WILL NOT PERMIT ANY
OF ITS SUBSIDIARIES TO, ENTER INTO ANY SWAP AGREEMENT, EXCEPT (A) SWAP
AGREEMENTS ENTERED INTO TO HEDGE OR MITIGATE RISKS TO WHICH THE COMPANY OR ANY
SUBSIDIARY HAS ACTUAL EXPOSURE (OTHER THAN THOSE IN RESPECT OF EQUITY INTERESTS
OF THE COMPANY OR ANY OF ITS SUBSIDIARIES), AND (B) SWAP AGREEMENTS ENTERED INTO
IN ORDER TO EFFECTIVELY CAP, COLLAR OR EXCHANGE INTEREST RATES (FROM FIXED TO
FLOATING RATES, FROM ONE FLOATING RATE TO ANOTHER FLOATING RATE OR OTHERWISE)
WITH RESPECT TO ANY INTEREST-BEARING LIABILITY OR INVESTMENT OF THE COMPANY OR
ANY SUBSIDIARY.
SECTION 6.06.
TRANSACTIONS WITH AFFILIATES.
THE COMPANY WILL NOT, AND WILL NOT
PERMIT ANY OF ITS SUBSIDIARIES TO, SELL, LEASE OR OTHERWISE TRANSFER ANY
PROPERTY OR ASSETS TO, OR PURCHASE, LEASE OR OTHERWISE ACQUIRE ANY PROPERTY OR
ASSETS FROM, OR OTHERWISE ENGAGE IN ANY OTHER TRANSACTIONS WITH, ANY OF ITS
AFFILIATES, EXCEPT (A) IN THE ORDINARY COURSE OF BUSINESS AT PRICES AND ON TERMS
AND CONDITIONS NOT LESS FAVORABLE TO THE COMPANY OR SUCH SUBSIDIARY THAN COULD
BE OBTAINED ON AN ARM'S-LENGTH BASIS FROM UNRELATED THIRD PARTIES,
(B) TRANSACTIONS BETWEEN OR AMONG THE COMPANY AND ITS WHOLLY OWNED SUBSIDIARIES
NOT INVOLVING ANY OTHER AFFILIATE AND (C)
ANY RESTRICTED PAYMENT PERMITTED BY
SECTION 6.07.
SECTION 6.07.
RESTRICTED PAYMENTS.
THE COMPANY WILL NOT, AND WILL NOT PERMIT
ANY OF ITS SUBSIDIARIES TO, DECLARE OR MAKE, OR AGREE TO PAY OR MAKE, DIRECTLY
OR INDIRECTLY, ANY RESTRICTED PAYMENT, EXCEPT, SO LONG AS NO DEFAULT OR EVENT OF
DEFAULT HAS OCCURRED AND IS CONTINUING PRIOR TO MAKING
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SUCH RESTRICTED PAYMENT OR WOULD ARISE AFTER GIVING EFFECT (INCLUDING PRO FORMA
EFFECT) THERETO, (A) THE COMPANY MAY DECLARE AND PAY DIVIDENDS WITH RESPECT TO
ITS EQUITY INTERESTS PAYABLE SOLELY IN ADDITIONAL SHARES OF ITS COMMON STOCK,
(B) SUBSIDIARIES MAY DECLARE AND PAY DIVIDENDS RATABLY WITH RESPECT TO THEIR
EQUITY INTERESTS, (C) THE COMPANY MAY MAKE RESTRICTED PAYMENTS PURSUANT TO AND
IN ACCORDANCE WITH STOCK OPTION PLANS OR OTHER BENEFIT PLANS FOR MANAGEMENT OR
EMPLOYEES OF THE COMPANY AND ITS SUBSIDIARIES, (D) THE COMPANY MAY PAY REGULARLY
SCHEDULED DIVIDENDS WITH RESPECT TO ITS COMMON STOCK, (E) THE COMPANY MAY REDEEM
EQUITY INTERESTS OWNED BY ANY EXECUTIVE OF THE COMPANY, IF SUCH EQUITY INTERESTS
WERE ACQUIRED BY SUCH EXECUTIVE PURSUANT TO THE HARDINGE 2002 STOCK INCENTIVE
PLAN, AND ANY SUCH EXECUTIVE HAS THE RIGHT TO REQUIRE THE COMPANY TO REDEEM SUCH
EQUITY INTERESTS TO DISCHARGE TAX LIABILITIES RESULTING FROM THE ACQUISITION OR
OWNERSHIP OF SUCH EQUITY INTERESTS AND (F) THE COMPANY AND ITS SUBSIDIARIES MAY
MAKE ANY OTHER REPURCHASE OF ITS COMMON STOCK SO LONG AS THE AGGREGATE AMOUNT OF
ALL SUCH STOCK REPURCHASES DURING THE TERM OF THIS AGREEMENT DOES NOT EXCEED
$10,000,000.
SECTION 6.08.
RESTRICTIVE AGREEMENTS.
THE COMPANY WILL NOT, AND WILL NOT
PERMIT ANY OF ITS SUBSIDIARIES TO, DIRECTLY OR INDIRECTLY, ENTER INTO, INCUR OR
PERMIT TO EXIST ANY AGREEMENT OR OTHER ARRANGEMENT THAT PROHIBITS, RESTRICTS OR
IMPOSES ANY CONDITION UPON (A) THE ABILITY OF THE COMPANY OR