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.
3
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