EMPLOYMENT AGREEMENT dated as of January 1, 1997 (the "Agreement"), between
HARDINGE INC., a New York corporation (the "Company") and XXXXXX X. XXXXXX (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, 1997.
2. EMPLOYMENT AND DUTIES
2.1 General. The Company herebyemploys 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 the Effective Date, the Executive shall be entitled
to receive a base salary ("Base Salary") at a rate of $116,000 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 willfulmisconduct by theExecutive 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) a 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:
Xxxxxx X. Xxxxxx
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, 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 X. Xxxx
Title: Chairman of the Board
and Chief Executive Officer
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx.
For purposes of this Agreement, I hereby designate Xxxx X. Xxxxxx as my
beneficiary hereunder.
Date: 3/13/97 /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx.
State of New York )
: ss.
County of Chemung )
On the 13th day of March, 1997, 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 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
Notary Public
State of New York )
: ss.
County of Chemung )
On this 13th day of March, 1997, before me, the subscriber, personally
appeared XXXXXX X. XXXXXX, 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
Notary Public
