Exhibit 10.1


 


	
   

  	
   

  	
  Master no. 0254-L0030759

  
	
   

  	
  (for internal
  bank use only)

  
	
   

  	
   

  
	
  Master
  Credit Agreement

  UBS Corporate Financing

  	
   

  	
  UBS AG

  P.O. Box 1964, 9000 St. Gallen

  Tel. +41-71-221 83 10

  www.ubs.com

  



 


 


1.        Borrower


L. Kellenberger & Co. AG

Heiligkreuzstrasse 28

9009 St. Gallen


(hereinafter referred to as
the ‘Borrower’)


 


 


2.        Lender


UBS AG


Am Bahnhofplatz


9000 St. Gallen


(hereinafter referred to as
‘UBS’)


 


 


3.        Credit
facility


UBS grants the Borrower a
credit facility in a maximum amount of
7 000 000 CHF


(seven million Swiss Francs).


 


 


4.        Financing
purpose


To finance current assets for
operating purposes.


 


 


5.        Availability


Subject to the terms and
conditions of this Credit Agreement, this credit facility is available in the
following forms:


 


Up to a maximum amount of
3 000 000 CHF.


·                  as a current
account overdraft in CHF and/or any freely-available and convertible currency


·                  as UBS fixed
advances with terms of 1 - 12 months in an amount of at least
250 000 CHF and/or in the equivalent in any freely-available and
convertible currency.


 


Up to a maximum amount of
7 000 000 CHF.


·                  for issuing advance payment
guarantees in form and substance acceptable to UBS with a maximum term of one
year, for issuing other guarantees with a maximum term of two years. The issuing
of letter of Indemnities is not allowed. 


·                  for opening of documentary
credits in a form acceptable to UBS for a period of up to one year.


 


Upon the Borrower’s request
UBS is in exceptional cases ready to examine the issuing of guarantees and/or
documentary credits with terms exceeding one or two years.


 


 


6.        Interest rates
and commission


 


6.1      UBS current
accounts


The interest rate currently
applicable for use with CHF is 5.75% p.a. Rates for any freely-available and
convertible currency upon request.


 


Plus credit commission in the
amount of 0.25% per quarter based on the average debit balance.


 


At the end of each calendar
quarter, a closing statement showing interest and commission charges shall be
provided. UBS shall have the right to adjust interest and commission rates to
changing market conditions at any time with immediate effect.


 


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6.2      UBS fixed
advances


For any advance with a term of
up to and including 6 months, principal and interest shall be calculated and
charged as a single payment at maturity.


 


For any advance with a term of
more than 6 months, interest shall be calculated and charged quarterly at the
end of each calendar quarter. Principal and interest shall be calculated and
charged at maturity.


 


The base interest rate shall
be calculated according to Euromarket rates for the relevant term and currency,
plus a UBS margin.


 


The interest rate shall be
fixed two bank working days prior to any advance being drawn down or renewed,
for the corresponding term and currency. The instructions for drawdown or
renewal must be received by UBS at least two bank working days before such
drawdown or renewal. Where such instructions are unavailable, advances falling
due shall not be renewed and both principal and interest shall be debited from
the relevant current account.


 


6.3      Guarantees/documentary
credits


Commissions and fees shall be
fixed by UBS on a case-by-case basis, and shall depend in particular on the
nature, size, term and complexity of the transaction as well as the Borrower’s
credit rating.


 


UBS shall have the right to
adjust its commissions at any time during the term of a guarantee, subject to a
notice period of 90 days. UBS shall notify the Borrower of such adjustment in
writing.


 


6.4      Interest
calculation


Interest shall be calculated
on a 365/360 basis, i.e. the actual number of days per month divided by a
360-day year.


 


 


7.        Security


The forms of security listed
below shall serve UBS as security for all claims including all past due and
current interest, commission, etc.:


 


1)                        Transfer of

mortgage note (‘Namenschuldbrief’) by way of security in the nominal value of
7 000 000 CHF, in 1st rank of priority,

mortgage note (‘Namenschuldbrief’) by way of security in the nominal value of
7 000 000 CHF, in 1st rank of priority,

mortgage note (‘Namenschuldbrief’) by way of security in the nominal value of
7 000 000 CHF, in 1st rank of priority,

at Land Register Biel, no. 9443, Mohnweg 5, 2500 Biel/Bienne,

pursuant to the separate form «Transfer of Title as Collateral».


 


The
above-mentioned securities serve UBS only for current account overdraft and UBS
fixed advances up to a maximum amount of 3 000 000 CHF.


 


 


8.        Term


Until further notice.


 


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9.        Termination


 


9.1      Ordinary
termination


The Borrower shall have the
right to terminate this Credit Agreement at any time with immediate effect.


 


UBS shall have the right to
terminate this Credit Agreement at any time with immediate effect, and to
refuse to make funds available to the Borrower under the credit facility at its
discretion, without having to provide any reasons.


 


Any termination shall cancel
the unused portion of the credit facility with immediate effect. To the extent
that the credit facility has been drawn down, any outstanding amounts shall
become due and payable as follows:


 


·                  UBS current
account

immediately


 


·                  UBS fixed
advance

on expiration of the agreed term


 


Any guarantees and documentary
credits issued by UBS shall remain in effect with no changes until their
expiration in accordance with the terms and conditions applicable on a
case-by-case basis, and the Borrower shall remain fully liable.


 


9.2        Extraordinary
termination


The Borrower shall have the
right to terminate this Credit Agreement extraordinarily at any time by observing
a period of 30 days’ advance notice, and to repay any outstanding amounts drawn
down under the same in whole or in part. In the event that the outstanding
amount becomes due as a result of an extraordinary termination during a current
fixed interest period or on a date other than the original due date, an
indemnity pursuant to paragraph 1 of «Indemnity in the event of an extraordinary
termination» is due and payable on the due date of the premature repayment.


 


UBS shall have the right to
terminate this Credit Agreement at any time with immediate effect, and to
declare all outstanding amounts including accrued interest, commission, fees,
etc. immediately due and payable, irrespective of the term of any credit
facility granted, if:


 


1)                        the Borrower or a
Group company («Group company» shall hereinafter mean any company within the
meaning of Art. 663e, para. 1 of the Swiss Code of Obligations that may be
deemed to belong to the Borrower’s consolidated group of companies) is more
than 30 calendar days in arrears with payment of interest, commission and/or
principal payments owed to UBS or a third party (including any parties that may
have acquired claims under the credit granted), or fails to reduce overdrafts
by repayment or providing sufficient additional security within the time period
set therefor by UBS.


 


2)                        the Borrower or
one of its Group companies is/are required by official order (in particular in
the area of environmental protection) to undertake remedial measures which are
deemed by UBS as having a potentially material effect on the Borrower’s ability
to perform its financial obligations.


 


3)                        in the opinion of
UBS a material reduction in the value of security is imminent or has occurred.


 


4)                        there has been a
change of ownership/controlling interests in relation to the Borrower which UBS
deems to be material.


 


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5)                        the Borrower or a
Group company changes its/their legal or commercial structure, e.g. through
liquidation, sale of a substantial part of its assets, change of its objects or
business activities, merger or restructuring, provided that the relevant event
is deemed by UBS as having a potentially material effect on the Borrower’s
ability to perform its financial obligations.


 


6)                        with regard to
the Borrower or a Group company bankruptcy proceedings or a stay of bankruptcy
proceedings are filed and/or an application for court or out-of-court creditor
protection is made.


 


7)                        the Borrower or a
Group company has suspended payments or the earnings or asset position of the
Borrower or a Group company is deemed by UBS to have deteriorated
significantly.


 


8)                        there is a change
of ownership of the whole or any part of any mortgaged real estate property.


 


9)                        the Borrower or a
Group company is in breach of any other obligations arising under this Credit
Agreement.


 


Should the credit facility
have been utilized in the form of guarantees and documentary credits at the
time of the extraordinary termination, the Borrower undertakes to release UBS
immediately from such contingent obligations or to provide security by pledging
marketable assets up to the full amount of those commitments plus a customary
bank margin.


 


 


10.        Indemnity in
the event of an extraordinary termination


In the event of an
extraordinary termination by the Borrower an indemnity must be paid. This indemnity
shall be calculated on the basis of the difference interest rate applied until
the end of the fixed interest period, whereas the difference interest rate
shall be the difference between the agreed interest rate and the interest rate
obtainable at the time of the premature repayment on an investment in the money
or capital market with a corresponding remaining term. If the interest rate is
higher than the investment rate, the resulting difference shall be charged to
the Borrower; if the interest rate is less than the investment rate, the
resulting difference shall be credited to the Borrower.


 


In the event that UBS
terminates this agreement extraordinarily, the Borrower shall be liable to indemnify
UBS for all losses UBS has suffered and/or costs incurred as a result, for any
amount utilized under the Credit Agreement with a fixed interest period, in
particular but not limited to, any indemnity which shall be calculated on the
basis of the difference interest rate applied until the end of the fixed
interest period, whereas the difference interest rate shall be the difference
between the agreed interest rate and the interest rate obtainable at the time
of the premature repayment on an investment in the money or capital market with
a corresponding remaining term. UBS reserves the right to claim additional
compensation.


 


 


11.        Representations
and warranties


The Borrower represents and
warrants that:


 


1)                        the Borrower has
not created any security interest in respect of its own obligations and/or the
obligations of third parties other than security given under this Credit
Agreement or in the context of other credit agreements with UBS and/or any
security given in favour of other creditors with respect to which the Borrower
has expressly notified UBS.


 


2)                        no event has
occurred which would entitle UBS to effect extraordinary termination, and no legal
action is pending which could have a material adverse effect on the Borrower or
its assets.


 


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12.        Positive
covenants


The Borrower undertakes to
insure against fire and damage from the elements in an amount deemed sufficient
in the opinion of UBS, those buildings and any appurtenances thereto located on
the mortgaged property, which are not otherwise subject to compulsory
insurance, with an insurance company domiciled in Switzerland. Upon request by
UBS, the Borrower shall produce the policy and the receipts proving payment of
the premium.


 


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13.                     Negative
covenants


The Borrower undertakes,
without prior written consent from UBS, 


 


1)                       not to enter into
or assume any obligations (incl. contingent liabilities) which are secured by a
right of lien, transfer of title as collateral or any other encumbrance upon
its current or future assets.


 


2)                      not to secure
existing obligations (incl. contingent liabilities) in the above-mentioned
manner (Exception: The pledge of collaterals at Credit Suisse).


 


3)                       not to grant any
security for obligations (incl. contingent liabilities) of a third party.


 


4)                       not to prioritize
any third party claims over UBS claims out of or in connection with this Credit
Agreement (pari passu).


 


 


In addition, the Borrower
undertakes:


 


5)                       to refrain from
using the credit under this Agreement, either in whole or in part, in order to
grant loans or any other type of financing to any other Group company or to a
third party.


 


6)                       to ensure that
for the entire term of this Credit Agreement, any real estate property financed
by UBS shall not be used for any purpose other than that originally stipulated,
without the prior consent of UBS.


 


7)                      not to grant
intercompany loans to any other Hardinge Group companies except for intercompany
loans up to the amount of 10 000 000 CHF in the aggregate.


 


 


14.                     Financial
ratios


The Borrower undertakes to
maintain at all times during the entire term of this Credit Agreement the key
ratios listed below:


 


1)                       Equity
ratio in the consolidated annual financial statement of at least 35%.

The equity ratio is calculated as follows: equity capital (share capital,
statutory and free reserves, profit carried forward as well as shareholder
loans with subordinated priority less goodwill, losses carried forward and
loans to shareholders) in relation to total assets, not including any
contingent liabilities.


 


 


15.                     Information
undertaking


For the entire term of this
Credit Agreement, the Borrower undertakes to provide the following information
to UBS:


 


1)                        annually one copy
of the balance sheet, the profit and loss statement and, if required by law, an
audit report compliant with the legal requirements by no later than four months
following the end of the financial year and consolidated annual report of
Hardinge group.


 


In
the event of a change in circumstances UBS reserves the right to demand an
audit report or to increase the requirements the audit report has to fulfill.


 


2)                        one copy of the
budget, including the investment budget, by no later than 30 calendar days
prior to commencement of the relevant fiscal year.


 


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3)                      one copy of the
quarterly reporting incl. balance sheet and profit and loss statement,
statement of cash flow US-Gaap and development of order backlog by no later
than one month following the end of the financial quarter, first due on 30 September 2009.




 


UBS treats this information as
confidential.


 


The Borrower undertakes, for
the entire term of this credit facility, to immediately inform UBS of any
material changes, in particular of the occurrence, or likely occurrence, of any
circumstances which might constitute grounds for extraordinary termination.


 


 


16.        Conditions
precedent


No utilisation may be drawn
down until all copies of the documents listed below have been received by UBS,
executed in the required form, and UBS has received the agreed security in
legally valid form:


 


·                  one copy of this Credit
Agreement


·                  Transfer of Title as
Collateral


·                  Repledging of your Collateral


 


In the event that UBS has not
received all of the documents and/or security, in the required form, within one
month of the date of execution of this Credit Agreement, UBS shall be
authorized to rescind this Credit Agreement without granting any extension of
the deadline for receiving the said documents and/or security.


 


 


17.        Miscellaneous
provisions


 


17.1     General
conditions


The «General Conditions» of UBS
shall form an integral part of this Credit Agreement.


 


17.2     Order in which
security shall be realized


In the event that several
items of security have been provided to UBS, UBS shall, if and when realizing
the security, decide at its discretion to what extent and in which order the
items shall be realized, and how the proceeds from such realization shall be
allocated to the individual drawdowns.


 


 


18.        Transfer


UBS shall have the right to
offer for transfer, or to transfer, in whole or in part, its rights under this
Credit Agreement, including any security provided in respect of the credit
facility, such as mortgage notes and any other security, to any third parties
in Switzerland or abroad. UBS may at any time provide all third parties,
including rating agencies, which may be parties to such transfer, with access
to all information and data relevant to the transfer, and shall be exempted in
this regard from the statutory obligation to maintain banking secrecy. Insofar
as third parties are not subject to Swiss legislation on banking secrecy,
information and data shall only be disclosed if the said parties undertake to
maintain secrecy and, in turn, ensure that this obligation is binding upon any
further contracting parties.


 


All assignees shall be
entitled to reassign the rights acquired, provided that each subsequent
assignee also undertakes to maintain secrecy. UBS (and any party acquiring
rights as a result of any transfer made in accordance with this Clause) may,
without having to obtain consent from the Borrower, assign any limit obligation
agreed under this Credit Agreement, and/or any other obligations arising
hereunder, to the assignee in respect thereof, together with any claims under
the credit granted. Any party acquiring such obligations must either be a
company affiliated with UBS, or a Swiss or foreign financial institution (bank,
insurance company, or similar). UBS shall be released from any obligation to
the extent that it transfers same.


 


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In accordance with and
pursuant to this provision, UBS shall be also entitled to transfer the Contract
as a whole to such an assignee (change of contracting party). Each assignee
shall be entitled to further transfer the entire Contract to a next assignee. 


 


 


19.        Applicable
law, place of performance, jurisdiction and debt enforcement


This Credit Agreement shall be
governed by and construed in accordance with Swiss law. The place of
performance of all obligations and exclusive place of jurisdiction for any
disputes arising out of or in connection with this Credit Agreement shall be
St. Gallen. This is also the place of debt enforcement for the Borrower if
domiciled abroad. UBS reserves the right, however, to take legal action against
the Borrower before the authority of the latter’s domicile.


 


 


This Agreement was executed in
two original copies and replaces the Agreement dated 5 November 2008.


 


 


	
  Ref. F916-FCC

  	
   

  	
  UBS AG

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  St. Gallen, 27
  October 2009

  	
   

  	
  /s/
  Gerhard Koster

  	
  /s/
  Marcel Fercher

  
	
  Place/Date

  	
   

  	
  Gerhard
  Koster

  	
  Marcel
  Fercher

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Agreed

  	
   

  
	
   Borrower

  	
   

  	
  L.
  Kellenberger & Co. AG

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  St.
  Gallen, 30 October 2009

  	
   

  	
  /s/
  Jurg Kellenberger

  	
  /s/
  Peter Huersch

  
	
  Place/Date

  	
   

  	
  Signature(s)

  	
   

  



 


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