Document:

Confidential  treatment  has  been  requested for portions of this exhibit.  The
copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

                   SPACE EXPLORATION TECHNOLOGIES CORPORATION

                        FALCON LAUNCH SERVICES AGREEMENT

     This Launch Services Agreement ("Agreement") is entered into as of November
15,  2005  ("Effective  Date")  by  and  between  Space Exploration Technologies
Corporation, a Delaware corporation with headquarters at 1310 East Grand Avenue,
El  Segundo,  CA 90245 ("SpaceX") and SpaceDev, Inc., with headquarters at 13855
Stowe  Drive,  Poway  California,  92064  ("Customer").  SpaceX and Customer may
hereinafter  be  referred  to  individually  as  "Party"  and  collectively   as
"Parties."

     WHEREAS,  Customer  desires  to purchase launch services for its spacecraft
and  its  customers'  spacecraft  with  the  parameters set forth in Appendix 1,
Statement  of  Work  ("Payload")  into  Earth  orbit;  and

     WHEREAS,  SpaceX provides launch services using the Falcon 1 Launch Vehicle
("Falcon");

     NOW  THEREFORE,  the  Parties  hereby  agree  as  follows:

1.     Services  to  be  Provided.  SpaceX  shall furnish launch services on the
Falcon  in  accordance  with  Appendix  1,  Statement  of  Work,  ("Basic Launch
Services"),  subject  to  the terms and conditions of this Agreement. Additional
services  may  be  provided  by  SpaceX on a time and material basis, subject to
negotiations,  mutual agreement of the Parties, and a separate statement of work
("Additional  Services").

2.     Contract  Price.

The  Contract  Price  is  the  sum  of:

     -  Basic  Launch  Services  at  [***  ***]  dollars  ($[***  ***]);

     -  Federal  range  usage  (RTS & VAFB) and payload integration fees at [***
     ***]  dollars  ($[***  ***]);  and

     -  Third  party liability insurance fees are [*** ***] dollars ($[*** ***])
     per  mission  thereafter.

Purchase  with pricing set forth in this section 2 is guaranteed to Customer for
up to two additional missions (at the option of Customer); however, a [*** ***]%
annual  increase  in  the  overall  Contract  Price  will be added to adjust for
inflation,  starting  on  Jan  1,  2008.

3.     Date  of  Launch.  The  expected launch date for contractual and planning
purposes  is  May 15, 2008 ("Estimated Launch Date"). By mutual agreement of the
Parties, the Estimated Launch Date may be adjusted up to 18 months in advance of
the  Estimated  Launch  date.  It  is mutually understood that the date when the
launch  actually  occurs ("Actual Launch Date") is dependent upon weather, range
availability,  government  approvals,  Falcon  readiness,  Payload readiness and
similar  factors.

                                      PAGE

Confidential  treatment  has  been  requested for portions of this exhibit.  The
copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

4.     Payment  Terms.

     4.1     Payment  Schedule.  Customer shall pay to SpaceX the Contract Price
in  five  installments  in  accordance  with  the  following  schedule.

     -  [***  ***]  dollars  (US $[*** ***]) is a deposit and is due and payable
     [***  ***]  business  days  after  the  Effective  Date;

     - [*** ***] dollars (US $[*** ***]) is due and payable [*** ***] (Estimated
     Launch  Date  minus  [***  ***]);

     - [*** ***] dollars (US $[*** ***]) is due and payable [*** ***] (Estimated
     Launch  Date  minus  [***  ***]);

     -  [*** ***] dollars (US $[*** ***] is due and payable [*** ***] (Estimated
     Launch  Date  minus  [***  ***]);

     -  [***  ***]  dollars  (US $[*** ***]) is due and payable within [*** ***]
     days  of  actual  launch.

     4.2 Invoices. SpaceX shall submit invoices to Customer at least thirty (30)
days prior to the payment due date for each scheduled payment event set forth in
Section  4.1,  provided, however, that the executed Agreement shall serve as the
invoice for the first scheduled payment. Any payments delayed beyond the payment
due  date  shall  be  subject  to  interest at a rate of [*** ***] percent ([***
***]%)  per  day  of  delay.

     4.3  Invoice  Address.  SpaceX  shall  invoice  Customer  at  the following
address:

                             SpaceDev, Incorporated
                                Accounts Payable
                                  Stowe Drive
                                Poway, CA 92064

5.     Taxes.  To  the  best  knowledge  of SpaceX on the Effective Date of this
Contract,  no  taxes are due for the activities and transactions contemplated by
this  Agreement.  However, should taxes be levied, Customer alone shall bear any
and  all  national,  federal,  state  or  local sales, use, value added or other
taxes,  customs duties, or similar tariffs and fees that may levied or collected
upon  the  transactions contemplated by this Agreement ("Taxes"). Such Taxes are
not  included in the Contract Price as defined in Section 2, Contract Price, and
shall  be  borne  by Customer in addition to the Contract Price. Where SpaceX is
required  by  law  to  collect  Taxes,  SpaceX  shall  notify Customer of such a
requirement,  provide  evidence of requirement and Customer shall pay SpaceX the
appropriate  amount  in  addition  to  the  Contract  Price.

                                      PAGE

Confidential  treatment  has  been  requested for portions of this exhibit.  The
copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

6.     Best  Price  Assurance.  SpaceX  intends that the Customer never pay more
than  the  standard price for Basic Launch Services at the time of the Estimated
Launch Date. If SpaceX reduces the single flight, standard price of Basic Launch
Services  prior  to  the Estimated Launch Date, the Customer will be entitled to
reduce  their  next  payment  to  SpaceX  accordingly  by the difference. If all
payments  for  launch  have been made or the reduction in price exceeds payments
due  from  the Customer, SpaceX will wire the appropriate rebate to the Customer
no  later  than  thirty  (30)  days  in  advance  of  the  Actual  Launch  Date.

7.     Reflight  Launch  Option.

     7.1 The Reflight Launch Option will entitle Customer to a [*** ***] for the
Basic Launch Services, paying only the [*** ***]. The Reflight Launch Option may
be  [***  ***]  the  Basic  Launch  Services  price up to [*** ***] prior to the
Estimated  Launch  Date and shall be subject to the terms and conditions of this
Agreement.  SpaceX  shall  make [*** ***] efforts to execute the reflight launch
within  [*** ***] months following the Actual Launch Date. The SpaceX obligation
to  execute  a  reflight launch will extend no more than [*** ***] following the
Actual  Launch  Date.  This option is [*** ***] only to [*** ***] and [*** ***].

     7.2 Qualifying Condition. The Parties agree that the Reflight Launch Option
is  exercisable  only  in the event of a Launch Failure due to the Falcon launch
vehicle. Such a Launch Failure must constitute either delivery of the Payload to
an  orbit  where  it  cannot  reasonably  be  used  for  the  intended  mission,
destruction  of the Payload as a result of Falcon breakup, or substantial damage
to  the  Payload due to launch loads that materially exceed those defined in the
Interface  Control  Document.

     7.3 Sole Remedy. The reflight launch shall be the sole and exclusive remedy
available  to  customer  for  any  launch failure or payload failure whatsoever,
including  any  inability  to  use  the  payload for all or part of its intended
mission,  howsoever  caused, and regardless of the theory of liability (with the
exception  of  gross  negligence),  whether based in contract or tort, including
negligence,  product  liability,  and  strict  liability, or any other theory of
liability,  provided,  however,  that  this  remedy shall be available only when
customer has purchased a reflight launch option and customer has made all of the
payments  and  reasonably  complied  with  all  of  the other conditions of this
agreement

8.     Third  Party  Liability.

     8.1     Insurance.  SpaceX  shall  procure  and maintain third party launch
liability  insurance  as  prescribed  by  the  Federal Aviation Administration's
Associate  Administrator  for  Commercial  Space  Transportation pursuant to the
Commercial  Space Launch Act, as amended, 49 U.S.C. Sec.Sec. 70101-70121. SpaceX
shall name as additional insureds Customer and its Payload customer, contractors
and  subcontractors  involved  in  launch  services, the U.S. government and its
contractors  and  subcontractors  involved  in  launch  services,  and  SpaceX's
contractors  and subcontractors involved in launch services. Such insurance will
comply  with  the  terms  of  the  Federal  launch  license.

                                      PAGE

9.     Cross  Waivers  of  Liability.
Confidential  treatment  has  been  requested for portions of this exhibit.  The
copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

     9.1     Third  party Liability. SpaceX shall be exclusively liable to third
parties  for  any  injury,  loss  or  damage to any third party caused solely by
SpaceX  or  its equipment, including the Falcon or parts thereof. Customer shall
be  exclusively  liable  to  third parties for any injury, loss or damage to any
third party caused solely by Customer or its equipment, including the Payload or
parts  thereof.

     9.2  Waivers. SpaceX and Customer agree to a reciprocal waiver of liability
pursuant  to which each Party agrees to assume the risk and agrees not to sue or
otherwise  bring  a  claim against the other Party or that Party's Related Third
Parties  or  against  the U.S. government and its contractors andsubcontractors,
for  any property loss or damage, including loss of or damage to the Payload, or
other  financial  loss  it  sustains, or for any injury, death, property loss or
damage  or  other financial loss sustained by its employees, officers, directors
or  agents,  arising  in  any  manner  out  of  or in connection with activities
relating  to  the  performance  of  this  Agreement.

     9.3 Extension of Waivers. SpaceX and Customer agree to extend the waiver of
liability  to  their respective contractors and subcontractors requiring them to
waive  the  right  to  sue or otherwise bring a claim against the other Party or
that  Party's  Related  Third Parties or the U.S. government and its contractors
and subcontractors, for any property loss or damage, including loss of or damage
to  the  Payload or Falcon, or other financial loss they may sustain, or for any
injury,  death,  property  loss  or  damage or other financial loss sustained by
their  employees, officers, directors or agents, arising in any manner out of or
in  connection  with  activities  relating to the performance of this Agreement.

     9.4  Indemnification.  SpaceX  and  Customer  agree  that  each Party shall
indemnify  and  hold  harmless  the  other  Party  from and against liability or
expense,  including  attorneys'  fees,  resulting  from any suit or claim by the
indemnifying  Party's  Related  Third  Parties  for any property loss or damage,
including  loss of or damage to the Payload, or other financial loss it sustains
or  for  any  injury,  death,  property  loss  or damage or other financial loss
sustained by its employees, officers, directors or agents, arising in any manner
out  of  or  in  connection  with activities relating to the performance of this
Agreement.

     9.5  Applicability.  When  applicable  to  the  Parties'  contractors   and
subcontractors,  the  waivers  shall  apply to contractors and subcontractors at
every  tier  that are involved in activities relating to the performance of this
Agreement.  The  waivers  shall  apply  regardless  of  the theory of liability,
whether  based in contract or tort, including negligence, product liability, and
strict  liability, or any other theory of liability. Each Party agrees to obtain
insurance as it deems necessary to cover death, injury, loss or damage for which
it  has  waived  the  right to sue or bring a claim against the other Party, and
each  Party  agrees  to  obtain  a waiver of subrogation rights from any insurer
providing  such  insurance  coverage.  Nothing  in this Section 9 shall preclude
SpaceX  from  suing  or otherwise bringing a claim against its own Related Third
Parties, nor shall it preclude Customer from suing or otherwise bringing a claim
against  its own Related Third Parties. The Parties agree to further memorialize
the rights and obligations described in this Section 9 in any agreement that may
advised  or  required  by  the  U.S.  government.

     9.6  Definition.  "Related  Third  Parties"  shall  mean:  1)  the Parties'
respective  contractors  and  subcontractors  at every tier that are involved in
activities  relating  to  the  performance  of  this  Agreement; 2) the Parties'
respective  directors,  officers,  employees,  and  agents;  or 3) any entity or
person  who has any valid right, title or interest in the Payload or the Falcon.

                                      PAGE

Confidential  treatment  has  been  requested for portions of this exhibit.  The
copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

10.     Delays.

     10.1     Excusable  delay.  Neither  Party shall be liable for any delay or
failure  to  perform  under this Agreement in the event such delay or failure to
perform  is  due  to  a cause beyond the control and not due to the fault of the
Party  invoking  this Section 10.1. Such excusable delays shall include, but not
be  limited  to, Acts of God, acts of government in its sovereign or contractual
capacity,  acts or threat of terrorism, earthquake, riot, revolution, hijacking,
fire,  strike,  embargo,  sabotage,  or  interruption  of  essential services or
supplies.  The  period  of performance under this Agreement shall be extended by
the  duration  of  the  excusable delay. Notification of excusable delay will be
provided  in  writing  and  the  extension  period will     be agreed to by both
parties  in  writing.
10.2     Payload  delays.  If  the  Payload  causes  launch  delays  beyond  the
Estimated  Launch  Date,  the  Customer  will  pay  penalties  to  SpaceX on the
following  schedule  until the Payload is ready and delivered to SpaceX's launch
site:

     -  [***  ***]  for  the  [***  ***]  months;  and

     - [*** ***] of the Total Contract Price per month for months [*** ***]; and

     -  [***  ***]  of  the Total Contract Price per month for months [*** ***].

     10.3     Launch  vehicle delays. If the launch vehicle causes delays beyond
the  Estimated  Launch Date, SpaceX will reimburse the customer on the following
schedule  until  the  launch  vehicle  is ready for shipment to the launch site:

     -  [***  ***]  for  the  [***  ***]  months;  and

     - [*** ***] of the Total Contract Price per month for months [*** ***]; and

     -  [***  ***]  of  the Total Contract Price per month for months [*** ***].

     10.4     Delay  as a result of [*** ***]. If any [*** ***] of the [*** ***]
occurring  immediately before Customer's [*** ***] are [*** ***] as defined [***
***] then the Customer has the option of [*** ***] until SpaceX has demonstrated
to Customer's satisfaction [*** ***] and with the performance capability to [***
***].  [***  ***]  occurring  under  this  section  10.4 are not an [*** ***] as
defined  in  Section  10.1 and the Customer retains [*** ***] as defined in [***
***].
                                      PAGE

Confidential  treatment  has  been  requested for portions of this exhibit.  The
copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

11.     Intellectual  Propel Rights. SpaceX shall exclusively own and retain all
right,  title  and  interest  in  and  to  all  Inventions created, conceived or
developed  by  SpaceX  under this Agreement, including all intellectual property
rights therein and thereto. Customer shall exclusively own and retain all right,
title  and  interest in and to all Inventions created, conceived or developed by
Customer  under  this  Agreement,  including  all  intellectual  property rights
therein and thereto. The Parties do not intend to jointly develop any Inventions
under  this Agreement. As used in this Section 11, "Inventions" means all ideas,
designs,  concepts,  techniques,  inventions,  discoveries, works of authorship,
modifications,  improvements,  or derivative works, regardless of patentability.

12.     Confidentiality.

     12.1     Confidentiality  of  this  Agreement. Neither Party shall disclose
any  of the terms of this Agreement to any third party without the prior written
consent  of  the  other  Party,  except  as  compelled  by  judicial  or  other
governmental  action  and  with  reasonable  notice  provided  in writing to the
affected  Party  at  least  five  business  days  in  advance of the disclosure.

     12.2 Announcements. No public announcement, release, or other disclosure of
information  relating  to  this  Agreement,  including  the  existence  of  this
Agreement, shall be made except by prior written agreement of the Parties on the
specific  content  of  such  disclosure;  however,  such  agreement  may  not be
unreasonably  be  withheld.

     12.3  Confidential Information. SpaceX and Customer each agree to retain in
confidence  all  non-public  information,  trade secrets, and know-how disclosed
pursuant  to  this  Agreement  which  is either designated as proprietary and/or
confidential,  or  which  by  the  nature  of  the   circumstances   surrounding
disclosure,  should  reasonably  be understood to be confidential ("Confidential
Information"). Each Party agrees to: 1) preserve and protect the confidentiality
of  the  other Party's Confidential Information; 2) refrain from using the other
Party's  Confidential  Information  except as contemplated in this Agreement; 3)
disclose the Confidential Information only to its directors, officers, employees
or  agents  as  is  reasonably  required in connection with the exercise of that
Party's  rights  and  obligations  under this Agreement and subject to a binding
non-disclosure  agreement that is at least as protective as this Section 12; and
4)  not disclose Confidential Information to any third party, provided, however,
that  either Party may disclose Confidential Information of the other Party that
is: a) already in the public domain through no fault of the disclosing Party; b)
discovered  or  created  by  the  receiving  Party  without  reference  to   the
Confidential Information of the disclosing Party; c) otherwise made known to the
receiving Party through no wrongful conduct of the receiving Party or the entity
providing the information to the receiving party; or d) required to be disclosed
by  judicial or other governmental action (subject to reasonable notice provided
in  writing  to the affected Party at least five business days in advance of the
disclosure).  The  confidentiality  obligations of this Section 12 shall survive
the  expiration or termination of this Agreement for a period of five (5) years.

     12.4  Notwithstanding  any  provision  of  this Section 12 to the contrary,
either  Party  may disclose the Confidential Information, including the terms of
this  Agreement:  1)  in  confidence,  to  legal  counsel;  2) in confidence, to
accountants,  banks,  and  financing  sources  and their advisors solely for the
purposes  of  securing  financing; 3) in confidence, to its insurance broker and
prospective  insurers  solely  for  the  purposes  of securing insurance for the
payload and launch services and in settling any claim for loss; 4) in connection
with  the enforcement of this Agreement or rights under this Agreement; or 5) in
confidence,  in  connection  with  an actual or proposed merger, acquisition, or
similar  transaction  solely  for  use  in  the  due  diligence investigation in
connection  with  such  transaction.
                                      PAGE

Confidential  treatment  has  been  requested for portions of this exhibit.  The
copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

13.     Limitation  of  Liability.

     13.1     No Consequential Damages. In no event shall either Party be liable
for  any  indirect,  special,  incidental,  exemplary, punitive or consequential
damages  of  any  kind,  for  the  cost of procurement of substitute products or
services,  or for lost revenues or profits, arising out of or in connection with
this  Agreement,  howsoever  caused  and  regardless of the theory of liability,
whether  based in contract or tort, including negligence, product liability, and
strict  liability,  or  any  other  theory  of  liability.

     13.2  Total  Liability. SpaceX's total and cumulative liability arising out
of  or  in connection with this Agreement howsoever caused and regardless of the
theory  of  liability,  whether based in contract or tort, including negligence,
product liability, and strict liability, or any other theory of liability, shall
in  no event exceed the amounts actually paid by Customer and received by SpaceX
for  Basic  Launch  Services  pursuant  to  this  Agreement.

     13.3  Application. The limitations set forth in this Section 13 shall apply
even  if  SpaceX  has been advised of the possibility of such losses or damages,
and  notwithstanding  any failure of essential purpose of any limited remedy set
forth  in  this  Agreement.  The  Parties  acknowledge  that the amounts payable
hereunder  are based in part on the limitations of this Section 13 and that such
limitations  are  a  bargained  for  and  essential  part  of  this  Agreement.

14.     Warranties.  Except  for  the  Reflight  Launch  Option (if purchased by
Customer),  SpaceX  has  not  made,  nor  does  it  make,  any representation or
warranty,  whether  written  or oral, whether express or implied, including, but
not  limited  to,  any  warranty  of  design,  operation,  quality, workmanship,
suitability,  result,  merchantability, or fitness for a particular purpose with
respect  to  the  Falcon, launch services, or associated equipment and services.
Any  implied warranties, including warranties of merchantability and fitness for
a  particular  purpose,  are  hereby  expressly  disclaimed.

15.     Termination.

     15.1     Mutual  Agreement.  This  contract  may  be  terminated  by mutual
consent  of the Parties in writing signed by the duly authorized representatives
of  both  Parties.

     15.2  Customer's  Right  to Terminate. If SpaceX is unable to provide Basic
Launch  Services  within  twelve (12) months following the Estimated Launch Date
(with  the  exception  of  additional  time resulting from an excusable delay as
defined  by  section  10.1), Customer will, subject to a thirty (30) day written
notice  to SpaceX, have the option of terminating this Agreement. Separately, in
the  event  of  failure by SpaceX to comply with any other material provision of
this  Agreement  after  having  been given a ninety (90) day period to cure such
non-performance,  Customer  will  have the option of terminating this Agreement.
Upon  such termination, Customer shall be entitled to receive a refund within 30
days  of all payments actually made by Customer and received by SpaceX for Basic
Launch  Services  pursuant to this Agreement (minus any penalties paid to SpaceX
pursuant  to  Section 10.2 and any payments attributable to Federal range usage,
payload  integration  fees,  or  third-party  liability   insurance   fees,   if
applicable)  up  to  the  date  of  Termination and SpaceX shall have no further
obligations  or  liability  to  Customer.  The  right to terminate and receive a
refund  is  Customer's sole and exclusive remedy for termination in the event of
delay  in  the  launch  of  the  Payload.

                                      PAGE

Confidential  treatment  has  been  requested for portions of this exhibit.  The
copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

     15.3  SpaceX's  Right  to  Terminate.  SpaceX  shall  have  the  option  of
terminating  this  Agreement  and  retaining  all   payments   without   further
obligations  or liability to Customer for the following reasons: in the event of
a  failure  by Customer to deliver the Payload for integration within thirty six
(36)  months  following  the  Estimated  Launch  Date  (with  the  exception  of
additional  time  resulting from an excusable delay as defined by section 10.1);
or  in  the  event  of  failure  by  Customer  to comply with any other material
provision  of this Agreement after having been given a ninety (90) day period to
cure  such  non-performance.

     15.4  Supplemental  right [*** ***]. Customer shall have the option of [***
***] in writing at any time at least [*** ***] months prior to the [*** ***] and
shall  be  entitled  to  a  [***  ***].

16.     Licenses.  Each  Party  shall be responsible for obtaining any licenses,
authorizations, clearances, approvals or permits ("Licenses") necessary to carry
out  its  obligations  under  this  Agreement.  Each  Party  agrees  to  provide
reasonable  assistance  to the other Party as necessary to obtain such Licenses.
SpaceX  shall  be  responsible  for obtaining any Licenses required to carry out
launch services in the United States, and Customer agrees to provide information
and  to execute any documentation needed to obtain such Licenses pursuant to the
United  States  International  Traffic  in  Arms  Regulations,  22  C.F.R. Parts
120-130,  and Regulations for the Importation of Arms, Ammunition and Implements
of  War,  27  C.F.R.  Part  447.

17.     Compliance  with  Government  Requirements. SpaceX and Customer agree to
comply  with  their  respective  national,  federal,  state  and  local laws and
regulations,  and  any government licenses, and Customer, in addition, agrees to
comply  with  U.S.  export  and  import  laws,  regulations, rules, licenses and
agreements  applicable  to  the  launch of Customer's Payload. Customer shall be
responsible  for  arranging  for  registration  of  the  Payload pursuant to the
Convention  on  Registration  of  Space  Objects Launched Into Outer Space, done
January  14,  1975,  T.I.A.S.  8480.

18.     Notices

     18.1     Transmittal.  All  notifications and other data transmittals under
this  Agreement  shall  be  in  writing  and shall be hand-delivered or sent via
express  mail,  first  class mail, or electronic mail to the addresses specified
below  with  confirmation  of  receipt.

     18.2  Effective  Date.  The  date  upon  which  any  such  communication is
hand-delivered  or,  if  such  communication  is  sent  by mail or by electronic
transmission,  the  date  upon  which  the  addressee  receives it, shall be the
effective  date  of  such  communication.

                                      PAGE

Confidential  treatment  has  been  requested for portions of this exhibit.  The
copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

18.3     Change  of  Address.  Each Party shall promptly notify the other in the
event  of  any  change  in  their  respective  addresses.

For  correspondence  sent  to  SpaceX:

          Space Exploration Technologies Corp. 1310 East Grand Avenue
                              El Segundo, CA 90245
                              Attn: Gwynne Shotwell
                             PH. 310-414-6555 X 229
                                Fax: 310-414-6552
                            Email: gwynne@spacex.com

For  correspondence  sent  to  Customer:

                                 SpaceDev, Inc.
                                  Stowe Drive
                                Attn: John Cloyd
                                PH: 858-375-2000
                                Fax: 858-375-1000
                         Email: John.Cloyd@spacedev.com

19.     Dispute  Resolution.  All  disputes  and controversies of every kind and
nature  arising  out  of  this  Agreement including the existence, construction,
validity,  interpretation, performance, nonperformance, enforcement or breach of
any  provision  of this Agreement, shall be settled by commercial arbitration in
accordance  with  the  Commercial  Arbitration Rules of the American Arbitration
Association. The findings of such Arbitrator shall be final and binding upon all
parties.  Any  award  of  arbitration  shall  include attorney fees and costs of
arbitration,  including  but  not limited to expert witness fees, payable to the
prevailing  party  in  the  arbitration,  as  determined  by  the  Arbitrator.

20.     Appendices.

     20.1     Incorporation  by  Reference.  The  following  appendices  are
incorporated  into  this Agreement by reference and shall be an integral part of
this  Agreement:

     -  Appendix  1,  Statement  of  Work

     -  Appendix  2, [*** ***] Document--to be provided at Estimated Launch Date
     minus  18  months .

     20.2     Precedence.  In  the  event of conflict between this Agreement and
any  of  the appendices, this Agreement shall govern. In the event of a conflict
between  Appendices,  the  sequence  of  precedence  shall  be  as listed above.

21.     Severability.  If  any  portion  of  this Agreement is held invalid, the
Parties  agree  that  such  invalidity  shall  not  affect  the  validity of the
remaining  portions  of  this Agreement, unless applying such remaining portions
would  frustrate  the  purpose  of  this  Agreement.

                                      PAGE

Confidential  treatment  has  been  requested for portions of this exhibit.  The
copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

22.     Waiver.  The  failure  of  either Party to exercise any right granted in
this  Agreement  or  to require any performance of any term of this Agreement or
the  waiver  by either Party of any breach of this Agreement shall not prevent a
subsequent  exercise  or enforcement of, or be deemed a waiver of any subsequent
breach  of,  the  same  or  any  other  term  of  this  Agreement.

23.     No  Joint  Venture or Agency. Nothing in this Agreement shall constitute
or create a joint venture, partnership, or any other similar arrangement between
the  Parties.  No  Party  is  authorized  to  act  as  agent for the other Party
hereunder  except  as  expressly  stated  in  this  Agreement.

24.     Assignment. Customer may not assign, delegate or otherwise transfer this
Agreement  or any rights or obligations under this Agreement, whether voluntary,
by  operation  of law or otherwise, without the prior written consent of SpaceX,
unless  to a successor. With the written consent of SpaceX, Customer may use the
value  of  the  Agreement  in  excess  of  cost  as  collateral  to  secure  any
indebtedness of Customer. SpaceX may assign, delegate or otherwise transfer this
Agreement,  or  any rights or obligations under this Agreement, to any successor
by  way of merger, acquisition or sale of all or substantially all of the assets
relating  to  the  performance  of  this  Agreement. SpaceX or any successor may
assign  all  or  part  of  the  right  to  payments  under  this  Agreement. Any
assignment,  delegation,  or transfer of this Agreement made in contravention of
the  terms  hereof  shall  be  null  and  void.  Subject  to the foregoing, this
Agreement  shall  be  binding  on  and  inure  to  the  benefit  of the Parties'
respective  successors  and  permitted  assigns.

25.     Governing  Law.  This Agreement and performance by the Parties hereunder
shall  be  construed  in  accordance  with  the laws of the State of California,
U.S.A.,  without  regard  to  provisions  on  the  conflicts  of  laws.

26.     Entire  Agreement.  This  Agreement,  and  all  Exhibits  and Appendices
hereto,  supersedes  all prior communications, transactions, and understandings,
whether  oral  or  written,  with  respect  to  the  subject  matter  hereof and
constitutes  the sole and entire agreement between the Parties pertaining to the
subject  matter  hereof.

27.     Modification. No modification, addition or deletion, or waiver of any of
the  terms  and  conditions  of  this Agreement shall be binding on either Party
unless  made in a non-preprinted agreement clearly understood by both Parties to
be  a  modification or waiver, and signed by a duly authorized representative of
each  Party.

28.     Insurance Support. Parties agree to cooperate with reasonable efforts to
obtain  and  maintain  launch  insurance  and to support filing and settling any
claims.  This  includes  responding  to  insurer questions, delivering requested
information  regarding the Falcon and the launch range facilities and conducting
insurance  briefings and facilitating site inspections as required to obtain and
maintain  such  insurance.

IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of
the  Effective  Date:

                                      PAGE

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copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

Space  Exploration  Technologies  Corp.               Customer

By:      /s/  Elon  Musk                          By:    /s/  Richard B. Slansky
         ----------------                                 ----------------------
Name:         Elon  Musk                             Name:  Richard  B.  Slansky
              ----------                                     -------------------
Title:     CEO                                              Title:     President
           ---                                                         ---------
Date:     11/15/05                                            Date:     11/15/05

                                      PAGE

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copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

                                   APPENDIX 1

                                STATEMENT OF WORK
                        FOR PROGRAM NAME LAUNCH SERVICES

1.0     SCOPE

This  document  defines  the  effort  required by Space Exploration Technologies
(SpaceX)  and  the  customer  to  launch  the  spacecraft  and to accomplish the
objectives  of  the  PROGRAM NAME program.  The Program Master Plan Master (MP),
includes  this  description  of the tasks and responsibilities to launch PROGRAM
NAME program as well as an integrated Master Schedule. This Document can be used
by  the  customer for tracking the programmatic and technical status and will be
updated,  as  required  throughout  the  program  with  customer  concurrence.

     1.1  OBJECTIVES

The  objectives of the PROGRAM NAME program is the successful launch and orbital
insertion  of  the  PROGRAM NAME payload.  The payload will be placed into a TBD
orbit.  The  launch  will  take  place  according  to the schedule identified in
Attachment  1, IMS.  For performance purposes, the spacecraft and launch vehicle
adapter  are  assigned  a  combined maximum mass of TBD (to be identified in the
contract).

     1.2  ROLES  AND  RESPONSIBILITIES

SpaceX will furnish [*** ***].  The customer will provide the spacecraft, unique
spacecraft  support  equipment,  payload  specific  facilities,  and  [*** ***].

[***  ***]  shall:

     -  Provide the [*** ***] the PROGRAM NAME mission (documentation is defined
     in  the  CDRL  list)

     - Provide [*** ***] for the spacecraft for up to [*** ***] to the scheduled
     launch  date  on  [***  ***]

     -  Process  the  [***  ***]  at  the  launch  range

     -  Provide  all  range  and  safety  interfaces  including  127-1  document
     templates  for  the  spacecraft provider to complete, a copy of EWR 127 and
     RCC  319,  as  tailored  for  the  PROGRAM  NAME  program,

     -  Successfully  [***  ***]  within the specified environmental constraints

     -  Command  the  [***  ***]

     -  Support  post-flight  analysis  to verify successful separation from the
     launch  vehicle  and  identify  the  spacecraft  orbit

     -  Provide  post  launch  services  including  delivery  of  the [*** ***].

                                      PAGE

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copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

In  addition, [*** ***] shall be provided a sufficient level of insight in order
to  assess  mission  risk  and  safety  for  [***  ***].

A  successful  launch  is  always a result of teamwork and cooperation.  To this
end,  [***  ***]  responsibilities  include  the  following:

     1. Verification that [*** ***] can function appropriately after exposure to
     the  following  [***  ***]  environments:
          a.  [***  ***]
          b.  [***  ***]
          c.  [***  ***]
          d.  [***  ***]
          e.  [***  ***]
          f.  [***  ***]

     2.  [***  ***]  must  show  that:
          a.  It  does  not  interfere  with  [***  ***]
          b.  LV  and  range  [***  ***]

     3.  [***  ***]  must  provide  information  necessary  to  satisfy:
          a.  Range  Safety
          b.  NEPA
          c.  FAA
          d.  Other  regulatory  agencies  as  appropriate

     4.  In  addition,  [***  ***]  is  responsible  for:
          a.  Reporting  final  [***  ***].
          b.  Providing  an  appropriate  and  secure  [***  ***].
          c.  Transporting  [***  ***]  to  the  launch  location.
          d.  Checkout  of  [***  ***]  at  [***  ***],  including  [***  ***].

[***  ***]  shall  be  responsible  for  providing  the  following:

     -  Inputs  to  the  Launch  Vehicle  to  Spacecraft  ICD
     -  Test  verified  [***  ***]  structural  math  model
     -  [***  ***]  launch  configuration  envelope  drawing  or  model
     -  Spacecraft  design  information  for  mission  analyses
     -  Participate  in  [***  ***]
     -  [***  ***]  support  and  checkout  equipment
     -  Inputs  to  [***  ***]
     -  Inputs  to  [***  ***]
     -  Present  [***  ***]
     -  Present  [***  ***]  at  the  [***  ***]

2.0     PROGRAM  MANAGEMENT

[***  ***]  shall  manage  the  PROGRAM  NAME program tasks as described in this
document.

                                      PAGE

Confidential  treatment  has  been  requested for portions of this exhibit.  The
copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

2.1        [***  ***]

[*** ***] shall provide [*** ***] providing sufficient insight to [*** ***], the
launch  vehicle  to spacecraft interface and integration, [*** ***].  Changes to
[***  ***].

2.2        [***  ***]

[***  ***]  shall  provide  [***  ***],  including  all [*** ***].  SpaceX shall
coordinate  with  the  customer  to  integrate  [***  ***]  into  this  plan.

2.3        [***  ***]
[***  ***] shall implement [*** ***] to ensure maximum [*** ***] of PROGRAM NAME
[***  ***],  including  [***  ***]  launch  services.  The  SpaceX  [***  ***].

2.4        [***  ***]

Per  the  [***  ***] PROGRAM NAME [*** ***],[*** ***] will conduct [*** ***] for
this  contract  which  meets  the  [***  ***],  as tailored for the PROGRAM NAME
program.

2.5        [***  ***]

[*** ***] shall implement and maintain a [*** ***].  The system shall [*** ***].

SpaceX  shall  provide  drawings and documentation to adequately define the [***
***].  These  [***  ***]  shall  be document in [*** ***].  In addition the [***
***]  shall  include  the [*** ***].  The [*** ***] shall be approved and signed
off  by  SpaceX  and the customer by the date defined in Table 1.  The [*** ***]
shall  be  maintained  by  [***  ***].  Any  changes  to  the [*** ***] shall be
approved  by  both  SpaceX  and  the  customer.

2.6     PROGRAM  REVIEWS  AND  MEETINGS

     2.6.1  [***  ***]

[***  ***]  shall  be  conducted  at the SpaceX facility.  The expected need for
these  [***  ***].  SpaceX  shall  [***  ***].

For  the  PROGRAM  NAME,  the  [***  ***]:

     -  [***  ***]
     -  [***  ***]
     -  [***  ***]
     -  Performing  [***  ***]  and  [***  ***]

     2.6.2  [***  ***]

As  necessary, [*** ***] shall be [*** ***] related to [*** ***].  The [*** ***]
and  [***  ***]  be  coordinated  as  necessary  with the customer.  Topic areas
include:

     -  Definition  of  [***  ***]
     -  Planning  [***  ***]  operations  and  associated  [***  ***]
     -  Coordinating  all  [***  ***]  analyses

                                      PAGE

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copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

     -  Coordinate  [***  ***]  and  refining  the  [***  ***]
     -  Planning  and  performing  [***  ***]

2.6.3     [***  ***]  Review

[***  ***] shall conduct a review of the [*** ***].  This serves as a [*** ***].
[*** ***] shall prepare [*** ***] providing the [*** ***] compared to [*** ***].
The [*** ***] shall include the [*** ***].  An assessment of any [*** ***] shall
also  be included.  The output of this task shall be the [*** ***].  Preliminary
data  shall  be  delivered [*** ***] after launch.  The final [*** ***] shall be
delivered  within  [***  ***]  of  launch.

2.6.4     [***  ***]  Reviews

A  [***  ***]  will be conducted that includes a [*** ***].  This [*** ***] will
nominally  be  conducted  [***  ***]  to launch.  The [*** ***] will prepare and
brief the [*** ***] of this [*** ***].  Coordination of the presentation is [***
***].

The  [***  ***]  shall  be  held [*** ***] prior to launch and presented to [***
***].

2.7     REPORTS

[***  ***]  shall  provide data and reports to [*** ***] as proposed here and in
accordance with the Contract.  Electronic submission of all deliverable items is
preferred.

A  detailed  list  of  the  reports  and  deliverables  for are identified here:

                            PROGRAMMATIC DELIVERABLES
                            -------------------------
               TOP LEVEL DELIVERABLES     FREQUENCY     [*** ***]
               ----------------------     ---------     ---------
[***  ***]     [***  ***]
----------     ----------

                      TECHNICAL MILESTONES AND DELIVERABLES
                      -------------------------------------
                   NUMBER     TITLE     DETAILS     [*** ***]
                   ------     -----     -------     ---------
1     [***  ***]     [***  ***]     [***  ***]
-     ----------     ----------     ----------
2     [***  ***]     [***  ***]     [***  ***]
-     ----------     ----------     ----------
3     [***  ***]     [***  ***]     [***  ***]
-     ----------     ----------     ----------
4     [***  ***]     [***  ***]     [***  ***]
-     ----------     ----------     ----------

                                      PAGE

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copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

3.0     VEHICLE  PRODUCTION  AND  FLIGHT

[***  ***]  shall  produce  the  PROGRAM  NAME  [***  ***].

3.1     DESIGN  AND  ANALYSIS

[***  ***]  shall  conduct  analyses  and  verify  the  design  of  [*** ***] to
accommodate  and  successfully  [*** ***] system.  Specific analyses planned are
listed  below.

3.1.1     [***  ***]  Planning

[***  ***] shall conduct planning and analyses to support [*** ***].  The output
of  this  planning  shall  be  the  [***  ***].

[***  ***]  shall  perform [*** ***] which shall support performance, [*** ***].
The  output  of  this  task  is  a  report  describing  [***  ***].

[***  ***]  shall  perform  [***  ***].  The  output  of  this  task is a report
summarizing  the  results  of  this  analysis  and  highlighting  any  issues or
concerns.

[***  ***]  shall perform a [*** ***] all phases of this mission.  The output of
this  task  is  a  [***  ***],  as defined in the [*** ***], with the [*** ***].

3.1.2        [***  ***]

[***  ***]  shall  perform [*** ***].  Final due dates of the [*** ***] provided
data  and  [***  ***] provided [*** ***] shall be mutually agreed to in the [***
***].

[***  ***]  shall  perform  [*** ***] to determine the [*** ***].  The [*** ***]
test [*** ***] shall be provided by [*** ***] for the purposes of this analysis.
This  analysis  shall  include  a  recommendation  for  [***  ***].

[***  ***]  will provide a time history of relevant [*** ***] by which [*** ***]
can perform [*** ***] analyses.  Assumptions for the [*** ***] will be discussed
during  [***  ***]  meetings.

[***  ***]  shall  provide  [*** ***] for the [*** ***] with a [*** ***] factor.
[***  ***] is responsible for ensuring [*** ***] can withstand this environment.

[*** ***] will provide [*** ***] with the relevant [*** ***] prior to and during
launch,  including the [*** ***] environment.  [*** ***] will be responsible for
ensuring  the  [***  ***]  does not cause a hazardous condition while exposed to
this  environment.

[***  ***] will provide [*** ***] the [*** ***] will be responsible for ensuring
[***  ***]  does  not  cause  a  hazardous  condition  while  exposed  to  this
environment.
                                      PAGE

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copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

[***  ***]  will provide [*** ***] the [*** ***] environment.  [*** ***] will be
responsible  for  ensuring  [*** ***] does not cause a hazardous condition while
exposed  to  this  environment

3.2        [***  ***]

The [*** ***] supplied by [*** ***] shall utilize the [*** ***], as described in
the  Contract and the [*** ***].  The payload interface characteristics, payload
environmental  conditions, and implementation of the services shall be described
in  the  [*** ***].  Following [*** ***] of [*** ***] will be maintained by [***
***] shall coordinate all aspects of [*** ***].  The standard [*** ***] consists
of  the  following:

     -  [***  ***]:
          o  [***  ***]
          o  [***  ***]  information  [***  ***]
          o  [***  ***]  Output  includes:
               -  [***  ***]  PROGRAM  NAME  [***  ***]
               -  PROGRAM  NAME  [***  ***]
               -  Preliminary  [***  ***]
               -  Templates  for  the  [***  ***]
               -  [***  ***]
               -  [***  ***]

     -  Final  [***  ***]  design,  including:  [***  ***]  requirements
          o  [***  ***]  to  provide  test  verified  [***  ***]
          o  [***  ***]  analysis  begins

     -  [***  ***]  Readiness
          o  [***  ***]  plan
          o  [***  ***]

     -  [***  ***]
          o  [*** ***] review of [*** ***] verifying [*** ***] with PROGRAM NAME
          environments
          o  [***  ***]  checks
          o  [***  ***]  and  PROGRAM  NAME  [***  ***]  completed
          o  Confirm  [***  ***]  are  compatible  with  PROGRAM  NAME
          o  [***  ***]  approval

     -  [***  ***]  review
                                      PAGE

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copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

     -  Payload  [***  ***]  location
     -  [***  ***]
     -  [***  ***]
     -  [***  ***]
     -  [***  ***]

3.3     LAUNCHVEHICLE  PROCUREMENT  AND  MANUFACTURE
[***  ***]  shall  [***  ***]  to  meet  the  program  schedule.

3.4     LAUNCH
[***  ***] shall prepare for and [*** ***].   The [*** ***] the customer and the
launch  range.

3.4.1     Launch  Site
[***  ***]  shall  provide  [***  ***].   The  launch  is  [***  ***].

3.4.2     Facility  Support  and  Operations
Except  as noted below, the [*** ***] shall provide the [*** ***], and [*** ***]
the  [***  ***]  is  responsible for [*** ***], handling and transportation [***
***].

The  facilities  to  be  [*** ***] shall include the [*** ***] shall act as [***
***] shall maintain appropriate [*** ***] on all range related interfaces.  [***
***]

Base  security  and  badge  control     Equipment  storage
-----------------------------------     ------------------
Shop  and  laboratory  services         Non  hazardous  fluids  and  gases
-------------------------------         ----------------------------------
Range  scheduling                       Range  system  safety
-----------------                       ---------------------
Meteorology                             Communications  and  timing
-----------                             ---------------------------
Environmental  health                   Metric  tracking
---------------------                   ----------------
Launch  Vehicle  Telemetry              Video  coverage
--------------------------              ---------------
Fire  Protection
----------------

3.4.3        [***  ***]

[***  ***]  shall be available for [*** ***].  The facilities shall include [***
***]  space  for  [***  ***]  shall maintain [*** ***] management and scheduling
responsibilities throughout the [*** ***].  As [*** ***], some oversight of [***
***]  shall  be  conducted  by [*** ***], and shall be coordinated and scheduled
between  the  customer  and  [***  ***] shall support and schedule any [*** ***]
conducted  at  the  [***  ***] shall support the implementation of all [*** ***]
developed  by  the  [***  ***].
                                      PAGE

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copy  filed herewith omits the information subject to a confidentiality request.
Omissions are designated [*** ***].  A complete version of this exhibit has been
filed  separately  with  the  Securities  and  Exchange  Commission.

3.4.4        [***  ***]

The [*** ***] shall include the [*** ***].  If required for contingency purposes
only,  access to [*** ***] will be [*** ***].  Provisions for [*** ***] shall be
provided  [*** ***] shall [*** ***] which will serve [*** ***] will provide [***
***].

3.4.5     Administrative  and  Storage  Facilities

Administrative  facilities  with desks, [*** ***], one [*** ***], one [*** ***],
one  [***  ***]  and any other necessary common [*** ***] shall be provided [***
***]  for  [***  ***].

Non-conditioned  storage  facilities  for [*** ***] and support equipment not in
use  shall  be  [***  ***]  by  [***  ***].

3.4.6     Support  Equipment

[***  ***]  shall provide the equipment necessary to transport, handle, test and
checkout  the  [***  ***],  and  integrate the encapsulated payload at [*** ***]
shall  provide  the [*** ***] required to [*** ***] the encapsulated payload and
[***  ***]  provided  [***  ***]  shall  provide  all  [***  ***].

3.4.7     Launch  Control  Organization

[***  ***]  shall  provide the [*** ***] with [*** ***] coordinated through [***
***],  and  a  coordinated  [***  ***]  shall  [***  ***].

3.4.8     Launch  Licensing

[***  ***]  will  generate  and  submit  the application for a commercial launch
license  from  the  Federal  Aviation  Administration.  Note that inputs will be
required  from  [***  ***].

                                      PAGEEXHIBIT 10.1

 

AMENDMENT NO. 3

TO

AMENDED AND RESTATED REVOLVING
CREDIT AND TERM LOAN AGREEMENT

 

THIS
AMENDMENT NO. 3 (“Amendment No. 3”)
dated as of this 22nd day of December, 2005 to the Amended and Restated
Revolving Credit and Term Loan Agreement among HARDINGE
INC. (the “Borrower”),
the Banks signatory thereto (the “Banks”), MANUFACTURERS AND TRADERS TRUST COMPANY, as Agent and Lead
Arranger, JPMORGAN CHASE BANK, N.A., as
Syndication Agent, and KEYBANK NATIONAL
ASSOCIATION, as Documentation Agent.

 

THIS
AMENDMENT NO. 3 IS MADE WITH REFERENCE TO THE FOLLOWING FACTS:

 

R.1                               The
Borrower, the Banks, the Agent, the Syndication Agent and the Documentation
Agent entered into an Amended and Restated Revolving Credit and Term Loan
Agreement dated on or about January 28, 2005 (as amended from time to
time, the “Loan Agreement”).

 

R.2                               Pursuant
to the terms of Amendment No. 1 to the Amended and Restated Revolving
Credit and Term Loan Agreement dated February 11, 2005, the Borrower, the
Banks, the Agent, the Syndication Agent and the Documentation Agent amended Section 6.09
of the Loan Agreement.

 

R.3                               Pursuant
to the terms of Amendment No. 2 to the Amended and Restated Revolving
Credit and Term Loan Agreement dated July 16, 2005, the Borrower, the
Banks, the Agent, the Syndication Agent and the Documentation Agent amended
various provisions of the Loan Agreement concerning the pledge of stock and
related collateral of the Borrower’s foreign subsidiary known as Hardinge
Taiwan Limited.

 

R.4                               The
Borrower, the Banks, the Agent, the Syndication Agent and the Documentation
Agent now desire to further amend certain of the others sections of the Loan
Agreement as outlined in this Amendment No. 3.

 

R.5                               The
Borrower, the Banks, the Agent, the Syndication Agent and the Documentation
Agent also now desire to include provisions within the Loan Agreement for a new
$20,000,000.00 bridge loan credit facility.

 

 

NOW, THEREFORE, the parties agree as follows:

 

1.                                       Definitions.  Except as otherwise set forth herein, as used
in this Amendment No. 3, the terms defined in the Loan Agreement shall
have the meanings assigned to them in the Loan Agreement.

 

2.                                       Amendments.
As of the “Amendment No. 3 Effective Date” (as such term is defined in Section 2.9
below):

 

2.1                                 In
Article I of the Loan Agreement, the definition of “Aggregate Commitment”
shall be modified to read as follows:

 

“Aggregate
Commitment” means, on any date of determination, the aggregate
amount on such date of the Commitments of all of the Banks.  On the Amendment No. 3 Effective Date,
the Aggregate Commitment shall be increased by the amount of the Aggregate
Bridge Loan Commitment.

 

2.2                                 In
Article I of the Loan Agreement, under the definition of “Compliance
Certificate” the reference to Section 6.02(c) is changed to Section 6.02(d) and
the phrase “in connection with both the Existing Revolving Loans and the
Existing Term Loans” in the last lines under the definition of “Guaranty” is
deleted and replaced with the following language: “...which guaranties were
originally delivered in connection with the Existing Revolving Loans and the
Existing Term Loans...”

 

2.3                                 In
Article I of the Loan Agreement, the definition of “Commitment” shall be
modified to read as follows:

 

“Commitment”
means, with respect to a Bank, its respective Revolving Credit Commitment, Term
Loan Commitment and Bridge Loan Commitment (if any).

 

2.4                                 In
Article I of the Loan Agreement, the following sentence shall be included
as a new last sentence for the definition of “Interest Period”:

 

Interest Periods related
to the Bridge Loans shall be limited to one-month periods and no Interest
Period applicable to the Bridge Loans may expire on a date that is later than
the Bridge Loans Maturity Date.

 

2

 

2.5                                 In
Article I of the Loan Agreement, the definition of “Loan” or “Loans” shall
be modified to read as follows:

 

“Loan”
or “Loans” means, as the context may
require, Revolving Loans, Term Loans and/or Bridge Loans.

 

2.6                                 In
Article I of the Loan Agreement, the definition of “Notes” shall be
modified to read as follows:

 

“Notes”
means, collectively, the Revolving Credit Notes, the Swing Line Note, the Term
Loan Notes and the Bridge Loan Notes, and “Note” means
any of the Notes.

 

2.7                                 In
article I of the Loan Agreement, sub-section (d) of the
definition of “Pro Rata Share” shall be re-lettered as sub-section (e) and
the following shall be inserted as a new sub-section (d) for said
definition:

 

(d)                                 with
respect to a Bank’s obligation to make Bridge Loans and prior to the
acceleration of all amounts due under the Notes in accordance with Section 9.02,
to receive payment of principal, interest, fees, costs and expenses with
respect thereto: (i) prior to the Aggregate Bridge Loan Commitment being
terminated or reduced to zero, the percentage obtained by dividing: (x) such
Bank’s Bridge Loan Commitment, by (y) the Aggregate Bridge Loan Commitment, and
(ii) from and after the time that the Aggregate Bridge Loan Commitment has
been terminated or reduced to zero, the percentage obtained by dividing: (x)
the aggregate unpaid principal amounts of such Bank’s Bridge Loan Credit
Exposure due under the terms of the Bridge Loan Notes delivered to such Bank by
the Borrower under the terms of this Agreement, by (y) the Aggregate Bridge
Loan Commitment.

 

2.8                                 In
Article I of the Loan Agreement, the definition of Required Lenders shall
be modified to read as follows:

 

“Required
Banks” means, (a) at any time while no Obligations are
outstanding, Banks having Commitments equal to at least 66 2/3% of the Aggregate Commitments and, (b) at
any time while any Obligations remain outstanding and unpaid, Banks having a
Revolving Credit Exposure, unpaid principal with respect to their Bridge Loans
and unpaid principal with respect to their Term Loans which constitute at least
66 2/3% of the sum of (i) the Aggregate Revolving Credit Exposure and (ii) the
unpaid principal amount of all outstanding Term Loans and Bridge Loan.

 

3

 

2.9                                 In
Article I of the Loan Agreement, the following definitions shall be added:

 

“Additional
Technical Information” shall mean and refer to the technical
information required for the manufacture of the products, accessories and
spares, including but not limited to blueprints, designs, schematics, drawings,
specifications, computer source and object codes, customer lists and other
proprietary rights and assets of a similar nature, all as described with
particularity in the Bridgeport Acquisition Documents.

 

“Aggregate
Bridge Loan Commitment” means, on any date of determination, the
aggregate amount on such date of the Bridge Loan Commitments of all of the
Banks.  On the Amendment No. 3
Effective Date, the Aggregate Bridge Loan Commitment is $20,000,000.00.

 

“Amendment
No. 3 Effective Date” means December 22, 2005, or, if
later, the date on which the conditions contained in Section 5 of
Amendment No. 3 have been satisfied (or waived in accordance with Section 11.01
of the Loan Agreement).

 

“Bridge
Loan Commitment” means, with respect to each Bank, the commitment
and obligation of such Bank to make Bridge Loans under the terms of this
Agreement, in an aggregate principal amount not to exceed the amount set forth
opposite such Bank’s name on Schedule IX,
or in an Assignment and Assumption Agreement executed by it, in all cases as
such amount may be reduced from time to time in accordance with the terms
hereof.

 

“Bridge
Loan Credit Exposure” means, with respect to any Bank at any
time, the sum of the outstanding principal amount of such Bank’s Bridge Loans.

 

“Bridge
Loans” has the meaning given to such term in Section 2.15(a) hereof.

 

“Bridge
Loans Maturity Date” means June 30, 2006.

 

“Bridge
Loan Notes” means the various Bridge Loan Notes of the Borrower
to each of the Banks in an aggregate amount not to exceed the principal amount
of their respective Bridge Loan Commitment, in the form of Exhibit J
hereto evidencing the Bridge Loans made by the Banks hereunder (each a “Bridge Loan Note”) as the same may
be amended, modified, extended, renewed, restated, consolidated and replaced
from time to time.

 

“Bridgeport
Acquisition Documents” means the various agreements and
instruments executed by and between the Borrower and BPT IP, LLC including but
not limited to that certain Alliance Agreement dated November, 2004 whereby
among other things, BP IP, LLC granted to the Borrower an option to purchase
the 

 

4

 

Additional Technical
Information on or before December 31, 2005 as described with particularity
in Section 7.6.3 of the Alliance Agreement.

 

“ROC
Joint Venture Agreement” means the Joint Venture Agreement dated
as of February 12, 1999 by and among the Borrower and the ROC
Shareholders, as the same may have been amended, modified or restated from time
to time or any time.

 

“ROC
Shareholders” shall mean and refer to the ROC Shareholders
identified under the terms of the Joint Venture Agreement (as such agreement
was in effect on February 12, 1999) as Mr. R.M. Yang, Ms. Shain
Wu, Mr. Paul Ling and Ms. J. R. Ho.

 

“Taiwanese
Property” has the meaning given to such term is Section 2.15(h) of
the Loan Agreement.

 

2.10                           Section 2.01
of the Loan Agreement shall be amended to include a new sub-section (c) which
shall read as follows:

 

(c)                                  Bridge Loans.  Subject to the terms and conditions set
forth in this Agreement, each Bank agrees to make Bridge Loans to the Borrower
from time to time from the Amendment No. 3 Effective Date until the Bridge
Loans Maturity Date in an aggregate principal amount that will not result in: (i) such
Bank’s Bridge Loan Credit Exposure exceeding such Bank’s Bridge Loan
Commitment, and (ii) the aggregate Bridge Loan Credit Exposure of all
Banks exceeding the Aggregate Bridge Loan Commitment.  With the advance of each Bridge Loan, the
Aggregate Bridge Loan Commitment of the Banks shall immediately be reduced by
the same principal amount thereof.

 

2.11                           The
payment application provisions outlined in Section 2.05 of the Loan
Agreement shall be modified to read as follows:

 

(i)                                     first,
to the payment of any outstanding costs and expenses incurred by the Agent in
protecting, preserving or enforcing rights under this Agreement and the other
Loan Documents and in any event including all costs and expenses of a character
which the Borrower has agreed to pay under Section 11.03 hereof (such
funds to be retained by the Agent for its own account unless it has previously
been reimbursed for such costs and expenses by the Banks, in which event such
amounts shall be remitted to the Banks to reimburse them for payments theretofore
made to the Agent);

 

(ii)                                  second,
to the payment of any outstanding interest or other fees or indemnification
amounts due with respect to the Obligations represented by the Bridge Loan
Notes, ratably as among the Agent and the Banks in accord 

 

5

 

with the amount of
such interest and other fees or indemnification amounts owing each;

 

(iii)                               third, to the payment of
any outstanding interest or other fees or indemnification amounts due with
respect to all Obligations other than the Obligations represented by the Bridge
Loan Notes, ratably as among the Agent and the Banks in accord with the amount
of such interest and other fees or indemnification amounts owing each

 

(iv)                              fourth,
to the payment of the principal of the Swing Loans;

 

(v)                                 fifth,
to the payment of the principal of the Bridge Loans;

 

(vi)                              sixth,
to the payment of all other Obligations in accordance with each Bank’s Pro Rata
Share (including required payments into the Facility Letter of Credit Shortfall
Collateral Account), except that the JPMorgan Obligations shall be only to a
maximum amount of $8,000,000 and the Bank Product Obligations of Subsidiaries
of the Borrower that are not Credit Parties shall be only to a maximum of
$3,000,000;

 

(vii)                           seventh, to payment of any
remaining unpaid JPMorgan Obligations and Bank Product Obligations; and

 

(viii)                        eighth, to the Borrower or to
whoever the Agent reasonably determines to be lawfully entitled thereto.

 

2.12                           All
references contained in Section 2.12 to the prepayment of the Term Loans
and Revolving Loans shall be modified to read, “Term Loans, Revolving Loans and
Bridge Loans (if any)”.

 

2.13                           The
last sentence of sub-section 2.12(c) shall be deleted in it entirety
and replaced with the following language:

 

The Agent shall apply any
such mandatory prepayment first to the Bridge Loans (if any) and then to the
Term Loans.

 

2.14                           In
addition to the changes described in Paragraphs 2.10 and 2.11 above, Section 2.12
of the Loan Agreement shall also be modified to include the following language
for a new sub-section (e):

 

6

 

(e)                                  Subject
to and without waiver of the mandatory prepayment provisions of this Agreement,
the Bridge Loans may be prepaid at any time or from time to time (subject to
any applicable fees, including any LIBOR breakage fees).

 

2.15                           Article 2
of the Loan Agreement shall be amended to include a new Section 2.15 which
shall read as follows:

 

Section 2.15                            Amount
and Terms of the Bridge Loans.

 

(a)                                  As
of the Effective Date, the Banks agree, on the terms and conditions hereinafter
set forth, to make loans (the “Bridge Loans”)
to Borrower, in the aggregate principal amount of Twenty Million and 00/100
Dollars ($20,000,000.00).

 

(b)                                 Borrower’s
obligation to repay the Bridge Loans shall be evidenced by its promissory notes
in substantially the form of Exhibit J to this Agreement, with
blanks appropriately completed.  Bridge
Loan Notes shall be delivered by the Borrower to each of the Banks in
connection with each advance made under the Bridge Loan Commitment (the amount
of which shall be determined on the basis of the percentage of each Bank’s
respective Bridge Loan Commitment), provided, however, that the aggregate
amount of all of the respective Banks’ Bridge Loan Notes shall not at any time
or from time to time exceed the Aggregate Bridge Loan Commitment.

 

(c)                                  Except
for Borrowings which exhaust the full remaining amount of the Aggregate Bridge
Loan Commitment available to the Borrower, all Bridge Loans shall be in an
amount equal to at least One Million and 00/100 Dollars ($1,000,000.00).

 

(d)                                 Unless
earlier due or terminated pursuant to Sections 2.12 (including as set forth in Section 2.15(h) below
and, 9.02), the entire outstanding principal amount of the Bridge Loans shall
be due and payable, and the Bridge Loan Commitment shall terminate on the
Bridge Loans Maturity Date.

 

(e)                                  Interest
shall accrue and the Borrower shall pay interest to the Banks pursuant to and
in accordance with the terms of Section 2.7 of this Agreement.

 

(f)                                    Interest
on the Bridge Loans shall be paid in immediately available funds to the Agent,
in the case of Base Rate Loans on the first day of each month and in the case
of LIBOR Loans, on the last day of the Interest Period with respect thereto.  All remaining accrued interest shall be due
and payable on the Bridge Loans Maturity Date.

 

7

 

(g)                                 Borrower
shall make each payment under this Agreement and under the Bridge Loan Notes in
accordance with the provisions of Section 2.05 of this Agreement.  Without limiting the generality of the
foregoing statement, each payment under this Agreement shall be made by the
Borrower not later than 11:00 a.m. New York time on the date when due, in
lawful money of the United States, and payable to the Agent at its Principal
Office in immediately available funds. 
Borrower hereby authorizes the Agent, if and to the extent payment is
not made when due under this Agreement and under the Bridge Loan Notes, to charge
from time to time against any account of Borrower with the Agent any amount so
due.  Whenever any payment to be made
under this Agreement or under the Bridge Loan Notes shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest.

 

(h)                                 The
proceeds of the Bridge Loans shall be used by Borrower to finance: (i) the
purchase of the Additional Technical Information in accordance with the terms
of the Bridgeport Acquisition Agreement, (ii) the purchase by the Borrower
of the ROC Shareholders under and pursuant to the terms of the ROC Joint
Venture Agreement, and (iii) the Borrower’s purchase of the lands located
at and commonly known as 305 Nan-Kang Sub-section Lin-Tze Section, Nanto
County, Taiwan and the buildings thereon (including a four-floor office
building and a factory with two floors above the ground level and one basement
below the ground level)(with the lands and improvements located thereon being
collectively referred to herein as the “Taiwanese Property”)
under and pursuant to the terms of the ROC Joint Venture Agreement and in the
Lease Agreement attached thereto as an exhibit thereof.  Borrower will not, directly or indirectly,
use any part of such proceeds for the purpose of purchasing or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System or to extend credit to any person for the purpose of
purchasing or carrying any such margin stock, or for any purpose which
violates, or is inconsistent with, Regulation X of such Board of Governors.

 

(i)                                     Prior
to the disbursement of the proceeds of any Bridge Loan the President, Treasurer,
Controller or Chief Financial Officer shall certify to the Agent, in writing in
a form and substance satisfactory to the Agent: (i) as to the use of
proceeds for said Bridge Loans, (ii) that the proposed use of proceeds is
and shall at all times be in compliance with the terms and conditions of this
Agreement, and (iii) that the consummation of the relevant acquisition
shall be completed in accordance with the terms and conditions of the relevant
agreements or instruments as acknowledged and permitted hereby.  Notwithstanding the foregoing, wherever herein an acquisition is permitted
in accordance with the terms of an agreement or instrument, neither Borrower
nor any of its Subsidiaries 

 

8

 

may
materially modify, amend, or waive any of the terms or condition thereof after
the date hereof without notice thereof to, and the written consent of the
Agent.

 

(j)                                     Although
no specific reference is made within the below noted-sections to the Bridge
Loans and without limiting the general applicability of the other provisions of
this Agreement, the provisions of Section 3 as well as the provisions of
Sections 2.04, 2.05 (as modified by the terms of this Amendment No. 3),
2.06, 2.07, 2.08, 2.10 and 2.12 (as modified by the terms of this Amendment No. 3)
shall apply to the Bridge Loans.

 

(k)                                  On
the Amendment No. 3 Effective Date, the Agent shall have received from the
Borrower an upfront fee of twenty five (25) basis points on the amount by which
each Bank’s Commitment is increased pursuant to this Amendment No. 3,
which fees shall be for the account of each Bank.

 

2.16                           Section 7.01
of the Loan Agreement shall be modified to include the following new sub-section (a)(xi):

 

(a)...

 

(xi)                                Provided
that the Borrower is at all times in compliance with the terms and conditions
of the Loan Agreement, no Default or Event of Default exists, and no event or
condition has occurred or is continuing which with the giving of notice, lapse
of time or other condition would constitute a Default or Event of Default, the
Borrower and/or its Subsidiaries may incur, assume or permit to exist Debt in
connection with the mortgage of the Taiwanese Property; provided, however,
that: (a) the aggregate amount of any such mortgage Debt shall not at any
one time or from time to time exceed $6,000,000.00, (b) said mortgage Debt
shall be secured only by a mortgage on the Taiwanese Property or a
sale/leaseback transaction affecting the Taiwanese Property, and (c) all
net proceeds (with net proceeds being defined as the proceeds available to the
Borrower after the payment of the Purchase Price for the Taiwanese Property in
accordance with the terms of the ROC Joint Venture Agreement and the Lease
Agreement attached thereto, and the payment of any reasonable costs and
expenses incurred in connection with the Borrower’s purchase of the Taiwanese
Property) received by the Borrower or any of its Subsidiaries (whether directly
or indirectly) in connection with incurrence of such mortgage Debt shall be
paid over to the Agent within five (5) Business Days and shall be applied
by the Agent as a mandatory prepayment under the terms of the Loan
Agreement.  In all events, if completed
in accordance with the terms of this Agreement, any resulting liens and encumbrances
on the Taiwanese Property shall be considered a permitted Subsidiary Real
Property Lien under the terms of Section 5.12(a) of the Agreement.

 

9

 

2.17                           Section 7.06
of the Loan Agreement shall be modified to include the following new sub-section (e):

 

(e)                                  Provided
that the Borrower is at all times in compliance with the terms and conditions
of the Loan Agreement, no Default or Event of Default exists, and no event or
condition has occurred or is continuing which with the giving of notice, lapse
of time or other condition would constitute a Default or Event of Default, the
Borrower shall be permitted to: (i) acquire the minority interests of
Hardinge Taiwan Limited that are currently owned by the ROC Shareholders in
accordance with the terms of the ROC Joint Venture Agreement, (ii) purchase
the Taiwanese Property in accordance with the terms of the ROC Joint Venture
Agreement, and (iii) acquire the Additional Technical Information in
accordance with the terms of the Bridgeport Acquisition Documents.

 

2.18                           Section 8.01
of the Loan Agreement shall be deleted in its entirety and the following
language shall be inserted in replacement therefore:

 

Section 8.01                            Leverage Ratio.  The Borrower shall maintain a Leverage Ratio
as measured as of each Quarterly Date of not greater than: (a) 3.50 to
1.00 for the Fiscal Year quarters ending on December 31, 2005 and March 31,
2006, (b) 3.25 to 1.00 for the Fiscal Year quarters ending on June 30,
2006, and (c) for the Fiscal Year quarter ending on September 30,
2006 and for each Fiscal Year quarter thereafter, 3.00 to 1.00.

 

2.19                           Section 8.02
of the Loan Agreement shall be deleted in its entirety and the following
language shall be inserted in replacement therefore:

 

Section 8.02                            Consolidated Tangible Net Worth.  The Borrower shall maintain a Consolidated
Tangible Net Worth as measured as of each Quarterly Date of not less than the
sum of: (1) 85% of the Consolidated Tangible Net Worth as of December 31,
2004, (b) an additional $500,000.00 as of each successive Quarterly Date
after the Effective Date, and (c) 90% of the Net Cash Proceeds received by
the Borrower or any of its Subsidiaries after the Effective Date from any
Equity Issuances.

 

2.20                           Article 8
of the Loan Agreement shall be modified to include the following new Section 8.04:

 

Section 8.04                            Calculations.  Whenever appropriate and without
duplication, calculations made pursuant to this Article 8 shall give
effect, on a pro-forma basis, to the acquisitions of the Additional Technical
Information and the minority interests of the ROC Shareholders made during the
quarter or year to which the required compliance relates, as if such
acquisitions had been consummated on the first day of the applicable reporting
period.

 

10

 

3.                                       Additional
and Supplemental Representations, Warranties and Covenants of the Borrower.  Borrower hereby represents, warrants and
covenants (as appropriate) to the Agent, in its capacity as an Agent and as a
Bank, and on behalf of the Banks that:

 

3.1                                 Corporate
Authority.  The execution, delivery
and performance by the Borrower of this Amendment No. 3 and all other Loan
Documents in connection herewith, including the Notes for the Bridge Loans, and
the consummation of the transactions contemplated hereby and thereby, have been
duly authorized by all necessary corporate action and does not and will not
require any consent or approval of its shareholders, which has not been
obtained, or contravene its certificate of incorporation or by-laws, as amended
to date.

 

3.2                                 Legally
Enforceable Amendment.  Amendment No. 1,
Amendment No. 2, this Amendment No. 3, the Loan Agreement, as
amended, and other Loan Documents are all legal, valid and binding obligations
of the Borrower or other Credit Parties who executed them, enforceable against
the Borrower or such other Credit Parties who executed, in accordance with
their respective terms, except to the extent that such enforcement might be
limited by applicable bankruptcy, insolvency or other similar laws affecting
creditors’ rights generally.

 

3.3                                 Compliance
with Terms and Conditions of the Joint Venture Agreement.  With each Bridge Loan extended for or in
connection with the Borrower’s purchase of the minority interests owned by the
ROC Shareholders and/or the purchase of the Taiwanese Property, the Borrower
shall represent and warrant to the Agent and the Banks that it has complied
with the requirements of the ROC Joint Venture Agreement and/or the Lease
Agreement referenced in and attached to the ROC Joint Venture Agreement as an Exhibit thereto.

 

3.4                                 Compliance
with Terms and Conditions of the Bridgeport Acquisition Documents and
Termination of Royalty Payments. 
With each Bridge Loan extended for or in connection with the Borrower’s
purchase of the Additional Technical Information, the Borrower shall represent
and warrant to the Agent and the Banks that it has complied with the
requirements of the Bridgeport Acquisition Documents.  In addition, the Borrower shall represent and
warrant to the Agent and the Banks that other than the payment of any royalties
due under the terms of the Bridgeport Acquisition Documents for transactions
completed prior to the date of the Borrower’s purchase of the Additional
Technical Information, then on and after the date of the Borrower’s purchase of
the 

 

11

 

Additional Technical
Information, no further royalty payments shall be due and owing to the any of
the parties under the Bridgeport Acquisition Documents.

 

3.5                                 Reaffirmation
of Existing Representations and Warranties; Confirmation of Information
Contained on Schedules.  The Borrower
hereby covenants that the representations, warranties and covenants set fort in
the Loan Agreement and in the other Loan Documents are true and complete on and
as of the Amendment No. 3 Effective Date. 
The Borrower also hereby covenants that: (a) the information
contained on the Schedules and Exhibits attached to the Loan Agreement and the
other Loan Documents is true and complete on and as of the Amendment No. 3
Effective Date and that updates to the Schedules and Exhibits shall be provided
pursuant to the terms of the Post Closing Deliveries Agreement described in Section 5.5
below.

 

3.6                                 Events
of Default.  With the exception of
any Default(s) or Event(s) of Default waived under Section 4 of this
Amendment No. 3, no Event of Default, Default or event which, with the
giving of notice or passage of time, or both, would become a Default or an
Event of Default has occurred and is continuing.

 

3.7                                 Material
Adverse Change.  There has been no
material adverse change in the condition (financial or otherwise), business or
operations of the Borrower or any Subsidiary.

 

4.                                       Waivers;
Consent of the Agent, Banks, Syndication Agent and Documentation Agent.  In consideration for the Borrower’s delivery
of this Amendment No. 3 and the payment of the upfront fees relative to
the Bridge Loans as described in Section 2.15 (k), the Agent, Lead
Arranger, Syndication Agent, Documentation Agent and the Banks, hereby grant
the following waivers and consents to the Borrower:

 

4.1                                 Capital
Expenditures.  Subject to the terms
and conditions of the Loan Agreement and provided that the Borrower is at all
times in compliance with the terms and conditions of the Loan Agreement, no
Default or Event of Default exists, and no event or condition has occurred or
is continuing which with the giving of notice, lapse of time or other condition
would constitute a Default or Event of Default, the Borrower shall be permitted
to exclude from the determination of Capital Expenditures after the date
hereof: (a) the costs associated with the closing of the transactions
contemplated by this Amendment No. 3 (which costs shall specifically
include the costs associated with the closing of the transactions described in Section 7.06(e) above),
and (b) the 

 

12

 

acquisition costs for the
JD Edwards software incurred or to be incurred during Fiscal Years 2005 and
2006, as previously represented to the Banks in writing by Borrower, provided,
however, that the acquisitions costs for said JD Edwards software shall
not, without the prior written consent of the Agent, exceed $4,000,000.00.

 

4.2                                 Consolidated
Tangible Net Worth Covenant.  It is
understood and agreed by the Agent, Lead Arranger, Syndication Agent,
Documentation Agent and the Banks, that the Borrower does not anticipate that
it will be in compliance with the Consolidated Tangible Net Worth Covenant set
forth in Section 8.02 of the Loan Agreement for the Quarterly Date of December 31,
2005.  If the Borrower is in fact in
violation of said covenant measurement as of said Quarterly Date, the Agent,
Lead Arranger, Syndication Agent, Documentation Agent and the Banks hereby
collectively waive the Borrower’s non-compliance with this financial covenant
for the measurement period ending on the Quarterly Date of December 31,
2005.

 

4.3                                 Limited
Waivers.  The waivers and consents
set forth in this Paragraph 4 of Amendment No. 3 are limited precisely as
written and shall not be deemed to be consent to or a waiver of any other term
or condition of the Loan Agreement or any of the other terms and conditions
contained in any other Loan Documents nor shall such waivers or consents
prejudice any right or rights which the Bank may now have or may have in the
future under or in connection with the Loan Agreement and/or any of the other
Loan Documents.

 

5.                                       Effectiveness.  This Amendment No. 3 shall be of no
force or effect unless and until the date on which all of the following
conditions are met (with such date being hereinafter referred to as the
Amendment No. 3 Effective Date):

 

5.1                                 Counterparts.  The Agent shall have each received
counterparts of this Amendment No. 3 duly executed by the Borrower, each
of the Banks, the Agent and Lead Arranger, the Syndication Agent and the
Documentation Agent.

 

5.2                                 Reaffirmation
Agreement.  The Agent shall have
received an original Reaffirmation Agreement as executed by the Borrower and
the Guarantors, whereby the Borrower and (as applicable) the Guarantors shall
reaffirm their existing obligations under the terms of the Security Documents,
Guaranty and/or Guaranty Supplement.

 

13

 

5.3                                 Opinion.  The Agent, on behalf of the Banks, shall have
received an opinion of Sayles & Evans, counsel for the Borrower and
its Subsidiaries, in form and content reasonably satisfactory to the Agent and
its counsel.

 

5.4                                 Payment
of the Upfront Fees.  The Agent shall
have received from the Borrower the upfront commitment fees described in Section 2.15(k)
of the Loan Agreement.

 

5.5                                 Post
Closing Deliveries Agreement.  The
Agent shall have received a fully executed Post Closing Deliveries Agreement
whereby the Borrower shall agree to deliver to the Agent certain required items
within the time frames delineated within the Post Closing Deliveries Letter.

 

5.6                                 Borrower
Due Diligence Documents.  The Agent
shall have received a certificate of the secretary of Borrower with attached
supporting documents as follows:

 

(i)                                     Resolutions
duly adopted by the Board of Directors of Hardinge authorizing the execution,
delivery and performance of the Borrower’s obligations under this Amendment No. 3
and any Bridge Loan Notes delivered in connection herewith;

 

(ii)                                  An
Incumbency Certificate;

 

(iii)                               Copies
of the Certificate of Incorporation and By-Laws of Borrower and any amendments
thereto; and

 

(iv)                              Appropriate
good standing and lien searches for the Borrower as determined by Agent.

 

5.7                                 Certifications.  The Agent shall have received from the
Borrower certifications together with copies of the ROC Joint Venture Agreement
and the Bridgeport Acquisition Documents, indicating that the Borrower has
provided the Agent with true and complete copies of the ROC Joint Venture Agreement
and Bridgeport Acquisition Documents, together with copies of all amendments,
addendums or other modifications thereto.

 

5.8                                 Reimbursement
of the Agent.  As consideration for
the delivery of this Amendment No. 3 by the Agent, Lead Arranger, Syndication
Agent, Documentation Agent and the Banks, the Borrower shall reimburse,
indemnify and hold Agent harmless for the reasonable fees and actual costs and
expenses incurred by the Agent for the services of legal professionals engaged
by the Agent in connection with the negotiation and preparation of this
Amendment No. 3.  With 

 

14

 

respect to any amount
required to be reimbursed by the Borrower pursuant to the foregoing provision
of this Paragraph 5.8, it is hereby agreed that the Agent may charge any such
amount to the Revolving Credit on the dates such reimbursement is made.

 

6.                                       Miscellaneous.  The amendments set forth in this Amendment No. 3
are limited precisely as written and shall not be deemed to be a consent to any
waiver of or modification of any other term or condition of the Loan Agreement
or any of the instruments or agreements referred to therein, or prejudice any
right or rights which the Bank may now have or may have in the future under or
in connection with the Loan Agreement, or any of the instruments or agreements
referred to herein.  Except as expressly
provided in Amendment No. 1, Amendment No. 2 and in this Amendment No. 3,
the Loan Agreement and the Loan Documents shall remain unchanged and in full
force and effect, except that each reference in the Loan Agreement, and in any
of the other Loan Documents, and in any agreements, certificates and notices
simultaneously herewith or hereafter executed under or pursuant to the Loan
Agreement or the other Loan Documents, to the “Loan Agreement”, “this Agreement”,
“hereof”, “herein” and similar terms referring to the Loan Agreement and other
Loan Documents, shall be deemed to refer to the Loan Agreement and the other
Loan Documents as amended by Amendment No. 1, Amendment No. 2 and
this Amendment No. 3.

 

This Amendment No. 3
shall be interpreted and construed according to its fair meaning and neither
for or against any party hereto, irrespective of which party caused the same to
be drafted.  Each of the parties hereto
hereby acknowledges that it has been or has had the opportunity to be
represented by an attorney in connection with the preparation and execution of
this Amendment No. 3.

 

Other than the
understandings, agreements, representations and warranties made in connection
with the Loan Agreement, Amendment No. 1 and Amendment No. 2, all
other prior understandings, agreement, representations and warranties, whether
oral or written, between the Borrower and the Agent and/or the Borrower and the
Banks are merged into this Amendment No. 3, which Amendment No. 3
completely expresses their full agreement and has been entered into after full
investigation, neither party relying upon any statement made by anyone else
that is not set forth in this Amendment No 3.

 

15

 

This Amendment No. 3
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed in such state,
without regard to conflict of laws principles.

 

This section headings
in this Amendment No. 3 are inserted for convenience only and shall not be
considered a part of this instrument.

 

This Amendment No. 3
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signature thereto and hereto were upon the same
instrument.

 

[remainder
of page left intentionally blank; signature pages to follow]

 

16

 

IN WITNESS WHEREOF,
the parties have caused this Amendment No. 3 to be executed as of the date
first above written.

 

 

	
   

  	
  HARDINGE INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ J. PATRICK ERVIN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  J. Patrick Ervin

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board,
  Chief

  Executive Officer and President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MANUFACTURERS AND TRADERS TRUST

  COMPANY, as Agent, Lead Arranger and as a Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ SUSAN A.BURTIS

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Susan A. Burtis

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.,
  as

  Syndication Agent and as a Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ CHRISTINE M.
  DESCHAMPS

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Christine M. Deschamps

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
											

 

17

 

	
   

  	
  KEYBANK NATIONAL ASSOCIATION,
  as

  Documentation Agent and as a Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ CARL J. LUGER, JR.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Carl J. Luger, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NBT BANK, NATIONAL ASSOCIATION,
  as a

  Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ RONALD G. GOODWIN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Ronald G. Goodwin

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

18

 

EXHIBIT J

 

FORM OF
BRIDGE LOAN NOTE

 

[REPLACEMENT] BRIDGE LOAN NOTE

 

	
  $                             

  	
                              ,
  200  

  

 

HARDINGE INC. (the “Borrower”), a corporation
organized under the laws of New York, for value received, hereby promises to
pay to the order of
                                   
(the “Bank”) the
principal sum of
                                                                      
Dollars ($                          ),
in lawful money of the United States of America and in immediately available
funds on June 30, 2006 an amount equal to the outstanding principal
hereunder and expenses.  Borrower also
promises to pay interest on the unpaid principal balance hereof, for the period
such balance is outstanding, in like money, at the rates of interest as
provided in the Agreement described below, on the date(s) and in the manner
provided in said Agreement.

 

This Bridge Loan Note is one of the Bridge
Loan Notes referred to in that certain Amended and Restated Credit and Term
Loan Agreement (as amended from time to time, the “Agreement”) dated as of January 28, 2005, made
among Borrower the Banks signatory thereto, Manufacturers and Traders Trust
Company, as Agent and Lead Arranger, JPMorgan Chase Bank, N.A., as Syndication
Agent, and KeyBank National Association, as Documentation Agent, and evidences
a Bridge Loan made thereunder.  All
capitalized terms not defined herein shall have the meanings given to them in
the Agreement.

 

Borrower waives presentment, notice of
dishonor, protest and any other notice or formality with respect to this Bridge
Loan Note.

 

This Bridge Loan Note may only be modified or
amended by a written instrument executed Borrower and Bank in accordance with
the terms of the Agreement.  This Bridge
Loan Note shall be governed by the laws of the State of New York.

 

	
  HARDINGE INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

19

 

SCHEDULE IX

 

Bridge Loan Commitment Amounts

 

 

	
   

  	
   

  	
  Commitment

  	
   

  	
  Bridge

  	
   

  
	
  Bank

  	
   

  	
  Percentage

  	
   

  	
  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Manufacturers and Traders Trust Company

  	
   

  	
  0.357142857143 

  	
   

  	
  7,142,857.14

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  0.285714285714 

  	
   

  	
  5,714,285.71

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KeyBank, National Association

  	
   

  	
  0.214285714286 

  	
   

  	
  4,285,714.29

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NBT Bank, National Association

  	
   

  	
  0.142857142857 

  	
   

  	
  2,857,142.86

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  1.000000000000 

  	
   

  	
  20,000,000.00

  	
   

  

 

20

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