Document:

EXHIBIT 10.2

 

FRAMEWORK AGREEMENT FOR CREDIT
PRODUCTS

between

 

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

Heiligkreuzstrasse 28, 9008
St. Gallen

(hereinafter referred to as “the Borrower”)

 

And

 

CREDIT SUISSE

	
  Mailing address:

  	
  P.O. Box 564, 9001 St. Gallen

  
	
  Contact address:

  	
  St. Leonhardstrasse 3, 9000 St. Gallen

  

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

 

	
  Amount of Credit Facility 

  	
   

  	
  CHF 5’000’000.00

  
	
   

  	
   

  	
   

  
	
  Purpose of Credit Facility

  	
   

  	
  Working Capital Facility

  
	
   

  	
   

  	
   

  
	
  Utilization

  	
   

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

   

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

   

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

   

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

  
	
   

  	
   

  	
   

  
	
  Conditions for Utilization of
  the Credit Facility

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Interest Rate

  	
   

  	
  Fixed advances

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

   

  General

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

  
	
   

  	
   

  	
   

  
	
  Interest Due Date

  	
   

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

  

 

1

 

	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Special
  Costs

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Account Closings

  	
   

  	
  Fixed advances are closed upon maturity.

  
	
   

  	
   

  	
   

  
	
  Collateral

  	
   

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

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

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

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

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

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

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

  
	
   

  	
   

  	
   

  
	
  Financial Ratios

  	
   

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

   

  Minimum Equity

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

  
	
   

  	
   

  	
   

  
	
  Borrower’s Affirmative
  Obligations

  	
   

  	
  ·                  Obligation to provide
  information

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

   

  · Quarterly:

  

 

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

   

  · Annually:

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

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

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·                  Pari Passu 

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Borrower’s Negative Obligations

  	
   

  	
  ·                  Negative Pledge Clause

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

  
	
   

  	
   

  	
   

  
	
  Late Payment

  	
   

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

   

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

  
	
   

  	
   

  	
   

  
	
  Ordinary Termination

  	
   

  	
  ·                  Framework agreement

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

   

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

   

  Irrespective of termination of the framework
  agreement, fixed 

  

 

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·                  General

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

  
	
   

  	
   

  	
   

  
	
  Maturity of a Fixed Advance 

  	
   

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

   

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

  
	
   

  	
   

  	
   

  
	
  Early Termination

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

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

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

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

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

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

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

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

  ·                  the auditor’s report contains a material qualification.

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  

 

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

  
	
   

  	
   

  	
   

  
	
  Automatic Acceleration of Due
  Date in the event of deficient cover

  	
   

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

  
	
   

  	
   

  	
   

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

  	
   

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

   

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

  
	
   

  	
   

  	
   

  
	
  Credit Risk Hedging

  	
   

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

   

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

   

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

  
	
   

  	
   

  	
   

  
	
  Additional Agreements and Special Contractual Terms

  	
   

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

  

 

5

 

	
   

  	
   

  	
  an
  integral part of this framework agreement.

   

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

  
	
   

  	
   

  	
   

  
	
  General Conditions

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Place of Performance

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Applicable Law and Place of
  Jurisdiction

  	
   

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

   

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

  
	
   

  	
   

  	
   

  
	
  Issuance/Signing of
  Agreement

  	
   

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

  

 

 

	
  CREDIT SUISSE

  	
   

  	
   

  	
   

  	
  L. Kellenberger & Co. AG

  
	
   

  	
   

  	
   

  	
   

  	
  Maschinenfabrik, St. Gallenn

  
	
   

  	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Armin Signer

  	
   

  	
  /s/ Christian Peters

  	
   

  	
  /s/ Peter Huersch

  
	
  Armin Signer

  	
   

  	
  Christian Peters

  	
   

  	
  Peter Huersch

  
	
   

  	
   

  	
   

  	
   

  	
  Borrower’s signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Zürich, 12. August 2009

  	
   

  	
   

  	
   

  	
  St. Gallen, 20 August 2009

  
	
   

  	
   

  	
   

  	
   

  	
  Place and date

  

 

 

“General
Conditions including Safe Custody Regulations”

 

6

 

General
Conditions

 

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

 

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

 

Art. 1
Identity check

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

 

Art. 2 Legal
incapacity

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

 

Art. 3
Communications from the Bank

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

 

Art. 4
Errors in transmission

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

 

Art. 5
Defective execution of instructions

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

 

Art. 6
Saturday an official holiday

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

 

Art. 7
Complaints

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

 

Art. 8 Right
of lien and set-off

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

 

Art. 9
Accounts

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

 

Art. 10
Accounts in foreign currencies

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

 

7

 

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

 

Art. 11
Drafts, cheques and other instruments

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

 

Art. 12
Termination of business relationship

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

 

Art. 13
Outsourcing of operations

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

 

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

 

Art. 15 Bank
customer secrecy

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

 

Art. 16
Amendments to the General Conditions

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

 

8

 

Safe
Custody Regulations

General Provisions

 

Art.1
Validity

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

 

Art. 2
Acceptance of Safe Custody Assets

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

 

Art. 3
Verification of Safe Custody Assets

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

 

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

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

 

Art. 5 Duty
of due Care of the Bank

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

 

Art. 6
Delivery and disposal of the Safe Custody Assets

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

 

Art. 7
Remuneration of the Bank

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

 

Art. 8
Duration of the Agreement

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

 

Art. 9
Amendments to the Safe Custody Regulations

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

 

Special Provisions for

Open Safekeeping Accounts

 

Art. 10 Form of
safekeeping

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

 

9

 

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

 

Art. 11
Administration

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

 

Art. 12
Postponed printing of certificates

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

 

Art. 13
Fiduciary Acceptance of Safe Custody Assets

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

 

Art. 14
Credits and debits

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

 

Art. 15
Statements

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

 

10

 

Conditions
for Payment Transactions

 

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

 

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

 

1.
Requirements for the Execution of a Payment Order

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

 

a) Payment
Order Specifications

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

 

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

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

􀂃 the payment amount, including
specification of currency

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

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

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

􀂃 the desired date of execution
of the payment order.

 

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

 

b)
Available Funds

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

 

c) Power of
Disposal

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

 

d) No
Disposal Restraints/Restrictions

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

 

2. Execution
of a Payment Order

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

 

3. Rejection
of the Payment Order

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

 

4. Credit

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

 

11

 

5. Waiver of
Data Comparison

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

 

6. Reverse
Transfers of Incoming Payments

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

 

7. Credit
and Debit Date

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

 

8. Credit
and Debit Advice Slips

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

 

9. Currency
Conversion/Exchange Risk

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

 

10. Fees

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

 

11. Cut-Off
Times

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

 

12. Data
Processing / Forwarding

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

 

13.
Applicable Law

These Conditions are governed
exclusively by Swiss law.

 

12

 

14. Changes
to the Conditions

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

 

15. Further
Special Contractual Conditions Affecting Payment Transactions

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

 

16. General
Conditions

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

 

13EXHIBIT
10.3

 

	
  BUSINESS LOAN AGREEMENT

  	
   

  	
  Chemung Canal Trust Company

  
	
   

  	
   

  	
  One Chemung Canal Plaza

  
	
   

  	
   

  	
  Elmira, New York 14901

  
	
   

  	
   

  	
  (607) 737-3711

  
	
   

  	
   

  	
   

  
	
  LOAN NUMBER

  	
   

  	
  AGREEMENT DATE

  	
   

  	
  ACCOUNT NUMBER

  
	
  702062413

  	
   

  	
  August 26, 2009

  	
   

  	
  702062413

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BORROWER INFORMATION

  	
   

  	
   

  
	
  Hardinge Inc.

  	
   

  	
  Type of Business
  Entity: Corporation

  
	
  1 Hardinge Drive

  	
   

  	
  State of Organization:
  New York

  
	
  Elmira, NY 14902

  	
   

  	
   

  

 

AGREEMENT. 
This Business Loan Agreement will be referred to in this document as the
“Agreement.”  This Agreement is made by
Chemung Canal Trust Company (Lender) and Borrower.  The consideration is the promises,
representations, and warranties made in this Agreement and Related Documents.

 

DEFINITIONS. 
These definitions are used in this Agreement.

 

“Collateral” means the Property, if any, that all
Obligors pledge, mortgage, or give Lender a security interest in, regardless of
where the Property is located and regardless of when it was or will be
acquired, together with all replacements, substitutions, proceeds, and products
of the Property.

 

“Events
of Default” means
any of the events described in the “Events of Default” section of this
Agreement.

 

“Financial
Statements” means
the balance sheets, earnings statements, and other financial information that
Obligors have, are, or will be giving to Lender.

 

“Indebtedness” means the Loan and all other loans and
indebtedness of Borrower to Lender, including but not limited to Lender’s
payments of insurance or taxes, all amounts Lender pays to protect its interest
in the Collateral, overdrafts in deposit accounts with Lender, and all other
indebtedness, obligations, and liabilities of Borrower to Lender, whether
matured or unmatured, liquidated or unliquidated, direct or indirect, absolute
or contingent, joint or several, due or to become due, now existing or
hereafter arising.

 

“Loan” means the loan or loans Lender makes to
Borrower under the note or notes dated the same date as this Agreement that
Borrower gives to Lender and all amendments, extensions, renewals, and
refinancing.

 

“Obligor” means any person having obligation to
Lender, whether for the payment of money or otherwise, under this Agreement or
under the Related Documents, including but not limited to any guarantors of the
Indebtedness.

 

“Parties” means all Borrowers guarantors, and Non-Borrower
Debtors signing this Agreement.

 

“Party” means any Borrower, guarantor, and
Non-Borrower Debtor signing this Agreement.

 

“Property” means the Parties assets, regardless of
what kind of assets they are.

 

“Related
Documents” means
all documents, promissory notes, security agreements, leases, mortgages,
construction loan agreements, assignments of leases and rents, guaranties,
pledges, and all other documents or agreements executed in  connection with this Agreement.  The term includes both documents existing at
the time of execution of this Agreement and documents executed after the date
of this Agreement.

 

IDENTIFICATION OF
INDEBTEDNESS.  The following loan and any amendments,
extensions, renewals or refinancing (the “Loans”) thereof is subject to this
Agreement:

 

·                  Loan number 702062413 with a principal amount of
$3,000,000.00

 

BORROWER’S REPRESENTATIONS AND
WARRANTIES.  Obligors represent and warrant to Lender
the accuracy of the description of Borrower, the statements made in this
section.  The representations and
warranties will continue and remain in effect until all of the Indebtedness is
fully paid to Lender and Obligors’ obligations are fully performed.

 

Borrower’s
Existence and Authority.  Borrower is duly formed and in good
standing under all laws governing Borrower and Borrower’s business, and the
person or persons executing this Agreement have the power and authority to
execute this Agreement and the Related Documents and to bind Borrower to the
obligation created in this Agreement and the Related Documents.

 

Financial
Information and Filing.  All Financial Statements
provided to Lender have been prepared and will continue to be prepared in
accordance with generally accepted accounting principles, consistently applied,
and fully and fairly present the financial condition of Obligors, and there has
been no material adverse change in Obligors’ business, Property, or condition,
either financial or otherwise, since the date of Obligors’ latest Financial
Statements. Obligors have filed all federal, state, and local tax returns and
other reports and filings required by law to be filed before the date of this
Agreement and have paid all taxes, assessments, and other charges that are due
and payable prior to the date of this Agreement.  Obligors have made reasonable provision for
these types of payments that are 

 

 

accrued but not yet
payable.  Borrower does not know of any
deficiency or additional assessment not disclosed in Borrower’s books and
records.

 

Title and
Encumbrances.  Each Obligor has good title to, or valid
leasehold interests in, all its respective real and personal property material
to its respective business, except for liens or encumbrances permitted pursuant
to Section 4c of that certain Credit Agreement, dated as of March 16,
2009 (as amended, restated, replaced or otherwise modified from time to time,
the “Credit Agreement”), between the Borrower and Manufacturers and Traders
Trust Company, as administrative agent, or minor defects in title that do not
interfere with its ability to conduct its respective business as currently
conducted or to utilize such properties for their intended purposes.

 

Compliance
with General Law.  Borrower is in compliance with and will
conduct its business and use its assets in compliance with all laws,
regulations, ordinances, directives, and orders of any level of governmental
authority that has jurisdiction over Borrower, Borrower’s business or Borrower’s
assets, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a material adverse effect on the
business, assets, property or condition (financial or otherwise) of the
Borrower and the subsidiaries taken as a whole.

 

Environmental
Compliance.  Obligors are in compliance with all
applicable laws and rules of federal, state, and local authorities
affecting the environment, as all have been or are amended, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a material adverse effect on the business, assets,
property or condition (financial or otherwise) of the Borrower and the
subsidiaries taken as a whole.

 

No
Litigation/No Misrepresentations.  There are no existing or pending suits or
proceedings before any court, government agency, arbitration panel,
administrative tribunal, or other body, or threatened against Borrower that may
result in any 

material adverse change
in Borrower’s business, property, or financial condition, and all
representations and warranties in this Agreement and the Loan Documents are
true and correct in all material respects and no material fact has been
omitted.

 

COVENANTS.  On the date of this Agreement and continuing until the
Indebtedness is repaid and Borrower’s obligations are fully performed, Borrower
covenants as follows.

 

Notices
of Claims and Litigation/Notice of Adverse Events. 
Borrower will promptly notify Lender in writing of all threatened and
actual litigation, governmental proceeding, default, and every other occurrence
that may have a material adverse effect on Borrower’s business, financial
condition, or the Property.

 

Confirmatory
Documents and Actions.  Borrower agrees that on Lender’s
request, Borrower will do any act or execute any additional documents that are
or may be required to make the terms of the Loan conform to the conditions contained
in Lender’s commitment to Borrower. 
Within five days of Lender’s request, Borrower will furnish an estoppel certificate
in a form Lender approves.

 

Payment
of Taxes.  Borrower will pay all taxes, levies, and
assessments required by all local, state, and federal agencies. Borrower will
make these payments when the amounts are due but before any penalty for late
payment is imposed. Borrower’s failure to promptly pay any tax, levy, or
assessment due will be an Event of Default unless Borrower is diligently disputing
the amount and Borrower has established a reserve account for the payment of
the taxes if Borrower does not prevail in the dispute.

 

Business
Existence and Operations.  Borrower will keep Borrower’s
existence in its current organizational form in full force and effect unless
Lender receives prior written notice of Borrower’s proposed change.  Borrower will not sell or merge Borrower’s
business or any part of Borrower’s business without prior written notice to the
Lender.  Borrower will continue its
business as currently conducted. 
Borrower will not change its name, its identification number, or its
place of organization without prior written notice to the Lender.  Borrower will keep its books and records at
the address in this Agreement. Borrower will promptly notify Lender in writing
of any planned change in Borrower’s principal place of business.

 

Environmental
Compliance.  Borrower will comply with all laws affecting
the environment, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a material adverse
effect on the business, assets, property or condition (financial or otherwise)
of the Borrower and the subsidiaries taken as a whole. Borrower will notify
lender within ten days after Borrower receives a summons, notice, citation,
letter, or any other type of notice from any federal, state, or local
authority, or any other person that claims Borrower, is in violation of any law
affecting the environment.  Obligors
indemnify and hold Lender harmless from all violations of any environmental
laws. This indemnity includes all costs and expenses incurred by Lender,
including reasonable attorneys’ fees, that are related to a violation of any
environmental laws, even if the Indebtedness has been paid at the time any
proceeding, claim, or action is started against Lender. Lender may itself or
through Borrower arrange for an environmental audit prepared by a qualified environmental
engineering firm acceptable to Lender to confirm the continued accuracy of
Borrower’s environmental representations and warranties.  Borrower will pay for the environmental
audit.

 

Use of
Proceeds.  Borrower will use the loan proceeds in its
business.

 

Pay
Limitations.  Borrower will not draw, permit, or pay anyone
more that is reasonable for services provided to Borrower.

 

Other
Information.  From the date hereof until the Indebtedness
is fully repaid and all of Obligors’ obligations are fully performed and
satisfied, the Parties cited below agree, unless otherwise consented to in
writing by Lender, they will submit the following:

 

Hardinge Inc. — Audited
Annual Statements within 120 days after the end of each calendar year in form
acceptable to Lender.

 

 

EVENTS OF DEFAULT. 
The occurrence of any of the following events will be an Event of
Default.

 

Noncompliance
with Lender Agreements.  Default by Borrower under any
provision of this Agreement, the Related Documents, or any other agreement with
Lender that is uncured for 10 days after receipt of notice from Lender of such Default.

 

False
Statements.  If an Obligor made or makes a materially
false or misleading misrepresentation in the Related Documents, in any
supporting material submitted to Lender or to third parties providing reports
to Lender, or in Financial Statements given or to be given to Lender.

 

Material
Adverse Change.  Any material adverse change in the Borrower’s
business, financial condition, or the Property has occurred or is imminent; if
the full performance of the obligations of any Obligor is materially impaired;
or if the Collateral and its value or Lender’s rights with respect thereto are
materially impaired in any way.  The
existence or reasonable likelihood of litigation, governmental proceeding, default,
or other event that may materially and adversely affect an Obligor’s business,
financial condition, or the Property.

 

Insolvency
or Liquidation.  An Obligor voluntarily suspends
transaction of its business or does not generally pay debts as they mature.  If an Obligor has or will made a general
assignment for the benefit of creditors or will file, or have filed against it,
any petition under federal bankruptcy law or under any other state or federal
law providing for the relief of debtors if the resulting proceeding is not
discharged within thirty days after filing. 
If a receiver, trustee or custodian is or will be appointed for an
Obligor.

 

Default
on Unrelated Debt.  If Borrower materially defaults under the
Credit Agreement so that the indebtedness under the Credit Agreement is
accelerated.

 

Judgments
or Attachments.  If there is entered against an Obligor a
judgment that materially affects the Borrower’s business, financial condition,
or the Property, and the same shall remain undischarged for a period of thirty consecutive
days during which execution shall not be effectively stayed, or if a tax lien,
levy, writ of attachment, garnishment, execution, or similar item is or will be
issued against the Collateral or which materially affects the Borrower’s business,
financial condition, or the Property, and which remains unpaid, unstayed on
appeal, undischarged, unbonded, or undismissed for thirty days after it was
issued.

 

Termination
of Existence or Change in Control.  Except as
permitted under the Credit Agreement, if Borrower or Borrower’s business is
sold or merged or if Borrower or Borrower’s business suspends business or
ceases to exist.

 

REMEDIES ON DEFAULT.

 

Remedies,
No Waiver.  The remedies provided for in this Agreement,
the Related Documents, and by law are cumulative and not exclusive.  Lender reserves the right to exercise some,
all, or none of its rights and reserves the right to exercise any right at any
time that Lender has the right, without regard to how much time has passed
since the right arose.  Lender may exercise
its rights in its sole, absolute discretion.

 

Acceleration,
Setoff.  Upon an Event of Default, the Loan and the
Indebtedness may, at Lender’s sole option, be declared immediately due and
payable.  Lender may apply Obligor’s bank
accounts and any other property held by Lender against the Indebtedness.

 

CROSS-DEFAULT. 
The default of any Party under the Related Documents, or under any other
obligation to Lender is a default under this Agreement if uncured for 10 days
after receipt of notice of such default from Lender.

 

ATTORNEY’S FEES AND OTHER COSTS. If legal proceedings are instituted to
enforce the terms of this Agreement, Borrower agrees to pay all reasonable
costs of the Lender in connection therewith, including reasonable attorneys’
fees, to the extent permitted by law.

 

EXPENSES. 
Obligors agree to pay all of Lender’s reasonable expenses incidental,
Uniform Commercial Code search fees, and all reasonable fees incurred by Lender
for audits, inspection, and copying of the Obligors’ books and records.  Obligors also agree to pay all reasonable
costs and expenses of Lender in connection with the enforcement of Lender’s
rights and remedies under this Agreement, the Related Documents, and any other
agreement between one of more Obligors and Lender, and in connection with the
preparation of all amendments, modifications, and waivers of consent with
respect to this Agreement, including reasonable attorneys’ fees.

 

GOVERNING LAW/PARTIAL ILLEGALITY. 
This Agreement and the Related Documents are and will be governed by,
and the rights of the Parties will be determined by the laws of the state of
New York except to the extent that federal law controls.  If any part, term,or provision of this Agreement
is determined to be illegal or in conflict with state or federal law, the
validity of the remaining portion or provisions of this Agreement will not be
affected, unless the stricken portion or provision adversely affects Lender’s
risk of realizing Lender’s anticipated return, in which case Lender may, in its
sole discretion, deem the Loan matured.

 

NOTICES. 
All notices required under this Agreement must be in writing and will be
considered given: (i) on the day of personal delivery, or (ii) one
business day after deposit with a nationally recognized overnight courier
service, or (iii) three business days after deposit with the United States
Postal Service sent certified mail, return receipt requested.  Any of these methods may be used 

 

 

to give notice.  All notices must be sent to the party or
parties entitled to notice at the address first set forth in this
Agreement.  Any Party may change its
address for notice purposes on five days prior written notice to the other
Parties.

 

INTEGRATION AND AMENDMENT. 
This Agreement and other written agreements among the Parties, including
but not limited to the Related Documents, are the entire agreement of the
Parties and will be interpreted as a group, one with the others.  None of the Parties will be bound by anything
not expressed in writing, and this Agreement cannot be modified except by a
writing executed by those Parties burdened by the modification.

 

FURTHER ACTION. 
Obligors will, upon request of Lender, make, execute, acknowledge, and
deliver to Lender the modified and additional instruments, documents, and
agreements, and will take the further action that is reasonably required, to
carry out the intent and purpose of this transaction.

 

CONTINUING EFFECT.  Unless superseded by a later Business Loan Agreement,
this Agreement will continue in full force and effect until all of the Obligors’
obligations to Lender are fully satisfied and the Loan and Indebtedness are
fully repaid.

 

HEADINGS. 
All headings in this Agreement are included for reference only and do
not have any effect on the interpretation of this Agreement.

 

COUNTERPARTS. 
This Agreement may be executed by the Parties using any number of copies
of this Agreement.  All executed copies
taken together will be treated as a single Agreement.

 

TIME IS OF THE ESSENCE. 
Time is of the essence in the performance of this Agreement.

 

TRANSFERS. 
Borrower may not assign or transfer its rights or obligations under this
Agreement without Lender’s prior written consent.  Lender may transfer its interest in Lender’s
sole discretion.  Borrower waives all
rights of offset and counterclaim Borrower has against Lender.  The purchaser of a participation in the loan
may enforce its interest regardless of any claims or defenses Borrower has
against Lender.

 

JURISDICTION. 
Obligors agree to waive any objection to jurisdiction or venue on the
ground that Obligors are not residents of Lender’s locality.  Obligors authorize any action brought to
enforce Obligor’s obligations to be instituted and prosecuted in any state
court having jurisdiction or in the United States District Court for the
District that includes Lender’s location as set forth at the beginning of this
Agreement.  Obligors authorize lender to
elect the court at Lender’s sole discretion.

 

WAIVER OF JURY TRIAL.  All parties to this Agreement, waive, to the fullest extent permitted
by law, any right to trial by jury of any dispute, whether in contract, tort,
or otherwise, arising out of, in connection with, related to, or incidental to
the relationship established between them in this Agreement or any other
instrument, document, or agreement executed or delivered in connection herewith
or the transaction related hereto.

 

ORAL AGREEMENTS DISCLAIMER. 
This Agreement represents that final agreement between the parties and
may not be contradicted by evidence of prior, contemporaneous or subsequent
oral agreements of the parties.  There
are no unwritten oral agreements between the parties.

 

By signing this Agreement,
Borrower acknowledges reading, understanding and agreeing to all its
provisions.

 

Hardinge Inc.

 

	
  /S/ EDWARD J. GAIO

  	
   

  	
  8/26/09

  	
   

  	
  /S/ DOUGLAS MALONE

  	
   

  	
  8/26/09

  	
   

  
	
  By: Edward J Gaio

  	
   

  	
  Date

  	
   

  	
  By: Douglas Malone

  	
   

  	
  Date

  	
   

  
	
  Vice
  President

  	
   

  	
   

  	
   

  	
  Controller

  	
   

  	
   

  	
   

  

 

 

	
  COMMERCIAL
  LINE OF CREDIT

  	
  Chemung
  Canal Trust Company

  
	
  AGREEMENT
  AND NOTE

  	
  One Chemung Canal Plaza

  
	
   

  	
  Elmira, New York 14901

  
	
   

  	
  (607)737-3711

  

 

	
  LOAN NUMBER

  	
   

  	
  AGREEMENT
  DATE

  	
   

  	
  LOAN
  TERM

  	
   

  	
  LINE
  OF CREDIT LIMIT

  	
   

  
	
  702062413

  	
   

  	
  August 26, 2009

  	
   

  	
  On Demand

  	
   

  	
  $

  	
  3,000,000.00

  	
   

  
									

 

LOAN PURPOSE: Working Capital

 

BORROWER INFORMATION

 

Hardinge Inc.

1 Hardinge Drive

Elmira, NY 14902

 

LINE OF CREDIT AGREEMENT AND NOTE. This Commercial
Line of Credit Agreement and Note will be referred to in this document as the
“Agreement”.

 

LENDER. “Lender” means Chemung Canal
Trust Company whose address is One Chemung Canal Plaza, Elmira, New York 14901
, its successors and assigns.

 

BORROWER. “Borrower” means each person
or legal entity who signs this Agreement.

 

PROMISE TO PAY. For value received, receipt
of which is hereby acknowledged, the Borrower promises to pay, on demand by
Lender, the principal amount of Three Million and 00/100 Dollars
($3,000,000.00) or such lesser amount as shall have been advanced by Lender,
from time to time, to or on behalf of Borrower under this Agreement, and all
interest and any other charges, including service charges, to the order of
Lender at its office at the address noted above or at such other place as
Lender may designate in writing. The Borrower will make all payments in lawful
money of the United States of America.

 

PAYMENT SCHEDULE. This Agreement will be paid
according to the following required payment schedule: Beginning on August 31,
2009, monthly payments of accrued and unpaid interest. All payments received by
the Lender from the Borrower for application to the Line of Credit may be
applied to the Borrower’s obligations under the Line of Credit in such order as
determined by the Lender.

 

INTEREST RATE AND SCHEDULED PAYMENT CHANGES. The initial
variable interest rate on this Agreement will be 5.000% per annum. This
interest rate may change on August 27, 2009, and every day thereafter.
Each date on which the interest rate may change is called the “Change Date.”
Beginning with the first Change Date, Lender will calculate the new interest
rate based on Wall Street Journal Prime Rate in effect on the Change Date (the
“Index”). If the Index is not available at that time, Lender will choose a new
Index which is based on comparable information. The Index is used solely to
establish a base from which the actual rate of interest payable under this
Agreement will be calculated, and is not a reference to any actual rate of
interest charged by any lender to any particular borrower. The interest rate
will never be greater than 16.000% or less than 5.000%.

 

Nothing contained herein shall be construed as to require the Borrower
to pay interest at a greater rate than the maximum allowed by law. If, however,
from any circumstances, Borrower pays interest at a greater rate than the
maximum allowed by law, the obligation to be fulfilled will be reduced to an
amount computed at the highest rate of interest permissible under applicable
law and if, for any reason whatsoever, Lender ever receives interest in an
amount which would be deemed unlawful under applicable law, such interest shall
be automatically applied to amounts owed, in Lender’s sole discretion, or as
otherwise allowed by applicable law. A change in the interest rates may result
in a change in your payment amount. Interest on this Agreement is calculated on
a 365/360 day basis.

 

LATE PAYMENT CHARGE. If any required payment is
more than 10 days late, then at Lender’s option, Lender will assess a late
payment charge of 4% of the amount past due, subject to a maximum charge of
$50.00.

 

LINE OF CREDIT TERMS. This Agreement is
discretionary. The Borrower acknowledges and agrees that although the Borrower
may from time to time request an advance under this Agreement up to a maximum
amount equal to the Line of Credit Limit, the Lender in no way is obligated to
make such advance and all advances will be made by Lender in its sole and
absolute discretion and subject to the terms and conditions of this Agreement.

 

Advances.

 

·      Advances under
this Agreement may be requested orally or in writing by the Borrower or by an
authorized person.

·      The total of
all advances requested and unpaid principal cannot exceed Three Million and 00/100
Dollars ($3,000,000.00).

·      All advances
made will be charged to a loan account in Borrower’s name on Lender’s books,
and the Lender shall debit such account the amount of each advance made to, and
credit to such account the amount of each repayment made by Borrower. Lender
shall provide to Borrower periodic statements of Borrower’s loan account, which
shall be deemed to be correct, accepted by, and binding upon Borrower unless
Lender receives a written statement of exception from Borrower within 10 days
after such statement is furnished.

 

Suspension and Termination. Advances under this
Agreement will be available until the earlier to occur of (a) demand by
the Lender; (b) the Line of Credit is cancelled by Borrower; or (c) the
occurrence of an Event of Default.

 

RIGHT
OF SET-OFF. To the extent permitted by law, Borrower agrees
that Lender has the right to set-off any amount due and payable under this
Agreement, whether matured or unmatured, against any amount owing by Lender to
Borrower including any or all of Borrower’s accounts with Lender. This shall
include all accounts Borrower holds jointly with someone else and all accounts
Borrower may open in the future. Such right of set-off may be exercised by Lender
against Borrower or against any assignee for the benefit of creditors, receiver,
or execution, judgment or attachment creditor of Borrower, or against anyone
else claiming through or against Borrower of such assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off has not been exercised by
Lender prior to the making, filing or issuance or service upon Lender of, or of
notice of, assignment for the benefit of creditors, appointment or application
for the appointment of a receiver, or issuance of execution, subpoena or order or
warrant.

 

PAYABLE
ON DEMAND. This is a demand note. Payment is due upon Lender’s
demand.

 

DEFAULT. Upon the
occurrence of any one of the following events (each, an “Event of Default” or
“default” or “event of default”), Lender’s obligations, if any, to make any
advances will, at Lender’s option, immediately terminate and Lender, at its
option, may declare all indebtedness of Borrower to Lender under this Agreement
to be immediately due and payable without further notice of any kind notwithstanding
anything to the contrary in this Agreement or any other agreement: (a) Borrower’s
failure to make any payment on time or in the amount due; (b) any default
by Borrower under the terms of this Agreement or any other agreement, security
agreement executed in connection with this Agreement (individually, a “Loan
Document” and collectively, the “Loan Documents”); (c) any default by
Borrower under the terms of any other loan agreement, security agreement,
mortgage or other document in favor of Lender; (d) the death, dissolution,
or termination of existence of Borrower or any guarantor; (e) Borrower is
not paying Borrower’s debts as such debts become due; (f) the commencement
of any proceeding under bankruptcy or insolvency laws by or against Borrower or
any guarantor or the appointment of a receiver; (g) any default under the terms
of any other indebtedness of Borrower to any other creditor; (h) any writ
of attachment, garnishment, execution, tax lien or similar instrument is issued
against any collateral securing the loan, if any, or any of Borrower’s property
or any judgment is entered against Borrower or any

 

	
  ©
  2004-2008 Copyright Compliance Systems, Inc. B44F-0301 - 2008.05.220

  	
  www.compliancesystems.com

  
	
  Commercial
  Line of Credit Agreement and Note - DL4006

  	
  800-968-8522 - Fax 616-956-1868

  

 

1

 

guarantor; (i) any part of Borrower’s business
is sold to or merged with any other business, individual, or entity; (j) any
representation or warranty made by Borrower to Lender in any of the Loan
Documents or any financial statement delivered to Lender proves to have been
false in any material respect as of the time when made or given; (k) if
any guarantor, or any other party to any agreement or instrument with or in
favor of Lender entered into or delivered in connection with the Loan
terminates, attempts to terminate or defaults under any such agreement or
instrument; (1) Lender has deemed itself insecure or there has been a
material adverse change of condition of the financial prospects of Borrower or
any collateral securing the obligations owing to Lender by Borrower. Upon the
occurrence of an event of default, Lender may pursue any remedy available under
any Related Document, at law or in equity.

 

RELATED DOCUMENTS. If this Agreement is secured
by a security agreement, mortgage, deed of trust, trust deed, security deed or
loan agreement of even or previous date, it is subject to all the terms
thereof.

 

GENERAL WAIVERS. To the extent
permitted by law, the Borrower severally waives any required notice of
presentment, demand, acceleration, intent to accelerate, protest and any other
notice and defense due to extensions of time or other indulgence by Lender or
to any substitution or release of collateral. No failure or delay on the part
of Lender, and no course of dealing between Borrower and Lender, shall operate
as a waiver of such power or right, nor shall any single or partial exercise of
any power or right preclude other or further exercise thereof or the exercise
of any other power or right.

 

JOINT AND SEVERAL LIABILITY. If permitted by law, each
Borrower executing this Agreement is jointly and severally bound.

 

SEVERABILITY. If a court of competent
jurisdiction determines any term or provision of this Agreement is invalid or
prohibited by applicable law, that term or provision will be ineffective to the
extent required. Any term or provision that has been determined to be invalid
or prohibited will be severed from the rest of this Agreement without
invalidating the remainder of either the affected provision or this Agreement.

 

SURVIVAL. The rights and privileges of
the Lender hereunder shall inure to the benefits of its successors and assigns,
and this Agreement shall be binding on all heirs, executors, administrators,
assigns and successors of Borrower.

 

ASSIGNABILITY. Lender may assign, pledge or
otherwise transfer this Agreement or any of its rights and powers under this
Agreement without notice, with all or any of the obligations owing to Lender by
Borrower, and in such event the assignee shall have the same rights as if
originally named herein in place of Lender. Borrower may not assign this
Agreement or any benefit accruing to it hereunder without the express written
consent of the Lender.

 

ORAL AGREEMENTS DISCLAIMER. This Agreement
represents the final agreement between the parties and may not be contradicted
by evidence of prior, contemporaneous or subsequent oral agreements of the
parties. There are no unwritten oral agreements between the parties.

 

GOVERNING LAW. This Agreement is governed by
the laws of the state of New York except to the extent that federal law
controls.

 

HEADING AND GENDER. The headings preceding text
in this Agreement are for general convenience in identifying subject matter,
but have no limiting impact on the text which follows any particular heading.
All words used in this Agreement shall be construed to be of such gender or
number as the circumstances require.

 

ATTORNEYS’ FEES AND OTHER COSTS. If legal
proceedings are instituted to enforce the terms of this Agreement, Borrower
agrees to pay all costs of the Lender in connection therewith, including
reasonable attorneys’ fees, to the extent permitted by law.

 

WAIVER OF JURY TRIAL. All parties to this Agreement
hereby knowingly and voluntarily waive, to the fullest extent permitted by law,
any right to trial by jury of any dispute, whether in contract, tort, or
otherwise, arising out of, in connection with, related to, or incidental to the
relationship established between them in this Agreement or any other
instrument, document or agreement executed or delivered in connection with this
Agreement or the related transactions.

 

By signing this Agreement, Borrower acknowledges
reading, understanding, and agreeing to all its provisions and receipt hereof.

 

	
  Hardinge
  Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Edward J. Gaio

  	
   

  	
  8/26/09

  	
   

  	
  /s/
  Douglas Malone

  	
   

  	
  8/26/09

  
	
  By:

  	
  Edward
  J Gaio

  	
  Date

  	
   

  	
  By:

  	
  Douglas
  Malone

  	
  Date

  
	
  Its:

  	
  Vice
  President

  	
   

  	
  Its:

  	
  Controller

  	
   

  
									

 

2

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