SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Hardinge Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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<PAGE>
Hardinge Logo
ESTABlISHED 1890
HARDINGE INC.
CORPORATE OFFICES AND MANUFACTURING FACILITY
Elmira, NY
-----------------
Notice of 1996 Annual Meeting
and Proxy Statement
-----------------
Dear Stockholder:
The directors and officers of your Company are pleased to invite you to
attend the annual meeting of Hardinge's stockholders, which will be held at
the Samuel L. Clemens Performing Arts Center, Clemens Center Parkway, Elmira,
New York, on Tuesday, April 23, 1996, at 3:00 P.M.
At the meeting, we will (1) elect two Class I directors and one Class III
director, (2) vote on a proposal to adopt the Hardinge Inc. 1996 Incentive
Stock Plan and (3) vote on a proposal to ratify the appointment of Ernst &
Young LLP as the Company's independent public accountants, each as described
in the formal notice of the meeting and Proxy Statement appearing on the
following pages. We also will report on the progress of Hardinge and comment
on matters of current interest. Stockholders will have an opportunity to
comment or ask questions.
Your vote is important. Whether or not you expect to attend the meeting
and regardless of the number of shares you own, please be sure to fill in,
sign and return the enclosed proxy. A prompt return of your proxy will be
appreciated.
Sincerely,
(Signature of Robert E. Agan)
Robert E. Agan
Chairman of the Board,
President and Chief Executive Officer
Main Office--One Hardinge Drive, Elmira, NY 14902-1507
Telephone: (607) 734-2281
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<PAGE>
HARDINGE INC.
Corporate Offices and Manufacturing Facility
Elmira, NY
-------------
To the Stockholders of
Hardinge Inc.
-------------
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of the Stockholders of
HARDINGE INC. will be held at the Samuel L. Clemens Performing Arts Center,
Clemens Center Parkway, Elmira, New York, on Tuesday, April 23, 1996, at 3:00
P.M., for the following purposes:
(1) To elect two Class I directors and one Class III director to the
Board of Directors;
(2) To consider a proposal to adopt the Hardinge Inc. 1996 Incentive
Stock Plan;
(3) To consider ratification of the appointment of Ernst & Young LLP as
the Company's independent public accountants for the fiscal year ending
December 31, 1996; and
(4) To consider and transact such other business as may properly come
before the meeting or any adjournment thereof.
The close of business on March 11, 1996 has been fixed as the record date
for the determination of the stockholders entitled to notice of and to vote
at the meeting.
By Order of the Board of Directors,
J. PHILIP HUNTER,
Secretary
Dated: March 15, 1996
Elmira, New York
<PAGE>
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<PAGE>
HARDINGE INC.
Corporate Offices and Manufacturing Facility
Elmira, NY
-------------------
Proxy Statement
-------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors for use at the Annual Meeting of
Stockholders (the "Annual Meeting") of Hardinge Inc. (the "Company") to be
held on Tuesday, April 23, 1996, at 3:00 P.M., at the Samuel L. Clemens
Performing Arts Center, Clemens Center Parkway, Elmira, New York. This Proxy
Statement and the accompanying Proxy and Notice of Annual Meeting of
Stockholders are being mailed to stockholders on or about March 15, 1996. A
stockholder granting a proxy has the right to revoke it by a duly executed
proxy bearing a later date, by attending the Annual Meeting and voting in
person, or by otherwise notifying the Secretary of the Company in writing
prior to the Annual Meeting.
When your proxy card is returned properly signed, the shares represented
will be voted in accordance with your directions. You can specify your
choices by marking the appropriate boxes on the enclosed proxy card. If your
proxy card is signed and returned without specifying choices, the shares will
be voted as recommended by the directors. Abstentions are voted neither "for"
nor "against," but are counted in the determination of a quorum. If you wish
to give your proxy to someone other than those individuals designated on the
enclosed proxy card, all three names appearing on the proxy card must be
crossed out and the name of another person or persons (not more than three)
inserted. The signed card must be presented at the meeting by the person or
persons representing you.
As a matter of policy, proxies, ballots and voting tabulations that
identify individual shareholders are kept private by the Company. Such
documents are available for examination only by the inspectors of election
and certain personnel associated with processing proxy cards and tabulating
the vote. The vote of any shareholder is not disclosed except as may be
necessary to meet legal requirements.
Shares allocated to the accounts of participants in the Hardinge Inc.
Savings Plan may be voted through separate participant direction cards that
have been mailed to participants in the Plan along with this Proxy Statement.
If a participant also owns shares outside this plan, the participant must
return both the proxy card and the participant direction card. The trustee of
this Plan will vote the number of shares allocated to a participant's account
or accounts under such plan in accordance with the directions on the
participant direction card. Shares for which the trustee receives no
instructions will be voted by the trustee in the same proportion as shares
for which voting instructions have been received.
Only stockholders of record at the close of business on March 11, 1996 are
entitled to receive notice of and to vote at the Annual Meeting. As of March
11, 1996, there were 6,471,388 shares of Common Stock outstanding and
entitled to vote. Each share of Common Stock is entitled to one vote. There
are no cumulative voting rights. Nominees for director will be elected by a
plurality of votes cast at the Annual Meeting by holders of Common Stock
present in person or by proxy and entitled to vote on such election. The
adoption of the Hardinge Inc. Incentive Stock Plan requires the affirmative
vote of a majority of the outstanding shares of Common Stock entitled to vote
at the Annual Meeting. Any other matter requires the affirmative vote of a
majority of the votes cast at the meeting, except as otherwise provided in
the Certificate or By-laws. Only shares affirmatively voted in favor of a
nominee will be counted toward the achievement of a plurality. Votes withheld
(including broker non-votes) and abstentions are counted as present for the
purpose of determining a quorum but are not counted as votes cast.
ACTION TO BE TAKEN UNDER THE PROXY
It is proposed that at the Annual Meeting action will be taken on the
matters set forth in the accompanying Notice of Annual Meeting of Stockholders
and described in this Proxy Statement. The Board of Directors does not know of
any other business to be brought before the Annual Meeting, but it is intended
that, as to any such
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other business, a vote may be cast pursuant to the Proxy in accordance with the
judgment of the person or persons acting thereunder; and should any herein-named
nominee for the office of director become unable to accept nomination or
election, which is not anticipated, it is intended that the persons acting under
the Proxy will vote for the election in the stead of such nominee of such other
person as the Board of Directors may recommend.
NOMINEES FOR ELECTION AS DIRECTORS
The Company's Board of Directors is divided into three classes. Nominees
Robert E. Agan and Richard J. Cole are Class I directors and if elected at the
Annual Meeting will serve a term of two years expiring at the 1998 Annual
Meeting of Stockholders or when their respective successors have been duly
elected and qualified. Nominee Douglas A. Greenlee is a Class III director and
if elected at the Annual Meeting will serve a term of one year expiring at the
1997 Annual Meeting of Stockholders or when his successor has been duly elected
and qualified. Mr. Whitney S. Powers, a Class II director, has reached the
mandatory retirement age for retirement and will retire from the Company's Board
at the conclusion of the Annual Meeting.
The following table sets forth with respect to each nominee for director
and each director continuing in office such person's length of service as a
director, age, principal occupation during the past five years, other positions
such person holds with the Company, if any, and any other directorships such
person holds in companies with securities registered pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES.
<TABLE>
<CAPTION>
Principal Occupations During Past 5 Years; Length of Service
Other Positions Held with the Company; as Director and
Name and Age Other Directorships of Publicly Traded Companies Expiration of Term
------------ ------------------------------------------------ ------------------
<S> <C> <C>
Nominees for
Class I Directors:
Robert E. Agan ......... Chairman of the Board, President and Chief Executive Officer Since 1980
(Age 57) of the Company; Director, Chemung Financial Corporation. Expires 1996
Richard J. Cole ........ Vice President, Meritus Consulting Services, a management Since 1991
(Age 64) consulting firm; formerly, Division Vice President, IBM Expires 1996
Corporation, manufacturer of information equipment.
Nominee for
Class III Director:
Douglas A. Greenlee .. Vice President of the Company since 1993, Secretary of Since 1979
(Age 48) the Company in 1992; formerly, attorney, Hazel & Thomas, Expires 1996
P.C., law firm.
Continuing in Service
Class I Director:
E. Martin Gibson ...... Retired December 1994 as Chairman and Chief Executive Since 1981
(Age 58) Officer, Corning Lab Services, Inc., provider of clinical Expires 1997
laboratory services, a subsidiary of Corning Incorporated,
and as a Director, Corning Incorporated. Currently Director,
Novacare, Inc., provider of healthcare services; Chairman
of the Board of Directors, International Technology Corp.,
provider of environmental services.
Class II Directors:
J. Philip Hunter ...... Partner, Sayles, Evans, Brayton, Palmer Since 1992
(Age 53) & Tifft, law firm; Secretary of the Company. Expires 1997
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Principal Occupations During Past 5 Years; Length of Service
Other Positions Held with the Company; as Director and
Name and Age Other Directorships of Publicly Traded Companies Expiration of Term
------------ ------------------------------------------------ -------------------
<S> <C> <C>
Dr. Eve L. Menger ...... Director of Characterization Science, Corning Since 1995
(Age 53) Incorporated; formerly, Vice Provost for University- Expires 1995
Industry Relations and Professor of Chemistry, University
of Virginia.
Class III Directors:
John W. Bennett......... Chairman of the Board and Chief Executive Officer and Since 1993
(Age 62) Director, Chemung Financial Corporation, a bank holding Expires 1997
company; prior to 1992, President, same corporation.
James L. Flynn .......... Retired since March 1994. Prior to that date, Senior Vice Since 1984
(Age 61) President--Investment Services, Corning Incorporated, Expires 1997
manufacturer of specialty glass and ceramic products and
provider of clinical laboratory services.
</TABLE>
PROPOSAL TO ADOPT THE HARDINGE INC.
1996 INCENTIVE STOCK PLAN
The 1996 Incentive Stock Plan (the "Plan"), attached hereto as Appendix A,
provides for the granting of stock options, stock appreciation rights,
restricted stock incentives and performance share incentives (collectively,
"Incentives") payable in Common Stock or cash, or a combination of shares and
cash, to Company employees and directors. The Plan will become effective on
April 23, 1996 if adopted by the Company's stockholders at the Annual Meeting
and shall terminate on April 22, 2006, but awards made prior thereto may
extend beyond that date. The purpose of the Plan is to enhance the
profitability and value of the Company for the benefit of its shareholders by
providing stock awards to attract, retain and motivate officers, directors
and other key employees who make important contributions to the success of
the Company. The Plan will be administered by the Incentive Compensation
Committee of the Board of Directors (the "Committee"). Terms and conditions
of awards will be set forth in written agreements. The Plan provides that
300,000 shares of Common Stock will be available for the granting of awards
under the Plan, limited in each calendar year commencing with 1996 to 1% of
the Company's outstanding stock-- 63,500 shares for 1996. The number of
shares subject to an outstanding stock option shall be reduced on a
one-to-one basis to the extent that any related SAR is executed and such
shares shall not again become available for issuance pursuant to the Plan.
The closing price of the Common Stock on March 1, 1996 was $26.50.
Any employee of the Company or any of its subsidiaries will be eligible
for any award under the Plan if selected by the Committee. Subject to the
provisions of the Plan, the Committee will have full authority and discretion
to determine the employees to whom awards will be granted and the amount and
form of such awards. There are approximately 1,350 persons employed by the
Company and its subsidiaries who would be eligible for selection for
participation by the Committee. No determination has been made by the
Committee with respect to the specific employees who will be recipients or
the amount or nature of any future awards under the Plan. The aggregate
number of shares in respect of which Incentives may be granted in any
calendar year to recipients under the Plan will not exceed 1% of the
Company's outstanding shares of Common Stock on the first business day of
that calendar year. The maximum number of shares in respect of which
Incentives may be granted during the term of the Plan to an individual
recipient will be 75,000.
Under the Plan, the Committee will be authorized to grant stock options
that qualify as "Incentive Stock Options" ("ISOs") under Section 422 of the
Internal Revenue Code (the "Code"), and to grant stock options that do not so
qualify. No stock option can be granted at an option price less than the fair
market value of the Common Stock at the time of grant. No stock option can be
exercised more than ten years after the date such option is granted. In the
case of Incentive Stock Options, the aggregate fair market value of the
Common Stock with respect to which options are exercisable for the first time
by any recipient during any calendar year cannot, under present tax rules,
exceed $100,000. The Committee will be authorized to issue, with limitations,
reload options upon exercise of stock options.
3
<PAGE>
The Committee will also be authorized to grant eligible employees other
Incentives, including stock appreciation rights, restricted stock incentives
and performance share incentives under such terms and conditions as the
Committee may prescribe. The Committee will establish performance goals in
respect of any performance share incentives, which goals may include earnings
per share, return on stockholders' equity, return on assets, net income,
Company earnings performance compared to its domestic competition or any
other financial or other measurement. The shares of Common Stock which may be
granted pursuant to a restricted stock incentive will be restricted and will
not be able to be sold, pledged, transferred or otherwise disposed of until
such restrictions lapse. Incentives and shares of Common Stock issued
pursuant to restricted stock incentives will be issued for no monetary
consideration.
Commencing with the Annual Meeting, outside directors of the Company shall
be granted options in respect of 500 shares of the Company's Common Stock as
of the close of the annual meeting at which such director is elected or
following which such director shall continue to serve as a director. The
options granted to outside directors will have a term of ten years and an
exercise price equal to 100% of the fair market value of the Company's Common
Stock on the date the options are granted. The Committee shall have no
authority regarding the granting of options to outside directors.
Appropriate adjustments will be made to the number of shares available for
awards and the terms of outstanding awards under the plan to reflect any
extraordinary dividend, reorganization, recapitalization, stock dividend,
stock split-up, change in par or no par value, combination of shares, merger,
consolidation, sale of all or substantially all of the assets of the Company,
warrant or rights offering or combination, exchange or reclassification of
Common Stock or any other similar event or any other change in the corporate
structure or shares of the Company.
Incentive holders shall forfeit all amounts not payable or privileges with
respect to stock options not immediately exercisable if the holder is
terminated for cause, voluntarily terminates other than by retirement after
the age of 55 or if the holder engages in competition or any activity or
conduct contrary to the best interests of the Company. Stock options
immediately exercisable upon such events will remain exercisable for seven
days.
Upon a change in control, all Incentives outstanding shall become fully
vested and exercisable and all stock options may be surrendered to the
Company for cash in an amount equal to the aggregate excess of the fair
market value over the exercise price of such options. For this purpose, a
change of control will include an acquisition (other than from or by the
Company or by an employee benefit plan of the Company) of 20% or more of the
Common Stock, a change in control of the Board, or a reorganization, merger,
consolidation of all or substantially all of the Company's assets (other than
a transaction after which beneficial owners of Common Stock prior to such
transaction continue to beneficially own more than 60% of the Common Stock,
no person or entity holds over 20% of the Common Stock and no change in
control of the Board has occurred).
The Plan is intended to comply with Section 162(m) of the Internal Revenue
Code of 1986, as amended, and Rule 16b-3 promulgated pursuant to the
Securities Exchange Act of 1934, as amended.
The Committee has sole discretion to grant Incentives to employees under
the Plan. No determination has been made as to specific employees who would
have been recipients in 1995 or who will be recipients and no determination
has been made as to the nature or amount of awards that would have been or
will be made under the Plan. Therefore, the amount or nature of awards that
would have been received or that will be received by employees under the Plan
cannot be now determined. As discussed above, outside directors will be
granted options in respect of 500 shares of Common Stock for each year of
service. Based on a Board immediately following the 1996 Annual Meeting of
Stockholders of six outside members, the non-executive directors as a group
would receive options in respect of 3,000 shares of Common Stock each year.
INCOME TAX CONSEQUENCES
Stock Options to be issued under the Plan as ISOs will satisfy the
requirements of Section 422 of the Code. Under the provisions of that
section, the optionee will not be deemed to receive any income at the time an
ISO is granted or exercised. If the optionee disposes of the shares of Common
Stock acquired more than two years after the grant and one year after the
exercise of the ISO, the gain, if any (i.e., the excess of the amount
realized for
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<PAGE>
the shares over the option price) will be long-term capital gain. If the
optionee disposes of the shares acquired on exercise of an ISO within two
years after the date of grant or within one year after the exercise of the
ISO, the disposition will constitute a "disqualifying disposition" and the
optionee will have ordinary income in the year of the disqualifying
disposition equal to the fair market value of the stock on the date of
exercise minus the option price. The excess of the amount received for the
shares over the fair market value at the time of exercise will be short-term
capital gain if the shares are disposed of within one year after the ISO is
exercised, or long-term capital gain if the shares are disposed of more than
one year after the ISO is exercised. If the optionee disposes of the shares
in a disqualifying disposition, and such disposition is a sale or exchange
which would result in a loss to the optionee, then the amount treated as
ordinary income shall not exceed the excess (if any) of the amount realized
on such sale or exchange over the adjusted basis of such shares.
The Company is not entitled to a deduction as a result of the grant or
exercise of an ISO. If the optionee has ordinary income as a result of a
disqualifying disposition, the Company will have a corresponding deductible
expense in an equivalent amount in the taxable year of the Company in which
the disqualifying disposition occurs.
The difference between the fair market value of the option at the time of
exercise and the option price is a tax preference item for alternative
minimum tax purposes. The basis in stock acquired upon exercise of an ISO for
alternative minimum tax purposes is increased by the amount of the
preference.
Stock options issued under the Plan which do not satisfy the requirements
of Section 422 of the Code will have the following tax consequences:
1. the optionee will have ordinary income at the time the option is
exercised in an amount equal to the excess of the fair market value of
the Common Stock acquired at the date of exercise over the exercise
price;
2. the Company will have a deductible expense in an amount equal to the
ordinary income of the optionee;
3. no amount other than the price paid upon exercise of the option shall be
considered as received by the Company for shares so transferred; and
4. any gain from the subsequent sale of the shares of Common Stock
acquired upon exercise for an amount in excess of the fair market value
on the date the option is exercised will be capital gain and any loss
will be capital loss.
In general, a recipient of other Incentives excluding restricted stock
awards (see below) will have ordinary income equal to the cash or fair market
value of the Common Stock on the date received in the year in which the award
is actually paid. The Company will have a corresponding deductible expense in
an amount equal to that reported by the recipient as ordinary income in the
same year so reported. The recipient's basis in the stock received will be
equal to the fair market value of the Common Stock when received and his or
her holding period will begin on that date.
Restricted stock awards do not constitute taxable income under existing
Federal tax law until such time as restrictions lapse with respect to any
installment. When any installment of shares are released from restriction,
the market value of such shares of Common Stock on the date the restrictions
lapse constitutes income to the recipient in that year and is taxable at
ordinary income rates. The Code, however, permits a recipient of a restricted
stock incentive to elect to have the award treated as taxable income in the
year of the award and to pay tax at ordinary income tax rates on the fair
market value of all of the shares awarded based on the price of the shares on
the date the recipient receives a beneficial interest in such shares. The
election must be made promptly within time limits prescribed by the Code and
the regulations thereunder. Any appreciation in value thereafter would be
taxed at capital gain rates when the restrictions lapse and the stock is
subsequently sold. However, should the market value of the stock, at the time
the restrictions lapse and the stock is sold, be lower than at the date
acquired, the recipient would have a capital loss, to the extent of the
difference. In addition, if, after electing to pay tax on the award in the
year received, the recipient subsequently forfeits the award for any reason,
the tax previously paid is not recoverable.
In the event of a change in control, the vesting, exercise and lapse of
restrictions on incentives may contribute to an excess parachute payment, as
defined in Section 280G of the Code. In such event, the Company's deduction
with respect to such excess parachute payment would be denied and the
recipient would be subject to a nondeductible 20% excise tax on such excess
parachute payment.
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Vote Required
The affirmative vote of a majority of the outstanding shares of Common Stock
entitled to vote at the Annual Meeting is required for approval of the
proposal.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors is seeking stockholder ratification of the
appointment of Ernst & Young LLP as its independent auditors for 1996.
The Audit Committee of the Board of Directors has reviewed and evaluated
all criteria it considered relevant in assessing the performance of Ernst &
Young LLP, such as the quality of its audit work, its knowledge of the
industry and the Company's affairs, the availability of its professional
advice on a timely basis and the reasonableness of its fees. Based upon such
review and evaluation, the engagement of Ernst & Young LLP as independent
auditors has been approved. If stockholders do not ratify the appointment of
Ernst & Young LLP, the appointment of independent auditors will be
reconsidered by the Audit Committee. Even if the appointment is ratified, the
Audit Committee in its discretion may nevertheless appoint another firm of
independent auditors at any time during the year if the Audit Committee
determined such a change would be in the best interests of the stockholders
and the Company.
Ernst & Young LLP has audited the Company's financial statements annually
since 1984. A representative of Ernst & Young LLP is expected to attend the
Annual Meeting, and will have the opportunity to make a statement if such
representative desires to do so and will be able to respond to appropriate
questions from stockholders.
Vote Required
The affirmative vote of a majority of the votes cast at the Annual Meeting is
required for ratification of the appointment.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP.
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<PAGE>
Security Ownership of Certain Beneficial Owners
The only persons who, to the knowledge of the management, owned
beneficially on March 1, 1996 more than 5% of any class of outstanding shares
of Common Stock of the Company are set forth below:
<TABLE>
<CAPTION>
Name and Address Number of Shares % of
of Beneficial Owner Beneficially Owned Class
------------------- ------------------ -----
<S> <C> <C>
Robert E. Agan (1) ........................ 350,532 5.42%
309 Holley Road
Elmira, NY 14905
Chemung Canal Trust Company (2) ............ 995,945 15.39%
1 Chemung Canal Plaza
Elmira, NY 14902
Hardinge Inc. Savings Plan (3) ............. 394,188 6.09%
c/o Chemung Canal Trust Company,
Trustee
1 Chemung Canal Plaza
Elmira, NY 14902
Douglas A. Greenlee (4) ..................... 345,689 5.34%
205 Kennedy Drive
Horseheads, NY 14845
FMR Corp. and said corporation's direct
and indirect subsidiaries (associated
with Fidelity Funds) ..................... 551,700 8.53%
82 Devonshire Street
Boston, MA 02109
</TABLE>
- ------------
(1) Sole beneficial owner of 168,426 shares of Common Stock and sole trustee
of trusts for the benefit of his children holding 16,182 shares of Common
Stock with sole voting and dispositive powers; shares as co-trustee of a
trust under the Company's Pension Plan voting and dispositive powers with
respect to 165,924 shares.
(2) As of March 1, 1996, Chemung Canal Trust Company ("CCTC") held 995,945
shares of the Company's Common Stock in various fiduciary capacities.
CCTC holds 865,928 shares for various parties in personal trusts, agency
and custodial accounts, pension accounts, estates and guardianships, with
respect to which shares CCTC has sole voting power as to 718,605 shares,
shared voting power with respect to 147,323 shares, sole investment power
with respect to 448,407 shares and shared investment power with respect
to 147,323 shares. In addition, 394,188 shares are held by CCTC as
trustee of the Company's Savings Plan, of which shares CCTC shares voting
and dispositive powers as to 130,017 shares. (See footnote 3 below.)
(3) Includes all shares of Common Stock held by Chemung Canal Trust Company
as the Trustee of the Hardinge Inc. Savings Plan. The participants in
said Plan may instruct the Trustee as to the voting of 264,171 of such
shares or if no instructions are received, the Trustee votes the shares
in the same proportion as it votes all of the shares for which
instructions are received. The power to dispose of said shares is
restricted by the provisions of the Plan. With respect to 130,017 shares
held by Chemung Canal Trust Company as trustee of said Savings Plan, the
trustee has the power to vote and dispose of said shares, except it is
required in the event of a tender offer or of any corporate action
requiring a greater than majority vote of stockholders to act in
accordance with instructions received from Plan participants.
(4) Sole beneficial owner of 31,981 shares of Common Stock, shares, as
co-trustee of a trust for the benefit of himself and others, voting and
dispositive powers as to 271,966 shares of Common Stock and 41,742 shares
are held with others as attorneys-in-fact for another. Not included are
220,871 shares of Common Stock held in trust by Chemung Canal Trust
Company (see footnote 2 above) as trustee for the benefit of himself and
others, nor 12,000 shares of Common Stock held in trust by another under
which trust Mr. Greenlee is a contingent remainderman.
7
<PAGE>
Security Ownership of Management
Set forth below is the number of shares of Common Stock of the Company
beneficially owned on March 1, 1996 by the directors and nominees for
directors, by the Executive Officers listed in the Summary Compensation Table
and by all directors and Executive Officers of the Company as a group.
<TABLE>
<CAPTION>
Name of Shares of Common Stock % of
Beneficial Owner Beneficially Owned (1) Class
- ----------------------------------- ---------------------- ------
<S> <C> <C>
Robert E. Agan (2)................. 350,532 5.42%
John W. Bennett.................... 3,019 *
Richard J. Cole.................... 2,969 *
James L. Flynn..................... 6,608 *
E. Martin Gibson................... 10,057 *
Malcolm L. Gibson (3).............. 221,155 3.42%
Douglas A. Greenlee (4)............ 345,689 5.34%
J. Philip Hunter................... 4,182 *
J. Allan Krul...................... 88,233 1.36%
Dr. Eve L. Menger.................. 1,721 *
Whitney S. Powers.................. 10,527 *
Douglas C. Tifft 42,706 *
All Executive Officers and
Directors as a Group (13 persons
including the above) (5) .......... 966,729 14.94%
</TABLE>
*Less than one percent of the Company's outstanding shares of Common Stock.
- -------------
(1) Includes shares which may be purchased pursuant to stock options held by
directors that were exercisable within 60 days as of March 1, 1996.
Messrs. Flynn and E.M. Gibson held 1,855 and 4,075, respectively, of such
options to purchase shares of Common Stock. Also includes all shares held
by the Trustee of the Hardinge Inc. Savings Plan allocated to members of
the group who have sole voting power with respect to said shares. The
Trustee holds for the benefit of Messrs. Agan, M.L. Gibson, Greenlee,
Krul and Tifft and all Executive Officers as a group 7,570, 376, 866,
4,244, 347 and 17,105 shares, respectively. Also includes shares subject
to forfeiture and restrictions on transfer granted pursuant to the
Company's 1993 Incentive Stock Plan.
(2) Sole beneficial owner of 168,426 shares of Common Stock and sole trustee
of trusts for the benefit of his children holding 16,182 shares of Common
Stock with sole voting and dispositive powers; shares as co-trustee of a
trust under the Company's Pension Plan voting and dispositive powers with
respect to 165,924 shares. See "Security Ownership of Certain Beneficial
Owners" above.
(3) Sole beneficial owner of 55,231 shares of Common Stock and shares as
trustee with Robert E. Agan (see footnote 2 above) voting and dispositive
powers as to 165,924 shares of Common Stock as trustees under the
Company's Pension Plan.
(4) Sole beneficial owner of 31,981 shares of Common Stock, shares, as
co-trustee of a trust for the benefit of himself and others, voting and
dispositive powers as to 271,966 shares of Common Stock and 41,742 shares
are held with others as attorneys-in-fact for another. Not included are
220,871 shares of Common Stock held in trust by Chemung Canal Trust
Company as trustee for the benefit of himself and others, nor 12,000
shares of Common Stock held in trust by another under which trust Mr.
Greenlee is a contingent remainderman. See "Security Ownership of Certain
Beneficial Owners" above.
(5) Includes 165,924 shares of Common Stock owned by the Company's Pension
Plan as to which Messrs. Agan and M.L. Gibson share, as trustees, voting
and dispositive powers.
8
<PAGE>
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. To the Company's knowledge, based solely on review of the copies
of such reports furnished to the Company and its representatives and certain
representations that no other reports were required, all persons subject to
these reporting requirements filed the required reports on a timely basis.
COMPENSATION OF EXECUTIVE OFFICERS
Report of the Compensation Committee on Executive Compensation:
The Company's compensation policies applicable to executive officers are
administered by the Compensation Committee (the "Committee") of the Board of
Directors, all of which Committee members are non-employee directors. The
compensation policies are designed to attract, motivate and retain qualified
individuals required to manage the Company to meet its short- and long-term
objectives and thereby increase stockholder value. Significant emphasis is also
placed on encouraging executive officers to build their holdings of the
Company's stock to align their goals with those of the stockholders. The
Company's program on executive compensation consists of three primary
components--base salary, annual incentive bonuses and long-term incentives under
a restricted stock plan. The Committee recommends to the Board of Directors the
salaries and incentive bonuses of executive officers and administers the
incentive stock plan. The Committee subjectively considers total individual
performance and the overall financial and other significant conditions of the
Company in making its compensation recommendations with specific financial
parameters established only by the setting of profit targets for incentive cash
bonuses. Each of the three components of executive compensation are reviewed for
competitiveness and reasonableness in relation to a group of companies with
comparable sales levels in the machine tool business, including, but not limited
to, the companies included in the peer group index on the Performance Graph
herein.
Base Salary:
In November 1994, the Committee determined the 1995 base salaries reported in
this proxy statement. At the time the Committee considered the financial
performance of the Company as a whole and the contribution of each of the
executive officers. The Committee reviewed salaries recommended by Mr. Robert
E. Agan for executive officers other than himself, together with a survey of
executive salaries for other domestic machine tool manufacturers. Mr. Agan's
salary and other compensation were determined out of his presence. Consistent
with the Committee's emphasis on incentive-based compensation, modest
percentage increases in base salaries were granted.
Incentive Bonuses:
The Committee administers the Company's incentive cash bonus program which
provides flexibility to the Committee from year to year to meet the
ever-changing business environment, provides competitive profit-focused cash
incentives for the corporate officers and allows the Chief Executive Officer to
establish specific individual objectives for all officers other than himself,
the achievement of which is rewarded by year-end cash bonuses if the Company is
sufficiently profitable. Under the program the Committee establishes levels of
bonus pools tied to specific per share corporate earnings targets with the Chief
Executive Officer then recommending the allocation of the bonus pool among
officers based upon individual performance and achievement during the year and
competitive data. The Committee's determination of Mr. Agan's cash bonus is more
subjective and not subject to specific criteria. In addition to the cash bonus
program administered consistent with past practice, the Committee for 1995
considered and granted special one-time bonuses in the form of outright stock
grants due to extraordinary Company performance. Factors in determining Mr.
Agan's cash bonus and all officers' stock bonuses included completion of a
successful public offering, substantial sales increases together with increased
productivity as evidenced by the almost doubling of the level of sales since
1993 within the same manufacturing facility and without a corresponding increase
in employment, maintaining reliability and quality, an increase in net profits
of over 100%, continued emphasis on total quality management and on pursuit of
acquisitions to increase the longer-term strength of the Company, the
introduction of high quality and updated product with ongoing customer
satisfaction and a substantial increase in the Company's share value in part
attributable to the foregoing.
9
<PAGE>
Incentive Stock Plan:
Under the 1993 Incentive Stock Plan (the "Plan") shares of Common Stock
have been set aside for grants to key employees of restricted stock and
performance share awards. Under the Plan, restricted stock grants have been
selected by the Committee for award to key executives with the resulting
emphasis on increased executive ownership of Company stock, long-term corporate
results and a substantial portion of executive pay and financial incentive
linked to increases in stockholder value. Individual grant awards are based upon
an executive's responsibilities and role in increasing stockholder value and the
Committee's subjective evaluation of individual performance with no
consideration given to the number of shares currently directly or indirectly
owned. Restrictions on shares awarded lapse upon passage of time as established
by the Committee on the date of the award, if said shares are not earlier
forfeited. Under this Plan for the year 1995, Messrs. Agan, Krul, Gibson,
Greenlee and Tifft were awarded (adjusted for the May 1995 recapitalization)
20,500, 10,000, 10,000, 6,000 and 6,000, respectively, restricted shares of
Common Stock subject to forfeiture and restrictions on transfer. Total
unconditional vesting will occur only upon the completion of from four (4) to
eight (8) years of continuous service or, if earlier, upon death, retirement
after age 60, retirement prior to age 60 for reasons of total and permanent
disability or retirement for other medical or health reasons which render an
employee unable to perform his duties and responsibilities or termination in
other limited circumstances. Partial vesting will occur if the employee is
terminated during a period from one (1) to eight (8) years for reasons other
than the gross deviation from duties and responsibilities. The Plan provides
that the possibility of forfeiture shall lapse in its entirety and the Company
shall deliver to the employee or his personal representative, free of any
restrictions, certificates representing the shares of Restricted Stock in the
event of a termination of the employee's employment with the Company or a
subsidiary within four years following a change of control as defined in the
agreements entered into pursuant to the Plan.
During 1995 the Compensation Committee had not yet developed a policy in
order to qualify any compensation to the five highest-paid executive officers
in excess of $1 Million per year for federal tax deductibility pursuant to
Section 162(m) of the Internal Revenue Code of 1986, as amended. The
Compensation Committee is considering the applicability of Section 162(m) to
various types of executive compensation and contemplates that the Incentive
Stock Plan submitted for approval to the 1996 Annual Meeting will so qualify.
The Compensation Committee intends to balance the interests of the Company in
maintaining flexible incentive plans and how the Company benefits from the
compensation package paid to any executive officer against the possible loss
of a tax deduction when taxable compensation for any of the five highest-paid
executive officers exceeds $1 Million per year.
E. Martin Gibson, Chairman J. Philip Hunter
Richard J. Cole
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Gibson, Cole and Hunter served as members of the Compensation
Committee during 1995. Mr. Hunter is the Secretary of the Company and Mr. Hunter
and Mr. Agan's son, Steven E. Agan, are partners with the law firm of Sayles,
Evans, Brayton, Palmer & Tifft ("Sayles & Evans"). Sayles & Evans has acted as
regular outside legal counsel to the Company since 1956 and the Company expects
to continue to use such services in 1996. During 1995 the Company paid Sayles &
Evans $536,140 for legal services, including fees incurred by the Company in
connection with its public offering in June and the acquisition of
L. Kellenberger & Co. AG in November, 1995.
Executive Compensation:
The following table sets forth information with respect to compensation
paid by the Company for periods during the last three years in which the named
persons served as executive officers of the Company.
10
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
----------------------------
Long-Term
Bonus Compensation
-------------------- --------------
Name and Restricted Stock All Other
Principal Position Year Salary Cash Stock(1) Awards(2) Compensation(3)
------------------ --- ------- ------- ------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Agan .......... 1995 $238,000 $260,000 $280,000 $290,000 $3,187
Chairman of the Board, 1994 225,000 150,000 -0- 375,000 591
President and Chief 1993 202,083 95,000 -0- 480,000 508
Executive Officer
J. Allan Krul ........... 1995 156,000 150,000 150,000 145,000 989
Executive Vice President 1994 142,000 85,000 -0- 200,000 419
and Chief Operating 1993 130,998 55,000 -0- 192,000 338
Officer
Malcolm L. Gibson ....... 1995 125,000 75,000 100,000 145,000 1,299
Senior Vice President 1994 117,000 42,000 -0- -0- 571
and Chief Financial 1993 112,875 27,000 -0- 120,000 495
Officer
Douglas A. Greenlee ..... 1995 109,000 55,000 75,000 87,000 855
Vice President 1994 104,000 36,000 -0- -0- 306
1993 100,333 24,000 -0- 192,000 200
Douglas C. Tifft ........ 1995 89,000 55,000 75,000 87,000 1,246
Vice President 1994 84,000 36,000 -0- -0- 551
1993 78,500 24,000 -0- 120,000 490
</TABLE>
- ---------
(1) Effective as of October 24, 1995, Messrs. Agan, Krul, Gibson, Greenlee
and Tifft were awarded 10,769, 5,769, 3,846, 2,884 and 2,884 bonus shares
of Common Stock, respectively. The closing price of the Company's Common
Stock on October 24, 1995 was $26.00 per share.
(2) As of December 29, 1995, Messrs. Agan, Krul, Gibson, Greenlee and Tifft
held 41,000, 52,400, 29,250, 22,400, and 25,250, respectively, restricted
shares of Common Stock having an aggregate value on that date of
$1,066,000, $1,362,400, $760,500, $582,400, and $656,500, respectively,
based upon the closing price of the Company's Common Stock on December
29, 1995. The restrictions on these shares lapse on a scheduled time
basis, or earlier, upon death and other conditions as provided in
restricted stock agreements with said persons. The officers are entitled
to vote said shares and to receive any and all dividends paid on the
stock.
(3) Represents Company contributions to the Hardinge Inc. Savings Plan for
each named executive officer and for Mr. Agan for the year 1995, $1,851
reimbursement for taxes paid by Mr. Agan with respect to certain
perquisites provided to him.
11
<PAGE>
Performance Graph:
Set forth below is a graph illustrating the Company's cumulative total
stockholder return over the last five years compared to two performance
indicators of the stock market--the Nasdaq National Market Composite Index and
"Nasdaq-Metalcutting," an index of companies listed on the Nasdaq National
Market with a "metal cutting machine" SIC code obtained from the Center for
Research in Security Prices, University of Chicago, Chicago, Illinois. The
returns of each company in the Nasdaq-Metalcutting have been weighted according
to their respective stock market capitalization for arriving at a peer group
average. The cumulative total return includes dividends paid and changes in the
share price of the Common Stock and assumes all dividends were reinvested. The
graph assumes the value of the investment in Hardinge Inc. and each index was
$100 on December 31, 1990.
COMPARATIVE FIVE-YEAR TOTAL RETURNS
Hardinge Inc., Nasdaq Composite, Nasdaq-Metalcutting
(Performance Results from 12/31/90 through 12/31/95)
(Line Chart with Plot Points)
<TABLE>
<CAPTION>
Values 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
$300
$250
$200
$150
$100
$50
</TABLE>
December 31,
Hardinge Inc.(1) NASDAQ-Composite NASDAQ Metalcutting Machines
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995
Hardinge Inc.(1) 100 95 110 122 149 280
NASDAQ-Composite 100 160 187 214 209 296
NASDAQ-Metalcutting 100 168 265 276 210 252
</TABLE>
- -----------
(1) Prior to the Company's May, 1995 public offering and listing on NASDAQ,
Hardinge's Common Stock was traded in a local, over-the-counter market in
small amounts and on an irregular basis. The Company was aware that
transfers took place, but often was without knowledge of whether the
transfer was a sale, was without consideration or was for
re-registration. Valuation of the Common Stock was made from time to time
for tax and other purposes and some of said valuations were known to the
Company. For example, the Common Stock was valued quarterly by Crestar
Securities Corporation ("Crestar") retained by the Company during
1991-1994 for purposes of Employee Stock Ownership Plan administration.
The Company had itself, based on its knowledge of all of the foregoing
and its own knowledge, valued its Common Stock for internal purposes.
Also, First Albany Corporation had supplied the Company with quarterly
data of actual trades known to it. The historic Company
12
<PAGE>
price data used to create the graph above for comparison to outside
indices was based on said Crestar appraisals which were higher than said
trading data received from First Albany Corporation. Because the Company
was not quoted on the Nasdaq National Market or any securities exchange
during the years 1991-1994, the usefulness of the comparison of the
performance of the Common Stock of the Company to these indices for said
years should be carefully considered.
Pension Plan:
The Company maintains a non-contributory defined benefit Pension Plan for all
employees. Normal retirement is at age 65; however, retirement before age 65 can
be selected under certain conditions. Annual pensions are computed on the basis
of adjusted career average compensation, excluding bonuses. The adjusted career
average compensation formula is the sum of (a) for service prior to December 1,
1993, 1.25% of the annual compensation rate as of December 1, 1993, times the
number of years of service prior to December 1, 1993, plus (b) 1.5% of
compensation on or after December 1, 1993. Pension amounts are not subject to
reductions for Social Security benefits or offset amounts but are subject to
federal law limitations on pensions payable under tax qualified plans.
The Company also maintains a non-qualified, unfunded benefit plan called
the Executive Supplemental Pension Plan ("Supplemental Plan") currently
covering Messrs. Agan, M.L. Gibson and Krul. The annual benefits under the
Supplemental Plan are determined on the basis of the average of the three
highest years base salary of the final five years of employment plus cash
bonuses times 1.25% for each year of service, except that in the case of Mr.
Krul, the percentages are 1.5% of each of his first five years of service,
2.0% of each of the next ten years and 2.2% for each additional year,
contingent on Mr. Krul's continued employment with the Company until age 62
terminable by the Company upon the occurrence of certain stated events. A
minimum benefit is provided under the Supplemental Plan for all covered
executives equal to 1.2 times the benefit earned under the qualified Pension
Plan. Benefits under the Supplemental Plan are reduced by benefits payable
under the Pension Plan.
If the Executive Officers remain continuously employed at current
compensation levels until retirement at the normal retirement age of 65, the
estimated annual pension amounts payable under the Pension and Supplemental
Plans for Messrs. Agan, Krul, Gibson, Greenlee and Tifft would be $207,877,
$83,653, $92,773, $32,409 and $50,033, respectively. Pensions described are
straight-life annuity amounts not reduced by joint and survivorship
provisions which are available to all retirees through reductions in pensions
otherwise payable.
Employment Agreements:
The Company has entered into written employment contracts with Messrs. Agan,
Krul, Gibson, Greenlee and Tifft (the "officers") effective January 1, 1995.
The term of each employment agreement is two years, with automatic,
successive one-year extensions unless either party provides the other with 60
days' prior notice of termination. In the case of a change of control (as
such term is defined in the employment agreements), the term of each
officer's employment agreement will be automatically extended for a period of
two years following the date of the change of control. Officers' bonuses
shall be determined in accordance with an annual bonus policy.
If an officer is terminated without cause, or resigns for good reason (as
such term is defined in the employment agreements), such officer will be
entitled to continued payment of his base salary for the greater of six
months or the remainder of the current term with the exception of two
agreements, which provide for a minimum of twelve months of base salary in
this situation. If an officer is terminated without cause or resigns for good
reason (as such term is defined in the employment agreements) on or after a
change of control, or resigns for any reason at any time six months or more
following a change of control, such officer will be entitled (i) to receive a
lump sum cash payment equal to one and one-half times the sum of his base
salary in effect immediately prior to his termination or resignation (or as
in effect immediately prior to the change of control, if higher) and his
average annual bonus for the three years preceding the change of control, and
(ii) to participate, at the Company's expense, in the Company's welfare
benefit plans for a period of three years following his resignation or
termination. Such lump sum cash payments shall be subject to reduction to the
extent necessary to prevent any amounts or benefits due from being deemed
"excess parachute payments" within the meaning of Section 280G of the Code.
COMPENSATION OF DIRECTORS AND COMMITTEE MEETINGS
The Board of Directors held nine regularly scheduled meetings during the
year ended December 31, 1995. The Board has standing Executive, Audit,
Nominating, Compensation and Pension and Profit Sharing Investment
Committees.
13
<PAGE>
The Chairman of the Executive Committee is Mr. Flynn. Other members are
Messrs. Agan, Bennett, Cole, Hunter and Powers. During the interim between
regular Board meetings, the Executive Committee possesses and may exercise
certain powers of the Board in the management and direction of the Company.
The Executive Committee did not meet during the year.
The Chairman of the Audit Committee is Mr. Cole. Other members are Messrs.
Bennett, Flynn, and Hunter and Dr. Menger. The functions of the Audit
Committee are to recommend engagement of independent accountants, review the
arrangement and scope of the audit, review the activities and consider
comments made by the independent auditors with respect to weaknesses in
internal controls and consideration given, or the corrective action taken, by
management. During the year, there was one Audit Committee meeting.
The Chairman of the Nominating Committee is Mr. Powers. Other members are
Messrs. Agan, Bennett and Flynn. The Committee selects and recommends to the
Board nominees for election to the Board and also selects and recommends to
the Board nominees for election as officers of the Company. The Committee
will consider written recommendations by stockholders for election to the
Board, if such recommendations are mailed to the Chairman of the Nominating
Committee or to the Chairman of the Board of Directors, at its main office,
One Hardinge Drive, Elmira, NY 14902. The Committee held one meeting during
1995.
The Chairman of the Compensation Committee is Mr. Gibson. Other members
include Messrs. Cole and Hunter. The Committee reviews and recommends to the
Board bonuses paid to employees, and salaries and bonuses of officers. It
also administers the Company's Incentive Stock Plan and grants restricted
stock awards thereunder. There was one meeting of the Committee during 1995.
The Chairman of the Pension and Profit Sharing Investment Committee is Mr.
Flynn. Other members include Messrs. Cole, Greenlee, Hunter, and Powers and
Dr. Menger. The Committee reviews the investments and performance of the
Trustee of the Pension and Savings Plans, fixes desirable goals and consults
with the Trustee thereon. There were two meetings of the Committee during
1995.
All members of the Board attended at least 75% of the aggregate number of
Board meetings and meetings of committees of which they are members held
during 1995, except that Dr. Eve L. Menger attended 55% of said meetings.
During 1995, the members of the Board who are not full-time employees of
the Company were paid an annual fee of $5,000 and $800 for each meeting of
the Board of Directors and each committee meeting attended. In addition, in
March each director received 420 shares of Common Stock. There is a Deferred
Directors Fee Plan that allows a director at his election to defer receiving
up to 100% of his fees, exclusive of the supplemental stock payment, until
the later of separation or age 70.
CERTAIN TRANSACTIONS
The Company in the normal course of business has retained the Chemung
Canal Trust Company, of which Mr. Agan is a director and Mr. Bennett is
Chairman of the Board/Chief Executive Officer and director, for various
banking services and as Trustee of the Company's Pension and Savings Plans.
The Company expects to do so during the current year.
See "Compensation Committee Interlocks and Insider Participation."
STOCKHOLDERS' PROPOSALS
Any qualified stockholder who intends to present proposals at the
Company's 1997 Annual Meeting of Stockholders must submit such stockholder's
proposals to the Secretary of the Company on or before November 16, 1996.
OTHER MATTERS
The Board of Directors knows of no business other than that set forth
above to be transacted at the meeting, but if other matters requiring a vote
of the stockholders arise, the persons designated as proxies will vote the
shares of common stock represented by the proxies in accordance with their
judgment on such matters. The cost of solic-
14
<PAGE>
iting proxies will be borne by the Company. In addition to solicitations by
mail, some of the directors, officers and regular employees of the Company
may conduct additional solicitations by telephone and personal interviews
without remuneration. The Company may also request nominees, brokerage
houses, custodians and fiduciaries to forward soliciting material to
beneficial owners of stock held of record and will reimburse such persons for
any reasonable expense.
The Company has purchased insurance from Federal Insurance Company
providing for reimbursement of directors and officers of the Company and its
subsidiary companies for costs and expenses incurred by them in actions
brought against them in connection with their actions as directors or
officers, including actions as fiduciaries under the Employee Retirement
Income Security Act of 1974. The insurance coverage, which expires on January
27, 1997, costs $145,645 on an annual basis, which will be paid by the
Company.
Financial statements for the Company and its consolidated subsidiaries are
included in Hardinge Inc.'s Annual Report to stockholders for the year 1995
which was mailed to the stockholders beginning March 15, 1996.
A COPY OF HARDINGE INC.'S 1995 ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION WILL BE AVAILABLE AFTER MARCH 22, 1996
WITHOUT CHARGE TO THOSE STOCKHOLDERS WHO WOULD LIKE MORE DETAILED INFORMATION
CONCERNING HARDINGE. TO OBTAIN A COPY, PLEASE WRITE TO: MALCOLM L. GIBSON,
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, HARDINGE INC., ONE
HARDINGE DRIVE, ELMIRA, NY 14902.
By Order of the Board of Directors,
J. Philip Hunter
Secretary
Dated: March 15, 1996.
15
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
APPENDIX A
PROPOSAL TO ADOPT THE
HARDINGE INC. 1996 INCENTIVE STOCK PLAN
<PAGE>
HARDINGE INC.
1996 INCENTIVE STOCK PLAN
1. Establishment of Plan.
Hardinge Inc. (hereafter referred to as the "Company") proposes to grant
to selected employees of the Company and its subsidiaries: (a) Incentive
Stock Options, (b) Non-Qualified Stock Options, (c) Stock Appreciation
Rights, (d) Restricted Stock Incentives, and (e) Performance Share Incentives
(collectively hereinafter sometimes referred to as "Incentives") for the
purpose of enhancing the profitability and value of the Company for the
benefit of its shareholders by providing stock awards to attract, retain and
motivate officers and other key employees who make important contributions to
the success of the Company.
The Company also proposes to grant to Outside Directors options to
purchase common stock of the Company pursuant to the Plan. The purpose of
such Director Options is to provide incentives for highly qualified
individuals to stand for election to the Board and to continue service on the
Board and to encourage increased stock ownership by Outside Directors in
order to promote long-term stockholder value. Restricted Stock Incentives,
Incentive Stock Options (as defined in Section 422A of the Internal Revenue
Code), Stock Appreciation Rights and Performance Share Incentives will not be
granted to Outside Directors under the Plan.
Incentives shall be granted pursuant to the plan herein set forth, which
shall be known as the Hardinge Inc. 1996 Incentive Stock Plan (hereinafter
referred to as the "Plan").
2. Definitions of Certain Terms Used in the Plan.
a. "Affiliate" means any subsidiary, whether directly or indirectly owned,
or parent of the Company, or any other entity designated by the Committee.
b. "Board" means the Company's Board of Directors.
c. "Change of Control" is defined in Section 18 of the Plan.
d. "Code" means the Internal Revenue Code of 1986, as amended, or any
successor code thereto.
e. "Committee" means the Incentive Compensation Committee of the Board of
Directors of the Company or any successor committee the Board of Directors
may designate to administer the Plan.
f. "Common Stock" means the Hardinge Inc. Common Stock, par value $.01 per
share.
g. "Competition" means to manage, operate, join, control, participate in,
provide consulting advice to, act as an agent or director of, or have any
financial interest in (as a partner, stockholder, investor or otherwise), any
firm, corporation, partnership, association, joint stock company, joint
venture, unincorporated organization, limited liability company or any such
similar business operation or activity (or any portion thereof), directly or
indirectly, in competition with any of the business operations or activities
of the Company or its Affiliates or affecting or attempting to affect a
Change of Control.
h. "Director Stock Option" means a Nonqualified Option granted to Outside
Directors pursuant to Section 7 of the Plan.
i. "Employee" means any person who is employed by the Company or a
subsidiary of the Company.
j. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
k. "Fair Market Value" of Stock means the fair and reasonable value
thereof as determined by the Committee according to prices in trades as
reported on the NASDAQ National Market. If there are no prices so reported or
if, in the opinion of the Committee, such reported prices do not represent
the fair and reasonable value of the Stock, then the Committee shall
determine Fair Market Value by any means it deems reasonable under the
circumstances.
l. "Incentive Stock Options" means stock options granted under the Plan
that meet the definition of Incentive Stock Options under Section 422 of the
Code.
m. "Nonqualified Options" means stock options granted under the Plan that
are not Incentive Stock Options.
A-1
<PAGE>
n. "Outside Director" means any member of the Company's Board of Directors
who is not also an employee.
o. "Performance Share Incentives" means Incentives granted under Section 9
of the Plan.
p. "Restricted Stock Incentives" means Incentives granted under Section 10
of the Plan.
q. "Retirement" means retirement under any pension or retirement plan of
the Company or of a subsidiary, or termination of employment with the Company
or a subsidiary, by action of the employing company, because of disability.
r. "Stock" means the Common Stock or any other authorized class or series
of common stock or any such other security outstanding upon the
reclassification of any of such classes or series of common stock, including,
without limitation, any stock split-up, stock dividend, creation of targeted
stock, or other distributions of stock in respect of stock, or any reverse
stock split-up, or recapitalization of the Company or any merger or
consolidation of the Company with any Affiliate.
s. "Stock Appreciation Rights" means Incentives granted under Section 8 of
the Plan.
t. "Stock Options" means Incentive Stock Options and Nonqualified Options
granted under the Plan.
u. A "subsidiary" means any corporation in which the Company owns,
directly or indirectly, at least thirty-five percent (35%) of the total
combined voting power of all classes of stock; except that for purposes of
any option subject to the provisions of Section 424 of the Internal Revenue
Code, as amended, the term "subsidiary" means any corporation in an unbroken
chain of corporations beginning with the Company if, at the time of the
granting of an Option, each of the corporations, other than the last
corporation in the unbroken chain, owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock of one of
the other corporations in such chain.
v. "Termination for Cause" means an Employee's termination of employment
with the Company or an Affiliate or an Outside Director's removal from office
as a director of the Company because of such person's willful engaging in
gross misconduct; provided, however, that a Termination for Cause shall not
include termination attributable to (i) poor work performance, bad judgment
or negligence, (ii) an act or omission believed by such person in good faith
to have been in or not opposed to the best interests of the Company and
reasonably believed by such person to be lawful, or (iii) the good faith
conduct of such person in connection with a Change of Control (including
opposition to or support of such Change of Control).
3. Stock Reserved for Incentives.
A maximum of 300,000 shares of Common Stock or the number of securities to
which said number of shares may be adjusted in accordance with Section 4
below, may be issued upon granting of Restricted Stock Incentives,
Performance Share Incentives, and the exercise of Stock Options and Stock
Appreciation Rights under the Plan. Such shares may be either authorized and
unissued shares or previously issued shares purchased by the Company for
purposes of the Plan. Subject to adjustment in accordance with Section 4
below, a maximum of one percent (1%) of the outstanding shares of the
Company's Common Stock as of the first business day of any calendar year may
be the subject of Incentives granted under the Plan in that calendar year.
The shares available for granting Incentives in any year shall be increased
by the number of shares available under the Plan in previous years but not
covered by Incentives granted under the Plan in those years plus any shares
as to which options or other benefits granted under the Plan have lapsed,
expired, terminated or been cancelled. Any shares subject to stock options,
grants or Incentives may thereafter be subject to new stock options, grants
or Incentives under the Plan if there is a forfeiture of any such grants or
Incentives, or the lapse, expiration or termination of any such option but
not if there is a surrender of an option or portion thereof pursuant to a
Stock Appreciation Right as provided hereafter in Section 8. The maximum
number of shares in respect of which Incentives may be granted during the
term of the Plan to an individual recipient of Incentives shall be 75,000.
4. Adjustment Provisions.
In the event of any extraordinary dividend, reorganization,
recapitalization, stock dividend, stock split-up, change in par or no par
value, combination of shares, merger, consolidation, sale of all or
substantially all of the
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assets of the Company, warrant or rights offering or combination, exchange or
reclassification of Common Stock or any other similar event or any other
change in the corporate structure or shares of the Company, the Committee or
its delegate shall cause such equitable adjustment as it deems appropriate to
be made in the number and kind of shares then remaining available for issue
under the Plan, and in the terms of the outstanding Incentives to reflect
such event and preserve the value of such Incentives. In the event the
Committee determines that any such event has a minimal effect on the value of
Incentives, it may elect not to cause any such adjustments to be made. In all
events, the determination of the Committee or its delegee shall be
conclusive. If any such adjustment would result in a fractional security
being issuable or awarded under the Plan, such fractional security shall be
disregarded.
5. Administration of the Plan.
The authority to grant Incentives to employees under the Plan shall be
vested in the Committee; provided, however, that the Committee shall have no
authority regarding the granting of Director Stock Options to Outside
Directors, which grants shall be non-discretionary. The Committee shall
determine those eligible to receive Incentives and the amount, type and terms
of each Incentive, subject to the provisions of the Plan. Each member of the
Committee shall be (i) an "outside director" within the meaning of Section
162(m) of the Code, subject to any transitional rules applicable to the
definition of outside director, and (ii) a "disinterested person" within the
meaning of Rule 16b-3 under the Exchange Act, or otherwise qualified to
administer this Plan as contemplated by that Rule or any successor Rule under
the Exchange Act. In making any determinations under the Plan, the Committee
shall be entitled to rely on reports, opinions or statements of officers or
employees of the Company, as well as those of counsel, public accountants and
other professional or expert persons. All determinations, interpretations and
other decisions under or with respect to the Plan or any Incentives by the
Committee shall be final, conclusive and binding upon all parties, including
without limitation, the Company, any Employee, and any other person with
rights to any Incentive under the Plan, and no member of the Committee shall
be subject to individual liability with respect to the Plan.
Subject to the provisions of the Plan, the Committee from time to time
shall determine the individuals to whom, and the time or times at which,
Incentives shall be granted and the terms thereof. In the case of officers to
whom Incentives may be granted, the selection of such officers and all of the
foregoing determinations shall be made directly by the Committee in its sole
discretion. In the case of key employees other than officers, the selection
of such employees and all of the foregoing determinations may be delegated by
the Committee to an administrative group of officers chosen by the Committee.
Incentives granted to one employee need not be identical to those granted
other employees.
The Committee shall administer and shall have full power to construe and
interpret the Plan; prescribe, amend and rescind rules and regulations
relating to the Plan; and make all other determinations and take all other
actions that the Committee believes reasonable and proper, including the
power to delegate responsibility to others to assist it in administering the
Plan. The determinations of the Committee shall be made in accordance with
its judgment as to the best interests of the Company and its stockholders and
in accordance with the purposes of the Plan. The Committee's determinations
shall in all cases be conclusive.
A majority of the members of the Committee shall constitute a quorum, and
all determinations of the Committee shall be made by a majority of the entire
Committee. Any determination of the Committee may be made, without notice or
meeting, by the written consent of a majority of the Committee members.
6. Eligibility.
Any Employee selected by the Committee, except a member of the Committee,
shall be eligible for any Incentive contemplated under the Plan. Outside
Directors of the Company shall be eligible for grants of Director Stock
Options under Section 7 of the Plan. An Employee or Director who has been
granted an Incentive under this or any other plan of the Company or any of
its Affiliates may or may not be granted additional Incentives under the Plan
at the discretion of the Committee.
7. Stock Options.
Commencing with the 1996 annual meeting of the stockholders of the
Company, Director Stock Options with an option period of ten (10) years and
an option price equal to 100% of the fair market value of the Common Stock
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on the date the Director Stock Option is granted, shall be granted to each
Outside Director for 500 shares of the Company's Common Stock effective as of
the close of each annual meeting of the stockholders of the Company (i) at
which such individual is elected a director, or (ii) following which such
individual will continue to serve as a director or member of a continuing
class of directors, and except as specifically provided in this paragraph
such Director Stock Options shall be subject to the terms and conditions of
this Section 7 of the Plan.
The Committee may grant Incentive Stock Options, other statutory options
under the Code, and Nonqualified Options to eligible Employees, and such
Stock Options shall be subject to the terms and conditions of this Section 7
of the Plan and such other terms and conditions as the Committee may
prescribe.
(a) Option Price. The option price per share with respect to each Stock
Option shall be determined by the Committee, but shall not be less than 100%
of the fair market value of the Common Stock on the date the Stock Option is
granted, as determined by the Committee.
(b) Period of Option. The period of each Stock Option shall be fixed by
the Committee; provided, however, that such period shall not exceed ten (10)
years from the grant date in the case of Incentive Stock Options.
(c) Payment. The option price shall be payable at the time the Stock
Option or the Director Stock Option is exercised in cash or, at the
discretion of the Committee, in whole or in part in the form of shares of
Common Stock already owned by the grantee (based on the fair market value of
the Common Stock on the date the option is exercised by the Committee). No
shares shall be issued until full payment therefor has been made. A grantee
of a Stock Option or a Director Stock Option shall have none of the rights of
a stockholder until the shares are issued.
(d) Exercise of Option. The shares covered by a Stock Option may be
purchased in such installments and on such exercise dates as the Committee
may determine. Any shares not purchased on the applicable exercise date may
be purchased thereafter at any time prior to the final expiration of the
Stock Option. In no event (including those specified in paragraphs (e), (f)
and (g) of this section below) shall any Stock Option or any Director Stock
Option be exercisable after its specified expiration period and in no event
shall a Stock Option or Director Stock Option be exercised after the
expiration of ten (10) years from the date such option is granted. The
Committee may provide that, subject to such conditions as it considers
appropriate, upon the delivery of shares of Common Stock to the Company in
payment of the exercise price of a Stock Option, the grantee of such Stock
Option automatically be awarded a replacement Stock Option (a "Reload
Option") for up to the number of shares of Common Stock so delivered;
provided, however, that a Reload Option shall not be awarded upon the
delivery of shares of Common Stock in payment of the exercise price of a
Reload Option previously awarded pursuant to this Section 7(d).
(e) Retirement and Termination. Upon Retirement or termination of the
Stock Option grantee for reasons other than those described in Section 15 of
the Plan, Stock Option privileges shall apply only to those Options
immediately exercisable at the date of such Retirement or termination. The
Committee, however, in its discretion, may provide on a case by case basis
that any Stock Options outstanding but not yet exercisable upon such
Retirement or termination of the Stock Option grantee may become exercisable
in accordance with a schedule to be determined by the Committee. Options
exercisable upon Retirement shall remain exercisable for three (3) years
after Retirement; Options exercisable upon termination for reasons other than
Retirement or those described in Section 15 of the Plan shall remain
exercisable for six (6) months after such termination.
(f) Death. Upon the death of a Stock Option or Director Stock Option
grantee, Stock Option or Director Stock Option privileges shall apply only to
those shares which were immediately exercisable at the time of death, and
options exercisable upon death shall remain exercisable for three (3) years
after death. The Committee, in its discretion, may provide that any Stock
Options or Director Stock Options outstanding but not yet exercisable upon
the death of a Stock Option or Director Stock Option grantee may become
exercisable in accordance with a schedule to be determined by the Committee.
Such privileges shall expire unless exercised by legal representatives within
such period of time as determined by the Committee but in no event later than
the date of the expiration of the Stock Option or Director Stock Option.
(g) Limits on Incentive Stock Options. Except as may otherwise be
permitted by the Code, the Committee shall not, in the aggregate, grant to
any Employee Incentive Stock Options that are first exercisable
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during any one calendar year (under all such plans of such Employee's
employer corporation and its parent and subsidiary corporations) to the
extent that the aggregate fair market value of the Common Stock, at the
time the Incentive Stock Options are granted, exceeds $100,000.
8. Stock Appreciation Rights.
The Committee may, in its discretion, grant a right to receive the
appreciation in the fair market value of shares of Common Stock either singly
or in combination with an underlying Stock Option granted hereunder. Such
Stock Appreciation Rights shall be subject to the following terms and
conditions and such other terms and conditions as the Committee may
prescribe:
(a) Time and Period of Grant. If a Stock Appreciation Right is granted in
connection with an underlying Stock Option, it may be granted at the time of
the Stock Option Grant or at any time thereafter but prior to the expiration
of the Stock Option Grant. If a Stock Appreciation Right is granted in
connection with an underlying Stock Option, at the time the Stock
Appreciation Right is granted the Committee may limit the exercise period for
such Stock Appreciation Right, before and after which period no Stock
Appreciation Right shall attach to the underlying Stock Option. In no event
shall the exercise period for a Stock Appreciation Right granted with respect
to an underlying Stock Option exceed the exercise period for such Stock
Option. If a Stock Appreciation Right is granted without an underlying Stock
Option, the period for exercise of the Stock Appreciation Right shall be set
by the Committee.
(b) Value of Stock Appreciation Right. If a Stock Appreciation Right is
granted in connection with an underlying Stock Option, the grantee shall be
entitled to surrender such Stock Appreciation Right and the Stock Option
which is then exercisable and receive in exchange therefor an amount equal to
the excess of the fair market value of the Common Stock on the date the
election to surrender is received by the Company over the Stock Option price
multiplied by the number of shares covered by the Stock Options which are
surrendered. If a Stock Appreciation Right is granted without an underlying
Stock Option, the grantee shall receive upon exercise of the Stock
Appreciation Right an amount equal to the excess of the fair market value of
the Common Stock on the date the election to surrender such Stock
Appreciation Right is received by the Company over the fair market value of
the Common Stock on the date of grant multiplied by the number of shares
covered by the grant of the Stock Appreciation Right.
(c) Payment of Stock Appreciation Right. Payment of a Stock Appreciation
Right shall be in the form of shares of Common Stock, cash, or any
combination of shares and cash. The form of payment upon exercise of such a
right shall be determined by the Committee either at the time of the grant of
the Stock Appreciation Right or at the time of exercise of the Stock
Appreciation Right.
9. Performance Share Incentives.
The Committee may grant awards under which payment may be made in shares
of Common Stock, cash or any combination of shares and cash if the
performance of the Company or any subsidiary or division of the Company
selected by the Committee during the award period meets certain goals
established by the Committee. Such Performance Share Incentives shall be
subject to the following terms and conditions and such other terms and
conditions as the Committee may prescribe.
(a) Incentive Period and Performance Goals. The Committee shall determine
and include in a Performance Share Incentive grant the period of time for
which a Performance Share Incentive is made ("Incentive Period"). The
Committee shall also establish performance objectives ("Performance Goals")
to be met by the Company, subsidiary or division during the Incentive Period
as a condition to payment of the Performance Share Incentive. The Performance
Goals may include earnings per share, return on stockholders' equity, return
on assets, net income, Company earnings performance compared to its domestic
competition or any other financial or other measurement established by the
Committee. The Performance Goal may include minimum and optimum objectives or
a single set of objectives.
(b) Payment of Performance Share Incentives. The Committee shall establish
the method of calculating the amount of payment to be made under a
Performance Share Incentive if the Performance Goals are met,
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including the fixing of a maximum payment. The Performance Share Incentive
shall be expressed in terms of shares of Common Stock referred to as
"Performance Shares". After the completion of an Incentive Period, the
performance of the Company, subsidiary or division shall be measured
against the Performance Goals and the Committee shall determine whether
all, none or any portion of a Performance Share Incentive shall be paid.
The Committee, in its discretion, may elect to make payment in shares of
Common Stock, cash or a combination of shares and cash. Any cash payment
shall be based on the fair market value of Performance Shares on, or as
soon as practicable prior to, the date of payment.
(c) Revision of Performance Goals. At any time prior to the end of an
Incentive Period, the Committee may revise the Performance Goals and the
computation of payment if unforeseen events occur which have a substantial
effect on the performance of the Company, subsidiary or division and which in
the judgment of the Committee make the application of the Performance goals
unfair unless a revision is made.
(d) Requirement of Employment. A grantee of a Performance Share Incentive
must remain in the employment of the Company until the completion of the
Incentive Period in order to be entitled to payment under the Performance
Share Incentive; provided that the Committee may, in its sole discretion,
provide for a partial payment where such an exception is deemed equitable.
(e) Dividends. The Committee may, in its discretion, at the time of the
granting of a Performance Share Incentive, provide that any dividends
declared on the Common Stock during the Incentive Period, and which would
have been paid with respect to the Performance Shares had they been owned by
a grantee, be (i) paid to the grantee, or (ii) accumulated for the benefit of
the grantee and used to increase the number of Performance Shares of the
grantee.
10. Restricted Stock Incentives.
The Committee may issue shares of Common Stock to a grantee which shares
shall be subject to the following terms and conditions and such other terms
and conditions as the Committee may prescribe:
(a) Requirement of Employment. A grantee of a Restricted Stock Incentive
must remain in the employment of the Company during a period designated by
the Committee ("Restriction Period"). If the grantee leaves the employment of
the Company prior to the end of the Restriction Period, the Restricted Stock
Incentive shall terminate and the shares of Common Stock shall be returned
immediately to the Company; provided that the Committee may, at the time of
the grant, provide for the employment restriction to lapse with respect to a
portion or portions of the Restricted Stock Incentive at different times
during the Restriction Period. The Committee may, in its discretion, also
provide for such complete or partial exceptions to the employment restriction
as it deems equitable.
(b) Restrictions on Transfer and Legend on Stock Certificates. During the
Restriction Period, the grantee may not sell, assign, transfer, pledge or
otherwise dispose of the shares of Common Stock except as provided under
Section 12 hereof. Each certificate for shares of Common Stock issued
hereunder shall contain a legend giving appropriate notice of the
restrictions in the grant.
(c) Escrow Agreement. The Committee may require the grantee to enter into
an escrow agreement providing that the certificates representing the
Restricted Stock Incentive will remain in the physical custody of an escrow
holder until all restrictions are removed or expire.
(d) Lapse of Restrictions. All restrictions imposed under the Restricted
Stock Incentive shall lapse upon the expiration of the Restriction Period if
the conditions as to employment set forth above have been met. The grantee
shall then be entitled to have the legend removed from the certificates.
(e) Dividends. The Committee shall, in its discretion, at the grant of the
Restricted Stock Incentive, provide that any dividends declared on the Common
Stock during the Restriction Period shall either be (i) paid to the grantee,
or (ii) accumulated for the benefit of the grantee and paid to the grantee
only after the expiration of the Restriction Period.
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11. Nontransferability.
Each Incentive granted under the Incentive Stock Plan shall not be
transferable other than by Will or the laws of descent and distribution, and
with respect to Stock Options, shall be exercisable during the grantee's
lifetime only by the grantee or the grantee's guardian or legal
representative.
12. No Right of Employment.
The Incentive Stock Plan and the Incentives granted hereunder shall not
confer upon any eligible employee the right to continued employment with the
Company or affect in any way the right of the Company to terminate the
employment of an eligible employee at any time and for any reason.
13. Taxes.
The Company shall be entitled to withhold, or otherwise collect from the
recipient, the amount of any tax attributable to any amount payable or shares
deliverable under the Plan after giving the person entitled to receive such
amount or shares notice as far in advance as practicable. The recipient may
elect, subject to approval by the Committee, to have shares withheld by the
Company in satisfaction of such taxes, or to deliver other shares of Stock
owned by the recipient in satisfaction of such taxes. With respect to
officers of the Company or a subsidiary or other recipients subject to
Section 16(b) of the Exchange Act, the Committee may impose such other
conditions on the recipient's election as it deems necessary or appropriate
in order to exempt such withholding from the penalties set forth in said
Section. The number of shares to be withheld or delivered shall be calculated
by reference to the Fair Market Value of the appropriate class or series of
Stock on the date that such taxes are determined.
14. Forfeiture of Incentives.
Unless the Committee shall have determined otherwise, the recipient of an
Incentive shall forfeit all amounts not payable or privileges with respect to
Stock Options not immediately exercisable upon the occurrence of any of the
following events:
a. The recipient is Terminated for Cause.
b. The recipient voluntarily terminates his or her employment other than
by Retirement after attainment of age 55, or such other age as may be provided
for in the Incentive.
c. The recipient engages in Competition with the Company or any Affiliate.
d. The recipient engages in any activity or conduct contrary to the best
interests of the Company or any Affiliate.
Stock Options and Director Stock Options immediately exercisable upon the
occurrence of any of the preceding events shall remain exercisable for seven
(7) days after the occurrence of such event unless the Committee in its sole
discretion shall provide that such Stock Options and Director Stock Options
shall remain exercisable for a longer period.
The Committee may include in any Incentive any additional or different
conditions of forfeiture it may deem appropriate. The Committee also, after
taking into account the relevant circumstances, may waive any condition of
forfeiture stated above or in the Incentive contract.
In the event of forfeiture, the recipient shall lose all rights in and to
the Incentive. Except in the case of Restricted Stock Incentives as to which
the restrictions have not lapsed, this provision, however, shall not be
invoked to force any recipient to return any Stock already received under an
Incentive.
Such determinations as may be necessary for application of this Section,
including any grant of authority to others to make determinations under this
Section, shall be at the sole discretion of the Committee, and its
determinations shall be conclusive.
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15. Acceleration.
The Committee may, in its sole discretion, accelerate the date of
exercise, vesting, lapse of restrictions or other receipt of any Incentive.
16. Rights as a Shareholder.
A recipient of an Incentive shall, unless the terms of the Incentive
provide otherwise, have no rights as a shareholder, with respect to any
options or shares which may be issued in connection with the Incentive until
the issuance of a Stock certificate for such shares, and no adjustment other
than as stated herein shall be made for dividends or other rights for which
the record date is prior to the issuance of such Stock certificate. In
addition, with respect to Restricted Stock Incentives, recipients shall have
only such rights as a shareholder as may be set forth on the certificate or
in the terms of the Incentive.
17. Foreign Nationals.
Incentives may be awarded to persons who are foreign nationals or employed
outside the United States on such terms and conditions different from those
specified in the Plan as the Committee considers necessary or advisable to
achieve the purposes of the Plan or to comply with applicable laws.
18. Change in Control Provisions.
(a) Impact of Event. Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change in control, any Incentives outstanding
as of the date such Change in Control is determined to have occurred and not
then exercisable and vested shall become fully exercisable and vested to the
full extent of the original grant and all restrictions on Incentives shall
immediately lapse.
(b) Change in Control Cash Out. Notwithstanding any other provision of the
Plan, upon the occurrence of a Change of Control all outstanding Stock
Options shall immediately become fully exercisable, and during the 60-day
period from and after such Change in Control (the "Exercise Period"), an
optionee shall have the right, in lieu of the payment of the exercise price
for the shares of Stock being purchased under the Stock Option or Director
Stock Option and by giving notice to the Company, to elect (within the
Exercise Period) to surrender all or part of the Stock Option or Director
Stock Option to the Company and to receive cash, within 30 days of such
notice, in an amount equal to the amount by which the Change in Control Price
per share of Stock on the date of such election shall exceed the exercise
price per share of Stock under the Stock Option or Director Stock Option (the
"Spread") multiplied by the number of shares of Stock granted under the Stock
Option or Director Stock Option as to which the right granted under this
section shall have been exercised; provided, however, that if the end of such
60-day period from and after a Change in Control is within six months of the
date of grant of a Stock Option or Director Stock Option held by an optionee
who is an officer or director of the Company and is subject to Section 16(b)
of the Exchange Act, such Stock Option or Director Stock Option shall be
cancelled in exchange for a cash payment to the optionee, effected on the day
which is six months and one day after the date of grant of such Option, equal
to the Spread multiplied by the number of shares of Stock granted under the
Stock Option or Director Stock Option. Notwithstanding the foregoing, if any
right granted pursuant to this section would make a Change in Control
transaction ineligible for pooling of interests accounting under APB No. 16
that but for this section would otherwise be eligible for such accounting
treatment, the Committee shall have the authority to replace the cash payable
pursuant to this section with Stock having a Fair Market Value equal to the
cash that would otherwise be payable hereunder. For purposes of this
paragraph only, the date of grant of any Stock Option or Director Stock
Option approved by the Committee prior to the date on which the Plan is
approved by the Company's shareholders shall be deemed to be the date on
which the Plan is approved by the Company's shareholders.
(c) Definition of Change in Control. For purposes of the Plan, a "Change
in Control" shall mean the happening of any of the following events:
(i) An acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person")
resulting in beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (x) the then
outstanding shares of
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Common Stock of the Company (the "Outstanding Company Common Stock") or
(y) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); excluding, however, the
following acquisitions of Outstanding Company Common Stock and Outstanding
Company Voting Securities: (1) any acquisition directly from the Company
(other than an acquisition pursuant to the exercise of a conversion
privilege), (2) any acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation or other entity controlled by the Company or
(4) any acquisition by any person pursuant to a reorganization, merger or
consolidation if, following such reorganization, merger or consolidation,
the conditions described in clauses (1), (2) and (3) of subsection (iii)
of this section are satisfied, or
(ii) Individuals who, as of the effective date of the Plan, constitute
the Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual who
becomes a member of the Board subsequent to such effective date, whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of directors then comprising the
Incumbent Board, shall be considered as though such individual were a
member of the incumbent Board; but, provided further, that any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf
of a person other than the Board shall not be so considered as a member of
the Incumbent Board; or
(iii) Approval by the shareholders of the Company of a reorganization,
merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company ("Business Combination");
excluding, however, such a Business Combination pursuant to which (1) all
or substantially all of the individuals and entities who are the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such
Business Combination own, directly or indirectly, more than 60% of,
respectively, the outstanding shares of common stock, and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation or other entity resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior
to such Business Combination, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (2) no person
(other than the Company, any employee benefit plan or related trust
sponsored or maintained by the Company or any corporation or other entity
controlled by the Company or such corporation resulting from such Business
Combination and any person beneficially owning, immediately prior to such
Business Combination, directly or indirectly, 20% or more of the
Outstanding Company Common Stock or Outstanding Company Voting Securities,
as the case may be) will beneficially own, directly or indirectly, 20% or
more of, respectively, the outstanding shares of common stock of the
corporation or other entity resulting from such Business Combination or
the combined voting power of the outstanding voting securities of such
corporation or other entity entitled to vote generally in the election of
directors and (3) at least a majority of the members of the board of
directors of the corporation or other entity resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) The approval by the shareholders of the Company of a plan of
partial or complete liquidation or dissolution of the Company.
(d) Change in Control Price. For purposes of the Plan, "Change in Control
Price" means the higher of (i) the highest reported sales price, regular way,
of a share of Stock in any transaction reported on the NASDAQ National Market
or other national securities exchange on which such shares are listed, as
applicable, during the 60-day period prior to and including the date of a
Change in Control and (ii) if the Change in Control is the result of a tender
or exchange offer or a Business Combination, the highest price per share of
Stock paid
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in such tender or exchange offer or Business Combination; provided, however,
that in the case of a Stock Option which (A) is held by an optionee who is an
officer or director of the Company and is subject to Section 16(b) of the
Exchange Act and (B) was granted within 240 days of the Change in Control,
then the Change in Control Price for such Stock Option shall be the Fair
Market Value of the Stock on the date such Stock Option is exercised,
cancelled or cashed out pursuant to the terms of the Plan. To the extent that
the consideration paid in any such transaction described above consists all
or in part of securities or other non-cash consideration, the value of such
securities or other non-cash consideration shall be determined in the sole
discretion of the Board.
19. Amendment of Incentive.
The Committee may amend, modify or terminate any outstanding Incentive,
including substituting therefor another Incentive of the same or a different
type, changing the date of exercise or realization and converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that the
holder's consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would not
materially and adversely affect the Employee.
20. Effective Date and Term.
This Plan shall be effective upon adoption by the shareholders of the
Company at its 1996 Annual Meeting to be held on April 23, 1996. The Plan
shall continue in effect until April 22, 2006, when it shall terminate. Upon
termination, any balances of shares reserved for issuance under the Plan
shall be cancelled, and no Incentives shall be granted under the Plan
thereafter. The Plan shall continue in effect, however, insofar as is
necessary to complete all of the Company's obligations under outstanding
Incentives to conclude the administration of the Plan.
21. Termination and Amendment of Plan.
The Plan may be terminated at any time by the Board of Directors except
with respect to any Stock Options, Director Stock Options, Restricted Stock
Incentives, Stock Appreciation Rights or Performance Share Incentives then
outstanding. Also, the Board may, from time to time, amend the Plan as it may
deem proper and in the best interests of the Company or as may be necessary
to comply with any applicable laws or regulations, provided that no such
amendment shall, without approval of the holders of a majority of the
outstanding shares of Common stock, (i) increase the total number of shares
which may be issued under the Plan, (ii) reduce the minimum purchase price or
otherwise materially increase the benefits under the Plan, (iii) change the
basis for valuing Stock Appreciation Rights, (iv) impair any outstanding
Incentives without the consent of the holder, (v) alter the class of
employees eligible to receive Incentives, or (vi) withdraw the administration
of the Plan from the Committee.
22. Construction of Plan.
The place of administration of the Plan shall be in the State of New York,
and the validity, construction, interpretation, administration and effect of
the Plan and of its rules and regulations, and rights relating to the Plan,
shall be determined solely in accordance with the laws, but not the laws
pertaining to choice of laws, of the State of New York.
A-10
<PAGE>
HARDINGE INC.
Proxy Solicited on Behalf of the Board of Directors
of Hardinge Inc. for the Annual Meeting
April 23, 1996
The undersigned hereby constitutes and appoints Robert E. Agan, James L.
Flynn and Boyd McDowell, II, and each of them his or her true and lawful agents
and proxies with full power of substitution in each, to represent the
undersigned at the Annual Meeting of Stockholders of Hardinge Inc. (the
"Company") to be held at the Samuel L. Clemens Performing Arts Center, Clemens
Center Parkway, Elmira, New York, on Tuesday, April 23, 1996 at 3:00 p.m., local
time, and at any adjournments or postponements thereof, with all powers the
undersigned would possess if then and there personally present, on all matters
properly coming before said Annual Meeting, including but not limited to the
matters set forth on the reverse side.
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. Your proxy cannot be
voted unless you sign, date and return this card.
This proxy when properly executed will be voted in the manner directed herein
and will be voted in the discretion of the proxies upon such other matters as
may properly come before the Annual Meeting. If no direction is made, this proxy
will be voted FOR proposals 1, 2 and 3.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3.
(reply box with X) Please mark your
votes as in this
example.
Directors recommend a vote "FOR"
WITHHELD
FOR ALL FROM ALL
NOMINEES NOMINEES
(reply box) (reply box)
1. Proposal for election of two Class I Directors for two-year terms
and one Class III Director for a one-year term.
For, except authority to vote WITHHELD from the
nominee(s) listed below (write name(s) on the line below)
Nominees: Class I
Robert E. Agan
Richard J. Cole
Class III
Douglas A. Greenlee
FOR AGAINST ABSTAIN
Directors recommend a vote "For" (open box) (open box) (open box)
2. Proposal to adopt the Hardinge Inc. 1996
Incentive Stock Plan
Directors recommend a vote "For" (open box) (open box) (open box)
3. Proposal to ratify the appintment of Ernst &
Young LLP as the Company's independent
auditors for 1996.
MARK HERE FOR
ADDRESS CHANGE
AND NOTE AT LEFT (open box)
PLEASE DATE, SIGN AND MAIL THIS PROXY TODAY IN THE ENCLOSED ENVELOPE TO:
American Stock Transfer & Trust Company, 40 Wall Street, 46th Floor,
New York, New York 10208-0438.
IF NO BOXES ARE MARKED, THIS PROXY WILL BE VOTED IN THE MANNER DESCRIBED ON THE
REVERSE SIDE.
SIGNATURE_____________________DATE_________________________ DATE______________
SIGNATURE IF HELD JOINTLY
NOTE: Please sign exactly as name appears herein. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
