United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Period Ended June 30, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition Period From to
Commission File No. 0-15760
HARDINGE INC.
(Exact Name of Registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of
incorporation or organization)
16-0470200
(I.R.S. Employer
Identification No.)
ONE HARDINGE DRIVE, ELMIRA, NEW YORK
(Address of principal executive offices)
14902
(Zip Code)
(607) 734-2281
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [x] No |B(
At June 30, 1995, there were 6,404,647 shares of Common Stock of the
Registrant outstanding.
<PAGE>
HARDINGE INC.
AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Part I Financial Information Page
------------------------------------------------------------- -------
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1995 and
December 31, 1994. 3
Consolidated Statements of Income and
Retained Earnings for the three months ended
June 30, 1995 and 1994 and the six months ended
June 30, 1995 and 1994. 5
Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 1995 and 1994. 6
Notes to Consolidated Financial Statements. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 9
Part II Other Information
-------------------------------------------------------------
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Default upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
-------------------------------------------------------------
</TABLE>
<PAGE>
Part I, Item 1.
HARDINGE INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in Thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, Dec. 31,
1995 1994
----------------- ------------------
(Unaudited)
Assets
Current assets:
Cash $ 18,489 $ 3,783
Accounts receivable 27,864 20,237
Notes receivable 4,870 4,935
Inventories 59,512 50,698
Deferred income taxes 981 981
Prepaid expenses 1,551 630
----------------- ------------------
Total current assets 113,267 81,264
Property, plant and equipment:
Property, plant and equipment 78,636 76,078
Less accumulated depreciation 47,673 45,812
----------------- ------------------
30,963 30,266
Other assets:
Notes receivable 9,334 7,744
Deferred income taxes 1,369 1,439
Other 820 1,013
----------------- ------------------
11,523 10,196
----------------- ------------------
Total assets $155,753 $121,726
================= ==================
</TABLE>
See accompanying notes.
<PAGE>
HARDINGE INC. AND SUBSIDIARIES
Consolidated Balance Sheets-Continued
(Dollars in Thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, Dec. 31,
1995 1994
----------------- ------------------
(Unaudited)
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 8,936 $ 9,415
Notes payable to bank 0 3,500
Accrued expenses 5,587 4,571
Accrued pension plan expense 591 339
Dividends payable 969 959
Accrued income taxes 947 1,246
Current portion long-term debt 714 714
----------------- ------------------
Total current liabilities 17,744 20,744
Other liabilities:
Long-term debt 3,738 15,164
Employee stock ownership plan obligation 50 150
Accrued pension plan expense 1,101 1,055
Accrued postretirement benefits 4,964 4,837
----------------- ------------------
9,853 21,206
Shareholders' equity
Common stocks, $5 par value:
Class A:
Authorized shares-3,000,000
Issued shares at
December 31, 1994-975,912 4,880
Class B:
Authorized shares-3,000,000
Issued shares at
December 31, 1994-912,910 4,564
Common stocks, $.01 par value:
Authorized shares-20,000,000
Issued shares at
June 30, 1995-6,458,703 65
Additional paid-in capital 54,878 655
Retained earnings 79,361 74,853
Treasury shares (678) (361)
Cumulative foreign currency translation
adjustment (1,715) (1,874)
Deferred employee benefits (3,755) (2,941)
----------------- ------------------
Total shareholders' equity 128,156 79,776
----------------- ------------------
Total liabilities and shareholders' equity $155,753 $121,726
================= ==================
</TABLE>
See accompanying notes.
<PAGE>
HARDINGE INC. AND SUBSIDIARIES
Consolidated Statements of Income and Retained Earnings (Unaudited)
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three months ended Six months ended
June 30, June 30,
1995 1994 1995 1994
------------ ------------ ------------ --------------
Net Sales $41,501 $29,023 $82,188 $56,502
Cost of sales 27,294 19,013 54,068 36,943
------------ ------------ ------------ --------------
Gross profit 14,207 10,010 28,120 19,559
Selling, general and administrative
expenses 8,406 6,652 16,821 13,224
------------ ------------ ------------ --------------
Income from operations 5,801 3,358 11,299 6,335
Interest expense 497 356 973 727
Interest (income) (175) (126) (296) (260)
(Gain) on sale of asset (326)
------------ ------------ ------------ --------------
Income before income taxes 5,479 3,128 10,948 5,868
Income taxes 2,204 1,309 4,369 2,437
------------ ------------ ------------ --------------
Net income 3,275 1,819 6,579 3,431
Retained earnings at beginning of
period 77,633 72,254 74,853 71,206
Less dividends declared 1,547 560 2,071 1,124
------------ ------------ ------------ --------------
Retained earnings at end of period $79,361 $73,513 $79,361 $73,513
============ ============ ============ ==============
Weighted average number of common
shares outstanding 4,349 3,545 3,941 3,560
============ ============ ============ ==============
Per share data:
Net Income $.75 $.51 $1.67 $.96
============ ============ ============ ==============
Dividends Declared $.30 $.15 $.45 $.30
============ ============ ============ ==============
</TABLE>
See accompanying notes.
<PAGE>
HARDINGE INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended
June 30,
1995 1994
------------ --------------
Net cash (used in) provided by operating
activities ($8,981) $9,243
Investing activities:
Capital expenditures (3,059) (1,982)
Proceeds from sale of assets 497 408
------------ --------------
Net cash (used in) investing activities (2,562) (1,574)
Financing activities:
(Decrease) in short-term notes payable to bank (3,500) (179)
(Decrease) in long-term debt (11,426) (5,000)
(Purchase) of treasury stock (317) (398)
Dividends paid (2,062) (1,877)
Proceeds from stock offering 43,457
------------ --------------
Net cash provided by (used in) financing
activities 26,152 (7,454)
Effect of exchange rate changes on cash 97 (72)
------------ --------------
Net increase in cash $14,706 $143
============ ==============
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
HARDINGE INC. AND SUBSIDIARIES
June 30, 1995
NOTE A-BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three and six month periods ended June 30, 1995, are not necessarily
indicative of the results that may be expected for the year ended December
31, 1995. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report for
the year ended December 31, 1994.
NOTE B-INVENTORIES
Inventories are summarized as follows (dollars in thousands):
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, December 31,
1995 1994
------------- ---------------
Finished products $18,264 $20,024
Work-in-process 26,466 19,439
Raw materials and purchased components 14,782 11,235
------------- ---------------
$59,512 $50,698
============= ===============
</TABLE>
NOTE C-CHANGES IN SHAREHOLDERS' EQUITY
At the annual meeting on May 16, 1995, shareholders approved amendments to
the Company's Certificate of Incorporation (a) authorizing a new class of
Preferred Stock consisting of 2,000,000 shares; (b) converting each Class A
common share into 2.00 shares of a new single class of Common Stock,
representing a 2-for-1 stock split and each Class B common share into 2.05
shares of a new single class of Common Stock, representing a 2.05-for-1 stock
split; and (c) increasing the number of shares of Common Stock the Company is
authorized to issue from 6,000,000 to 20,000,000 shares and reducing the par
value of all Common Stock from $5 to $0.01 per share. Approval of (b) and (c)
was conditioned upon the approval by the Board of Directors, or a committee
thereof, just prior to the effective date of a registration statement, of the
final terms of an underwriting agreement with respect to a public offering.
Such approval and offering occurred, and the amendments to the Certificate of
Incorporation were filed with the Secretary of State of New York on May 24,
1995.
<PAGE>
All historical per share data has been restated giving effect to the
amendments discussed above.
On June 2, 1995 the Company received proceeds from the public offering and
sale of 2,250,000 shares of common stock. Together with the underwriters'
over-allotment option exercised at the end of June for 290,000 additional
shares, the Company raised a net $43,500,000 from the offering. A portion of
the net proceeds of the offering were used to pay down debt existing at that
time. The remainder has been temporarily invested in interest bearing
accounts to fund the expansion of the Company's Elmira manufacturing facility
and for general corporate purposes.
NOTE D-EARNINGS PER SHARE AND WEIGHTED SHARES OUTSTANDING
Earnings per share are calculated using a monthly weighted average shares
outstanding and include common stock equivalents related to restricted stock.
Historical numbers have been restated to reflect the conversion of stock
mentioned above. Second quarter and year to date 1995 averages have been
calculated treating the 2,250,000 shares sold in the public offering as
outstanding for the month of June. The shares sold upon exercise of the
over-allotment option were not included since they were not issued until the
end of June.
NOTE E-DIVIDENDS DECLARED
Dividends declared for the first half of 1995 include the dividends paid for
March and June 1995, and the dividend payable for September of 1995.
Dividends declared for the same period of 1994 include only the dividends
paid for March and June 1994.
<PAGE>
Part I, Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following are management's comments relating to significant changes in
the results of operations for the three month and six month periods ended
June 30, 1995 and 1994 and in the Company's financial condition during the
six month period ended June 30, 1995.
Results of Operations
Net Sales
Net sales for the quarter ended June 30, 1995 increased by 43.0% to
$41,501,000 from $29,023,000 in the same 1994 period. Year to date
sales of $82,188,000 for the first six months of 1995 represent a 44.5%
increase over the $56,502,000 net sales for the same 1994 period. Unit
volumes increased in substantially all of the Company's Computer Numerically
Controlled (CNC) machine tool lines. Initial shipments of the Company's newly
introduced vertical CNC lathes and vertical CNC machining centers have met
expectations and contributed to quarterly and year to date net sales
increases. Shipments to the automobile industry of these new products, as well
as horizontal CNC lathes, contributed to increased sales in each of the
second quarter and year to date periods.
Sales of lathes and other machine tool equipment accounted for $26,187,000 of
net sales for the second quarter of 1995, representing a 63.7% increase from
the same 1994 period. Year to date June 30, 1995 sales in the same product
grouping accounted for $50,771,000 or a 61.2% increase over the $31,489,000
in the same 1994 period. Sales of non-machine products and services in the
second quarter of 1995 increased to $15,314,000, a 17.5% increase over the
levels in the same 1994 period, while year to date sales of this product
group increased to $31,417,000, a 25.6% increase over the previous year.
Sales of lathes and other machine tool equipment accounted for 63.1% and
61.8% of total net sales for the second quarter and first half of 1995,
respectively. In 1994, sales of this product group accounted for 55.1% and
55.7% of second quarter and first half total net sales.
The Company experienced improvements in each of its significant geographical
markets during the first half of 1995. The largest amount of the increase
came in the U.S. market, where net sales increased 42.4% to $32,824,000 in
the second quarter and 41.8% to $65,391,000 in the six month period ended in
June when compared to the sales in the same 1994 period. Net sales in the
Western European market, primarily the United Kingdom and France, increased
by $2,187,000 or 77.0% in the second quarter of 1995 over net sales in the
same markets for the second quarter of 1994. On a year to date comparison,
net sales in Western Europe resulted in a growth of $3,890,000, or 68.7%.
<PAGE>
Gross Profit
Gross profit in 1995, as a percentage of sales, was relatively unchanged
compared to the first quarter and first half of 1994. Gross margin was 34.2%
in each of the second quarter and first half of 1995, compared to 34.5%
and 34.6% in the same periods of 1994, respectively. Sales in the lathe and
other machine tool product group traditionally have generated lower gross
margins than the non-machine products and services group. Therefore, overall
gross margin, as a percentage of sales, is negatively affected when sales
in the lathe and other machine tool lines product group increase as a
proportion of total net sales, as it has in the first half of 1995. Year
to date gross margin was also affected by production startup costs for
the Company's vertical CNC lathes and vertical CNC machining centers. These
negative impacts were partially offset by the Company's ability to spread
its overhead costs over a larger number of units sold. The decline of the
dollar against the Japanese yen did not have a significant impact on year
to year comparisons of gross margin due to the Company's foreign
currency arrangements and lower level of discounts.
Selling, General, and Administrative Expenses
Selling, general and administrative ("SG&A") expenses decreased as a percent
of net sales to 20.3% and 20.5% in the second quarter and year to date of 1995,
respectively, compared to 22.9% and 23.4% in the same 1994 periods. This
decrease indicates the success of the Company's cost control strategy. Expenses
in this category increased 26.4% or $1,754,000 in the three month period ended
June 30, 1995, when compared to the same period of 1994. On a year to date
comparison, SG&A expenses increased 27.2%, or $3,597,000. These increases were
primarily in commission and other expenses that vary with sales levels, and
advertising and show expenses to promote new products.
Income from Operations
Income from operations as a percentage of net sales increased in the three
and six month periods ended June 30, 1995, to 14.0% and 13.7%, respectively,
from the same 1994 periods, which were 11.6% and 11.2%, respectively.
Interest Expense
Interest expense increased 39.6% to $497,000 in the second quarter of 1995
from $356,000 in the same 1994 period. Interest expense increased 33.8% in the
first half of 1995 to $973,000 compared to $727,000 in the same 1994 period.
Higher average borrowings in 1995 resulting from increases in working capital
caused the majority of this increase. The second quarter was positively
affected by a reduction in short term debt, payment of a $5,000,000 long term
note payable and a reduction in the revolving loan agreement during the month
of June using proceeds from the public offering.
Interest Income
Interest income increased 38.9% to $175,000 in the second quarter of 1995
from $126,000 in the same 1994 period, while year to date interest income
increased 13.8% to $296,000 from $260,000 in 1994 primarily due to interest
earned on cash from the public offering.
<PAGE>
Gain on Sale of Assets
Results for the first half of 1995 included a gain of $326,000
(approximately $198,000 on an after-tax basis) on the sale of a building in
Los Angeles during the first quarter. The Company's sales and demonstrations
office formerly located there has been relocated to a leased facility.
Income Taxes
The provision for income taxes as a percentage of net income
was 40.2% and 39.9%, for the second quarter and first half of 1995,
respectively, compared to 41.8% and 41.5% for the same 1994 periods. The 1995
consolidated tax rates were lower due to profits in the Company's Western
European operations for which no tax provision was recorded because of the
availability of net operating loss carryforwards.
Net Income
Net income for the second quarter of 1995 was $3,275,000, an increase of
$1,456,000 or 80.0% from the same 1994 period. Year to date 1995 net
income was $6,579,000, an increase of 91.8% or $3,148,000 from the same
1994 period. These increases represent an accumulation of the factors
discussed above. Geographically, operations in North America continue to show
significant improvements, while operations in Western Europe for the second
quarter and first half of 1995 have returned to profitability after net
losses in the same 1994 periods.
Quarterly Information
The following table sets forth certain quarterly financial data for each
of the periods indicated.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended
----------------------------------------------------------------------------
March 31, June 30, Sept. 30, Dec. 31, March 31, June 30,
1994 1994 1994 1994 1995 1995
-------- -------- -------- -------- -------- ---------
(in thousands, except per share data)
----------------------------------------------------------------------------
Net Sales $27,479 $29,023 $29,449 $31,385 $40,687 $41,501
Gross Profit 9,549 10,010 10,394 10,446 13,913 14,207
Income from operations 2,977 3,358 2,975 3,207 5,498 5,801
Net income 1,612 1,819 1,608 1,680 3,304 3,275
Net income per share .45 .51 .45 .47 .92 .75
Weighted average shares
outstanding 3,545 3,545 3,586 3,586 3,584 4,349
</TABLE>
Liquidity and Capital Resources
At the annual meeting on May 16, 1995, shareholders approved amendments to
the Company's Certificate of Incorporation (a) authorizing a new class of
Preferred Stock consisting of 2,000,000 shares; (b) converting each Class A
common share into 2.00 shares of a new single class of Common Stock,
representing a 2-for-1 stock split and each Class B common share into 2.05
shares of a new single class of Common Stock, representing a 2.05-for-1 stock
split; and (c)
<PAGE>
increasing the number of shares of Common Stock the Company is authorized to
issue from 6,000,000 to 20,000,000 shares and reducing the par value of all
Common Stock from $5 to $0.01 per share. Approval of (b) and (c) was
conditioned upon the approval by the Board of Directors, or a committee
thereof, just prior to the effective date of a registration statement, of the
final terms of an underwriting agreement with respect to a public offering.
Such approval and offering occurred and the amendments to the Certificate of
Incorporation were filed with the Secretary of State of New York on May 24,
1995.
On June 2, 1995, the Company received the proceeds from the public offering
and sale of 2,250,000 shares of common stock. Together with the underwriters'
over-allotment option exercised at the end of June for 290,000 additional
shares, the Company raised a net $43,500,000 from the offering. A portion of
the net proceeds of the offering were used to pay down debt existing at that
time. The remainder has been temporarily invested in interest bearing
accounts to fund the expansion of the Company's Elmira manufacturing facility
and for general corporate purposes.
The Company's current ratio at June 30, 1995 was 6.38:1 compared to 3.92:1
at December 31, 1994. Current assets increased by $32,000,000 during the
first half of 1995. Inventory increased by $8,814,000 as the Company
continues to purchase materials to increase production of new products and to
meet customer delivery requirements. Accounts receivable increased by
$7,627,000 from year end because of the higher level of sales in the second
quarter compared to the fourth quarter of 1994. Cash increased by $14,706,000
reflecting the proceeds of the offering. Current liabilities decreased by
$3,000,000 due primarily to the pay down of current debt.
In the first half of 1995, operating activities used $8,981,000 of cash,
while operating activities in the first half of 1994 generated $9,243,000 of
cash. Operating activities used cash in the 1995 period, notwithstanding the
Company's improved net income, primarily because of the increases in accounts
receivable and inventory. Operating activities in 1994 provided cash,
primarily because working capital requirements remained flat during the
period. In its investing and financing activities, the Company has required
cash for capital expenditures and dividend payments. Prior to the pay down of
debt with proceeds from the public offering, the Company used its cash flow
from income and its revolving credit facility to finance the increase in
current assets, its capital expenditures and dividend payments in the first
half of 1995. In the first half of 1994, cash provided by operations funded
capital expenditures and dividend payments, as well as a reduction in debt.
<PAGE>
As is common in its industry, the Company provides long-term financing for
the purchase of its equipment by qualified customers. The Company regards
this program as an important part of its marketing efforts, particularly to
independent machine shops. Customer financing is offered for a term of up to
seven years, with the Company retaining a security interest in the purchased
equipment. In response to competitive pressures, the Company occasionally
offers this financing at below market interest rates or with deferred
payments terms. The present value of the difference between the actual
interest charged on customer notes for periods during which finance charges
are waived or reduced and the estimated rate at which the notes could be sold
to financial institutions is accounted for as a reduction of the Company's
net sales. The amount of such reductions has not been material to the
Company's results of operations or financial condition. In the event of a
customer default and foreclosure, it is the practice of the Company to
recondition and resell the equipment. It has been the Company's experience
that such equipment resales have realized the approximate remaining contract
value.
In order to reduce debt and finance current operations, the Company has,
for many years, periodically sold a substantial portion of its underlying
customer notes receivable to various financial institutions. In the first
half of 1995, the Company sold $7,700,000 of customer notes compared to
$19,554,000 sold during the first half of 1994. The amount of shipments
financed through the Company's program have decreased in the first half of
1995. In the sales of customer notes, recourse against the Company from
customer defaults is limited to 10% of the then outstanding balance thereof
and is effected in the form of a hold back of that percentage of funds at the
time of the sale. The 10% portion of customer notes retained by the Company,
as well as all customer notes that have not been sold by the Company, are
included in notes receivable in its consolidated balance sheet. Although the
Company has no formal arrangements with financial institutions to purchase
its customer notes receivable, it has not experienced difficulty in arranging
such sales. While the Company's customer financing program has an impact on
its month-to-month borrowings from time-to-time, it has had little long-term
impact on its working capital because of the sales of the underlying customer
notes receivable. The amount of long-term customer notes receivable held by
the Company increased to $9,334,000 at June 30, 1995 from $7,744,000 at
December 31, 1994.
In April 1995, the Company began construction of three additions to its
manufacturing facility, which, when completed, will increase its machine
making capacity by approximately 25%. Construction is expected to be
completed by early 1996. The Company estimates that the cost of these
additions, together with the necessary machinery and equipment, will be
approximately $15,000,000, all or most of which
<PAGE>
will be funded with a portion of the net proceeds of the public offering
referred to above. The Company expects to spend approximately $12,000,000 of
this amount during 1995 and the balance in 1996. The Company currently
estimates that other capital expenditures will total $3,000,000 in 1995.
These other capital expenditures will primarily be made to improve operating
efficiencies at the Elmira manufacturing facility.
The Board of Directors past practice had been to pay five dividends in
respect of each year - four quarterly dividends during the year and a fifth
"extra" dividend in January of the following year. The Board communicated to
its shareholders in the second quarter of 1995 its present intent to
discontinue the payment of a fifth dividend. The Company paid total dividends
of $2,062,000 during the first half of 1995.
The Company has a revolving loan agreement with three banks providing for
borrowing up to $30,000,000 on a revolving basis through August 1, 1997. At
that time, the outstanding amounts convert to a term loan payable quarterly
over four years through 2001. This facility, along with a $5,000,000 short
term line with another bank, provide for immediate access of up to
$35,000,000. At June 30, 1995, outstanding borrowings under these
arrangements totaled $1,595,000. Using the net proceeds of the offering, the
Company paid down certain of its debt, including the $5,000,000 long term
debt which was due December 11, 1995. The Company currently intends to use
its improved financial condition to seek growth opportunities in new
products, international markets and strategic acquisitions. Management
believes that the currently available funds and credit facilities, along with
internally generated funds, will provide sufficient financial resources for
ongoing operations for at least the next two years.
<PAGE>
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
None
ITEM 2. Changes in Securities
None
ITEM 3. Default upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders was held on May 16, 1995 at the Company's
offices. Shareholders of record at the close of business on April 10, 1995
were entitled to vote. There were 990,917 shares of Class A common stock and
916,057 shares of Class B common stock outstanding and entitled to vote.
There were represented at the meeting 927,446 Class A and 840,225 Class B
shares. At the meeting and pursuant to the Notice of 1995 Annual Meeting and
Proxy Statement, dated April 13, 1995, shareholders voted on five proposals
further described in such Proxy Statement.
1. Election of Directors:
The holders of Class B common stock elected five directors to serve regular
two year terms voting as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Nominee Votes for Votes Against
Nominee Nominee
------------------------ ------------ --------------
John W. Bennett 830,694 9,531
James L. Flynn 830,510 9,715
E. Martin Gibson 830,696 9,529
J. Philip Hunter 830,694 9,531
Eve L. Menger 830,694 9,531
</TABLE>
Messrs. Robert E. Agan, Richard J. Cole, Douglas A. Greenlee and Whitney S.
Powers continue in service with their two year terms expiring at the 1996
Annual Meeting.
2. Amendment of the Certificate of Incorporation to change the name of the
Company:
Of the 1,906,974 shares of Class A and Class B common stock outstanding and
entitled to vote as a single class, 1,759,694 shares
<PAGE>
voted in favor of the proposal to amend the Company's Certificate of
Incorporation (the "Certificate") to change the name of the Company to
"Hardinge Inc." 6,799 shares voted against such proposal and 1,167 shares
abstained.
3. Amendment of the Certificate and By-laws to reclassify the Board of
Directors:
Of the 1,906,974 shares of Class A and Class B common stock outstanding and
entitled to vote as a single class, 1,705,204 shares voted in favor of the
proposal to amend the Company's Certificate and By-Laws to reclassify the
Board of Directors to consist of three classes rather than the present two
classes. 3,933 shares voted against such proposal and 4,629 shares abstained.
4. Amendment of the Certificate to authorize a new class of Preferred Stock:
Authorization of the new class of preferred stock required the approval of a
majority of the outstanding shares of Class A and Class B common stock,
voting as a single class, and approval of a majority of each of the Class A
common stock and the Class B common stock, voting as separate classes.
Of the 1,906,974 shares of Class A and Class B common stock outstanding and
entitled to vote as a single class, 1,658,988 shares voted in favor of the
proposal to amend the Company's Certificate to authorize a new class of
preferred stock consisting of 2,000,000 shares. 48,289 shares voted against
such proposal, and 6,491 shares abstained. Of the 990,917 shares of Class A
common stock issued, outstanding and entitled to vote, 860,422 shares voted
in favor of the above mentioned proposal, 27,053 shares voted against such
proposal and 2,733 shares abstained. Of the 916,057 shares of Class B common
stock issued, outstanding and entitled to vote, 798,566 shares voted in favor
of the above mentioned proposal, 21,236 shares voted against such proposal
and 3,758 shares abstained.
5. Amendment of the Certificate to reclassify the common stock and increase
the number of authorized shares of Common Stock:
The reclassification of the Class A common stock and Class B common stock
required the approval of a majority of the outstanding shares of Class A and
Class B common stock, voting as a single class, and approval of a majority of
each of the Class A common stock and the Class B common stock, voting as
separate classes.
Of the 1,906,974 shares of Class A and Class B common stock outstanding and
entitled to vote as a single class, 1,728,268 shares voted in favor of the
proposal to amend the Company's Certificate to reclassify each share of Class
A common stock, $5.00 par value, and
<PAGE>
Class B common stock, $5.00 par value, of the Company into 2.00 and 2.05
shares, respectively, of a single class of Common Stock, $0.01 par value.
31,096 shares voted against such proposal and 7,699 shares abstained.
Of the 990,917 shares of Class A common stock issued, outstanding and
entitled to vote, 909,607 shares voted in favor of the above mentioned
proposal. 13,033 shares voted against such proposal and 4,206 shares
abstained. Of the 916,057 shares of Class B common stock issued, outstanding
and entitled to vote, 818,661 shares voted in favor of the above mentioned
proposal. 18,063 shares voted against such proposal and 3,493 shares
abstained. Of the 1,906,974 shares of Class A and Class B common stock
outstanding and entitled to vote as a single class, 1,728,268 shares voted in
favor of the proposal to amend the Company's Certificate to increase the
number of authorized shares of Common Stock of the Company from 6,000,000 to
20,000,000 shares. 31,086 shares voted against such proposal and 7,699 shares
abstained.
6. Ratification of the appointment of Ernst & Young LLP as the Company's
independent accountants for 1995:
Of the 1,906,974 shares of Class A and Class B common stock outstanding and
entitled to vote as a single class, 1,763,185 shares voted in favor of the
proposal to ratify the appointment of Ernst & Young LLP as the Company's
independent public accountants for the fiscal year ending December 31, 1995.
2,034 shares voted against such proposal and 2,439 shares abstained.
No other matters were presented for vote at that meeting.
ITEM 5. Other Information
None
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
<S> <C> <C> <C>
A. Exhibits
Item Description
1.1 Underwriting Agreement, dated as of May 25, 1995,
among the Registrant, Wertheim Schroder & Co.
Incorporated and Prudential Securities Incorporated,
as representatives for the several underwriters.
4.1 Restated Certificate of Incorporation of the
Registrant filed with the Secretary of State
of New York on May 24, 1995.
27.1 Financial Data Schedule
B. During the quarter for which this report is filed, the Registrant
filed the following Current Reports on form 8-K:
1. Current report on Form 8-K, dated May 19, 1995 filed
in connection with announcing the results of the
Company's Annual Meeting and press release.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the Report to be signed on its behalf by the
undersigned, there unto duly authorized.
<TABLE>
<CAPTION>
<S> <C>
HARDINGE INC.
-------------------------------------------------
Robert E. Agan
President and Chief Executive Officer
-------------------------------------------------
Malcolm L. Gibson
Senior Vice President, Chief Financial
Officer and Assistant Secretary
(Principal Financial Officer)
-------------------------------------------------
Richard L. Simons
Controller
(Principal Accounting Officer)
</TABLE>
DATE:
HARDINGE INC.
2,282,000 Shares
Common Stock
(Par Value $.01 Per Share)
---------------
UNDERWRITING AGREEMENT
New York, New York
May 25, 1995
WERTHEIM SCHRODER & CO. INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
As Representatives of the several
Underwriters named in Schedule I hereto
c/o Wertheim Schroder & Co. Incorporated
Equitable Center
787 Seventh Avenue
New York, New York 10019-6016
Dear Sirs:
Hardinge Inc., a New York corporation (the "Company"), proposes, subject
to the terms and conditions stated herein, to issue and sell to the Underwriters
named in Schedule I hereto (the "Underwriters"), an aggregate of 2,250,000
shares of Common Stock, par value $.01 per share (the "Common Stock"), and the
persons named in Schedule II hereto (collectively, the "Selling Shareholder")
proposes, subject to the terms and conditions stated herein, to sell to the
Underwriters an aggregate of 32,000 shares of Common Stock. The 2,282,000 shares
of Common Stock to be sold by the Company and the Selling Shareholder are herein
referred to as the "Firm Securities." In addition, the Company proposes to grant
to the Underwriters an option to purchase up to an additional 342,300 shares of
Common Stock (the "Option Securities"), on the terms and for the purposes set
forth in Section 2 hereof. The Firm Securities and the Option Securities are
herein collectively referred to as the "Securities." Except as may be expressly
set forth below, any reference to you in this Agreement shall be solely in your
capacity as the Representatives.
1A. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
<PAGE>
(a) The Company meets the requirements for use of Form S-2, and a
registration statement on Form S-2 (File No. 33-91644), including as a
part thereof a preliminary prospectus, in respect of the Securities, has
been filed with the Securities and Exchange Commission (the
"Commission") in the form heretofore delivered to you and, with the
exception of exhibits to the registration statement, to you for each of
the other Underwriters; if such registration statement has not become
effective, an amendment (the "Final Amendment") to such registration
statement, including a form of final prospectus, necessary to permit
such registration statement to become effective, will promptly be filed
by the Company with the Commission; if such registration statement has
become effective and any post-effective amendment to such registration
statement has been filed with the Commission prior to the execution and
delivery of this Agreement, which amendment or amendments you shall not
have reasonably objected to, the most recent such amendment has been
declared effective by the Commission; if such registration statement has
become effective, a final prospectus (the "Rule 430A Prospectus")
relating to the Securities containing information permitted to be
omitted at the time of effectiveness by Rule 430A of the rules and
regulations of the Commission under the Securities Act of 1933, as
amended (the "Act"), will promptly be filed by the Company pursuant to
Rule 424(b) of the rules and regulations of the Commission under the Act
(any preliminary prospectus filed as part of such registration statement
being herein called a "Preliminary Prospectus," such registration
statement as amended at the time that it becomes or became effective,
or, if applicable, as amended at the time the most recent post-effective
amendment to such registration statement filed with the Commission prior
to the execution and delivery of this Agreement became effective (the
"Effective Date"), including all exhibits thereto and all information
deemed to be a part thereof at such time pursuant to Rule 430A of the
rules and regulations of the Commission under the Act, being herein
called the "Registration Statement" and the final prospectus relating to
the Securities in the form first filed pursuant to Rule 424(b)(1) or (4)
of the rules and regulations of the Commission under the Act or, if no
such filing is required, the form of final prospectus included in the
Registration Statement, being herein called the "Prospectus"); any
reference herein to any Preliminary Prospectus or the Prospectus or the
Registration Statement shall be deemed to include any information
incorporated by reference therein pursuant to Item 12 of Form S-2 under
the Act, as of the date of such Preliminary Prospectus, the Prospectus
or the Registration Statement, as the case may be.
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty
-2-
<PAGE>
shall not apply to any statements or omissions made in reliance upon and
in conformity with information furnished in writing to the Company by an
Underwriter through you expressly for use therein or to the description
of the Company's shareholder rights plan;
(c) On the Effective Date and the date the Prospectus is filed
with the Commission, and when any further amendment or supplements
thereto become effective, or are filed with the Commission, as the case
may be, the Registration Statement, the Prospectus and such amendment or
supplements did and will conform in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply
to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by an Underwriter
through you expressly for use therein;
(d) The documents incorporated by reference in the Preliminary
Prospectus and the Prospectus pursuant to Item 12 of Form S-2 under the
Act, when they were filed with the Commission, conformed in all material
respects to the requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; since January 1, 1994, the Company has timely filed all
documents with the Commission which were required to be filed under the
Exchange Act and the rules and regulations of the Commission thereunder
on or prior to the date hereof;
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of New York, with power and authority (corporate and other) to own,
lease and operate its properties and to conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
property, or conducts any business, so as to require such qualification
(except where the failure to so qualify would not have a material
adverse effect on the business, properties, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries,
taken as a whole); the Company's only subsidiaries are: Canadian
Hardinge Machine Tools, Ltd., Hardinge Machine Tools Ltd. and Hardinge
Brothers GmbH (collectively, the "Subsidiaries"), except for Hardinge
Brothers, Inc., Hardinge Credit Co., Inc., Hardinge Technologies
Systems, Inc., and Morrison Machine Products, Inc., which own no assets
and conduct no current business operations. Each
-3-
<PAGE>
Subsidiary has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own,
lease and operate its properties and to conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
property, or conducts any business, so as to require such qualification
(except where the failure to so qualify would not have a material
adverse effect on the business, properties, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries,
taken as a whole); Hardinge Brothers GmbH's net sales during the year
ended December 31, 1994 were less than $1,000,000;
(f) All the outstanding shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned by the Company
free and clear of all liens, encumbrances, equities, security interests
or claims (except for one share of capital stock of Hardinge Machine
Tools Ltd. ("Hardinge U.K.") that is owned by a director of that company
and except for a lien on the capital stock of Hardinge U.K. in favor of
Hardinge U.K.); and there are no outstanding options, warrants or other
rights calling for the issuance of, and, except as described in the
Prospectus, there are no commitments or arrangements to issue, any
shares of capital stock of any subsidiary or any security convertible or
exchangeable or exercisable for capital stock of any subsidiary; except
for the shares of stock of each subsidiary owned by the Company and the
Company's interest in Egret Aviation Co., neither the Company nor any
subsidiary owns, directly or indirectly, any shares of capital stock of
any corporation or have any equity interest in any firm, partnership,
joint venture, association or other entity;
(g) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement; the execution,
delivery and performance by the Company of its obligations under this
Agreement have been duly and validly authorized by all requisite
corporate action of the Company; and this Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms;
(h) Neither the Company nor any of its subsidiaries has sustained
since December 31, 1994, any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, which loss or interference is material to the Company
and its subsidiaries, taken as a whole; and, since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, there has not been, and prior to the Time of Delivery (as
defined in Section 4 hereof) there will not be, any change in the
capital stock (other than shares issued in connection with the
Reclassification (defined below) and pursuant to exercise of director
stock options that the Prospectus indicates are outstanding and the
vesting rights with respect
-4-
<PAGE>
to restricted stock issued pursuant to the Company's 1988 and 1993
Restricted Stock Plans (collectively, the "Permitted Shares")) or
short-term debt or long-term debt of the Company or any of its
subsidiaries (other than borrowings under the Company's credit
facilities described in the Prospectus), or any material adverse change,
or any development involving a prospective material adverse change, in
or affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus;
(i) The Company and its subsidiaries have such title to all real
property and to all personal property owned by them as is necessary to
conduct their respective business as described in the Prospectus, in
each case free and clear of all liens, encumbrances and restrictions
except such as are described or contemplated by the Prospectus or are
not material to the Company and its subsidiaries, taken as a whole; and
any real property held under lease by the Company and its subsidiaries
are held by them under valid, subsisting and enforceable leases with
such exceptions as are not material to the Company and its subsidiaries,
taken as a whole;
(j) The Company has an authorized, issued and outstanding
capitalization as set forth in the Registration Statement under the
caption "Capitalization", and all the outstanding shares of capital
stock of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable, are free of any preemptive rights,
rights of first refusal granted by the Company or other similar rights,
were issued and sold in compliance with the applicable Federal and state
securities laws and conform in all material respects to the description
in the Prospectus; except as described in the Prospectus, there are no
outstanding options, warrants or other rights calling for the issuance
of, and there are no commitments or arrangements to issue, any shares of
capital stock of the Company or any security convertible or exchangeable
or exercisable for capital stock of the Company; there are no holders of
securities of the Company who, by reason of the filing of the
Registration Statement have the right (and have not waived such right)
to require the Company to include in the Registration Statement
securities owned by them; the Company has filed the amendment to its
Certificate of Incorporation contemplated in the Company's 1995 Proxy
Statement with the Department of State of the State of New York, and
each of the proposed amendments to the Company's Certificate of
Incorporation and By-laws described therein (including, without
limitation, the Reclassification (as defined therein)) has become
effective;
(k) The Securities to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will
be duly and validly issued, fully paid and non-assessable, and will
conform in all material
-5-
<PAGE>
respects to the description thereof in the Prospectus; and the Common
Stock has been authorized for quotation on the Nasdaq National Market,
subject to notice of issuance; the Common Stock will be registered under
the Exchange Act at the Time of Delivery;
(l) The execution, delivery and performance of this Agreement,
the consummation of the transactions herein contemplated and the issue
and sale of the Securities and the compliance by the Company with all
the provisions of this Agreement will not conflict with, or result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon, any of the property or assets of the Company
or any of its subsidiaries pursuant to, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject; nor will
such action result in any violation of the provisions of the Certificate
of Incorporation or the By-Laws, in each case as amended to the date
hereof, of the Company or any of its subsidiaries; nor will such action
result in any violation of any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or qualification
of or with any court or governmental agency or body is required for the
issue and sale of the Securities or the consummation of the other
transactions contemplated by this Agreement, except the registration
under the Act of the Securities and under the Exchange Act of the Common
Stock, and such consents, approvals, authorizations, registrations or
qualifications as may be required under state or foreign securities or
Blue Sky laws or the by-laws of the National Association of Securities
Dealers, Inc. (the "NASD") in connection with the purchase and
distribution of the Securities by the Underwriters;
(m) There are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries or, to the best knowledge
of the Company, any of their respective officers or directors, is a
party or of which any property of the Company or any of its subsidiaries
is the subject, other than litigation or proceedings which would not
individually or in the aggregate have a material adverse effect on the
business, properties, condition (financial or otherwise), prospects or
results of operations of the Company and its subsidiaries, taken as a
whole; and, to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened
or contemplated by others; and neither the Company nor any of its
subsidiaries is involved in any material labor dispute, nor, to the
Company's knowledge, is any material labor dispute threatened;
(n) The Company and its subsidiaries have such material licenses,
permits and other approvals or authorizations of and from governmental
or
-6-
<PAGE>
regulatory authorities ("Permits") as are necessary under applicable law
to own their respective properties and to conduct their respective
businesses in the manner now being conducted and as described in the
Prospectus and the Company and its subsidiaries have fulfilled and
performed in all material respects all of their respective obligations
with respect to such Permits, and no event has occurred which allows, or
after notice or lapse of time or both would allow, revocation or
termination thereof or result in any other material impairment of the
rights of the holder of any such Permits;
(o) Ernst & Young LLP who have certified certain financial
statements of the Company and its consolidated subsidiaries and
delivered their report with respect to the audited consolidated
financial statements and schedules included in the Registration
Statement and the Prospectus, are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder;
(p) (i) The consolidated financial statements and schedules of
the Company and its subsidiaries included or incorporated by reference
in the Registration Statement and the Prospectus present fairly the
financial condition, the results of operations and the cash flows of the
Company and its subsidiaries as of the dates and for the periods therein
specified in conformity with generally accepted accounting principles
consistently applied throughout the periods involved, except as
otherwise stated therein; and the other financial and statistical
information and data set forth in the Registration Statement and the
Prospectus are accurately presented and, to the extent such information
and data are derived from the financial statements and books and records
of the Company and its subsidiaries, are prepared on a basis consistent
with such financial statements and the books and records of the Company
and its subsidiaries; no other financial statements or schedules are
required to be included in the Registration Statement and the
Prospectus;
(ii) The pro forma financial data of the Company included
in the Prospectus are based upon good faith estimates and assumptions
believed by the Company to be reasonable. No pro forma financial
information is required by the Act or the rules or regulations
thereunder to be included in the Registration Statement or the
Prospectus.
(q) There are no statutes or governmental regulations, or any
contracts or other documents that are required to be described in or
filed as exhibits to the Registration Statement which are not described
therein or filed or incorporated by reference as exhibits thereto; and
all such contracts to which the Company or any subsidiary is a party
have been duly authorized, executed and delivered by the Company or such
subsidiary;
(r) The Company and its subsidiaries own or possess adequate
patent rights or licenses or other rights to use patent rights,
inventions, trademarks,
-7-
<PAGE>
service marks, trade names, copyrights, technology and know-how
necessary to conduct their respective businesses in the manner now being
conducted; neither the Company nor any of its subsidiaries has received
any notice of infringement of or conflict with asserted rights of others
with respect to any patent, patent rights, inventions, trademarks,
service marks, trade names, copyrights, technology or know-how; and the
discoveries, inventions, products or processes of the Company and its
subsidiaries referred to in the Prospectus do not, to the Company's
knowledge, infringe or conflict with any patent or right of any third
party, or any discovery, invention, product or process which is the
subject of a patent application filed by any third party;
(s) Neither the Company nor any of its subsidiaries are in
violation of any term or provision of its Certificate of Incorporation
or By-Laws (or similar corporate constituent documents), in each case as
amended to the date hereof, or in violation in any material respect of
any law, ordinance, administrative or governmental rule or regulation
applicable to the Company or any of its subsidiaries; or in violation of
any decree of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries;
(t) No default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a default in the due
performance and observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, bank loan or credit agreement, a
material lease or other material agreement or material instrument to
which the Company or any of its subsidiaries is a party or by which any
of them or their respective properties is bound or may be affected;
(u) The Company and its subsidiaries have timely filed all
necessary tax returns and notices and have paid all federal, state,
county, local and foreign taxes of any nature whatsoever shown on its
tax returns as being due for all tax years through December 31, 1994, to
the extent such taxes have become due. The Company has no knowledge, or
any reasonable grounds to know, of any tax deficiencies which would have
a material adverse effect on the Company or any of its subsidiaries
taken as a whole; the Company and its subsidiaries, have paid all taxes
known to the Company which have become due, whether pursuant to any
assessments, or otherwise, and there is no further liability (whether or
not disclosed on such returns) or assessments for any such taxes, and no
interest or penalties accrued or accruing with respect thereto, except
as may be set forth or adequately reserved for in the financial
statements included or incorporated by reference in the Registration
Statement; the amounts currently set up as provisions for taxes or
otherwise by the Company and its subsidiaries on their books and records
are sufficient for the payment of all their unpaid federal, foreign,
state, county and local taxes accrued through the dates as of which they
speak, and for which the Company and its subsidiaries may be liable in
their own right, or as successor to any other corporation, association,
partnership, joint venture or other entity;
-8-
<PAGE>
(v) The Company and its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain
accountability for assets; and (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for current assets is compared with
existing current assets at reasonable intervals and appropriate action
is taken with respect to any differences;
(w) Except as disclosed in the Prospectus, neither the Company
nor any of its subsidiaries is in violation of any foreign, federal,
state or local law or regulation relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants, nor any federal or state law
relating to discrimination in the hiring, promotion or paying of
employees nor any applicable federal or state wages and hours laws, nor
any provisions of the Employee Retirement Income Security Act of 1974,
as amended, or the rules and regulations promulgated thereunder, where
such violation would have a material adverse effect on the Company and
its subsidiaries, taken as a whole;
(x) None of the Company or its subsidiaries, or its officers,
directors or employees has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity, or made any unlawful payment of funds of the Company
or any subsidiary or received or retained any funds in violation of any
law, rule or regulation;
(y) None of the Company or its subsidiaries, or its officers and
directors, have taken or will take, directly or indirectly, any action
designed to or which has constituted or that might be reasonably be
expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Securities; and
(z) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of
1940, as amended.
1B. The Selling Shareholder represents and warrants to, and
agrees with, each of the Underwriters that:
(a) The Selling Shareholder has, and at the Time of Delivery (as
defined in Section 4 hereof) will have, good and valid title to the
Securities to be sold by the Selling Shareholder hereunder, free and
clear of any liens,
-9-
<PAGE>
encumbrances, equities, security interests, claims and other
restrictions of any nature whatsoever, and the Selling Shareholder has
the full legal right, power and authority, and any approval required by
law, to execute and deliver this Agreement and to sell, assign, transfer
and deliver the Securities being sold by the Selling Shareholder
hereunder and to make the representations, warranties, covenants and
agreements made by the Selling Shareholder in this Agreement; and upon
the delivery of and payment for such Securities as herein provided, the
several Underwriters will acquire good and valid title thereto, free and
clear of all liens, encumbrances, equities, security interests, claims
and other restrictions of any nature whatsoever;
(b) The Selling Shareholder has duly executed and delivered an
agreement and power of attorney (with respect to the Selling
Shareholder, the "Power-of-Attorney",) in the form heretofore delivered
to the Representatives, appointing Scott H. Garber and any other duly
authorized representative of Marine Midland Bank, as the Selling
Shareholder's attorneys-in-fact (the "Attorney-in-Fact") with authority
to execute, deliver and perform this Agreement on behalf of the Selling
Shareholder. Certificates in negotiable form, endorsed in blank or
accompanied by blank stock powers duly executed, with signatures
appropriately guaranteed, representing the Securities to be sold by the
Selling Shareholder hereunder have been deposited with the Company,
acting as custodian (the "Custodian") pursuant to a custody agreement
(the "Custody Agreement") for the purpose of delivery pursuant to this
Agreement. The Selling Shareholder has full power and authority to
execute and deliver the Custody Agreement and the Power-of-Attorney and
to perform its obligations thereunder. The Custody Agreement and the
Power-of-Attorney have been duly authorized, executed and delivered by
the Selling Shareholder, and this Agreement has been duly authorized,
executed and delivered by the Selling Shareholder or by the
Attorney-in-Fact pursuant to the Power-of-Attorney. This Agreement, the
Custody Agreement and the Power-of-Attorney are the legal, valid, and
binding obligations of the Selling Shareholder, enforceable against the
Selling Shareholder in accordance with their respective terms. The
Selling Shareholder agrees that each of the Securities represented by
the certificates on deposit with the Custodian is subject to the
interests of the Underwriters, the Company and the Selling Shareholder
hereunder, that the arrangements made for such custody, the appointment
of the Attorney-in-Fact and the right, power and authority of the
Attorney-in-Fact to execute and deliver this Agreement and to carry out
the terms of this Agreement, are to that extent irrevocable and that the
obligations of the Selling Shareholder hereunder shall not be
terminated, except as provided in this Agreement, the Custody Agreement
or the Power-of-Attorney, by any act of the Selling Shareholder, by
operation of law or otherwise, whether in the case of any individual
Selling Shareholder by the death or incapacity of the Selling
Shareholder, or in the case of a corporate or partnership Selling
Shareholder by its liquidation or dissolution or by the occurrence of
any other event. If any individual Selling Shareholder should die or
become incapacitated, or if any corporate or partnership Selling
Shareholder shall
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liquidate or dissolve, or if any other event should occur, before the
delivery of the Securities hereunder, the certificates for such
Securities deposited with the Custodian shall be delivered by the
Custodian in accordance with the respective terms and conditions of this
Agreement as if such death, incapacity, termination, liquidation or
dissolution or other event had not occurred, regardless of whether or
not the Custodian or the Attorney-in-Fact shall have received notice
thereof;
(c) Neither the execution and delivery or performance of this
Agreement or the Agreement, the Custody Agreement and the
Power-of-Attorney or the consummation of the transactions herein or
therein contemplated nor the compliance with the terms hereof or thereof
by the Selling Shareholder will conflict with, or result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge,
claim or encumbrance on any property of the Selling Shareholder under,
any indenture, mortgage, deed of trust, lease or other agreement or
instrument to which the Selling Shareholder is a party or by which the
Selling Shareholder's property is bound, or the charter documents or
by-laws or other organizational documents of such Selling Shareholder,
or any statute, ruling, judgment, decree order, or regulation of any
court or other governmental authority or any arbitrator having
jurisdiction over the Selling Shareholder. All consents, approvals,
authorizations, orders and qualification of or with any governmental
agency or body required for the sale of the Securities to be sold by the
Selling Shareholder or the consummation of the other transactions
contemplated by this Agreement have been obtained, except the
registration under the Act of the Securities and under the Exchange Act
of the Common Stock, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state or
foreign securities or Blue Sky laws or the by-laws of the NASD in
connection with the purchase and distribution of the Securities by the
Underwriters;
(d) The sale by the Selling Shareholder of Securities pursuant
hereto is not prompted by any adverse information concerning the Company
that is not set forth in the Registration Statement or the Prospectus;
(e) At the Time of Delivery, all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection
with the sale and transfer of the Securities to be sold by the Selling
Shareholder to the several Underwriters hereunder will have been fully
paid or provided for by the Selling Shareholder and all laws imposing
such taxes will have been fully complied with; and
(f) The Selling Shareholder has read all information with respect
to the Selling Shareholder contained in the Prospectus and the
Registration Statement, and such information does not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or
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<PAGE>
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading.
2. Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to the several Underwriters an aggregate of 2,250,000
Firm Securities, the Selling Shareholder agrees to sell to the several
Underwriters the number of Firm Securities set forth on Schedule II opposite the
name of the Selling Shareholder and each of the Underwriters agrees to purchase
from the Company and the Selling Shareholder, at a purchase price of $17.67 per
share, the respective aggregate number of Firm Securities determined in the
manner set forth below. The obligation of each Underwriter to the Company and
the Selling Shareholder, respectively, shall be to purchase that portion of the
number of shares of Common Stock to be sold by the Company or the Selling
Shareholder pursuant to this Agreement as the number of Firm Securities set
forth opposite the name of such Underwriter on Schedule I bears to the total
number of Firm Securities to be purchased by the Underwriters pursuant to this
Agreement, in each case adjusted by you such that no Underwriter shall be
obligated to purchase Firm Securities other than in 100 share amounts. In making
this Agreement, each Underwriter is contracting severally and not jointly.
In addition, subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to the Underwriters, as required (for the sole
purpose of covering over-allotments in the sale of the Firm Securities), up to
342,300 Option Securities at the purchase price per share of the Firm Securities
being sold by the Company as stated in the preceding paragraph. The right to
purchase the Option Securities may be exercised by your giving 48 hours' prior
written or telephonic notice (subsequently confirmed in writing) to the Company
of your determination to purchase all or a portion of the Option Securities.
Such notice may be given at any time within a period of 30 calendar days
following the date of this Agreement. Option Securities shall be purchased
severally for the account of each Underwriter in proportion to the number of
Firm Securities set forth opposite the name of such Underwriter in Schedule I
hereto. No Option Securities shall be delivered to or for the accounts of the
Underwriters unless the Firm Securities shall be simultaneously delivered or
shall theretofore have been delivered as herein provided. The respective
purchase obligations of each Underwriter shall be adjusted by you so that no
Underwriter shall be obligated to purchase Option Securities other than in 100
share amounts. The Underwriters may cancel any purchase of Option Securities at
any time prior to the Option Securities Delivery Date (as defined in Section 4
hereof) by giving written notice of such cancellation to the Company.
3. The Underwriters propose to offer the Securities for sale upon the
terms and conditions set forth in the Prospectus.
4. Certificates in definitive form for the Firm Securities to be
purchased by each Underwriter hereunder shall be delivered by or on behalf of
the Company and the Selling Shareholder to you for the account of such
Underwriter, against payment by such Underwriter or on its behalf of the
purchase price therefor by certified or official
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bank check or checks, payable in New York Clearing House funds, to the order of
the Company, for the purchase price of the Firm Securities being sold by the
Company, and to the order of Marine Midland Bank for the purchase price of the
Firm Securities being sold by the Selling Shareholder, at the office of Wertheim
Schroder & Co. Incorporated, Equitable Center, 787 Seventh Avenue, New York, New
York, at 9:30 A.M., New York City time, on June 2, 1995, or at such other time,
date and place as you and the Company may agree upon in writing, such time and
date being herein called the "Time of Delivery."
Certificates in definitive form for the Option Securities to be
purchased by each Underwriter hereunder shall be delivered by or on behalf of
the Company to you for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price thereof by certified or
official bank check or checks, payable in New York Clearing House funds, to the
order of the Company, for the purchase price of the Option Securities, in New
York, New York, at such time and on such date (not earlier than the Time of
Delivery nor later than ten business days after giving of the notice delivered
by you to the Company with reference thereto) and in such denominations and
registered in such names as shall be specified in the notice delivered by you to
the Company with respect to the purchase of such Option Securities. The date and
time of such delivery and payment are herein sometimes referred to as the
"Option Securities Delivery Date." The obligations of the Underwriters shall be
subject, in their discretion, to the condition that there shall be delivered to
the Underwriters on the Option Securities Delivery Date opinions and
certificates, dated such Option Securities Delivery Date, referring to the
Option Securities, instead of the Firm Securities, but otherwise to the same
effect as those required to be delivered at the Time of Delivery pursuant to
Sections 7(d), 7(e), 7(f), 7(h), 7(i) and 7(l).
Certificates for the Firm Securities and the Option Securities so to be
delivered will be in good delivery form, and in such denominations and
registered in such names as you may request not less than 48 hours prior to the
Time of Delivery and the Option Securities Delivery Date, respectively. Such
certificates will be made available for checking and packaging in New York, New
York, at least 24 hours prior to the Time of Delivery and Option Securities
Delivery Date.
5. (a) The Company covenants and agrees with each of the Underwriters:
(i) If the Registration Statement has not become
effective, to file promptly the Final Amendment with the
Commission and use its best efforts to cause the Registration
Statement to become effective; if the Registration Statement has
become effective, to file promptly the Rule 430A Prospectus with
the Commission; to make no further amendment or any supplement to
the Registration Statement or Prospectus to which you shall
reasonably object after reasonable notice thereof; to advise you,
promptly after it receives notice thereof of the time when the
Registration Statement, or any amendment thereto, or any amended
Registration Statement has become effective or any supplement to
the Prospectus or
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<PAGE>
any amended Prospectus has been filed, of the issuance by the
Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the
Prospectus, of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose,
or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for
additional information; and in the event of the issuance of any
stop order or of any order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or suspending any
such qualification, to use promptly its best efforts to obtain
withdrawal of such order;
(ii) Promptly from time to time to take such action as you
may reasonably request to qualify the Securities for offering and
sale under the securities laws of such jurisdictions as you may
request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution,
provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(iii) To furnish each of the Representatives and counsel
for the Underwriters, without charge, signed copies of the
registration statement originally filed with respect to the
Securities and each amendment thereto (in each case including all
exhibits thereto) and to each other Underwriter a conformed copy
of such registration statement and each amendment thereto (in
each case without exhibits thereto) and, so long as a prospectus
relating to the Securities is required to be delivered under the
Act, as many copies of each Preliminary Prospectus, the
Prospectus and all amendments or supplements thereto as you may
from time to time reasonably request. If at any time when a
prospectus is required to be delivered under the Act an event
shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in
order to make statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or if for any other reason it shall be
necessary to amend or supplement the Prospectus in order to
comply with the Act, the Company will notify you and forthwith
prepare and, subject to the provisions of Section 5(a) hereto,
file with the Commission an appropriate supplement or amendment
thereto, and will furnish to each Underwriter and to any dealer
in securities, without charge, as many copies as you may from
time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or
admission or effect such compliance in accordance with the
requirements of Section 10 of the Act; and in case any
Underwriter is required to deliver a prospectus in
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<PAGE>
connection with sales of any of the Securities at any time 15
months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare
and deliver to such Underwriter as many copies as you may request
of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(iv) To make generally available to its shareholders as
soon as practicable, but in any event not later than 45 days
after the close of the period covered thereby, an earning
statement in form complying with the provisions of Section 11(a)
of the Act covering a period of 12 consecutive months beginning
not later than the first day of the Company's fiscal quarter next
following the Effective Date;
(v) To file promptly all documents required to be filed
with the Commission pursuant to Section 13, 14 or 15(d) of the
Exchange Act subsequent to the Effective Date and during any
period when the Prospectus is required to be delivered;
(vi) For a period of five years from the Effective Date,
to furnish to its shareholders after the end of each fiscal year
an annual report (including a consolidated balance sheet and
statements of income, cash flow and shareholders' equity of the
Company and its subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of
the first three quarters of each fiscal year (beginning with the
fiscal quarter ending after the Effective Date), consolidated
summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail;
(vii) During a period of five years from the Effective
Date, to furnish to you copies of all reports or other
communications (financial or other) furnished to its
shareholders, and deliver to you (i) a reasonable time after they
are so furnished or filed, copies of any reports and financial
statements furnished to or filed with the Commission or any
national securities exchange or automated quotation system on
which any class of securities of the Company is listed or quoted;
and (ii) such additional information concerning the business and
financial condition of the Company as you may from time to time
reasonably request in connection with your obligations hereunder,
other than information which is subject to a confidentiality
agreement and other information, the disclosure of which to any
third party the Company reasonably believes may adversely impact
its competitive position;
(viii) To apply the net proceeds from the sale of the
Securities in the manner set forth in the Prospectus under the
caption "Use of Proceeds";
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<PAGE>
(ix) That it will not, and will cause its subsidiaries,
officers and directors not to, take, directly or indirectly, any
action designed to cause or result in, or that might reasonably
be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the
sale or resale of the Securities;
(x) That prior to the Time of Delivery there will not be
any change in the capital stock (other than with respect to
Permitted Shares) or material change in the short-term debt or
long-term debt of the Company or any of its subsidiaries (other
than borrowings under the Company's credit facilities described
in the Prospectus), or any material adverse change, or any
development involving a prospective material adverse change, in
or affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company or
any of its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus;
(xi) That it will not, and will cause each of its
directors and officers, the Selling Shareholder and other
shareholders of the Company holding an aggregate of 3,234,432
shares of Common Stock (the "Other Shareholders") to enter into
agreements with you, in form and substance satisfactory to you,
to the effect that they will not, during the period of 180 days
after the date hereof (other than pursuant to this Agreement),
offer to sell, sell, contract to sell, pledge or otherwise
dispose of any capital stock of the Company (or securities
convertible into, or exchangeable for, capital stock of the
Company), directly or indirectly, without the prior written
consent of Wertheim Schroder & Co. Incorporated, except (x) in
the case of the Company, for grants of restricted stock under the
Company's Stock Incentive Plan up to the amount reserved for such
issuances disclosed in the Prospectus or pursuant to the terms of
convertible securities of the Company outstanding on the date
hereof, (y) in the case of the persons executing the agreements
referred to above, for the transfer of Common Stock by gift
subject to the condition that the donee of such Common Stock
agrees to be bound by the restrictions on transfer described
above and (z) in the case of Chemung Canal Trust Company
("Chemung"), subject to the condition that Chemung may make
distributions to estate or trust beneficiaries, but only in the
event that such distributions are required upon an estate's or
trust's termination in accordance with the terms of the governing
instrument;
(xii) That it will use its best efforts to maintain the
quotation of the Common Stock on the Nasdaq National Market; and
(xiii) To file with the Commission such reports on Form SR
as may be required pursuant to Rule 463 under the Act.
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<PAGE>
(b) The Selling Shareholder covenants and agrees with each of the
Underwriters that:
(i) The Selling Shareholder will not, during the period of
180 days after the date hereof, except pursuant to this
Agreement, offer to sell, sell, contract to sell, pledge or
otherwise dispose of any capital stock of the Company (or
securities convertible into, or exchangeable for, capital stock
of the Company), directly or indirectly, without the prior
written consent of Wertheim Schroder & Co. Incorporated, except
for the transfer of Common Stock by gift subject to the condition
that the donee of such Common Stock agrees to be bound by the
restrictions on transfer described above;
(ii) The Selling Shareholder will not, directly or
indirectly, take any action designed to cause or result in, or
that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities;
(iii) As soon as any of the individual trustees of the
Selling Shareholder are advised thereof, the Selling Shareholder
will advise the Representatives and confirm such advice in
writing, (i) of receipt by the Selling Shareholder or by any
representative or agent of the Selling Shareholder, of any
communication from the Commission relating to the Registration
Statement, the Prospectus or any Preliminary Prospectus, or any
notice or order of the Commission relating to the Company or the
Selling Shareholder in connection with the transactions
contemplated by this Agreement and (ii) of the happening of any
event which makes or may make any statement made in the
Registration Statement, the Prospectus or any Preliminary
Prospectus untrue or that requires the making of any change in
the Registration Statement, Prospectus or Preliminary Prospectus,
as the case may be, in order to make such statement, in light of
the circumstances in which it was made, not misleading; and
(iv) The Selling Shareholder will deliver to the
Representatives prior to the Time of Delivery a properly
completed and executed United States Treasury Department Form
W-9.
(v) The Selling Shareholder covenants and agrees that it
will pay for the fees, disbursements and expenses of its counsel.
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid: (i) the fees, disbursements and
expenses of counsel and accountants for the Company and all other expenses, in
connection with the preparation, printing and filing of the Registration
Statement and the Prospectus
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<PAGE>
and amendments and supplements thereto and the furnishing of copies thereof,
including charges for mailing, air freight and delivery and counting and
packaging thereof and of any Preliminary Prospectus and related offering
documents to the Underwriters and dealers; (ii) the cost of printing this
Agreement, the Agreement Among Underwriters, the Selling Agreement,
communications with the Underwriters and selling group, the Canadian Private
Offering Memorandum and the Preliminary and Supplemental Blue Sky Memoranda and
any other documents in connection with the offering, purchase, sale and delivery
of the Securities; (iii) all expenses in connection with the qualification of
the Securities for offering and sale under securities laws as provided in
Section 5(a)(ii) hereof, including filing and registration fees and the fees,
disbursements and expenses for counsel for the Underwriters in connection with
such qualification and in connection with Blue Sky surveys or similar advice
with respect to sales; (iv) the filing fees incident to, and the fees and
disbursements of counsel for the Underwriters in connection with, securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Securities; (v) all fees and expenses in connection
with quotation of the Securities on the Nasdaq National Market; and (vi) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this Section 6,
including the fees of the Company's Transfer Agent and Registrar, the cost of
any stock issue or transfer taxes on sale of the Securities to the Underwriters,
the cost of the Company's personnel and other internal costs, the cost of
printing and engraving the certificates representing the Securities and all
expenses and taxes incident to the sale and delivery of the Securities to be
sold by the Company and the Selling Shareholder to the Underwriters hereunder.
The Selling Shareholder will pay any transfer taxes incident to the transfer to
the Underwriters of the Securities being sold by such Selling Shareholder.
It is understood, however, that, except as provided in this Section,
Section 8 and Section 11 hereof, the Underwriters will pay all their own costs
and expenses, including the fees of their counsel, stock transfer taxes on
resale of any of the Securities by them, and any advertising expenses connected
with any offers they may make.
7. The obligations of the Underwriters hereunder shall be subject, in
their discretion, to the condition that all representations and warranties and
other statements of the Company and the Selling Shareholder herein are, at and
as of the Time of Delivery, true and correct, the condition that the Company and
the Selling Shareholder shall have performed all its and their obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Registration Statement shall have become effective, and
you shall have received notice thereof not later than 12:00 Noon, New
York City time, on the first full business day following the date of
execution of this Agreement, or at such other time as you and the
Company may agree; if required, the Prospectus shall have been filed
with the Commission in the manner and within the time period required by
Rule 424(b); no stop order suspending the effectiveness of the
Registration Statement shall have been issued
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and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with
to your reasonable satisfaction;
(b) All corporate proceedings and related legal and other matters
in connection with the organization of the Company and the registration,
authorization, issue, sale and delivery of the Securities shall have
been reasonably satisfactory to Fulbright & Jaworski L.L.P., counsel to
the Underwriters, and Fulbright & Jaworski L.L.P. shall have been timely
furnished with such papers and information as they may reasonably have
requested to enable them to pass upon the matters referred to in this
subsection;
(c) You shall not have advised the Company or any Selling
Shareholder that the Registration Statement or Prospectus, or any
amendment or supplement thereto, contains an untrue statement of fact or
omits to state a fact which in your judgment is in either case material
and in the case of an omission is required to be stated therein or is
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(d) Shearman & Sterling, special counsel to the Company, shall
have furnished to you their written opinion, dated the Time of Delivery,
in form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of New York;
(ii) The Securities being sold by the Company have been
duly authorized and, when duly countersigned by the Company's
Transfer Agent and Registrar and issued, delivered and paid for
in accordance with the provisions of the Registration Statement
and this Agreement, will be validly issued, fully paid and
non-assessable, and such shares are not subject to the preemptive
rights of any shareholder; the Securities conform in all material
respects to the description thereof in the Prospectus; and the
certificates for the Securities comply as to form with the laws
of the State of New York;
(iii) The Securities being sold by the Selling Shareholder
have been duly authorized and validly issued and are fully paid
and non-assessable; and none of such Securities was issued in
violation of the preemptive rights of any shareholder of the
Company;
(iv) All of the other outstanding shares of capital stock
of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; and none of the outstanding
shares of capital stock
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of the Company was issued in violation of the preemptive rights
of any shareholder of the Company;
(v) The Company has an authorized capitalization as set
forth in the Registration Statement under the caption
"Description of Capital Stock";
(vi) The Common Stock has been authorized for quotation on
the Nasdaq National Market, subject to notice of issuance; the
Common Stock has been registered under the Exchange Act;
(vii) The Company has full corporate power and authority
to execute, deliver and perform its obligations under this
Agreement; this Agreement has been duly authorized, executed and
delivered by the Company; and this Agreement constitutes the
legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as
enforceability of the same may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting creditors' rights generally and
except as enforceability of those provisions relating to
indemnity may be limited by the Federal securities laws,
principles of public policy and general principles of equity
(regardless of whether enforcement is considered in a proceeding
in equity or at law);
(viii) The execution, delivery and performance of this
Agreement, the consummation of the transactions herein
contemplated and the issue and sale of the Securities and the
compliance by the Company with all of the provisions of this
Agreement will not violate the provisions of the Certificate of
Incorporation or the By-laws of the Company, as amended to the
date hereof or, to the best knowledge of such counsel, any
existing applicable law, rule or regulation (other than the Act
or the securities or blue sky laws of the various states, as to
which such counsel need express no opinion);
(ix) All outstanding shares of the Company's Class A
Common Stock, par value $5.00 per share, and Class B Common
Stock, par value $5.00 per share, were converted into shares of
Common Stock at the ratios of 2.00 to 1 and 2.05 to 1,
respectively, pursuant to an amendment (the "Amendment") to the
Company's Certificate of Incorporation which was filed with the
Secretary of State of the State of New York and became effective
on May 24, 1995. The filing of the Amendment with the Department
of State of the State of New York was duly authorized by the
Company and its shareholders and the Amendment complied in all
respects with applicable law; and
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(x) No consent, approval, authorization, order,
registration or qualification of or with any court or any
regulatory authority or other governmental body is required for
the issue and sale of the Securities or the consummation of the
other transactions contemplated by this Agreement, except such as
have been obtained under the Act and the Exchange Act, or may be
required under state or foreign securities or blue sky laws or
the by-laws of the NASD in connection with the purchase and
distribution of the Securities by the Underwriters;
(xi) The Registration Statement has become effective under
the Act, the Prospectus has been filed in accordance with Rule
424(b) of the rules and regulations of the Commission under the
Act, including the applicable time periods set forth therein, or
such filing is not required and, to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or are pending under the Act;
the Registration Statement, the Prospectus, excluding documents
incorporated by reference therein, and each amendment or
supplement thereto (other than the financial statements and
related schedules and other financial or statistical data
included therein or omitted therefrom, as to which such counsel
need express no opinion), as of their respective effective or
issue dates, appear on their face to conform in all material
respects to the requirements of the Act and the rules and
regulations thereunder; the documents incorporated by reference
in the Prospectus (other than the financial statements and
related schedules and other financial or statistical data
included therein or omitted therefrom, as to which such counsel
need express no opinion, and except to the extent that any
statement therein is modified or superseded in the Prospectus),
as of the dates they were filed with the Commission, appear on
their face to conform in all material respects to the
requirements of the Exchange Act and the rules and regulations
thereunder.
(xii) To the extent summarized therein, all contracts and
agreements summarized in the Registration Statement and the
Prospectus (other than those under the caption "Management", as
to which such counsel need not give an opinion) are fairly
summarized therein and conform in all material respects to the
descriptions thereof contained therein and, to the extent such
summarized contracts or agreements are required under the Act or
the rules and regulations thereunder to be filed as exhibits to
the Registration Statement or incorporated by reference therein,
they have been filed or incorporated by reference; and such
counsel does not know of any contracts or other documents
required to be so summarized or disclosed in the Prospectus or
filed as an exhibit to the Registration Statement or incorporated
by reference therein that have not been so summarized or
disclosed, or filed as an exhibit or incorporated by reference as
required (excluding contracts or other documents that would
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be summarized or disclosed under the caption "Management" or, in
the case of exhibits, that pertain to matters covered under the
caption "Management").
(xiii) All descriptions in the Prospectus of statutes,
regulations or legal or governmental proceedings are fair
summaries thereof and fairly present the information required to
be shown with respect to such matters;
Such counsel shall also state that nothing has come to such counsel's
attention that would lead such counsel to believe that either the Registration
Statement or any amendment or supplement thereto (except for the financial
statements and other financial or statistical data included therein or omitted
therefrom), at the time such Registration Statement or amendment or supplement
became effective, or the Prospectus or any amendment or supplement thereto
(except for the financial statements and other financial or statistical data
included therein or omitted therefrom), as of its date and as of the Time of
Delivery, contains or contained any untrue statement of material fact or omitted
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
In rendering their opinions set forth in Section 7(d) above, such
counsel may (a) rely as to factual matters, upon certificates of public
officials and officers of the Company, and (b) state that they express no
opinion as to the laws of any jurisdiction other than the law of the State of
New York and the federal laws of the United States;
(e) Sayles, Evans, Brayton, Palmer & Tifft, counsel to the Company,
shall have furnished to you their written opinion, dated the Time of Delivery,
in form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of New York and is qualified to do business and is in good
standing in each jurisdiction in which its ownership or leasing
of properties requires such qualification or the conduct of its
business requires such qualification, except where the failure to
so qualify would not have a material adverse effect on the
business, properties, condition (financial or otherwise),
prospects or results of operations of the Company and its
subsidiaries, taken as a whole; and the Company has all necessary
corporate power and, to the best knowledge of such counsel, all
material governmental authorizations, permits and approvals
required under such laws to own, lease and operate its properties
and conduct its business as described in the Prospectus;
(ii) All the outstanding shares of capital stock of each
of the subsidiaries are owned by the Company of record and to the
knowledge
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of such counsel, (A) beneficially and (B) free and clear of any
security interest, adverse claim of any nature whatsoever or
encumbrance; to the knowledge of such counsel, there are no
outstanding options, warrants or other rights calling for the
issuance of, and there are no commitments or arrangements to
issue, any shares of capital stock of any subsidiary (other than
to the Company);
(iii) The Company has an authorized capitalization as set
forth in the Registration Statement under the caption
"Description of Capital Stock"; except as described in the
Prospectus, to the knowledge of such counsel, there are no
outstanding options, warrants or other rights calling for the
issuance of, and there are no commitments, plans or arrangements
to issue any shares of, capital stock of the Company; the
Securities conform in all material respects to the description
thereof in the Prospectus;
(iv) To the best of such counsel's knowledge and other
than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of
the subsidiaries is a party or of which any property of the
Company or any of the subsidiaries is the subject which, if
determined adversely to the Company or any subsidiary, would
individually or in the aggregate have a material adverse effect
on the consolidated financial position, shareholders' equity or
results of operations of the Company and its subsidiaries, taken
as a whole;
(v) This Agreement has been duly authorized, executed and
delivered by the Company;
(vi) The execution, delivery and performance of this
Agreement, the consummation of the transactions herein
contemplated and the issue and sale of the Securities and the
compliance by the Company with all the provisions of this
Agreement will not conflict with, or result in a breach of any of
the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge, claim
or encumbrance upon, any of the property or assets of the Company
or any subsidiary pursuant to, the terms of any indenture,
mortgage, deed of trust, loan agreement or other material
agreement or material instrument known to such counsel to which
the Company or any subsidiary is a party or by which the Company
or any subsidiary is bound or to which any of the property or
assets of the Company or any subsidiary is subject, or to the
best knowledge of such counsel, result in any violation of any
statute or any order, rule or regulation (other than the federal
and foreign securities laws or blue sky laws of the various
states, as to which such counsel need express no opinion) known
to such counsel of any court or governmental agency or body
having jurisdiction over the Company or any
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subsidiary or any of their properties, nor will such action
result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any subsidiary;
(vii) To the best of such counsel's knowledge, neither the
Company nor any subsidiary is currently (A) in violation of its
Certificate of Incorporation or By-laws (or similar corporate
constituent documents), in each case as amended to the date
hereof; or (B) in default under any indenture, mortgage, deed of
trust, lease, bank loan or credit agreement or any material other
agreement or material instrument of which such counsel has
knowledge to which the Company or any subsidiary is a party or by
which any of them or any of their property may be bound, or in
violation of any law, ordinance, rule or regulation applicable to
the Company or any of its subsidiaries, or of any decree of any
court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries (except for such defaults or
violations, either individually or in the aggregate, which will
not have a material adverse effect on the business, properties,
condition (financial or otherwise) or results of operations of
the Company and its subsidiaries, taken as a whole);
(viii) There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the voting
or transfer of, any Securities pursuant to the Company's
Certificate of Incorporation or By-Laws, in each case as amended
to the date hereof, or any agreement or other instrument known to
such counsel; and, to such counsel's knowledge, no holders of
securities of the Company (other than the Selling Shareholder)
have rights to the registration thereof under the Registration
Statement or, if any such holders have such rights, such holders
have waived such rights;
(ix) To the extent summarized therein, all contracts and
agreements summarized in the Registration Statement and the
Prospectus under the caption "Management" are fairly summarized
therein and conform in all material respects to the descriptions
thereof contained therein; and such counsel does not know of any
contracts or other documents required to be summarized or
disclosed under such caption which have not been so summarized or
disclosed nor of any contracts or other documents pertaining to
matters covered under such caption that are required to be filed
as an exhibit to the Registration Statement or incorporated by
reference therein that have not been so filed as required or
incorporated by reference;
(ix) Hardinge Machine Tools Limited ("Hardinge U.K.") is a
company duly incorporated in England under the Companies Act 1929
and registered in England and Wales;
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(x) A search made on June 2, 1995 at the Companies
Registry revealed no order or resolution for the winding up or
order for the administration of Hardinge U.K. and no notice for
the appointment of a receiver or an administrative receiver. The
High Court of Justice has confirmed orally in response to our
inquiry made on June 2, 1995 that they have no record of any
petition for the winding up of Hardinge U.K. having been
presented;
(xi) An inspection of Hardinge U.K.'s statutory books made
on June 2, 1995 and a search made on May 22, 1995 at Companies
House, revealed Hardinge U.K.'s authorized share capital to be
231,390 pounds, divided into 231,390 ordinary shares of 1 pound
each, and its issued share capital (the "Issued Shares") to be
131,390 pounds divided into 131,390 ordinary shares of 1 pound
each. Of the Issued Shares, 131,389 were shown in the Register of
Members as being registered in the name of Hardinge Brothers,
Inc. and one was shown to be registered in the name of Robert
Duxbury, a director of Hardinge U.K.;
(xii) Our inspection of Hardinge U.K.'s statutory books
and records revealed that the issue of the Issued Shares was duly
authorized and the Issued Shares are validly issued and fully
paid or credited as fully paid and, accordingly, no further
contributions in respect of such Issued Shares will be required
by the holders thereof by virtue only of it being such a holder.
Such counsel shall also state that while such counsel does not express
any opinion concerning, and does not assume any responsibility for, the
accuracy, completeness (including, without limitation, omission of information),
or fairness of the statements contained in the Registration Statement or the
Prospectus, and has not independently verified the accuracy, completeness
(including, without limitation, omission of information) or fairness of such
statements, nothing has knowingly come to such counsel's attention that has led
such counsel to believe that either the Registration Statement or any amendment
or supplement thereto (excluding the financial statements and other financial or
statistical data included therein or omitted therefrom), at the time such
Registration Statement or amendment or supplement became effective, or the
Prospectus or any amendment or supplement thereto (excluding the financial
statements and other financial or statistical data included therein or omitted
therefrom), as of its date and as of the Time of Delivery, contained or contains
any untrue statement of a material fact or omitted or omits to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
In rendering their opinions set forth in Section 7(e) above, such
counsel may (a) rely as to factual matters, upon certificates of public
officials and officers of the Company, (b) state that they express no opinion as
to (i) the laws of any jurisdiction other than the law of the State of New York
and the federal laws of the United States
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or (ii) the federal securities laws, foreign securities laws and the blue sky
laws of the various states (and the rules and regulations under any of said
laws) or other law relating to the sale of securities (other than the Business
Corporation Law of the State of New York and the other laws relating to
corporate governance generally) in connection with or in any way related to the
issue and sale of the Securities, and (c) rely as to laws of any jurisdiction
other than the United States and jurisdictions in which they are admitted, on
opinions of counsel (provided, however, that you shall have received a copy of
each such opinion which shall be dated the Time of Delivery and Sayles, Evans,
Brayton, Palmer & Tifft in its opinion to you delivered pursuant to this
subsection, shall state that such counsel are satisfactory to them and Sayles,
Evans, Brayton, Palmer & Tifft has no reason to believe that they are not
justified to so rely);
(f) Borden & Elliot, special Canadian counsel to the Company,
shall have furnished to you their written opinion, dated the Time of
Delivery, in form and substance satisfactory to you, to the effect that:
(i) Canadian Hardinge Machine Tools Ltd. ("Hardinge
Canada") has been duly incorporated and organized under the laws
of Ontario, Canada, and has not been dissolved;
(ii) Hardinge Canada is qualified to do business and is in
good standing in each jurisdiction in which its ownership or
leasing of properties require such qualification or the conduct
of its business requires such qualification (except where the
failure to so qualify would not have a material adverse effect on
the business or properties of Hardinge Canada (financial or
otherwise), the prospects or results of Hardinge Canada and its
subsidiaries taken as a whole; and Hardinge Canada has all
necessary corporate power and all material government
authorizations, permits and approvals required to own, lease and
operate its properties and to conduct its business as currently
being conducted;
(iii) All of the issued and outstanding shares of Hardinge
Canada have been duly authorized and are validly issued and
outstanding, fully paid and non-assessable and are owned by
Hardinge Brothers, Inc. of record, and to the best of our
knowledge are (A) beneficially owned by Hardinge Brothers, Inc.
and (B) free and clear of all liens, encumbrances, equities,
security interest or claims of any nature whatsoever. To such
counsel's knowledge, there are no outstanding options, warrants
or other rights calling for the issuance of, and there are no
commitments, plans or arrangements to issue any shares of
Hardinge Canada.
In rendering their opinions set forth in Section 7(f) above, such
counsel may rely, to the extent deemed advisable by such counsel, (a) as to
factual matters, upon certificates of public officials and officers of Hardinge
Canada; and (b) as to the laws of any jurisdiction other than Canada and
jurisdictions in which they are admitted;
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<PAGE>
(g) With respect to the Selling Shareholder, Hancock & Estabrook,
counsel for the Selling Shareholder, shall have furnished to you their
written opinion, dated the Time of Delivery, in form and substance
satisfactory to you and to Fulbright & Jaworski L.L.P. to the effect
that:
(i) The Selling Shareholder has the full legal right,
power and authority to enter into this Agreement, the Custody
Agreement and the Power-of-Attorney and to sell, transfer and
deliver the Securities being sold by the Selling Shareholder
hereunder in the manner provided in this Agreement and to perform
its obligations under the Custody Agreement and the
Power-of-Attorney; this Agreement has been duly authorized,
executed and delivered by the Selling Shareholder or on behalf of
the Selling Shareholder by the Attorney-in-Fact; the Custody
Agreement and the Power-of-Attorney have been duly authorized,
executed and delivered by the Selling Shareholder; this
Agreement, the Custody Agreement and the Power-of-Attorney
constitute the legal, valid and binding obligations of the
Selling Shareholder, enforceable in accordance with their
respective terms, except as enforcement of the same may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in
equity or at law);
(ii) upon delivery of and payment for the Securities being
sold by the Selling Shareholder, the several Underwriters will
receive good and valid title to such Securities, free and clear
of all liens, encumbrances, equities, security interests, claims
or other defects;
(iii) the sale of the Securities to the Underwriters by
the Selling Shareholder pursuant to this Agreement, the
compliance by the Selling Shareholder with the other provisions
of this Agreement, the Custody Agreement and the
Power-of-Attorney and the consummation of the other transactions
herein and therein contemplated do not (i) conflict with, or
result in a breach or violation of any of the terms and
provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge, claim or encumbrance
on any property of the Selling Shareholder under, any indenture,
mortgage, deed of trust, lease or other agreement or instrument
known to such counsel to which the Selling Shareholder is a party
or by which the Selling Shareholder or any of the Selling
Shareholder's property is bound, or the certificate of
incorporation or by-laws or similar organizational documents of
the Selling Shareholder, or any statute or any judgment, decree,
order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to the Selling
Shareholder, or (ii) require the consent, approval,
authorization, order, registration or qualification of or with
any governmental authority, except such as have been obtained and
such as may be required under the
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Act and such as may be required under state or foreign
securities, Blue Sky laws, or the by-laws of the NASD in
connection with the purchase and distribution of such Securities
by the Underwriters; and
(iv) there are no stock transfer taxes (other than income
taxes) known to such counsel payable in connection with the sale
and delivery of the Securities by the Selling Shareholder to the
several Underwriters or all such taxes have been fully paid in
connection with such sale and delivery.
In rendering such opinion, such counsel may rely, to the extent deemed
advisable by such counsel, (a) as to factual matters, upon certificates of
public officials and the Selling Shareholder and (b) upon certificates of state
officials.
(h) Fulbright & Jaworski L.L.P., counsel to the Underwriters,
shall have furnished to you their written opinion or opinions, dated the
Time of Delivery, in form and substance satisfactory to you, with
respect to the incorporation of the Company, the validity of the
Securities, the Registration Statement, the Prospectus and other related
matters as you may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(i) At the time this Agreement is executed and also at the Time
of Delivery, Ernst & Young LLP shall have furnished to you a letter or
letters, dated the date of this Agreement and the Time of Delivery, in
form and substance satisfactory to you, to the effect, that:
(i) They are independent accountants with respect to the
Company and its subsidiaries within the meaning of the Act and
the applicable published rules and regulations thereunder;
(ii) In their opinion the consolidated financial
statements of the Company and its subsidiaries (including the
related schedules and notes) included or incorporated by
reference in the Registration Statement and Prospectus and
covered by their reports included or incorporated by reference
therein comply as to form in all material respects with the
applicable accounting requirements of the Act or the Exchange
Act, as applicable and the published rules and regulations
thereunder;
(iii) On the basis of specified procedures as of a
specified date not more than five days prior to the date of their
letter (which procedures do not constitute an examination made in
accordance with generally accepted auditing standards),
consisting of a reading of the latest available unaudited interim
consolidated financial statements of the Company and its
subsidiaries, a reading of the latest available minutes of any
meeting of the Board of Directors and shareholders of the Company
and its
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subsidiaries since the date of the latest audited financial
statements included or incorporated by reference in the
Prospectus, inquiries of officials of the Company and its
subsidiaries who have responsibility for financial and accounting
matters, and such other procedures or inquiries as are specified
in such letter, nothing came to their attention that caused them
to believe that:
(A) The unaudited consolidated financial statements
of the Company and its subsidiaries included in the
Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of
the Act and the rules and regulations promulgated
thereunder or are not presented in conformity with
generally accepted accounting principles applied on a
basis substantially consistent with that of the audited
consolidated financial statements included in the
Registration Statement and the Prospectus;
(B) as of a specified date not more than five days
prior to the date of their letter, there was any change in
the capital stock, or the long-term debt or short-term
debt of the Company and its subsidiaries on a consolidated
basis, or any decrease in total assets, net current
assets, net assets or shareholders' equity or other items
specified by the Representatives, of the Company and its
subsidiaries on a consolidated basis, each as compared
with the amounts shown on the March 31, 1995 consolidated
balance sheet included in the Registration Statement and
the Prospectus, except in each case for changes, increases
or decreases which the Prospectus discloses have occurred
or may occur or such other changes, decreases or increases
which are described in their letter and which do not, in
the sole judgment of the Representatives, make it
impractical or inadvisable to proceed with the purchase
and delivery of the Securities as contemplated by the
Registration Statement; and
(C) for the period from April 1, 1995 to a
specified date not more than five days prior to the date
of such letter, there was any decrease, as compared with
the corresponding period of the preceding fiscal year, in
the following consolidated amounts: net sales, income from
operations, income before provision for income taxes, net
income or net income per share of the Company and its
subsidiaries except in all instances for decreases which
the Registration Statement discloses have occurred or may
occur; or such other decreases which are described in
their letter and which do not, in the sole judgment of the
Representatives, make it impractical or inadvisable to
proceed with the purchase and
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delivery of the Securities as contemplated by the
Registration Statement; and
(iv) in addition to the examination referred to in their
reports included in the Registration Statement and the Prospectus
and the limited procedures referred to in clause (iii) above,
they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts,
percentages and financial information specified by the
Representatives, which are derived from the general accounting
records of the Company and its subsidiaries which appear in the
Prospectus, or in Part II of, or in exhibits and schedules to,
(a) the Registration Statement, (b) the Company's Annual Report
on Form 10-K for the year ended December 31, 1994 (including the
information from the Company's 1995 Proxy Statement incorporated
by reference therein), and (c) the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1995, and have compared
such amounts and financial information with the accounting
records of the Company and its subsidiaries, and have found them
to be in agreement and have proved the mathematical accuracy of
certain specified percentages.
(j) Neither the Company nor any of the subsidiaries shall have
sustained since December 31, 1994, any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, which loss or interference is material to the
Company and its subsidiaries, taken as a whole, other than as set forth
or contemplated in the Prospectus; and since the respective dates as of
which information is given in the Prospectus, there shall not have been
any change in the capital stock (other than shares issued in connection
with the Reclassification and Permitted Shares) or short-term debt or
long-term debt of the Company or any of its subsidiaries (other than
borrowings under its credit facilities which facilities are disclosed in
the Prospectus) nor any change or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case is
in your judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities on the terms and in the manner contemplated in the
Prospectus;
(k) Between the date hereof and the Time of Delivery there shall
have been no declaration of war by the Government of the United States;
at the Time of Delivery there shall not have occurred any material
adverse change in the financial or securities markets in the United
States or in political, financial or economic conditions in the United
States or any outbreak or material escalation of hostilities or other
calamity or crisis, the effect of which is such as to make
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it, in the judgment of the Representatives, impracticable to market the
Securities or to enforce contracts for the resale of Securities and no
event shall have occurred resulting in (i) trading in securities
generally on the New York Stock Exchange or in the Common Stock on the
principal securities exchange or market in which the Common Stock is
listed or quoted being suspended or limited or minimum or maximum prices
being generally established on such exchange[s] or market, or (ii)
additional material governmental restrictions, not in force on the date
of this Agreement, being imposed upon trading in securities generally by
the New York Stock Exchange or in the Common Stock on the principal
securities exchange or market in which the Common Stock is listed or
quoted or by order of the Commission or any court or other governmental
authority, or (iii) a general banking moratorium being declared by
either Federal or New York authorities;
(l) The Company and the Selling Shareholder shall have furnished
or caused to be furnished to you at the Time of Delivery certificates
signed by the chief executive officer and the chief financial officer,
on behalf of the Company, and by the Selling Shareholder or the
Attorney-in-Fact on behalf of the Selling Shareholder, satisfactory to
you as to such matters as you may reasonably request and as to (i) the
accuracy of its and their respective representations and warranties
herein at and as of the Time of Delivery and (ii) the performance by the
Company and the Selling Shareholder of all their respective obligations
hereunder to be performed at or prior to the Time of Delivery; the
Company shall have furnished or caused to be furnished to you at the
Time of Delivery a certificate signed by the chief executive officer and
the chief financial officer, on behalf of the Company, as to (i) the
fact that they have carefully examined the Registration Statement and
Prospectus and, (a) as of the Effective Date, the statements contained
or incorporated by reference in the Registration Statement and the
Prospectus were true and correct in all material respects and neither
the Registration Statement nor the Prospectus omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading and (b) since the Effective Date, no
event has occurred that is required by the Act or the rules and
regulations of the Commission thereunder to be set forth in an amendment
of, or a supplement to, the Prospectus that has not been set forth in
such an amendment or supplement; and (ii) the matters set forth in
subsection (a) of this Section 7;
(m) Each director, officer, Selling Shareholder and Other
Shareholder shall have delivered to you an agreement not to offer, sell,
contract to sell or otherwise dispose of any shares of capital stock of
the Company (or securities convertible into, or exchangeable for,
capital stock of the Company), directly or indirectly, for a period of
180 days after the date of this Agreement, without the prior written
consent of Wertheim Schroder & Co. Incorporated, except (i) for the
transfer of Common Stock by gift subject to the condition that the donee
of such Common Stock agrees to be bound by the restrictions on transfer
described above and (ii) and in the case of Chemung, subject to the
condition that
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Chemung may make distributions to estate or trust beneficiaries, but
only in the event that such distributions are required upon an estate's
or trust's termination in accordance with the terms of the governing
instrument; and
(n) The Company shall have delivered to you evidence that the
Securities have been authorized for quotation on the Nasdaq National
Market as of the Effective Date.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained or incorporated by reference in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or in any Blue Sky application or other document executed by
the Company specifically for that purpose or based upon information furnished by
the Company filed in any state or other jurisdiction in order to qualify any or
all of the Securities under the securities laws thereof or filed with the
Commission or any securities association or securities exchange (each, an
"Application"), or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements made or
incorporated by reference therein not misleading, or (ii) the employment by the
Company of any device, scheme or artifice to defraud, or the engaging by the
Company in any act, practice or course of business which operates or would
operate as a fraud or deceit, or any conspiracy with respect thereto, in which
the Company shall participate, in connection with the issuance and sale of any
of the Securities, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating, preparing to defend, defending or appearing as a third-party
witness in connection with any such action or claim; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission relating to an
Underwriter made in any Preliminary Prospectus, the Registration Statement, the
Prospectus or such amendment or supplement or any Application in reliance upon
and in conformity with written information furnished to the Company by such
Underwriter through you expressly for use therein; provided, further, that the
indemnity agreement contained in this Section 8(a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter (or any
persons controlling such Underwriter) on account of any losses, claims, damages,
liabilities or litigation arising from the sale of Securities to any person, if
such Underwriter fails to send or give a copy of the Prospectus, as the same may
be then supplemented or amended, to such person, within the time required by the
Act and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Preliminary Prospectus was
corrected in the Prospectus, unless such failure is the result of noncompliance
by the Company with Section 5(a)(iii) hereof.
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(b) The Selling Shareholder will indemnify and hold harmless each
Underwriter and the Company against any losses, claims, damages or liabilities
to which such Underwriter or the Company may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained or incorporated by
reference in the Preliminary Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements made or incorporated by reference therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Preliminary Prospectus, the Registration Statement, the Prospectus or
such amendment or supplement in reliance upon and in conformity with information
furnished to such Underwriter or the Company by the Selling Shareholder
expressly for use therein, or (ii) any untrue statement or alleged untrue
statement made by the Selling Shareholder in Section 1B of this Agreement, and
will reimburse such Underwriter or the Company for any legal or other expenses
incurred by such Underwriter or the Company in connection with investigating,
preparing to defend, defending or appearing as a third-party witness in
connection with any such action or claim; provided, however, the indemnity
agreement contained in this Section 8(b) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or any persons
controlling such Underwriter) on account of any losses, claims, damages,
liabilities or litigation arising form the sale of Securities to any person, if
such Underwriter fails to send or give a copy of the Prospectus, as the same may
be then supplemented or amended, to such person within the time required by the
Act and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Preliminary Prospectus was
corrected in the Prospectus, unless such failure is the result of noncompliance
by the Company with Section 5(a)(iii) hereof. The obligations of the Selling
Shareholder to indemnify the Underwriters and the Company under this Section
8(b) shall be limited to the net proceeds received by the Selling Shareholder
hereunder for the sale of Securities to the Underwriters.
(c) In addition to any obligations of the Company and the Selling
Shareholder under Section 8(a) and 8(b), the Company and the Selling Shareholder
agree that they shall perform their indemnification obligations under Section
8(a) and Section 8(b) (as modified by the last paragraph of this Section 8(c))
with respect to counsel fees and expenses and other expenses reasonably incurred
by making payments within 45 days to the Underwriter in the amount of the
statements of the Underwriter's counsel or other statements which shall be
forwarded by the Underwriter, and that it shall make such payments
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the obligation to reimburse the Underwriters for such expenses
and the possibility that such payments might later be held to have been improper
by a court until such time as a court orders return of such payments.
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The indemnity agreements in Section 8(a) and Section 8(b) shall be in
addition to any liability which the Company or the Selling Shareholder may
otherwise have and shall extend upon the same terms and conditions to each
person, if any, who controls any Underwriter within the meaning of the Act or
the Exchange Act.
(d) Each Underwriter will indemnify and hold harmless the Company
and the Selling Shareholder against any losses, claims, damages or liabilities
to which the Company or such Selling Shareholder may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or any Application, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement, the Prospectus or such
amendment or supplement or any Application in reliance upon and in conformity
with written information furnished to the Company or the Selling Shareholder by
such Underwriter relating to such Underwriter through you expressly for use
therein, and will reimburse the Company and the Selling Shareholder for any
legal or other expenses reasonably incurred by the Company and the Selling
Shareholder in connection with investigating, preparing to defend or defending
any such action or claim.
The indemnity agreement in this Section 8(d) shall be in addition to any
liability which the respective Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each officer and director of the Company
or of the Selling Shareholder and to each person, if any, who controls the
Company or the Selling Shareholder within the meaning of the Act or the Exchange
Act.
(e) Promptly after receipt by an indemnified party under Section
8(a), 8(b) or 8(d) of notice of the commencement of any action (including any
governmental investigation), such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such subsection,
promptly notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party under Section 8(a),
8(b) or 8(d) except to the extent it was unaware of such action and has been
prejudiced in any material respect by such failure or from any liability which
it may have to any indemnified party otherwise than under such Section 8(a),
8(b) or 8(d). In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such
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<PAGE>
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. If, however, (i) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party or (ii) an indemnified party
shall have reasonably concluded that representation of such indemnified party
and the indemnifying party by the same counsel would be inappropriate under
applicable standards of professional conduct due to actual or potential
differing interests between them and the indemnified party so notifies the
indemnifying party, then the indemnified party shall be entitled to employ
counsel different from counsel for the indemnifying party at the expense of the
indemnifying party and the indemnifying party shall not have the right to assume
the defense of such indemnified party. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in addition to
local counsel) for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same set of allegations or circumstances. The counsel with respect to which
fees and expenses shall be so reimbursed shall be designated in writing by
Wertheim Schroder & Co. Incorporated in the case of parties indemnified pursuant
to Section 8(a) and Section 8(b) and by the Company in the case of parties
indemnified pursuant to Section 8(d).
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding. An
indemnifying party shall not be liable for any settlement of any claim effected
without its prior written consent (which consent shall not be unreasonably
withheld).
(f) In order to provide for just and equitable contribution under
the Act in any case in which (i) any Underwriter (or any person who controls any
Underwriter within the meaning of the Act or the Exchange Act) makes claim for
indemnification pursuant to Section 8(a) or Section 8(b) hereof, but is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that Section 8(a) or Section 8(b) provides for
indemnification in such case or (ii) contribution under the Act may be required
on the part of any Underwriter or any such controlling person in circumstances
for which indemnification is provided under Section 8(d), then, and in each such
case, each indemnifying party shall contribute to the aggregate losses, claims,
damages or liabilities to which it may be subject as an indemnifying party
hereunder (after contribution from others) in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Selling
Shareholder on the one hand and the Underwriters on the other from the offering
of the Securities. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required
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<PAGE>
under Section 8(e) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Selling Shareholder on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Shareholder on the one hand and
the Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Securities purchased under this
Agreement (before deducting expenses) received by the Company and the Selling
Shareholder bear to the total underwriting discounts and commissions received by
the Underwriters with respect to the Securities purchased under this Agreement,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Selling Shareholder on the one hand or the Underwriters on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, the
Selling Shareholder and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(f) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8(f). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section
8(f) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8(f), (x) no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission and (y)
the Selling Shareholder shall not be required to contribute an amount in excess
of the net proceeds received by the Selling Shareholder hereunder for the sale
of Securities to the Underwriters. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 8(f) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(g) Promptly after receipt by any party to this Agreement of
notice of the commencement of any action, suit or proceeding, such party will,
if a claim for contribution in respect thereof is to be made against another
party (the "contributing party"), notify the contributing party of the
commencement thereof; but the omission so to notify the contributing party will
not relieve it from any liability which it may have to any other party for
contribution under the Act except to the extent it was
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<PAGE>
unaware of such action and has been prejudiced in any material respect by such
failure or from any liability which it may have to any other party other than
for contribution under the Act. In case any such action, suit or proceeding is
brought against any party, and such party notifies a contributing party of the
commencement thereof, the contributing party will be entitled to participate
therein with the notifying party and any other contributing party similarly
notified.
9. (a) If any Underwriter shall default in its obligation to purchase
the Firm Securities which it has agreed to purchase hereunder, you may in your
discretion arrange for you or another party or other parties to purchase such
Firm Securities on the terms contained herein. If the aggregate number of Firm
Securities as to which Underwriters default is more than one-eleventh of the
aggregate number of all the Firm Securities and within 36 hours after such
default by any Underwriter you do not arrange for the purchase of such Firm
Securities, then the Company and the Selling Shareholder shall be entitled to a
further period of 36 hours within which to procure another party or other
parties satisfactory to you to purchase such Firm Securities on such terms. In
the event that, within the respective prescribed periods, you notify the Company
and the Selling Shareholder that you have so arranged for the purchase of such
Firm Securities, or the Company and the Selling Shareholder notifies you that
they have so arranged for the purchase of such Firm Securities, you or the
Company shall have the right to postpone the Time of Delivery for a period of
not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Firm Securities.
(b) If, after giving effect to any arrangements for the purchase
of the Firm Securities of such defaulting Underwriter or Underwriters by you or
the Company and the Selling Shareholder or both as provided in subsection (a)
above, the aggregate number of such Firm Securities which remain unpurchased
does not exceed one-eleventh of the aggregate number of all the Firm Securities,
then the Company and the Selling Shareholder shall have the right to require
each non-defaulting Underwriter to purchase the number of the Firm Securities
which such Underwriter agreed to purchase hereunder and, in addition, to require
each non-defaulting Underwriter to purchase its pro rata share (based on the
number of Firm Securities which such Underwriter agreed to purchase hereunder)
of the Firm Securities of such defaulting Underwriter or Underwriters for which
such arrangements have not been made; but nothing shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase
of the Firm Securities of a defaulting Underwriter or Underwriters by you or the
Company and the Selling Shareholder as provided in subsection (a) above, the
aggregate number of such Firm Securities which remain unpurchased exceeds
one-eleventh of the
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<PAGE>
aggregate number of all the Firm Securities, or if the Company and the Selling
Shareholder shall not exercise the right described in subsection (b) above to
require non-defaulting Underwriters to purchase Firm Securities of a defaulting
Underwriter or Underwriters, then this Agreement shall thereupon terminate
without liability on the part of any non-defaulting Underwriter, the Company or
any Selling Shareholder, except for the expenses to be borne by the Company and
the Selling Shareholder and the Underwriters as provided in Section 6 hereof and
the indemnity agreement in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Shareholder and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or an officer or director or controlling person of
the Company, or the Selling Shareholder, or any controlling person of the
Selling Shareholder, and shall survive delivery of and payment for the
Securities.
11. This Agreement shall become effective (a) if the Registration
Statement has not heretofore become effective, at the earlier of 12:00 Noon, New
York City time, on the first full business day after the Registration Statement
becomes effective, or at such time after the Registration Statement becomes
effective as you may authorize the sale of the Securities to the public by
Underwriters or other securities dealers, or (b) if the Registration Statement
has heretofore become effective, at the earlier of 24 hours after the filing of
the Prospectus with the Commission or at such time as you may authorize the sale
of the Securities to the public by Underwriters or securities dealers, unless,
prior to any such time you shall have received notice from the Company that it
elects that this Agreement shall not become effective, or you, or through you
such of the Underwriters as have agreed to purchase in the aggregate fifty
percent or more of the Firm Securities hereunder, shall have given notice to the
Company that you or such Underwriters elect that this Agreement shall not become
effective; provided, however, that the provisions of this Section 11 and
Sections 6 and Section 8 hereof shall at all times be effective.
If this Agreement shall be terminated pursuant to Section 9 hereof, or
if this Agreement, by election of you or the Underwriters, shall not become
effective pursuant to the provisions of this Section, the Company and the
Selling Shareholder shall not then be under any liability to any Underwriter
except as provided in Sections 6 and Section 8 hereof, but if this Agreement
becomes effective and is not so terminated but the Securities are not delivered
by or on behalf of the Company or the Selling Shareholder as provided herein
because the Company or the Selling Shareholder has been unable for any reason
beyond its control and not due to any default by it to comply with the terms and
conditions hereof, the Company will reimburse the Underwriters through you for
all out-of-pocket expenses approved in writing by you,
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<PAGE>
including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Securities, but the Company and the Selling Shareholder shall then be under no
further liability to any Underwriter except as provided in Sections 6 and
Section 8 hereof.
12. The statements set forth in the last paragraph on the front cover
page of the Prospectus, the paragraph on the inside front cover of the
Prospectus containing stabilization language and the second paragraph under the
caption "Underwriting" in the Prospectus constitute the only information
furnished by any Underwriter through the Representatives to the Company for
purposes of Sections 1(b), 1(c) and 8 hereof.
13. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Wertheim Schroder & Co. Incorporated on behalf of you
as the Representatives, and in all dealings with the Selling Shareholder
hereunder, you and the Company shall be entitled to act and rely upon any
statement, request, notice or agreement furnished in writing by or on behalf of
such Selling Shareholder or made or given by the Attorney-in-Fact for such
Selling Shareholder.
All statements, requests, notices and agreements hereunder, unless
otherwise specified in this Agreement, shall be in writing and, if to the
Underwriters, shall be delivered or sent by mail, telex or facsimile
transmission (subsequently confirmed by delivery or by letter sent by mail) to
you as the Representatives in care of Wertheim Schroder & Co. Incorporated,
Equitable Center, 787 Seventh Avenue, New York, New York 10019, Attention:
Syndicate Department; and if to the Company or the Selling Shareholder, shall be
delivered or sent by letter sent by mail, telex or facsimile transmission
(subsequently confirmed by delivery or by letter sent by mail) to the address of
the Company set forth in the Registration Statement, Attention: Chief Executive
Officer; provided, however, that any notice to any Underwriter pursuant to
Section 8(d) hereof shall be delivered or sent by mail, telex or facsimile
transmission (subsequently confirmed by delivery or by letter sent by mail) to
such Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof.
14. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Shareholder and, to
the extent provided in Section 8 and Section 10 hereof, the officers and
directors of the Company and each person who controls the Company, the Selling
Shareholder or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
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<PAGE>
15. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
16. This Agreement shall be construed in accordance with the laws of the
State of New York, without giving effect to the conflicts of laws principles
thereof.
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<PAGE>
This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us two counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, the Company
and the Selling Shareholder. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in a form of Agreement Among Underwriters, manually or facsimile executed
counterparts of which, to the extent practicable and upon request, shall be
submitted to the Company for examination, but without warranty on your part as
to the authority of the signers thereof.
Very truly yours,
HARDINGE INC.
By: /s/
Name:
Title:
SELLING SHAREHOLDER
By: /s/
As Attorney-in-Fact for the
Selling Shareholder listed in
Schedule II
Accepted as of the date hereof:
WERTHEIM SCHRODER & CO. INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
as Representatives of the several Underwriters
By: WERTHEIM SCHRODER & CO. INCORPORATED
By: /s/
Managing Director
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<PAGE>
SCHEDULE I
Number of
Underwriter Firm Securities
Wertheim Schroder & Co. Incorporated............... 578,500
Prudential Securities Incorporated................. 578,500
Bear, Stearns & Co. Inc............................ 50,000
Alex. Brown & Sons Incorporated.................... 50,000
Dean Witter Reynolds Inc........................... 50,000
Dillon, Read & Co. Inc............................. 50,000
Donaldson, Lufkin & Jenrette Securities
Corporation....................................... 50,000
A.G. Edwards & Sons, Inc........................... 50,000
Goldman, Sachs & Co................................ 50,000
Lazard Freres & Co. LLC............................ 50,000
Lehman Brothers Inc................................ 50,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..................................... 50,000
Morgan Stanley & Co. Incorporated.................. 50,000
NatWest Securities Limited......................... 50,000
Oppenheimer & Co., Inc............................. 50,000
PaineWebber Incorporated........................... 50,000
Salomon Brothers Inc............................... 50,000
Smith Barney Inc................................... 50,000
Advest, Inc........................................ 25,000
Arnhold and S. Bleichroeder, Inc................... 25,000
Robert W. Baird & Co. Incorporated................. 25,000
William Blair & Company............................ 25,000
The Chicago Corporation............................ 25,000
Dain Bosworth Incorporated......................... 25,000
Fahnestock & Co. Inc............................... 25,000
McDonald & Company Securities, Inc................. 25,000
Piper Jaffray Inc.................................. 25,000
The Robinson-Humphrey Company, Inc................. 25,000
Wheat, First Securities, Inc....................... 25,000
Brean Murray, Foster Securities Inc................ 10,000
First Albany Corporation........................... 10,000
C.L. King & Associates, Inc........................ 10,000
Robotti & Eng Incorporated......................... 10,000
The Seidler Companies Incorporated................. 10,000
Total.............................................. 2,282,000
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SCHEDULE II
Number of
Firm Securities
Selling Shareholder to be Sold
Trust U/W Eleanor L. Evans
B/O Prochnow et. al................................ 16,000
Trust U/W Eleanor L. Evans
B/O Gunnell et. al................................. 16,000
Total.............................................. ___________
32,000
===========
1
RESTATED CERTIFICATE OF INCORPORATION
-of-
HARDINGE INC.
Under Section 807
of the Business Corporation Law.
We, ROBERT E. AGAN and J. PHILIP HUNTER, being respectively, the President
and Chief Executive Officer and the Secretary of Hardinge Inc., in accordance
with Section 807 of the Business Corporation Law, hereby certify:
1. The name of the Corporation is Hardinge Inc.
2. The Corporation is a consolidation of Morrison Machine Products, Inc.,
whose Certificate of Incorporation was filed by the Department of State of
the State of New York on December 14, 1925, and Hardinge Brothers, Inc.,
whose Certificate of Incorporation was filed by the Department of State of
the State of New York on March 3, 1931. The Certificate of Consolidation,
pursuant to Section 86 of the New York Stock Corporation Law, was filed 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 19, 1987. A Certificate
of Amendment of the Certificate of Incorporation of the Corporation was filed
by the Department of State of the State of New York on each of June 21, 1988,
May 19, 1995 and May 24, 1995.
3. The text of the Certificate of Incorporation as amended heretofore is
hereby restated without further amendment or change to read as herein set
forth:
<PAGE>
2
1. The name of the Corporation is Hardinge Inc.
2. The purposes for which it is to be formed are to acquire, buy,
purchase, lease or otherwise equip, maintain and operate a general machine
shop, to design and manufacture tools, machinery, boilers, engines and all
things made wholly or partly from metals, to do repairing, welding, brazing,
stamping and cutting and electrical work of all kinds, to engage in all kinds
of mechanical and electrical engineering and manufacturing business; to apply
for, acquire, buy, lease, sell, assign, pledge or otherwise acquire or
dispose of letters patent issued by the United States or by any foreign
country; and to acquire by purchase or otherwise, and to sell, assign, or
pledge or license territorial rights authorizing the manufacture of patent
articles, to acquire by purchase or otherwise licenses, privileges,
inventions, trade-marks and trade-names used in connection with any article
that this Corporation has the right to manufacture, buy or sell; and to grant
licenses under letters patent of the United States or any foreign country; to
purchase, lease or otherwise acquire and to sell, mortgage or lease real
property, whether improved or unimproved, or any interest therein, and to any
amount, in the State of New York, or any state or territory of the United
States or any foreign country; and to conduct and carry on its business or
any branch thereof in any state or territory of the United States or in any
foreign country, in conformity with the laws of said state, territory or
foreign country; and to have and maintain in any said state, territory or
foreign country a business office, plant or store; and to do and perform all
and everything which may be necessary, advisable or suitable and proper for
the conduct of the business of said Corporation and for the purpose of
carrying out the objects heretofore expressed, and to exercise all implied
powers and rights in the conduct of the business which the Corporation may
possess.
3. The total number of shares which the Corporation may henceforth have is
22,000,000, all of which are to have a par value of $0.01 each, which shares
shall be classified as follows:
2,000,000 shares of the par value of $0.01 each are to be Preferred Stock;
and
20,000,000 shares of the par value of $0.01 each are to be a single class
of common stock (the "Common Stock").
4. The relative voting, dividend, liquidation and other rights,
preferences and limitations of the shares of each class are as follows:
<PAGE>
3
I. The Preferred Stock may be issued from time to time in one or more
series, each such series to have the number of shares and designation, and
the shares of each such series to have such relative rights, preferences, or
limitations, as the Board of Directors, subject to the limitations prescribed
by law or provided herein, may from time to time fix, before issuance, by
delivering an appropriate certificate of amendment to the Department of State
pursuant to the Business Corporation Law of the State of New York. The
authority of the Board of Directors with respect to each series shall
include, but not be limited to, the fixing of the following:
(a) The number of shares to constitute the series and the distinctive
designation thereof;
(b) The dividend rate on the shares of the series; whether dividends
shall be cumulative; and, if so, from what date or dates;
(c) Whether or not the shares of the series shall be redeemable and,
if redeemable, the terms upon which the shares of the series may be
redeemed and the premium, if any, over and above the par value thereof
and any dividends accrued thereon which the shares of the series shall
be entitled to receive upon the redemption thereof;
(d) Whether or not the shares of the series shall be subject to the
operation of a retirement or sinking fund to be applied to the purchase
or redemption of such shares for retirement and, if such retirement or
sinking fund be established, the annual amount thereof and the terms and
provisions relative to the operation thereof;
(e) Whether or not the shares of the series shall be convertible into
shares of any class or classes of stock of the Corporation, with or
without par value, or of any other series of the same class and, if
convertible, the conversion price or prices or the rate at which such
conversion may be made and the method, if any, of adjusting the same;
(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
<PAGE>
4
junior to the shares of the series, and the restrictions, if any, on the
purchase or redemption of the shares of any such junior class;
(h) Whether the series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting
rights; and
(i) Any other relative rights, preferences and limitations of the
series.
II. Holders of shares of Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors, out of funds legally
available for the payment of dividends, dividends at the rates fixed by the
Board of Directors for the respective series, before any dividends shall be
declared and paid, or set apart for payment, on any other class of stock of
the Corporation ranking junior to the Preferred Stock either as to dividends
or assets, with respect to the same dividend period.
III. Whenever, at any time, dividends on the then outstanding Preferred
Stock as may be required by the terms of the certificate creating the series
representing the shares outstanding shall have been paid or declared and set
apart for payment on the then outstanding Preferred Stock and after complying
with all the provisions with respect to any retirement or sinking fund or
funds for any series of Preferred Stock, the Board of Directors may, subject
to the provisions of any certificate creating any series of Preferred Stock
with respect to the payment of dividends on any other class or classes of
stock, declare and pay dividends on the Common Stock, and the Preferred Stock
shall not be entitled to share therein.
IV. Upon any liquidation, dissolution or winding-up of the Corporation,
after payment, if any is required, shall have been made in full to the
Preferred Stock as provided in any certificate creating any series thereof,
but not prior thereto, the Common Stock shall, subject to the respective
terms and provisions, if any, of any such certificate, be entitled to receive
any and all assets remaining to be paid or distributed, and the Preferred
Stock shall not be entitled to share therein.
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
<PAGE>
5
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 A Preferred Stock. The designation and amount, relative
rights, preferences and limitations of the shares of Series A Preferred
Stock, par value $.01 per share, as fixed by the Board of Directors of the
Corporation, are as follows:
(1) Designation and Amount. The shares of such series shall be
designated as "Series A Preferred Stock" and the number of shares
constituting such series shall be 250,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors;
provided, however, that no decrease shall reduce the number of shares of
Series A Preferred Stock to a number less than that of the shares then
outstanding plus the number of shares issuable upon exercise of
outstanding rights, options, or warrants or upon conversion of
outstanding securities issued by the Company.
(2) Dividends and Distributions. (A) Subject to the prior and superior
rights of the holders of any shares of any other series of Preferred
Stock or any other shares of preferred stock of the Corporation ranking
prior and superior to the shares of Series A Preferred Stock with
respect to dividends, each holder of one one-hundredth (1/100) of a
share (a "Unit") of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for that purpose, (i) quarterly dividends payable in
cash on the last day of March, June, September, and December in each
year (each such date being a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of such Unit of Series A Preferred Stock, in an amount per Unit
(rounded to the nearest cent) equal to the greater of (a) $.01 or (b)
subject to the provision for adjustment hereinafter set forth, the
aggregate per share amount of all cash dividends declared on shares of
the Common Stock since the immediately preceding Quarterly
<PAGE>
6
Dividend Payment Date, or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of a Unit of Series A Preferred
Stock, and (ii) subject to the provision for adjustment hereinafter set
forth, quarterly distributions (payable in kind) on each Quarterly
Dividend Payment Date in an amount per Unit equal to the aggregate per
share amount of all non-cash dividends or other distributions (other
than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock, by reclassification or
otherwise) declared on shares of Common Stock since the immediately
preceding Quarterly Dividend Payment Date, or with respect to the first
Quarterly Dividend Payment Date, since the first issuance of a Unit of
Series A Preferred Stock. In the event that the Corporation shall at any
time after May 16, 1995 (the "Rights Declaration Date"} (i) declare any
dividend on outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide outstanding shares of Common Stock or (iii)
combine outstanding shares of Common Stock into a smaller number of
shares, then in each such case the amount to which the holder of a Unit
of Series A Preferred Stock was entitled immediately prior to such event
pursuant to the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which shall be the number of
shares of Common Stock that are outstanding immediately after such event
and the denominator of which shall be the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on Units
of Series A Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the shares
of Common Stock (other than a dividend payable in shares of Common
Stock); provided, however, that, in the event no dividend or
distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $.01 per Unit
on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and shall be cumulative on each
outstanding Unit of Series A Preferred Stock
<PAGE>
7
from the Quarterly Dividend Payment Date next preceding the date of
issuance of such Unit of Series A Preferred Stock, unless the date of
issuance of such Unit is prior to the record date for the first
Quarterly Dividend Payment Date, in which case, dividends on such Unit
shall begin to accrue from the date of issuance of such Unit, or unless
the date of issuance is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of Units of
Series A Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events
such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on Units of Series A Preferred Stock in an
amount less than the aggregate amount of all such dividends at the time
accrued and payable on such Units shall be allocated pro rata on a
unit-by-unit basis among all Units of Series A Preferred Stock at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of Units of Series A Preferred Stock entitled
to receive payment of a dividend or distribution declared thereon, which
record date shall be no more than 30 days prior to the date fixed for
the payment thereof.
(3) Voting Rights. The holders of Units of Series A Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each Unit of Series A Preferred Stock shall entitle the holder thereof
to one vote on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock or (iii) combine the outstanding
shares of Common Stock into a smaller number of shares, then in each
such case the number of votes per Unit to which holders of Units of
Series A Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the numerator
of which shall be the number of shares of Common Stock outstanding
immediately after such event and the denominator of which shall be the
number of
<PAGE>
8
shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein or by law, the holders of
Units of Series A Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Units of Series A Preferred
Stock shall be in arrears in an amount equal to six quarterly dividends
thereon, then during the period (a "default period") from the occurrence
of such event until such time as all accrued and unpaid dividends for
all previous quarterly dividend periods and for the current quarterly
dividend period on all Units of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment,
all holders of Units of Series A Preferred Stock, voting separately as a
class, shall have the right to elect two Directors.
(ii) During any default period, such voting rights of the holders of
Units of Series A Preferred Stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this Section 3(C) or at
any annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting rights nor any right of the
holders of Units of Series A Preferred Stock to increase, in certain cases,
the authorized number of Directors may be exercised at any meeting unless
one-third or more of the outstanding Units of Preferred Stock shall be
present at such meeting in person or by proxy. The absence of a quorum of
the holders of Common Stock shall not affect the exercise by the holders of
Units of Series A Preferred Stock of such rights. At any meeting at which
holders of Units of Series A Preferred Stock shall exercise such voting
rights initially during an existing default period, they shall have the
right, voting separately as a class, to elect Directors to fill up to two
vacancies in the Board of Directors, if any such vacancies may then exist,
or, if such right is exercised at an annual meeting, to elect two
Directors. If the number which may be so elected to fill vacancies at any
special meeting does not amount to the required number, proper provision
shall be made so that the
<PAGE>
9
number of Directors constituting the entire Board of Directors shall be
increased by that number of Directors necessary to permit the election
by the holders of the Series A Preferred Stock of the required number.
After the holders of Units of Series A Preferred Stock shall have
exercised their right to elect Directors during any default period, the
number of Directors shall not be increased or decreased except as
approved by a vote of the holders of Units of Series A Preferred Stock
as herein provided or pursuant to the rights of any equity securities
ranking senior to the Series A Preferred Stock.
(iii) Unless the holders of Series A Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than 25% of the total
number of the Units of Series A Preferred Stock outstanding may request,
the calling of a special meeting of the holders of Units of Series A
Preferred Stock, which meeting shall thereupon be called by the
Secretary of the Corporation. Notice of such meeting and of any annual
meeting at which holders of Units of Series A Preferred Stock are
entitled to vote pursuant to this paragraph (C)(iii) shall be given to
each holder of record of Units of Series A Preferred Stock by mailing a
copy of such notice to him at his last address as the same appears on
the books of the Corporation. Such meeting shall be called for a time
not earlier than 20 days and not later then 60 days after such order or
request or in default of the calling of such meeting within 60 days
after such order or request, such meeting may be called on similar
notice by any stockholder or stockholders owning in the aggregate not
less than 25% of the total number of outstanding Units of Series A
Preferred Stock. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the 60 days
immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) During any default period, the holders of shares of Common Stock
and Units of Series A Preferred Stock, and other classes or series of
stock of the Corporation, if applicable, shall continue to be entitled
to elect all the Directors until holders of the Units of Series A
Preferred Stock shall have exercised their right to elect two Directors
voting as a separate
<PAGE>
10
class, after the exercise of which right (x) the Directors so elected by
the holders of Units of Series A Preferred Stock shall continue in
office until their successors shall have been elected by such holders or
until the expiration of the default period, and (y) any vacancy in the
Board of Directors may (except as provided in paragraph (C)(ii) of this
Section 3) be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class of capital stock which
elected the Director whose office shall have become vacant. References
in this paragraph (C) to Directors elected by the holders of a
particular class of capital stock shall include Directors elected by
such Directors to fill vacancies as provided in clause (y) of the
foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Units of Series A Preferred Stock as a separate
class to elect Directors shall cease, (y) the term of any Directors
elected by the holders of Units of Series A Preferred Stock as a
separate class shall terminate, and (z) the number of Directors shall be
such number as may be provided for in the Certificate or by-laws
irrespective of any increase made pursuant to the provisions of
paragraph (C)(ii) of this Section 3 (such number being subject, however,
to change thereafter in any manner provided by law or in the Certificate
or by-laws). Any vacancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding sentence may be
filled by a majority of the remaining Directors.
(vi) The provisions of this paragraph (C) shall govern the election
of Directors by holders of Units of Preferred Stock during any default
period notwithstanding any provisions of the Certificate to the
contrary.
(D) Except as set forth herein, holders of Units of Series A
Preferred Stock shall have no special voting rights and their consents
shall not be required (except to the extent they are entitled to vote
with holders of shares of Common Stock as set forth herein) for taking
any corporate action.
(4) Certain Restrictions. (A) Whenever quarterly dividends or other
dividends or distributions payable on Units of Series A Preferred Stock
as provided in Section 2 are in arrears,
<PAGE>
11
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on outstanding Units of Series A Preferred
Stock shall have been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
junior stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of parity stock, except dividends paid ratably on Units of
Series A Preferred Stock and shares of all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts
to which the holders of such Units and all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any parity stock, provided, however, that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any junior stock;
(iv) purchase or otherwise acquire for consideration any Units of
Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of
Directors) to all holders of such Units.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
(5) Reacquired Shares. Any Units of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such Units shall, upon their cancellation, become
authorized but unissued Units of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by resolution or
<PAGE>
12
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
(6) Liquidation, Dissolution or Winding Up. (A) Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (i) to the holders of shares of junior stock
unless the holders of Units of Series A Preferred Stock shall have
received, subject to adjustment as hereinafter provided in paragraph (B),
the greater of either (a) $.01 per Unit plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, or (b) the amount equal to the
aggregate per share amount to be distributed to holders of shares of Common
Stock, or (ii) to the holders of shares of parity stock, unless
simultaneously therewith distributions are made ratably on Units of Series
A Preferred Stock and all other shares of such parity stock in proportion
to the total amounts to which the holders of Units of Series A Preferred
Stock are entitled under clause (i)(a) of this sentence and to which the
holders of shares of such parity stock are entitled, in each case upon such
liquidation, dissolution or winding up.
(B) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on outstanding shares of
Common Stock payable in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock, or (iii) combine outstanding shares
of Common Stock into a smaller number of shares, then in each such case
the aggregate amount to which holders of Units of Series A Preferred
Stock were entitled immediately prior to such event pursuant to clause
(i)(b) of paragraph (A) of this Section 6 shall be adjusted by
multiplying such amount by a fraction the numerator of which shall be
the number of shares of Common Stock that are outstanding immediately
after such event and the denominator of which shall be the number of
shares of Common Stock that were outstanding immediately prior to such
event.
(7) Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in
which the shares of common stock are exchanged for or converted into
other stock or
<PAGE>
13
securities, cash and/or any other property, then in any such case Units
of Series A Preferred Stock shall at the same time be similarly
exchanged for or converted into an amount per Unit (subject to the
provision for adjustment hereinafter set forth) equal to the aggregate
amount of stock, securities, cash and/or any other property (payable in
kind), as the case may be, into which or for which each share of Common
Stock is converted or exchanged. In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare any dividend on
outstanding shares of Common Stock payable in shares of Common Stock,
(ii) subdivide outstanding shares of Common Stock, or (iii) combine
outstanding Common Stock into a smaller number of shares, then in each
such case the amount set forth in the immediately preceding sentence
with respect to the exchange or conversion of Units of Series A
Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which shall be the number of shares of Common
Stock that are outstanding immediately after such event and the
denominator of which shall be the number of shares of Common Stock that
were outstanding immediately prior to such event.
(8) Redemption. The Units of Series A Preferred Stock shall not be
redeemable.
(9) Ranking. The Units of Series A Preferred Stock shall rank junior
to all other series of the Preferred Stock and to any other class of
preferred stock that hereinafter may be issued by the Corporation as to
the payment of dividends and the distribution of assets, unless the
terms of any such series or class shall provide otherwise.
(10) Amendment. The Certificate, including, without limitation, this
resolution, shall not hereafter be amended, either directly or
indirectly, or through merger or consolidation with another corporation
in any manner that would alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of a majority or
more of the outstanding Units of Series A Preferred Stock, voting
separately as a class.
<PAGE>
14
(11) Fractional Shares. The Series A Preferred Stock may be issued in
Units or other fractions of a share, which Units or fractions shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions
and to have the benefit of all other rights of holders of Series A
Preferred Stock.
(12) Certain Definitions. As used herein with respect to the Series A
Preferred Stock, the following terms shall have the following meanings:
(A) The term "Common Stock" shall mean the class of stock designated
as the Series Common Stock, par value $.01 per share, of the Corporation
at the date hereof or any other class of stock resulting from successive
changes or reclassification of the common stock.
(B) The term "junior stock" (i) as used in Section 4 shall mean the
Common Stock and any other class or series of capital stock of the
Corporation hereafter authorized or issued over which the Series A
Preferred Stock has preference or priority as to the payment of
dividends and (ii) as used in Section 6, shall mean the Common Stock and
any other class or series of capital stock of the Corporation over which
the Series A Preferred Stock has preference or priority in the
distribution of assets on any liquidation, dissolution or winding up of
the Corporation.
(C) The term "parity stock" (i) as used in Section 4, shall mean any
class or series of stock of the Corporation hereafter authorized or
issued ranking pari passu with the Series A Preferred Stock as to
dividends and (ii) as used in Section 6, shall mean any class or series
of capital stock ranking pari passu with the Series A Preferred Stock in
the distribution of assets on any liquidation, dissolution or winding
up.
5. The office of the Corporation shall be located in the County of
Chemung, New York, and the address to which the Secretary of State shall mail
a copy of process in any action or proceeding against the Corporation, which
may be served upon him, is P.O. Box 1507, Elmira, New York 14902.
6. The duration of the Corporation shall be perpetual.
<PAGE>
15
7. Subject to the other provisions of this Certificate of
Incorporation, the business of the Corporation shall be managed under the
direction of its Board of Directors. The number of Directors constituting the
Board shall be nine subject to increase or decrease from time to time as
provided in the By-laws of the Corporation. The By-laws may be amended only
by the affirmative vote of at least 75% of the entire Board of Directors or
by the affirmative vote of the holders of at least 75% of the outstanding
shares of stock of the Corporation entitled to vote generally in the election
of directors, voting together as a single class. The Directors shall be
classified, with respect to the period for which they shall severally hold
office into three classes as nearly equal in number as possible each holding
office, subject to the transitional provisions described below, for a period
expiring at the third annual meeting of stockholders following the first
annual meeting of stockholders of the Corporation at which Directors of such
class have been elected. For transitional purposes the Directorships held by
the 9 Directors holding office following the 1995 Annual Meeting shall be
classified as follows:
<TABLE>
<CAPTION>
<S> <C>
Class I Directorships.- Messrs. Agan, Cole and Gibson will be
considered to hold Class I Directorships.
The Class I Directorships held by Messrs.
Agan and Cole will expire at the Annual
Meeting of Stockholders in 1996 and 1998
and at the Annual Meetings held every
third year thereafter and the Class I
Directorship held by Mr. Gibson will
expire at the Annual Meeting of
Stockholders in 1995, 1997 and 1998 and at
the Annual Meetings held in every third
year thereafter;
Class II Directorships.- Dr. Menger and Messrs. Powers and Hunter
will be considered to hold Class II
Directorships. The Class II Directorships
held by Dr. Menger and Mr. Hunter will
expire at the Annual Meeting of
Stockholders in 1995, 1997 and 1999 and at
the Annual Meetings held in every third
year thereafter and the Class II
Directorship held by Mr. Powers will
expire at the Annual Meeting of
Stockholders held in 1996, 1997 and 1999
and at the Annual Meetings held in every
third year thereafter; and
<PAGE>
16
Class III Messrs. Bennett, Flynn and Greenlee will
Directorships.- be considered to hold Class III
Directorships. The Class III Directorships
held by Messrs. Bennett and Flynn will
expire at the Annual Meeting of
Stockholders in 1995 and 1997 and at the
Annual Meetings of Stockholders held in
every third year thereafter and the Class
III Directorship held by Mr. Greenlee will
expire at the Annual Meeting of
Stockholders held in 1996 and 1997 and at
the Annual Meetings held in every third
year thereafter.
</TABLE>
Newly created Directorships resulting from any increase in the number of
directors and any vacancies on the Board of Directors resulting from death,
resignation, retirement, disqualification, removal or other cause shall be
filled only by the affirmative vote of a majority of the remaining Directors
then in office, even though less than a quorum of the Board of Directors. Any
Director elected in accordance with the preceding sentence shall hold office
until the next meeting of stockholders at which the election of Directors is in
the regular order of business and until such Director's successor shall have
been elected and qualified. No decrease in the number of directors constituting
the Board of Directors or change in the restrictions and qualifications for
Directors shall shorten the term of any incumbent director.
Any Director, an entire class of Directors or the entire Board of
Directors may be removed from office, only for cause, and only by the
affirmative vote of the holders of at least 75% of the outstanding shares of
stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class.
Notwithstanding anything contained in this Certificate of Incorporation
to the contrary, the affirmative vote of the holders of at least 75% of the
outstanding shares of stock of the Corporation entitled to vote generally in
the election of directors, voting together as a single class, shall be
required to alter, amend, or adopt any provision inconsistent with or to
repeal this Article 7, provided, however, that the vote of only a majority of
the outstanding shares of stock of the Corporation entitled to vote generally
in the election of directors voting together as a single class shall be
<PAGE>
17
required if such alteration, amendment, inconsistent provision or repeal
was approved by at least 75% of the entire Board of Directors.
8. The Secretary of State is designated as the agent of the Corporation
upon whom process in any action or proceeding against it may be served.
9. Business Combinations.
9.1 For the purposes of this Article 9:
1. The term "beneficial owner" and correlative terms shall have the
meaning as set forth in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended, or any similar successor Rule. Without
limitation and in addition to the foregoing, any shares of Voting
Stock of this Corporation which any Major Stockholder has the right
to vote or to acquire (i) pursuant to any agreement, (ii) by reason
of tenders of shares by stockholders of the Corporation in
connection with or pursuant to a tender offer made by such Major
Stockholder (whether or not any tenders have been accepted, but
excluding tenders which have been rejected), or (iii) upon the
exercise of conversion rights, warrants, options or otherwise, shall
be deemed "beneficially owned" by such Major Stockholder.
2. The term "Business Combination" shall mean:
a. any merger or consolidation (whether in a single transaction or a
series of related transactions, including a series of separate
transactions with a Major Stockholder, any Affiliate or Associate
thereof or any Person acting in concert therewith) of this
Corporation or of a Major Stockholder into this Corporation or a
Subsidiary;
b. any sale, lease, exchange, transfer, distribution or other
disposition, including without limitation, a mortgage, pledge or
any other security device, to or with a Major Stockholder by the
Corporation or any of its Subsidiaries (in a single transaction or
a series of related transactions) of all,
<PAGE>
18
substantially all or any Substantial Part of the assets of this
Corporation or a Subsidiary (including, without limitation, any
securities of a Subsidiary);
c. the purchase, exchange, lease or other acquisition by the
Corporation or any of its Subsidiaries (in a single transaction or a
series of related transactions) of all, substantially all or any
Substantial Part of the assets or business of a Major Stockholder;
d. the issuance of any securities, or of any rights, warrants or
options to acquire any securities, of this Corporation or a
Subsidiary to a Major Stockholder or the acquisition by this
Corporation or a Subsidiary of any securities, or of any rights,
warrants or options to acquire any securities, of a Major
Stockholder;
e. any reclassification of Voting Stock, recapitalization or other
transaction (other than a redemption in accordance with the terms
of the security redeemed) which has the effect, directly or
indirectly, of increasing the proportionate amount of Voting Stock
of the Corporation or any Subsidiary thereof which is beneficially
owned by a Major Stockholder;
f. Any plan or proposal for any partial or complete liquidation, spin
off, split off or split up of the Corporation or any Subsidiary
thereof proposed directly or indirectly by or on behalf of a Major
Stockholder; and
g. any agreement, contract or other arrangement providing for any of
the transactions described herein.
3. The term "Continuing Director" shall mean (i) a person who was a
member of the Board of Directors of this Corporation immediately
prior to the time that any then existing Major
<PAGE>
19
Stockholder became a Major Stockholder or (ii) a person elected to
the Board of Directors at the 1986 Annual Meeting of stockholders or
(iii) a person designated (before initially becoming a director) as
a Continuing Director by a majority of the then Continuing
Directors. All references to a vote of the Continuing Directors
shall mean a vote of the total number of Continuing Directors of the
Corporation.
4. The term "Major Stockholder" shall mean any Person which, together
with its "Affiliates" and "Associates" (as defined in Rule 12b-2 of
the Securities Exchange Act of 1934, as amended, or any similar
successor Rule) and any Person acting in concert therewith, is the
beneficial owner of 10% or more of the votes held by the holders of
the outstanding shares of the Voting Stock of this Corporation, and
any Affiliate or Associate of a Major Stockholder, including a
Person acting in concert therewith. The term "Major Stockholder"
shall not include a Subsidiary of this Corporation, nor a Person who
was a Major Stockholder on May 20, 1986.
5. The term "Person" shall mean any individual, corporation,
partnership or other person, group or entity (other than the
Corporation, any Subsidiary of the Corporation or a trustee holding
stock for the benefit of employees of the Corporation or its
Subsidiaries, or any of them, pursuant to one or more employee
benefit plans or arrangements). When two or more Persons act as a
partnership, limited partnership, syndicate, association or other
group for the purpose of acquiring, holding or disposing of shares
of stock, such partnerships, syndicate, association or group will be
deemed a "Person".
6. The term "Subsidiary" shall mean any business entity 50% or more of
which is beneficially owned by the Corporation.
7. The term "Substantial Part", as used in reference to the assets of
the Corporation, of any Subsidiary or of any Major Stockholder means
assets having a value of more than 10% of the total consolidated
assets of the Corporation and its Subsidiaries as of the end of the
Corporation's most recent fiscal year ending prior to the time the
determination is made.
<PAGE>
20
8. The term "Voting Stock", shall mean the Common Stock and any other
securities entitled to vote upon any action to be taken in
connection with any Business Combination including stock or other
securities convertible into Voting Stock.
9.2 Notwithstanding any other provisions of these Articles of
Incorporation and except as set forth in 9.3 of this Article 9, neither the
Corporation nor any Subsidiary shall be party to a Business Combination
unless the Business Combination was approved by at least 75% of the
outstanding Voting Stock of this Corporation and by at least 75% of the
outstanding Voting Stock beneficially owned by stockholders other than any
Major Stockholder, provided, however, that such 75% vote of the outstanding
stockholders and such 75% vote of the stockholders other than the Major
Stockholder shall not be required and such Business Combination shall only
require such affirmative vote, if any, of the stockholders as is required by
law and any other provision of this Certificate of Incorporation, if
1. The Business Combination was approved by the Board of Directors of
the Corporation prior to the Major Stockholder involved in the
Business Combination becoming a Major Stockholder; or
2. The Major Stockholder involved in the Business Combination sought
and obtained the unanimous prior approval of the Board of
Directors to become a Major Stockholder and the Business
Combination was approved by a majority of the Continuing
Directors; or
3. The Business Combination was approved by at least 75% of the
Continuing Directors of the Corporation.
9.3 During the time a Major Stockholder exists, a resolution to
voluntarily dissolve the Corporation shall be adopted only upon the vote by at
least 75% of the outstanding Voting Stock of this Corporation and by at least
75% of the outstanding Voting Stock beneficially owned by stockholders other
than any Major Stockholder, provided, however, that such 75% vote of the
outstanding stockholders and such 75% vote of the stockholders other than the
Major Stockholder shall not be required and such Business Combination shall
require only such affirmative vote, if any, of the stockholders as is
required by law and any other provision of this Certificate of Incorporation
if such dissolution was approved by the vote of at least 75% of the
Continuing Directors of the Corporation.
<PAGE>
21
9.4 The Board of Directors of the Corporation, when evaluating a Business
Combination or the dissolution of the Corporation, shall give due consideration
to all relevant factors, including without limitation the social and economic
effects of such action or transaction upon the Corporation, its stockholders,
employees, customers, vendors, suppliers and other constituencies, and on the
communities in which the Corporation operates or is located.
9.5 As to any particular transaction, the Continuing Directors shall
have the power and duty to determine, on the basis of information known to
them:
1. The amount of Voting Stock beneficially held by any Person;
2. Whether a Person is an Affiliate or Associate of another;
3. Whether a Person is acting in concert with another;
4. Whether the assets subject to any Business Combination constitute
a "Substantial Part" as herein defined;
5. Whether a proposed transaction is subject to the provisions of
this Article 9; and
6. Any other matters with respect to which a determination is
required under this Article 9.
Any such determination shall be conclusive and binding for all purposes
of this Article 9.
9.6 The affirmative vote of the Board of Directors, the Continuing
Directors, or the Voting Stock required by this Article 9 is in addition to
the vote otherwise required by law or this Certificate of Incorporation.
9.7 Any amendment, change or repeal of this Article 9 or any other
amendment of this Certificate of Incorporation which would have the effect of
modifying or permitting circumvention of the provisions of this Article 9
shall require approval by at least 75% of the outstanding voting Stock of the
<PAGE>
22
Corporation and at least 75% of the outstanding Voting Stock beneficially
owned by stockholders other than any Major Stockholder, provided, however,
that such 75% vote of the outstanding stockholders and such 75% vote of the
stockholders other than the Major Stockholder shall not be required and such
Business Combination shall only require such affirmative vote, if any, of the
stockholders as is required by law and any other provision of this
Certificate of Incorporation if such amendment, change, repeal or other
amendment was approved by the vote of at least 75% of the Continuing
Directors of the Corporation.
9.8 The requirements and restrictions of this Article 9 relating to
Business Combinations are in addition to the requirements and restrictions of
Section 912 of the Business Corporation Law relating to Business Combinations
but shall not limit any requirements or restrictions of said Section 912
relating to Business Combinations.
10. The provisions of Section 912 of the Business Corporation Law shall
apply to this Corporation.
11. Liability of Directors. A director of the Corporation shall not be
liable to the Corporation or its stockholders for damages for any breach of
duty as a director, except to the extent that such exemption from liability
or limitation thereof is not permitted under the Business Corporation Law as
the same exists or may hereafter be amended. Any repeal or modification of
this Article 11 by the stockholders of the Corporation shall not affect
adversely any right or protection of a director of the Corporation existing
at the time of such repeal or modification.
4. This restatement of the Certificate of Incorporation was authorized
by the Board of Directors.
IN WITNESS WHEREOF, we have signed this Restated Certificate of
Incorporation on the 22 day of May, 1995.
/s/ Robert E. Agan
Robert E. Agan,
President and Chief Executive Officer
of Hardinge Inc.
<PAGE>
/s/ J. Philip Hunter
J. Philip Hunter,
Secretary of Hardinge Inc.
<PAGE>
State of New York, )
: ss.
County of Chemung. )
On this 22 day of May, 1995, before me personally came Robert E. Agan
and J. Philip Hunter, to me known, and known to me to be the persons
described in and who executed the foregoing Restated Certificate of
Incorporation, and they thereupon severally duly acknowledged to me that they
executed the same.
/s/ Joy L. Bliler
Notary Public
JOY L. BLILER
Notary Public in the State of New York
CHEMUNG COUNTY #4962075
Commission Expires February 12, 1996
State of New York, )
: ss.
County of Chemung. )
Robert E. Agan and J. Philip Hunter, being duly sworn, depose and say
that each for himself deposes and says: That he, Robert E. Agan, is the
President and Chief Executive Officer of Hardinge Inc. and he, J. Philip
Hunter, is the Secretary thereof; that he was duly authorized to execute and
file the foregoing Restated Certificate of Incorporation by the authorization
of the Board of Directors of Hardinge Inc., at a Directors' meeting held at
One Hardinge Drive in the Town of Horseheads, New York, on the 16th day of
May, 1995, at 4:00 P.M.
/s/ Robert E. Agan
Robert E. Agan, President and Chief
Executive Officer
/s/ J. Philip Hunter
J. Philip Hunter, Secretary
Subscribed and sworn to before
me this 22 day of May, 1995.
/s/ Joy L. Bliler
Notary Public
JOY L. BLILER
Notary Public in the State of New York
CHEMUNG COUNTY #4962075
Commission Expires February 12, 1996
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
HARDINGE INC
UNDER SECTION 807 OF THE
BUSINESS CORPORATION LAW
SHEARMAN & STERLING
599 LEXINGTON AVE
NY, NY 10022
HARDINGE INC. AND SUBSIDARIES
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMXTION EXTRACTED FROM THE COMPANY'S
UNAUDITED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-END> Jun-30-1995
<CASH> 18,489
<SECURITIES> 0
<RECEIVABLES> 42,068
<ALLOWANCES> 0
<INVENTORY> 59,512
<CURRENT-ASSETS> 113,267
<PP&E> 78,636
<DEPRECIATION> 47,673
<TOTAL-ASSETS> 155,753
<CURRENT-LIABILITIES> 17,744
<BONDS> 3,738
<COMMON> 65
0
0
<OTHER-SE> 128,091
<TOTAL-LIABILITY-AND-EQUITY> 155,753
<SALES> 82,188
<TOTAL-REVENUES> 82,188
<CGS> 54,068
<TOTAL-COSTS> 16,821
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 973
<INCOME-PRETAX> 10,948
<INCOME-TAX> 4,369
<INCOME-CONTINUING> 6,579
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,579
<EPS-PRIMARY> 1.67
<EPS-DILUTED> 1.67
</TABLE>
