Document:

EXHIBIT
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 

 

 

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).

 

 

2.13            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.

 

 

3.6                  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.

 

 

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) 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.

 

 

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.

 

 

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: December 10,
  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 10th
day of December, 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 CURREN

  
	
   

  	
  Notary Public — Nancy 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:

 

 

Exhibit A

 

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

 

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

 

b.                                      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;

 

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

 

d.                                      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; and

 

e.                                       existing
liens set forth on Exhibit B hereto.

 

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)

 

 

EXHIBIT B

 

EXISTING
LIENS

 

	
  Debtor

  	
   

  	
  Secured Party

  	
   

  	
  Jurisdiction

  	
   

  	
  Filing Information

  	
   

  	
  Collateral

  
	
  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

  
	
  L. Kellenberger & Co. AG

  	
   

  	
  Credit Suisse

  	
   

  	
  Switzerland

  	
   

  	
  N/A

  	
   

  	
  Mortgage on real property in St. Gallen, SwitzerlandEXHIBIT
10.4

 

 

PLEDGE OF SECURITIES

New York

 

Pledgor (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

 

Borrower (if not the same as
Pledgor) (Name):

(Organizational Structure):

(State Law organized under):

(Address
of residence/chief executive office):

 

Bank:  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.

 

THIS SECURITY AGREEMENT is granted to
the Bank by Pledgor in consideration of and as further security for payment of
the Obligations, and for other valuable consideration, the receipt and
sufficiency of which is acknowledged. 
Pledgor, intending to be legally bound, agrees with the Bank as follows:

 

1.     DEFINITIONS.  All terms unless otherwise defined in this
Agreement shall have the meanings assigned in 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 as assigned in the Credit Agreement dated
December 10, 2009 between Pledgor and Bank.

 

a.     “Brokerage Account” means,
collectively, any and all security, commodity or other form of account
containing assets included in the Collateral at any time, including, without
limitation, all cash and credit balances credited to any such account and all
investment property held, carried or otherwise referenced in any such
account.  Except as otherwise agreed by
the Bank in writing, any reference herein to a Brokerage Account at a
particular Institution shall include all accounts maintained by Pledgor with
the same Institution.

 

b.     “Collateral” means
collectively, whether now owned or hereafter acquired or existing and wherever
located, all Pledgor’s investment property described on Schedule A, which
Pledgor has delivered to the Bank or agrees to deliver (or cause to be
delivered) or for which appropriate book-entries have been (or will be) made
by, or which otherwise have been (or will be) identified on any Institution’s
books and records as being subject to the Bank’s security interest, whether or
not described in any schedule delivered to the Bank, together with all
Brokerage Accounts and all Income and Proceeds. 
In addition, the word “Collateral” includes all property of Pledgor
(however owned) in the possession of, or subject to the control of, the Bank
(or in the possession or subject to the control of an Institution or other
third party, which possession or control is now or hereafter becomes subject to
the control of the Bank), whether now owned or hereafter existing and whether
tangible or intangible in character.

 

c.     “Control Agreement” means an
agreement, in form and substance acceptable to the Bank in its sole discretion,
by and among the Bank, an Institution and Pledgor, for the purpose of
perfecting the security interest granted to the Bank by Pledgor herein.

 

d.     Any of the following events
or conditions shall constitute an “Event of Default”:  (i) failure by Pledgor to make any
payment when due (whether at the stated maturity, by acceleration or otherwise)
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) Pledgor defaults in the performance of any covenant or other
provision with respect to this Agreement, the Control Agreement, the
Obligations or any other agreement between Pledgor and the Bank or any of its
affiliates or subsidiaries (collectively, “Affiliates”)); (iii) Pledgor
fails to pay when due (whether at the stated maturity, by acceleration or
otherwise) any material indebtedness for borrowed
money owing to any third party, 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 any affiliate; (iv) the reorganization, merger,
consolidation or dissolution of Pledgor (or the making of any agreement
therefor); the sale, assignment, transfer or delivery of all or substantially
all of the assets of Pledgor to a third party; or the cessation by Pledgor as a
going business concern; (v) the death or judicial declaration of
incompetency of Pledgor, if an individual; (vi) failure to pay, withhold
or collect any tax as required by law; the service or filing against Pledgor or
any of its assets of any lien (other than a lien permitted in writing by the
Bank), judgment, garnishment, order or award; (vii) if Pledgor becomes
insolvent or is generally not paying its debts as such debts become due; (viii) the
making of any general assignment by Pledgor for the benefit of creditors; the
appointment of a receiver or similar trustee for Pledgor or its assets; or the
making of any, or sending notice of any intended, bulk sale; (ix) Pledgor
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
Pledgor and such proceeding is not dismissed or stayed
within sixty (60) days; (x) any representation or warranty made
in this Agreement, any related document, any agreement between Pledgor and the
Bank or any Affiliate or in any financial statement of Pledgor proves to have
been misleading in any material respect when made; Pledgor omits to state a
material fact necessary to make the statements made in this Agreement, any
related document, any agreement between Pledgor and the Bank or any Affiliate
or any financial statement of Pledgor not misleading in light of the
circumstances in which they were made; or, if upon the date of execution of
this Agreement, there shall have been any materially 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 Pledgor 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 Pledgor’s ability to repay its debts; (xii) the
occurrence of any event described in paragraph 1(d)(i) through and including
1(d)(xi) hereof with respect to Borrower (if Pledgor and Borrower are not the
same) or 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; (xiii) the occurrence of any event described
in  

 

© Manufacturers and
Traders Trust Company, 2006

 

1

 

paragraph 1(d)(ii), (iv), (vi), (vii),
(viii), (ix) or (xi) with respect to any Institution if the Collateral is,
or is in, a Brokerage Account or otherwise held by an Institution; or (xiv) any
Control Agreement is terminated without the consent of the Bank.

 

e.     “Income and Proceeds” mean all
present and future income, proceeds, earnings, increases, and substitutions
from or for the Collateral of every kind and nature, whether direct or
indirect, including without limitation all payments, interest, profits,
distributions, benefits, rights, options, warrants, dividends, stock dividends,
stock splits, stock rights, regulatory dividends, distributions, subscriptions,
monies, claims for money due and to become due, proceeds of any insurance on
the Collateral, shares of stock of different par value or no par value issued
in substitution or exchange for shares included in the Collateral (whether
voluntary or involuntary, by agreement or by operation of law), proceeds of any
sale, transfer, surrender, redemption, exchange or other disposition of the
Collateral (whether merger, dissolution or liquidation of the issuer of the Collateral)
and all other property Pledgor is entitled to receive on account of such
Collateral, including accounts, documents, instruments, chattel paper,
investment property, and general intangibles.

 

f.      “Institution” means any (i) securities
intermediary; (ii) broker; (iii) issuer; or (iv) any other
entity holding or that has issued any of the Collateral to or on behalf of
Pledgor, including, without limitation, any fiduciary.

 

g.     “Obligations” means
collectively, any and all indebtedness and other liabilities or obligations of
Pledgor to the Bank of every kind and character and all extensions,
refinancings, renewals, modifications and replacements thereof, including,
without limitation, all unpaid accrued interest thereon and all of the costs
and expenses payable as hereinafter provided: 
(i) whether now existing or hereafter incurred; (ii) whether
direct, indirect, primary, absolute, secondary, contractual, tortious,
liquidated, unliquidated, contingent, secured, unsecured, matured or unmatured,
by guarantee or otherwise; (iii) whether such indebtedness or obligations
are from time to time reduced and thereafter increased, or entirely
extinguished and thereafter reincurred; (iv) whether such indebtedness was
originally contracted with the Bank or with another or others; (v) whether
or not such indebtedness or obligations are evidenced by a negotiable or
non-negotiable instrument or any other writing; (vi) whether such
indebtedness is contracted by Pledgor alone or jointly or severally with
another or others; and (vii) all indebtedness incurred prior to, during or
after any filing by or against Pledgor of any petition or request for
liquidation, reorganization, arrangement, adjudication as a bankrupt, relief as
a debtor, or other relief under 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, notwithstanding Pledgor’s legal status as
a debtor or a debtor-in-possession or Pledgor’s discharge in any such
proceeding. Obligations also include, without limitation, all payments
recovered from the Bank such as sums claimed as impermissible set-offs,
diversion of trust funds or as a preference or fraudulent transfer.  Such recovered sums shall be reinstated as Obligations
of Pledgor as of the date they arose, but for purposes of any statute limiting
action by the Bank under this Agreement or relating to the Obligations, as of
the date of recovery from the Bank.  If
Pledgor and Borrower are not the same person or entity, then any reference to “Pledgor”
in this section mean Pledgor and/or Borrower.

 

h.     “Pledgor” means each of
the persons or entities identified above as Pledgor in any capacity, and each
legal representative, successor or assign of any thereof.

 

2.     SECURITY INTEREST.

 

a.     Grant of Security Interest.  As security for payment and performance of
the Obligations, Pledgor grants a security interest in, and assigns, pledges
and hypothecates to the Bank all of its rights, title and interest in and to
the Collateral, whether now or hereafter acquired or existing and wherever
located.  For
perfection of the pledge contemplated by this Agreement under Swiss law, the
stock certificate shall be delivered into the Bank’s possession.

 

b.     Continuing and Unconditional Pledge.  This Agreement is absolute and unconditional
and shall continue, notwithstanding any interim payment in full of the
Obligations, until released in writing by the Bank.

 

c.     Control Agreement.  To the extent any portion of the Collateral
is, or is maintained in, a Brokerage Account with or through an Institution, or
is otherwise held in the custody of an Institution, Pledgor agrees to cause
such Institution(s) (along with such other parties as may be deemed
necessary by the Bank in its sole discretion) to execute and deliver to the
Bank, contemporaneously herewith, a Control Agreement.  If any such Institution refuses to execute a
Control Agreement that is acceptable to the Bank in its sole discretion,
Pledgor agrees to transfer the Collateral to a Brokerage Account maintained
with or through M&T Securities, Inc. (or such other affiliate of the
Bank as may be designated by the Bank), or if the Collateral is in certificated
form, cause the Collateral to be delivered to the Bank, duly endorsed in blank
without restrictions and with all signatures guaranteed with medallion
signature guaranty acceptable to the Bank and with all necessary transfer tax
stamps affixed, if applicable.  To the
extent that any portion of the Collateral is held in a Brokerage Account with
or through M&T Securities, Inc. (or any successor or assignee
thereof), Pledgor hereby acknowledges and consents to such portion of the
Collateral being subject to the terms of a master control agreement by and
among the Bank, M&T Securities, Inc., the current custodial agent for
M&T Securities, Inc., and such other Affiliates and interested parties
as appropriate, as such agreement may be amended, restated, modified or
replaced from time to time (“Master Control Agreement”).  Pledgor acknowledges that such Master Control
Agreement provides, among other things, that the Bank has the ability and right
under certain circumstances to have the Collateral sold, transferred or
otherwise disposed of without further action or consent by Pledgor.

 

d.     Delivery of Certificated and
Uncertificated Securities Not in Brokerage Account.  If the Collateral is not maintained in a
Brokerage Account, then contemporaneously with the execution and delivery of
this Agreement to the Bank, Pledgor shall:

 

i.      Certificated Securities.  To the extent the Collateral includes
certificated securities, deliver such certificated securities to the Bank, duly
endorsed or assigned (where necessary) in blank
without restrictions and with all signatures guaranteed with medallion
signature guaranty acceptable to the Bank and with all necessary transfer tax
stamps affixed.  Furthermore,
the Pledgor procures that the Bank will be registered in the shareholders’
ledger of Hardinge Holdings GmbH (“Holdings”) as pledgee of the 63,747 shares
held by the Pledgor in Holdings being pledged hereunder.

 

ii.    Uncertificated Securities.  To the extent the Collateral includes
uncertificated securities, either (x) procure the issuance of security
certificates to represent such uncertificated securities and endorse and
deliver such certificates as required above; (y) cause the issuer thereof
to register the Bank as the registered owner of such uncertificated securities;
or (z) cause the issuer of the uncertificated securities to enter into a
Control Agreement with the Bank and Pledgor.

 

3.     REPRESENTATIONS AND WARRANTIES.  Pledgor hereby represents and warrants to the
Bank that now and until this Agreement is terminated:

 

2

 

a.     Enforceability.  Pledgor, if an entity, (i) is duly
organized, validly existing and in good standing under the law of the
jurisdiction in which it was formed; (ii) is duly authorized to do
business in each jurisdiction in which failure to be so qualified might have a
material adverse effect on its business or assets; and (iii) has the
power, authority and approvals necessary to own the Collateral and grant a
security interest in the Collateral under this Agreement and execute and
deliver this Agreement and each Control Agreement (if applicable).  This Agreement and each Control Agreement (if
applicable) have been duly executed and delivered by or on behalf of Pledgor,
constitute valid and legally binding obligations of Pledgor and are enforceable
in accordance with their respective terms against Pledgor.

 

b.     No Conflicts.  The execution, delivery and performance by
Pledgor of this Agreement and each Control Agreement (if applicable), the grant
of the security interest in the Collateral hereunder and the consummation of
the transactions contemplated hereby and thereby do not and will not (i) violate
any statute, regulation or other law applicable to Pledgor; (ii) violate
any judgment, order or award of any court, agency or other governmental
authority or of any arbitrator applicable to Pledgor; (iii) if an entity,
violate Pledgor’s certificate of incorporation, by-laws, partnership agreement,
operating agreement or other applicable governing documents; (iv) constitute
a default under any agreement binding on Pledgor or result in a lien or
encumbrance on any assets of Pledgor; or (v) violate any restriction on
the transfer of any of the Collateral.

 

c.     No Consents.  No consent, approval, license, permit or
other authorization of any third-party (other than an Institution) or any
governmental body or office is required for the valid and lawful execution and
delivery of this Agreement and each Control Agreement, the creation and
perfection of the Bank’s security interest in the Collateral, the valid and
lawful exercise by the Bank of the remedies available to it under this
Agreement, any Control Agreement or applicable law or of the voting and other
rights granted to the Bank in this Agreement or any Control Agreement, except
as may be required for the offer of sale of those items of the Collateral that
are securities under applicable law.

 

d.     Sole Owner; No Other Lien.  Pledgor is sole record and beneficial owner
of the Collateral free and clear of all liens, security interests, pledges
encumbrances and adverse claims (other than those created under this
Agreement), has the unrestricted right to grant the security interest granted
under this Agreement and has granted to the Bank a valid security interest in
the Collateral free of all liens, encumbrances and adverse claims.  There are no restrictions applicable to the
transfer of any of the Collateral, unless fully and accurately described in an
exhibit to this Agreement.   The
Collateral is held or registered in Pledgor’s legal name.

 

e.     Brokerage Account.  If any of the Collateral is, or is maintained
in, a Brokerage Account, such Brokerage Account is a valid and legally binding
obligation of the Institution with which such Brokerage Account is maintained,
the securities entitlements credited thereto are valid and genuine and are
enforceable in accordance with their terms and Pledgor has provided the Bank
with a complete and accurate statement of the financial assets and money
credited to such Brokerage Account as of the date hereof.

 

f.      Certificates Genuine.  If any of the Collateral is certificated
securities, each certificate or other document evidencing such portion of the
Collateral is genuine, has been duly authorized and validly issued by each of
the respective Issuers, is in all respects what it purports to be and is
enforceable in accordance with its terms.

 

g.     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 that
involves Pledgor or any of the Collateral and might have a material adverse
effect upon, or threaten the validity of, this Agreement or any of the
Collateral.  Pledgor shall immediately
notify the Bank upon acquiring knowledge of such an action.

 

h.     Name, Address and Organizational
Information.  Pledgor’s
full legal name, its principal residence or its chief executive office (if a
business) address, and its state of registration and organizational
identification number (if any) are correctly set forth at the beginning of this
Agreement.

 

i.      Mutual Funds Held for 30 Days.  If any of the Collateral consists of mutual
fund shares or any other interest in a mutual fund, such shares or interest
shall have been owned by Pledgor for more than thirty (30) days prior to the
date of this Agreement.

 

4.     COVENANTS.  Pledgor hereby covenants and agrees with the
Bank that now and until this Agreement is terminated Pledgor shall:

 

a.     Defend Title.  Defend its title to the Collateral and the
security interest of the Bank therein against the claims of any person claiming
rights in the Collateral against or through Pledgor and maintain and preserve
such security and its priority.

 

b.     Collateral Coverage.  Intentionally Omitted.

 

c.     No Transfer.  Neither sell, offer to sell nor otherwise
transfer or encumber any of the Collateral and if any of the Collateral is, or
is in, a Brokerage Account or subject to a Control Agreement, withdraw any
money or property from such Brokerage Account or enter into a control agreement
with any third-party relating to the foregoing. 
If any of the Collateral is, or is maintained in, a Brokerage Account,
this provision shall not prohibit Pledgor from making trades in such Brokerage
Account before the occurrence of an Event of Default provided that (i) the
Bank has agreed in a writing (acceptable to the Bank in its sole discretion),
signed by a duly authorized officer of the Bank and the Institution, that
Pledgor is authorized to engage in such trading; (ii) the proceeds of such
trades remain in the Brokerage Account; and (iii) the trades do not have a
material adverse effect on the value of all or any part of the Collateral and
are not otherwise inconsistent with the provisions of this Agreement or any
Control Agreement.

 

d.     Control and Customer Agreements.  If the Collateral is held in a Brokerage
Account, neither attempt to modify or attempt to terminate any Control
Agreement or the customer agreement with the Institution under which such
Brokerage Account was established.

 

e.     Later Deliveries.  Pledgor shall promptly deliver or transfer to
the Bank (with respect to any of the Collateral in the physical possession of
the Bank) or to an Institution (with respect to any of the Collateral held by
such Institution) for credit to the Brokerage Account and/or coverage by the Control
Agreement with such Institution, such portion of the Collateral (including,
without limitation, any certificate or instrument constituting or representing
such portion of the Collateral and any replacement or related certificates or
instruments, transaction statements, option contracts, warrants or related
documents evidencing transactions or proceeds thereof) that Pledgor may obtain
possession of after the date hereof, free and clear of all liens, encumbrances,
transfer restrictions and adverse claims so that the Bank has a first priority
interest in such portion of the Collateral. 
All such certificates, instruments and the like shall be duly endorsed
in blank without restriction and with all signatures guaranteed with a
medallion signature guaranty acceptable to the Bank.  Until such delivery or transfer, Pledgor
shall hold each such item in trust for the Bank.

 

3

 

f.      Recordkeeping and Financial
Statements.  Maintain
accurate and complete records in conformity with generally accepted accounting
principles consistently applied and furnish to the Bank financial statements in
such form and at such intervals as the Bank may request from time to time.

 

g.     Taxes to be Paid.  Pay when due every tax, assessment, fee and
charge and file each report required by any taxing authority for Pledgor or its
assets, including without limitation the Collateral.

 

h.     Additional Collateral.  Intentionally Omitted.

 

i.      Notice of Changes.  Immediately notify the Bank of (i) any
Event of Default; (ii) any event or condition that might have a material
adverse effect upon Pledgor (or Borrower, if not same), the Institution, the
value of the Collateral or the security interest of the Bank; or (iii) any
encumbrance upon or claim asserted against any of the Collateral.  Pledgor shall notify the Bank at least ninety
(90) days in advance of any change in (i) the name, identity or structure
of Pledgor (or Borrower, if not same) or (ii) the location of (A) any
of the Collateral, (B) any record concerning any of the Collateral, or (C) Pledgor’s  (or Borrower’s, if not same) state of
registration, chief executive office or principal residence.

 

j.      Mark-to-Market Provisions.  Cause the Bank to receive all information
needed to enable the Bank to monitor the market value of the Collateral
including, without limitation, if the Collateral is held by an Institution, to
cause such Institution to send to the Bank a complete and accurate copy of each
statement, confirmation, notice or other communication concerning any Brokerage
Account that the Institution sends to Pledgor. 
All information furnished by Pledgor concerning the Collateral or
otherwise in connection with this Agreement is or shall be at the time the same
is furnished, accurate, correct and complete in all material respects.

 

k.    Further Assurances.

 

i.      At Pledgor’s expense,
Pledgor shall do such further acts and execute and deliver to the Bank all such
additional conveyances, financing statements, certificates, stock or bond
powers, instruments, legal opinions and other assurances as the Bank may from
time to time request or require to protect, assure or enforce its interests,
rights and remedies under this Agreement. 
All endorsements must be in blank without restriction and with all signatures
guaranteed with a medallion signature guaranty acceptable to the Bank.

 

ii.    Pledgor will promptly
deliver to the Bank (with respect to any of the Collateral in the physical
possession of the Bank) or to an Institution (with respect to any of the Collateral
held by such Institution), all endorsements and instruments that could be
necessary or convenient to transfer any financial asset in the physical
possession of the Bank or an Institution, that are registered in the name of,
payable to the order of or specially endorsed to Pledgor, to such Institution
or one of their respective nominees.

 

5.     POWER OF ATTORNEY, IRREVOCABLE
PROXY.

 

a.     Pledgor irrevocably and
unconditionally appoints the Bank as its attorney-in-fact with full power, while an Event of Default exists, to perform in the name
of Pledgor each of Pledgor’s obligations under this Agreement or any Control
Agreement and take any action or execute any instrument that the Bank deems
necessary or convenient for such purpose including, without limitation, the
power to endorse or execute and deliver all stock or bond powers, pledges,
instruments of assignment, certificates, orders for transfer, financing
statements, releases and other writings relating to any of the Collateral in
the Bank’s or Pledgor’s name.  Such power
of attorney is coupled with an interest in favor of the Bank, and shall not be
terminated or otherwise affected by the death, bankruptcy, disability or
incompetence of Pledgor or by lapse of time. 
While an Event of Default exists, the Bank
may receive and open any mail addressed to Pledgor, retain any enclosure
constituting or relating to any of the Collateral, and take any other action
deemed necessary in the Bank’s sole discretion to perfect or protect the Bank’s
interests pursuant to this Agreement or any Control Agreement.  Pledgor authorizes (both prospectively and
retroactively) the Bank to file in any public office financing statements, and
any continuations and amendments thereof, regarding any of the Collateral
without the signature of Pledgor.  A
photocopy or other reproduction of this Agreement or any financing statement
relating to any of the Collateral shall be sufficient as a financing
statement.  Pledgor hereby consents and
agrees that the issuers of or obligors of the Collateral or any registrar or
transfer agent or trustee for any of the Collateral shall be entitled to accept
the provisions hereof as conclusive evidence of the rights of the Bank to
effect any transfer pursuant to this Agreement and the authority granted to the
Bank herein, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by Pledgor or any other person to any of such
issuers, obligors, registrars, transfer agents and trustees.

 

b.     Pledgor irrevocably consents
and appoints the Bank, whether or not any of the Collateral has been
transferred into the name of the Bank or its nominee, as Pledgor’s proxy with
full power, while an Event of Default exists, in
the same manner, to the same extent and with the same effect as if Pledgor were
to do the same:  (i) to attend all
meetings of stockholders of the issuer of any financial asset which comprises
the Collateral (the “Company”) held from the date hereof and to vote such
portion of the Collateral at such meeting in such manner as the Bank shall, in
its sole discretion, deem appropriate, including, without limitation, in favor
of the liquidation of the Company; (ii) to consent, in the sole discretion
of the Bank, to any and all action by or with respect to the Company for which the
consent of the stockholders of the Company is or may be necessary or
appropriate; and (iii) without limitation, to do all things which Pledgor
can or could do as a stockholder of the Company, giving to the Bank full power
of substitution and revocation.  Such
proxy shall not be exercisable by the Bank and Pledgor alone shall have the
foregoing powers (whether or not any of the Collateral has been transferred
into the name of the Bank or its nominee) until the occurrence and during the continuance of an Event of Default; provided,
however, Pledgor shall not exercise or, as the case may be, shall not refrain
from exercising such rights if, in the Bank’s judgment, such action would
impair or otherwise have a material adverse effect on the value of the Collateral
or would otherwise be inconsistent with this Agreement.  The Bank, in its sole discretion, may elect
to postpone having such proxy become exercisable notwithstanding the occurrence
of any Event of Default which would otherwise cause such proxy to become
exercisable.  Such proxy shall terminate
when this Agreement is no longer in full force and effect as hereinafter
provided.  Any expenses incurred with the
exercise of any of the rights hereunder shall constitute part of the
Obligations.

 

c.     Pledgor hereby revokes for
the duration of this Agreement each power of attorney, authorization and proxy
granted by Pledgor to any other person (other than any Institution acting as
safekeeping agent, if any) with respect to the Collateral.

 

6.     PLEDGOR’S WAIVERS.  Neither Pledgor’s obligations under this
Agreement nor Bank’s interest in the Collateral shall be released, impaired or
affected in any way by (i) Pledgor’s (or Borrower’s, if not same)
bankruptcy, reorganization or insolvency under any law or that of any other
party, or any action of a trustee in any such proceeding; (ii) failure of
any other party to perform its obligations to the Bank; or (iii) any other
circumstance that might constitute a legal or equitable defense to Pledgor’s
(or Borrower’s, if not same) obligations under this Agreement, including
without limitation:  (A) any new
agreements or obligations of Pledgor (or Borrower, if not same) with or to the
Bank, amendments, changes in rate of interest, extensions of time for payments,
modifications, renewals or the existence of or waivers of default as to any
existing or future agreements of Pledgor (or Borrower, if not same) or 

 

4

 

any other party with the Bank; (B) any
adjustment, compromise or release of any of the Obligations by the Bank or any
other party; the existence or nonexistence or order of any filings, exchanges,
releases, impairment or sale of any security for the Obligations or any part
thereof or the order in which payments and proceeds of collateral are applied;
or acceptance by the Bank of any writing intended by any other party to create
an accord and satisfaction with respect to any of the Obligations; (C) any
delay in or failure to call for, take, hold, continue, collect, preserve or
protect, replace, assign, sell, lease, exchange, convert or otherwise transfer
or dispose of, perfect a security interest in, realize upon or enforce any
security interest in any security for the Obligations or any part thereof,
regardless of its value; (D) any exercise, delay in the exercise or waiver
of, any failure to exercise, or any forbearance or other indulgence relating
to, any right or remedy of the Bank against Pledgor (or Borrower, if not same)
or other person or relating to the Obligations, any part thereof or any
security for the Obligations; (E) any fictitiousness, incorrectness,
invalidity or unenforceability, for any reason, of any instrument or other
agreement, or act of commission or omission by the Bank or Pledgor (or
Borrower, if not same); (F) any composition, extension, moratoria or other
statutory relief granted to Pledgor (or Borrower, if not same); or (G) any
interruption in the business relations between the Bank and Pledgor (or
Borrower, if not same), or any dissolution or change in form of organization,
name or ownership of Pledgor (or Borrower, if not same) or death or declaration
of Pledgor or Borrower (if not same) if an individual as incompetent.  Further, Pledgor (or Borrower, if not same)
waives without notice each demand, presentment, protest and other act or thing
upon which any of Pledgor’s (or Borrower’s, if not same) obligations or the
Bank’s rights or remedies pursuant to this Agreement or otherwise would or
might be conditioned.

 

7.     INCOME AND PROCEEDS OF THE
COLLATERAL.

 

a.     Cash Income.  Until the occurrence and
continuance of an Event of Default, Pledgor reserves the right to
request to receive all cash income and cash dividends that comprise the Income
and Proceeds (except cash income or cash dividends paid or payable in respect
of the total or partial liquidation or dissolution of an issuer) paid on the
Collateral; provided, however, until actually paid, all rights to such cash
income or cash dividends shall remain subject to the Bank’s security interest
granted hereunder.  Any other Income and
Proceeds shall be delivered to the Bank immediately upon receipt (but not later
than the next business day), in the exact form received and without commingling
with other property which may be received by, paid or delivered to Pledgor or
for Pledgor’s account, whether as an addition to, in discharge of, in
substitution of, or in exchange of any of the Collateral.

 

b.     Bond Coupons.  If the Collateral consists of bonds with
coupons, Pledgor authorizes the Bank to remove all coupons from such bonds when
interest is due and send them for collection on Pledgor’s behalf.  The proceeds of such bonds will be applied as
directed by Pledgor in writing.  The Bank
shall have no responsibility or liability for failure to process such coupons in
a timely fashion.  If any coupon is
returned unpaid, the Bank may either debit any of Pledgor’s deposit accounts
with the Bank or reverse the loan credit, as appropriate, in the amount of each
such coupon previously credited, plus the Bank expenses incurred in the
attempted collection.  If Pledgor’s
deposit accounts have insufficient funds to pay any or all such amounts, each
such unpaid amount shall be added to the Obligations, and shall be secured by
the Collateral.

 

c.     Cash Income After Event of Default.  While an Event of Default
exists, Pledgor shall not demand or receive any cash income or cash
dividends with regard to the Collateral, and if Pledgor receives any such cash
income or cash dividends, the same shall be held by Pledgor in trust for the Bank
in the same medium in which received, shall not be commingled with any assets
of Pledgor and shall be delivered to the Bank in the form received, properly
endorsed to permit collection, not later than the next business day following
the day of its receipt.  The Bank may
apply the net cash receipts from such income or cash dividends to payment of
the Obligations or any part thereof, provided that the Bank shall account for
and pay over to Pledgor any such income or interest remaining after payment in
full of the Obligations.

 

d.     Increases and Profits.  Whether or not an Event of Default has
occurred, Pledgor authorizes the Bank to receive Income and Proceeds on the
Collateral and to hold the same as part of the Collateral and agrees to deliver
the Income and Proceeds (except as provided in 7(a) above) to the Bank
immediately upon receipt (but not later than the next business day), in the
exact form received and without commingling with other property which may be
received by, paid or delivered to Pledgor or for Pledgor’s account, whether as
an addition to, in discharge of, in substitution of, or in exchange of any of
the Collateral.

 

8.     ADDITIONAL DUTIES OF PLEDGOR AND
RIGHTS OF THE BANK.

 

a.     Compliance with Securities Laws.

 

                i.      Pledgor has not acquired or transferred
any of the Collateral in any manner that would result in a violation of any
applicable law, including without limitation federal and state securities
laws.  Pledgor shall execute and deliver
or file each form and other writing (including without limitation any
application for exemption or notice of proposed sale pursuant to any securities
laws) and take each other action (including without limitation making public
any non-public material adverse information with respect to the issuer of any
Security), that the Bank deems necessary or desirable to permit the sale or
other disposition of any portion of the Collateral with or without
registration.  Pledgor shall upon the
request of the Bank cause the Collateral to be registered and take each other action
including, without limitation, compliance with all applicable “blue sky” and
other securities laws and regulations to permit transfer or registration of
those items of the Collateral in each jurisdiction which the Bank shall select;
and Pledgor shall execute and deliver in form and substance satisfactory to the
Bank its indemnity of each underwriter of such Security against all of its
liabilities, costs and expenses in connection with the transfer, including
attorneys’  fees and disbursements.

 

                ii.    Pledgor acknowledges that
compliance with the Securities Act of 1933, as amended, the rules and
regulations thereunder (collectively, the “Act”) may impose limitations on the
right of the Bank to sell or otherwise dispose of securities included in the
Collateral.  For this reason, Pledgor
hereby authorizes the Bank to sell, while an Event of Default
exists, any securities included in the Collateral in such manner and
to such person as would, in the sole discretion of the Bank, help to ensure the
prompt transfer or sale of such securities and shall not require any of such
securities to be registered or qualified under any applicable securities
law.  Without limiting the generality of
the foregoing, in any such event the Bank in its sole discretion may (i) proceed
to make a private sale notwithstanding that a registration statement for the
purpose of registering any of such securities could be or shall have been filed
under the Act; (ii) approach and negotiate with a single possible
purchaser to effect such sale; (iii) restrict such sale to a purchaser who
will represent and agree that such purchaser is purchasing for its own account,
for investment and not with a view to the distribution or sale of any of such
securities; or (iv) require that any sale hereunder (including a sale at
auction) be conducted subject to restrictions (A) as to the financial
sophistication and ability of any person permitted to bid or purchase at sale, (B) as
to the content of legends to be placed upon any certificates representing the securities
sold in such sale, including restrictions on future transfer thereof, (C) as
to the representations required to be made by each person bidding or purchasing
at such sale relating to that person’s access to financial information about
Pledgor or any issuer of any of such securities, such person’s intentions as to
the holding of any of such securities so sold for investment, for its own
account, and not with a view to the distribution thereof, and (D) as to
such other matters as the Bank may, in its sole discretion, deem necessary or
appropriate in order that such sale (notwithstanding any failure so to
register) may be effected in compliance with the UCC and other laws affecting
the enforcement of creditors’ rights under the Act and all applicable state
securities laws.  Pledgor understands
that 

 

5

 

a sale under the above circumstances may
yield a substantially lower price for such securities than would otherwise be
obtainable if the same were registered and sold in the open market, and Pledgor
shall not attempt to hold the Bank responsible for sale of any of such
securities at an inadequate price even if the Bank accepts the first offer
received or if only one potential purchaser appears or bids at any such
sale.  If the Bank shall sell any
securities included in the Collateral at a sale, the Bank shall have the right
to rely upon the advice and opinion of any qualified appraiser, investment
banker or broker as to the commercially reasonable price obtainable on the sale
thereof but shall not be obligated to obtain such advice or opinion.  Pledgor acknowledges that, notwithstanding
the legal availability of a private sale or a sale subject to restrictions of
the character described above, the Bank may, in its sole discretion, elect to
seek registration of any securities included in the Collateral under the Act
(or any applicable state securities laws). 
Pledgor hereby assigns to the Bank any registration rights or similar
rights Pledgor may have from time to time with respect to any securities
included in the Collateral.

 

b.     Substitution of Collateral.  Prior to an Event of Default, Pledgor may
request the Bank in writing to liquidate an item of the Collateral held by the
Bank and use the Proceeds thereof to purchase substitute items of the
Collateral.  If the Bank grants such
request, the items purchased with the Proceeds shall constitute part of the
Collateral without the need for any additional notice or action by the Bank or
Pledgor.

 

c.     Subsequent Changes Affecting
Collateral.  Pledgor
acknowledges that it has made its own arrangements for keeping informed of
changes or potential changes affecting the Collateral including, but not
limited to, conversions, subscriptions, exchanges, reorganizations, dividends,
tender offers, mergers, consolidations, maturity of bonds or other financial
assets and shareholder meetings.  Pledgor
agrees that the Bank has no responsibility to inform Pledgor of such matters or
to take any action with respect thereto even if any of the Collateral has been
registered in the name of the Bank or its agent or nominee.

 

d.     Tax Reporting.  All items of income, gain, expense and loss
recognized in any Brokerage Account or any Collateral in the possession of the
Bank shall be reported to the Internal Revenue Service and all state and local
taxing authorities under the name and taxpayer identification number of
Pledgor.

 

e.     Right to Cure.  While an Event of Default
exists, the Bank has the right, but not the obligation, to perform
at Pledgor’s expense any of Pledgor’s obligations with respect to the
Collateral under this Agreement. 
Further, at its option, while an Event of Default
exists, the Bank may pay and discharge taxes, liens, securities
interest or other encumbrances on or adverse claim against the Collateral and
Pledgor agrees to reimburse the Bank for any payment made or any expenses
incurred (including attorneys’ fees) by the Bank pursuant to the foregoing.

 

9.     DEFAULT.

 

a.     Remedies Upon Default.  At any time, and from time to time, after the
occurrence and during the  existence of any Event of Default the Bank may
take one or more of the following remedies:

 

i.      Acceleration.  All of the Obligations then owing by Pledgor
(or Borrower, if not same) to the Bank shall become immediately due and
payable, at the sole discretion of the Bank and without any notice, demand,
presentment or protest of any kind. 
Nothing in this subsection shall render any portion of the Obligations
which is payable on demand to be payable otherwise than on demand or shall in
any other way affect any right or remedy of the Bank with respect to the
Obligations or the Collateral.

 

ii.    Sale of Collateral.

 

(1)   The Bank may, in its sole
discretion, transfer and realize upon its interest in any portion of the
Collateral by public or private sale or otherwise, without notice to Pledgor
including, without limitation, (i) deliver a notice under any Control
Agreement to an Institution for the sale or other disposition of the financial
assets in a Brokerage Account, (ii) remove any financial asset in a
Brokerage Account and register such asset in the Bank’s name or the name of the
Bank’s Institution or nominee or any other nominee; (iii) exchange
certificates representing any of the Collateral for certificates of larger or smaller
denominations; (iv) collect, including by legal action, any notes, checks
or other instruments for the payment of money included in the Collateral and
compromise or settle with any obligor of any such instrument.

 

(2)   If notice of the time and
place of any public sale of any of the Collateral or the time after which any
private sale or other intended disposition thereof is required by the UCC,
Pledgor acknowledges that ten (10) days
advance notice shall constitute reasonable notice.  The Bank shall not be obligated to make any
sale of any of the Collateral regardless of notice of sale having been
given.  The Bank may adjourn any public
or private sale from time to time by announcing at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place to
which it was so adjourned.

 

(3)   If, under the UCC, the Bank
may purchase any portion of the Collateral, it may in payment of any part of
the purchase price thereof, cancel any part of the Obligations.

 

(4)   If any portion of the
Collateral is sold on credit or for future delivery, it need not be retained by
the Bank until the purchase price is paid and the Bank shall incur no liability
if the purchaser fails to take up or pay for such portion of the Collateral.  In case of any such failure, such portion of
the Collateral may be sold again.

 

(5)   Pledgor shall execute and
deliver to the purchasers of any portion of the Collateral all instruments and
other documents necessary or proper to sell, convey and transfer title to such
portion of the Collateral and, if approval of any sale of such portion of the
Collateral by any governmental body or officer is required, Pledgor shall
prepare or cooperate fully in the preparation of and cause to be filed with
such governmental body or officer all necessary or proper applications,
reports, registration statements and forms and do all other things necessary or
proper to expeditiously obtain such approval.

 

iii.   Set-off.  The Bank shall have the right but not the
obligation to set off against the Obligations any amount owing by the Bank or
any of its Affiliates in any capacity to any Pledgor in any capacity.  Such set-off shall be deemed to have been
exercised immediately at the time the Bank or such Affiliate elect to do so.

 

iv.    Termination of Commitments.  Any commitment of the Bank to grant any
financial accommodation to Pledgor (or Borrower, if not same) shall terminate.

 

6

 

b.     Application of Proceeds.  Any cash held by the Bank as part of the
Collateral and all cash Proceeds of any sale of, collection from or other
realization upon any portion of the Collateral may, in the sole discretion of
the Bank, be held by the Bank as collateral for, or then or at any time be
applied, after payment of the Bank’s Costs (defined below), in whole or in part
against, the Obligations or any part thereof in such order as the Bank may
elect, in its sole discretion.  Any
surplus of such cash or cash Proceeds held by the Bank and remaining after the Bank’s
Costs and the Obligations have been indefeasibly paid in full shall be paid
over to Pledgor or to whomever may be lawfully entitled to receive such
surplus.

 

c.     Consent to Change Collateral to
Book-Entry or Uncertificated Form.  Pledgor authorizes the Bank and each
Institution, while an Event of Default exists, to
take, at Pledgor’s expense, all steps necessary to change to appropriate form
each certificated item of the Collateral which is eligible for safekeeping in
uncertificated form, to be maintained in a Brokerage Account subject to a
Control Agreement (if held with an Institution) or to be held by the Bank
(subject to the delivery requirements in Section 2(d) hereof).  Pledgor understands that there may be some
delay and expense in release of uncertificated items of the Collateral if
Pledgor requires its reissue in certificated form and that change to book-entry
form for U.S. Treasury securities may not be reversible.

 

d.     Registered Holder of Collateral.  Pledgor authorizes the Bank, while an Event of Default exists, to transfer any of the
Collateral into its own name or that of its nominee so that the Bank or its
nominee may appear on record as the sole owner thereof; provided, however,
notwithstanding such a transfer, the Bank shall refrain from exercising its
rights under Section 9 until the occurrence of an Event of Default.

 

10.  STANDARD OF CARE.  Other than the exercise of reasonable care in
the custody of the Collateral in the Bank’s physical possession, the Bank shall
have no responsibility or duty with respect to any of the Collateral or any
matter or proceeding arising out of or relating thereto and shall have no
liability to Pledgor (or Borrower, if not same) arising from any failure or
delay by the Bank.  The Bank shall be
deemed to have exercised reasonable care in the custody and preservation of any
portion of the Collateral which is in its possession if the Bank affords such
portion of the Collateral treatment substantially equal to the treatment that
the Bank accords its own assets of a similar nature; provided, however, that
the Bank shall have no duty to sell or convert any of the Collateral whose
market value is declining.  In no event
shall the Bank be obligated to (a) preserve any right or remedy of Pledgor
against any party with respect to any of the Collateral; (b) ascertain any
maturity, call, exchange, conversion, redemption, offer, tender or similar
matter relating to any of the Collateral or provide notice of any such matter
to Pledgor; or (c) provide to Pledgor any communication received by the
Bank or its nominee.  Pledgor
acknowledges that Pledgor is not looking to the Bank to provide it with
investment advice.

 

11.  COSTS AND EXPENSES; INDEMNITY.

 

a.     Bank Costs.  Pledgor agrees to pay on demand all costs and
expenses incurred by the Bank in enforcing this Agreement, in realizing upon or
protecting any of the Collateral (including preserving the value of any of the
Collateral) and in enforcing and collecting any of the Obligations or any
guaranty thereof, including, without limitation, if the Bank retains counsel
for advice, suit, appeal, insolvency or other proceedings under the Federal
Bankruptcy Code or otherwise, or for any of the above purposes, the actual
attorneys’ fees incurred by the Bank (collectively “Bank Costs”).  Payment of all Bank Costs is secured by the
Collateral.

 

b.     Indemnity.  Pledgor shall indemnify the Bank and its
directors, officers and employees, agents and attorneys against, and hold them
harmless from, all liabilities, costs or expenses, including attorneys’ fees,
incurred by any of them under the corporate or securities laws applicable to
holding, registering or selling any of the Collateral, except for liability,
costs or expenses arising out of the gross negligence or willful misconduct of
the Bank.

 

7

 

12.  MISCELLANEOUS.

 

a.               When
all of the Obligations have been discharged in full, the certificated
securities and all related stock transfer powers or any remainder thereof shall
be promptly released and returned to the Pledgor or such other party as
designated by the Pledgor.

 

b.               Remedies
Cumulative; Non-Waiver.  The
Bank shall have all of the rights and remedies of a secured party under the UCC
and other applicable law as well as those specified by agreement with Pledgor
or Borrower.  All rights and remedies of
the Bank are cumulative, and no right or remedy shall be exclusive of any other
right or remedy.  No single, partial or
delayed exercise by the Bank of any right or remedy shall preclude full and timely
exercise at any time of any right or remedy of the Bank without notice.  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.

 

c.               Construction  This Agreement and any agreement executed in
connection herewith contains the entire agreement between the Bank and Pledgor
with respect to the Collateral, and supersedes every course of dealing, other
conduct, oral agreement and representation previously made by the Bank.  Pledgor expressly disclaims any reliance on
any oral representation of the Bank with respect to the subject matter of this
Agreement or otherwise.  No change in
this Agreement shall be effective unless made in a writing duly executed by the
Bank.  This Agreement is a binding obligation
enforceable against Pledgor and its successors and assigns and shall inure to
the benefit of the Bank and its successors and assigns.  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 a court deems any provision invalid, the
remainder of this Agreement shall remain in effect.  Pledgor agrees that, in any legal proceeding,
a copy of this Agreement kept in the course of the Bank’s business may be
admitted into evidence as an original. Unless the context otherwise clearly
requires, references to plural includes the singular and references to the
singular include the plural and “or” has the inclusive meaning represented by
the phrase “and/or”.  Section headings
are for convenience only.  Neuter
pronouns shall be construed as masculine or feminine, and singular forms as
plural, as appropriate.

 

d.               Guaranty
of Obligations.  Solely to
the extent required by applicable law to make the Collateral available for
payment of the Obligations, Pledgor guarantees the payment of the Obligations,
without set-off, counterclaim or other deduction and without limitation as to
amount.

 

e.               Waiver
of Subrogation.  Pledgor
hereby waives any claim, right or remedy which Pledgor may now have or
hereafter acquire against Borrower that arises hereunder or from the
performance by Pledgor hereunder including, without limitation, any claim,
remedy or right of subrogation, reimbursement, exoneration, indemnification,
contribution or participation in any claim, right or remedy of the Bank against
Borrower or any security which the Bank now has or hereafter acquires, whether
or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise.

 

f.                 Notices.  Any demand or notice hereunder or under any
applicable law pertaining hereto shall be in writing and duly given if
delivered to Pledgor (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) 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 Pledgor and the
Bank.

 

g.              Joint
and Several Liability.  If
there is more than one Pledgor, each of them shall be jointly and severally
liable pursuant to this Agreement and the term “Pledgor” shall include each as
well as all of them.

 

h.              Governing
Law and Jurisdiction.  This
Agreement has been delivered to and accepted by the Bank 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.  PLEDGOR
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 PLEDGOR’S ADDRESS SET FORTH ABOVE FOR
PROVIDING NOTICE OR DEMAND; PROVIDED THAT NOTHING CONTAINED IN THIS AGREEMENT
WILL PREVENT THE BANK FROM BRINGING ANY ACTION, ENFORCING ANY AWARD OR JUDGMENT
OR EXERCISING ANY RIGHTS AGAINST PLEDGOR INDIVIDUALLY, AGAINST ANY SECURITY OR
AGAINST ANY PROPERTY OF PLEDGOR WITHIN ANY OTHER COUNTY, STATE OR OTHER FOREIGN
OR DOMESTIC JURISDICTION. 
Pledgor acknowledges and agrees that the venue provided above is the
most convenient forum for both the Bank and Pledgor.  Pledgor waives any objection to venue and any
objection based on a more convenient forum in any action instituted under this
Agreement.

 

i.                 Waiver
of Jury Trial.  PLEDGOR AND THE BANK
HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY
JURY PLEDGOR AND THE BANK MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR
IN EQUITY, IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS RELATED
HERETO. PLEDGOR 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.  PLEDGOR ACKNOWLEDGES THAT THE BANK HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE PROVISIONS OF
THIS SECTION.

 

13.  TIN CERTIFICATION.  Under penalties of perjury, Pledgor certifies
that: (1) the taxpayer number set forth below is Pledgor’s correct social
security or employer identification number (or I am waiting for a number to be
issued to me); and (2) Pledgor is not subject to backup withholding
because (a) Pledgor is exempt from backup withholding; (b) Pledgor
has not been notified by the Internal Revenue Service (“IRS”) that it is
subject to backup withholding as a result of a failure to report all interest
or dividends; or (c) the IRS has notified Pledgor that it is no longer
subject to backup withholding.  CERTIFICATION INSTRUCTIONS:  
Pledgor must cross out item (2) if it has been notified by the IRS
that Pledgor is currently subject to backup withholding because of
under-reporting interest or dividends on Pledgor’s tax return.

(Please check here o only if you
are subject to backup withholding.)

 

8

 

The IRS does not require your
consent to any provision of this document other than the certifications
required to avoid backup withholding.

 

	
  Dated: 

  	
  December 10, 2009

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SS#/TIN 16-0470200

  	
   

  	
  PLEDGOR:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HARDINGE INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  /S/ DOUGLAS J. MALONE

  	
   

  	
  By: 

  	
  /S/ EDWARD J. GAIO

  
	
  Witness Signature

  	
   

  	
   

  	
  Name: 

  	
  Edward J. Gaio

  
	
  Douglas J. Malone

  	
   

  	
   

  	
  Title:

  	
  Vice President and CFO

  
	
  Witness Name Printed

  	
   

  	
   

  	
   

  

 

ACKNOWLEDGMENT

 

	
  STATE OF NEW YORK

  	
  )

  
	
   

  	
  : SS.

  
	
  COUNTY OF CHEMUNG

  	
  )

  

 

On
the 10th day of December, 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 CURREN

  
	
   

  	
  Notary
  Public - Nancy Curren

  

 

9

 

SCHEDULE
A

to

PLEDGE
OF SECURITIES

 

of
HARDINGE INC. (“Pledgor”)

 

 

DESCRIPTION
OF PLEDGED SECURITIES

 

1.              Maximum
Obligation to Value:                 %   OR   Minimum Market Value: $                               

 

2.              Initial
Market Value: $                                                     

 

3.              List of
Collateral for Initial Pledge:

 

	
   

  	
  o

  	
  See attached copy of account
  statement from Institution

  
	
   

  	
   

  	
   

  
	
   

  	
  x

  	
  See list below or on
  separate sheet

  

 

(include:
number of shares or face value, issue name, CUSIP number, maturity date)

 

63,747
shares issued by Hardinge Holdings GmbH with a total nominal value of CHF
6,374,700

 

If Collateral is held by an
Institution, also complete the following:

 

	
  4.

  	
  Institution Holding Collateral

  
	
   

  	
   

  
	
   

  	
  M&T
  Bank

  
	
   

  	
   

  
	
   

  	
  One
  Fountain Plaza, 3rd Floor

  
	
   

  	
   

  
	
   

  	
  Buffalo,
  New York 14203

  
	
   

  	
   

  
	
   

  	
  Attention:
  David Ducatte Commercial Closing Department

  
	
   

  	
   

  
	
   

  	
  Phone:

  
	
   

  	
   

  
	
  5.

  	
  M&T Collateral Account
  No. (at Institution):

  
	
   

  	
   

  
	
  6.

  	
  Brokerage Account Title:

  	
  M&T Collateral Account
  for Hardinge Inc.

  
	
   

  	
   

  	
  (Pledgor)

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Statements to:

  	
  M&T Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  
	
   

  	
   

  	
  (Loan Officer)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}]]