EXHIBIT 10.2
EMPLOYMENT AGREEMENT dated as of August 3, 1998 (the "Agreement"), between
HARDINGE INC., a New York corporation (the "Company") and XXXXXXX X. XXXXXXX
(the "Executive").
WHEREAS, the Executive is currently employed by the Company;
and
WHEREAS, the Company desires to engage the Executive to
provide services pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. EFFECTIVENESS OF AGREEMENT AND EFFECTIVE DATE
This Agreement shall become effective as of the date hereof.
For purposes of this Agreement, the term "Effective Date" shall mean January 1,
1998.
2. EMPLOYMENT AND DUTIES
2.1 General. The Company hereby employs the Executive, and the
Executive agrees to serve, upon the terms and conditions herein contained. The
Executive shall perform such duties and services for the Company as may be
designated from time to time by the Board of Directors of the Company (the
"Board") or the Chief Executive Officer of the Company. The Executive agrees to
serve the Company faithfully and to the best of his ability under the direction
of the Board and the Chief Executive Officer of the Company.
2.2 Exclusive Services. Except as may otherwise be approved in
advance by the Board or the Chief Executive Officer of the Company, and except
during vacation periods and reasonable periods of absence due to sickness,
personal injury or other disability, the Executive shall devote his full working
time throughout the Employment Term (as defined in Section 2.3) to the services
required of him hereunder. The Executive shall render his services exclusively
to the Company during the Employment Term, and shall use his best efforts,
judgment and energy to improve and advance the business and interests of the
Company in a manner consistent with the duties of his position.
2.3 Term of Employment. The Executive's employment under this
Agreement shall commence as of the date hereof and shall terminate on the
earlier of (i) the second anniversary of the Effective Date or (ii) termination
of the Executive's employment pursuant to this Agreement; provided, however,
that the term of the Executive's employment shall be automatically extended
without further action of either party for additional one year periods unless
written notice of either party's intention not to extend has been given to the
other party hereto at least 60 days prior to the expiration of the then
effective term. The period commencing as of the Effective Date and ending on the
second anniversary of the Effective Date or such later date to which the term of
the Executive's employment shall have been extended is hereinafter referred to
as the "Employment Term". Notwithstanding the foregoing, in the event of a
Change in Control (as defined in Section 5.5) occurring during the Employment
Term, the Employment Term shall be extended so that it terminates on the second
anniversary of the date of the Change in Control.
2.4 Reimbursement of Expenses. The Company shall reimburse the
Executive for reasonable travel and other business expenses incurred by him in
the fulfillment of his duties hereunder upon presentation by the Executive of an
itemized account of such expenditures, in accordance with Company practices
consistently applied.
3. ANNUAL COMPENSATION
3.1 Base Salary. From August 1, 1998, the Executive shall be
entitled to receive a base salary ("Base Salary") at a rate of $120,000 per
annum, payable in accordance with the Company's payroll practices, with such
changes as may be provided in accordance with the terms hereof. Once changed,
such amount shall constitute the Executive's annual Base Salary.
3.2 Annual Review. The Executive's Base Salary shall be
reviewed by the Board, based upon the Executive's performance, not less often
than annually.
3.3 Bonus. After the Effective Date, the Executive shall be
entitled to such bonus, if any, as may be awarded to the Executive from time to
time by the Board.
4. EMPLOYEE BENEFITS
The Executive shall, during his employment under this
Agreement, be included to the extent eligible thereunder in all employee benefit
plans, programs or arrangements (including, without limitation, any plans,
programs or arrangements providing for retirement benefits, incentive
compensation, profit sharing, bonuses, disability benefits, health and life
insurance, or vacation and paid holidays) which shall be established by the
Company for, or made available to, its executives generally.
5. TERMINATION OF EMPLOYMENT
5.1 Termination Without Cause; Resignation for Good Reason.
5.1.1 Prior to a Change in Control. If, prior to the
expiration of the Employment Term, the Executive's employment is terminated by
the Company without Cause (as defined in Section 5.3), or the Executive resigns
from his employment hereunder for Good Reason (as defined in Section 5.4.1), at
any time prior to a Change in Control, the Company shall continue to pay the
Executive the Base Salary (at the rate in effect immediately prior to such
termination) for the greater of (i) 6 months or (ii) the remainder of the
Employment Term (such period being referred to hereinafter as the "Severance
Period"), at such intervals as the same would have been paid had the Executive
remained in the active service of the Company. In addition, the Executive shall
be entitled to continue to participate during the Severance Period in all
employee welfare benefit plans that the Company provides and continues to
provide generally to its employees, provided that the Executive is entitled to
continue to participate in such plans under the terms thereof. The Executive
shall have no further right to receive any other compensation or benefits after
such termination or resignation of employment except as determined in accordance
with the terms of the employee benefit plans or programs of the Company. In the
event of the Executive's death during the Severance Period, Base Salary
continuation payments under this Section 5.1.1 shall continue to be made during
the remainder of the Severance Period to the beneficiary designated in writing
for this purpose by the Executive or, if no such beneficiary is specifically
designated, to the Executive's estate.
If, during the Severance Period, the Executive materially
breaches his obligations under Section 8 of this Agreement, the Company may,
upon written notice to the Executive, terminate the Severance Period and cease
to make any further payments or provide any benefits described in this Section
5.1.1.
5.1.2 Following a Change in Control. If, prior to the
expiration of the Employment Term, (a) the Executive's employment is terminated
by the Company without Cause (as defined in Section 5.3), or the Executive
terminates his employment hereunder for Good Reason (as defined in Section
5.4.2), at any time following a Change in Control or (b) the Executive resigns
from his employment hereunder for any reason at any time later than six months
following a Change in Control, the Company shall pay to the Executive a lump sum
cash payment equal to 1.5 times the sum of (i) his Base Salary (at the rate in
effect immediately prior to such termination or, if higher, as in effect
immediately prior to the Change in Control) and (ii) his average annual bonus
earned during the three fiscal years immediately preceding the Change in
Control. In addition, the Executive shall be entitled to continue to participate
for a period of three years following such termination in all employee benefit
welfare plans that the Company provides and continues to provide generally to
its executive employees (or, if the Executive is not entitled to participate in
any such plan under the terms thereof, in a comparable substitute arrangement
provided by the Company). The Company shall reimburse the Executive for any
premiums or other expenses incurred by the Executive with respect to his
participation and that of any of his dependents in any such employee benefit
welfare plan.
5.2 Termination for Cause; Resignation Without Good Reason.
If, prior to the expiration of the Employment Term, the Executive's employment
is terminated by the Company for Cause, or the Executive resigns from his
employment hereunder other than for Good Reason, the Executive shall (subject to
Section 5.1.2) be entitled only to payment of his Base Salary as then in effect
through and including the date of termination or resignation. Subject to Section
5.1.2, the Executive shall have no further right to receive any other
compensation or benefits after such termination or resignation of employment,
except as determined in accordance with the terms of the employee benefit plans
or programs of the Company.
5.3 Cause. Termination for "Cause" shall mean termination of
the Executive's employment because of:
(i) any act or omission that constitutes a material breach by the
Executive of any of his obligations under this
Agreement;
(ii) the continued failure or refusal of the Executive to
substantially perform the duties reasonably required of him as an
employee of the Company;
(iii) any willful and material violation by the Executive of any
Federal or state law or regulation applicable to the business of the
Company or any of its subsidiaries, or the Executive's conviction of a
felony, or any willful perpetration by the Executive of a common law
fraud; or
(iv) any other willful misconduct by the Executive which is
materially injurious to the financial condition or business reputation
of, or is otherwise materially injurious to, the Company or any of its
subsidiaries or affiliates.
5.4 Good Reason.
5.4.1 Prior to a Change in Control. For purposes of
this Agreement, "Good Reason" shall mean a material breach by the Company of any
term or provision of this Agreement (without the Executive's prior written
consent).
5.4.2 Following a Change in Control. Following a
Change in Control, for purposes of this Agreement, "Good Reason" shall also mean
(in addition to the event or condition described in Section 5.4.1), any of the
following (without the Executive's prior written consent):
(i) decrease in the Executive's base rate of compensation or a
failure by the Company to pay material compensation due and payable to
the Executive in connection with his employment;
(ii) a material diminution of the responsibilities or title of the
Executive with the Company; or
(iii) a failure to continue in effect any medical, dental, accident,
disability or other material employee welfare benefit plan in which the
Executive is entitled to participate immediately prior to the Change in
Control or any material decrease in the benefits provided under any
such plan (except that employee contributions may be raised to the
extent of any cost increases imposed by third parties);
(iv) the Company's requiring the Executive to relocate to an office
or location more than 50 miles from his principal employment location
immediately prior to the Change in Control; or
(v) a failure or refusal of any successor company to assume the
Company's obligations under this Agreement.
5.5 Change in Control. For purposes of this Agreement, the
term "Change in Control" shall mean and shall be deemed to occur if and when:
(i) an offeror (other than the Company) purchases shares of Common
Stock of the Company pursuant to a tender or exchange offer for such
shares;
(ii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended), other
than any employee benefit plan of the Company or any person or entity
appointed or established pursuant to any such plan, who is not now but
who shall hereafter become the beneficial owner, directly or
indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding securities,
excluding any such securities held by such person as trustee or other
fiduciary of an employee benefit plan of the Company;
(iii) the membership of the Board changes as the result of a
contested election or elections, so that a majority of the individuals
who are directors at any particular time were proposed by persons other
than (a) directors who were members of the Board immediately prior to a
first such contested election ("Continuing Directors") or (b) directors
proposed by the Continuing Directors and were initially elected to the
Board as a result of such a contested election or elections occurring
within the previous two years; or
(iv) the shareholders of the Company approve a merger,
consolidation, sale or disposition of all or substantially all of the
Company's assets, or a plan of partial or complete liquidation.
6. DEATH, DISABILITY OR RETIREMENT.
In the event of termination of employment by reason of death,
Permanent Disability (as hereinafter defined) or retirement, the Executive (or
his estate, as applicable) shall be entitled to Base Salary and benefits
determined under Sections 3 and 4 through the date of termination. Other
benefits shall be determined in accordance with the benefit plans maintained by
the Company, and the Company shall have no further obligation hereunder. For
purposes of this Agreement, "Permanent Disability" means a physical or mental
disability or infirmity of the Executive that prevents the normal performance of
substantially all his duties as an employee of the Company, which disability or
infirmity shall exist for any continuous period of 180 days.
7. MITIGATION OF DAMAGES
The Executive shall be required to mitigate the amount of any
payment provided for in Section 5.1.1 by seeking other employment, and any such
payment will be reduced by any amounts which the Executive receives or is
entitled to receive from another employer with respect to the Severance Period.
The Executive shall promptly notify the Company in writing in the event that
other employment is obtained during the Severance Period.
8. NONSOLICITATION; CONFIDENTIALITY; NONCOMPETITION
8.1 Nonsolicitation. For so long as the Executive is employed
by the Company, and continuing for two years thereafter if termination of
employment occurs prior to a Change in Control, the Executive shall not, without
the prior written consent of the Company, directly or indirectly, as a sole
proprietor, member of a partnership, stockholder or investor, officer or
director of a corporation, or as an employee, associate, consultant or agent of
any person, partnership, corporation or other business organization or entity
other than the Company: (x) solicit or endeavor to entice away from the Company
or any of its subsidiaries any person or entity who is, or, during the then most
recent 12-month period, was employed by, or had served as an agent or key
consultant of the Company or any of its subsidiaries; or (y) solicit or endeavor
to entice away from the Company or any of its subsidiaries any person or entity
who is, or was within the then most recent 12-month period, a customer or client
(or reasonably anticipated to the general knowledge of the Executive or the
public to become a customer or client) of the Company or any of its
subsidiaries.
8.2 Confidentiality. The Executive covenants and agrees with
the Company that he will not at any time, except in performance of his
obligations to the Company hereunder or with the prior written consent of the
Company, directly or indirectly, disclose any secret or confidential information
that he may learn or has learned by reason of his association with the Company
or any of its subsidiaries and affiliates. The term "confidential information"
includes information not previously disclosed to the public or to the trade by
the Company's management, or otherwise in the public domain, with respect to the
Company's or any of its subsidiaries' or affiliates' products, facilities,
applications and methods, trade secrets and other intellectual property,
systems, procedures, manuals, confidential reports, product price lists,
customer lists, technical information, financial information (including the
revenues, costs or profits associated with any of the Company's products),
business plans, prospects or opportunities, but shall exclude any information
which (i) is or becomes available to the public or is generally known in the
industry or industries in which the Company operates other than as a result of
disclosure by the Executive in violation of his agreements under this Section
8.2 or (ii) the Executive is required to disclose under any applicable laws,
regulations or directives of any government agency, tribunal or authority having
jurisdiction in the matter or under subpoena or other process of law.
8.3 No Competing Employment. For so long as the Executive is
employed by the Company, and continuing for one year thereafter if termination
of employment occurs prior to a Change in Control, the Executive shall not,
directly or indirectly, as a sole proprietor, member of a partnership,
stockholder or investor (other than a stockholder or investor owning not more
than a 1% interest), officer or director of a corporation, or as an employee,
associate, consultant or agent of any person, partnership, corporation or other
business organization or entity other than the Company, render any service to or
in any way be affiliated with a competitor (or any person or entity that is
reasonably anticipated to the general knowledge of the Executive or the public
to become a competitor) of the Company or any of its subsidiaries.
8.4 Exclusive Property. The Executive confirms that all
confidential information is and shall remain the exclusive property of the
Company. All business records, papers and documents kept or made by Executive
relating to the business of the Company shall be and remain the property of the
Company, except for such papers customarily deemed to be the personal copies of
the Executive.
8.5 Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any of the
covenants contained in this Section 8 may result in material and irreparable
injury to the Company or its affiliates or subsidiaries for which there is no
adequate remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or threat thereof,
the Company shall be entitled to seek a temporary restraining order and/or a
preliminary or permanent injunction restraining the Executive from engaging in
activities prohibited by this Section 8 or such other relief as may be required
specifically to enforce any of the covenants in this Section 8. If for any
reason, it is held that the restrictions under this Section 8 are not reasonable
or that consideration therefor is inadequate, such restrictions shall be
interpreted or modified to include as much of the duration and scope identified
in this Section 8 as will render such restrictions valid and enforceable.
9. ARBITRATION
Any dispute or controversy arising under or in connection with
this Agreement that cannot be mutually resolved by the parties hereto shall be
settled exclusively by arbitration in New York, New York, before one arbitrator
of exemplary qualifications and stature, who shall be selected jointly by the
Company and the Executive, or, if the Company and the Executive cannot agree on
the selection of the arbitrator, shall be selected by the American Arbitration
Association. Judgment may be entered on the arbitrator's award in any court
having jurisdiction. The parties hereby agree that the arbitrator shall be
empowered to enter an equitable decree mandating specific enforcement of the
terms of this Agreement.
10. CERTAIN PAYMENTS
Notwithstanding anything in this Agreement to the contrary, if
any amounts due to the Executive under this Agreement and any other plan or
program of the Company constitute a "parachute payment" (as defined in Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), then
the aggregate of the amounts constituting the parachute payment shall be reduced
to an amount that will equal three times his "base amount" (as defined in
Section 280G(b)(3) of the Code) less $1.00. The determination to be made with
respect to this Section 10 shall be made by an accounting firm jointly selected
by the Company and the Executive and paid by the Company, and which may be the
Company's independent auditors.
11. MISCELLANEOUS
11.1 Notices. All notices or communications hereunder shall be
in writing, addressed as follows:
To the Company:
Hardinge Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000-0000
Telecopier No. (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxx
To the Executive:
Xxxxxxx X. Xxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
All such notices shall be conclusively deemed to be received and shall be
effective, (i) if sent by hand delivery, upon receipt, (ii) if sent by telecopy
or facsimile transmission, upon confirmation of receipt by the sender of such
transmission, or (iii) if sent by registered or certified mail, on the fifth day
after the day on which such notice is mailed.
11.2 Severability. Each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
11.3 Assignment. The rights and obligations of this Agreement
shall bind and inure to the benefit of any successor of the Company by
reorganization, merger or consolidation, or any assignee of all or substantially
all of the Company's business and properties. Neither this Agreement nor any
rights hereunder shall be assignable or otherwise subject to hypothecation by
the Executive.
11.4 Entire Agreement. This Agreement represents the entire
agreement of the parties and shall supersede any and all previous contracts,
arrangements or understandings between the Company and the Executive relating to
the subject matter hereof. This Agreement may be amended at any time by mutual
written agreement of the parties hereto.
11.5 Withholding. The payment of any amount pursuant to this
Agreement shall be subject to applicable withholding and payroll taxes, and such
other deductions as may be required under the Company's employee benefit plans,
if any.
11.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed entirely within that state.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed and the Executive has hereunto set his hand, as of the day and
year first above written.
HARDINGE INC.
By /s/ Xxxxxx X. Xxxx
Name: Xxxxxx E, Xxxx
Title: Chairman of the Board, President
and Chief Executive Officer
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx.
For purposes of this Agreement, I hereby designate Xxxxx X.
Xxxxxxx as my beneficiary hereunder.
Date: August 3, 1998 /s/ Xxxxxxx X. Xxxxxxx
--------------- ----------------------
Xxxxxxx X. Xxxxxxx
State of New York )
: ss.
County of Chemung )
On the 3rd day of August , 1998, before me, personally came
Xxxxxx X. Xxxx, to me known, who being by me duly sworn, did depose and say that
he resides in the Town of Elmira, Chemung County, New York; that he is the
Chairman of the Board, President and Chief Executive Officer of HARDINGE INC.,
the corporation described in and which executed the foregoing instrument; that
he knows the seal of said corporation; that it was so affixed by order of the
Board of Directors of said corporation and that he signed his name thereto by
like order.
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Notary Public
State of New York )
: ss.
County of Chemung )
On this 3rd day of August , 1998, before me, the subscriber,
personally appeared XXXXXXX X. XXXXXXX, to me personally known and known to me
to be the same person described in and who executed the foregoing instrument,
and he duly acknowledged to me that he executed the same.
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Notary Public
