EXHIBIT 10.2


 


FRAMEWORK AGREEMENT FOR CREDIT
PRODUCTS


between


 


L. Kellenberger &
Co.AG Maschinenfabrik, St. Gallen,


Heiligkreuzstrasse 28, 9008
St. Gallen


(hereinafter referred to as “the Borrower”)


 


And


 


CREDIT SUISSE


	
  Mailing address:

  	
  P.O. Box 564, 9001 St. Gallen

  
	
  Contact address:

  	
  St. Leonhardstrasse 3, 9000 St. Gallen

  



(the lender, hereinafter referred to as the
“Bank”)


 


	
  Amount of Credit Facility 

  	
   

  	
  CHF 5’000’000.00

  
	
   

  	
   

  	
   

  
	
  Purpose of Credit Facility

  	
   

  	
  Working Capital Facility

  
	
   

  	
   

  	
   

  
	
  Utilization

  	
   

  	
  This credit facility can be used as a limit for
  cash credits in the form of fixed advances in CHF and/or in any other freely
  convertible foreign currencies with maximum terms of up to 36 month(s)

   

  Any
  extension of a fixed advance must be requested by no later than two banking
  days before the fixed advance expires.

   

  Fixed
  advances may be granted without having to comply with any specific
  requirements as to form; they will be confirmed by the Bank in writing, but
  without a signature.

   

  The
  Bank reserves the right to refuse individual transactions relating to the
  credit products above.

  
	
   

  	
   

  	
   

  
	
  Conditions for Utilization of
  the Credit Facility

  	
   

  	
  This credit facility may not be used until
  all collateral has been legally established in favour of the Bank.

  
	
   

  	
   

  	
   

  
	
  Interest Rate

  	
   

  	
  Fixed advances

  Interest rates may be agreed upon, including
  orally, without any specific requirements as to form. The interest rate is
  based, among other things, on the prevailing money and capital market
  conditions (taking into account the term and currency).

   

  General

  If the currently valid capital requirements
  are increased through measures by authorities or provisions of law, the Bank
  reserves the right to pass on the additional borrowing costs that thereby
  result to the Borrower by increasing the interest rate.

  
	
   

  	
   

  	
   

  
	
  Interest Due Date

  	
   

  	
  Interest falls due in each case upon the
  account closing (cf. “Account Closings” below).

  



 


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  The interest may be debited to an account of
  the Borrower.

  
	
   

  	
   

  	
   

  
	
  Special
  Costs

  	
   

  	
  All costs that the Bank incurs on the basis
  of the present Framework Agreement and the associated loan arrangements,
  including any contingent liabilities of the Bank, among other things, from
  pursuing or defending its rights, shall be paid by the Borrower at the Bank’s
  first request.

  
	
   

  	
   

  	
   

  
	
  Account Closings

  	
   

  	
  Fixed advances are closed upon maturity.

  
	
   

  	
   

  	
   

  
	
  Collateral

  	
   

  	
  ·                  CHF 150’000.00 charge on real estate (“Namenschuldbrief”) ranked
  no 1, no prior ranking,

  ·                  CHF 25’000.00 charge on real estate (“Inhaberschuldbrief”), ranked
  no 2, prior ranking CHF 150’000.00,

  ·                  CHF 1’500’000.00 charge on real estate (“Inhaberschuldbrief”), ranked
  no 3, prior ranking CHF 175’000.00, ranking equally with CHF
  4’500’000.00,

  ·                  CHF 1’500’000.00 charge on real estate (“Inhaberschuldbrief”), ranked
  no 3, prior ranking CHF 175’000.00, ranking equally with CHF
  4’500’000.00,

  ·                  CHF 1’500’000.00 charge on real estate (“Inhaberschuldbrief”), ranked
  no 3, prior ranking CHF 175’000.00, ranking equally with CHF
  4’500’000.00,

  ·                  CHF 1’500’000.00 charge on real estate (“Inhaberschuldbrief”), ranked
  no 3, prior ranking CHF 175’000.00, ranking equally with CHF
  4’500’000.00,

  on the building at Heiligkreuzstrasse 28,
  9008 St. Gallen, land register St. Fiden (SG), land register No. 342,
  transferred to the Bank as collateral in accordance with the “Security
  Agreement” (to be signed).

  
	
   

  	
   

  	
   

  
	
  Financial Ratios

  	
   

  	
  The
  Borrower’s adherence to the following financial ratios is mandatory:

   

  Minimum Equity

  The
  minimum equity means, (share capital, plus reserves, plus retained earnings,
  minus long term intercompany accounts, minus other intercompany accounts
  except intercompany trade accounts) must at no time fall below 35% of the
  balance sheet total assets (according to the auditors’ report in accordance
  with Swiss Auditing Standards) during the entire term of the credit
  relationship. The ratio resulting from minimum equity divided by total
  assets.

  
	
   

  	
   

  	
   

  
	
  Borrower’s Affirmative
  Obligations

  	
   

  	
  ·                  Obligation to provide
  information

  The
  Borrower is obliged to inform the Bank without delay of current business
  developments and significant changes in its management and in its direct
  and/or indirect ownership/control as well as other significant changes that
  could influence the Borrower’s financial situation.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In particular, the Borrower will submit the
  following documents to the Bank:

   

  · Quarterly:

  



 


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  ·                  Statements including income statement, bookings and actual backlog of
  the Borrower not later than 60 days after the end of each quarter

   

  · Annually:

  ·                  Annual report including balance sheet, profit and loss statement as
  well as appendices and auditor’s report of the Borrower within six months
  after the end of each financial year

  ·                  Budget figures, including the capital expenditure budget of the
  Borrower within the first month of the budget year

  ·                  Group financial statements of Hardinge Inc. with auditors’ report
  within six months after the end of each financial year.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·                  Pari Passu 

  
	
   

  	
   

  	
  The Borrower undertakes to provide collateral
  for its current and future obligations vis-à-vis third parties in their
  favour only if the Borrower simultaneously provides the same collateral, or
  collateral accepted by the Bank as being equivalent, for all current and
  future obligations under this framework agreement.

  
	
   

  	
   

  	
   

  
	
  Borrower’s Negative Obligations

  	
   

  	
  ·                  Negative Pledge Clause

  The Borrower undertakes, to the extent
  permitted by law, to refrain from providing new or additional collateral in
  favour of a thrid party to secure existing or future liabilities or the
  Borrower or a third party  except cash
  credits up to an amount of CHF 3’000’000.00 secured by charges on real estate
  (“Schuldbrief”).

  
	
   

  	
   

  	
   

  
	
  Late Payment

  	
   

  	
  The Borrower will be in default with
  immediate effect, without any reminder by the Bank, if he/she/it fails to
  fulfill a payment obligation under this framework agreement and/or any
  agreements based on the framework agreement when they fall due.

   

  In the event of late payment, the Bank is to
  increase the interest rate by 2% p.a. as of the due date, but in any case to
  charge a minimum rate of 5% p.a.

  
	
   

  	
   

  	
   

  
	
  Ordinary Termination

  	
   

  	
  ·                  Framework agreement

  This framework agreement may be terminated by
  either party at any time with immediate effect.

   

  Upon termination of the framework agreement,
  all limits and other utilization options granted under this framework
  agreement lapse; in particular, a loan that has not been terminated will fall
  due for repayment within six weeks or on a repayment date determined by the
  Bank. Where legally permissible, the Bank may, at its discretion, give early
  notice on or terminate any of its contingent liabilities.

   

  Irrespective of termination of the framework
  agreement, fixed 

  



 


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  advances shall
  continue to run until their maturity; the following provisions on early
  termination and an automatic acceleration of the due date remain reserved.
  Following the termination of the framework agreement, no fixed advances may
  be extended and no new fixed advances may be claimed.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·                  General

  The termination or maturity of a credit
  product granted under this framework agreement does not automatically result
  in the termination of this framework agreement.

  
	
   

  	
   

  	
   

  
	
  Maturity of a Fixed Advance 

  	
   

  	
  Subject to an extension or early termination,
  each fixed advance automatically falls due for repayment upon its maturity,
  without any need for a termination notice.

   

  The Bank is entitled to debit a fixed advance
  that is due for repayment to an account of the Borrower.

  
	
   

  	
   

  	
   

  
	
  Early Termination

  	
   

  	
  Upon the occurrence of one of the following
  events, the Bank is entitled at any time to declare all fixed advances (fixed
  term) and credit products with an agreed notice period granted under this
  framework agreement, plus all accrued interest, commission and fees, to be
  immediately due and payable, on an accelerated basis:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·                  the Borrower is more than 30 calendar days in default on an interest
  payment or a repayment of principal;

  ·                  the Borrower has breached any other obligation under this framework
  agreement and/or under any agreements based hereon and has failed or was
  unable to restore the proper contractual situation within 30 calendar days
  after written notice from the Bank;

  ·                  the credit facility  is used for
  a purpose other than the purpose mentioned above under “Purpose of Credit
  Facility”;

  ·                  bankruptcy proceedings have been instituted against the Borrower or a
  third party providing collateral, one of them has been granted a debt
  restructuring moratorium or deferral of bankruptcy, or one of them has concluded
  a judicial or extrajudicial debt restructuring agreement;

  ·                  there has been a change in direct or indirect ownership/control in
  respect of the Borrower to the extent of 50 % ownership/control except for
  internal restructuring action within Hardinge Inc.;

  ·                  there has been a change in direct or indirect ownership/control in
  respect of Hardinge Inc. to the extent of 50% ownership/control;

  ·                  owing to default and/or maturity clauses, another loan or similar
  obligation entered into by the Borrower has been terminated early;

  ·                  in the Bank’s view, the Borrower’s asset and/or revenue situation has
  deteriorated significantly;

  ·                  the auditor’s report contains a material qualification.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Bank is entitled at its discretion to
  declare an acceleration of the 

  



 


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  due date of the loan, either immediately or
  at a later point in time.

  
	
   

  	
   

  	
   

  
	
  Automatic Acceleration of Due
  Date in the event of deficient cover

  	
   

  	
  If, in the Bank’s view, the existing
  collateral is not sufficient to cover the outstanding loans and the Borrower
  failed to remedy the situation to the extent required by the Bank and within
  the deadline set by the Bank, all claims in connection with this framework
  agreement automatically fall due for immediate repayment on expiry of this
  deadline (subject to special agreements in collateral agreements). 

  
	
   

  	
   

  	
   

  
	
  Settlement of Costs in the Event of Early Termination of
  Fixed Advances 

  	
   

  	
  If
  any fixed advances granted under this framework agreement are terminated
  early, the Bank will credit or debit the Borrower with the interest gain or
  interest shortfall accrued thereon. This is calculated based on the
  difference between the contractual interest rate which applies at the time of
  termination and the interest rate that, in the Bank’s view, can be earned on
  an investment with the same residual term in the money or capital markets at
  the time of termination, multiplied by the outstanding credit amount and the
  residual term. Any surplus in favor of the Borrower is set off against the fee
  described below for the Bank’s time and expense.

   

  In addition a flat fee of 0.1% of the loan
  amount, but not less than CHF 1’000.00, is owed for the Bank’s expenses.

  
	
   

  	
   

  	
   

  
	
  Credit Risk Hedging

  	
   

  	
  In order for the Bank to directly or indirectly insure or
  hedge credit risk arising from this credit relationship or collateral
  underlying the credit, the Bank may, at any time, disclose data and
  information associated with the credit relationship and the credit risk
  evaluation required for buying credit protection or credit insurance from a
  third party. Such hedging and insurance transactions do not
  entail a transfer of all or any part of this credit relationship or its
  servicing to a third party.

   

  Data and
  information may be disclosed to third parties in Switzerland or abroad,
  namely to hedging or insurance providers, such as banks, financial
  institutions, credit insurers, hedge funds or to other entities offering
  credit protection. In the context of
  such hedging transactions data and information may also be disclosed to other
  parties involved within the scope of such hedging or insurance transactions,
  such as rating agencies.

   

  These third parties shall be obliged to keep such
  transferred data and information confidential and to handle it securely which
  is subject to the local legal and regulatory provisions governing secrecy and
  data protection obligations.

  
	
   

  	
   

  	
   

  
	
  Additional Agreements and Special Contractual Terms

  	
   

  	
  The
  additional agreements that must be concluded or have already been concluded
  in accordance with the terms of this framework agreement and the agreed
  credit products (including the special contractual terms applicable to the
  individual credit products) form 

  



 


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  an
  integral part of this framework agreement.

   

  Should any provisions of this framework
  agreement contradict those of the additional agreements and/or any special
  contractual terms, then those provisions/contractual terms shall take
  precedence over the provisions of this framework agreement.

  
	
   

  	
   

  	
   

  
	
  General Conditions

  	
   

  	
  The Bank’s “General Conditions including the
  Safe Custody Regulations” supplement this framework agreement.

  
	
   

  	
   

  	
   

  
	
  Place of Performance

  	
   

  	
  The
  place of performance is the location of the Swiss branch of the Bank with
  which the Borrower has a contractual relationship.  For Borrowers
  whose present or future domicile is outside Switzerland, the place of
  performance shall also be the place of debt enforcement (“special domicile”
  as defined in Art. 50 par. 2 of the Federal Law on Debt Collection and Bankruptcy).

  
	
   

  	
   

  	
   

  
	
  Applicable Law and Place of
  Jurisdiction

  	
   

  	
  This framework agreement and the agreements
  based on this framework agreement are governed by Swiss law.

   

  The Borrower recognizes the exclusive
  jurisdiction of the courts of Zurich
  or of the location of the branch of the Bank with which the contractual
  relationship exists. The Bank also has the right to bring legal action
  against the Borrower before any other competent court.

  
	
   

  	
   

  	
   

  
	
  Issuance/Signing of
  Agreement

  	
   

  	
  This framework agreement is being issued and
  signed in duplicate. The Borrower and the Bank shall each receive one
  specimen hereof.

  



 


 


	
  CREDIT SUISSE

  	
   

  	
   

  	
   

  	
  L. Kellenberger & Co. AG

  
	
   

  	
   

  	
   

  	
   

  	
  Maschinenfabrik, St. Gallenn

  
	
   

  	
   

  	
   

  	
   

  	
  [Borrower’s name/company name
  as per commercial register]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Armin Signer

  	
   

  	
  /s/ Christian Peters

  	
   

  	
  /s/ Peter Huersch

  
	
  Armin Signer

  	
   

  	
  Christian Peters

  	
   

  	
  Peter Huersch

  
	
   

  	
   

  	
   

  	
   

  	
  Borrower’s signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Zürich, 12. August 2009

  	
   

  	
   

  	
   

  	
  St. Gallen, 20 August 2009

  
	
   

  	
   

  	
   

  	
   

  	
  Place and date

  



 


 


“General
Conditions including Safe Custody Regulations”


 


6
















 


General
Conditions


 


These General Conditions
govern the relationship between Credit Suisse AG (hereinafter referred to as
Bank) and its clients subject to any special agreement and the established rules of
banking practice.


 


For the sake of clarity, the
Bank uses only masculine pronouns in its forms. These are to be understood as
including both sexes.


 


Art. 1
Identity check


The Bank undertakes to check
carefully the identity of its clients and their authorised agents. The client
is liable for any damage resulting from failure to recognise falsifications or
incorrect identification provided that the Bank has exercised the degree of due
care usual in banking transactions.


 


Art. 2 Legal
incapacity


The client is liable for any
damage resulting from his incapacity to act provided that such incapacity to
act was not apparent to the Bank on exercising the degree of due care usual in
banking transactions. The client is liable in all cases for any damage or loss
resulting from incapacity on the part of his authorised agent or other third
party.


 


Art. 3
Communications from the Bank


Communications from the Bank
are deemed to have been duly transmitted if sent to the last address supplied
to the Bank by the client.


 


Art. 4
Errors in transmission


Damage resulting from the use
of postal services, fax, telephone, telex, e-mail and other means of
communication or transport, such as from loss, delay, misunderstandings,
mutilation or duplicate dispatch is to be borne by the client provided that the
Bank has exercised the degree of due care usual in banking transactions.


 


Art. 5
Defective execution of instructions


In the event of damage
resulting from the defective execution, late execution or non-execution of
instructions (with the exception of instructions relating to stock exchange
transactions), the Bank’s liability is limited to an amount equal to the loss
of interest, unless its attention has been expressly directed to the risk of
more extensive damage at the time of and in respect of such instructions.


 


Art. 6
Saturday an official holiday


In business transactions with
the Bank, Saturday shall be treated as an official Bank holiday.


 


Art. 7
Complaints


Complaints by a client
relating to the execution of instructions as well as to other communications
must be lodged immediately upon receipt of the communication concerned and at
the latest within the particular period specified by the Bank. If the Bank
fails to send a communication which the client expects, the client must
nevertheless lodge his complaint as if he had received the communication by ordinary
mail. Any damage arising from delay in making a complaint is to be borne by the
client. Objections concerning account or safekeeping account statements must be
submitted within one month of receipt. Upon expiry of this period the statement
is deemed to have been approved.


 


Art. 8 Right
of lien and set-off


The Bank has a right of lien
on all assets it holds for the account of a client whether in its own custody
or placed elsewhere and a right of set-off as regards all funds credited to a
client’s account in respect of all claims which the Bank may have against the
client, irrespective of the due dates of such claims or currencies in which
they are expressed. Immediately upon default by the client the Bank shall be
entitled to dispose, either by forced sale or in the open market, of any assets
over which it has a right of lien.


 


Art. 9
Accounts


The Bank reserves the right
to alter its interest and commission rates at any time, e.g. in the event of
changes in market conditions and to advise the client of such change in writing
or by other suitable means. No deductions are allowed from interest and
commissions due to the Bank. Any expenses, taxes or other charges are to be
borne by the client. If the client gives several instructions, the total amount
of which exceeds his available balance, the Bank will decide at its discretion
which of the instructions to carry out, in whole or in part, irrespective of
the date they bear or the date of their receipt by the Bank.


 


Art. 10
Accounts in foreign currencies


The Bank’s assets
corresponding to the client’s credit balances in foreign currency are held in
the same currency in or outside of the country whose currency is involved. The
client bears proportionately to his share all the economic and legal
consequences which, as a result of measures taken by the country in question,
affect all the Bank’s assets in the country of the currency or in the country
where the funds are invested. The obligations of the Bank arising from accounts
in foreign currencies will be discharged exclusively at the place of business
of the


 


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branches or offices at which
the accounts in question are held solely through the establishment of a credit
entry at a Bank branch, a correspondent bank or a bank nominated by the client
in the country of the currency.


 


Art. 11
Drafts, cheques and other instruments


The Bank reserves the right
to debit the client’s account with unpaid drafts, cheques or other instruments,
previously credited or discounted. Pending the settlement of any outstanding
debit balance, the Bank retains a claim to payment of the total amount of the
draft, cheque or similar instrument, plus related claims against any party
liable under the instrument, whether such claims emanate from the instrument or
exist for any other legal reason.


 


Art. 12
Termination of business relationship


The Bank or the client may
terminate the business relationship at any time and at either’s own discretion.
The Bank may in particular cancel credit facilities at any time and demand
repayment of debts without notice.


 


Art. 13
Outsourcing of operations


The Bank reserves the right
to outsource, in whole or in part, certain areas of business (e.g. funds
transfer and securities operations).


 


Art. 14
Applicable law and venue for legal proceedings All legal relations between the
client and the Bank are governed by Swiss law. The exclusive venue for any kind
of legal proceedings is Zurich or the place of business of the Swiss branch of
the Bank with which the contractual relationship exists. The Bank also reserves
the right to take legal action against the client before any other competent
court.


 


Art. 15 Bank
customer secrecy


All agents, employees and
representatives of the Bank are obliged by law to treat the business
transactions of the client with confidentiality. The client releases the Bank
from its obligation to secrecy in so far as this is necessary to safeguard the
legitimate interests of the Bank: 0  in the case of legal
proceedings against the Bank initiated by the client 0  to secure claims of the Bank
and enable it to make use of securities of the client or third parties 0  to collect claims by the Bank
against the client 0  in the case of client
accusations against the Bank in public or to the authorities in Switzerland or
abroad 0  to the extent the terms applying to
transactions in foreign securities or rights demand disclosure. All legal
obligations imposed upon the Bank to disclose information are expressly
reserved.


 


Art. 16
Amendments to the General Conditions


The Bank reserves the right
to amend the General Conditions at any time. The client will be notified in
writing or by other suitable means.


 


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Safe
Custody Regulations


General Provisions


 


Art.1
Validity


These Safe Custody
Regulations shall apply, in addition to the General Conditions of the Bank, to
all assets and other objects of value (hereinafter called “Safe Custody Assets”)
accepted by the Bank for safe custody. These Regulations shall be supplementary
to any special contractual agreements or special regulations for special safe
custody accounts.


 


Art. 2
Acceptance of Safe Custody Assets


The Bank will accept a)
securities for safe custody and administration, as a rule in open safekeeping accounts b) precious
metals for safe custody, as a rule in open
safekeeping accounts c) money market and capital market investments
not issued in the form of securities for entry and administration in open safekeeping accounts d) documents of
title or documents evidencing entitlements for safe custody, as a rule in open safekeeping accounts e) valuables and
other  ppropriate objects for safe
custody, as a rule in sealed safe
deposit arrangements. Separate regulations shall apply to sealed
safe deposit arrangements. The Bank may refuse to accept Safe Custody Assets
without stating any reasons. 


 


Art. 3
Verification of Safe Custody Assets


The Bank may verify Safe
Custody Assets delivered to the Bank by the depositor or by third parties for
the account of the depositor for authenticity and blocking or freezing
notifications, without thereby assuming any liability for such verification. In
particular, the Bank shall be obliged to undertake administrative acts only
after such verification is completed. Accordingly, the Bank shall not be
obliged during the verification period to execute any sales orders or other
transactions in which the assets must be released to a third party against
payment. The Bank shall undertake the verification of the Safe Custody Assets
in accordance with the resources and documents at its disposal. Foreign Safe
Custody Assets may be given to the depository or another suitable agent in the
relevant country for verification.


 


Art. 4
Book-entry securities with a similar function as securities


Certificated Securities and
book-entry securities with a similar function for which no physical
certificates are issued shall be treated the same. The rules on commission
(art. 425 et seq. Swiss Code of 
bligations) shall apply to the relationship between the depositor and
the Bank.


 


Art. 5 Duty
of due Care of the Bank


The Bank shall exercise the
same degree of due care in safeguarding the Safe Custody Assets as if such
assets were the property of the Bank.


 


Art. 6
Delivery and disposal of the Safe Custody Assets


The depositor may at any
time, subject to notice periods and provisions of the law as well as pledges,
charges, liens, rights of retention or set-off and other similar entitlements
of the Bank, demand that the Safe Custody Assets be delivered to him or put at
his disposal. The usual time to effect delivery in the market concerned must be
observed. The Safe Custody Assets shall be transported or dispatched for the
account and at the risk of the depositor. If no instructions are received from the
depositor, the Bank may insure and declare the value of the Safe Custody Assets
at its own discretion.


 


Art. 7
Remuneration of the Bank


The remuneration of the Bank
shall be calculated according to the fee tariff in force at the time. The Bank
reserves the right to change the fee tariff at any time. Changes shall be
notified to the depositor in an appropriate manner.


 


Art. 8
Duration of the Agreement


The Agreement shall generally
be for an indefinite period The legal relationships established by these Regulations
shall not lapse upon the death, incapacity or bankruptcy of the depositor.


 


Art. 9
Amendments to the Safe Custody Regulations


The Bank may amend the Safe
Custody Regulations at any time. Amendments shall be notified to the depositor
in writing or another appropriate manner.


 


Special Provisions for


Open Safekeeping Accounts


 


Art. 10 Form of
safekeeping


The Bank is explicitly
authorised to deposit Safe Custody Assets with third parties in its own name
but for the account and at the risk of the depositor. Unless instructed to the
contrary, the Bank is also authorised to hold the Safe Custody Assets in
collective deposit according to their type or to deposit them with a central
collective depository. Depositors shall have a right of co-ownership based on
the ratio of Safe Custody Assets deposited by


 


9

















 


them to all Safe Custody
Assets in the collective depository, provided that the collective depository is
in Switzerland. This does not include Safe Custody Assets which, because of their
form or for other reasons, have to be kept separately in safe custody. Safe
Custody Assets held abroad shall be subject to the laws and customs of the
place of deposit. If the applicable law of the foreign country renders it
difficult or impossible for the Bank to return assets deposited abroad or to
transfer the proceeds from the sale of such assets, then the Bank shall only be
obliged to procure for the depositor a claim for the return of property or
payment of the sums involved, provided that such a claim exists and is assignable.
Safe Custody Assets in registered form may be registered in the name of the
depositor. The depositor hereby accepts the disclosure of its name to the third
party depository. Alternatively the Bank may register the assets in its own
name or in the name of a third party, in either case for the account and at the
riskof the depositor, especially if it is not customary or possible to register
the assets in the name of the depositor. Safe Custody Assets redeemable by
drawings may also be held according to their type in collective safe custody;
drawn lots shall be allocated amongst the depositors by the Bank, using a
method which guarantees all depositors the same chance of inclusion in the
sub-drawing as under the main drawing.


 


Art. 11
Administration


The Bank shall, without
specific instructions from the depositor, attend to the usual administrative
matters such as the collection of dividends and interest, repayments of
principal, monitoring of drawings, redemptions and maturities, conversions and
subscription rights, etc. and shall also normally require depositors to take
the measures incumbent on them pursuant to par. 2 of this article. In this
regard the Bank shall rely on the customary information media available to it
but does not assume any responsibility therefore. The Bank shall notify the
depositor on the deposit statement or by other means if it is unable to
administer individual assets in the usual manner. The administrative actions in
respect of registered shares without coupons shall be carried out only if the
address for delivery of dividends and subscription rights is that of the Bank.
Unless otherwise agreed, it shall be the responsibility of the depositor to
take all other measures to obtain and preserve the rights accruing on the Safe
Custody Assets, in particular to issue instructions for the handling of
conversions, the exercise, purchase or sale of subscription rights and the
exercise of conversion rights. If instructions from the depositor are not  eceived in time, the Bank shall be
authorised, but not obliged, to act at its discretion (including to debit the
customer’s account, for example when exercising subscription rights).


 


Art. 12
Postponed printing of certificates


If it is intended to postpone
the issuance of certificates for the duration of the deposit for safe custody
with the Bank, the Bank shall be explicitly authorised to a) cause the
respective certificates to be cancelled upon their delivery into the
safekeeping account b) carry out the usual administrative actions for the
account of the depositor during the safe custody and give the issuer the
necessary instructions and obtain the necessary information, and c) demand the
physical issuance of the certificates on behalf of the depositor upon their
delivery out of the safekeeping account.


 


Art. 13
Fiduciary Acceptance of Safe Custody Assets


If it is not customary or
possible for title to the Safe Custody Assets to be vested in the depositor,
the Bank may purchase the Safe Custody Assets or cause them to be purchased in
its own name or in the name of a third party and to exercise the rights arising
thereunder or cause them to be exercised, at all times for the account and at
the risk of the depositor.


 


Art. 14
Credits and debits


Amounts (principal, income,
fees, expenses, etc.) shall be credited or debited to the account pursuant to
the booking instructions as agreed, unless instructed otherwise by the
depositor. Such amounts shall be converted into the currency of the relevant account
if necessary. Changes to the account instructions must be received by the Bank
at least 5 bank business days before the transaction falls due.


 


Art. 15
Statements


The Bank shall provide the
depositor with a statement of the Safe Custody Assets in the safekeeping
account, as a rule at the end of the year. The statement may also include
other assets which are not subject to the Safe Custody Regulations. Safekeeping
account valuations shall be based on nonbinding prices and market values taken
from the usual bank sources of information. The Bank shall not assume any
liability for the accuracy of these valuations or for further information
relating to the posted assets.


 


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Conditions
for Payment Transactions


 


The following conditions
govern the relationship between the client and Credit Suisse AG for both
domestic and crossborder payments.


 


For the sake of clarity, the
Bank uses only masculine pronouns in its forms. These are to be understood as
including both sexes.


 


1.
Requirements for the Execution of a Payment Order


All of the following
requirements must be fulfilled before Credit Suisse AG can execute a payment
instruction (hereinafter “payment order”) on behalf of a client or one or more
of the client’s authorized representatives (hereinafter collectively referred
to as “the instructingparty”):


 


a) Payment
Order Specifications


The instructing party must
provide Credit Suisse AG with the following details:


 


􀂃 the account number of the
account to be debited, or the IBAN (“International Bank Account Number”)
derived from this account number


􀂃 the last name and first name
or company name and the place of domicile of the client


􀂃 the payment amount, including
specification of currency


􀂃 the IBAN or the account
number of the account to be credited of the beneficiary


􀂃 the last name and first name
or company name and the place of domicile of the beneficiary


􀂃 the BIC (“Bank Identifier
Code”) and/or name and address of the beneficiary’s financial institution


􀂃 the desired date of execution
of the payment order.


 


For payment orders to be
processed according to the SEPA (Single Euro Payments Area) payments standards,
they must be denominated in euros and contain the BIC of the beneficiary’s
financial institution as well as the IBAN of the beneficiary’s account (such
transactions will hereinafter also be referred to as “SEPA transactions”).
These details must be complete, precise, and free of any internal
contradiction.


 


b)
Available Funds


In order for the transaction
to be processed, the client must have a sufficient account balance or a
sufficient account credit limit at the time of execution at least equivalent to
the amount of the payment order.


 


c) Power of
Disposal


Credit Suisse AG must be in
no doubt as to the instructing party’s power of disposal over the funds in question.


 


d) No
Disposal Restraints/Restrictions


In particular, there must be
no legal or regulatory provisions, no orders by authorities, and no agreements
(e.g. pledges of account balance) that would rule out execution of the
payment order in question. For collective orders, these requirements must be
fulfilled for each individual payment order. Otherwise, the entire collective
order may be rejected (see Para. 3 below).


 


2. Execution
of a Payment Order


If the requirements of Para.
1 above have been fulfilled, Credit Suisse AG will execute the payment order on
the date specified by the instructing party; however, such execution will also
be subject to Para. 7 (Credit and Debit Date) and Para. 11 (Cut-Off Times)
below. In the event of deficient or incomplete information as per Para. 1a)
above, Credit Suisse AG is entitled but not obligated to nonetheless execute
the payment order if this information can be corrected and/or supplemented by
Credit Suisse AG in a manner free from doubt. Credit Suisse AG will decide at
its discretion whether or not to execute a payment order despite insufficient
funds. When a payment order is executed, the account specified by the
instructing party will be debited on the date of execution (= value date).


 


3. Rejection
of the Payment Order


If one or more of the
requirements set out in Para. 1 above are not fulfilled, and as a result the
payment order is not executed, or if the execution is rejected by another party
involved in the payment (e.g. by a clearing house or by the beneficiary’s
financial institution) after the instructing party’s account has been debited,
Credit Suisse AG will inform the instructing party within a reasonable
timeframe and in an appropriate manner about the reason for the rejection and,
provided the payment amount has already been debited, re-credit the transferred
amount to the relevant account by means of a reverse transfer. In the event
that this requires a currency conversion, this process will be subject to Para.
9 (Currency Conversion/Exchange Risk) below. Where Credit Suisse AG itself is
in a position to eliminate the cause of the rejection of the payment order, it
is entitled but not obligated to re-execute the payment order without consulting
the instructing party.


 


4. Credit


Incoming payments are
credited to the account as per the IBAN or account number specified in the
payment order (subject to Paras. 5 and 6 below). If the amount being
transferred is denominated in a currency different from that in which the
specified account is denominated, Credit Suisse AG may credit this amount to an
account of the client denominated in the appropriate currency.


 


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5. Waiver of
Data Comparison


Where the client is the
beneficiary, he acknowledges that the payment amount will be credited solely on
the basis of the IBAN or account number specified, without any comparison being
made between these details and the name and address of the beneficiary. Credit
Suisse AG nonetheless reserves the right to undertake this comparison at its
discretion and to reject the payment order 
in the event of discrepancies. Where a rejection occurs for this reason,
Credit Suisse AG is entitled to inform the 
inancial institution of the instructing party about the discrepancies in
question. Where the client is the instructing party, he acknowledges that the
payment amount will be credited by the financial institution of the beneficiary
solely on the basis of the IBAN or account number specified, without any
comparison being made between these details and the name and address of the
beneficiary. The financial institution of the beneficiary may nonetheless
reserve a similar right to undertake this comparison at its discretion and to reject
the payment order in the event of discrepancies.


 


6. Reverse
Transfers of Incoming Payments


Incoming payments for which
no or a non-existent IBAN or account number is specified, and incoming payments
that cannot be credited for any other reason (in particular legal or regulatory
provisions, orders by authorities, revoked accounts) are transferred back to
the financial institution of the instructing party. For incoming payments that
are not processed according to the SEPA payments standards, Credit Suisse AG
reserves the right to undertake the booking despite the absence of the IBAN
or  ccount number, if the data
transferred to Credit Suisse AG leaves no doubt as to the identity of the
beneficiary indicated. In the event of a reverse transfer, Credit Suisse AG is
entitled to inform all parties involved in the transaction (including the
instructing party) of the reason for the unsuccessful credit.


 


7. Credit
and Debit Date


If a credit or debit date
falls on a Saturday, a Sunday, or an official holiday, Credit Suisse AG is
entitled to effect the credit or debit on the next bank working day, unless
otherwise agreed with the client. As the instructing party, the client
acknowledges that the crediting of payment amounts to the  eneficiary may also be delayed as a result of
foreign regulations with respect to official holidays and bank working days.


 


8. Credit
and Debit Advice Slips


Advice slips notifying the
client about payment debits and credits will be provided in an appropriate
manner within one month at the latest, except where special agreements are in
place with respect to the timing, manner, and type of advice slip.


 


9. Currency
Conversion/Exchange Risk


If no account exists in the
currency of the amount to be debited or (re-)credited, this amount will be
credited or debited to an account as determined by Credit Suisse AG denominated
in another currency in the absence of instructions from the client to the
contrary. The conversion will take place at the exchange rate used by Credit
Suisse AG for this transaction at the time the transaction is processed. Any
price risks (e.g. for a re-crediting in the event of a rejection/reverse
transfer as per Paras. 3 and 6 above) are borne by the client.


 


10. Fees


Credit Suisse AG is entitled
to charge fees for the execution of payment orders, the processing of incoming
payments, and for currency conversions. It is entitled to debit these fees
directly from an account of the client. Credit Suisse AG may change these fees
at any time. The applicable fees and any changes thereto will be communicated
to the client in an appropriate manner.


 


11. Cut-Off
Times


Cut-off times will be
communicated to the client in an appropriate manner. If a payment order is
submitted by the client after the corresponding cut-off time, the payment will
normally be executed on the next bank working day.


 


12. Data
Processing / Forwarding


As the instructing party, the
client agrees that his data — in particular his name, address, IBAN or  account number, and other details as set out
under Para. 1a) above — will be disclosed in connection with the processing of
domestic and cross-border payment orders to the banks involved (particularly
domestic and foreign correspondent banks of Credit Suisse AG), to the operators
of payments systems both within Switzerland and abroad (e.g. Swiss Interbank
Clearing), to SWIFT (Society for Worldwide Interbank Financial
Telecommunication), and to beneficiaries both within Switzerland and abroad. In
addition, the client agrees that all parties involved in the transaction may
for their part transfer the data for further processing or for storage purposes
to mandated third parties in other countries. In addition, the client
acknowledges that data transmitted abroad is no longer protected by Swiss law,
but is instead subject to the law of the foreign jurisdiction in question, and
that foreign laws and orders by authorities may require this data to be passed
on to governmental authorities or other third parties.


 


13.
Applicable Law


These Conditions are governed
exclusively by Swiss law.


 


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14. Changes
to the Conditions


Credit Suisse AG reserves the
right to change these Conditions at any time. Any such changes will be
communicated to the client by Credit Suisse AG in an appropriate manner 30 days
before they enter into force, and will be deemed to have been approved by him
unless a written objection is received within a month of said communication.


 


15. Further
Special Contractual Conditions Affecting Payment Transactions


Further special contractual
conditions of Credit Suisse AG pertaining to payment transactions shall be
reserved. In cases where these further special conditions contradict these
Conditions, the former shall take precedence to these Conditions.


 


16. General
Conditions


In all other respects, the
General Conditions of Credit Suisse AG apply.


 


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