EXHIBIT 10.1


 


SHARE PURCHASE AGREEMENT


 


THIS SHARE PURCHASE
AGREEMENT (the “Agreement”)
is entered into as of this 27th day of December 2005 by and among:


 


(1)   Hardinge Inc., a
corporation duly organized and existing under the laws of the State of New York,
the U.S.A. and having its registered office at One Hardinge Drive, Elmira, NY
14902-1507, U.S.A. (“Purchaser”);


 


(2)   Mr. Jih-Ming
Yang (), a
citizen of the Republic of China (“ROC”) and having his domicile at 22
Hsin-Ping, Shin-Long Neighborhood, Taiping City, Taichung County, Taiwan, ROC;


 


Ms. Shain Wu (),
an ROC citizen and having her domicile at 3 Fl.-6, 286 Mei-Chuan West Road, Section 4,
Taichung City, Taiwan, ROC;


 


Mr. Paul
Ling (), an
ROC citizen and having his domicile at 11 Fl., 20 Chin-Nan Street, North Area,
Taichung City, Taiwan, ROC; and


 


Ms. J.
R. Ho (), an ROC
citizen and having her domicile at 5 Fl.-5, 187 Shin-Chin Road, North Area,
Taiwan, ROC (hereinafter referred to individually as a “Seller”, collectively, the “Sellers”.)


 


(Each of the Purchaser
and the Sellers is hereinafter referred to individually a “Party”
and collectively, the “Parties”.)


 


W I T
N E S S E T H:


 


WHEREAS, Hardinge Taiwan
Limited (the “Company”),
a company limited by shares organized and existing under the laws of the
R.O.C., having its registered office at 4 Tse-Chiang San Road, Nan-Kang
Industrial Park, Nanto City, Taiwan, R.O.C., has a paid-in capital of NT$103,750,000
with 10,375,000 issued and outstanding shares of common stock, at a par value
of Ten New Taiwan Dollars (NT$10) per share;


 


WHEREAS, the
Sellers entered into a Joint Venture Agreement with the Purchaser dated March 16,
1999 (the “JVA”), and collectively
own 49% of the issued and outstanding shares in the Company with each of their
shareholding as indicated in Schedule 1
hereof;


 


WHEREAS,
Mr. Jih-Ming Yang and Ms. Shain Wu each entered into a Consultant
Agreement with the Company dated March 16, 1999 as contemplated under the
JVA


 


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(collectively the “Consultant Agreements”); and


 


WHEREAS,
the Sellers intend to sell to the Purchaser and the Purchaser intends to
purchase from the Sellers all of the Sellers’ shares in the Company (the “Sale Shares”) to make the Company a
wholly-owned subsidiary of the Purchaser, on the terms and conditions
hereinafter set forth.


 


NOW, THEREFORE,
in consideration of the foregoing and of the covenants and agreements herein
contained and intending to be legally bound, the Parties agree as follows:


 


ARTICLE 1.  PURCHASE AND SALE OF THE SALE SHARES


 


1.01         Purchase
and Sale of the Sale Shares.  Upon
the terms and subject to the conditions of this Agreement, on the Closing Date
(as defined in Article 2.01 hereof), each Seller shall sell, assign,
transfer and deliver to the Purchaser, and the Purchaser shall purchase and
acquire from each Seller, his/her portion of the Sale Shares, together with all
rights attached or accrued thereto including the right to all dividends and
distributions declared, paid or made in respect thereof on or after the date
hereof.


 


1.02         Purchase
Price.  In consideration of the sale
and purchase of the Sale Shares as provided in Article 1.01 hereof, the
purchase price for Mr. Jih-Ming Yang’s 2,306,780 shares shall be
NT$133,793,240; for Ms. Shain Wu’s 1,153,390 shares shall be
NT$66,896,620, for Mr. Paul Ling’s 811,790 shares shall be NT$47,083,820;
for Ms. J.R. Ho’s 811,790 shares shall be NT$47,083,820, and the total
purchase price for the entire Sale Shares shall be NT$294,857,500 (“Purchase Price”).


 


ARTICLE 2.  THE CLOSING


 


2.01         The
Closing.  Upon the terms and subject
to the conditions of this Agreement, the Closing of the transactions
contemplated herein (the “Closing”)
will take place at the office of Lee & Li, Attorneys-at-law at 7th
Fl., 201 Tun Hua North Road, Taipei, Taiwan, R.O.C on December 29, 2005 or
such other date as agreed to by the Parties (the “Closing Date”).


 


2.02        Deliveries
by the Sellers and the Company.  At
or prior to the Closing, each Seller shall or shall cause the Company to, as
applicable, deliver or have delivered each of the following to the Purchaser in
form and substance satisfactory to the Purchaser:


 


(1)           A
receipt issued by each Seller acknowledging the receipt of payment of his/her
portion of the Purchase Price and specifying the number of his/her portion of
the Sale Shares being transferred to the Purchaser as of the Closing Date;


 


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(2)           Share
Certificates representing his/her portion of the Sale Shares, duly endorsed by such
Seller, together with all necessary documents as required by the Purchaser for
registration of share transfer for the Sale Shares;


 


(3)           The shareholders’ roster of the Company having
registered therein the Purchaser as the shareholder holding the Sale Shares
(the shareholders roster shall be duly affixed with seals of the Company and
its Chairman of the Board of Directors); and


 


(4)           All
other documents, certificates, instruments, chops and writings required to be
delivered by the Sellers on or prior to the Closing Date pursuant to this
Agreement or otherwise required in connection therewith.


 


2.03         Payment by the Purchaser.   The Purchaser shall pay the Purchase
Price to the Sellers on the Closing date, and withhold an amount equivalent to
the 0.3% Securities and Transaction Tax and the relevant bank charges for
effecting the payment, to the accounts designated by each of the Sellers. The
Purchaser agrees to pay to the competent tax authorities, on the Closing Date,
the Securities and Transaction Tax payable on the sale of the Sale Shares.


 


The Parties
acknowledge that the
Purchase Price is based on the assumption that the net book value of the
Company on the Closing Date (the “Closing Book Value”) will be equal to the net
book value reflected on the audited balance sheet of the Company as of September 30,
2005 (the “September Book Value”).  Accordingly,
the Parties agree that if the Closing Book Value turns out to be different from
the September Book Value, the Parties shall make an upward or downward
adjustment to the Purchase Price by March 31, 2006, on a dollar for dollar
basis based on the audited balance sheet as of December 31, 2005.  The amount of the adjustment which is payable
by the Purchaser or the Sellers, as the case may be, shall be paid within 7 business
days after March 31, 2006.


 


ARTICLE 3.  CONDITIONS PRECEDENT


 


3.01         Purchaser’s
Conditions to Closing.   The obligation of the Purchaser to purchase
the Sale Shares is subject to the satisfaction of following conditions
precedent on or before the Closing Date, unless waived by the Purchaser in
writing:


 


(1)           All
government approvals for the transaction contemplated herein in all relevant
jurisdictions have been obtained, including without limitation to the approvals
of the R.O.C. Investment Commission (the “FIA
Approval”) for the Purchaser’s purchase of the Sale Shares.


 


(2)           The
Sellers’ representations and warranties set out in Articles 4.01 and 4.02 below
shall remain true and correct as of the Closing Date.


 


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ARTICLE 4.  REPRESENTATIONS AND WARRANTIES


 


4.01         Each
Seller.   Each of the Sellers hereby severally represents
and warrants to the Purchaser that:


 


(1)           He/She
owns the portion of the Sale Shares registered under his/her name free and
clear of any trusts, liens, pledges, security agreements, options,
restrictions, encumbrances or charges of whatever nature, and has full legal
right, power and authority, without the prior or subsequent approval of any
person, government body or court, to sell, transfer, assign and deliver the Sale
Shares as provided in this Agreement, and such delivery will convey to the
Purchaser lawful, valid, marketable and indefeasible title to the Sale Shares,
free and clear of any trusts, liens, pledges, security agreement, options,
restrictions, encumbrances or charges of whatsoever nature.


 


(2)           There
is no legal action, suit, proceeding, litigation, claim, administrative
proceeding or governmental action currently pending or threatened that does or
might affect: (i) such Seller’s interest in the Sale Shares, or (ii) such
Seller’s ability to convey to the Purchaser good, marketable and unencumbered
title to the Sale Shares, or (iii) such Seller’s authority to enter into
and perform this Agreement.


 


4.02         The
Purchaser.   The Purchaser represents and warrants to the
Sellers that:


 


(1)           The
Purchaser is duly incorporated and validly existing under the State of New
York, the U.S.A.


 


(2)           The
Purchaser has obtained all corporate approvals necessary and appropriate for
the valid execution, delivery and performance hereof.


 


(3)           The
Purchaser is legally permitted to make the investment hereunder, and this
Agreement constitutes the legal, valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms.


 


ARTICLE 5.  COVENANTS, UNDERTAKINGS, AND GUARANTEES


 


5.01         Further
Assurance.              Each of Sellers and
Purchaser shall use its best efforts to consummate in a timely manner the purchase
and sale of the Sale Shares. The Parties further agree to perform (or procure
the performance of) all further acts and things, and execute and deliver (or
procure the execution and delivery of) such further documents, as may be
required by law or as the other third parties may reasonably require, whether
on or after Closing, to implement and/or give effect to this Agreement and the sale
of the Sale Shares contemplated by it and for the purpose of vesting in the Purchaser
the Sale Shares to be transferred to it


 


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pursuant to the
provisions of this Agreement.


 


The Parties agree that in
order to make the upward or downward adjustment in accordance with Article 2.03,
the Parties hereby authorize Lee and Li, Attorneys-at-law (“Lee and Li”) to
retain ten (10%) percent of the Purchase Price (the “Retention Fund”),
equivalent to NT$29,485,750 in a custodian account.  The Parties shall jointly issue a written
notice to Lee and Li to instruct the release of Retention Fund when the
adjustment has been determined by the Parties, and Lee and Li shall pay any
amount of the Retention Fund payable to the Sellers and release the balance to
the Purchaser.


 


5.02         Non
Competition.   In consideration of the amount of payment
received under this Agreement, each Seller agrees not to, for one year from the
execution of this Agreement, directly or indirectly, in the R.O.C., conduct any
business that is same or related to either (i) the business of the Company
or (ii) the business directly or indirectly owned by the Purchaser that is
same or related to the business of the Company (“Non-compete Business”), including without limitation, the
provision of services or products that are same or similar to Non-compete
Business, or concerning the Non-compete Business, the solicitation or diversion
of any of the customers or accounts of the Company, or the entity directly or
indirectly owned by the Purchaser for any purpose.


 


5.03         Non
Disclosure.   Each of the Sellers shall not divulge,
disclose, reproduce or distribute to any person or entity any confidential
information pertaining to the Company, or the Purchaser including, without
limitation, the Proprietary Information (as defined below) of the Company or
any of the Company Subsidiaries or the Purchaser or any of their respective shareholders,
directors, officers, employees or customers.   
Each of the Sellers shall abide by his/her obligations under the R.O.C.
Trade Secrets Act and other relevant laws. For the purpose of this Agreement, “Proprietary
Information” shall mean all materials, vendors and users lists, designs, plans,
specifications, intellectual property and intellectual property applications,
trade secrets, sales and marketing information, computer applications, methods
and policies of doing business, and any other proprietary information and data.


 


5.04         Termination
of JVA and Release.   The Parties
agree that the JVA shall automatically terminate upon the Closing.  No Party shall have any claim against the
other Party (or its shareholders, directors, officers and employees) for any
damages, costs or expenses arising or incurred in connection with JVA or its
termination.


 


5.05         Termination of
Consultant Agreements and Release.   Mr. Jih-Ming Yang and Ms. Shain Wu
agree that the Consultant Agreements shall automatically terminate upon the
Closing.  Neither of them shall have any
claim against the Company or the Purchaser (or their shareholders, directors,
officers and employees) for any damages, costs or expenses arising or incurred
in connection


 


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with the Consultant Agreements or its termination. 


 


ARTICLE 6.  SURVIVAL OF WARRANTIES; INDEMNIFICATION.


 


6.01         Indemnification
by Each Seller.   Each of the Sellers hereby agrees to severally
indemnify, defend and hold harmless the Purchaser (including its officers,
employees, directors, Sellers, assigns and successors) from and against any and
all claims, actions, deficiencies, assessments, liabilities, losses, damages,
costs, expenses, judgments and settlements against the Company and/or the
Purchaser, including reasonable legal fees, of any kind (collectively, “Claims”) relating to or arising out of
or in connection with or incidental to any breach by such Seller of any
representation or warranty under Article 4.01 of this Agreement. The
indemnification obligations described herein shall survive the termination, rescission
or expiration of this Agreement.  For the
purpose of this Article 6.01, any damages or losses to the Company shall
be deemed as the losses or damages to the Purchaser.


 


ARTICLE 7.  CANCELLATION


 


7.01         Cancellation
Prior to Closing.   This Agreement may be canceled at any time
prior to the Closing Date:


 


(1)           by
mutual written consent of the Purchaser and the Sellers;


 


(2)           by
the Purchaser, if the FIA Approval cannot be obtained within a certain period
of time for causes not attributable to the Purchaser;


 


(3)           by
the Purchaser, if there has been a material violation or breach by any of the
Sellers of any agreement, representation or warranty contained in this
Agreement;


 


(4)           by
the Sellers jointly, if there has been a material violation or breach by the
Purchaser of any agreement, representation or warranty contained in this
Agreement; or


 


(5)           by
the Purchaser, in the event that by December 31, 2005, the Sellers are not
able to complete the transfer of Sale Shares to the Purchaser.


 


The Purchaser shall have the right to cancel this
Agreement pursuant to this provision only in part with respect to the Seller
meeting any of the circumstances described above.


 


7.02         Cancellation
After Closing.   The Parties acknowledge that this transaction
is related to another transaction for the purchase of all shares in U-Sung Co.
Ltd. (“U-Sung Transaction”) as contemplated in another share purchase agreement


 


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dated [December 27,
2005] between the Company and the shareholders of U-Sung Co. Ltd.  In the event that the U-Sung Transaction is
cancelled for whatever reasons, either Party shall be entitled to cancel this
Agreement.  In such case, the Sellers
shall return the Purchaser Price (plus any deducted Securities and Transaction
Tax and the relevant bank charges) to the Purchaser and the Purchaser shall
return the Sale Shares to the Sellers. 
All the associated Securities and Transaction Tax in connection with the
return of the Sale Shares shall be borne by the Sellers.


 


7.03         Procedure
and Effect of Cancellation.   In the event of cancellation of this Agreement
pursuant to Article 7.01 or 7.02, written notice thereof shall forthwith
be given to the other Party and this Agreement shall be canceled and the
transactions contemplated hereby shall be abandoned, without further action by
any of the Parties.  If this Agreement is
canceled as provided in Article 7.01 or 7.02:


 


(1)           no
Party nor any of its directors, officers or affiliates shall have any liability
or further obligation to any other Party or to its directors, officers or
affiliates pursuant to this Agreement except for those provided in Articles 7
and 8 hereof; provided, that this is not intended to release any Party of any
liability it may otherwise have for a breach of any provision of this Agreement
before the cancellation, and


 


(2)           all
filings, applications and other submissions made pursuant to this Agreement
shall, to the extent practicable and permitted by law, be withdrawn from the
agency of other person to which made.


 


ARTICLE 8.  MISCELLANEOUS


 


8.01         Non-Waiver.   Any
failure or delay by any Party in exercising any right, power or remedy shall
not preclude the further exercise thereof, and every right, power of remedy of
the Parties hereto shall continue in full force and effect until such right,
power or remedy is specifically waived in writing by the relevant Party.


 


8.02         Transactional
Expenses.   Whether or not the transactions contemplated
by this Agreement are consummated, each Party shall pay its own fees and
expenses incident to the negotiation, preparation, execution, delivery and
performance hereof, including without limitation, the fees and expenses of its
counsel, accountants and other experts.


 


8.03        Notices.
  Any notice required or permitted to be given
under this Agreement shall be in writing and shall be (i) personally
delivered, (ii) transmitted by telecopier (with confirmation by mail,
postage prepaid, registered or certified, return receipt requested, or by
airmail in the event of mailing for delivery outside of the country in which
mailed), or (iii) transmitted by an overnight courier, to the


 


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other Party as
follows, as elected by the Party giving such notice:


 


To the Purchaser:


Attention: J. Patrick
Ervin


Address: One Hardinge
Drive


Elmira, NY 14902-1507


USA


Fax: 002-1-607-735-0474


 


To the Sellers:


Mr. Jih-Ming Yang


Address: 22 Hsin-Pin,
Shin-Long Neighborhood, Taiping City


Taichung County, Taiwan,
ROC


Fax: 04-278-9323


 


With copies to


Ms. Shain Wu


3 Fl.-6, 286 Mei-Chuan
West Road, Section 4, Taichung City, Taiwan, ROC


 


Mr. Paul Ling


11 Fl., 20 Chin-Nan
Street, North Area, Taichung City, Taiwan, ROC


 


Ms. J. R. Ho,


5 Fl.-5, 187 Shin-Chin
Road, North Area, Taiwan, ROC


 


Except as otherwise
specified herein, all notices and other communications shall be deemed to have
been duly given on the date of receipt. 
Any Party may change its address for purposes hereof by notice as
aforesaid to the other Party.


 


8.04         Assignment.  This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the Parties without the prior written consent of the other Party, except that
the Purchaser may assign its rights under this Agreement to its affiliates by
serving a written notice to the Sellers without the prior consent of the
Sellers.


 


8.05         Governing
Law.  This Agreement shall be
construed, interpreted and governed by the laws of the R.O.C., and the Parties
hereby consent to the exclusive jurisdiction of the Taipei District Court for
the first instance in any dispute arising hereunder.


 


8.06         Entire
Agreement.  This Agreement, including
the Schedules hereto, and the other documents and certificates delivered
pursuant to the terms hereof, constitute the entire agreement of the Parties in
respect of the transactions contemplated herein.  There are no restrictions, promises,
representations, warranties,


 


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covenants or
undertakings, other than those expressly set forth or referred to herein.  This Agreement supersedes all prior
agreements and understandings among the Parties with respect to the transaction
contemplated herein.


 


8.07         Severability.  In the event that any one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any of the other provisions hereof, which shall nevertheless
remain in full force and effect, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provisions had never been contained
herein.


 


8.08         Language.  This Agreement shall be executed in the
English language.  Any version hereof in
any other language shall be for reference only. 
In the event of any conflicts or discrepancies between the English and
translated versions, the English one shall prevail and govern the meaning of
this Agreement.


 


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IN WITNESS WHEREOF, the
Parties have caused this Agreement to be duly executed as of the day and year
first above written.


 


 


Hardinge Inc.


 


 


	
  /S/ J. PATRICK ERVIN

  	
   

  
	
  By: J. Patrick Ervin

  
	
  Title: Chairman of the
  Board,

  
	
  Chief
  Executive Officer

  
	
  and
  President

  
	
   

  
	
   

  
	
  Mr. Jih-Ming Yang
  ()

  
	
   

  
	
   

  
	
  /S/ JIH-MING YANG

  	
   

  
	
  ID No.: B100337139

  
	
  Address: 22 Hsin-Pin,
  Shin-Long Neighborhood, Taiping City, Taichung County, Taiwan, ROC

  
	
   

  
	
   

  
	
  Ms. Shain Wu ()

  
	
   

  
	
   

  
	
  /S/ SHAIN WU

  	
   

  
	
  ID No.: B220209307

  
	
  Address: 3 Fl.-6, 286
  Mei-Chuan Western Road, Section 4, Taichung City, Taiwan, ROC

  
	
   

  
	
   

  
	
  Mr. Paul Ling ()

  
	
   

  
	
   

  
	
  /S/ PAUL LING

  	
   

  
	
  ID No.: B120692837

  
	
  Address: 11 Fl., 20
  Chin-Nan Street, North Area, Taichung City, Taiwan, ROC

  
	
   

  
	
   

  
	
  Ms. J. R. Ho ()

  
	
   

  
	
   

  
	
  /S/ J. R. HO

  	
   

  
	
  ID No.: B221096742

  
	
  Address: 5 Fl.-5, 187
  Shin -Chin Road, North Area, Taiwan, ROC

  



 


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Schedule 1


 


	
  Shareholder

  	
   

  	
  Number of Shares

  	
   

  	
  Purchase Price

  	
   

  	
  Bank Account No.

  
	
  Jih-Ming Yang

  ()

  	
   

  	
  2,306,780

  	
   

  	
  133,793,240

  	
   

  	
  064-10-10421-9

  ICBC Nanto Branch

  
	
  Shain Wu

  ()

  	
   

  	
  1,153,390

  	
   

  	
  66,896,620

  	
   

  	
  6000-657326

  Citi Bank Taichung Branch

  
	
  Paul Ling

  ()

  	
   

  	
  811,790

  	
   

  	
  47,083,820

  	
   

  	
  04700400013998

  SinoPac Bank Feng Yuan Branch

  
	
  J. R. Ho

  ()

  	
   

  	
  811,790

  	
   

  	
  47,083,820

  	
   

  	
  04700400008189

  SinoPac Bank Feng Yuan Branch

  



 


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