Document:

EXHIBIT 10.2

 

 

LIBOR TERM NOTE

New York

 

	
  March 16, 2009

  	
  $10,000,000.00

  

 

BORROWER (Name):  Hardinge Inc.

(Organizational Structure):  Corporation

(State Law organized under):  New York

(Address of residence/chief executive office):  One Hardinge Drive, Elmira, New York 
14902

 

BANK:  MANUFACTURERS
AND TRADERS TRUST COMPANY, a New York banking corporation with its
principal banking office at One M&T Plaza, Buffalo, NY 14203.  Attention: Office of General Counsel

 

1.     DEFINITIONS.  Each capitalized term shall have the meaning
specified herein and the following terms shall have the indicated meanings:

 

a.     “Applicable Rate”
shall mean either the LIBOR Rate or the Base Rate, as the case may be.

b.     “Adjustment Date”, when applicable, shall mean two (2) London
Business Days before the first day of the applicable Interest Period (each of
which shall have a duration as selected below; see LIBOR Rate definition).

c.     “Base Rate” shall mean 1.0
percentage point(s) above the rate of interest announced by the Bank from
time to time as its prime rate of interest (“Prime Rate”).  If the prior blank is not completed, the Base
Rate shall be two (2) percentage points above the Prime Rate.

d.     “Continuation Date” shall mean the last day of each Interest
Period.

e.     “Interest
Period” shall mean, as used
in connection with the LIBOR Rate, the period commencing on the date of this
Note or Continuation Date (as the case may be) and ending on the date that
shall be the numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) of the calendar month that is one (1), two
(2), three (3) or six (6) months thereafter (as selected below);
provided, however, that if an Interest Period would end on a day that is not a
Joint Business Day, such Interest Period shall be extended to the next
succeeding Joint Business Day unless such next succeeding Joint Business Day
would fall in the next calendar month, in which case such Interest Period shall
end on the immediately preceding Joint Business Day.  To the extent that the preceding
clause results in either the extension or shortening of an Interest Period, the
Bank shall have the right (but not the obligation) to shorten or extend,
respectively, the succeeding Interest Period so that it shall end on a day that
numerically corresponds to the date of this Note.

f.      “Joint Business Day” shall mean a
day that is both a New York Business Day and a London Business Day.

g.     “LIBOR” shall mean the rate per annum (rounded upward, if necessary, to the
nearest 1/16th of 1%) obtained by dividing (i) one-month,
two-month, three-month or six-month interest period London Interbank Offered
Rate (as applicable in accordance with the LIBOR Rate selected below), fixed by
the British Bankers Association for United States dollar deposits in the London
interbank market at approximately 11:00 a.m. London, England time (or as
soon thereafter as practicable) as determined by the Bank from any broker,
quoting service or commonly available source utilized by the Bank by (ii) a
percentage equal to 100% minus the stated maximum rate of all reserves required
to be maintained against “Eurocurrency Liabilities” as specified in Regulation
D (or against any other category of liabilities which includes deposits by
reference to which the interest rate on LIBOR Rate loans is determined or any
category of extensions of credit or other assets which includes loans by a
non-United States’ office of a bank to United States residents) on such date to
any member bank of the Federal Reserve System. 
Notwithstanding any provision above, the practice of rounding to
determine LIBOR may be discontinued at any time in the Bank’s sole discretion.

h.     “LIBOR Rate” shall mean (a) the
greater of 5.0 percentage point(s) above
x one-month  o
two-month  o
three-month  

o six-month LIBOR with an Interest Period of
equal duration through September 29, 2009 and, thereafter,
the greater of 6.0 percentage
point(s) above x one-month  o
two-month  o
three-month  o
six-month LIBOR with an Interest Period of equal duration from September 30,
2009 through  the Maturity Date,
or (b)  5.5%
(the “Interest Rate Floor”).  (Check only
ONE box.  If no clear selection is made,
one-month LIBOR shall apply.)

i.      “London Business Day” shall mean
any day on which dealings in United States dollar deposits are carried on by
banking institutions in the London interbank market.

j.      “Maturity
Date” shall mean March 16, 2010.

k.    “New York
Business Day” shall mean any day other than Saturday, Sunday or
other day on which commercial banking institutions in New York, New York are
authorized or required by law or other governmental action to remain closed for
business.

l.      “Payment
Due Date”, when applicable,
shall mean the same day of the calendar month as the date of this Note (or if
there is no numerically corresponding day in a month, on the last day of such
month); provided, however, if that day is not a New York Business Day, the
Payment Due Day shall be extended to the next succeeding New York Business Day
unless such next succeeding New York Business Day would fall in the next
calendar month, in which case such Payment Due Date shall  be the immediately preceding New York
Business Day.

m.    “Principal Amount”
shall mean Ten Million and 00/100
Dollars ($10,000,000.00).

 

2.     PAYMENT
OF PRINCIPAL, INTEREST AND EXPENSES.

 

a.     Promise to Pay.  For value received, and intending to be
legally bound, Borrower promises to pay to the order of the Bank on the dates
set forth below, the Principal Amount, plus interest as set forth below and all
fees and costs (including without limitation the Bank’s attorneys’ fees and
disbursements, whether for internal or outside counsel) the Bank incurs in
order to collect any amount due under this Note, to negotiate or document a
workout or restructuring, or to preserve its rights or realize upon any
guaranty or other security for the payment of this Note (“Expenses”).

 

1

 

b.     Initial Applicable Rate.  The initial Applicable Rate shall be the
LIBOR Rate in effect on the date that is two (2) London Business Days
before the date of this Note.  The
initial Interest Period shall start on the date of this Note.

 

c.     Interest.  Interest shall accrue each day on the
outstanding Principal Amount calculated on the basis of a 360-day year for the
actual number of days of each year (365 or 366) as follows:

 

i.      If the LIBOR Rate is the
Applicable Rate, interest
shall accrue on the Principal Amount from and including the first day of each
Interest Period until, but not including, the last day of such Interest Period
or the day the Principal Amount is paid in full (if sooner), at a rate per
annum equal to the LIBOR Rate, as determined using LIBOR in effect on the
applicable Adjustment Date.

 

ii.     If the Base Rate is the
Applicable  Rate, interest shall accrue on the Principal
Amount from and including the first date the Base Rate is the Applicable Rate
to, but not including, the day such Principal Amount is paid in full or the
Applicable Rate is converted to the LIBOR Rate, at the rate per annum equal to
the Base Rate.  Any change in the Base
Rate resulting from a change in the Prime Rate shall be effective on the date
of such change.

 

d.     Payment Schedule.  [Complete
and insert only ONE of the following alternatives, as approved by M&T Bank
for this credit facility:

 

x   Borrower shall pay the entire
outstanding Principal Amount on the Maturity Date.  In addition, until the outstanding Principal
Amount is paid in full, Borrower shall pay all accrued and unpaid interest, in
amounts that may vary, monthly, or as otherwise invoiced by the Bank.

 

OR

 

o    Borrower
shall pay the outstanding Principal Amount in                               
consecutive monthly, bi-monthly, quarterly, semi-annual or annual installments
(depending on the duration of the Interest Period selected above) as
follows:  starting on the last day of the
Interest Period that commences on the date of this Note and on the last day of
each Interest Period thereafter; consisting of                               
equal installments of principal each in the amount of $                              
and ONE (1) FINAL INSTALLMENT on the Maturity Date in an amount equal to
the outstanding Principal Amount at that time, together with all other amounts
outstanding hereunder including, without limitation, accrued interest, costs
and Expense (the “Final Installment”); provided, however, if the Applicable
Rate is converted to the Base Rate, Borrower shall pay the outstanding
Principal Amount in consecutive monthly installments commencing on the first
Payment Due Date after the date of such conversion and on the same Payment Due
Date thereafter until (a) conversion back to the LIBOR Rate (at which time
Borrower shall resume the monthly, bi-monthly, quarterly, semi-annual or annual
installments in the amount set forth above or as otherwise agreed to by the
Bank and Borrower in writing) or (b) the Maturity Date (at which time
Borrower shall pay the Final Installment), with each such installment being
equal and in the amount necessary to fully amortize the outstanding Principal
Amount of the Note in full by the Maturity Date or such other date agreed to by
the Bank and Borrower in writing.  The
determination by the Bank of the foregoing amount shall, in the absence of
manifest error, be conclusive and binding upon Borrower.  In addition, until the outstanding Principal
Amount is paid in full, Borrower shall pay all accrued and unpaid interest, in
amounts that may vary, monthly, or as otherwise invoiced by the Bank.]

 

e.     Maximum Legal Rate.  It is the intent of the Bank and Borrower that
in no event shall interest be payable at a rate in excess of the maximum rate
permitted by applicable law (the “Maximum Legal Rate”).  Solely to the extent necessary to prevent
interest under this Note from exceeding the Maximum Legal Rate, any amount that
would be treated as excessive under a final judicial interpretation of
applicable law shall be deemed to have been a mistake and automatically
canceled, and, if received by the Bank, shall be refunded to Borrower.

 

f.      Default Rate.  If an Event of Default (defined below)
occurs, the interest rate on the unpaid Principal Amount shall immediately be
automatically increased to five (5) percentage points per year above the
higher of the LIBOR Rate or the Base Rate (“Default Rate”), and any judgment
entered hereon or otherwise in connection with any suit to collect amounts due
hereunder shall bear interest at such Default Rate.

 

g.     Payments; Late Charge.  Payments shall be made in immediately
available United States funds at any banking office of the Bank.  Interest will continue to accrue until payment
is actually received.  If payment is not
received within five days of its due date, Borrower shall pay a late charge
equal to the greatest of (a) 5% of the delinquent amount, (b) the
Bank’s then-current late charge as announced from time to time, or (c) $50.00;
provided, however, that if this Note is secured by a one to six-family
owner-occupied residence, the late charge shall equal 2% of the delinquent
amount and shall be payable if payment is not received within fifteen days of
its due date.  Payments may be applied in
any order in the sole discretion of the Bank but, prior to default, shall be
applied first to past due interest, Expenses, late charges and principal, then
to current interest, Expenses, late charges and principal, and last to
remaining principal.

 

h.     Prepayment; Breakage Fee.

 

i.      Subject to the following, during the term of this
Note, Borrower shall have the option of paying the Principal Amount to the Bank
in advance of the Maturity Date, in whole or in part, at any time and from time
to time upon written notice received by the Bank at least thirty (30) days
prior to making such payment; provided, however, that if (i) except pursuant to a refinance of the Principal Amount with the Bank, Borrower
prepays, in whole or in part, any Principal Amount, when the Applicable Rate is
the LIBOR Rate, on any day other than the last day of an Interest Period,  or (ii) the Applicable Rate is converted
from the LIBOR Rate to the Base Rate before the end of an Interest Period in
accordance with the terms of  Section 3
of this Note, then Borrower shall be liable for and shall pay the Bank, on
demand, the higher of $250.00 or the actual amount of the liabilities,
expenses, reasonable costs or funding losses that
are a direct or indirect result of such prepayment or other condition described
above, whether such liability, expense, cost or loss is by reason of (a) any
reduction in yield, by reason of the liquidation or reemployment of any deposit
or other funds acquired by the Bank, (b) the fixing of the interest rate 

 

2

 

payable on any LIBOR Rate loan or (c) otherwise (collectively, the
“Breakage Fee”).  The determination by
the Bank of the foregoing amount shall, in the absence of manifest error, be
conclusive and binding upon Borrower.

 

ii.     Upon making any prepayment of
the Principal Amount in full, Borrower shall pay to the Bank all interest and
Expenses owing pursuant to the Note and remaining unpaid.  Each partial prepayment of the Principal
Amount shall be applied in inverse order of maturity to the principal included
in the installment payments provided for herein.

 

iii.    In the event the Maturity Date
is accelerated following an Event of Default, any tender of payment of the
amount necessary to satisfy the entire indebtedness made after such Event of
Default shall be expressly deemed a voluntary prepayment.  In such a case, to the extent permitted by
law, the Bank shall be entitled to the amount necessary to satisfy the entire
indebtedness, plus the appropriate prepayment premium calculated in accordance
with the terms of this Note.

 

3.     CONTINUATIONS
AND CONVERSIONS.

 

a.     Expiration of Interest
Period.  Subject to Section 3(b),
upon the expiration of the first Interest Period and each Interest Period
thereafter, on the applicable Continuation Date, the LIBOR Rate will be
automatically continued with an Interest Period of the same duration as the
Interest Period duration initially selected above.

 

b.     Conversion Upon Default.  Unless the Bank shall otherwise consent in
writing, if (i) Borrower fails to pay when due, in whole or in part, the
indebtedness under the Note (whether upon maturity, acceleration or otherwise),
or (ii) there exists a condition or event which with the passage of time,
the giving of notice or both shall constitute an Event of Default, the Bank, in
its sole discretion, may (i) permit the LIBOR Rate to remain in effect
until the last day of the applicable Interest Period, at which time the
Applicable Rate shall automatically be converted to the Base Rate, or (ii) convert
the LIBOR Rate to the Base Rate at or before the end of the applicable Interest
Period.  Nothing herein shall be
construed to be a waiver by the Bank of the right to have the Principal Amount
accrue interest at the Default Rate or the right of the Bank to charge and
collect a Breakage Fee.

 

4.     REPRESENTATIONS,
WARRANTIES AND COVENANTS.  Borrower
represents and warrants to and agrees and covenants with the Bank that now and
until this Note is paid in full:

 

a.     Business Purpose.  The Loan proceeds shall be used only for a
business purpose and not for any personal, family or household purpose, unless
the following box is checked: o
Personal Loan.

 

b.     Good Standing; Authority.  Borrower is an entity or sole proprietor (i) duly
organized and existing and in good standing under the laws of the jurisdiction
in which it was formed, (ii) duly qualified, in good standing and
authorized to do business in every jurisdiction in which failure to be so
qualified might have a material adverse effect on its business or assets and (iii) has
the power and authority to own each of its assets and to use them as
contemplated now or in the future.

 

c.     Legality.  The execution, issuance, delivery to the Bank
and performance by Borrower of this Note (i) are in furtherance of
Borrower’s purposes and within its power and authority; (ii) do not (A) violate
any statute, regulation or other law or any judgment, order or award of any
court, agency or other governmental authority or of any arbitrator or (B) violate
Borrower’s certificate of incorporation or other governing instrument,
constitute a default under any agreement binding on Borrower, or result in a
lien or encumbrance on any assets of Borrower; and (iii) have been duly
authorized by all necessary corporate or partnership action.

 

d.     Compliance.  The Borrower conducts its business and
operations and the ownership of its assets in compliance with each applicable
statute, regulation and other law, including without limitation environmental
laws.  All approvals, including without
limitation authorizations, permits, consents, franchises, licenses,
registrations, filings, declarations, reports and notices (the “Approvals”)
necessary to the conduct of Borrower’s business and for Borrower’s due issuance
of this Note have been duly obtained and are in full force and effect.  The Borrower is in compliance with all
conditions of each Approval.

 

e.     Financial and Other
Information.  For each year until
this Note is paid in full, Borrower shall provide to the Bank in form and
number of copies and by accountants satisfactory to the Bank, within ninety
(90) days after the end of each fiscal year of the Borrower, statements of
income and cash flows and the financial position and balance sheet of the
Borrower as of the fiscal year end, each in reasonable detail and certified by
an officer or member of Borrower to have been prepared in accordance with
generally accepted accounting principles to present fairly the results of
Borrower’s operations and cash flows and its financial position in conformity
with such principles, and to be correct, complete and in accordance with
Borrower’s records.  Promptly upon the
request of the Bank from time to time, Borrower shall supply all additional
information requested and permit the Bank’s officers, employees, accountants,
attorneys and other agents to (i) visit and inspect each of Borrower’s
premises, (ii) examine, audit, copy and extract from Borrower’s records
and (iii) discuss Borrower’s or its affiliates’ business, operations,
assets, affairs or condition (financial or other) with its responsible officers
and independent accountants.

 

f.      Accounting; Tax Returns and
Payment of Claims.  Borrower will
maintain a system of accounting and reserves in accordance with generally
accepted accounting principles, has filed and will file each tax return
required of it and, except as disclosed in an attached schedule, has paid and
will pay when due each tax, assessment, fee, charge, fine and penalty imposed
by any taxing authority upon Borrower or any of its assets, income or
franchises, as well as all amounts owed to mechanics, materialmen, landlords,
suppliers and the like in the ordinary course of business.

 

g.     Title to Assets; Insurance.  Borrower has good and marketable title to
each of its assets free of security interests and mortgages and other liens
except as disclosed in its financial statements or on a schedule attached to
this Note or pursuant to the Bank’s prior written consent.  Borrower will maintain its property in good
repair and will maintain and on request provide the Bank with evidence of
insurance coverage satisfactory to the Bank including without limitation fire
and hazard, liability, worker’s compensation and business interruption insurance
and flood hazard insurance as required.

 

h.     Judgments and Litigation.  There is no pending or threatened claim,
audit, investigation, action or other legal proceeding or judgment, order or
award of any court, agency or other governmental authority or arbitrator which
involves Borrower or its assets and might have a material adverse effect upon
Borrower or threaten the validity of this Note or any transaction
document (each an “Action”). 
Borrower will immediately notify the Bank in writing upon acquiring
knowledge of any such Action.

 

3

 

i.      Notice of Change of Address
and of Default.  Borrower will
immediately notify the Bank in writing (i) of any change in its address or
of the location of any collateral securing this Note, (ii) of the
occurrence of any Event of Default defined below, (iii) of any material
change in Borrower’s ownership or management and (iv) of any material
adverse change in Borrower’s ability to repay this Note.

 

j.      No Transfer of Assets.  Until this Note is paid in full, Borrower
shall not without the prior written consent of the Bank (i) sell or
otherwise dispose of substantially all of its assets, (ii) acquire
substantially all of the assets of another entity, (iii) if it is a
corporation, participate in any merger, consolidation or other absorption or (iv) agree
to do any of these things.

 

5.     EVENTS
OF DEFAULT; REMEDIES.

 

a.     Events of Default.  The following constitute an event of default
(“Event of Default”): (i) failure by Borrower to make any payment when due
(whether at the stated maturity, by acceleration or otherwise) of any principal installments of the amounts due under this
Note, or any part thereof, or to pay any interest
thereon or any fee or other amount payable under this Note and such failure
continues unremedied for a period of three (3) business days or
there occurs any event or condition which after notice, lapse of time or both
will permit such acceleration; (ii) Borrower defaults in the performance
of any covenant or other provision with respect to this Note or any other
agreement between Borrower and the Bank or any of its affiliates or
subsidiaries (collectively, “Affiliate”); (iii) Borrower fails to pay when
due (whether at the stated maturity, by acceleration or otherwise) any material indebtedness for borrowed money owing to the Bank
(other than under this Note),  any third
party or Affiliate or the occurrence of any event which results
in acceleration of payment of any such indebtedness or the failure to perform
any agreement with any third party or Affiliate; (iv) the reorganization,
merger, consolidation or dissolution of Borrower (or the making of any
agreement therefor); the sale, assignment, transfer or delivery of all or
substantially all of the assets of Borrower to a third party; or the cessation
by Borrower as a going business concern; (v) the death or judicial
declaration of incompetency of Borrower, if an individual; (vi) failure to
pay, withhold or collect any tax as required by law; the service
or filing against Borrower or any of its assets of any lien (other than a lien
permitted in writing by the Bank), on or more judgments, garnishments, orders
or awards in an aggregate amount of $500,000.00 over and above any insurance
coverage which has been determined by the insurance carrier to be applicable to
the claim underlying the judgment, garnishment, order or award, and any such
judgments, garnishments, orders or awards remain unbonded, unstayed or
undismissed for a period of thirty (30) consecutive days; (vii) if
Borrower becomes insolvent or is generally not paying its debts as such debts
become due; (viii) the making of any general assignment by Borrower for
the benefit of creditors; the appointment of a receiver or similar trustee for
Borrower or its assets; or the making of any, or sending notice of any
intended, bulk sale; (ix) Borrower commences, or has commenced against it,
any proceeding or request for relief under any bankruptcy, insolvency or
similar laws now or hereafter in effect in the United States of America or any
state or territory thereof or any foreign jurisdiction or any formal or
informal proceeding for the dissolution or liquidation of, settlement of claims
against or winding up of affairs of Borrower which is not
dismissed or stayed within sixty (60) days of commencement; (x) any
representation or warranty made in this Note, any related document, any
agreement between Borrower and the Bank or any Affiliate or in any financial
statement of Borrower proves to have been misleading in any material respect
when made; Borrower omits to state a material fact necessary to make the
statements made in this Note, any related document, any agreement between
Borrower and the Bank or any Affiliate or any financial statement of Borrower
not misleading in light of the circumstances in which they were made; or, if
upon the date of execution of this Note, there shall have been any material
adverse change in any of the facts disclosed in any financial statement,
representation or warranty that was not disclosed in writing to the Bank at or
prior to the time of execution hereof; (xi) any pension plan of Borrower fails
to comply with applicable law or has vested unfunded liabilities that, in the
opinion of the Bank, might have a material adverse effect on Borrower’s ability
to repay its debts; (xii) an adverse change in the Borrower, its business,
assets, operations, management, ownership, affairs or condition (financial or
otherwise) from the status shown on any financial statement or other document
submitted to the Bank or any Affiliate, and which change the Bank reasonably determines will have a material adverse effect on
(a) the Borrower, its business, assets, operations or condition (financial
or otherwise), or (b) the ability of the Borrower to pay or perform any
obligation to the Bank; and (xiii) the
occurrence of any event described in sub-paragraph (i) through and
including (xii) hereof with respect to any guarantor or any other party liable
for, or whose assets or any interest therein secures, payment of any of the
amounts due under this Note (“Guarantor”).

 

b.     Rights and Remedies Upon
Default.  Upon the occurrence of any
Event of Default, the Bank without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law) to or upon the Borrower or any other person (all and each of
which demands, presentments, protests, advertisements and notices are hereby
waived), may exercise all rights and remedies under the Borrower’s agreements
with the Bank or its Affiliates, applicable law, in equity or otherwise and may
declare all or any part of any amounts due hereunder not payable on demand to
be immediately due and payable without demand or notice of any kind and
terminate any obligation it may have to grant any additional loan, credit or
other financial accommodation to the Borrower. 
All or any part of any amounts due hereunder whether or not payable on
demand, shall be immediately due and payable automatically upon the occurrence
of an Event of Default in sub-paragraph (ix) above, or at the Bank’s
option, upon the occurrence of any other Event of Default.  The provisions hereof are not intended in any
way to affect any rights of the Bank with respect to any amounts due hereunder
which may now or hereafter be payable on demand.

 

6.     SETOFF.  The Bank shall have the right to set off
against the amounts owing under this Note any property held in a deposit or
other account with the Bank or any Affiliate or otherwise owing by the Bank or
any Affiliate in any capacity to Borrower or any Guarantor or endorser of this
Note.  Such set-off shall be deemed to
have been exercised immediately at the time the Bank or such Affiliate elects
to do so.

 

7.     INABILITY
TO DETERMINE LIBOR RATES, INCREASED COSTS, ILLEGALITY.

 

a.     Increased Costs.  If the Bank shall determine that, due to
either (a) the introduction of any change (other than any change by way of
imposition of or increase in reserve requirements included in the calculation
of the LIBOR) in or in the interpretation of any requirement of law or (b) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to the Bank of agreeing to make or making, funding or
maintaining any loans based on LIBOR, then Borrower shall be liable for, and
shall from time to time, upon demand therefor by the Bank, pay to the Bank such
additional amounts as are sufficient to compensate the Bank for such increased
costs.

 

b.     Inability to Determine Rates.  If the Bank shall determine that for any
reason adequate and reasonable means do not exist for ascertaining LIBOR for
the Interest Period specified above, the Bank will give notice of such
determination to Borrower.  Thereafter,
the Bank may not maintain the loan hereunder at the LIBOR Rate until the Bank
revokes such notice in writing and, until such revocation, the Bank may convert
the Applicable Rate from the LIBOR Rate to the Base Rate.

 

4

 

c.     Illegality.  If the Bank shall determine that the
introduction of any law (statutory or common), treaty, rule, regulation,
guideline or determination of an arbitrator or of a governmental authority or
in the interpretation or administration thereof, has made it unlawful, or that
any central bank or other governmental authority has asserted that it is
unlawful for the Bank to make loans at based on LIBOR then, on notice thereof
by the Bank to Borrower, the Bank may suspend the maintaining of the loan
hereunder at the LIBOR Rate until the Bank shall have notified Borrower that
the circumstances giving rise to such determination shall no longer exist.  If the Bank shall determine that it is unlawful
to maintain the loan hereunder based on LIBOR, the Bank may convert the
Applicable Rate from the LIBOR Rate to the Base Rate.

 

8.     MISCELLANEOUS.  This Note, together with any related loan and
security agreements and guaranties, contains the entire agreement between the
Bank and Borrower with respect to the Note, and supersedes every course of
dealing, other conduct, oral agreement and representation previously made by
the Bank.  All rights and remedies of the
Bank under applicable law and this Note or amendment of any provision of this
Note are cumulative and not exclusive. 
No single, partial or delayed exercise by the Bank of any right or
remedy shall preclude the subsequent exercise by the Bank at any time of any
right or remedy of the Bank without notice. 
No waiver or amendment of any provision of this Note shall be effective
unless made specifically in writing by the Bank.  No course of dealing or other conduct, no
oral agreement or representation made by the Bank, and no usage of trade, shall
operate as a waiver of any right or remedy of the Bank.  No waiver of any right or remedy of the Bank
shall be effective unless made specifically in writing by the Bank.  Borrower agrees that in any legal proceeding,
a copy of this Note kept in the Bank’s course of business may be admitted into
evidence as an original.  This Note is a
binding obligation enforceable against Borrower and its successors and assigns
and shall inure to the benefit of the Bank and its successors and assigns.  If a court deems any provision of this Note
invalid, the remainder of the Note shall remain in effect.  Section headings are for convenience
only.  Borrower hereby waives protest,
presentment and notice of any kind in connection with this Note. Singular
number includes plural and neuter gender includes masculine and feminine as
appropriate.

 

9.     NOTICES.  Any demand or notice hereunder or under any
applicable law pertaining hereto shall be in writing and duly given if
delivered to Borrower (at its address on the Bank’s records) or to the Bank (at
the address on page one and separately to the Bank officer responsible for
Borrower’s relationship with the Bank). 
Such notice or demand shall be deemed sufficiently given for all
purposes when delivered (i) by personal delivery and shall be deemed
effective when delivered, or (ii) by mail or courier and shall be deemed
effective three (3) New York Business Days after deposit in an official
depository maintained by the United States Post Office for the collection of
mail or one (1) New York Business Day after delivery to a nationally
recognized overnight courier service (e.g., Federal
Express).  Notice by e-mail is not valid
notice under this or any other agreement between Borrower and the Bank.

 

10.  JOINT
AND SEVERAL.  If there is more than
one Borrower, each of them shall be jointly and severally liable for all
amounts which become due under this Note and the term “Borrower” shall include
each as well as all of them.

 

11.  GOVERNING
LAW; JURISDICTION.  This Note has
been delivered to and accepted by the Bank and will be deemed to be made in the
State of New York.  This Note will be
interpreted in accordance with the laws of the State of New York excluding its
conflict of laws rules.  BORROWER HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF
ANY STATE OR FEDERAL COURT IN THE STATE OF NEW YORK IN A COUNTY OR JUDICIAL
DISTRICT WHERE THE BANK MAINTAINS A BRANCH, AND CONSENTS THAT THE BANK MAY EFFECT
ANY SERVICE OF PROCESS IN THE MANNER AND AT BORROWER’S ADDRESS SET FORTH ABOVE
FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT NOTHING CONTAINED IN THIS NOTE
WILL PREVENT THE BANK FROM BRINGING ANY ACTION, ENFORCING ANY AWARD OR JUDGMENT
OR EXERCISING ANY RIGHTS AGAINST BORROWER INDIVIDUALLY, AGAINST ANY SECURITY OR
AGAINST ANY PROPERTY OF BORROWER WITHIN ANY OTHER COUNTY, STATE OR OTHER
FOREIGN OR DOMESTIC JURISDICTION.  Borrower acknowledges and agrees that the
venue provided above is the most convenient forum for both the Bank and
Borrower.  Borrower waives any objection
to venue and any objection based on a more convenient forum in any action
instituted under this Note.

 

12.  WAIVER
OF JURY TRIAL.  BORROWER AND THE BANK
HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY
JURY BORROWER AND THE BANK MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR
IN EQUITY, IN CONNECTION WITH THIS NOTE OR THE TRANSACTIONS RELATED
HERETO.  BORROWER REPRESENTS AND WARRANTS
THAT NO REPRESENTATIVE OR AGENT OF THE BANK HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE BANK WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THIS JURY TRIAL WAIVER.  BORROWER
ACKNOWLEDGES THAT THE BANK HAS BEEN INDUCED TO ENTER INTO THIS NOTE BY, AMONG
OTHER THINGS, THE PROVISIONS OF THIS SECTION.

 

o    Amended and Restated Note.  The Borrower acknowledges, agrees and
understands that this Note is given in replacement of and in substitution for,
but not in payment of, a prior note dated on or about                      ,
        , in the original principal
amount of $                     ,
given by Borrower in favor of the Bank (or its predecessor-in-interest), as the
same may have been amended or modified from time to time (“Prior Note”), and
further, that: (a) the obligations of the Borrower as evidenced by the
Prior Note shall continue in full force and effect, as amended and restated by
this Note, all of such obligations being hereby ratified and confirmed by the
Borrower; (b) any and all liens, pledges, assignments and security
interests securing the Borrower’s obligations under the Prior Note shall
continue in full force and effect, are hereby ratified and confirmed by the
Borrower, and are hereby acknowledged by the Borrower to secure, among other
things, all of the Borrower’s obligations to the Bank under this Note, with the
same priority, operation and effect as that relating to the obligations under
the Prior Note; and (c) nothing herein contained shall be construed to
extinguish, release, or discharge, or constitute, create, or effect a novation
of, or an agreement to extinguish, the obligations of the Borrower with respect
to the indebtedness originally described in the Prior Note or any of the liens,
pledges, assignments and security interests securing such obligations.

 

Preauthorized Transfers from Deposit Account.  If a deposit account number is provided in
the following blank Borrower hereby authorizes the Bank to debit Borrower’s
deposit account #                                                                        
with the Bank automatically for any amount which becomes due under this Note.

 

5

 

Acknowledgment.  Borrower acknowledges that it has read and
understands all the provisions of this Note, including the Governing
Law, Jurisdiction and Waiver of Jury Trial,
and has been advised by counsel as necessary or appropriate.

 

	
   

  	
  HARDINGE INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ 

  	
  EDWARD J. GAIO

  
	
   

  	
  Name: 

  	
  Edward J. Gaio

  
	
   

  	
  Title:

  	
  Vice President and CFO

  

 

	
  /S/ SUSAN A. BURTIS

  	
   

  
	
  Signature of Witness

  	
   

  

 

	
  Susan A. Burtis

  	
   

  
	
  Typed Name of Witness

  	
   

  

 

 

ACKNOWLEDGMENT

 

STATE OF NEW YORK           )

:SS.

COUNTY OF CHEMUNG        )

 

On 16th  day of
March, in the year 2009, before me, the undersigned, a Notary Public in and for
said State, personally appeared EDWARD J. GAIO,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument,
the individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.

 

 

	
   

  	
  /S/ NANCY L. CURREN

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
   

  	
  Nancy L. Curren

  

 

 

FOR BANK USE ONLY

 

	
  Authorization Confirmed:

  	
   

  

Product Code: 22660

Disbursement of Funds:

 

	
  Credit A/C

  	
  #

  	
   

  	
   

  	
  Off Ck

  	
  #

  	
   

  	
   

  	
  Payoff Obligation

  	
  #

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  $

  	
   

  

 

6EXHIBIT 10.3

 

 

GENERAL SECURITY AGREEMENT

New York

 

Debtor (Name):  Hardinge
Inc.

(Organizational Structure):  Corporation

(State Law organized under):  New York

(Organizational Identification
Number, if any; note that this is NOT a request for the Taxpayer Identification
Number):

(Address of residence/chief executive office):  One Hardinge Drive, Elmira, New York 
14902

 

Bank/Secured Party: 
Manufacturers and Traders Trust Company, a New
York banking corporation with its banking offices at One M&T Plaza,
Buffalo, New York 14203 Attention: Office of General Counsel.

 

For good and valuable
consideration, the receipt and sufficiency of which is acknowledged, and
intending to be legally bound, Debtor agrees with Secured Party as follows:

 

1.                        Security
Interests.

 

1.1                  Grant.  As security for the prompt and complete
payment and performance when due of all of the Obligations, Debtor does hereby
grant to Secured Party a continuing security interest (“Security Interest”) in
all personal property and fixtures of Debtor, wherever located, whether now
existing or owned or hereafter arising or acquired, whether or not subject to
the Uniform Commercial Code, as the same may be in effect in the State of New
York, as amended from time to time (“UCC”), and whether or not affixed to any
realty, including, without limitation, (i) all accounts, chattel paper,
investment property, deposit accounts, documents, goods, equipment, farm
products, general intangibles (including trademarks, service marks, trade
names, patents, copyrights, licenses and franchises), instruments, inventory,
money, letter of credit rights, causes of action (including tort claims) and
other personal property (including agreements and instruments not constituting
chattel paper or a document, general intangible or instrument); (ii) all
additions to, accessions to, substitutions for, replacements of and supporting
obligations of the foregoing; (iii) all proceeds and products of the
foregoing, including, without limitation, insurance proceeds; and (iv) all
business records and information relating to any of the foregoing and any
software or other programs for accessing and manipulating such information
(collectively, the “Collateral”).  Debtor
acknowledges and agrees that the foregoing collateral description is intended
to cover all assets of Debtor, other than real property
assets.  Nothing
herein shall be construed to be a grant of a security interest in more than
two-thirds of Debtor’s equity interests in any foreign subsidiary.

 

1.2                  Obligations.  The term “Obligations” means any and all
indebtedness or other obligations of Debtor to Secured Party in any capacity,
now existing or hereafter incurred, however created or evidenced, regardless of
kind, class or form, whether direct, indirect, absolute or contingent
(including obligations pursuant to any guaranty, endorsement, other assurance
of payment or otherwise), whether joint or several, whether from time to time
reduced and thereafter increased, or entirely extinguished and thereafter
reincurred, together with all extensions, renewals and replacements thereof,
and all interest, fees, charges, costs or expenses which accrue on or in
connection with the foregoing, including, without limitation, any indebtedness
or obligations (i) not yet outstanding but contracted for, or with regard
to which any other commitment by Secured Party exists; (ii) arising prior
to, during or after any pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of 
whether allowed or allowable in such proceeding; (iii) owed by
Debtor to others and which Secured Party obtained, or may obtain, by assignment
or otherwise; or (iv) payable under this Agreement.

 

2.                        Covenants.  Debtor covenants and agrees as follows:

 

2.1                  Perfection of Security Interest.  Debtor shall execute and deliver to Secured
Party such financing statements, control agreements or other documents, in form
and content satisfactory to Secured Party, as Secured Party may from time to
time request to perfect and continue the Security Interest.  Upon the request of Secured Party, Debtor
shall deliver to Secured Party any and all instruments, chattel paper,
negotiable documents or other documents evidencing or constituting any part of
the Collateral properly endorsed or assigned, in a manner satisfactory to
Secured Party.  Until such delivery,
Debtor shall hold such portion of the Collateral in trust for Secured
Party.  Debtor shall pay all expenses for
the preparation, filing, searches and related costs in connection with the
grant and perfection of the Security Interest. 
Debtor authorizes (both prospectively and retroactively) Secured Party
to file financing statements, and any continuations and amendments thereof,
with respect to the Collateral without Debtor’s signature.  A photocopy or other reproduction of any
financing statement or this Agreement shall be sufficient as a financing
statement for filing in any jurisdiction.

 

2.2                  Negative Pledge; Disposition of
Collateral.  Debtor shall not grant
or allow the imposition of any lien, security interest or encumbrance on, or
assignment of, the Collateral unless consented to in writing by Secured
Party.  Debtor shall not make or permit
to be made any sale, transfer or other disposition of the Collateral; provided,
however, prior to the occurrence of an Event of Default, Debtor may in the
ordinary course of business consistent with its past practices and with prudent
and standard practices used in the industry that is the same or similar to that
in which Debtor is engaged: (i) dispose of any Collateral consisting of
equipment that is obsolete or worn-out; (ii) sell or exchange any
Collateral consisting of equipment in connection with the acquisition of other
equipment that is at least as valuable as such equipment, that Debtor intends
to use for substantially the same purposes as such equipment and that is not
subject to any security interest or other lien or encumbrance; (iii) collect
Collateral consisting of accounts or assign such Collateral for purposes of
collection; or  (iv) sell or lease
Collateral consisting of inventory.  A
sale, lease or other transfer of such Collateral consisting of 

 

1

 

inventory in the ordinary course of Debtor’s business does not include
a transfer in partial or complete satisfaction of any liability or obligation
or any bulk sale.

 

2.3                  Condition of Collateral;
Impermissible Use.  Debtor shall keep
the Collateral consisting of goods in good condition and shall not commit or
permit damage or destruction (other than ordinary wear and tear) to such
Collateral.  Debtor shall not permit any
Collateral consisting of goods (i) to be used in such a manner that would
violate any insurance policy or warranty covering the Collateral or that would
violate any applicable law of any governmental authority (including any
environmental law) now or hereafter in effect; (ii) to become fixtures on
any real property on which Secured Party does not have a first priority
mortgage lien (unless Secured Party has been provided with an acceptable landlord/mortgagee
waiver) or become an accession to any goods not included in the Collateral; or (iii) to
be placed in any warehouse that may issue a negotiable document with regard to
such Collateral.

 

2.4                  Modification to Collateral.
Debtor shall not, without Secured Party’s prior written consent, grant any
extension on, compound, settle for less than the full amount of, release (in
whole or in part), modify, cancel, or allow for any substitution, credit or
adjustment on Collateral consisting of accounts, chattel paper, general
intangibles, instruments, documents or investment property, except that in the
absence of an Event of Default, Debtor may grant to account debtors, or other
persons obligated with respect to the Collateral, extensions, credits, discounts,
compromises or settlements in the ordinary course of business consistent with
its past practices and consistent with prudent and standard practices used in
the industries that are the same or similar to those in which Debtor is
engaged.

 

2.5                  Titled Goods.  Debtor shall cause all goods included in the
Collateral to be properly titled and registered to the extent required by
applicable law.  Upon the request of
Secured Party, Debtor shall cause the interest of Secured Party to be properly
indicated on any certificate of title relating to such goods and deliver to
Secured Party each such certificate, and any additional evidence of ownership,
certificates of origin or other documents evidencing any interest in such
goods.

 

2.6                  Insurance.  Debtor shall, at its own expense and at all
times, maintain effective insurance policies covering damage to persons and
against fire, flood, theft and all other risks to which the Collateral may be
subject, all in such amounts, with such deductibles and issued by such insurance
company as shall be satisfactory to Secured Party.  Such insurance policies shall have all
endorsements that Secured Party may require and shall further (i) name
Secured Party, exclusively, as the additional insured on the casualty insurance
and the lender’s loss payee and/or mortgagee on the hazard insurance; (ii) provide
that Secured Party shall receive a minimum of thirty (30) days prior written
notice of any amendment or cancellation; and (iii) insure Secured Party
notwithstanding any act or neglect of Debtor or other owner of the property
described in such insurance.  If Debtor
fails to obtain the required insurance as provided herein, Secured Party may,
but is not obligated, to obtain such insurance as Secured Party may deem
appropriate, including, without limitation, if Secured Party so chooses, “single
interest insurance” which will cover only Secured Party’s interest in the
Collateral.  Debtor shall pay or
reimburse to Secured Party the cost of such insurance.  Secured Party shall have the option, in its
sole discretion, to hold insurance proceeds as part of the Collateral, apply
any insurance proceeds toward the Obligations or allow the Debtor to apply the
insurance proceeds towards repair or replacement of the item of Collateral in
respect of which such proceeds were received. 
Upon the request of Secured Party, Debtor shall from time to time
deliver to Secured Party such insurance policies, or other evidence of such
policies satisfactory to Secured Party, and such other related information Secured
Party may request.

 

2.7                  Collateral Information.  Debtor shall provide all information, in form
and substance satisfactory to Secured Party, that Secured Party shall from time
to time request to (i) identify the nature, extent, value, age and location
of any of the Collateral, or (ii) identify any account debtor or other
party obligated with respect to any chattel paper, general intangible,
instrument, investment property, document or deposit account included in the
Collateral.

 

2.8                  Financial Information.  Debtor shall furnish to Secured Party
financial statements in such form (e.g., audited,
reviewed, compiled) and at such intervals as Secured Party shall request from
time to time plus any additional financial information that Secured Party may
request.  All such financial statements
shall be in conformity with generally accepted accounting principles
consistently applied.

 

2.9                  Taxes; Licenses; Compliance with
Laws.  Before the end of any
applicable grace period, Debtor shall pay each tax, assessment, fee and charge
imposed by any governmental authority upon the Collateral, the ownership,
disposition or use of any of the Collateral, this Agreement or any instrument
evidencing any of the Obligations. 
Debtor shall maintain in full force and effect each license, franchise
or other authorization needed for any ownership, disposition or use of the
Collateral and the conduct of its business, operations or affairs.  Debtor shall comply with all applicable law
of any governmental authority (including any environmental law), now or
hereafter in effect, applicable to the ownership, disposition or use of the
Collateral or the conduct of its business, operations or affairs.

 

2.10            Records; Legend.  Debtor shall maintain accurate and complete
books and records relating to the Collateral in conformity with generally
accepted accounting principles consistently applied.  At Secured Party’s request, Debtor will
legend, in form and manner satisfactory to Secured Party, its books and records
to indicate the Security Interest.

 

2.11            Additional Collateral.  Intentionally Omitted.

 

2.12            Notifications of Change.  Immediately upon acquiring knowledge or
reason to know of any of the following, Debtor shall notify Secured Party of
the occurrence or existence of (i) any Event of Default; (ii) any
event or condition that, after notice, lapse of time or after both notice and
lapse of time, would constitute an Event of Default; (iii) any account or
general intangible that arises out of a contract with any governmental
authority (including the United States); (iv) any event or condition that
has or (so far as can be foreseen) will or might have any material adverse
effect on the Collateral (including a material loss, destruction or theft of,
or of any damage to, the Collateral, material decline in value of the
Collateral or a material default by an account debtor or other party’s
performance of obligations with respect to the Collateral), on Debtor or its
business, operations, affairs or condition (financial or otherwise).

 

2

 

2.13            Lien Law.  If any account or general intangible included
in the Collateral represents money owing pursuant to any contract for the
improvement of real property or for a public improvement for purposes of the Lien
Law of the State of New York (the “Lien Law”), Debtor shall (i) give
Secured Party notice of such fact; (ii) receive and hold any money
advanced by Secured Party with respect to such account or general intangible as
a trust fund to be first applied to the payment of trust claims as such term
and/or concept is defined in the Lien Law (in Section 71 thereof, or
otherwise); and (iii) until such trust claim is paid, not use or permit
the use of any such money for any purpose other than the payment of such trust
claims.

 

2.14            Protection of Collateral; Further
Assurances.  Debtor shall, at its own
cost, faithfully preserve, defend and protect the Security Interest as a prior
perfected security interest in the Collateral under the UCC and other
applicable law, superior and prior to the rights of all third parties (other
than those permitted pursuant to Section 3.1) and shall defend the
Collateral against all setoffs, claims, counterclaims, demands and
defenses.  At the request of Secured
Party, Debtor shall do, obtain, make, execute and deliver all such additional
and further acts, things, deeds, assurances and instruments as Secured Party
may deem necessary or advisable from time to time in order to attach, continue,
preserve, perfect or protect the Security Interest and Secured Party’s rights
hereunder including obtaining waivers (in form and content acceptable to
Secured Party) from landlords, warehousemen and mortgagees.  Debtor hereby irrevocably appoints Secured
Party, its officers, employees and agents, or any of them, as attorneys-in-fact
for Debtor with full power and authority in the place and stead of Debtor and
in the name of Debtor or its own name from time to time in Secured Party’s
discretion, to perform all acts which Secured Party deems appropriate to
attach, continue, preserve or perfect and continue the Security Interest,
including signing for Debtor (to the extent such signature may be required by
applicable law) UCC-1 financing statements, UCC-3 amendment or other
instruments and documents to accomplish the purposes of this Agreement.  This power of attorney, being coupled with an
interest, is irrevocable and shall not be affected by the subsequent disability
or incompetence of Debtor.

 

3.                        Representations
and Warranties.  Debtor represents,
warrants and agrees as follows:

 

3.1                  Title.  Debtor holds good and marketable title to the
Collateral free and clear from any security interest or other lien or
encumbrance of any party, other than the Security Interest or such liens,
security interests or other liens or encumbrances specifically permitted by
Secured Party and set forth on Exhibit A hereto (“Permitted Liens”).  Debtor has not made any prior sale, pledge,
encumbrance, assignment or other disposition of any of the Collateral except
for the Permitted Liens.

 

3.2                  Authority.  If Debtor is a business entity, it is duly
organized, validly existing and in good standing under the laws of the
above-named state of organization. 
Debtor has the full power and authority to grant the Security Interest
and to execute, deliver and perform its obligations in accordance with this
Agreement.  The execution and delivery of
this Agreement will not (i) violate any applicable law of any governmental
authority or any judgment or order of any court, other governmental authority
or arbitrator; (ii) violate any agreement governing Debtor or to which
Debtor is a party; or (iii) result in a security interest or other lien or
encumbrance on any of Debtor’s assets, except in favor of Secured Party.  Debtor’s certificate of incorporation,
by-laws or other organizational documents do not prohibit any term or condition
of this Agreement.  Each authorization,
approval or consent from, each registration and filing with, each declaration
and notice to, and each other act by or relating to, any party required as a
condition of Debtor’s execution, delivery or performance of this Agreement
(including any shareholder or board of directors or similar approvals) has been
duly obtained and is in full force and effect. 
Debtor has the power and authority to transact the business in which it
is engaged and is duly licensed or qualified and in good standing in each
jurisdiction in which the conduct of its business or ownership of property
requires such licensing or such qualifications.

 

3.3                  Judgments and Litigation.  There is no pending or threatened claim,
audit, investigation, action or other legal proceeding or judgment or order of
any court, agency or other governmental authority or arbitrator which involves
Debtor or the Collateral and which might have a material adverse effect upon
the Collateral, the Debtor, its business, operations, affairs or condition
(financial or otherwise), or threaten the validity of this Agreement or any
related document or action.  Debtor will
immediately notify Secured Party upon acquiring knowledge of the foregoing.

 

3.4                  Enforceability of Collateral.  Instruments, chattel paper, accounts or
documents which constitute any part of the Collateral are genuine and
enforceable in accordance with their terms, comply with the applicable law of
any governmental authority concerning form, content, manner of preparation and
execution, and all persons appearing to be obligated on such Collateral have
authority and capacity to contract and are in fact obligated as they appear to
be on such Collateral.  There are no
restrictions on any assignment or other transfer or grant of the Security
Interest by Debtor.  Each sum represented
by Debtor from time to time as owing on accounts, instruments, deposit
accounts, chattel paper and general intangibles constituting any part of the
Collateral by account debtors and other parties with respect to such Collateral
is the sum actually and unconditionally owing by account debtors and other
parties with respect thereto at such time, except for applicable normal cash
discounts.  None of the Collateral is
subject to any defense, set-off, claim or counterclaim of a material nature
against Debtor except as to which Debtor has notified Secured Party in writing.

 

3.5                  Location of Chief Executive Office,
Records, Collateral.  The locations
of the following are listed on page one of this Agreement or, if different
or additional, on Exhibit A hereto: 
(i) Debtor’s residence, principal place of business and chief
executive office; (ii) the office in which Debtor maintains its books or
records relating to the Collateral; (iii) the facility (including any
storage facility) at which now owned or subsequently acquired inventory,
equipment and fixtures constituting any part of the Collateral shall be kept; and
(iv) the real property on which any crop included in the Collateral is
growing or is to be grown, or on which any timber constituting any part of the
Collateral is or is to be standing. 
Debtor will not effect or permit any change in any of the foregoing
locations (or remove or permit the removal of the records or Collateral
therefrom, except for mobile equipment included in the Collateral which may be
moved to another location for not more than thirty (30) days) without thirty
(30) days prior written notice to Secured Party and all actions deemed
necessary by Secured Party to maintain the Security Interest intended to be
granted hereby at all times fully perfected and in full force and effect have
been taken.  All of the locations listed
on page one or Exhibit A are owned by Debtor, of if not, by the
party(ies) identified on Exhibit A.

 

3

 

3.6                  Structure; Name.  Debtor’s organizational structure, state of
registration and organizational identification number (if any) are stated
accurately on page one of this Agreement, and its full legal name and any
trade name used to identify it are stated accurately on page one of this
Agreement, or if different or additional are listed on Exhibit A hereto.
Debtor will not change its name, or its identity, its organizational structure,
state of registration or organizational identification number without thirty
(30) days prior written notice to Secured Party.  All actions deemed necessary by Secured Party
to maintain the Security Interest intended to be granted hereby at all times
fully perfected and in full force and effect have been taken.

 

4.                        Performance
and Expenditures by Secured Party. 
If Debtor fails to perform or comply with any of the terms hereof,
Secured Party, at its option, but without any obligation so to do, may perform
or comply, or otherwise cause performance or compliance, with such terms
including the payment or discharge of all taxes, fees, security interest or
other liens, encumbrances or claims, at any time levied or placed on the
Collateral.  An election to make
expenditures or to take action or perform an obligation of Debtor under this
Agreement, after Debtor’s failure to perform, shall not affect Secured Party’s
right to declare an Event of Default and to exercise its remedies.  Nor shall the provisions of this Section relieve
Debtor of any of its obligations hereunder with respect to the Collateral or
impose any obligation on Secured Party to proceed in any particular manner with
respect to the Collateral.

 

5.                        Duty
of Secured Party.  Secured Party’s
sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession shall be to deal with it in the same manner as
Secured Party deals with similar property for its own account.  Neither Secured Party nor its directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of the Collateral upon the request of
Debtor or any other person or to take any other action whatsoever with regard
to the Collateral.  The powers conferred
on Secured Party hereunder are solely to protect Secured Party’s interests in
the Collateral and shall not impose any duty upon any Secured Party to exercise
any such powers.  Secured Party shall be
accountable only for amounts that it actually receives as a result of the
exercise of its powers under this Agreement, and neither it nor its officers,
directors, employees or agents shall be responsible to Debtor for any act or
failure to act hereunder, except for its own gross negligence or willful
misconduct.

 

6.                        Certain
Rights and Remedies.

 

6.1                  Inspection; Verification.  Secured Party, and such persons as it may
designate, shall have the right from time to time to (i) audit and inspect
(a) the Collateral, (b) all books and records related thereto (and
make extracts and copies from such records), and (c) the premises upon
which any of the Collateral or books and records may be located; (ii) discuss
Debtor’s business, operations, affairs or condition (financial or otherwise)
with its officers, accountants; and (iii) verify the validity, amount,
quality, quantity, value, condition and status of, or any other matter relating
to the Collateral in any manner and through any medium Secured Party may
consider appropriate (including contacting account debtors or third party
possessing the Collateral for purpose of making such verification).  Debtor shall furnish all assistance and
information and perform any acts Secured Party may require regarding
thereto.  Debtor shall bear the cost and
expense of any such inspection and verification.

 

6.2                  Notification of Security Interest.  After, and during the
continuance of any Event of Default, Secured Party may notify any or
all account debtors and other person obligated with respect to the Collateral
of the Security Interest therein.

 

6.3                  Application of Proceeds.  Secured Party may apply the proceeds from the
sale, lease or other disposition or realization upon the Collateral to the
Obligations in such order and manner and at such time as Secured Party shall,
in its sole discretion, determine. 
Debtor shall remain liable for any deficiency if the proceeds of any
sale, lease or other disposition or realization upon the Collateral are
insufficient to pay the Obligations.  Any
proceeds received by Debtor from the Collateral after an Event of Default shall
(i) be held by Debtor in trust for Secured Party in the same medium in
which received; (ii) not be commingled with any assets of Debtor; and (iii) be
delivered to Secured Party in the form received, properly indorsed to permit
collection.  After an Event of Default,
Debtor shall promptly notify Secured Party of the return to or repossession by
Debtor of goods constituting part of the Collateral, and Debtor shall hold the
same in trust for Secured Party and shall dispose of the same as Secured Party
directs.

 

6.4                  Income and Proceeds of Instruments
and Investment Property.  Until the
occurrence of an Event of Default, Debtor reserves the right to request to
receive all cash income or cash distribution (whether in cash or evidenced by
check) payable on account of any instrument or investment property constituting
part of the Collateral (collectively, “Cash Distribution”).  Until actually paid, all rights in the
foregoing shall remain subject to the Security Interest.  Any other income, dividend, distribution,
increase in or profits (including any stock issued as a result of any stock
split or dividend, any capital distributions and the like) on account of any
instrument or investment property constituting part of the Collateral and, upon
the occurrence of an Event of Default, all Cash Distributions, shall be
delivered to Secured Party immediately upon receipt, in the exact form received
and without commingling with other property which may be received by, paid or
delivered to Debtor or for Debtor’s account, whether as an addition to, in
discharge of, in substitution of, or in exchange of the Collateral.  Until delivery, such Collateral shall be held
in trust for Secured Party.

 

6.5                  Registered Holder of the Collateral.  While an Event of Default
exists, Secured Party shall have the right to transfer to or
register (with or without reference to this Agreement) in the name of Secured
Party or its nominee any investment property, general intangible, instrument or
deposit account constituting part of the Collateral so that Secured Party or
such nominee shall appear as the sole owner of record thereof; provided,
however, that so long as no Event of Default has occurred, Secured Party shall
deliver to Debtor all notices, statements or other communications received by
it or its nominee as such registered owner, and upon demand and receipt of
payment of necessary expenses thereof, shall give to Debtor or its designee a
proxy or proxies to vote and take all action with respect to such
Collateral.  After the occurrence and during the continuance of any Event of Default, Debtor
waives all rights to be advised of or to receive any notices, statements or
communications received by Secured Party or its nominee as such record owner,
and agrees that no proxy or proxies given by Secured Party to Debtor or its
designee as aforesaid shall thereafter be effective.

 

4

 

7.                        Default.

 

7.1                  Events of Default.  Any of the following events or conditions
shall constitute an “Event of Default”:  (i) failure
by Debtor to pay when due (whether at the stated maturity, by acceleration,
upon demand or otherwise) any principal installments
on the Obligations, or to pay any interest thereon or any fee or other amount
payable under the transaction documents and such failure continues unremedied
for a period of three (3) business days; (ii) default by
Debtor in the performance of any obligation, term or condition of this
Agreement or any other agreement with Secured Party or any of its affiliates or
subsidiaries (collectively, “Affiliates”); (iii) failure by Debtor to pay
when due (whether at the stated maturity, by acceleration, upon demand or
otherwise) any material indebtedness or
obligation owing to any third party or any Affiliate, the occurrence of any
event which results in acceleration of payment
of any such indebtedness or obligation or the failure to perform any agreement
with any third party or any affiliate; (iv) Debtor is dissolved, becomes
insolvent, generally fails to pay or admits in writing its inability generally
to pay its debts as they become due; (v) Debtor makes a general
assignment, arrangement or composition agreement with or for the benefit of its
creditors or makes, or sends notice of any intended, bulk sale; the sale,
assignment, transfer or delivery of all or substantially all of the assets of
Debtor to a third party; or the cessation by Debtor as a going business
concern; (vi) Debtor files a petition in bankruptcy or institutes any
action under federal or state law for the relief of debtors or seeks or
consents to the appointment of an administrator, receiver, custodian or similar
official for the wind up of its business (or has such a petition or action
filed against it and such petition action or appointment is not dismissed or
stayed within sixty (60) days); (vii) the
reorganization, merger, consolidation or dissolution of Debtor (or the making
of any agreement therefor); (viii) the death or judicial declaration of
incompetency of Debtor, if an individual; (ix) the entry of one or more
judgments of any court, other governmental authority or arbitrator against
Debtor in an aggregate amount of $500,000.00 over and
above any insurance coverage which has been determined by the insurance carrier
to be applicable to the claim underlying the judgment, and any such judgments
remain unbonded, unstayed or undismissed for a period of thirty (30)
consecutive days ; (x) falsity, material omission
or inaccuracy of facts submitted to Secured Party or any Affiliate (whether in
a financial statement or otherwise); (xi) an adverse change in the Collateral,
Debtor, its business, operations, affairs or condition (financial or otherwise)
from the status shown on any financial statement or other document submitted to
Secured Party, and which change Secured Party reasonably
determines will have a material adverse affect on (a) Debtor, its
business, operations or condition (financial or otherwise), or (b) the
ability of Debtor to pay or perform the Obligations; (xii) any pension plan of
Debtor fails to comply with applicable law or has vested unfunded liabilities
that, in the opinion of Secured Party, might have a material adverse effect on
Debtor’s ability to repay its debts; (xiii) any indication or evidence received
by Secured Party that Debtor may have directly or indirectly been engaged in
any type of activity which, in Secured Party’s reasonable
judgment, might result in the forfeiture of any property of Debtor
to any governmental authority;  or (xiv) the occurrence of any event described in Section 7.1(i) through
and including 7.1(xiii) with respect to any material endorser,
guarantor or any other party liable for, or whose assets or any interest
therein secures, payment of any of the Obligations.

 

7.2                  Rights and Remedies Upon Default.  Upon the occurrence of any Event of Default,
Secured Party may exercise all rights and remedies of a secured party under the
UCC, under other applicable law, in equity or otherwise or available under in
this Agreement including:

 

7.2.1          Obligations Immediately Due; Termination of
Lending.  Intentionally
Omitted.

 

7.2.2          Access to Collateral.  Secured Party, or its agents, may peaceably
retake possession of the Collateral with or without notice or process of law,
and for that purpose may enter upon any premises where the Collateral is
located and remove the same.  At Secured
Party’s request, Debtor shall assemble the Collateral and deliver it to Secured
Party or any place designated by Secured Party, at Debtor’s expense.

 

7.2.3          Sell Collateral.  Secured Party shall have the right to sell,
lease or otherwise dispose of the Collateral in one or more parcels at public
or private sale or sales upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk.  Each purchaser at any such sale shall hold
the property sold absolutely, free from any claim or right on the part of
Debtor.  Debtor hereby waives (to the
extent permitted by law) all rights of redemption, stay and appraisal which
Debtor now has or may at any time in the future have under any applicable law
now existing or hereafter enacted. 
Secured Party shall have the right to use Debtor’s premises and any
materials or rights of Debtor (including any intellectual property rights)
without charge for such sales or disposition of the Collateral or the
completion of any work in progress for such times as Secured Party may see
fit.  Without in any way requiring notice
to be given in the following time and manner, Debtor agrees that with respect to
any notice by Secured Party of any sale, lease or other disposition or
realization or other intended action hereunder or in connection herewith,
whether required by the UCC or otherwise, such notice shall be deemed
reasonable and proper if given at least ten (10) days
before such action in the manner described below in the Section entitled “Notices”.

 

7.2.4          Collect Revenues.  Secured Party may either directly or through
a receiver (i) demand, collect and sue on any Collateral consisting of
accounts or any other Collateral including notifying account debtors or any
other persons obligated on the Collateral to make payment on the Collateral
directly to Secured Party; (ii) file any claim or to take any other action
or proceeding in any court of law or equity or otherwise deemed appropriate by
Secured Party with respect to the Collateral or to enforce any other right in
respect of the Collateral; (iii) take control, in any manner, of any
payment or proceeds from the Collateral; (iv) prosecute or defend any
suit, action or proceeding brought against Debtor with respect to the
Collateral; (v) settle, compromise or adjust any and all claims arising
under the Collateral or, to give such discharges or releases as Secured Party
may deem appropriate; (vi) receive and collect all mail addressed to
Debtor, direct the place of delivery thereof to any location designated by
Secured Party; to open such mail; to remove all contents therefrom; to retain
all contents thereof constituting or relating to the Collateral; (vii) execute,
sign or endorse any and all claims, endorsements, assignments, checks or other
instruments with respect to the Collateral; or (viii) generally, use,
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral; and Debtor hereby irrevocably appoints Secured
Party, its officers, employees and agents, or any of them, as attorneys-in-fact
for Debtor with full power and authority in the place and stead of Debtor and
in the name of Debtor or in its own name from time to time in Secured Party’s
discretion, to take any and all appropriate action Secured Party deems
necessary or desirable to accomplish any of the foregoing or otherwise to
protect, preserve, collect or realize upon the Collateral or to accomplish the
purposes of this Agreement.  Debtor revokes
each power of attorney (including any proxy) heretofore granted by Debtor with
regard to the Collateral.  This power of
attorney, being coupled with an interest, is irrevocable and shall not be
affected by the subsequent disability or incompetence of Debtor.

 

5

 

7.2.5          Setoff. 
Secured Party may place an administrative hold on and set off against
the Obligations any property held in a deposit or other account with Secured
Party or any of its Affiliates or otherwise owing by Secured Party or any of
its Affiliates in any capacity to Debtor. Such set-off shall be deemed to have
been exercised immediately at the time Secured Party or such Affiliate elects
to do so.

 

8.                        Expenses.  Debtor shall pay to Secured Party on demand
all costs and expenses (including all reasonable fees and disbursements of all
counsel retained for advice, suit, appeal or other proceedings or purpose and
of any experts or agents it may retain), which Secured Party may incur in
connection with (i) the administration of this Agreement, including any
administrative fees Secured Party may impose for the preparation of discharges,
releases or assignments to third-parties; (ii) the custody or preservation
of, or the sale, lease or other disposition or realization on the Collateral; (iii) the
enforcement and collection of any Obligations or any guaranty thereof; (iv) the
exercise, performance ,enforcement or protection of any of the rights of
Secured Party hereunder; or (v) the failure of Debtor to perform or
observe any provisions hereof.  After
such demand for payment of any cost, expense or fee under this Section or
elsewhere under this Agreement, Debtor shall pay interest at the highest
default rate specified in any instrument evidencing any of the Obligations from
the date payment is demanded by Secured Party to the date reimbursed by
Debtor.  All such costs, expenses or fees
under this Agreement shall be added to the Obligations.

 

9.                        Indemnification.  Debtor shall indemnify Secured Party and its
Affiliates and each officer, employee, accountant, attorney and other agent
thereof (each such person being an “Indemnified Party”) on demand, without any
limitation as to amount, against each liability, cost and expense (including
all reasonable fees and disbursements of all counsel retained for advice, suit,
appeal or other proceedings or purpose, and of any expert or agents an
Indemnified Party may retain) heretofore or hereafter imposed on, incurred by
or asserted against any Indemnified Party (including any claim involving any
allegation of any violation of applicable law of any governmental authority
(including any environmental law or criminal law)), however asserted and
whether now existing or hereafter arising, arising out of any ownership, disposition
or use of any of the Collateral; provided, however, the foregoing indemnity
shall not apply to liability, cost or expense solely attributable to an
Indemnified Party’s gross negligence or willful misconduct.  This indemnity agreement shall survive the
termination of this Agreement.  Any
amounts payable under this or any other section of this Agreement shall be
additional Obligations secured hereby.

 

10.                 Miscellaneous.

 

10.1            Notices.  Any demand or notice hereunder or under any
applicable law pertaining hereto shall be in writing and duly given if
delivered to Debtor (at its address on Secured Party’s records) or to Secured
Party (at the address on page one and separately to Secured Party’s
officer responsible for Debtor’s relationship with Secured Party). Such notice
or demand shall be deemed sufficiently given for all purposes when delivered (i) by
personal delivery and shall be deemed effective when delivered, or (ii) by
mail or courier and shall be deemed effective three (3) business days after
deposit in an official depository maintained by the United States Post Office
for the collection of mail or one (1) business day after delivery to a
nationally recognized overnight courier service (e.g., Federal Express).  Notice by e-mail is not valid notice under
this or any other agreement between Debtor and Secured Party.

 

10.2            Governing Law; Jurisdiction.  This Agreement has been delivered to and
accepted by Secured Party and will be deemed to be made in the State of New
York.  Except as otherwise provided under
federal law, this Agreement will be interpreted in accordance with the laws of
the State of New York excluding its conflict of laws rules. DEBTOR HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY
STATE OR FEDERAL COURT IN THE STATE OF NEW YORK IN A COUNTY OR JUDICIAL
DISTRICT WHERE SECURED PARTY MAINTAINS A BRANCH AND CONSENTS THAT SECURED PARTY
MAY EFFECT ANY SERVICE OF PROCESS IN THE MANNER AND AT DEBTOR’S ADDRESS
SET FORTH ABOVE FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT NOTHING CONTAINED
IN THIS AGREEMENT WILL PREVENT SECURED PARTY FROM BRINGING ANY ACTION,
ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST DEBTOR
INDIVIDUALLY, AGAINST ANY SECURITY OR AGAINST ANY PROPERTY OF DEBTOR WITHIN ANY
OTHER COUNTY, STATE OR OTHER FOREIGN OR DOMESTIC JURISDICTION.  Debtor acknowledges and agrees that the venue
provided above is the most convenient forum for both Secured Party and
Debtor.  Debtor waives any objection to
venue and any objection based on a more convenient forum in any action
instituted under this Agreement.

 

10.3            Security Interest Absolute.  All rights of Secured Party hereunder, the
Security Interest and all obligations of Debtor hereunder shall be absolute and
unconditional irrespective of (i) any filing by or against Debtor of any
petition in bankruptcy or any action under federal or state law for the relief
of debtors or the seeking or consenting to of the appointment of an
administrator, receiver, custodian or similar officer for the wind up of its business;
(ii) any lack of validity or enforceability of any agreement with respect
to any of the Obligations, (iii) any change in the time, manner or place
of payment of, or in any other term of, all or any of the Obligations, or any
other amendment or waiver of or any consent to any departure from any agreement
or instrument with respect to the Obligations, (iv)any exchange, release or
non-perfection of any lien or any release or amendment or waiver of or consent
under or departure from any guarantee, securing or guaranteeing all or any of
the Obligations, or (v) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, Debtor in respect of the
Obligations or this Agreement.  If, after
receipt of any payment of all or any part of the Obligations, Secured Party is
for any reason compelled to surrender such payment to any person or entity,
because such payment is determined to be void or voidable as a preference,
impermissible setoff, or a diversion of trust funds, or for any other reason,
such payment shall be reinstated as part of the Obligations and this Agreement
shall continue in full force notwithstanding any contrary action which may have
been taken by Secured Party in reliance upon such payment, and any such contrary
action so taken shall be without prejudice to Secured Party’s rights under this
Agreement and shall be deemed to have been conditioned upon such payment having
become final and irrevocable.

 

10.4            Remedies Cumulative; Preservation of
Rights.  The rights and remedies
herein are cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies which Secured Party may have under
other agreements now or hereafter in effect between Debtor and Secured Party,
at law (including under the UCC) or in equity. 
No failure or delay of Secured Party in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power.  Debtor expressly disclaims any reliance on
any course of dealing or usage of trade or oral representation of Secured Party
including representations to make loans to Debtor.  No notice to or demand on Debtor in any case
shall entitle Debtor to any other or further notice or demand in similar or
other circumstances.

 

6

 

10.5            Joint and Several; Successors and Assigns.  If there is more than one Debtor, each of
them shall be jointly and severally liable for all amounts, which become due,
and the performance of all obligations under this Agreement and the term “Debtor”
shall include each as well as all of them. 
This Agreement shall be binding upon Debtor and upon its heirs and legal
representatives, its successors and assignees, and shall inure to the benefit
of, and be enforceable by, Secured Party, its successors and assignees and each
direct or indirect assignee or other transferee of any of the Obligations;
provided, however, that this Agreement may not be assigned by Debtor without
the prior written consent of Secured Party.

 

10.6            Waivers; Changes in Writing.  No course of dealing or other conduct, no
oral agreement or representation made by Secured Party or usage of trade shall
operate as a waiver of any right or remedy of Secured Party.  No waiver of any provision of this Agreement
or consent to any departure by Debtor therefrom shall in any event be effective
unless made specifically in writing by Secured Party and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given.  No modification to any
provision of this Agreement shall be effective unless made in writing in an
agreement signed by Debtor and Secured Party.

 

10.7            Interpretation.  Unless the context otherwise clearly
requires, references to plural includes the singular and references to the
singular include the plural; the word “or” has the inclusive meaning
represented by the phrase “and/or”; the word “including”, “includes” and “include”
shall be deemed to be followed by the words “without limitation”; and captions
or section headings are solely for convenience and not part of the substance of
this Agreement.  Any representation,
warranty, covenant or agreement herein shall survive execution and delivery of
this Agreement and shall be deemed continuous. 
Each provision of this Agreement shall be interpreted as consistent with
existing law and shall be deemed amended to the extent necessary to comply with
any conflicting law.  If any provision
nevertheless is held invalid, the other provisions shall remain in effect.  Debtor agrees that in any legal proceeding, a
photocopy of this Agreement kept in Secured Party’s course of business may be
admitted into evidence as an original. 
Terms not otherwise defined in this Agreement shall have the meanings
attributed to such terms in the UCC.

 

10.8            Waiver of Jury Trial.  DEBTOR AND
SECURED PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT
TO TRIAL BY JURY DEBTOR AND SECURED PARTY MAY HAVE IN ANY ACTION OR
PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS AGREEMENT OR ANY
TRANSACTIONS RELATED HERETO. DEBTOR REPRESENTS AND WARRANTS THAT NO
REPRESENTATIVE OR AGENT OF SECURED PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SECURED PARTY WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THIS JURY TRIAL WAIVER.  DEBTOR
ACKNOWLEDGES THAT SECURED PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION.

 

 

	
  Dated:
  March 16, 2009

  	
  HARDINGE
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: /S/
  EDWARD J. GAIO

  
	
   

  	
  Name: 

  	
  Edward J.
  Gaio

  
	
   

  	
  Title:

  	
  Vice
  President and CFO

  
				

 

 

ACKNOWLEDGMENT

 

	
  STATE OF NEW
  YORK

  	
  )

  
	
   

  	
  : SS.

  
	
  COUNTY OF
  CHEMUNG`

  	
  )

  

 

On the 16th  day of
March, in the year 2009, before me, the undersigned, a Notary Public in and for
said State, personally appeared EDWARD J. GAIO,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s) on the
instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.

 

	
   

  	
  /S/ NANCY L.
  CURREN

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
   

  	
  Nancy L. Curren

  

 

 

FOR
SECURED PARTY USE ONLY:

	
  Authorization
  confirmed:

  	
   

  

If Debtor’s Obligations arise under a guaranty in favor of Secured
Party, list the name whose indebtedness is being guaranteed under such
guaranty:

 

7

 

Exhibit A

 

1.                                       Permitted
Liens (§3.1) means and includes:

 

a.                                       Liens
(as that term is defined in the Credit Agreement dated as of June 13, 2008
among Borrower, Hardinge Holdings GMBH, certain lenders and JPMorgan Chase
Bank, N.A. as Administrative Agent (the “JPMorgan Agreement”)) imposed by law
for taxes that are not yet due or being contested in compliance with Section 5.04
of the JPMorgan Agreement;

b.                                      carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens (as
that term is defined in the JPMorgan Agreement) imposed by law, arising in the
ordinary course of business and securing obligations that are not overdue by
more than thirty (30) days or are being contested in compliance with Section 5.04
of the JPMorgan Agreement;

c.                                       pledges
and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
regulations;

d.                                      deposits
to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature, in each case in the ordinary course of business;

e.                                       judgment
liens in respect of judgments that do not constitute an Event of Default under Section 7;

f.                                         easements,
zoning restrictions, rights-of-way and similar encumbrances on real property
imposed by law or arising in the ordinary course of business that do not secure
any monetary obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of the
Borrower or any subsidiary of Borrower; and

g.                                      liens
reflected on Exhibit B hereto.

 

provided that the term “Permitted Liens” shall
not include any Lien (as that term is defined in the JPMorgan Agreement)
securing Indebtedness.

 

2.                                       Residence,
principal place of business or chief executive office (§3.5(i))

 

3.                                       Location
of Books and Records (§3.5(ii))

 

4.                                       Location
of Inventory, Equipment, Fixtures, Crops or Timber (§3.5(iii) and
§3.5(iv))

 

5.                                       Locations
Not Owned by Debtor and Name of Record Owner (§3.5)

 

6.                                       Trade
Name, “Doing Business As” Name or Assumed Name (§3.6)

 

 

SCHEDULE 4(C)

 

EXISTING LIENS

 

	
  Debtor

  	
   

  	
  Secured Party

  	
   

  	
  Jurisdiction

  	
   

  	
  Filing Information

  	
   

  	
  Collateral

  
	
  Hardinge, Inc.

  	
   

  	
  IBM Credit LLC

  	
   

  	
  New York Secretary of State

  	
   

  	
  200407205605560 07/20/2004

  	
   

  	
  Certain leased equipment

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hardinge Machine Tools Limited

  	
   

  	
  Hormann (UK) Limited

  	
   

  	
  UC Companies House; England and Wales

  	
   

  	
  Registered 02/09/2005

  	
   

  	
  The deposit account and all money from time to time placed in the
  deposit account in accordance with a certain rent deposit deed

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hardinge Machine Tools Limited

  	
   

  	
  HMT Trustees Limited, as Trustee of the Hardinge Machine Tools
  Limited Staff

  	
   

  	
  UK Companies House; England and Wales

  	
   

  	
  To be registered following completion

  	
   

  	
  Debenture granting security over all assets to secure performance of
  obligations under deficit recovery plan in connection with £0.9 million
  deficit of the Hardinge Machine Tools Limited Staff Pensions Scheme

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  L. Kellenberger & Co. AG (as successor by merger to HTT
  Hauser Tripet Tschudin, Ag)

  	
   

  	
  UBS AG

  	
   

  	
  Switzerland

  	
   

  	
  05/07/2003

  	
   

  	
  Mortgage on real property in Biel, Switzerland

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hardinge Taiwan Precision Machinery Limited

  	
   

  	
  Mega International Commercial Bank

  	
   

  	
  Taiwan

  	
   

  	
  06/2006

  	
   

  	
  Mortgage on real property in Taiwan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hardinge Inc.

  	
   

  	
  Citicapital Commercial Leasing Corporation

  	
   

  	
  New York Secretary of State

  	
   

  	
  200511176009826 11/17/2005

  	
   

  	
  Certain leased equipment

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