EXHIBIT 10.2
HARDINGE INC.
EMPLOYMENT
AGREEMENT
EMPLOYMENT AGREEMENT dated as of March 3, 2008 (the
“Agreement”), between HARDINGE INC. , a New York
corporation (the “Company”) and EDWARD J. GAIO
(the “Executive”).
WHEREAS, the Company desires to engage the Executive to provide
services pursuant to the terms of this Agreement and the Executive
desires to accept such engagement.
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 March 3, 2008.
2.
EMPLOYMENT AND DUTIES
2.1
General . The Company hereby employs the Executive as,
and the Executive agrees to serve as, Vice President and Chief
Financial Officer, 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, 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. During the Employment Term, the Executive will not
be employed with any other person or entity, or be self-employed,
without the prior written approval of the Board or the Chief
Executive Officer of the Company.
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 (a “
Non-Renewal Notice ”)
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 5.6) 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, provided, however, the Employment Term will not be so
extended if the Executive has given a Notice of Non-Renewal prior
to the occurrence of the Change of Control.
2.4
Reimbursement of Expenses . Unless otherwise agreed to
by the Executive and the Company, 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 the Effective Date, the Executive
shall be entitled to receive a base salary (“ Base
Salary ”) at a rate of $205,000.00 per annum, payable in
accordance with the Company’s payroll practices.
Subject to the Executive’s rights under Section 5.2,
Base Salary is subject to increase or decrease, from time to time,
in the sole and absolute discretion of the Board. 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
Discretionary 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 in the sole
and absolute discretion of 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 Events .
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5.1.1. By the Company
. The Company may terminate the Executive’s employment
at any time for Cause (as hereinafter defined), without Cause, or
upon the Executive’s Permanent Disability (as hereinafter
defined).
5.1.2. By the Executive
. The Executive may terminate his employment at any time for
Good Reason (as hereinafter defined) or without Good
Reason.
5.2
Termination Without Cause; Resignation for Good Reason
.
5.2.1 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, or the
Executive resigns from his employment hereunder for Good Reason, in
either case 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, if the Executive elects
to continue his health insurance coverage in the applicable Company
plan pursuant to the Consolidated Omnibus Reconciliation Act of
1985, as amended, then the Company shall pay for such coverage
during the Severance Period, provided, however, that (i) the
Executive shall be responsible for paying such portion of the
applicable health insurance premium as the Company requires from
executive employees under the applicable Company plan, and
(ii) the Company’s obligation to pay for such coverage
during the Severance Period will terminate if, during the Severance
Period, the Executive becomes eligible to receive health insurance
coverage from another source at a cost to the Executive that is
equal to, or less than, the Executive’s cost under the
Company Plan. 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 5.2.1 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 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 5.2.1.
The Company’s obligation to make the Base Salary continuation
and health insurance payments described in this Section 5.2.1
shall be subject to the following conditions: (i) within
twenty-one (21) days after the effective date of termination or
resignation, the Executive shall have executed and delivered to the
Company a Termination Agreement and Release (“Release”)
in the form of Exhibit A attached hereto, and
(ii) the Release shall not have been revoked by the Executive
during the Executive during the revocation period specified
therein. If the Executive fails to deliver a fully executed
Release to the Company before expiration of such twenty-one (21)
day period, or such release is revoked as permitted
therein,
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then the Company will
have no obligation to make any of the payments specified in this
Section 5.2.1.
5.2.2 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, or the Executive
terminates his employment hereunder for Good Reason, in either case
at any time following a Change in Control or (b) the Executive
resigns from his employment her 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 welfare benefit 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.
5.3
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 5.2.2) 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 5.2.2, 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.
5.4
Cause . Termination for “ Cause ”
shall mean termination of the Executive’s employment by the
Company because of:
(i)
any act or omission that constitutes a breach by the Executive of
any of his obligations under this Agreement or any Company policy
or procedure and failure to cure such breach after notice of, and a
reasonable opportunity to cure, such breach;
(ii)
the continued willful failure or refusal of the Executive to
substantially perform the duties reasonably required of him as an
employee of the Company;
(iii)
an act of moral turpitude, dishonesty or fraud by, or criminal
conviction of, the Executive which in the determination of the
Board would render his continued employment by the Company damaging
or detrimental to the Company;
(iv)
any misappropriation of Company property by the Executive;
or
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(v)
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.
5.5
Good Reason . For purposes of this Agreement, “
Good Reason ” shall mean any of the following (without
the Executive’s prior written consent):
(i)
a decrease in the Executive’s Base Salary or a failure by the
Company to pay material compensation due and payable to the
Executive in connection with his employment;
(ii)
the Company’s failure to assign to the Executive duties that
are generally consistent with the Executive’s position and
title;
(iii)
a material diminution in benefits provided by the Company to the
Executive except for a diminution applicable to substantially all
of the Company’s senior executives;
(iv)
the Company’s requiring the Executive to relocate to an
office or location more than 50 miles from the Company’s
facilities in Elmira, New York;
(v)
a failure or refusal of any successor company to assume the
Company’s obligations under this Agreement; or
(vi)
the Company’s breach of any term of this Agreement and
failure to cure such breach after notice of, and a reasonable
opportunity to cure, such breach.
5.6
Change in Control . For purposes of this Agreement,
the term “ Change in Control
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