EXHIBIT 10.2


 


HARDINGE INC.

EMPLOYMENT AGREEMENT

Amendment One Effective January 1, 2009


 


AMENDMENT dated as of January 1, 2009 (the “Amendment”) of an
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 entered into the Agreement as of March 3,
2008 in order to engage the Executive to provide services pursuant to the terms
of the Agreement; and


 


WHEREAS, this Amendment is intended to revise the Agreement effective January 1,
2009 to include provisions intended to comply with final regulations
promulgated under Internal Revenue Code (“Code”) Section 409A and shall be
construed to the extent practicable so as to avoid causing any amounts payable
to the Executive under the Agreement to be includable in his gross income under
Code Section 409A(a)(1).


 


NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:


 


1.             Section 5.2,
entitled “Termination Without Cause; Resignation for Good Reason” is amended
effective January 1, 2009 to read as follows:


 


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”).  The
payments shall occur in installments in the same amount and at the same regular
payment intervals as the Executive’s Base Salary was being paid on January 1,
2009 and such installments shall be deemed a series of separate payments within
the meaning of Treas. Reg. §1.409A-2(b)(2)(iii).  Installments which in the aggregate do not
exceed Executive’s Base Salary payable over 6 months shall be paid in a lump
sum within 60 days following Executive’s termination of employment.  The remaining installments, if any, shall be
paid in regular payment intervals with the first such installment paid on the
first payment date occurring on or after the day following the 6-month
anniversary of the Executive’s termination of employment.  In addition, if the Executive elects to
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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, then the Company will have no obligation to make any of the
payments specified in this Section 5.2.1.


 


5.2.2        Within
6 Months Following 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 terminates his
employment hereunder for Good Reason, in either case within 6 months following
a Change in Control, the Company shall pay to the Executive cash payments 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.  The payment based on the Executive’s Base
Salary shall occur in installments in the same amount and at the same regular payment
intervals as the Executive’s Base Salary was being paid on January 1, 2009
and such installments shall be deemed a series of 


 


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separate payments within the meaning of Treas. Reg.
§1.409A-2(b)(2)(iii).  Installments which
in the aggregate do not exceed Executive’s Base Salary payable over 6 months
shall be paid in a lump sum within 60 days following Executive’s termination of
employment.  The remaining installments
shall be paid in regular payment intervals with the first such installment paid
on the first payment date occurring on or after the day following the 6-month
anniversary of the Executive’s termination of employment.  The payment based on the Executive’s average
annual bonus, which shall be deemed a separate “payment” within the meaning of
Treas. Reg. §1.409A-2(b)(2) from the payment based on Base Salary, shall
be paid in a lump sum within 60 days following the Executive’s termination of
employment.  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)
provided, however, that for the first six months following the Executive’s
termination of employment, the Executive shall pay the premiums of any welfare
benefit plans to the extent that the payment of such premiums by the Company
would have constituted gross income to the Executive.  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.


 


5.2.3        After
6 Months Following a Change in Control. 
If, prior to the expiration of the Employment Term, the Executive
resigns from his employment for any reason at any time later than six months
following a Change in Control, the Company shall pay to the Executive cash
payments 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.  The payment based on the
Executive’s Base Salary shall occur in installments in the same amount and at
the same payment intervals as the Executive’s Base Salary was being paid on January 1,
2009 provided, however, that no such installment shall be paid before the day
following the 6-month anniversary of the Executive’s termination of
employment.  The payment based on the
Executive’s average annual bonus, which shall be deemed a separate “payment”
within the meaning of Treas. Reg. §1.409A-2(b)(2) from the payment based
on Base Salary, shall be paid in a lump sum on the day following the 6-month
anniversary of the Executive’s termination of employment.  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) provided, however,
that for the first six months following the Executive’s termination of
employment, the Executive shall pay the premiums of any welfare benefit plans
to the extent that the payment of such premiums by the Company would have
constituted gross income to the Executive. 
The Company shall reimburse the Executive for any premiums or other 


 


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expenses incurred by the Executive with respect to his participation
and that of any of his dependents in any such employee benefit welfare plan.


 


2.             Section 5.5,
entitled “Good Reason” is amended effective January 1, 2009 to read as
follows:


 


5.5           Good
Reason.  For purposes of this
Agreement, “Good Reason” shall mean the occurrence of one or more of the
following events provided that, the Executive shall give the Company a written
notice, within 90 days following the initial occurrence of the event, describing
the event that the Executive claims to be Good Reason and stating the Executive’s
intention to terminate employment unless the Company takes appropriate
corrective action:


 


(i)            a material 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 material breach of any material
term of this Agreement.


 


The Company shall have 30 days from the date of receipt of the written
notice from the Executive stating his claim of Good Reason in which to take
appropriate corrective action.  If the
Company does not cure the Good Reason, the Good Reason will be deemed to have
occurred at the end of the 30-day period. 
This section shall apply with respect to any successor of the Company
following a Change in Control as if such successor were the Company.


 


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IN WITNESS WHEREOF, the Company has caused this Amendment of the 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/ RICHARD L. SIMONS

  
	
   

  	
  Name:  Richard L. Simons

  
	
   

  	
  Title:  President and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /S/ EDWARD J. GAIO

  
	
   

  	
  Edward J.
  Gaio

  	
   

  
				



 


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