EXHIBIT 10.1

 

HARDINGE INC.

 

SEPARATION AND CONSULTING AGREEMENT

 

                                THIS SEPARATION AND CONSULTING AGREEMENT
(“Agreement”) is made as of May 22, 2008 by and between HARDINGE INC., a New
York corporation with its principal office at One Hardinge Drive, Elmira, New
York 14902-1507 (the “Company”) and J. Patrick Ervin, an individual residing at
27 Dublin Drive, Elmira, New York 14905 (“Mr. Ervin”).

 

                                WHEREAS, Mr. Ervin and the Company have agreed
that Mr. Ervin’s service as President and Chief Executive Officer of the Company
will terminate effective upon the date of this Agreement; and

 

                                WHEREAS, because Mr. Ervin has extensive
knowledge, experience, skill and ability, and because of Mr. Ervin’s long
standing knowledge of the Company’s business, the Company desires to engage
Mr. Ervin as a consultant to the Company upon termination of Mr. Ervin’s
employment with the Company and secure Mr. Ervin’s covenant to not compete with
the Company on the terms and conditions set forth in this Agreement.

 

                                NOW, THEREFORE, in consideration of the promises
exchanged herein, the parties agree as follows:

 

                                1.             SEPARATION.

 

                                                (A)           EFFECTIVE UPON THE
DATE OF THIS AGREEMENT (THE “SEPARATION DATE”), MR. ERVIN’S SERVICE AS AN
OFFICER AND EMPLOYEE OF THE COMPANY AND IN ALL CAPACITIES IN WHICH MR. ERVIN IS
SERVING ANY AFFILIATE (AS HEREINAFTER DEFINED) OR ANY EMPLOYEE BENEFIT PLAN
SPONSORED BY THE COMPANY OR ANY AFFILIATE, INCLUDING, BUT NOT LIMITED TO, AS
DIRECTOR, OFFICER, MANAGER, EMPLOYEE AND TRUSTEE, IS HEREBY TERMINATED.

 

                                                (B)           MR. ERVIN HEREBY
ALSO RESIGNS AS A DIRECTOR OF THE COMPANY, EFFECTIVE ON THE SEPARATION DATE.

 

                                                (C)           MR. ERVIN AGREES
TO RESIGN, EFFECTIVE UPON THE SEPARATION DATE, AS AN OFFICER, TRUSTEE AND MEMBER
OF THE ANDERSON-EVANS FOUNDATION OF ELMIRA, NY (THE “AE FOUNDATION”) AND WILL
PROMPTLY AFTER HIS EXECUTION OF THIS AGREEMENT SUBMIT A WRITTEN RESIGNATION, IN
CUSTOMARY FORM, TO THE BOARD OF DIRECTORS OF THE AE FOUNDATION.

 

                                                (D)           MR. ERVIN FURTHER
AGREES TO EXPEDITIOUSLY RESIGN FROM ANY POSITIONS HE HOLDS WITH ANY TRADE,
CIVIC, PROFESSIONAL OR OTHER ORGANIZATIONS IN WHICH HE IS SERVING AS, OR IS
IDENTIFIED AS, A REPRESENTATIVE OF THE COMPANY.

 

                                2.             CONSULTING ENGAGEMENT.  EFFECTIVE
ON THE SEPARATION DATE, THE COMPANY HEREBY ENGAGES MR. ERVIN AS AN INDEPENDENT
CONSULTANT TO ADVISE AND CONSULT WITH THE COMPANY DURING THE CONSULTING TERM (AS
HEREINAFTER DEFINED) WITH RESPECT TO ALL MATTERS REGARDING THE BUSINESS OF THE
COMPANY AND ITS AFFILIATES THAT ARE WITHIN MR. ERVIN’S KNOWLEDGE,

 

 

 

 

 

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EXPERIENCE OR EXPERTISE OR ARE RELATED TO MR. ERVIN’S FORMER DUTIES AS AN
EXECUTIVE OFFICER OF THE COMPANY, AND MR. ERVIN HEREBY ACCEPTS SUCH ENGAGEMENT. 
MR. ERVIN SHALL PROVIDE SUCH CONSULTATION SERVICES TO THE COMPANY DURING NORMAL
BUSINESS HOURS AND UPON REASONABLE NOTICE FROM THE COMPANY.  MR. ERVIN SHALL NOT
BE REQUIRED TO DEVOTE MORE THAN FORTY (40) HOURS PER MONTH TO HIS CONSULTING
DUTIES UNDER THIS AGREEMENT.  TO AVOID INCONVENIENCE OR CONFLICT WITH RESPECT TO
MR. ERVIN’S OTHER BUSINESS OR PERSONAL AFFAIRS, THE COMPANY WILL USE REASONABLE
EFFORTS TO ALLOW MR. ERVIN TO PROVIDE CONSULTATION SERVICES TO THE COMPANY USING
TELEPHONE, ELECTRONIC MAIL OR OTHER MEANS OF COMMUNICATIONS.

 

                                3.             TERM.  THE TERM OF MR. ERVIN’S
ENGAGEMENT AS A CONSULTANT TO COMPANY WILL COMMENCE ON THE SEPARATION DATE AND
CONTINUE UNTIL MARCH 31, 2012 (THE “CONSULTING TERM”), PROVIDED, HOWEVER, THAT
THE CONSULTING TERM SHALL IMMEDIATELY TERMINATE UPON (I) MR. ERVIN’S DEATH, OR
(II) WRITTEN NOTICE BY THE COMPANY TO MR. ERVIN THAT MR. ERVIN HAS BREACHED, IN
ANY RESPECT, ANY OF HIS OBLIGATIONS UNDER THIS AGREEMENT AND MR. ERVIN’S FAILURE
TO CURE SUCH BREACH (IF CURABLE) WITHIN TEN (10) DAYS AFTER RECEIPT OF SUCH
NOTICE.

 

                                4.             COMPENSATION.

 

                                                (A)           IN CONSIDERATION
OF MR. ERVIN’S PERFORMANCE OF ALL OF HIS OBLIGATIONS UNDER THIS AGREEMENT
INCLUDING, BUT NOT LIMITED TO, THE CONSULTING SERVICES PROVIDED UNDER SECTION 2
AND MR. ERVIN’S COMPLIANCE WITH THE COVENANTS SET FORTH IN SECTION 9, THE
COMPANY WILL PAY MR. ERVIN AS FOLLOWS:

 

                                                                (I)           
DURING THE PERIOD COMMENCING ON THE SEPARATION DATE AND ENDING ON DECEMBER 31,
2008, THE COMPANY WILL CONTINUE TO PAY TO MR. ERVIN HIS BASE SALARY AT THE
ANNUAL RATE IN EFFECT IMMEDIATELY PRIOR TO THE SEPARATION DATE.  FOR ALL
PURPOSES RELATED TO INCOME TAX AND PAYROLL TAX REPORTING AND WITHHOLDING AND
APPLICABLE FEDERAL, STATE AND LOCAL LAWS, RULES AND REGULATIONS, THESE PAYMENTS
WILL CONSTITUTE SEVERANCE PAYMENTS IN RESPECT OF MR. ERVIN’S SEPARATION FROM THE
COMPANY.  THESE PAYMENTS ARE ALSO INTENDED TO CONSTITUTE “SEPARATION PAY” FOR
PURPOSES OF TREASURY REGULATION § 1.409A-1(B)(9).

 

                                                                (II)          
DURING THE PERIOD COMMENCING ON JANUARY 1, 2009 AND ENDING ON MARCH 31, 2012,
THE COMPANY WILL PAY MR. ERVIN THE SUM OF $16,666.66 PER CALENDAR MONTH ON OR
BEFORE THE 15TH DAY OF EACH MONTH DURING THE CONSULTING TERM, COMMENCING
JANUARY 15, 2009.  FOR ALL PURPOSES RELATED TO INCOME AND PAYROLL TAX REPORTING
AND WITHHOLDING AND APPLICABLE FEDERAL, STATE AND LOCAL LAWS, RULES AND
REGULATIONS, THESE PAYMENTS WILL BE MADE TO MR. ERVIN IN HIS CAPACITY AS AN
INDEPENDENT CONTRACTOR TO THE COMPANY.

 

                                                (B)           IF THE CONSULTING
TERM TERMINATES PRIOR TO MARCH 31, 2012, THE COMPANY’S OBLIGATION TO MAKE THE
PAYMENTS SPECIFIED IN THIS SECTION 4 SHALL ALSO TERMINATE, PROVIDED, HOWEVER,
THAT IN THE EVENT OF MR. ERVIN’S DEATH PRIOR TO DECEMBER 31, 2008, THE COMPANY
WILL CONTINUE TO PAY TO HIS ESTATE THE PAYMENTS SPECIFIED IN
PARAGRAPH 4(A)(I) ABOVE.

 

 

 

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                                5.             HEALTH INSURANCE.

 

                                                (A)           THE COMPANY WILL
AMEND THE COMPANY’S GROUP HEALTH INSURANCE PLAN IN WHICH MR. ERVIN PARTICIPATED
IMMEDIATELY PRIOR TO THE SEPARATION DATE (THE “HEALTH PLAN”) TO PERMIT MR. ERVIN
TO REMAIN A PARTICIPANT IN THE HEALTH PLAN DURING THE CONSULTING TERM. 
MR. ERVIN SHALL CONTINUE TO PARTICIPATE IN THE HEALTH PLAN DURING THE CONSULTING
TERM ON THE SAME TERMS AND CONDITIONS AS EACH OTHER PARTICIPANT IN THE HEALTH
PLAN UNLESS AND UNTIL THE COMPANY REASONABLY DETERMINES THAT HIS PARTICIPATION
IS NO LONGER POSSIBLE DUE TO CHANGES IN THE APPLICABLE GROUP HEALTH INSURANCE
CONTRACT, THE INSURER’S POLICIES OR RULES, OR APPLICABLE LAW OR REGULATIONS.  IF
THE COMPANY SO DETERMINES THAT MR. ERVIN’S PARTICIPATION IN THE HEALTH PLAN IS
NO LONGER POSSIBLE, THEN COMMENCING ON THE DATE MR. ERVIN CEASES TO PARTICIPATE
IN THE HEALTH PLAN AND CONTINUING UNTIL EXPIRATION OR EARLIER TERMINATION OF THE
CONSULTING TERM, THE COMPANY WILL REIMBURSE MR. ERVIN,  UP TO A MAXIMUM OF
$1,000 PER MONTH, FOR THE PREMIUM EXPENSE OF HEALTH INSURANCE FOR MR. ERVIN AND
HIS IMMEDIATE FAMILY UNDER A PLAN SELECTED AND PURCHASED BY MR. ERVIN.  SUCH
PAYMENTS BY THE COMPANY WILL BE MADE UPON MR. ERVIN’S PRESENTATION TO THE
COMPANY OF REASONABLY SATISFACTORY EVIDENCE OF SUCH COVERAGE AND THE COST
THEREOF, WHICH PRESENTATION SHALL BE MADE NO LATER THAN SIXTY (60) DAYS AFTER
MR. ERVIN’S INCURRENCE OF THE COST.

 

                                                (B)           COMMENCING ON
APRIL 1, 2012, PROVIDED THAT THE CONSULTING TERM HAS NOT BEEN TERMINATED PRIOR
TO MARCH 31, 2012 PURSUANT TO CLAUSE (I) OR (II) OF SECTION 3, MR. ERVIN WILL BE
PERMITTED TO REMAIN A PARTICIPANT IN THE HEALTH PLAN PROVIDED THAT HE WILL BE
SOLELY RESPONSIBLE FOR ALL COSTS OF HIS PARTICIPATION INCLUDING, BUT NOT LIMITED
TO, ALL INSURANCE PREMIUMS AND PROVIDED, FURTHER, THAT SUCH PARTICIPATION WILL
TERMINATE IF THE COMPANY REASONABLY DETERMINES THAT HIS PARTICIPATION IS NO
LONGER POSSIBLE DUE TO CHANGES IN THE APPLICABLE GROUP HEALTH INSURANCE
CONTRACT, THE INSURER’S POLICIES OR RULES, OR APPLICABLE LAW OR REGULATIONS.

 

                                                (C)           THE COMPANY’S
OBLIGATIONS UNDER THIS SECTION 5 WILL TERMINATE UPON WRITTEN NOTICE BY THE
COMPANY TO MR. ERVIN THAT MR. ERVIN HAS BREACHED, IN ANY RESPECT, ANY OF HIS
OBLIGATIONS UNDER THIS AGREEMENT AND MR. ERVIN’S FAILURE TO CURE SUCH BREACH (IF
CURABLE) WITHIN TEN (10) DAYS AFTER RECEIPT OF SUCH NOTICE.

 

                                6.             LIFE INSURANCE.  THE COMPANY IS
CURRENTLY THE OWNER AND BENEFICIARY OF THE FOLLOWING LIFE INSURANCE POLICIES
ISSUED BY NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY INSURING THE LIFE OF
MR. ERVIN (THE “LIFE POLICIES”):

 

                                                                (I)           
POLICY NO. 14-202-406 ISSUED ON APRIL 25, 1997

 

                                                                (II)          
POLICY NO. 15-392-726 ISSUED ON MAY 22, 2000

 

As soon as practicable after the Separation Date, the Company will assign
ownership of the Life Policies to Mr. Ervin.  Mr. Ervin will be solely
responsible for any income tax consequences arising from such assignment and for
all premiums due in respect of the Life Policies from and after the Separation
Date.

 

 

 

 

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                                7.             SERP BENEFITS.

 

                                                (A)           MR. ERVIN’S
BENEFIT UNDER THE HARDINGE INC. EXECUTIVE SUPPLEMENTAL PENSION PLAN AS AMENDED
AND RESTATED EFFECTIVE AUGUST 9, 2005 (THE “SERP”) WILL BE CALCULATED AS
FOLLOWS:

 

                                                                (I)           
MR. ERVIN’S GROSS SERP BENEFIT SHALL BE THE BENEFIT DETERMINED UNDER
SECTION 2(A) OF THE SERP AS IF HE CONTINUED TO BE EMPLOYED BY THE COMPANY UNTIL
HIS 55TH BIRTHDAY AND HIS FINAL AVERAGE COMPENSATION WERE THE AMOUNT DETERMINED
UNDER THE SERP ON THE SEPARATION DATE.

 

                                                                (II)          
MR. ERVIN’S NET SERP BENEFIT SHALL BE THE GROSS SERP BENEFIT DETERMINED UNDER
PARAGRAPH 7(A)(I) ABOVE REDUCED BY THE ACTUAL AMOUNT OF BENEFIT PAYABLE TO HIM
UNDER THE HARDINGE INC. PENSION PLAN AS RESTATED EFFECTIVE JANUARY 1, 1999 AND
AS FURTHER AMENDED BY AMENDMENT NOS. 1-15 (THE “PENSION PLAN”).

 

                                                (B)           FOR THE PURPOSE OF
CALCULATING MR. ERVIN’S NET SERP BENEFIT UNDER PARAGRAPH 7(A), THE GROSS SERP
BENEFIT, THE ACTUAL BENEFIT PAYABLE TO MR. ERVIN UNDER THE PENSION PLAN, AND
MR. ERVIN’S NET SERP BENEFIT SHALL ALL BE CALCULATED IN THE FORM OF SINGLE LIFE
ANNUITIES COMMENCING ON THE FIRST DAY OF THE MONTH FOLLOWING HIS 65TH BIRTHDAY. 
HIS NET SERP BENEFIT THUS CALCULATED SHALL BE ACTUARIALLY ADJUSTED, USING THE
RULES AND ACTUARIAL ASSUMPTIONS CONTAINED IN THE PENSION PLAN TO REFLECT (I) THE
COMMENCEMENT OF BENEFIT PAYMENTS BEFORE HIS 65TH BIRTHDAY (TAKING INTO ACCOUNT
MR. ERVIN’S DEEMED CONTINUED EMPLOYMENT FOR PURPOSES OF THE SERP UNTIL HIS 55TH
BIRTHDAY) AND (II) THE CONVERSION OF HIS NET SERP BENEFIT FROM A SINGLE LIFE
ANNUITY TO A JOINT AND 100% SURVIVOR ANNUITY.

 

                                                (C)           THE AMOUNT DUE
MR. ERVIN UNDER THIS SECTION 7 SHALL BE PAID IN THE FORM OF A JOINT AND 100%
SURVIVOR ANNUITY WITH HIS SPOUSE AS THE SURVIVING ANNUITANT BEGINNING ON
APRIL 1, 2012, PROVIDED, HOWEVER, THAT IF MR. ERVIN IS FOR ANY REASON NOT
MARRIED ON APRIL 1, 2012, THE AMOUNT DUE SHALL BE PAID IN THE FORM OF AN
ACTUARIALLY EQUIVALENT OPTIONAL FORM OF ANNUITY (THAT IS A PERMITTED OPTIONAL
FORM OF ANNUITY UNDER THE PENSION PLAN) BEGINNING ON SUCH DATE WHICH IS ELECTED
BY MR. ERVIN ON OR BEFORE THAT DATE.

 

                                                (D)           THE SERP SHALL BE
DEEMED TO BE AMENDED AS OF THE SEPARATION DATE TO BE CONSISTENT WITH THE TERMS
OF THIS AGREEMENT.

 

                                                (E)           MR. ERVIN
CONTINUES TO BE ELIGIBLE FOR A PENSION BENEFIT DETERMINED UNDER THE TERMS OF THE
PENSION PLAN AND NOTHING IN THIS SECTION 7 IS INTENDED TO ENLARGE OR DIMINISH
HIS RIGHTS UNDER THE PENSION PLAN.

 

                                8.             RESTRICTED STOCK.  AS OF THE DATE
OF THIS AGREEMENT, MR. ERVIN OWNS 55,500 SHARES OF COMMON STOCK OF THE COMPANY
WHICH ARE UNVESTED RESTRICTED SHARES AWARDED PURSUANT TO THE COMPANY’S 2002
INCENTIVE STOCK PLAN (THE “RESTRICTED SHARES”).  ON THE SEPARATION DATE, 17,750
OF THE RESTRICTED SHARES WILL IMMEDIATELY VEST AND THE COMPANY WILL DELIVER
CERTIFICATES FOR SUCH RESTRICTED SHARES TO MR. ERVIN.  IN ADDITION, MR. ERVIN
WILL RETAIN OWNERSHIP, SUBJECT TO FORFEITURE, OF 6,983 RESTRICTED SHARES (THE
“CONTINGENT SHARES”).  THE

 

 

 

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CONTINGENT SHARES WILL VEST ON THE EARLIER OF (I) MR. ERVIN’S DEATH, OR
(II) MARCH 31, 2009 PROVIDED THAT THE CONSULTING TERM HAS NOT THEN ENDED.  IF
THE CONSULTING TERM ENDS FOR ANY REASON PRIOR TO MARCH 31, 2009 FOR ANY REASON
EXCEPT MR. ERVIN’S DEATH, THEN THE CONTINGENT SHARES ARE IRREVOCABLY FORFEITED. 
THE REMAINING 30,767 RESTRICTED SHARES ARE HEREBY IRREVOCABLY FORFEITED BY
MR. ERVIN.

 

                                9.             NONCOMPETITION; CONFIDENTIAL
INFORMATION;

                                                INVENTIONS.

 

                                                (A)           MR. ERVIN
ACKNOWLEDGES THAT THE COMPANY (AND ITS AFFILIATES), AT THE COMPANY’S (AND ITS
AFFILIATE’S) EXPENSE, HAS ACQUIRED, CREATED AND MAINTAINED AND WILL CONTINUE TO
ACQUIRE, CREATE AND MAINTAIN, SIGNIFICANT GOODWILL WITH ITS CUSTOMERS, VENDORS
AND EMPLOYEES, AND THAT SUCH GOODWILL IS VALUABLE PROPERTY OF THE COMPANY. 
MR. ERVIN FURTHER ACKNOWLEDGES THAT, TO THE EXTENT THAT SUCH GOODWILL HAS BEEN
AND WILL BE GENERATED THROUGH MR. ERVIN’S EFFORTS, SUCH EFFORTS HAVE BEEN AND
WILL BE FUNDED BY THE COMPANY AND MR. ERVIN HAS BEEN AND WILL BE FAIRLY
COMPENSATED AND REIMBURSED FOR SUCH EFFORTS.  MR. ERVIN ACKNOWLEDGES THAT ALL
GOODWILL DEVELOPED BY MR. ERVIN RELATIVE TO THE COMPANY’S CUSTOMERS, VENDORS AND
EMPLOYEES IS THE SOLE AND EXCLUSIVE PROPERTY OF THE COMPANY AND IS NOT PERSONAL
TO MR. ERVIN.  ACCORDINGLY, IN ORDER TO AFFORD THE COMPANY REASONABLE PROTECTION
OF SUCH GOODWILL, FOR A PERIOD COMMENCING ON THE SEPARATION DATE AND CONTINUING
UNTIL MARCH 31, 2012, MR. ERVIN SHALL NOT ENGAGE OR BECOME INTERESTED, DIRECTLY
OR INDIRECTLY, AS OWNER, EMPLOYEE, PARTNER, THROUGH STOCK OWNERSHIP (EXCEPT THE
OWNERSHIP OF LESS THAN 1% OF THE OUTSTANDING SECURITIES OF A CORPORATION
PUBLICLY TRADED AND LISTED ON A NATIONAL SECURITIES EXCHANGE), INVESTMENT OF
CAPITAL, LENDING OF MONEY OR PROPERTY, RENDERING OF SERVICES, OR OTHERWISE,
WHETHER ALONE OR IN ASSOCIATION WITH OTHERS, IN THE OPERATION OF ANY BUSINESS OR
ENTERPRISE IN ANY WAY COMPETITIVE TO ANY BUSINESS PRESENTLY OR HEREAFTER
CONDUCTED BY THE COMPANY OR ANY AFFILIATE ANYWHERE IN THE WORLD.  WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, MR. ERVIN SHALL NOT, DIRECTLY OR
INDIRECTLY: (I) SOLICIT OR ACCEPT ORDERS FOR PRODUCTS OR SERVICES COMPETITIVE TO
THOSE SOLD OR OTHERWISE PROVIDED BY THE COMPANY OR ANY AFFILIATE FROM ANY PERSON
WHO IS THEN A CUSTOMER OR PROSPECTIVE CUSTOMER OF THE COMPANY OR ANY AFFILIATE
OR WHO WAS A CUSTOMER OF THE COMPANY OR ANY AFFILIATE DURING THE PRECEDING FIVE
(5) YEARS; (II) INDUCE OR ATTEMPT TO INDUCE ANY SUCH CUSTOMER TO REDUCE ITS
PURCHASE OF PRODUCTS OR SERVICES FROM THE COMPANY OR ANY AFFILIATE;
(III) SOLICIT ANY EMPLOYEE OR CONTRACTOR OF THE COMPANY OR ANY AFFILIATE TO
LEAVE THE EMPLOY OR SERVICE OF THE COMPANY OR ANY AFFILIATE; (IV) INDUCE ANY
EMPLOYEE OR CONTRACTOR OR FORMER EMPLOYEE OR CONTRACTOR OF THE COMPANY OR ANY
AFFILIATE TO BREACH ANY AGREEMENT WITH THE COMPANY OR ANY AFFILIATE; OR
(V) SOLICIT OR INDUCE ANY VENDOR OF THE COMPANY OR ANY AFFILIATE TO TERMINATE OR
MODIFY ITS RELATIONSHIP WITH THE COMPANY OR ANY AFFILIATE.

 

                                                (B)           MR. ERVIN
ACKNOWLEDGES THAT THE COMPANY AND ITS AFFILIATES HAVE DEVOTED AND WILL CONTINUE
TO DEVOTE SUBSTANTIAL SUMS OF MONEY AND EFFORT IN DEVELOPING, ACQUIRING AND
MAINTAINING CERTAIN CONFIDENTIAL INFORMATION (AS HEREAFTER DEFINED).  MR. ERVIN
HAS ACQUIRED AND WILL CONTINUE TO ACQUIRE KNOWLEDGE OF SUCH CONFIDENTIAL
INFORMATION, WHICH MR. ERVIN ACKNOWLEDGES IS VALUABLE PROPERTY OF THE COMPANY
AND ITS AFFILIATES.  EXCEPT AS REQUIRED IN THE COURSE OF HIS ENGAGEMENT AS A
CONSULTANT TO THE COMPANY, DURING THE CONSULTING TERM AND AT ALL TIMES
THEREAFTER, MR. ERVIN WILL NOT, DIRECTLY OR INDIRECTLY, DISCLOSE TO OTHERS OR
PERMIT SUCH DISCLOSURE, OR MAKE USE OF OR PERMIT THE USE OF FOR HIS OWN BENEFIT
OR THE BENEFIT OF OTHERS, ANY

 

 

 

 

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CONFIDENTIAL INFORMATION, WITHOUT PRIOR WRITTEN CONSENT OF THE COMPANY. 
MR. ERVIN WILL RETAIN SUCH CONFIDENTIAL INFORMATION IN TRUST IN A FIDUCIARY
CAPACITY FOR THE SOLE BENEFIT OF THE COMPANY.  “CONFIDENTIAL INFORMATION” AS
USED IN THIS AGREEMENT MEANS ANY INFORMATION, WHICH PERTAINS TO THE BUSINESS OF
THE COMPANY OR ITS AFFILIATES.  EXAMPLES OF CONFIDENTIAL INFORMATION INCLUDE,
BUT ARE NOT LIMITED TO, THE FOLLOWING:

 

(A)                              LISTS OF CUSTOMERS AND PROSPECTIVE CUSTOMERS;

 

(B)                                MARKETING STRATEGIES, PROGRAMS, AND
FORECASTS;

 

(C)                                INFORMATION ABOUT CUSTOMERS, INCLUDING
STATISTICAL INFORMATION AND CUSTOMER PROFILES;

 

(D)                               INFORMATION ABOUT PAST, PRESENT, OR FUTURE
FINANCIAL CONDITION OR PERFORMANCE;

 

(E)                                 INFORMATION RELATING TO COMPETITORS;

 

(F)                                 INFORMATION ABOUT VENDORS, INCLUDING
INFORMATION ABOUT PRICES AND TERMS EXTENDED BY VENDORS;

 

(G)                                INFORMATION ABOUT EMPLOYEES, INCLUDING
INFORMATION ABOUT SALARIES, WAGES AND BENEFITS;

 

(H)                               INFORMATION ABOUT PRICING STRATEGIES AND
PROGRAMS; AND

 

(I)                                    PROPRIETARY TECHNOLOGY, KNOW-HOW,
IMPROVEMENTS, DISCOVERIES, DEVELOPMENTS, DESIGNS, INVENTIONS AND TECHNIQUES.

 

The foregoing notwithstanding, Confidential Information will cease to be such
when it becomes generally available to the public other than as result of an
improper disclosure by Mr. Ervin or others.  Information shall constitute
Confidential Information regardless of the form in which it appears.  For
instance, Confidential Information could be a document, electronically-stored
data, or the substance of an oral conversation.

 

(C)           UPON THE EARLIER OF TERMINATION OF THE CONSULTING TERM (FOR ANY
REASON) OR A REQUEST FROM THE COMPANY, MR. ERVIN WILL PROMPTLY DELIVER TO THE
COMPANY ALL DOCUMENTS, ELECTRONICALLY-STORED DATA, EQUIPMENT AND OTHER PERSONAL
PROPERTY BELONGING TO THE COMPANY INCLUDING, BUT NOT LIMITED TO, ALL OTHER 
MATERIALS OR MEDIUM WHICH INCLUDE OR REFLECT CONFIDENTIAL INFORMATION OR WHICH
OTHERWISE RELATE TO THE BUSINESS OF THE COMPANY OR ITS AFFILIATES, THAT ARE IN
HIS POSSESSION OR UNDER HIS CONTROL.  UPON SUCH DELIVERY, MR. ERVIN WILL NOT
RETAIN ANY COPIES OF DOCUMENTS OR ELECTRONICALLY STORED DATA.

 

(D)           FOR PURPOSES OF THIS AGREEMENT, “INVENTION” MEANS ANY DISCOVERY,
CONCEPT OR IDEA, WHETHER PATENTABLE OR COPYRIGHTABLE OR NOT, INCLUDING BUT NOT
LIMITED TO, PROCESSES, METHODS, FORMULAE AND TECHNIQUES, AS WELL AS IMPROVEMENTS
THEREFOR AND KNOW-HOW RELATED THERETO.  MR. ERVIN WILL PROMPTLY AND FULLY INFORM
THE COMPANY IN WRITING (SETTING FORTH

 

 

 

 

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IN DETAIL THE PROCEDURES EMPLOYED AND THE RESULTS ACHIEVED) OF ANY INVENTION
WHICH WAS OR IS CONCEIVED, MADE, OR REDUCED TO PRACTICE BY MR. ERVIN, EITHER
SOLELY OR JOINTLY WITH ANOTHER OR OTHERS, DURING HIS EMPLOYMENT WITH THE
COMPANY, DURING THE CONSULTING TERM OR WITHIN TWELVE (12) MONTHS AFTER
TERMINATION OF THE CONSULTING TERM AND WHICH (I) IS CONCEIVED, MADE, OR REDUCED
TO PRACTICE DURING MR. ERVIN’S HOURS OF SERVICE TO THE COMPANY OR ANY AFFILIATE,
OR (II) IS CONCEIVED, MADE, OR REDUCED TO PRACTICE WITH THE USE OF CONFIDENTIAL
INFORMATION OR THE COMPANY’S OR ANY AFFILIATE’S EQUIPMENT, FACILITIES,
MATERIALS, PERSONNEL OR OTHER RESOURCES, OR (III) AT THE TIME IT IS CONCEIVED,
MADE OR REDUCED TO PRACTICE RELATES TO THE COMPANY’S OR ANY AFFILIATE’S PRESENT
OR PROSPECTIVE BUSINESS OR ACTUAL OR DEMONSTRABLY ANTICIPATED RESEARCH OR
DEVELOPMENT, OR (IV) IS THE RESULT OF ANY WORK PERFORMED BY MR. ERVIN FOR THE
COMPANY OR ANY AFFILIATE (EACH, A “CONSULTANT INVENTION”).  THE COMPANY AND/OR
ITS NOMINEE OR ASSIGN WILL BE THE SOLE OWNER, WITHOUT PAYMENT OF ROYALTY OR ANY
OTHER COMPENSATION THEREFORE, OF ANY CONSULTANT INVENTION.  WITH RESPECT TO EACH
CONSULTANT INVENTION:

 

(A)                              MR. ERVIN WILL APPLY, AT THE COMPANY’S REQUEST
AND EXPENSE, FOR UNITED STATES AND/OR FOREIGN LETTERS PATENT EITHER IN
MR. ERVIN’S NAME OR OTHERWISE AS THE COMPANY DESIRES;

 

(B)                                MR. ERVIN WILL APPLY, AT THE COMPANY’S
REQUEST AND EXPENSE, FOR UNITED STATES AND/OR FOREIGN COPYRIGHT REGISTRATIONS
EITHER IN THE MR. ERVIN’S NAME OR OTHERWISE AS THE COMPANY DESIRES;

 

(C)                                MR. ERVIN WILL ASSIGN AND DOES HEREBY ASSIGN
TO THE COMPANY ALL OF HIS RIGHT, TITLE, AND INTEREST IN AND TO ANY SUCH
CONSULTANT INVENTION AND TO APPLICATIONS FOR UNITED STATES AND/OR FOREIGN
LETTERS PATENT AND THE UNITED STATES AND/OR FOREIGN LETTERS PATENT GRANTED UPON
SUCH CONSULTANT INVENTION, AND TO ANY UNITED STATES OR FOREIGN COPYRIGHT
REGISTRATIONS;

 

(D)                               MR. ERVIN WILL ACKNOWLEDGE AND DELIVER
PROMPTLY TO THE COMPANY (WITHOUT CHARGE TO THE COMPANY BUT AT ITS EXPENSE) SUCH
WRITTEN INSTRUMENTS AND DO SUCH OTHER ACTS AS MAY BE NECESSARY IN THE OPINION OF
THE COMPANY TO OBTAIN AND MAINTAIN UNITED STATES AND/OR FOREIGN LETTERS PATENT
OR UNITED STATES OR FOREIGN COPYRIGHT REGISTRATIONS AND TO VEST THE ENTIRE RIGHT
AND TITLE THEREUNTO IN THE COMPANY; AND

 

(E)                                 MR. ERVIN HEREBY IRREVOCABLY DESIGNATES AND
APPOINTS THE COMPANY AND ITS DULY AUTHORIZED OFFICERS AND AGENTS AS MR. ERVIN’S
AGENT AND ATTORNEY-IN-FACT, TO ACT FOR AND IN MR. ERVIN’S BEHALF AND STEAD TO
EXECUTE AND FILE ANY SUCH APPLICATIONS OR OTHER NECESSARY DOCUMENTS AND TO DO
ALL OTHER LAWFULLY PERMITTED ACTS TO FURTHER THE PROSECUTION, ISSUANCE, OR
ENFORCEMENT OF PATENTS, COPYRIGHTS, OR SIMILAR PROTECTIONS RELATED TO SUCH
CONSULTANT INVENTION WITH THE SAME LEGAL FORCE AND EFFECT AS IF MR. ERVIN HAD
EXECUTED THEM HIMSELF.

 

 

 

 

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                                Mr. Ervin will keep and maintain adequate and
current written records of all Inventions made by him (in the form of notes,
sketches, drawings, and as may be specified by the Company), which records shall
be available to and remain the sole property of the Company at all times.

 

                                                (E)           MR. ERVIN AGREES
THAT THE RESTRICTIONS SET FORTH IN PARAGRAPHS 9(A), 9(B), 9(C) AND 9(D) OF THIS
AGREEMENT ARE REASONABLE AND JUSTIFIED IN LIGHT OF THE NATURE OF THE BUSINESS OF
THE COMPANY AND IN LIGHT OF THE CONFIDENTIAL INFORMATION TO WHICH MR. ERVIN HAS
HAD EXPOSURE AND ACCESS AS AN EXECUTIVE OFFICER OF THE COMPANY AND MAY CONTINUE
TO HAVE EXPOSURE AND ACCESS DURING THE CONSULTING TERM.

 

                                                (F)            EACH PROVISION OF
THIS SECTION 9 WILL BE TREATED AS A SEPARATE AND INDEPENDENT CLAUSE, AND THE
UNENFORCEABILITY OF ANY ONE CLAUSE WILL IN NO WAY IMPAIR THE ENFORCEABILITY OF
ANY OF THE OTHER CLAUSES HEREIN.  IN THE EVENT ANY COURT OF COMPETENT
JURISDICTION DETERMINES THAT ANY OF THE PROVISIONS OF THIS SECTION 9 ARE VOID
AND UNENFORCEABLE, SUCH COURT SHALL HAVE THE RIGHT, AND IS AUTHORIZED BY
MR. ERVIN AND THE COMPANY, TO MODIFY SUCH TERMS OR PROVISIONS SO AS TO RENDER
THE REMAINING OR MODIFIED TERMS OR PROVISIONS OF THIS SECTION 9 VALID AND
ENFORCEABLE TO THE MAXIMUM EXTENT POSSIBLE AND, AS SO MODIFIED, TO ENFORCE THIS
AGREEMENT IN ACCORDANCE WITH ITS TERMS.  IF ANY PROVISION IN THIS SECTION 9
SHALL BE HELD TO BE EXCESSIVELY BROAD, IT SHALL BE LIMITED TO THE EXTENT
NECESSARY TO COMPLY WITH APPLICABLE LAW.  IF ANY PROVISION IN THIS SECTION 9
SHALL, NOTWITHSTANDING THE PRECEDING SENTENCE, TO HELD TO BE UNENFORCEABLE, SUCH
UNENFORCEABILITY SHALL NOT AFFECT ANY OTHER PROVISION OF THIS AGREEMENT.

 

                                                (G)           IF MR. ERVIN
BREACHES IN ANY RESPECT ANY PROVISION OF THIS SECTION 9 AND FAILS TO CURE SUCH
BREACH (IF CURABLE) WITHIN TEN (10) DAYS AFTER HIS RECEIPT OF WRITTEN NOTICE
THEREOF, THEN, IN ADDITION TO ANY OTHER RIGHT OR REMEDY AVAILABLE TO THE COMPANY
AT LAW OR EQUITY, THE COMPANY MAY BY WRITTEN NOTICE TO MR. ERVIN TERMINATE THE
CONSULTING TERM, TERMINATE ITS PAYMENTS TO MR. ERVIN UNDER SECTION 4, AND
TERMINATE THE HEALTH INSURANCE BENEFITS PROVIDED UNDER SECTION 5.

 

                                                (H)           MR. ERVIN AGREES
THAT A REMEDY AT LAW WOULD BE INSUFFICIENT, BY ITSELF, TO REMEDY ANY BREACH BY
MR. ERVIN OF THE PROVISIONS OF THIS SECTION 9 AND THAT THE COMPANY WILL BE
ENTITLED TO INJUNCTIVE RELIEF TO ENFORCE THE PROVISIONS OF THIS SECTION 9.

 

                                                (I)            THE RIGHTS OF THE
COMPANY AND THE OBLIGATIONS OF MR. ERVIN SET FORTH IN THIS SECTION 9 ARE IN
ADDITION TO ALL RIGHTS AND OBLIGATIONS PROVIDED BY LAW.

 

                                10.           RELEASE.  In consideration for the
Company’s performance of its obligations under this Agreement, which include
payments and other valuable consideration that the Company is not otherwise
obligated to provide to Mr. Ervin, Mr. Ervin agrees to execute and deliver to
the Company the release attached hereto as Exhibit A (the “Release”) on the
Separation Date.  The Company’s obligations under this Agreement will terminate
in all respects if Mr. Ervin fails to deliver the Release on the Separation Date
or revokes the Release in accordance with the terms thereof.

 

 

 

 

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                                11.           NON-DISPARAGMENT.  THE COMPANY AND
MR. ERVIN AGREE NOT TO PUBLISH (IN WRITING OR ORALLY) ANY DISPARAGING STATEMENT
ABOUT THE OTHER PARTY.  FOR ALL PURPOSES, THE COMPANY AND MR. ERVIN WILL
CHARACTERIZE THE TERMINATION OF MR. ERVIN’S EMPLOYMENT WITH THE COMPANY AS “A
MUTUALLY AGREED UPON SEPARATION”.

 

                                12.           MISCELLANEOUS.

 

                                                (A)           THIS AGREEMENT IS
THE SOLE AND ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE
SUBJECT MATTER HEREOF AND SUPERSEDES ALL PRIOR NEGOTIATIONS AND WRITTEN, ORAL OR
IMPLIED REPRESENTATIONS, WARRANTIES, COMMITMENTS, OFFERS, CONTRACTS, AGREEMENTS,
AWARDS, AND UNDERSTANDINGS BETWEEN THE PARTIES REGARDING MR. ERVIN’S EMPLOYMENT
WITH THE COMPANY, THE TERMINATION THEREOF, AND THE MATTERS ADDRESSED IN THIS
AGREEMENT.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THIS AGREEMENT
TERMINATES AND SUPERSEDES IN ALL RESPECTS THE EMPLOYMENT AGREEMENT DATED
MARCH 11, 1997 BETWEEN MR. ERVIN AND THE COMPANY AND NEITHER PARTY WILL HAVE ANY
FURTHER RIGHT OR OBLIGATION UNDER SUCH EMPLOYMENT AGREEMENT, PROVIDED, HOWEVER,
THAT MR. ERVIN SHALL REMAIN LIABLE FOR ANY BREACH BY HIM OF THE COVENANTS UNDER
SECTION 8 OF SUCH EMPLOYMENT AGREEMENT ON OR BEFORE THE SEPARATION DATE.  ANY
ADDITION, CHANGE OR MODIFICATION OF THIS AGREEMENT WILL BE VOID UNLESS IN
WRITING AND DULY EXECUTED BY EACH PARTY HERETO.

 

                                                (B)           THIS AGREEMENT
SHALL INURE TO THE BENEFIT OF, AND BE BINDING UPON,  THE COMPANY, MR. ERVIN AND
THEIR RESPECTIVE SUCCESSORS AND PERMITTED ASSIGNS.  THE OBLIGATIONS OF MR. ERVIN
HEREUNDER ARE PERSONAL AND MAY NOT BE ASSIGNED.  THE COMPANY MAY UNILATERALLY
ASSIGN ITS RIGHTS AND THE BENEFITS OF MR. ERVIN’S OBLIGATIONS UNDER THIS
AGREEMENT TO ANY AFFILIATE, PURCHASER OF ALL OR SUBSTANTIALLY ALL OF THE
COMPANY’S ASSETS, CORPORATE SUCCESSOR BY WAY OF MERGER, CONSOLIDATION, OR
REORGANIZATION, OR ANY OTHER SUCCESSOR IN INTEREST TO ITS BUSINESS.

 

                                                (C)           THE OBLIGATIONS OF
MR. ERVIN SPECIFIED IN SECTION 9 HEREOF SHALL SURVIVE ANY TERMINATION OR
EXPIRATION OF THE CONSULTING TERM OR THIS AGREEMENT.

 

                                                (D)           MR. ERVIN’S
OBLIGATIONS HEREUNDER MAY NOT BE MODIFIED, RELEASED, OR TERMINATED, IN WHOLE OR
IN PART, EXCEPT IN A WRITING SIGNED BY AN OFFICER OF THE COMPANY AFTER SPECIFIC
WRITTEN AUTHORIZATION THEREFOR APPROVED BY THE BOARD OF DIRECTORS OF THE
COMPANY.  ANY WAIVER BY THE COMPANY OF A BREACH OF ANY PROVISION OF THIS
AGREEMENT SHALL NOT OPERATE OR BE CONSTRUED AS A WAIVER OF ANY SUBSEQUENT BREACH
THEREOF.

 

                                                (E)           THIS AGREEMENT
SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH NEW YORK LAW
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

 

                                                (F)            FOR THE PURPOSES
OF THIS AGREEMENT, “AFFILIATE” MEANS ANY ENTITY WHICH (I) IS CONTROLLED BY THE
COMPANY, (II) UNDER COMMON CONTROL WITH THE COMPANY, OR (III) OR CONTROLS THE
COMPANY, WITH “CONTROL” MEANING THE ABILITY TO VOTE AT LEAST FIFTY PERCENT (50%)
OF THE OUTSTANDING VOTING INTERESTS OF AN ENTITY.

 

                                                (G)           NOTWITHSTANDING
ANY PROVISION IN THIS AGREEMENT TO THE CONTRARY, NO PAYMENT HEREUNDER THAT
CONSTITUTES PAYMENT FROM A “NONQUALIFIED DEFERRED COMPENSATION

 

 

 

 

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PLAN” WITHIN THE MEANING OF INTERNAL REVENUE CODE SECTION 409A AND THE TREASURY
REGULATIONS PROMULGATED THEREUNDER SHALL BE PAID TO MR. ERVIN BEFORE DECEMBER 1,
2008 (OR 6 MONTHS AND ONE DAY AFTER HIS SEPARATION FROM SERVICE, IF LATER).

 

IN WITNESS WHEREOF the parties have signed or caused this Agreement to be signed
as of the date first above written.

 

 

 

HARDINGE INC.

 

 

 

By

/s/ Kyle H. Seymour, Chairman of the Board

 

 

Kyle H. Seymour, Chairman of the Board

 

 

 

 

 

 

/s/ J. Patrick Ervin

 

 

J. Patrick Ervin

 

 

 

 

 

 

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EXHIBIT A

RELEASE

 

In consideration of the payments to be provided to me by Hardinge Inc. (the
“Company”) pursuant to the Separation and Consulting Agreement between the
Company and me dated as of May 22, 2008 (the “Separation and Consulting
Agreement”), on behalf of myself and my heirs, successors executors,
administrators, trustees, legal representatives, agents and assigns, I fully and
forever release and discharge the Company, its subsidiaries, divisions and
affiliates and its and all of their predecessors, successors, assigns, directors
and officers (collectively “Released Parties”) from any and all claims, demands,
suits, causes of action, obligations, promises, damages, fees, covenants,
agreements, attorneys’ fees, debts, contracts and torts of every kind
whatsoever, known or unknown, at law or in equity, foreseen or unforeseen, which
against the Released Parties I ever had, now have or which I may have for, upon
or by reason of any matter, cause or thing whatsoever relating to or arising
from my employment with the Company or its affiliates or the termination
thereof, specifically including, but not limited to, all claims under the
following:  the Civil Rights Acts of 1866, 1871, 1964 and 1991; the Age
Discrimination in Employment Act of 1967; the Older Workers’ Benefit Protection
Act of 1990; the Americans with Disabilities Act; the Equal Pay Act; the
Employee Retirement Income Security Act; the Worker Adjustment Retraining
Notification Act; the Family and Medical Leave Act; the National Labor Relations
Act; the Occupational Safety and Health Act; the New York State Human Rights
Law; the New York City Human Rights Law; the New York State Labor Law; §§ 120
and 241 of the New York State Workers’ Compensation Law; any contract of
employment, express or implied; and any and all other federal, state or local
laws, rules or regulations.

 

I hereby waive the right to receive any personal relief (i.e. monetary or
equitable relief) as the result of any lawsuit or other proceeding brought by
the EEOC or any other governmental agency, based on or related to any of the
matters from which I have released the Released Parties. I also will take all
actions necessary, if any, now or in the future, to make this Release effective,
including seeking and obtaining any necessary governmental or court approval.

 

This Release shall not operate to release the Company from its obligations under
the Separation and Consulting Agreement or from any obligation arising after the
date hereof under any employee benefit plan sponsored by the Company.

 

In connection with this Release (i) I acknowledge that the Separation and
Consulting Agreement provides me with payments to which I would not otherwise be
entitled but for my execution and delivery to the Company of the Separation and
Consulting Agreement and this Release (collectively, this “Instrument”), (ii) I
acknowledge that I have been advised by the Company to consult with an attorney
before signing this Instrument, (iii) the Company has allowed me at least
twenty-one (21) days from the date I first receive this Instrument to consider
it before being required to sign it and return it to the Company, provided,
however, that any changes made to this Instrument shall not restart the running
of the twenty-one (21) day period, and (iv) I may revoke this Instrument, in its
entirety, within seven (7) days after signing it by

 

 

 

 

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delivering written notice of such revocation to the Company on or before
5:00 p.m. on the seventh day of such revocation period.

 

IN WITNESS WHEREOF, the undersigned has executed this instrument as of the 22nd
day of May, 2008.

 

 

 

 

/s/ J. Patrick Ervin

 

J. Patrick Ervin

 

 

 

 

 

 

 

 

 

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