Exhibit 10.2

 

MODIFICATION, AND/OR REAFFIRMATION OF

COMMERCIAL LOAN GUARANTYAND SECURITY AGREEMENT

 

THIS MODIFICATION AND REAFFIRMATION OF COMMERCIAL LOAN AND SECURITY AGREEMENT
(“Agreement”) is entered into as of the 24th day of December, 2012 by and among:

 

M&T BANK

a New York banking corporation

with its principal banking office at

One M&T Plaza, Buffalo, New York 14203 (“Lender”)

 

and

HARDINGE INC.

a New York corporation

with a place of business at

One Hardinge Drive, Elmira, New York 14902 (“Borrower”)

 

and

HARDINGE TECHNOLOGY SYSTEMS, INC.

a New York corporation

with a place of business at

One Hardinge Drive, Elmira, New York 14902 (“Guarantor”)

 

RECITALS

 

WHEREAS, Borrower executed a Replacement Daily Adjusting LIBOR Revolving Line
Note dated December 16, 2011, in the original principal amount of up to
$25,000,000.00 with an Expiration Date of March 31, 2013 ( the “Note”) (the
“Loan”); and

 

WHEREAS, Guarantor jointly, severally and unconditionally guaranteed the prompt
payment and performance of Borrower’s obligations to the Lender (as defined in
the Guaranty) by Guaranty dated December 16, 2005 (the “Guaranty”); and

 

WHEREAS, Borrower’s and Guarantor’s respective obligations to the Lender are
more fully set forth in a Credit Agreement dated December 16, 2012 (the “Loan
Agreement”), reference being hereby made to the Loan Agreement for the
definition of certain capitalized terms used herein and not otherwise defined;
and

 

WHEREAS, Borrower’s obligations of payment and performance under the Note are
secured by (i) a continuing first security interest on all non-realty assets of
Borrower pursuant to a General Security Agreement dated December 16, 2011, and
(ii) a Restated Pledge of Securities securing 65% of Borrower’s stock in
Hardinge Holdings GmbH dated August 31, 2012 (“Stock

 

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Pledge”), and Negative Pledge Agreement dated December 16, 2011 with respect to
Guarantor’s interest in real property located at One Hardinge Drive, Elmira, New
York; and

 

WHEREAS, as further security for the payment of the Loan and the Guaranty, and
the performance by Borrower and Guarantor of all of their respective obligations
under the Agreement and the other Loan Documents, Borrower and Guarantor have
also pledged and assigned to Lender, and given and granted to Lender, a security
interest in certain Collateral, all as set forth in the Loan Agreement and
General Security Agreement; and

 

WHEREAS, in connection with the Note, Guaranty, Loan Agreement, Borrower and
Guarantor executed and delivered various other documents, instruments, pledges
and/or indemnities to Lender (including without limitation, the Note, the Loan
Agreement, Restated Pledge of Securities, General Security Agreement, Negative
Pledge Agreement, Guaranty, Irrevocable Stock or Bond Power, (hereinafter
collectively, the “Loan Documents”); and

 

WHEREAS, Borrower and the Guarantor desire to extend the Expiration Date (as
defined in the Note) to March 31, 2014 and modify the LIBOR Rate from 3.50
percentage point(s) above one-month LIBOR to 2.75 percentage point(s) above
one-month LIBOR; and

 

WHEREAS, Lender has agreed to extend the Expiration Date to March 31, 2014 and
modify the LIBOR Rate from 3.50 percentage point(s) above one-month LIBOR to
2.75 percentage point(s) above one month LIBOR upon the terms and conditions
hereinafter set forth, and upon the payment by Borrower of a modification fee.

 

NOW, THEREFORE in consideration of the mutual promises and covenants contained
herein, the parties hereto agree as follows:

 

1.       As of the date hereof, the outstanding principal balance of the Loan is
$2,500,000.00.

 

2.       The Borrower shall execute a Replacement Note in the form attached here
to as Exhibit A.

 

3.       The Schedule to the Loan Agreement is hereby deleted and replaced with
the Schedule attached hereto.

 

4.       The Loan Documents are hereby modified to the extent necessary to
incorporate the terms contained in this Agreement.  Any default in this
Agreement shall be an Event of Default as defined in the Note and Loan
Agreement.

 

5.       The Borrower and Guarantor reaffirm all of the representations,
warranties, covenants (both affirmative and negative), waivers and indemnities
contained in the Loan Documents.  All of the representations and warranties set
forth in the Loan Documents are true and correct as if made on the date hereof.

 

6.       The Guarantor hereby consents to the modifications contained herein and
hereby ratifies and confirms that (a) it jointly, severally and unconditionally
guarantees to Lender the

 

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payment and performance from and by Borrower of the Obligations of Borrower to
Lender (as defined in the Guaranty) and (b) such Obligations include, without
limitation, the Note and Loan Agreement, as modified hereby.  Guarantor
acknowledges that its reaffirmation and ratification of its Guaranty is a
material inducement for Lender to enter into this Agreement and that Lender
would not do so without said reaffirmation and ratification.  This Agreement and
the Guaranty are the Guarantor’s valid and binding obligation enforceable
against them in accordance with their terms.

 

7.       The Borrower and the Guarantor represent, acknowledge and affirm that
neither of them has any claim, defense, offset or counterclaim whatsoever
against Lender with respect to the Note, Loan Agreement, Guaranty or any other
Loan Document, or the modifications made herein, and that Lender is relying on
this representation in agreeing to said modifications.  The Borrower and
Guarantor further acknowledge that Lender would not agree to said modifications
unless the Borrower and the Guarantor made the representations contained in this
paragraph and elsewhere in this Agreement freely and willingly, after due
consultation with their attorneys.  Borrower further represents that this
Agreement and all of the Loan Documents executed by it are its valid and binding
obligations and enforceable in accordance with their terms and further
represents that no Event of Default (as defined in the Note or Loan Agreement)
has occurred nor has there occurred any event or condition which, with the
giving of notice or the passage of time or both would constitute an Event of
Default.

 

8.     In furtherance of the immediately preceding paragraph, Borrower and
Guarantor hereby release, and forever discharge the Lender, its officers,
agents, successors and assigns, from any and all claims, actions, causes of
action, obligations and liabilities of any kind known or unknown which the
Borrower or Guarantor have or may have as of the date hereof whether relating to
the Note, Loan Agreement, Guaranty or any Loan Document or any of the
transactions contemplated hereby or consummated in connection herewith, or any
negotiations in connection with any of the foregoing.

 

9.     The parties agree that nothing contained herein shall in any way impair
the Note, Loan Agreement, Guaranty, or any Loan Document, and the Collateral
shall remain in all respects subject to the lien, charge and encumbrance of the
Loan Agreement and Loan Documents.  The parties further agree that nothing
contained herein or modified pursuant to this Agreement shall affect or be
construed to affect the lien, charge or encumbrance of or warranty of title in
or conveyance affected by or the priority of the Loan Agreement, over other
liens, charges and encumbrances, or release or affect the liability of any other
party or parties who may now or hereafter be liable under, pursuant to, or on
account of the Note and/or Loan Agreement and/or Loan Documents.

 

10.  Capitalized terms not otherwise defined herein shall have the same meaning
as in the document to which they refer.  Except as modified by this Agreement,
the Note, and all other Loan Documents shall remain unchanged and in full force
and effect.  Borrower and Guarantor shall keep and perform all of the terms and
agreements contained therein as may be applicable to them.

 

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11.  This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their respective heirs, successors and assigns.  This Agreement
may only be amended in writing.  Any capitalized term not otherwise defined
herein shall have the same meaning as defined in the document to which it
refers.

 

12.  This Agreement may be signed in one or more counterparts all of which shall
constitute one document and shall be construed under the laws of the State of
New York.

 

13.  THE BORROWER AND GUARANTOR WAIVE TRIAL BY JURY IN ANY COURT IN ANY SUIT,
ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH THE NOTE, LOAN
AGREEMENT,  GUARANTY, ANY LOAN DOCUMENT, THIS AGREEMENT OR IN ANY WAY RELATED TO
THE FINANCING TRANSACTIONS OF WHICH THIS AGREEMENT IS A PART AND/OR THE DEFENSE
OR ENFORCEMENT OF ANY OF LENDER’S RIGHTS OR REMEDIES.  BORROWER AND GUARANTOR
ACKNOWLEDGE THAT THEY MAKE THIS WAIVER KNOWINGLY AND VOLUNTARILY AFTER
CONSULTATION WITH THEIR ATTORNEY.

 

14.  Borrower and Guarantor will, upon demand, furnish to the Lender such
further information, and will execute and deliver such instruments or documents,
and will do all such acts as the Lender may, at any time or from time to time,
reasonably request, or as may be necessary or appropriate to establish and
maintain a valid and enforceable first security interest of the Lender in the
Collateral described in the Loan Agreement and Loan Documents. Borrower and
Guarantor hereby authorize the filing by Lender of any and all financing
statements and any subsequent amendments thereto with or without the Borrower’s
or Guarantor’s signature.  Lender may, in its discretion, file all such
financing statements with an “all assets of Debtor” Collateral description.

 

IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement to be
executed and delivered on the day and year first above mentioned.

 

 

 

Hardinge, Inc.

 

 

 

 

 

By:

/S/ Edward J. Gaio

 

 

Name:

Edward J. Gaio

 

 

Title:

Vice President & CFO

 

 

 

 

 

 

 

 

 

 

Hardinge Technology Systems, Inc.

 

 

 

 

 

 

 

 

 

By:

/S/ Richard L. Simons

 

 

Name:

Richard L. Simons

 

 

Title:

President

 

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M&T Bank

 

 

 

 

By:

/S/ Susan A. Burtis

 

 

Name:

Susan A. Burtis

 

 

Title:

Vice President

 

 

ACKNOWLEDGMENT

 

 

 

 

 

STATE OF NEW YORK

)

 

 

 

 

:SS.

 

 

 

COUNTY OF CHEMUNG

)

 

 

 

 

On 20th day of December, in the year 2012, before me, the undersigned, a Notary
Public in and for said State, personally appeared EDWARD J. GAIO, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacity, and that by his signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.

 

 

 

 

/S/ Nancy L. Curren

 

 

 

Notary Public

 

 

 

 

 

 

 

 

 

 

STATE OF NEW YORK

)

 

 

 

 

:SS.

 

 

 

COUNTY OF CHEMUNG

)

 

 

 

 

On the 20th day of December, in the year 2012, before me, the undersigned, a
Notary Public in and for said State, personally appeared RICHARD L. SIMONS,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is  subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.

 

 

 

 

/S/ Nancy L. Curren

 

 

 

Notary Public

 

 

 

 

 

 

 

 

 

 

STATE OF NEW YORK

)

 

 

 

 

:SS.

 

 

 

COUNTY OF BROOME

)

 

 

 

 

On the 21st day of December in the year 2012, before me, the undersigned, a
Notary Public in and for said State, personally appeared SUSAN A. BURTIS,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is  subscribed to the within instrument and
acknowledged to me that she executed the same in her capacity, and that by her
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.

 

 

 

 

/S/ Kelly J. Anderson

 

 

 

Notary Public

 

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EXHBIIT A

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GRAPHIC [g274412km01i001.gif]

 

REPLACEMENT DAILY ADJUSTING LIBOR REVOLVING LINE NOTE

New York

 

December 24, 2012

 

$25,000,000.00

 

BORROWER (Name):  Hardinge Inc.

 

(Organizational Structure):  Corporation

 

(State Law organized under):  New York

 

(Address of residence/chief executive office):  One Hardinge Drive, Elmira, New
York 14902

 

BANK:       M&T BANK, a New York banking corporation with its principal banking
office at One M&T Plaza, Buffalo, NY 14203.  Attention: Office of General
Counsel

 

1)            DEFINITIONS.  Each capitalized term shall have the meaning
specified herein and the following terms shall have the indicated meanings:

 

a)             “Authorized Person” shall mean, each individually, Edward J.
Gaio, as Vice President and CFO and Doug Malone, as Corporate Controller, or any
other officer, employee or representative of Borrower who is authorized or
designated as a signer of loan documents under the provisions of Borrower’s most
recent resolutions or similar documents on file with the Bank.  Notwithstanding
that individual names of Authorized Persons may have been provided to the Bank,
the Bank shall be permitted at any time to rely solely on an individual’s title
to ascertain whether that individual is an Authorized Person.

 

b)             “Base Rate” shall mean a rate per annum equal to 1.0 percentage
point(s) above the rate of interest announced by the Bank from time to time as
its prime rate of interest (“Prime Rate”).  If the prior blank is not completed,
the Base Rate shall be two (2) percentage points above the Prime Rate.

 

c.               “Base Rate Loan” shall mean a Loan that accrues interest at the
Base Rate.

 

d.              “Draw Date” shall mean, in relation to each Loan, the date that
such Loan is made or deemed to be made to Borrower pursuant to this Note.

 

e.     “Expiration Date” shall mean March 31, 2014.

 

f.                “LIBOR” shall mean the rate per annum (rounded upward, if
necessary, to the nearest 1/16th of 1%) obtained by dividing (i) the applicable 
London Interbank Offered Rate (see LIBOR Rate definition below), as fixed by the
British Bankers Association for United States dollar deposits in the London
interbank market at approximately 11:00 a.m. London, England time (or as soon
thereafter as practicable) on the appropriate day in accordance with the terms
of this Note, as determined by the Bank from any broker, quoting service or
commonly available source utilized by the Bank, by (ii) a percentage equal to
100% minus the stated maximum rate of all reserves required to be maintained
against “Eurocurrency Liabilities” as specified in Regulation D (or against any
other category of liabilities, which includes deposits by reference to which the
interest rate on LIBOR Rate Loan(s) is determined, or any category of extensions
of credit or other assets which includes loans by a non-United States’ office of
a bank to United States’ residents) on such date to any member bank of the

 

7

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Federal Reserve System.  Notwithstanding any provision above, the practice of
rounding to determine LIBOR may be discontinued at any time in the Bank’s sole
discretion.

 

g.              “LIBOR Rate” shall mean the rate per annum equal to:

·      2.75  percentage point(s) above one-month LIBOR, adjusting daily.

 

h.              “LIBOR Rate Loan” shall mean any Loan that accrues interest at a
LIBOR Rate, as determined by the Bank.

 

i.      “Loan” shall mean any advance of funds made to Borrower by the Bank
pursuant to this Note.

 

j.                 “London Business Day” shall mean any day on which dealings in
United States dollar deposits are carried on by banking institutions in the
London interbank market.

 

k.              “Maximum Principal Amount” shall mean Twenty-Five Million and
00/100 Dollars ($25,000,000.00).

 

l.     “New York Business Day” shall mean any day other than Saturday, Sunday or
other day on which commercial banking institutions in New York, New York are
authorized or required by law or other governmental action to remain closed for
business.

 

m.   “Outstanding Principal Amount” shall mean, at any point in time, the
aggregate outstanding principal amount of all Loans made pursuant to this Note.

 

2)            PAYMENT OF PRINCIPAL, INTEREST AND EXPENSES.

 

a)    Promise to Pay.  For value received, and intending to be legally bound,
Borrower promises to pay to the order of the Bank, on the Expiration Date, the
Maximum Principal Amount or the Outstanding Principal Amount, if less, plus
interest as set forth below and all fees and costs (including without limitation
the Bank’s attorneys’ fees and disbursements, whether for internal or outside
counsel) the Bank incurs in order to collect any amount due under this Note, to
negotiate or document a workout or restructuring, or to preserve its rights or
realize upon any guaranty or other security for the payment of this Note
(“Expenses”).

 

b)    Interest.  Each Loan shall earn interest on the Outstanding Principal
Amount thereof calculated on the basis of a 360-day year for the actual number
of days of each year (365 or 366), as follows:

 

i)             LIBOR Rate Loans.  Interest shall accrue each day on any LIBOR
Rate Loan, from and including the Draw Date to, but not including, the date such
LIBOR Rate Loan is paid in full (or converts to a Base Rate Loan), at the LIBOR
Rate in effect for that day.  The applicable LIBOR Rate shall be determined each
day using LIBOR in effect for that day, which, if such day is not a London
Business Day, shall have been fixed on the nearest preceding London Business
Day.

 

ii)            Base Rate Loans.  Interest shall accrue each day on any Base Rate
Loan, from and including the first day a Loan becomes a Base Rate Loan to, but
not including, the day such Base Rate Loan is paid in full, at a rate per annum
equal to the Base Rate in effect each day.  Any change in the Base Rate
resulting from a change in the Prime Rate shall be effective on the date of such
change.

 

c)     Maximum Legal Rate.  It is the intent of the Bank and Borrower that in no
event shall interest be payable at a rate in excess of the maximum rate
permitted by applicable law (the “Maximum Legal Rate”).  Solely to the extent
necessary to prevent interest under this Note from exceeding the Maximum Legal
Rate, any amount that would be treated as excessive under a final judicial
interpretation of applicable law shall be deemed to have been a mistake and
automatically canceled, and, if received by the Bank, shall be refunded to
Borrower.

 

d)    Intentionally omitted.

 

e.     Payments.  Payments shall be made in immediately available United States
funds at any banking office of the Bank.

 

8

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f.     Preauthorized Transfers from Deposit Account.  If a deposit account
number is provided in the following blank, Borrower hereby authorizes the Bank
to debit Borrower’s deposit account
#                                             with the Bank automatically for
any amount which becomes due under this Note.

 

g.     Late Charge.  If Borrower fails to pay, within five (5) days of its due
date, any amount due and owing pursuant to this Note or any other agreement
executed and delivered to the Bank in connection with this Note, Borrower shall
immediately pay to the Bank a late charge equal to the greatest of (a) $50.00,
(b) five percent (5%) of the delinquent amount, or (c) the Bank’s then current
late charge as announced by the Bank from time to time. Notwithstanding the
above, if this Note is secured by a one- to six-family owner-occupied residence,
the late charge shall equal 2% of the delinquent amount and shall be payable if
payment is not received within fifteen days of its due date.

 

h.     Default Rate.       If the Borrower fails to make any payment when due
under this Note, the interest rate on the Outstanding Principal Amount  shall
immediately and automatically increase to five (5) percentage points per year
above the otherwise applicable rate per year, and any judgment entered hereon or
otherwise in connection with any suit to collect amounts due hereunder shall
bear interest at such default rate.

 

i.      Interest Accrual; Application of Payments.  Interest will continue to
accrue on the Outstanding Principal Amount until the Outstanding Principal
Amount is paid in full.  All installment payments (excluding voluntary
prepayments of principal) will be applied as of the date each payment is
received and processed.  Payments may be applied in any order in the sole
discretion of the Bank, but, prior to demand for payment in full, may be applied
chronologically (i.e., oldest invoice first) to unpaid amounts due and owing, in
the following order: first to accrued interest, then to principal, then to late
charges and other fees, and then to all other Expenses.

 

3)            CREDIT AVAILABILITY.

 

a)    General.  This Note is issued by Borrower to the Bank in connection with a
certain line of credit or loan limit made available by the Bank to Borrower (the
“Credit”).  Except as otherwise provided herein, each Loan advanced hereunder
shall be in the form of a LIBOR Rate Loan.

 

b.     Authorized Representatives.  The Bank may make any Loan pursuant to the
Credit in reliance upon any oral, telephonic, written, teletransmitted or other
request (the “Request(s)”) that the Bank in good faith believes to be valid and
to have been made by Borrower or on behalf of Borrower by an Authorized Person. 
The Bank may act on the Request of any Authorized Person until the Bank shall
have received from Borrower, and had a reasonable time to act on, written notice
revoking the authority of such Authorized Person.  Borrower acknowledges that
the transmission between Borrower and Bank of any Request or other instructions
with respect to the Credit involves the possibility of errors, omissions,
misinterpretations, fraud and mistakes, and agrees to adopt such internal
measures and operational procedures as may be necessary to prevent such
occurrences.  By reason thereof, Borrower hereby assumes all risk of loss and
responsibility for, and releases and discharges the Bank from any and all
responsibility or liability for, and agrees to indemnify, reimburse on demand
and hold Bank harmless from, any and all claims, actions, damages, losses,
liability and expenses by reason of, arising out of, or in any way connected
with or related to: (i) Bank’s accepting, relying on and acting upon any Request
or other instructions with respect to the Credit; or (ii) any such error,
omission, misinterpretation, fraud or mistake, provided such error, omission,
misinterpretation, fraud or mistake is not directly caused by the Bank’s gross
negligence or willful misconduct.  The Bank shall incur no liability to Borrower
or to any other person as a direct or indirect result of making any Loan
pursuant to this paragraph.

 

c.     Lending Limit.  Any Request for a Loan hereunder shall be limited in
amount, such that the sum of (i) the principal amount of such Request; (ii) the
Outstanding Principal Amount under this Note; and (iii) the aggregate face
amounts of (or, if greater, Borrower’s aggregate reimbursement obligations to
the Bank (or any of its affiliates) in connection with) any letters of credit
issued by the Bank (or any of its affiliates) at the request (or for the
benefit) of Borrower, pursuant to this Credit; does not exceed the Maximum
Principal Amount under this Note.

 

9

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d.     Revolving Credit.  This Note evidences a revolving Credit.  Subject to
all applicable provisions in this Note and in any and all other agreements
between the Borrower and the Bank related hereto, the Borrower may borrow, pay,
prepay and reborrow hereunder at any time prior to the Expiration Date. 
Notwithstanding that, from time to time, there may be no amounts outstanding
respecting this Note, this Note shall continue in full force and effect until
all obligations and liabilities evidenced by this Note are paid in full and the
Credit evidenced by this Note has been terminated by the Bank.

 

e.     Request for LIBOR Rate Loans.  In making any Request for a Loan, Borrower
shall specify the aggregate amount of such Loan and the Draw Date; provided,
however, if a Request is received by the Bank after 2:00 p.m. (Eastern Standard
Time) on any given day, the earliest possible Draw Date will be the next New
York Business Day; and

 

f.     Delivery of Requests.  Delivery of a Request for a LIBOR Rate Loan shall
be made to the Bank at the following address, or such other address designated
by the Bank from time to time:

 

M&T Bank

 

68 Exchange Street

 

2nd Floor

 

Binghamton, New York  13901

 

Attn: Susan A. Burtis

 

Fax No.  (607) 779-2346

 

Telephone No.  (607) 779-5902

 

4)            CONVERSION UPON DEFAULT.  Unless the Bank shall otherwise consent
in writing, if (i) Borrower fails to pay when due, in whole or in part, the
indebtedness under the Note (whether by demand or otherwise), or (ii) there
exists a condition or event which, with the passage of time, the giving of
notice or both, shall constitute an event of default under any of Borrower’s
agreement with the Bank, if any, the Bank, in its sole discretion, may convert
any LIBOR Rate Loan to a Base Rate Loan.  Nothing herein shall be construed to
be a waiver by the Bank to have any Loan accrue interest at the Default Rate of
interest (which shall be calculated from the higher of the LIBOR Rate or the
Base Rate, as described above).

 

5)            RIGHT OF SETOFF.  The Bank shall have the right to set off against
the amounts owing under this Note any property held in a deposit or other
account with the Bank or any of its affiliates or otherwise owing by the Bank or
any of its affiliates in any capacity to Borrower or any guarantor or endorser
of this Note.  Such setoff shall be deemed to have been exercised immediately at
the time the Bank or such affiliate elects to do so.

 

6)            BANK RECORDS CONCLUSIVE.  The Bank shall set forth on a schedule
attached to this Note or maintained on computer, the date and original principal
amount of each Loan and the date and amount of each payment to be applied to the
Outstanding Principal Amount of this Note.  The Outstanding Principal Amount set
forth on any such schedule shall be presumptive evidence of the Outstanding
Principal Amount of this Note and of all Loans.  No failure by the Bank to make,
and no error by the Bank in making, any annotation on any such schedule shall
affect the Borrower’s obligation to pay the principal and interest of each Loan
or any other obligation of Borrower to the Bank pursuant to this Note.

 

7)            PURPOSE.  Borrower certifies (a) that no Loan will be used to
purchase margin stock except with the Bank’s express prior written consent for
each such purchase and (b) that all Loans shall be used for a business purpose,
and not for any personal, family or household purpose.

 

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8)                                     AUTHORIZATION.  Borrower, if a
corporation, partnership, limited liability company, trust or other entity,
represents that it is duly organized and in good standing or duly constituted in
the state of its organization and is duly authorized to do business in all
jurisdictions material to the conduct of its business; that the execution,
delivery and performance of this Note have been duly authorized by all necessary
regulatory and corporate or partnership action or by its governing instrument;
that this Note has been duly executed by an authorized officer, partner or
trustee and constitutes a binding obligation enforceable against Borrower and
not in violation of any law, court order or agreement by which Borrower is
bound; and that Borrower’s performance is not threatened by any pending or
threatened litigation.

 

9)                                     INABILITY TO DETERMINE LIBOR
RATES, INCREASED COSTS, ILLEGALITY.

 

a)             Increased Costs.  If the Bank shall determine that, due to either
(a) the introduction of any change in law (other than any change by way of
imposition of or increase in reserve requirements included in the calculation of
the LIBOR) or in the interpretation of any requirement of law, or (b) the
compliance requirements for any guideline or request from any central bank or
other governmental authority (whether or not having the force of law), there
shall be any increase in the cost to the Bank of agreeing to make or making,
funding or maintaining any LIBOR Rate Loans, then Borrower shall be liable for,
and shall from time to time, upon demand therefor by the Bank, pay to the Bank
such additional amounts as are sufficient to compensate the Bank for such
increased costs.

 

b)             Inability to Determine Rates.  If the Bank shall determine that
for any reason adequate and reasonable means do not exist for ascertaining LIBOR
with respect to a proposed LIBOR Rate Loan, the Bank will give notice of such
determination to Borrower.  Thereafter, the Bank may not make or maintain, as
the case may be, LIBOR Rate Loans hereunder until the Bank revokes such notice
in writing.  Upon receipt of such notice, the Bank may convert any LIBOR Rate
Loans to Base Rate Loans, and Borrower may revoke any pending Request that
Borrower previously made for a LIBOR Rate Loan.  If Borrower does not revoke any
such Request, the Bank may make the Loans, as proposed by Borrower, in the
amount specified in the applicable Request submitted by Borrower, but such Loans
shall be made as Base Rate Loans instead of LIBOR Rate Loans.

 

c)              Illegality.  If the Bank shall determine that the introduction
of any law (statutory or common), treaty, rule, regulation, guideline or
determination of an arbitrator or of a governmental authority or in the
interpretation or administration thereof, has made it unlawful, or that any
central bank or other governmental authority has asserted that it is unlawful
for the Bank to make LIBOR Rate Loans, then, on notice thereof by the Bank to
Borrower, the Bank may suspend the making of LIBOR Rate Loans until the Bank
shall have notified Borrower that the circumstances giving rise to such
determination shall no longer exist.  If the Bank shall determine that it is
unlawful to maintain any LIBOR Rate Loans, Borrower shall immediately pay to the
Bank the aggregate principal amount of all LIBOR Rate Loans then outstanding,
together with accrued interest and related Expenses.  If Borrower is required to
pay off any LIBOR Rate Loan as set forth in this subsection, then concurrently
with such payment, Borrower may borrow from the Bank, in the amount of such
payment, a Base Rate Loan.

 

10)                              MISCELLANEOUS.  This Note, together with any
related loan and security agreements and guaranties, contains the entire
agreement between the Bank and Borrower with respect to the Note, and supersedes
every course of dealing, other conduct, oral agreement and representation
previously made by the Bank.  All rights and remedies of the Bank under
applicable law and this Note or amendment of any provision of this Note are
cumulative and not exclusive.  No single, partial or delayed exercise by the
Bank of any right or remedy shall preclude the subsequent exercise by the Bank
at any time of any right or remedy of the Bank without notice.  No waiver or
amendment of any provision of this Note shall be effective unless made
specifically in writing by the Bank.  No course of dealing or other conduct, no
oral agreement or representation made by the Bank, and no usage of trade, shall
operate as a waiver of any right or remedy of the Bank.  No waiver of any right
or remedy of the Bank shall be effective unless made specifically in writing by
the Bank.  Borrower agrees that in any legal proceeding, a copy of this Note
kept in the Bank’s course of business may be admitted into evidence as an
original.  This Note is a binding obligation enforceable against Borrower and
its successors and assigns and shall inure to the benefit of the Bank and its
successors and assigns.  If a court deems any provision of this Note invalid,
the remainder of the Note shall remain in effect.  Section headings are for
convenience only.  Singular number includes plural and neuter gender includes
masculine and feminine as appropriate.

 

11)                              NOTICES.  Any demand or notice hereunder or
under any applicable law pertaining hereto shall be in writing and duly given if
delivered to Borrower (at its address on the Bank’s records) or to the Bank (at
the address on page one and separately to the Bank officer responsible for

 

11

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Borrower’s relationship with the Bank).  Such notice or demand shall be deemed
sufficiently given for all purposes when delivered (i) by personal delivery and
shall be deemed effective when delivered, or (ii) by mail or courier and shall
be deemed effective three (3) New York Business Days after deposit in an
official depository maintained by the United States Post Office for the
collection of mail or one (1) New York Business Day after delivery to a
nationally recognized overnight courier service (e.g., Federal Express).  Notice
by e-mail is not valid notice under this or any other agreement between Borrower
and the Bank.

 

12)                              JOINT AND SEVERAL.  If there is more than one
Borrower, each of them shall be jointly and severally liable for all amounts
which become due under this Note and the term “Borrower” shall include each as
well as all of them.

 

13)                              GOVERNING LAW; JURISDICTION.  This Note has
been delivered to and accepted by the Bank and will be deemed to be made in the
State of New York.  Except as provided under federal law, this Note will be
interpreted in accordance with the laws of the State of New York excluding its
conflict of laws rules.  BORROWER HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT IN THE STATE OF NEW YORK IN A COUNTY
OR JUDICIAL DISTRICT WHERE THE BANK MAINTAINS A BRANCH, AND CONSENTS THAT THE
BANK MAY EFFECT ANY SERVICE OF PROCESS IN THE MANNER AND AT BORROWER’S ADDRESS
SET FORTH ABOVE FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT NOTHING CONTAINED
IN THIS NOTE WILL PREVENT THE BANK FROM BRINGING ANY ACTION, ENFORCING ANY AWARD
OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST BORROWER INDIVIDUALLY, AGAINST ANY
SECURITY OR AGAINST ANY PROPERTY OF BORROWER WITHIN ANY OTHER COUNTY, STATE OR
OTHER FOREIGN OR DOMESTIC JURISDICTION.  Borrower acknowledges and agrees that
the venue provided above is the most convenient forum for both the Bank and
Borrower.  Borrower waives any objection to venue and any objection based on a
more convenient forum in any action instituted under this Note.

 

14)                              WAIVER OF JURY TRIAL.  BORROWER AND THE BANK
HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY
JURY BORROWER AND THE BANK MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN
EQUITY, IN CONNECTION WITH THIS NOTE OR THE TRANSACTIONS RELATED HERETO. 
BORROWER REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE OR AGENT OF THE BANK HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WILL NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THIS JURY TRIAL WAIVER.  BORROWER ACKNOWLEDGES THAT
THE BANK HAS BEEN INDUCED TO ENTER INTO THIS NOTE BY, AMONG OTHER THINGS, THE
PROVISIONS OF THIS SECTION.

 

x                                 Amended and Restated Note.  The Borrower
acknowledges, agrees and understands that this Note is given in replacement of
and in substitution for, but not in payment of, a prior Replacement Daily
Adjusting Libor Revolving Line Note dated on or about December 16, 2011, in the
original principal amount of $25,000,000.00, given by Borrower in favor of the
Bank, as the same may have been amended or modified from time to time (“Prior
Note”),, and further, that: (a) the obligations of the Borrower as evidenced by
the Prior Note shall continue in full force and effect, as amended and restated
by this Note, all of such obligations being hereby ratified and confirmed by the
Borrower; (b) any and all liens, pledges, assignments and security interests
securing the Borrower’s obligations under the Prior Note shall continue in full
force and effect, are hereby ratified and confirmed by the Borrower, and are
hereby acknowledged by the Borrower to secure, among other things, all of the
Borrower’s obligations to the Bank under this Note, with the same priority,
operation and effect as that relating to the obligations under the Prior Note;
and (c) nothing herein contained shall be construed to extinguish, release, or
discharge, or constitute, create, or effect a novation of, or an agreement to
extinguish, the obligations of the Borrower with respect to the indebtedness
originally described in the Prior Note or any of the liens, pledges, assignments
and security interests securing such obligations.

 

12

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Acknowledgment.  Borrower acknowledges that it has read and understands all the
provisions of this Note, including the Governing Law, Jurisdiction and Waiver of
Jury Trial, and has been advised by counsel as necessary or appropriate.

 

 

 

 

HARDINGE INC.

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

Edward J. Gaio

 

 

 

 

 

 

Title:

Vice President and CFO

 

 

 

 

 

 

 

 

 

 

 

 

Signature of Witness

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Typed Name of Witness

 

 

 

 

 

ACKNOWLEDGMENT

 

 

STATE OF NEW YORK

 

)

 

 

 

 

 

:SS.

 

 

 

 

COUNTY OF

 

)

 

 

13

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On                      day of December, in the year 2012, before me, the
undersigned, a Notary Public in and for said State, personally appeared EDWARD
J. GAIO, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in his capacity, and that by
his signature on the instrument, the individual, or the person upon behalf of
which the individual acted, executed the instrument.

 

 

 

 

 

 

 

Notary Public

 

14

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FOR BANK USE ONLY

 

Authorization Confirmed:

 

Product Code: 11900

 

Disbursement of Funds:

 

Credit A/C

#

Off Ck

#

Payoff Obligation

#

 

 

 

 

 

 

 

$

 

$

 

$

 

15

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EXHIBIT B

 

16

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SCHEDULE

 

Additional Representations and Warranties (§2)

 

1.                                      Judgments and Litigation.   None

 

Additional Affirmative Covenants (§3)

 

1.                                      Accounts.  Borrower shall maintain a
lock box with the Bank into which Borrower shall cause to be deposited monies
payable to it by account debtors.  The Borrower shall maintain an interest
bearing account for excess cash balances.

 

2.                                      The existing outstanding letters of
credit of the Borrower and its Subsidiaries shall be blocked against the Loan
and advances thereunder.

 

3.                                      Borrower shall provide to the Bank
monthly, Borrowing Base Certificates in form and content satisfactory to the
Bank.  “Borrowing Base Certificates” shall mean a report of the Borrower, in the
form required by the Bank, certified as true and correct by a responsible
officer of the Borrower.

 

Permitted Indebtedness (§4(a)):

 

1.                                      the Obligations;

 

2.                                      Guarantees by the Borrower of
Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of the
Borrower or any other Subsidiary;

 

3.                                      Indebtedness that is the subject of that
certain Amended and Restated Intercreditor Agreement between Bank and Keybank
International Association dated November 29, 2011, as amended November 29, 2012
in the amount of $1,500,000.00, and any extension, renewal, or replacement
thereof.

 

4.                                      Indebtedness of the Borrower to Chemung
Canal Trust Company in the amount of up to $3,000,000.00, and any extension,
renewal, or replacement thereof.

 

5.                                      Indebtedness of Borrower and its direct
and indirect Subsidiaries to Bank of America, N.A. in connection with foreign
exchange transactions which is secured by certain domestic assets of Borrower 
up to $4,000,000.00 at any given time and subject to an Intercreditor Agreement
dated as of December 13, 2011, as amended July 27, 2012, between Bank and Bank
of America, N.A., and any extension, renewal, or replacement thereof.

 

6.                                      In connection with the acquisition of
the stock of USACH Technologies, Inc. (“USACH”) for an aggregate purchase price
of up to $18,000,000 (the “USACH Investment”), plus or minus a customary working
capital adjustment, comprised, in part, of certain contingent indebtedness based
on future earnings (the “Contingent Payment Obligation”), pursuant to which
USACH became a subsidiary of Borrower:

 

a.  Indebtedness of USACH to American Chartered Bank in the form of a secured
revolving line of credit in the maximum principal amount of up to $2,000,000.00,
and any extension, renewal, or replacement thereof, which Indebtedness is
guaranteed by Borrower, and

 

17

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b.  Indebtedness of Borrower to the former owners of USACH under the Contingent
Payment Obligation, and any extension, renewal, or replacement thereof.

 

Permitted Guaranties (§4(b)):

 

Guaranties by the Borrower of indebtedness of any Subsidiary and by any
Subsidiary of indebtedness of the Borrower or any other Subsidiary, and any
other Guaranties constituting indebtedness permitted by Section 4(a) hereof.

 

Permitted Liens (§4(c)) means and includes:

 

1.                                      pledges and deposits made in the
ordinary course of business in compliance with workers’ compensation,
unemployment insurance and other social security laws or regulations;

 

2.                                      deposits to secure the performance of
bids, trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in the
ordinary course of business;

 

3.                                      judgment liens in respect of judgments
that do not constitute an Event of Default under Section 6(a);

 

4.                                      easements, zoning restrictions,
rights-of-way and similar encumbrances on real property imposed by law or
arising in the ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the affected
property or interfere with the ordinary conduct of business of the Borrower or
any Subsidiary; and

 

5.                                      existing liens set forth on Schedule
4(c) hereto.

 

Permitted Investments (§4(d)) means:

 

1.                                      direct obligations of, or obligations
the principal of and interest on which are unconditionally guaranteed by, the
United States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United States of
America), in each case maturing within one year from the date of acquisition
thereof;

 

2.                                      investments in commercial paper maturing
within 270 days from the date of acquisition thereof and having, at such date of
acquisition, a short-term commercial paper rating of at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s,
or being guaranteed by any industrial company with a long term unsecured debt
rating of at least A or A2, or the equivalent of each thereof, from S&P or
Moody’s, as the case may be;

 

3.                                      investments in certificates of deposit,
banker’s acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any State
thereof which has a combined capital and surplus and undivided profits of not
less than $500,000,000;

 

18

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4.                                      fully collateralized repurchase
agreements with a term of not more than thirty (30) days for securities
described in clause #1 above and entered into with a financial institution
satisfying the criteria described in clause #3 above;

 

5.                                      money market funds that (i) comply with
the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the
Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and
(iii) have portfolio assets of at least $5,000,000,000;

 

Permitted Loans (§4(e)):

 

Investments, capital contributions, loans or advances made by the Borrower in or
to any Subsidiary and made by any Subsidiary to the Borrower in excess of an
aggregate amount of $10,000,000.00 outstanding at any one time.  Existing
investments, the USACH Investment, and capital contributions by Borrower in any
Subsidiary are permitted and are not considered Loans for purposes of the
limitations of this Section. In addition, the Parties hereto acknowledge that
the Borrower is in the process of contributing its shares of Hardinge Taiwan
Precision Machinery Limited to Hardinge Holdings, B.V. in exchange for the
shares of Hardinge Holdings, B.V. after which time Borrower will then contribute
its shares in Hardinge Holdings, B.V. to Hardinge Holdings, GmbH in exchange for
additional capital in Hardinge Holdings, GmbH.  This transfer and subsequent
additional capital shall not be considered Loans for the purposes of the
limitations of this Section.

 

Additional Miscellaneous Covenants (§11)

 

1.                                      Advance Formula.  Advances made pursuant
to this revolving credit facility shall be limited to a maximum of the line
amount or the sum of 80% of Eligible Accounts and Eligible Inventory.

 

2.                                      Unused Portion Fee.  The Bank will
assess an unused portion fee of 3/8% quarterly on the daily unused portion of
the commitment to be assessed in arrears at the end of each quarter.  The Bank
will bill the Borrower based on this calculation at the end of each quarter
during the Loan.  The Borrower shall pay the Bank such unused portion fee
promptly upon receipt of invoice for same.

 

19

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SCHEDULE 4(C)

 

EXISTING LIENS

 

(A)

 

Debtor

 

Secured Party

 

Jurisdiction

 

Filing Information

 

Collateral

Hardinge Machine Tools Limited

 

Hormann (UK) Limited

 

UC Companies House; England and Wales

 

Registered 02/09/2005

 

The deposit account and all money from time to time placed in the deposit
account in accordance with a certain rent deposit deed

 

 

 

 

 

 

 

 

 

Hardinge Machine Tools Limited

 

HMT Trustees Limited, as Trustee of the Hardinge Machine Tools Limited Staff

 

UK Companies House; England and Wales

 

To be registered following completion

 

Debenture granting security over all assets to secure performance of obligations
under deficit recovery plan in connection with £0.9 million deficit of the
Hardinge Machine Tools Limited Staff Pensions Scheme

 

 

 

 

 

 

 

 

 

L. Kellenberger & Co. AG (as successor by merger to HTT Hauser Tripet Tschudin,
Ag)

 

UBS AG

 

Switzerland

 

10/30/2009

 

Mortgage on real property in Biel, Switzerland

 

 

 

 

 

 

 

 

 

Hardinge Taiwan Precision Machinery Limited

 

Mega International Commercial Bank

 

Taiwan

 

06/2006

 

Mortgage on real property in Taiwan

 

 

 

 

 

 

 

 

 

L. Kellenberger & Co. AG

 

Credit Suisse

 

Switzerland

 

8/20/2009

 

Mortgage on real property in St. Gallen, Switzerland

 

20

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Hardinge, Inc.

 

KeyBank National Association

 

New York

 

New York SOS — Filing No. 201112018402949

 

All personal property

 

 

 

 

 

 

 

 

 

Hardinge Precision Machinery (Jiaxing) Co., Ltd

 

China Construction Bank, Jiaxing Branch

 

China

 

N/A

 

Mortgage on land use right and construction in process

 

 

 

 

 

 

 

 

 

Hardinge, Inc.

 

The Robert E. Morris Company

 

New York

 

New York SOS — Filing No. 201203028075963

 

Specific Equipment

 

 

 

 

 

 

 

 

 

Hardinge, Inc.

 

Machine Tool Systems, LLC

 

New York

 

New York SOS — Filing No. 201203218099177

 

Specific Equipment

 

 

 

 

 

 

 

 

 

Hardinge, Inc.

 

Bank of America, N.A

 

New York

 

New York SOS — Filing No. 201206110331952

 

All assets

 

(B)                               A lien in favor of American Chartered Bank on
all personal property assets of USACH Technologies, Inc. securing indebtedness
of USACH Technologies, Inc. to American Chartered Bank.

 

21

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