
the Preferred Shares contained in Section 11(a) through (c) hereof,
inclusive, and the provisions of Sections 7, 9, 10 and 13 hereof with respect
to the Preferred Shares shall apply on like terms to any such other shares.


 


(g)           All Rights originally issued by the
Company subsequent to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price, the number of
one one-hundredths of a Preferred Share purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.


 


(h)           Unless the Company shall have
exercised its election as provided in Section 11(i) hereof, upon each
adjustment of the Purchase Price as a result of the calculations made in
Sections 11(b) and (c) hereof, each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of
a Preferred Share (calculated to the nearest one one-millionth of a Preferred
Share) obtained by (A) multiplying (x) the number of one
one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (B) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.


 


(i)            The Company may elect, on or after
the date of any adjustment of the Purchase Price, to adjust the number of
Rights in substitution for any adjustment in the number of one one-hundredths
of a Preferred Share purchasable upon the exercise of a Right.  Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable immediately



 


22

















 


prior
to such adjustment.  Each Right held of
record prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price.  The Company shall
make a public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of
the adjustment to be made.  This record
date may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. 
If Right Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such
adjustment.  Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein, and shall be registered in the names of the holders of record of
Right Certificates on the record date specified in the public announcement.


 


(j)            Irrespective of any adjustment or
change in the Purchase Price or in the number of one one-hundredths of a
Preferred Share issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price


 


23

















 


and
the number of one one-hundredths of a Preferred Share which were expressed in
the initial Right Certificates issued hereunder.


 


(k)           Before taking any action that would
cause an adjustment reducing the Purchase Price below one one-hundredth of the
then par value, if any, of the Preferred Shares issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Preferred Shares at such adjusted Purchase
Price.


 


(l)            In any case in which this Section 11
shall require that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right exercised after
such record date of the Preferred Shares and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the
Preferred Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing
such holder’s right to receive such additional shares upon the occurrence of
the event requiring such adjustment.


 


(m)          Anything in this Section 11 to
the contrary notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it, in its sole
discretion, shall determine to be advisable in order that any consolidation or
subdivision of the Preferred Shares, issuance wholly for cash of any Preferred
Shares at less than the current market price, issuance wholly for cash of
Preferred Shares or securities which by their terms are convertible into or exchangeable


 


24

















 


for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or issuance
of rights, options or warrants referred to in Section 11(b) hereof,
hereafter made by the Company to holders of the Preferred Shares shall not be
taxable to such stockholders.


 


(n)           In the event that, at any time after
the date of this Agreement and prior to the Distribution Date, the Company
shall (i) declare or pay any dividend on the Common Shares payable in
Common Shares, or (ii) effect a subdivision, combination or consolidation
of the Common Shares (by reclassification or otherwise than by payment of
dividends in Common Shares) into a greater or lesser number of Common Shares,
then, in any such case, (A) the number of one one-hundredths of a
Preferred Share purchasable after such event upon proper exercise of each Right
shall be determined by multiplying the number of one one-hundredths of a
Preferred Share so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of Common Shares outstanding immediately
before such event and the denominator of which is the number of Common Shares
outstanding immediately after such event, and (B) each Common Share
outstanding immediately after such event shall have issued with respect to it
that number of Rights which each Common Share outstanding immediately prior to
such event had issued with respect to it. 
The adjustments provided for in this Section 11(n) shall be
made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.


 


Section 12.             Certificate of Adjusted Purchase
Price or Number of Shares.  Whenever
an adjustment is made as provided in Section 11 or 13 hereof, the Company
shall promptly (a) prepare a certificate setting forth such adjustment and
a brief statement of the facts accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares and the Securities and Exchange Commission a copy


 


25

















 


of
such certificate and (c) if such adjustment occurs at any time after the
Distribution Date, mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25 hereof.


 


Section 13.             Consolidation, Merger or Sale or
Transfer of Assets or Earning Power. 
In the event, directly or indirectly, at any time after a Person has
become an Acquiring Person, (a) the Company shall consolidate with, or
merge with and into, any other Person, (b) any Person shall consolidate
with the Company, or merge with and into the Company and the Company shall be
the continuing or surviving corporation of such merger and, in connection with
such merger, all or part of the Common Shares shall be changed into or
exchanged for stock or other securities of any other Person (or the Company) or
cash or any other property, or (c) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one or more transactions, assets or earning power aggregating 50% or more of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person other than the Company or one or more of its
wholly-owned Subsidiaries, then, and in each such case, proper provision shall
be made so that (i) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise thereof
at a price equal to the then current Purchase Price multiplied by the number of
one one-hundredths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation) as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number
of one one-hundredths of a Preferred Share for which a Right is then
exercisable and dividing that product by (B) 50% of the then current per
share market price of the Common Shares of such


 


26

















 


other
Person (determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; (ii) the
issuer of such Common Shares shall thereafter be liable for, and shall assume,
by virtue of such consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the term “Company”
shall thereafter be deemed to refer to such issuer; and (iv) such issuer
shall take such steps (including, but not limited to, the reservation of a
sufficient number of its Common Shares in accordance with Section 9
hereof) in connection with such consummation as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to the Common Shares thereafter deliverable upon the
exercise of the Rights.  The Company
shall not consummate any such consolidation, merger, sale or transfer unless,
prior thereto, the Company and such issuer shall have executed and delivered to
the Rights Agent a supplemental agreement so providing.  The Company shall not enter into any
transaction of the kind referred to in this Section 13 if at the time of
such transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights. 
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.


 


Section 14.             Fractional Rights and Fractional
Shares.  (a)  The Company shall
not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. 
In lieu of such fractional Rights, there shall be paid to the registered
holders of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of
the current market value of a whole Right. 
For the purposes of this Section 14(a), the current market value of
a whole Right shall be the closing


 


27
















 


price of the Rights for the Trading Day immediately prior to the date
on which such fractional Rights would have been otherwise issuable.  The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case,
as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or,
if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company.  If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be
used.


 


(b)           The
Company shall not be required to issue fractions of Preferred Shares (other
than fractions which are integral multiples of one one-hundredth of a Preferred
Share) upon exercise of the Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are integral multiples
of one one-hundredth of a Preferred Share). 
Fractions of Preferred Shares in integral multiples of one one-hundredth
of a Preferred Share may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it; provided that such 


 


28

















 


agreement shall provide that the holders of such depositary receipts
shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Shares represented by such
depositary receipts.  In lieu of
fractional Preferred Shares that are not integral multiples of one
one-hundredth of a Preferred Share, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one Preferred Share.  For the
purposes of this Section 14(b), the current market value of a Preferred
Share shall be the closing price of a Preferred Share (as determined pursuant
to the second sentence of Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of such exercise.


 


(c)           The
holder of a Right, by the acceptance of the Right, expressly waives such holder’s
right to receive any fractional Rights or any fractional shares upon exercise
of a Right (except as provided above).


 


Section 15.             Rights
of Action.  All rights of action in
respect of this Agreement, excepting the rights of action given to the Rights
Agent under Section 18 hereof, are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of the Common Shares); and any registered holder of any
Right Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Shares), may, in
such holder’s own behalf and for such holder’s own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to enforce,
or otherwise act in respect of, such holder’s right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement.  Without
limiting the foregoing or any remedies available to the holders of Rights, it
is specifically 


 


29

















 


acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement, and will be entitled to
specific performance of the obligations under, and injunctive relief against
actual or threatened violations of the obligations of any Person subject to,
this Agreement.


 


Section 16.             Agreement
of Right Holders.  Every holder of a
Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:


 


(a)           prior
to the Distribution Date, the Rights will be transferable only in connection
with the transfer of the Common Shares;


 


(b)           after
the Distribution Date, the Right Certificates are transferable only on the
registry books of the Rights Agent if surrendered at the principal office of
the Rights Agent, duly endorsed or accompanied by a proper instrument of
transfer; and


 


(c)           the
Company and the Rights Agent may deem and treat the person in whose name the
Right Certificate (or, prior to the Distribution Date, the associated Common
Shares certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Right Certificate or the associated Common Shares certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.


 


Section 17.             Right
Certificate Holder Not Deemed a Stockholder.  No holder, as such, of any Right Certificate
shall be entitled to vote, receive dividends or be deemed for any 


 


30

















 


purpose the holder of the Preferred Shares or any other securities of
the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except
as provided in Section 25 hereof), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions hereof.


 


Section 18.             Concerning
the Rights Agent.  The Company agrees
to pay to the Rights Agent reasonable compensation for all services rendered by
it hereunder, and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder.  The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of
this Agreement, including the costs and expenses of defending against any claim
of liability in the premises.


 


The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any
Right Certificate or certificate for the Preferred Shares or Common Shares or
for other securities of the Company, instrument of assignment or  transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or 


 


31

















 


other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.


 


Section 19.             Merger
or Consolidation or Change of Name of Rights Agent.  Any corporation into which the Rights Agent
or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the stock transfer or corporate trust powers of the
Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided
that such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof.  In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and, in case at
that time any of the Right Certificates shall not have been  countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and, in all such
cases, such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.


 


In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and, in case at that time any of the Right Certificates shall
not have been countersigned, 


 


32

















 


the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and, in all such
cases, such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.


 


Section 20.             Duties
of Rights Agent.  The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:


 


(a)           The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete authorization
and protection to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion.


 


(b)           Whenever
in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Treasurer or the Secretary of
the Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.


 


(c)           The
Rights Agent shall be liable hereunder to the Company and any other Person only
for its own gross negligence, bad faith or willful misconduct.


 


33

















 


(d)           The
Rights Agent shall not be liable for or by reason of any of the statements of
fact or recitals contained in this Agreement or in the Right Certificates
(except its countersignature thereof) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have been made by
the Company only.


 


(e)           The
Rights Agent shall not be under any responsibility in respect of the validity
of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including
the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, 11, 13, 23 or 24 hereof, or the ascertaining
of the existence of facts that would require any such change or adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice that such change or adjustment is required); nor shall it
by any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Shares
will, when issued, be validly authorized and issued, fully paid and
nonassessable.


 


(f)            The
Company agrees that it will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the provisions
of this Agreement.


 


34

















 


(g)           The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any one of the Chairman
of the Board, the Chief Executive Officer, the President, any Vice President,
the Secretary or the Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions.


 


(h)           The
Rights Agent and any stockholder, director, officer or employee of the Rights
Agent may buy, sell or deal in any of the Rights or other securities of the
Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement.  Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
other legal entity.


 


(i)            The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided that reasonable care was exercised in the selection
and continued employment thereof.


 


Section 21.             Change
of Rights Agent.  The Rights Agent or
any successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 days’ notice in writing mailed to the Company and, in
the event that the Rights Agent or one of its Affiliates 


 


35

















 


is not also the transfer agent for the Company, to each transfer agent
of the Common Shares or Preferred Shares by registered or certified mail.  In the event the transfer agency relationship
in effect between the Company and the Rights Agent terminates, the Rights Agent
will be deemed, as of the day that is 30 days after the effective date of such
termination, to resign and be discharged from its duties under this Agreement,
and the Company shall be responsible for sending any required notice.  The Company may remove the Rights Agent or
any successor Rights Agent upon 30 days’ notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail.  If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. 
If the Company shall fail to make such appointment within a  period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (which holder shall, with such notice, submit such holder’s
Right Certificate for inspection by the Company), then the registered holder of
any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent.  Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation or other entity organized and doing business under the
laws of the United States or of the State of New York (or of any other state of
the United States so long as such corporation is authorized to do business as a
banking institution in the State of New York), in good standing, which is authorized
under such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state authority and which
has individually or combined with an Affiliate at the time of its appointment
as Rights Agent a 


 


36

















 


combined capital and surplus of at least $50 million.  After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose.  Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares or
Preferred Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. 
Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.


 


Section 22.             Issuance
of New Right Certificates. 
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by the Board of Directors of
the Company to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Agreement.


 


Section 23.             Redemption.  (a)  The Board of Directors of the
Company may, at its option, at any time prior to such time as any Person
becomes an Acquiring Person, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred to as
the “Redemption Price”).  The
redemption of the Rights by the Board of Directors of the Company may be made
effective


 


37






 


 


 


 












 


at such time, on such basis and with such conditions as the Board of
Directors of the Company, in its sole discretion, may establish.


 


(b)           Immediately upon the action of the Board
of Directors of the Company ordering the redemption of the Rights pursuant to
paragraph (a) of this Section 23, and without any further action and
without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price.  The Company shall promptly
give public notice of any such redemption; provided, however,
that the failure to give, or any defect in, any such notice shall not affect
the validity of such redemption.  Within
10 days after such action of the Board of Directors of the Company ordering the
redemption of the Rights, the Company shall mail a notice of redemption to all
the holders of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Shares.  Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice.  Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.  Neither the Company nor
any of its Affiliates or Associates may redeem, acquire or purchase for value
any Rights at any time in any manner other than that specifically set forth in
this Section 23 or in Section 24 hereof, and other than in connection
with the purchase of Common Shares prior to the Distribution Date.


 


Section 24.            Exchange.  (a)  The Board of Directors of the
Company may, at its option, at any time after any Person becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any adjustment in the number 


 


38

















 


of Rights pursuant to Section 11(i) (such exchange ratio
being hereinafter referred to as the “Exchange Ratio”).  Notwithstanding the foregoing, the Board of
Directors of the Company shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any such plan), becomes
the Beneficial Owner of 50% or more of the Common Shares then outstanding.


 


(b)           Immediately upon the action of the Board
of Directors of the Company ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 and without any further action and
without any notice, the right to exercise such Rights shall terminate and the
only right thereafter of a holder of such Rights shall be to receive that
number of Common Shares equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio.  The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. 
The Company promptly shall mail a notice of any such exchange to all of
the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent.  Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. 
Each such notice of exchange will state the method by which the exchange
of the Common Shares for Rights will be effected, and, in the event of any
partial exchange, the number of Rights which will be exchanged.  Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which have become
void pursuant to the provisions of Section 11(a)(ii) hereof) held by
each holder of Rights.


 


(c)           In the event that there shall not be
sufficient Common Shares issued but not outstanding or authorized but unissued
to permit any exchange of Rights as contemplated in


 


39

















 


accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional Common Shares for issuance
upon exchange of the Rights.  In the
event the Company shall, after good faith effort, be unable to take all such
action as may be necessary to authorize such additional Common Shares, the
Company shall substitute, for each Common Share that would otherwise be
issuable upon exchange of a Right, a number of Preferred Shares or fraction
thereof such that the current per share market price of one Preferred Share
multiplied by such number or fraction is equal to the current per share market
price of one Common Share as of the date of issuance of such Preferred Shares
or fraction thereof.


 


(d)           The Company shall not be required to
issue fractions of Common Shares or to distribute certificates which evidence
fractional Common Shares.  In lieu of
such fractional Common Shares, the Company shall pay to the registered holders
of the Right Certificates with regard to which such fractional Common Shares
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Common Share. 
For the purposes of this paragraph (d), the current market value of a
whole Common Share shall be the closing price of a Common Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this Section 24.


 


Section 25.            Notice of Certain Events.  (a)  In
case the Company shall, at any time after the Distribution Date, propose (i) to
pay any dividend payable in stock of any class to the holders of the Preferred
Shares or to make any other distribution to the holders of the Preferred Shares
(other than a regular quarterly cash dividend), (ii) to offer to the
holders of the Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification 


 


40

















 


of the Preferred Shares (other than a reclassification involving only
the subdivision of outstanding Preferred Shares), (iv) to effect any
consolidation or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any other
Person, (v) to effect the liquidation, dissolution or winding up of the
Company, or (vi) to declare or pay any dividend on the Common Shares
payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least
10 days prior to the record date for determining holders of the Preferred
Shares for purposes of such action, and, in the case of any such other action,
at least 10 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Common Shares and/or Preferred
Shares, whichever shall be the earlier.


 


(b)           In case the event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall, as soon as practicable thereafter, give to
each holder of a Right Certificate, in accordance with Section 26 hereof,
a notice of the occurrence of such event, which notice shall 


 


41

















 


describe such event and the consequences of such event to holders of
Rights under Section 11(a)(ii) hereof.


 


Section 26.            Notices.  Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
overnight delivery service or first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent) as follows:


 


Hardinge Inc.


One Hardinge Drive


Elmira, NY, 14902-1507

Attention:  Corporate Secretary


 


Subject to the provisions of Section 21 hereof,
any notice or demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the Rights Agent
shall be sufficiently given or made if sent by overnight delivery service or
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:


 


Computershare
Trust Company, N.A.


2 North LaSalle
Street


Chicago, IL 60602


Attention: Client
Services


 


Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the holder of any Right
Certificate shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as
shown on the registry books of the Company.


 


42

















 


Section 27.            Supplements and Amendments.  The Company
may from time to time supplement or amend this Agreement without the approval
of any holders of Right Certificates in order to cure any ambiguity, to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or to make any other provisions
with respect to the Rights which the Company may deem necessary or desirable,
any such supplement or amendment to be evidenced by a writing signed by the
Company and the Rights Agent; provided, however, that, from and
after such time as any Person becomes an Acquiring Person, this Agreement shall
not be amended in any manner which would adversely affect the interests of the
holders of Rights.  The Rights Agent will
duly execute and deliver any supplement or amendment hereto requested by the
Company, provided that such supplement or amendment does not adversely affect
the rights, duties or obligations of the Rights Agent under this Agreement.


 


Section 28.            Successors.  All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.


 


Section 29.            Benefits of this Agreement.  Nothing in
this Agreement shall be construed to give to any Person other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares).


 


43

















 


Section 30.            Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.


 


Section 31.            Governing Law.  This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts to
be made and performed entirely within such state.


 


Section 32.            Counterparts.  This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.  A signature to
this Agreement transmitted electronically shall have the same authority, effect
and enforceability as an original signature.


 


Section 33.            Descriptive Headings.  Descriptive
headings of the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.


 


Section 34             Force Majeure. 
Notwithstanding anything to the contrary contained herein, the Rights
Agent shall not be liable for any delays or failures in performance resulting
from acts beyond its reasonable control including, without limitation, acts of
God, terrorist acts, shortage of supply, breakdowns or malfunctions,
interruptions or malfunction of computer facilities, or loss of data due to
power failures or mechanical difficulties with information 


 


44

















 


storage or retrieval systems, labor difficulties, war, or civil
unrest.  The Rights Agent shall provide
the Company prompt notice as soon as practicable in the event that any such
delay or failure in performance occurs.


 


45

















 


IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and attested, all as of the day and year
first above written.


 


 


	
  Attest:

  	
   

  	
  HARDINGE
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By

  	
  /s/ Edward J. Gaio

  	
   

  	
   

  	
  By

  	
  /s/
  Richard L. Simons

  
	
  Name: Edward J. Gaio

  	
   

  	
   

  	
  Name:
  Richard L. Simons

  
	
  Title: 

  	
  Vice President and Chief

  	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  
	
   

  	
  Financial Officer

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
  COMPUTERSHARE
  TRUST COMPANY, 

  
	
   

  	
   

  	
   

  	
  N.A.

  
	
   

  	
   

  	
   

  	
   

  
	
  By

  	
  /s/ James Walsh

  	
   

  	
   

  	
  By

  	
  /s/
  Dennis V. Moccia

  
	
  Name: James Walsh

  Title: Relationship Manager

  	
   

  	
   

  	
  Name:
  Dennis V. Moccia

  Title: Manager, Contract Adminstrator

  
								



 


46
















 


Exhibit A


 


FORM OF


 


CERTIFICATE OF AMENDMENT


 


of


 


THE CERTIFICATE OF INCORPORATION


 


of


 


HARDINGE INC.


 


(Pursuant to Section 805 of the Business
Corporation Law)


 


It is hereby certified that:


 


FIRST:                                                           The name of the corporation is Hardinge
Inc. (hereinafter called the “Corporation”). 
The name under which the Corporation was formed was Hardinge Brothers, Inc.


 


SECOND:                                            The Certificate of Consolidation with
respect to the consolidation of Hardinge Brothers, Inc. and Morrison
Machine Products, Inc. was filed by the Department of State of the State
of New York on December 24, 1937.  A
Restated Certificate of Incorporation of the Corporation was filed by the Department
of State of the State of New York on May 24, 1995.


 


THIRD:                                                       This Certificate of Amendment (1) eliminates
the existing subdivision VII of Article 4 of the Certificate of Incorporation
respecting the series of preferred stock, par value $0.01 per share, of the
Corporation (the “Preferred Stock”) designated as the “Series A Preferred
Stock” and (2) creates a new subdivision VII (which replaces the existing
subdivision VII) of Article 4 of the Certificate of Incorporation
respecting a new series of Preferred Stock designated as the “Series B Preferred
Stock.”


 


FOURTH:                                           To effect the foregoing, Article 4
of the Certificate of Incorporation, relating to capitalization of the
Corporation, is amended to read in its entirety as follows:


 


“4.                                 The relative voting, dividend,
liquidation and other rights, preferences and limitations of the shares of each
class are as follows:


 


I.                                         The Preferred Stock may be issued from
time to time in one or more series, each such series to have the number of
shares and designation, and the shares of each such series to have such
relative rights, preferences or limitations, as the Board of Directors, subject
to the limitations prescribed by law or provided herein, may from time to time
fix, before issuance, by delivering an appropriate certificate of amendment to
the Department of State pursuant to the Business Corporation Law of the State
of New York.  The authority of the Board


 


A-1

















 


of Directors with respect
to each series shall include, but not be limited to, the fixing of the
following:


 


(a)                                  The number of shares to constitute the series
and the distinctive designation thereof;


 


(b) The
dividend rate on the shares of the series; whether dividends shall be cumulative,
and, if so, from what date or dates;


 


(c) Whether
or not the shares of the series shall be redeemable and, if redeemable, the
terms upon which the shares of the series may be redeemed and the premium, if
any, over and above the par value thereof and any dividends accrued thereon
which the shares of the series shall be entitled to receive upon the redemption
thereof;


 


(d) Whether
or not the shares of the series shall be subject to the operation of a
retirement or sinking fund to be applied to the purchase or redemption of such
shares for retirement and, if such retirement or sinking fund be established,
the annual amount thereof and the terms and provisions relative to the operation
thereof;


 


(e) Whether
or not the shares of the series shall be convertible into shares of any class
or classes of stock of the Corporation, with or without par value, or of any
other series of the same class and, if convertible, the conversion price or
prices or the rate at which such conversion may be made and the method, if any,
of adjusting the same;


 


(f) The
rights of the shares of the series in the event of voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation;


 


(g) The
restrictions, if any, on the payment of dividends upon, and the making of the
distributions to any class of stock ranking junior to the shares of the series,
and the restrictions, if any, on the purchase or redemption of the shares of
any such junior class;


 


(h) Whether
the series shall have voting rights, in addition to the voting rights provided
by law, and, if so, the terms of such voting rights; and


 


(i) Any other
relative rights, preferences and limitations of the series.


 


II.                                     Holders of shares of Preferred Stock
shall be entitled to receive, when and as declared by the Board of Directors,
out of funds legally available for the payment of dividends, dividends at the
rates fixed by the Board of Directors for the respective series, before any
dividends shall be declared and paid, or set apart for payment, on any other
class of stock of the Corporation ranking junior to


 


A-2

















 


the Preferred Stock
either as to dividends or assets, with respect to the same dividend period.


 


III.                                 Whenever, at any time, dividends on the
then outstanding Preferred Stock as may be required by the terms of the
certificate creating the series representing the shares outstanding shall have
been paid or declared and set apart for payment on the then outstanding
Preferred Stock and after complying with all the provisions with respect to any
retirement or sinking fund or funds for any series of Preferred Stock, the
Board of Directors may, subject to the provisions of any certificate creating
any series of Preferred Stock with respect to the payment of dividends on any
other class or classes of stock, declare and pay dividends on the Common Stock,
and the Preferred Stock shall not be entitled to share therein.


 


IV.                                 Upon any liquidation, dissolution or
winding-up of the Corporation, after payment, if any is required, shall have
been made in full to the Preferred Stock as provided in any certificate
creating any series thereof, but not prior thereto, the Common Stock shall,
subject to the respective terms and provisions, if any, of any such
certificate, be entitled to receive any and all assets remaining to be paid or
distributed, and the Preferred Stock shall not be entitled to share therein.


 


V.                                     No holder of Common Stock or any series
of Preferred Stock shall, as such holder, have any preemptive or preferential
right of subscription to any stock of any class of the Corporation or to any
obligations convertible into any such stock or to any right of subscription to,
or to any warrant or option for, the purchase of any stock, other than such, if
any, as the Board of Directors of the Corporation in its discretion may
determine from time to time.


 


VI.                                 The holders of the Common Stock shall
have the right to vote on all questions to the exclusion of all other classes
of stock, except as by law expressly provided or as otherwise expressly provided
with respect to the holders of any other class or classes of stock.


 


VII.  Series B Preferred Stock:  The designation and amount, relative rights,
preferences and limitations of the shares of Series B Preferred Stock, par
value $0.01 per share, as fixed by the Board of Directors of the Corporation,
are as follows:


 


Section 1.                    Designation and Amount.  The shares of
such series shall be designated as “Series B Preferred Stock” (the “Series B
Preferred Stock”) and the number of shares constituting the Series B
Preferred Stock shall be 200,000.  Such
number of shares may be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the number of shares
of Series B Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the Corporation convertible into Series B
Preferred Stock.


 


A-3

















 


Section 2.                    Dividends and Distributions.


 


(A)                              Subject to the rights of the holders of
any shares of any series of Preferred Stock (or any similar stock) ranking
prior and superior to the Series B Preferred Stock with respect to
dividends, the holders of shares of Series B Preferred Stock, in preference
to the holders of Common Stock, par value $.01 per share (the “Common Stock”),
of the Corporation, and of any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the
first 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 B Preferred Stock, in
an amount per share (rounded to the nearest cent) equal to the greater of (a) $1
or (b) 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 since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a share
of Series B Preferred Stock.  In the
event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in
each  such case the amount to which
holders of shares of Series B 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 B Preferred Stock as provided in paragraph (A) of
this Section immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $1 per share on the Series B Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.


 


(C)                                Dividends shall begin to accrue and be
cumulative on outstanding shares of Series B Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such
shares, unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination


 


A-4

















 


of holders of shares of Series B Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to accrue and
be cumulative from such Quarterly Dividend Payment Date.  Accrued but unpaid dividends shall not bear
interest.  Dividends paid on the shares
of Series B 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 or distribution
declared thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.


 


Section 3.                    Voting Rights.  The holders
of shares of Series B Preferred Stock shall have the following voting
rights:


 


(A)                              Subject to the provision for adjustment
hereinafter set forth, each share of Series B 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 declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series B
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, in
any other Certificate of Amendment creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series B Preferred
Stock and the holders of shares of Common Stock and any other capital stock of
the Corporation having general voting rights shall vote together as one class
on all matters submitted to a vote of stockholders of the Corporation.


 


(C)                                Except as set forth herein, or as otherwise
provided by law, holders of Series B 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 B  Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series B Preferred Stock outstanding
shall have been paid in full, the Corporation shall not:


 


A-5

















 


(i)                                     declare or pay dividends, or make any
other distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series B
Preferred Stock;


 


(ii)                                  declare or pay dividends, or make any
other distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series B
Preferred Stock, except dividends paid ratably on the Series B 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 junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series B Preferred
Stock, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior 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 B Preferred Stock;
or


 


(iv)                              redeem or purchase or otherwise acquire
for consideration any shares of Series B Preferred Stock, or any shares of
stock ranking on a parity with the Series B 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 B 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
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Amendment creating
a series of Preferred Stock or any similar stock or as otherwise required by
law.


 


Section 6.                    Liquidation, Dissolution or Winding Up. 
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking
junior (either as to dividends or 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 $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, provided


 


A-6

















 


that the holders
of shares of Series B Preferred Stock shall be entitled to receive an aggregate
amount per share, subject to the provision for adjustment hereinafter set
forth, equal to 100 times the aggregate amount to be distributed per share to
holders of shares of Common Stock, or (2) to the holders of shares of stock
ranking on a parity (either as to dividends or 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.  In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount
to which holders of shares of Series B 
Preferred Stock were entitled immediately prior to such event under the
proviso in clause (1) 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.


 


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 each share of Series B Preferred Stock
shall at the same time be similarly exchanged or changed into 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 changed or exchanged. 
In the event the Corporation shall at any time declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series B 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 B Preferred Stock shall not be redeemable.


 


Section 9.                    Rank.  The Series B
Preferred Stock shall rank, with respect to the payment of dividends and the
distribution of assets, junior to all series of any other class of the
Corporation’s Preferred Stock.


 


Section 10.              Amendment.  The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series B Preferred
Stock so as to affect them adversely without the


 


A-7

















 


affirmative
vote  of the holders of at least
two-thirds of the outstanding shares of Series B Preferred Stock, voting
together as a single class.”


 


FIFTH:                                                          This amendment to the Certificate of
Incorporation was authorized, pursuant to Section 502 of the Business
Corporation Law and the Certificate of Incorporation, by a vote of the Board of
Directors.  Pursuant to Section 502
of the Business Corporation Law and the Certificate of Incorporation, no vote
of the stockholders was necessary for adoption of this amendment.  The Board of Directors adopted resolutions on
February 17, 2010 authorizing the amendment of the Certificate of
Incorporation to (1) pursuant to Section 502(e) of the Business
Corporation Law, eliminate from the Certificate of Incorporation subdivision
VII of Article 4 thereof respecting the series of series of Preferred
Stock designated as the “Series A Preferred Stock” as none of the
authorized shares of such series are outstanding and no shares of such series
will be issued subject to the Certificate of Incorporation and (2) pursuant
to Section 502(c) of the Business Corporation Law and the Certificate
of Incorporation, create a new series of Preferred Stock, state the designation
of such series as the “Series B Preferred Stock” and the number of shares
thereof, and fix the relative rights, preferences, and limitations thereof as
set forth above in new subdivision VII (which replaces the existing subdivision
VII) of Article 4.  The Certificate
of Incorporation provides that the Board of Directors may, by delivering an
appropriate certificate of amendment to the Department of State of the State of
New York, fix the designation and number of shares of one or more series of
Preferred Stock, and may establish all relative rights, preferences and
limitations pertaining to such series, without the approval of the stockholders
of the Corporation.


 


A-8

















 


IN WITNESS WHEREOF, we have subscribed
this document on this           
day of February, 2010 and do hereby affirm, under the penalties of perjury,
that the statements contained therein have been examined by me and are true and
correct.


 


 


	
   

  	
   

  
	
   

  	
  Richard
  L. Simons

  
	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Edward J. Gaio

  
	
   

  	
  Vice
  President and Chief Financial Officer

  



 


A-9

















 


CERTIFICATE OF AMENDMENT


 


of


 


THE CERTIFICATE OF INCORPORATION


 


of


 


HARDINGE INC.


 


(Pursuant to Section 805 of the Business Corporation Law)


 


Dated:             February       ,
2010


 


Filer:                                                  Richard L.
Simons


President
and Chief Executive Officer


Hardinge
Inc.


One
Hardinge Drive


Elmira,
NY 14902


 


A-10
















 


Exhibit B


 


Form of Right
Certificate


 


	
  Certificate No. R-

  	
   

  	
   

  	
   Rights

  



 


NOT
EXERCISABLE AFTER MARCH 1, 2011 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS.  THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE AGREEMENT.


 


Right Certificate


 


HARDINGE INC.


 


This certifies that                     ,
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Agreement, dated as of February 18, 2010
(the “Agreement”), between Hardinge Inc., a New York corporation (the
“Company”), and Computershare Trust Company, N.A. (the “Rights Agent”), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Agreement) and prior to 5:00 P.M., New York City time,
on March 1, 2011 at the principal office of the Rights Agent, or at the
office of its successor as Rights Agent, one one-hundredth of a fully paid
non-assessable share of Series B Preferred Stock, par value $0.01 per
share, of the Company (the “Preferred Shares”), at a purchase price of
$ 35.00 per one one-hundredth of a Preferred Share (the “Purchase Price”),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed.  The
number of Rights evidenced by this Right Certificate (and the number of one
one-hundredths of a Preferred Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of           ,
20    , based on the Preferred Shares as constituted
at such date.  As provided in the Agreement,
the Purchase Price and the number of one one-hundredths of a Preferred Share
which may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events.


 


This Right Certificate is subject to all of the terms, provisions and
conditions of the Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Right Certificates.  Copies of the Agreement are on file at the
principal executive offices of the Company and the offices of the Rights Agent.


 


This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right Certificates



 


B-1

















 


surrendered shall have entitled such holder to
purchase.  If this Right Certificate
shall be exercised in part, the holder shall be entitled to receive upon
surrender hereof another Right Certificate or Right Certificates for the number
of whole Rights not exercised.


 


Subject to the provisions of the Agreement, the Rights evidenced by
this Right Certificate (i) may be redeemed by the Company at a redemption
price of $.01 per Right or (ii) may be exchanged in whole or in part for
Preferred Shares or shares of the Company’s Common Stock, par value $0.01 per
share.


 


No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but, in lieu thereof, a
cash payment will be made, as provided in the Agreement.


 


No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Agreement
or herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any  meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Agreement), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as provided
in the Agreement.


 


This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.


 


WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal. 
Dated as of           ,
        .


 


	
  ATTEST:

  	
   

  	
  HARDINGE INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  
	
  Title:

  	
   

  	
   

  	
  Title:

  
	
  Countersigned:

  	
   

  	
   

  



 


 


	
  COMPUTERSHARE TRUST COMPANY, N.A.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  



 


Form of Reverse Side of
Right Certificate


 


B-2

















 


FORM OF ASSIGNMENT


 


(To be executed by the
registered holder if such

holder desires to transfer the Right Certificate.)


 


FOR VALUE RECEIVED                                 
hereby sells, assigns and transfers unto                                               


	
   

  
	
  (Please print name and
  address of transferee)

  
	
   

  
	
   

  



this Right Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint                     
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  



 


Signature Guaranteed:


 


All Guarantees must be made by a financial institution (such as a bank
or broker) which is a participant in the Securities Transfer Agents Medallion
Program (“STAMP”), the New York Stock Exchange, Inc. Medallion Signature
Program (“MSP”), or the Stock Exchanges Medallion Program (“SEMP”) and must not
be dated.  Guarantees by a notary public
are not acceptable.


 


The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not Beneficially Owned by an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Agreement).


 


 


	
   

  	
   

  	
  Signature

  



 


Form of Reverse Side of
Right Certificate — continued


 


B-3

















 


FORM OF ELECTION TO
PURCHASE


 


(To be executed if holder
desires to exercise

Rights represented by the Right Certificate.)


 


To:  HARDINGE
INC.


 


The undersigned hereby irrevocably elects to exercise                            
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for
such Preferred Shares be issued in the name of:


 


Please insert social security

or other identifying number


 


	
   

  
	
  (Please
  print name and address)

  
	
   

  
	
   

  



 


If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and delivered to:


 


Please insert social security

or other identifying number


 


	
   

  
	
  (Please
  print name and address)

  
	
   

  
	
   

  



 


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  



 


Signature Guaranteed:


 


All Guarantees must be made by a financial institution (such as a bank
or broker) which is a participant in the Securities Transfer Agents Medallion
Program (“STAMP”), the New York Stock Exchange, Inc. Medallion Signature
Program (“MSP”), or the Stock Exchanges Medallion Program (“SEMP”) and must not
be dated.  Guarantees by a notary public
are not acceptable.


 


B-4

















 


The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not Beneficially Owned by an Acquiring Person or an
Affiliate or Associate thereof and (as such terms are defined in the Agreement).


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  



 


NOTICE


 


The signature in the Form of Assignment or Form of Election
to Purchase, as the case may be, must conform to the name as written upon the
face of this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.


 


In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the Beneficial Owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Agreement) and such Assignment
or Election to Purchase will not be honored.


 


B-5

















 


Exhibit C


 


SUMMARY OF RIGHTS TO
PURCHASE

PREFERRED SHARES


 


Introduction


 


On February 17,
2010, the Board of Directors of our Company, Hardinge Inc., a New York
corporation, declared a dividend of one preferred share purchase right (a
“Right”) for each outstanding share of common stock, par value $0.01 per
share.  The dividend is payable on March 1,
2010 to the stockholders of record on March 1, 2010.


 


In connection with the
distribution of Rights, our Company entered into a Rights Agreement with
Computershare Trust Company, N.A., as the Rights Agent, dated February 18,
2010 (the “Rights Agreement”).  Our Board
has adopted this Rights Agreement to protect stockholders from coercive or
otherwise unfair takeover tactics.  In
general terms, it works by imposing a significant penalty upon any person or
group which acquires 20% or more of our outstanding common stock without the approval
of our Board.  The Rights Agreement
should not interfere with any merger or other business combination approved by
our Board.


 


For those interested in the
terms of the Rights Agreement, we provide the following summary
description.  Please note, however, that
this description is only a summary, and is not complete, and should be read
together with the entire Rights Agreement, which has been filed by the Company
with the Securities and Exchange Commission as an exhibit to a Current Report
on Form 8-K filed on February 23, 2010.  A copy of the agreement is available free of
charge from our Company.


 


The
Rights.  The Rights will initially trade with, and will
be inseparable from, the common stock. 
The Rights are evidenced only by certificates that represent shares of
common stock.  New Rights will accompany
any new shares of common stock we issue after March 1, 2010 until the
Distribution Date described below.


 


Exercise
Price.  Each Right will allow its holder to purchase
from our Company one one-hundredth of a share of Series B Preferred Stock
(a “Preferred Share”) for $35.00 (the “Exercise Price”), once the Rights become
exercisable.  This portion of a Preferred
Share will give the stockholder approximately the same dividend, voting, and
liquidation rights as would one share of common stock.  Prior to exercise, the Right does not give
its holder any dividend, voting, or liquidation rights.


 


Exercisability.  The
Rights will not be exercisable until 10 days after the public announcement that
a person or group has become an “Acquiring Person” by obtaining beneficial ownership
of 20% or more of our outstanding common stock.


 


We
refer to the date when the Rights become exercisable as the “Distribution
Date.”  Until that date, the common stock
certificates will also evidence the Rights, and any transfer of shares of
common stock will constitute a transfer of Rights.  After that date, the Rights will separate
from the common stock and be evidenced by book-entry credits or by Rights
certificates that we will mail to all eligible holders of common stock.  Any Rights held by an Acquiring Person are
void and may not be exercised.


 


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Consequences of a Person or Group Becoming an
Acquiring Person.


 


·                  Flip In. 
If a person or group becomes an Acquiring Person, all holders of Rights
except the Acquiring Person may, for $35.00, purchase shares of our common
stock with a market value of $70.00, based on the market price of the common
stock prior to such acquisition.


 


·                  Flip Over. 
If our Company is later acquired in a merger or similar transaction
after the Distribution Date, all holders of Rights except the Acquiring Person
may, for $35.00, purchase shares of the acquiring corporation with a market
value of $70.00, based on the market price of the acquiring corporation’s stock
prior to such transaction.


 


Preferred
Share Provisions.


 


Each
one one-hundredth of a Preferred Share, if issued:


 


·                  will not be redeemable.


 


·                  will entitle its holder to quarterly dividend payments
of $.01, or an amount equal to the dividend paid on one share of common stock,
whichever is greater.


 


·                  will entitle its holder upon liquidation either to
receive $1 or an amount equal to the payment made on one share of common stock,
whichever is greater.


 


·                  will have the same voting power as one share of common
stock.


 


·                  if shares of our common stock are exchanged via
merger, consolidation, or a similar transaction, will entitle holders to a per
share payment equal to the payment made on one share of common stock.


 


The
value of one one-hundredth interest in a Preferred Share should approximate the
value of one share of common stock.


 


Expiration. 
The Rights will expire on March 1, 2011.


 


Redemption. 
Our Board may redeem the Rights for $.01 per Right at any time before
any person or group becomes an Acquiring Person.  If our Board redeems any Rights, it must
redeem all of the Rights.  Once the
Rights are redeemed, the only right of the holders of Rights will be to receive
the redemption price of $.01 per Right. 
The redemption price will be adjusted if we have a stock split or stock
dividends of our common stock.


 


Exchange. 
After a person or group becomes an Acquiring Person, but before an
Acquiring Person owns 50% or more of our outstanding common stock, our Board
may extinguish the Rights by exchanging one share of common stock or an
equivalent security for each Right, other than Rights held by the Acquiring
Person.


 


Anti-Dilution
Provisions.  Our Board may adjust the purchase price of
the Preferred Shares, the number of Preferred Shares issuable and the number of
outstanding Rights to prevent dilution 


 


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that
may occur from a stock dividend, a stock split, a reclassification of the
Preferred Shares or common stock.  No
adjustments to the Exercise Price of less than 1% will be made.


 


Amendments.  The terms of the Rights Agreement may be
amended by our Board without the consent of the holders of the Rights.  After a person or group becomes an Acquiring
Person, our Board may not amend the agreement in a way that adversely affects
holders of the Rights.


 


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