Document:

EXHIBIT 10.1

 

 

CREDIT AGREEMENT

New York

 

December 10, 2009

 

Borrower:  Hardinge Inc.

 

a(n) o
individual  x
corporation  o general
partnership  o limited
liability company  o

 

organized under the laws of New York

 

having its chief executive
office at One Hardinge Drive, Elmira, New York 14902.

 

Bank:     MANUFACTURERS AND TRADERS TRUST
COMPANY, a New York banking corporation with its chief executive office at One
M&T Plaza, Buffalo, NY  14240.  Attention: 
Office of General Counsel.

 

The Bank and the Borrower agree as follows:

 

1.     DEFINITIONS.

 

a.     “Account
Debtor” means any person(s) who is obligated on a receivable.

 

b.     “Capital
Expenditures” means, for any fiscal year, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities, and including
expenditures for obligations under any lease with respect to which Borrower’s
obligations thereunder should, in accordance with G.A.A.P., be capitalized and
reflected as a liability on the balance sheet of Borrower) by Borrower during
such period that are required by G.A.A.P. to be included in or reflected by the
property, plant or equipment or similar fixed asset accounts on the balance
sheet of Borrower.

 

c.     “Cash Flow” means the sum
of (i) net income after tax, dividends and distributions, plus (ii) depreciation
expense and amortization, plus (iii) Interest Expense, all determined in
accordance with G.A.A.P.

 

d.     “Cash Flow
Coverage” means the ratio of Cash Flow to the sum of (i) the
current portion of all Long Term Debt as specified in the financial statement
dated twelve (12) months prior, plus (ii) Interest Expense, all determined
in accordance with G.A.A.P

 

e.     “Credit” means any and
all credit facilities and any other financial accommodations made by the Bank
in favor of the Borrower whether now or hereafter in existence.

 

f.      “Current
Assets” means, at any time, the aggregate amount of all current assets,
including, but not limited to, cash, cash equivalents, marketable securities,
receivables maturing within twelve (12) months from such time, and inventory
(net of LIFO Reserve), but excluding prepaid expenses and officer, stockholder,
employee and related entity advances and receivables, all as determined in
accordance with G.A.A.P.

 

g.     “Current
Liabilities” means, at any time, the aggregate amount of all
liabilities and obligations which are due and payable on demand or within
twelve (12) months from such time, or should be properly reflected as
attributable to such twelve (12) month period in accordance with G.A.A.P.

 

h.     “Current
Ratio” means the ratio of Current Assets to Current Liabilities.

 

i.      “Eligible Account” or “Eligible
Accounts” shall mean an account receivable of the Borrower (net of any credit
balance, trade discount, or unbilled amount or retention) for which each of the
following statements is accurate and complete (and the Borrower by including
such account receivable in any computation of the collateral value of the
borrowing base shall be deemed to represent and warrant to the Bank the
accuracy and completeness of such statements): (i) said account receivable
is a binding and valid obligation of the obligor thereon, in full force and
effect and enforceable in accordance with its terms; (ii) said account
receivable is genuine, in all respects as appearing on its face or as
represented in the books and records of the Borrower, and all information set
forth therein is true and correct; (iii) said account receivable is free
of all default of any party thereto, counterclaims, offsets, and defenses and
from any rescission, cancellation, or avoidance, and all right thereof, whether
by operation of law or otherwise; (iv) the payment of said account
receivable is not more than sixty (60) days past the due date nor more than
ninety (90) days past the invoice date thereof; (v) said account receivable
is free of concessions or understandings with the obligor thereon of any kind
not disclosed to and approved by Bank in writing; (vi) said account
receivable is, and at all times will be, free and clear of all liens except in
favor of the Bank; (vii) said account receivable is derived from sales
made or services rendered to the obligor in the ordinary course of business; (viii) the
obligor on said account receivable (a) is located within the United
States, the District of Columbia or Canada or are foreign receivables that are
covered by a letter of credit or appropriate credit insurance; (b) is not
the subject of any bankruptcy or insolvency proceeding nor has a trustee or
receiver been appointed for all or a substantial part of its property, nor has
said obligor made an assignment for the benefit of creditors, admitted its
inability to pay its debts as they mature or suspended its business; (c) is
not affiliated, directly or indirectly, with the Borrower as a Subsidiary or
other Affiliate, employee or otherwise; and (d) is not a state or federal
governmental department, commission, board, bureau or agency; (ix) said
account receivable did not arise from sales to an obligor as to whom
twenty-five percent (25%) or more of the total accounts receivable owing by
such obligor to the Borrower are more than ninety (90) days past due the
invoice

 

©
Manufacturers and Traders Trust Company, 2004

 

1

 

date thereof; (x) said
account receivable arises from sales in excess of the amount of any account
payable owed by the Borrower to the obligor unless said obligor has entered
into a written agreement with the Borrower to waive its right of offset against
said receivable; and (xi) said account receivable is otherwise satisfactory to
the Bank, in its reasonable judgment.

 

j.      “Eligible Inventory” shall mean
inventory that consists of inventory that is reasonably acceptable as
determined in the sole discretion of the Bank, valued at the lower of cost or
market in accordance with GAAP on a first in first out basis.  Inventory, machinery, and equipment advance
rates are subject to change based on the findings of any appraisals, field
audits or other material information that would cause them to be unreasonable
or ineligible in the Bank’s reasonable discretion.  Advances against Eligible Inventory shall not
exceed 50% of gross availability. 
Advances to be made on machinery and equipment are to be advanced at 60%
of the forced liquidation thereof.  For
the purposes of this provision, Eligible Inventory shall be those of Hardinge
Inc. only.  Eligible Inventory shall be
determined using the following formulas against the gross balance in each
category: (a) raw material advance rate shall be 13.4%; (b) work in
progress advance rate shall be 26.7%; (c) finished goods advance rate
shall be 40.8%; (d) in-transit and other inventory advance rate shall be
42.5%.

 

k.     “G.A.A.P.” means, with
respect to any date of determination, generally accepted accounting principles
as used by the Financial Accounting Standards Board and/or the American
Institute of Certified Public Accountants consistently applied and maintained
throughout the periods indicated.

 

l.      “Interest
Expense” means all finance charges reflected on the income
statement as interest expense for all obligations of Borrower to any person,
including, but not limited to, Bank, as shown on the balance sheet in
accordance with G.A.A.P.

 

m.    “Long Term
Debt” means all obligations of Borrower to any person, including, but not
limited to, the Obligations, payable more than twelve (12) months from the date
of their creation, which in accordance with G.A.A.P. are shown on the balance
sheet as a liability (excluding reserves for deferred income taxes) for the
period then ended.

 

n.     “Obligations” means any and all indebtedness or other obligations of the Borrower to
the Bank 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 any
indebtedness or obligations (i) not yet outstanding but contracted for, or
with regard to which any other commitment by the Bank 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 the Borrower to others and
which the Bank obtained, or may obtain, by assignment or otherwise; and (iv) payable
under this Agreement.

 

o.     “Quick
Ratio” means the ratio of Current Assets less inventory (net of LIFO
Reserve), to Current Liabilities.

 

p.     “Subordinated
Debt” means all indebtedness of the Borrower which has been formally
subordinated to payment and collection of the Obligations.

 

q.     “Subsidiary” means any corporation or other business entity of
which at least fifty percent (50%) of the voting stock or other ownership
interest is owned by the Borrower directly or indirectly through one or more
Subsidiaries.  If the Borrower has no
Subsidiaries, the provisions of this Agreement relating to the Subsidiaries
shall be disregarded, without affecting the applicability of such provisions to
the Borrower alone.

 

r.      “Tangible
Net Worth” means the aggregate assets of Borrower excluding
all intangible assets, including, but not limited to, goodwill, licenses,
trademarks, patents, copyrights, organization costs, appraisal surplus,
officer, stockholder, related entity and employee advances or receivables,
mineral rights and the like, less liabilities, plus Subordinated Debt, all
determined in accordance with G.A.A.P. (except to the extent that under
G.A.A.P. “tangible net worth” excludes leasehold improvements which are
included in “Tangible Net Worth” as defined herein).

 

s.     “Total Liabilities” means the
aggregate amount of all assets of the Borrower less the sum of shareholder
equity and Subordinated Debt (if any), as shown on the balance sheet in
accordance with G.A.A.P.

 

t.      “Transaction
Documents” means this Agreement and all documents, instruments
or other agreements by the Borrower in favor of the Bank in connection
(directly or indirectly) with the Obligations, whether now or hereafter in
existence, including promissory notes, security agreements, guaranties and
letter of credit reimbursement agreements.

 

u.     “Working
Capital” means that amount which is equal to the excess of
Current Assets over Current Liabilities.

 

2.     REPRESENTATIONS AND WARRANTIES.  The Borrower makes the following
representations and warranties and any “Additional Representations and
Warranties” on the schedule attached hereto and made part hereof (the “Schedule”),
all of which shall be deemed to be continuing representations and warranties as
long as this Agreement is in effect:

 

a.     Good Standing; Authority.  The Borrower and each Subsidiary (if either
is not an individual) is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it was formed.  The Borrower and each Subsidiary 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
has the power and authority to own each of its assets and to use them in the
ordinary course of business now and in the future.

 

2

 

b.     Compliance.  The Borrower and each Subsidiary conducts its
business and operations and the ownership of its assets in compliance with each
applicable statute, regulation and other law, including environmental
laws.  All approvals, including
authorizations, permits, consents, franchises, licenses, registrations, filings,
declarations, reports and notices (the “Approvals”) necessary for the conduct
of the Borrower’s and each Subsidiary’s business and for the Credit have been
duly obtained and are in full force and effect. 
The Borrower and each Subsidiary is in compliance with the
Approvals.  The Borrower and each
Subsidiary (if either is not an individual) is in compliance with its
certificate of incorporation, by-laws, partnership agreement, articles of
organization, operating agreement or other applicable organizational or
governing document as may be applicable to the Borrower or a Subsidiary
depending on its organizational structure (“Governing Documents”).  The Borrower and each Subsidiary is in
compliance with each material
agreement to which it is a party or by which it or any of its assets is bound.

 

c.     Legality.  The execution, delivery and performance by
the Borrower of the Transaction Documents, (i) are in furtherance of the
Borrower’s purposes and within its power and authority; (ii) do not (A) violate
any statute, regulation or other law or any judgment, order or award of any
court, agency or other governmental authority or of any arbitrator with respect
to the Borrower or any Subsidiary or (B) violate the Borrower’s or any
Subsidiary’s Governing Documents (if either is not an individual), constitute a
default under any agreement binding on the Borrower or any Subsidiary or result
in a lien or encumbrance on any assets of the Borrower or any Subsidiary; and (iii) if
the Borrower or any Subsidiary is not an individual, have been duly authorized
by all necessary organizational actions.

 

d.     Fiscal Year.  The fiscal year of the Borrower is the
calendar year unless the following blank states otherwise:  year ending December 31.

 

e.     Title to Assets.  The Borrower and each Subsidiary has good and
marketable title to each of its assets free of security interests, mortgages or
other liens or encumbrances, except as set forth on the Schedule titled “Permitted
Liens” or pursuant to the Bank’s prior written consent.

 

f.      Judgments and Litigation.  Except for Weiner vs.
Hardinge Inc., et al. (further described in the Schedule attached hereto and
made a part hereof, there is no pending or threatened claim, audit,
investigation, action or other legal proceeding or judgment, order or award of
any court, agency or other governmental authority or arbitrator which involves
the Borrower, its Subsidiaries or their respective assets and might have a
material adverse effect upon the Borrower or any Subsidiary or threaten the
validity of the Credit or any
Transaction Document (any, an “Action”).

 

g.     Full Disclosure.  Neither this Agreement nor any certificate,
financial statement or other writing provided to the Bank by or on behalf of
the Borrower or any Subsidiary contains any statement of fact that is incorrect
or misleading in any material respect or omits to state any fact necessary to
make any such statement not incorrect or misleading.  The Borrower has not failed to disclose to
the Bank any fact that might have a material adverse effect on the Borrower or
any Subsidiary.

 

3.     AFFIRMATIVE COVENANTS.  So long as this Agreement is in effect, the
Borrower will comply with any “Additional Affirmative Covenant” contained in
the Schedule and shall:

 

a.     Financial Statements and Other
Information.  Promptly
deliver to the Bank (i) within ninety (90)
days after the end of each of its first three fiscal quarters, an unaudited
consolidating and consolidated financial statement of the Borrower and each
Subsidiary as of the end of such quarter, which financial statement shall
consist of income and cash flows for the quarter, for the corresponding quarter
in the previous fiscal year and for the period from the end of the previous
fiscal year, with a consolidating and consolidated balance sheet as of the
quarter end all in such detail as the Bank may request; (ii) within ninety
(90) days after the end of each fiscal year, consolidating and consolidated
statements of the Borrower’s and each Subsidiary’s income and cash flows and
its consolidating and consolidated balance sheet as of the end of such fiscal
year, setting forth comparative figures for the preceding fiscal year and to be
(check applicable box, if no box is checked the financial statements shall be
audited):

 

	
  x
  audited

  	
   

  	
  o
  reviewed

  	
   

  	
  o
  compiled

  

 

by an independent certified public accountant
acceptable to the Bank; all such statements shall be certified by the Borrower’s
chief financial officer to be correct and in accordance with the Borrower’s and
each Subsidiary’s records and to present fairly the results of the Borrower’s
and each Subsidiary’s operations and cash flows and its financial position at
year end; and (iii) with each statement of income, a certificate executed
by the Borrower’s chief executive and chief financial officers or other such
person responsible for the financial management of the Borrower (A) setting
forth the computations required to establish the Borrower’s compliance with
each financial covenant, if any, during the statement period, (B) stating
that the signers of the certificate have reviewed this Agreement and the
operations and condition (financial or other) of the Borrower and each of its
Subsidiaries during the relevant period and (C) stating that no Event of
Default occurred during the period, or if an Event of Default did occur,
describing its nature, the date(s) of its occurrence or period of
existence and what action the Borrower has taken with respect thereto.  The Borrower shall also promptly provide the
Bank with copies of all annual reports, proxy statements and similar
information distributed to shareholders, partners or members, and copies of all
filings with the Securities and Exchange Commission and the Pension Benefit
Guaranty Corporation, and shall provide, in form satisfactory to the Bank, such
additional information, reports or other information as the Bank may from time
to time reasonably request regarding the financial and business affairs of the
Borrower or any Subsidiary.  If the
Borrower is an individual, the Borrower shall provide annually a personal
financial statement in form and detail acceptable to the Bank and such other
financial information as the Bank may from time to time reasonably
request.  In addition, Borrower shall provide monthly accounts receivable, accounts
payable aging reports and internally prepared financial statements within
thirty (30) days of the month’s end and at any time upon the reasonable request
by the Bank.   The Borrower shall provide
to the Bank annually the Form 10-K that the Borrower files with the
Securities and Exchange Commission (the “SEC”). 
The Borrower shall provide to Bank quarterly the Form 10-Q that the
Borrower files with the SEC.  Both the Form 10-K
and the Form 10-Q shall be provided to the Bank in conformity with the
requirements of the SEC.

 

3

 

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

 

c.     Inspections.  Promptly upon the Bank’s reasonable
request the Borrower will permit, and cause its Subsidiaries to permit, the
Bank’s officers, attorneys or other agents to inspect its and its Subsidiary’s
premises, examine and copy its records and discuss its and its Subsidiary’s
business, operations and financial or other condition with its and its
Subsidiary’s responsible officers and independent accountants.

 

d.     Operating Accounts.  Maintain all of its
principal bank accounts with the Bank.

 

e.     Changes in Management and
Control.  If the
Borrower is not an individual, immediately upon any change in the identity of
the Borrower’s chief executive officers or any ownership change
resulting in a change of control, the Borrower will provide to the
Bank a certificate executed by its senior individual authorized to transact
business on behalf of the Borrower, specifying such change.

 

f.      Notice of Defaults and Material
Adverse Changes.  Immediately
upon acquiring reason to know of (i) any Event of Default, (ii) any
event or condition that might have a material adverse effect upon the Borrower
or any Subsidiary or (iii) any Action, the Borrower will provide to the
Bank a certificate executed by the Borrower’s senior individual authorized to
transact business on behalf of the Borrower, specifying the date(s) and
nature of the event or the Action and what action the Borrower or its
Subsidiary has taken or proposes to take with respect to it.

 

g.     Insurance.  Maintain its, and cause its Subsidiaries to
maintain, property in good repair and will on request provide the Bank with
evidence of insurance coverage satisfactory to the Bank, including fire and
hazard, liability, workers’ compensation and business interruption insurance
and flood hazard insurance as required.

 

h.     Further Assurances.  Promptly upon the request of the Bank, the
Borrower will execute, and cause its Subsidiaries to execute, and deliver each
writing and take each other action that the Bank deems necessary or desirable
in connection with any transaction contemplated by this Agreement.

 

4.     NEGATIVE COVENANTS.  As long as this Agreement is in effect, the
Borrower shall not violate, and shall not suffer or permit any of its
Subsidiaries to violate, any of the following covenants and any “Additional
Negative Covenant” on the Schedule.  The
Borrower shall not:

 

a.     Indebtedness.  Permit any indebtedness (including direct and
contingent liabilities) not described on the Schedule titled “Permitted
Indebtedness” except for trade indebtedness or current liabilities for salary
and wages incurred in the ordinary course of business and not substantially
overdue.

 

b.     Guaranties.  Become a guarantor, a surety, or otherwise
liable for the debts or other obligations of another, whether by guaranty or
suretyship agreement, agreement to purchase indebtedness, agreement for
furnishing funds through the purchase of goods, supplies or services (or by way
of stock purchase, capital contribution, advance or loan) for the purpose of
paying or discharging indebtedness, or otherwise, except as an endorser of
instruments for the payment of money deposited to its bank account for
collection in the ordinary course of business and except as may be specified in
the Schedule titled “Permitted Guaranties”.

 

c.     Liens.  Permit any of its assets to be subject to any
security interest, mortgage or other lien or encumbrance, except as set forth
on the Schedule titled “Permitted Liens” and except for liens for property
taxes not yet due; pledges and deposits to secure obligations or performance
for workers’ compensation, bids, tenders, contracts other than notes, appeal
bonds or public or statutory obligations; and materialmens’, mechanics’,
carriers’ and similar liens arising in the normal course of business.

 

d.     Investments.  As to the Borrower only, make
any investment other than in FDIC insured deposits or United States Treasury
obligations of less than one year, or in money market or mutual funds
administering such investments, except as set forth on the Schedule titled “Permitted
Investments”.

 

e.     Loans.  Make any loan, advance or other extension of
credit except as disclosed on the Schedule titled “Permitted Indebtedness”,
except for endorsements of negotiable instruments deposited to the Borrower’s
deposit account for collection, trade credit in the normal course of business
and intercompany loans approved in writing by the Bank.

 

f.      Distributions.  Intentionally Omitted.

 

g.     Changes In Form.  (i) Transfer or dispose of substantially
all of its assets, (ii) do business under or otherwise use any name other
than its true name or (iii) make any material change in its business,
structure, purposes or operations that might have a material adverse effect on
the Borrower or any of its Subsidiaries. 
If the Borrower or any Subsidiary is not an individual, (i) participate
in any merger, consolidation or other absorption, unless the
Borrower or any Subsidiary is the survivor thereof, with notice of such
participation provided to Lender in a timely manner or (ii) make,
terminate or permit to be revoked any election pursuant to Subchapter S of the
Internal Revenue Code.

 

4

 

h.     Additional
Funded Debt.  The Borrower nor any
Subsidiary shall incur additional funded debt beyond the existing approved
facilities without the Bank’s prior written consent with the following
exceptions: (i) a potential $4,000,000.00 line of credit for the Borrower’s
Chinese Subsidiary for the issuance of guarantees and for working capital; (ii) a
potential increase to a maximum of $6,000,000.00 to the Taiwanese line of
credit; and (iii) acquisition financing in Switzerland for a potential
facility and related equipment in an amount not to exceed $6,500,000.00 to
replace an existing leased facility.

 

5.     FINANCIAL COVENANTS.  During the term of this
Agreement, the Borrower shall not violate, and shall not suffer or permit any
of its Subsidiaries to violate, any of the following covenants (complete
applicable financial covenant) or any Additional Financial Covenants on the
Schedule.  For purposes
of this Section, if the Borrower has any Subsidiaries all references to the
Borrower shall include the Borrower and all of its Subsidiaries on a
consolidated basis.  Unless a
different measurement period is specified, compliance for the financial
covenants shall be required at all times.

 

o    A.    Borrower shall maintain
Tangible Net Worth of not less than $N/A, measured
(select one: quarterly or annually) N/A as of each
(select one: quarter or fiscal year) N/A end.

 

o    B.    Borrower shall
maintain a ratio of Total Liabilities to Tangible Net Worth of not greater than
N/A:N/A, measured
(select one: quarterly or annually) N/A as of each
(select one; quarter or fiscal year ) N/A  end.

 

o    C.    Borrower shall maintain a
Current Ratio of not less than N/A:N/A, measured
(select one: quarterly or annually) N/A  as of each
(select one: quarter or fiscal year) N/A end.

 

o    D.    Borrower shall
maintain Working Capital of not less than $N/A, measured
(select one: quarterly or annually) N/A  as of each
(select one: quarter or fiscal year) N/A  end.

 

o    E.     Borrower shall
maintain Cash Flow Coverage of not less than N/A:N/A, measured for
the previous four quarters as of each (select one: quarter or fiscal year) N/A  end.

 

o    F.     Without the
prior written consent of Bank, Borrower shall not make any Capital Expenditures
in excess of $N/A  in the aggregate during any
fiscal year of Borrower.

 

o    G.    Borrower shall
not pay or accrue during any fiscal year compensation (including but not
limited to all salary, bonuses, consulting, management or other fees, rentals
and other payments to any person owning or managing 5%or more of the Borrower
or any relative or cohabitant of such a person, and to any entity under common
control with or controlling the Borrower) exceeding $N/A  in the
aggregate.

 

o    H.    Borrower shall
not become obligated as lessee pursuant to operating leases exceeding $N/A  in the
aggregate during any fiscal year.

 

6.     DEFAULT.

 

a.     Events of Default.  Any of the following events or conditions
shall constitute an “Event of Default”:  (i) failure
by the Borrower 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 the Borrower in
the performance of any obligation, term or condition of this Agreement, the
other Transaction Documents or any other agreement with the Bank or any of its
affiliates or subsidiaries (collectively, “Affiliates”); (iii) failure by
the Borrower 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) the Borrower is dissolved,
becomes insolvent, generally fails to pay or admits in writing its inability
generally to pay its debts as they become due; (v) the Borrower 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 the Borrower to a third party; or the cessation by the Borrower as a
going business concern; (vi) the Borrower 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 the Borrower (or the
making of any agreement therefor); (viii) the death or judicial
declaration of incompetency of the Borrower, if an individual; (ix) the
entry of one or more judgments of any court,
other governmental authority or arbitrator against the Borrower 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 the Bank or any Affiliate (whether in a
financial statement or otherwise); (xi) an adverse change in the Borrower, its
business, assets, operations, affairs or condition (financial or otherwise)
from the status shown on any financial statement or other document submitted to
the Bank or any Affiliate, and which change the Bank reasonably determines
will have a material adverse affect on (a)  the Borrower, its business,
assets, operations or condition (financial or otherwise), or (b) the
ability of the Borrower to pay or perform the Obligations; (xii) any pension
plan of the Borrower fails to comply with applicable law or has vested unfunded
liabilities that, in the opinion of the Bank, might have a material adverse
effect on the Borrower’s ability to repay its debts; (xiii) any indication or
evidence received by the Bank that the Borrower may have directly or indirectly
been engaged in any type of activity which, in the Bank’s reasonable
judgment, might result in the forfeiture or any property of the
Borrower to any governmental

 

5

 

authority; or
(xiv) the occurrence of any event described in Section 6(a)(i) through
and including 6(a)(xiii) with respect to any material Subsidiary
or to any endorser, guarantor or any other party liable for, or whose assets or
any interest therein secures, payment of any of the Obligations.

 

b.     Rights and Remedies Upon Default.  Upon the occurrence of any Event of Default,
the Bank without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law) to or
upon the Borrower, any Subsidiary or any other person (all and each of which
demands, presentments, protests, advertisements and notices are hereby waived),
may exercise all rights and remedies under the Borrower’s or its Subsidiaries’
agreements with the Bank or its Affiliates, applicable law, in equity or
otherwise and may declare all or any part of any Obligations not payable on
demand to be immediately due and payable without demand or notice of any kind
and terminate any obligation it may have to grant any additional loan, credit
or other financial accommodation to the Borrower or any Subsidiary.  All or any part of any Obligations whether or
not payable on demand, shall be immediately due and payable automatically upon
the occurrence of an Event of Default in Section 6(a)(vi) above.  The provisions hereof are not intended in any
way to affect any rights of the Bank with respect to any Obligations which may
now or hereafter be payable on demand.

 

7.     EXPENSES.  The Borrower shall pay to the Bank on demand
all reasonable costs and expenses
(including all fees and disbursements of counsel retained for advice, suit,
appeal or other proceedings or purpose and of any experts or agents it may
retain), which the Bank may incur in connection with (i) the
administration of the Obligations, including any administrative fees the Bank
may impose for the preparation of discharges, releases or assignments to
third-parties; (ii) the enforcement and collection of any Obligations or
any guaranty thereof; (iii) the exercise, performance, enforcement or
protection of any of the rights of the Bank hereunder; or (iv) the failure
of the Borrower or any Subsidiary 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, the Borrower shall pay interest at the highest default rate
specified in any instrument evidencing any of the Obligations from the date
payment is demanded by the Bank to the date reimbursed by the Borrower.  All such costs, expenses or fees under this
Agreement shall be added to the Obligations.

 

8.     TERMINATION.  This Agreement shall remain in full force and
effect until (i) all Obligations outstanding, or contracted or committed
for (whether or not outstanding), shall be finally and irrevocably paid in full
and (ii) all Transaction Documents have been terminated by the Bank.

 

9.     RIGHT OF SETOFF.  If an Event of Default occurs, the Bank shall
have the right to set off against the amounts owing under this Agreement and
the other Transaction Documents any property held in a deposit or other account
or otherwise with the Bank or its Affiliates or otherwise owing by the Bank or
its Affiliates in any capacity to the Borrower, its Subsidiary or any guarantor
of, or endorser of any of the Transaction Documents evidencing, the
Obligations.  Such setoff shall be deemed
to have been exercised immediately at the time the Bank or such Affiliate elect
to do so.

 

10.   MISCELLANEOUS.

 

a.     Notices.  Any demand or notice hereunder or under any
applicable law pertaining hereto shall be in writing and duly given if
delivered to Borrower (at its address on the Bank’s records) or to the Bank (at
the address on page one and separately to the Bank officer responsible for
Borrower’s relationship with the Bank). 
Such notice or demand shall be deemed sufficiently given for all
purposes when delivered (i) by personal delivery and shall be deemed
effective when delivered, or (ii) by mail or courier and shall be deemed
effective three (3) 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 Borrower and the
Bank.

 

b.     Generally Accepted Accounting
Principles.  Any
financial calculation to be made, all financial statements and other financial
information to be provided, and all books and records, system of accounting and
reserves to be kept in connection with the provisions of this Agreement, shall
be in accordance with generally accepted accounting principles consistently
applied during each interval and from interval to interval; provided, however,
that in the event changes in generally accepted accounting principles shall be
mandated by the Financial Accounting Standards Board or any similar accounting
body of comparable standing, or should be recommended by Borrower’s certified
public accountants, to the extent such changes would affect any financial
calculations to be made in connection herewith, such changes shall be
implemented in making such calculations only from and after such date as
Borrower and the Bank shall have amended this Agreement to the extent necessary
to reflect such changes in the financial and other covenants to which such
calculations relate.

 

c.     Indemnification.  If after receipt of any payment of all, or
any part of, the Obligations, the Bank 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, an impermissible setoff, or
a diversion of trust funds, or for any other reason other than
the gross negligence or willful misconduct of the Bank, the
Transaction Documents shall continue in full force and the Borrower shall be
liable, and shall indemnify and hold the Bank harmless for, the amount of such
payment surrendered.  The provisions of
this Section shall be and remain effective notwithstanding any contrary action
which may have been taken by the Bank in reliance upon such payment, and any
such contrary action so taken shall be without prejudice to the Bank’s rights
under the Transaction Documents and shall be deemed to have been conditioned
upon such payment having become final and irrevocable.  The provisions of this Section shall
survive the termination of this Agreement and the Transaction Documents.

 

d.     Further Assurances.  From time to time, the Borrower shall take,
and cause its Subsidiaries to take, such action and execute and deliver to the
Bank such additional documents, instruments, certificates, and agreements as
the Bank may reasonably request to effectuate the purposes of the Transaction
Documents.

 

e.     Cumulative Nature and
Non-Exclusive Exercise of Rights and Remedies.  All rights and remedies of the Bank pursuant
to this Agreement and the Transaction Documents shall be cumulative, and no
such right or remedy shall be exclusive of any other such right or remedy.  In the

 

6

 

event of any unreconcilable inconsistencies,
this Agreement shall control.  No single
or partial exercise by the Bank of any right or remedy pursuant to this
Agreement or otherwise shall preclude any other or further exercise thereof, or
any exercise of any other such right or remedy, by the Bank.

 

f.      Governing Law; 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. BORROWER HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF
ANY STATE OR FEDERAL COURT IN THE STATE OF NEW YORK IN A COUNTY OR JUDICIAL
DISTRICT WHERE THE BANK MAINTAINS A BRANCH AND CONSENTS THAT THE BANK MAY EFFECT
ANY SERVICE OF PROCESS IN THE MANNER AND AT BORROWER’S ADDRESS SET FORTH ABOVE
FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT NOTHING CONTAINED IN THIS
AGREEMENT WILL PREVENT THE BANK FROM BRINGING ANY ACTION, ENFORCING ANY AWARD
OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST BORROWER INDIVIDUALLY, AGAINST ANY
SECURITY OR AGAINST ANY PROPERTY OF BORROWER WITHIN ANY OTHER COUNTY, STATE OR
OTHER FOREIGN OR DOMESTIC JURISDICTION.   Borrower acknowledges and agrees that the
venue provided above is the most convenient forum for both the Bank and
Borrower.  Borrower waives any objection
to venue and any objection based on a more convenient forum in any action
instituted under this Agreement.

 

g.     Joint and Several; Successors and
Assigns.  If there is
more than one Borrower, 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 “the Borrower” shall include each as well as all
of them.  This Agreement shall be binding
upon the Borrower and upon its heirs and legal representatives, its successors
and assignees, and shall inure to the benefit of, and be enforceable by, the
Bank, 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 the Borrower without the prior written consent
of the Bank.

 

h.     Waivers; Changes in Writing.  No failure or delay of the Bank 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.  The Borrower expressly disclaims any reliance
on any course of dealing or usage of trade or oral representation of the Bank
(including representations to make loans to the Borrower) and agrees that none
of the foregoing shall operate as a waiver of any right or remedy of the
Bank.  No notice to or demand on the
Borrower in any case shall entitle the Borrower to any other or further notice
or demand in similar or other circumstances. 
No waiver of any provision of this Agreement or consent to any departure
by the Borrower therefrom shall in any event be effective unless made
specifically in writing by the Bank 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 the Borrower and the Bank.

 

i.      Interpretation.  Unless the context otherwise clearly
requires, references to plural includes the singular and references to the
singular include the plural; references to “individual” shall mean a natural
person and shall include a natural person doing business under an assumed name
(e.g., a “DBA”); 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.  The Borrower agrees that in any legal
proceeding, a photocopy of this Agreement kept in the Bank’s course of business
may be admitted into evidence as an original.

 

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

 

k.             Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute but one and the same instrument, and shall be binding upon each of
the undersigned as fully and completely as if all had signed the same instrument.

 

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

 

7

 

	
   

  	
  MANUFACTURERS
  AND TRADERS TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/ SUSAN A. BURTIS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Susan A. Burtis

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARDINGE
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /S/ EDWARD J. GAIO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Edward J. Gaio

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President and CFO

  

 

8

 

ACKNOWLEDGMENT

 

	
  STATE OF NEW YORK

  	
   

  	
  )

  
	
   

  	
   

  	
  : SS.

  
	
  COUNTY OF BROOME

  	
   

  	
  )

  

 

On the 10th day of December in the year
2009, before me, the undersigned, a Notary Public in and for said State,
personally appeared SUSAN A. BURTIS,
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/ ANGEL M. ATON

  
	
   

  	
  Notary Public

  
	
   

  	
  Angel M. Aton

  

 

 

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

  

 

 

BANK USE ONLY

 

	
  Authorization Confirmed:

  	
   

  
	
   

  	
  Signature

  

 

9

 

SCHEDULE

 

Additional Representations and Warranties (§2)

 

1.     Judgments and Litigation.  The parties acknowledge that there is
existing litigation known as Weiner
vs. Hardinge Inc. et al.  This action was commenced in the
United States District Court for the Western District of New York on October 28,
2008, and an amended complaint was filed on March 30, 2009.  The
Plaintiff, who sues on behalf of a putative class of purchasers of the Borrower’s
securities between January 16, 2007 and February 21, 2008, alleges in
the amended complaint that the Borrower and certain former officers named as
defendants made materially false and misleading statements in violation of the
federal securities laws.  The complaint, as amended, seeks unspecified
compensatory damages in favor of the class, together with interest, attorneys’
fees and other expenses.  By order entered January 23, 2009 the Court
approved the lead plaintiff’s appointment and his selection of counsel. 
Defendants filed a motion to dismiss the complaint, as amended, on May 29,
2009 which motion is pending.

 

Additional Affirmative Covenants (§3)

 

1.     Accounts.  As soon as is practicable but no later than March 31,
2010, the Borrower shall establish a lock box with the Bank into which Borrower
shall cause to be deposited monies payable to it by account debtors.  The Borrower shall also establish an interest
bearing account for excess cash balances.

2.     The
existing outstanding letters of credit of the Borrower and its Subsidiaries
shall be blocked against the Loan and advances thereunder.

3.     Borrower
shall provide to the Bank monthly and more often upon reasonable request,
Borrowing Base Certificates in form and content satisfactory to the Bank.  “Borrowing Base Certificates” shall mean a
report of the Borrower, in the form required by the Bank, certified as true and
correct by a responsible officer of the Borrower.

 

Permitted Indebtedness (§4(a)):

 

1.     the Obligations;

2.     Guarantees by the Borrower of Indebtedness
of any Subsidiary and by any Subsidiary of Indebtedness of the Borrower or any
other Subsidiary;

3.     Indebtedness that is the subject of that
certain Intercreditor Agreement between Bank and Keybank International
Association dated June 1, 2009 in the amount of $10,000,000.00.

 

Permitted Guaranties (§4(b)):

 

Guaranties by the Borrower of indebtedness of any
Subsidiary and by any Subsidiary of indebtedness of the Borrower or any other
Subsidiary, and any other Guaranties constituting indebtedness permitted by Section 4(a) hereof.

 

Permitted Liens (§4(c)) means and includes:

 

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

2.     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;

3.     judgment liens in respect of judgments that
do not constitute an Event of Default under Section 6(a);

4.     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

5.  existing liens set forth on Schedule 4(c) hereto.

 

Permitted Investments (§4(d)) means:

 

1.     direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the
United States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United States of
America), in each case maturing within one year from the date of acquisition
thereof;

2.     investments in commercial paper maturing
within 270 days from the date of acquisition thereof and having, at such date
of acquisition, a short-term commercial paper rating of at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody’s, or being guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2, or the equivalent of each thereof,
from S&P or Moody’s, as the case may be;

3.     investments in certificates of deposit,
banker’s acceptances and time deposits maturing within 180 days from the date
of acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any State
thereof which has a combined capital and surplus and undivided profits of not
less than $500,000,000;

4.     fully collateralized repurchase agreements
with a term of not more than thirty (30) days for securities described in
clause #1 above and entered into with a financial institution satisfying the
criteria described in clause #3 above;

5.     money market funds that (i) comply
with the criteria set forth in Securities and Exchange Commission Rule 2a-7
under the Investment Company Act of 1940, (ii) are rated AAA by S&P
and Aaa by Moody’s and (iii) have portfolio assets of at least
$5,000,000,000;

 

Permitted Loans (§4(e)):

 

Investments, capital contributions, loans or advances
made by the Borrower in or to any Subsidiary and made by any Subsidiary to the
Borrower in excess of an aggregate amount of $7,500,000.00 outstanding at any
one time.  Existing investments and
capital contributions by Borrower in any Subsidiary are permitted and are not
considered Loans for purposes of the limitations of this Section. In addition,
the Parties hereto acknowledge that the Borrower is in the process of
contributing its shares of Hardinge Taiwan Precision Machinery Limited to
Hardinge Holdings, B.V. in exchange for the shares of Hardinge Holdings, B.V.
after which time Borrower will then contribute its shares in Hardinge Holdings,
B.V. to Hardinge Holdings, GmbH in exchange for additional capital in Hardinge
Holdings, GmbH.  This transfer and
subsequent additional capital shall not be considered Loans for the purposes of
the limitations of this Section.

 

Additional Miscellaneous Covenants (§11)

 

1.     Advance
Formula.  Advances made pursuant to this
revolving credit facility shall be limited to a maximum of the line amount or
the sum of 80% of Eligible Accounts and Eligible Inventory.

 

 

2.     Unused
Portion Fee.  The Bank will assess an
unused portion fee of 3/8% quarterly on the daily unused portion of the
commitment to be assessed in arrears at the end of each quarter.  The Bank will bill the Borrower based on this
calculation at the end of each quarter during the Loan.  The Borrower shall pay the Bank such unused
portion fee promptly upon receipt of invoice for same.

 

 

SCHEDULE 4(C)

 

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 10.2

 

 

REVOLVING
LIBOR GRID NOTE

(LIBOR ONLY)

New
York

 

	
  December 10, 2009

  	
  $10,000,000.00

  

 

BORROWER
(Name):  Hardinge Inc.

(Organizational Structure):  Corporation

(State Law organized under):  New York

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

 

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

 

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

 

a.               “Agreement” shall
mean the Credit Agreement between Borrower and Bank dated on or about the date
hereof as the same may be amended from time to time.

b.               “Authorized
Person” shall mean, Edward J. Gaio as Vice
President and CFO, Doug Malone as Corporate Controller, or Beth Trantor as
Assistant Corporate Controller.

Mention of the Authorized
Person’s name is for reference purposes only and the Bank may rely on a person’s
title to ascertain whether someone is an Authorized Person who may act on
behalf of the Borrower in connection herewith.

c.               “Automatic Adjustment Rate Determination
Date”, when applicable,  shall mean:

(i)             If the Interest Period
duration selected for such LIBOR Rate Loan is “one day”:  the first day of the applicable Interest
Period.

(ii)          If the Interest
Period duration selected for such LIBOR Rate Loan is other than “one day”:  two (2) London Business Days before the
first day of the applicable Interest Period.

d.               “Automatic Continuation Option”  shall,
with respect to any LIBOR Rate Loan, mean the option to have the then-current
Interest Period duration, as previously selected by Borrower, remain the same
for the succeeding Interest Period.

e.               “Base Rate” shall mean 1.0 percentage point(s) above the rate of interest
announced by the Bank from time to time as its prime rate of interest  (“Prime Rate”).

f.                 “Base Rate Loan” shall mean a
Loan which bears interest at the Base Rate.

g.              “Continuation Date” shall mean
the date that Borrower’s election to continue a LIBOR Rate Loan for another
Interest Period becomes effective in accordance with this Note.

h.              “Draw Date” shall mean, in
relation to each Loan, the date that such Loan is made or deemed to be made to
Borrower pursuant to this Note.

i.                 “Expiration Date”
shall mean March 31, 2011.

j.                 “Interest
Period” shall mean, with respect to any LIBOR Rate Loan, the period
commencing on the Draw Date or Continuation Date for such LIBOR Rate Loan and
ending on the date that shall be:

(i)             If the Interest
Period duration selected for such LIBOR Rate Loan is “one day”:  the following day; provided, however, that if
an Interest Period would end on a day that is neither a London Business Day nor
a New York Business Day, such Interest Period shall be extended to the next
succeeding day that is either a London Business Day or a New York Business Day.

(ii)          If the Interest
Period duration selected for such LIBOR Rate Loan is other than “one day”:  the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day) of the calendar
month that is one (1), two (2), three (3) or six (6) months after the
commencement of such period, in accordance with Borrower’s election made
pursuant to the terms of this Note; provided, however, that if an Interest
Period would end on a day that is not a Joint Business Day, such Interest
Period shall be extended to the next succeeding Joint Business Day, unless such
next succeeding Joint Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the immediately preceding Joint
Business Day.  To the extent that the
preceding clause results in either the extension or shortening of an Interest
Period for a particular Loan, the Bank shall have the right (but not the
obligation) to shorten or extend, respectively, the succeeding Interest Period
so that it shall end on a day that numerically corresponds to the Draw Date for
such Loan.

k.             “Interest
Rate Floor” shall mean 5.5%.

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

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

 

©Manufacturers and Traders Trust Company, 2009

 

1

 

n.              “LIBOR
Rate” shall mean, as selected by Borrower, for each LIBOR Rate Loan and/or as
otherwise applicable, in accordance with the terms of this Note, the greater of
one of the following rates: (i) 5.0 percentage point(s) above the
one-month LIBOR, each with an Interest Period duration of one day; or (ii) the
Interest Rate Floor.

o.               “LIBOR Rate Loan” shall mean a
Loan that bears interest at a LIBOR Rate. 
Each advance of funds hereunder, to the extent originally priced at the
LIBOR Rate, shall be treated as a separate LIBOR Rate Loan.

p.               “Loan” shall mean a loan made to Borrower by the Bank pursuant to this Note.

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

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

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

t.                 “Outstanding
Principal Amount”  shall
mean, at any point in time, the actual outstanding principal amount under this
Note.

 

2.              PAYMENT OF
PRINCIPAL, INTEREST AND EXPENSES.

 

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

 

b.               Interest.  Each Loan shall earn interest on the
Outstanding Principal Amount thereof calculated on the basis of a 360-day year
for the actual number of days of each year (365 or 366) as follows:

 

i.                 LIBOR Rate
Loans.  Interest shall accrue
each day on each LIBOR Rate Loan from and including the first day of each
Interest Period applicable thereto until, but not including, the last day of
each such Interest Period or the day the LIBOR Rate Loan is paid in full (if
sooner) at a rate per annum equal to the LIBOR Rate, as determined using LIBOR
in effect on the following dates, as applicable:  (a) for new LIBOR Rate Loans, the Draw
Date (if the Interest Period selected is one day) or two (2) London
Business Days before the Draw Date (if the Interest Period selected is other
than one day); (b) for continuations of LIBOR Rate Loans (other than as
provided for in subsection 4(c) below), the Joint Business Day the Bank
receives (or is deemed to receive) the Notice of Continuation in accordance
with the terms of this Note; (c) for LIBOR Rate Loans where the Automatic
Continuation Option is in effect, the applicable Automatic Adjustment Rate
Determination Date for such LIBOR Rate Loan.

 

ii.             Base Rate Loans.  Interest shall accrue on a Base Rate Loan
from and including the first date a Loan becomes a Base Rate Loan to, but not
including, the day such Base Rate Loan is paid in full, at the rate per annum
equal to the Base Rate.  Any change in
the Base Rate resulting from a change in the Prime Rate shall be effective on
the date of such change.

 

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

 

d.               Payments; Late
Charge; Default Rate.  Payments shall
be made in immediately available United States funds at any banking office of
the Bank.  Interest
only shall be due and payable beginning on January 1, 2010 and then on the
first day of each month thereafter until the Expiration Date.  Upon the Expiration Date, this
Note shall mature and Borrower shall pay to the Bank the Outstanding Principal,
plus all accrued and unpaid interest, fees and expenses in full, without
presentation, demand, or further notice of any kind.  If payment is not received within five days
of its due date, Borrower shall pay a late charge equal to the greatest of (a) 5%
of the delinquent amount, (b) the Bank’s then current late charge as
announced by the Bank from time to time, or (c) $50.00.  In addition, if the Bank has not actually
received any payment due under this Note within thirty days after its due date,
from and after such thirtieth day the interest rate for all amounts outstanding
under this Note shall automatically increase to 5 percentage points above the
higher of the Base Rate or the LIBOR Rate (“Default Rate”), and any judgment
entered hereon or otherwise in connection with any suit to collect amounts due
hereunder shall bear interest at such Default Rate. Payments may be applied in
any order in the sole discretion of the Bank, but prior to demand, shall be
applied first to past due interest, Expenses, late charges, and principal
payments, if any, which are past due, then to current interest and Expenses and
late charges, and last to remaining principal.

 

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

 

2

 

3.              LOANS.

 

a.               General.  Except as otherwise provided herein, each
Loan advanced hereunder shall be in the form of a LIBOR Rate Loan.  The Bank may make any Loan in reliance upon
any oral, telephonic, written, teletransmitted or other request (the “Request(s)”)
that the Bank in good faith believes to be valid and to have been made by
Borrower or on behalf of Borrower by an Authorized Person.  The Bank may act on the Request of any
Authorized Person until the Bank shall have received from Borrower, and had a reasonable
time to act on, written notice revoking the authority of such Authorized
Person.  The Bank shall incur no
liability to Borrower or to any other person as a direct or indirect result of
making any Loan pursuant to this paragraph.

 

b.               Request for LIBOR
Rate Loans.  Borrower shall give the
Bank its irrevocable Request for each LIBOR Rate Loan specifying:

 

i.                  the
Draw Date for the LIBOR Rate Loan, which shall be at least two (2) Joint
Business Days following the date of the Request (except in the case of a LIBOR
Rate Loan with an Interest Period of one day, for which the Draw Date may be
the same day as the date of the Request; provided, however, if a Request is
received by the Bank after 2:00 p.m. (Eastern Standard Time), the Request
for such LIBOR Rate Loan shall be deemed to have been received on the next New
York Business Day;

 

ii.               the aggregate
amount of such LIBOR Rate Loan, which amount shall not be less than the Minimum
Borrowing Amount;

 

iii.            the applicable LIBOR
Rate selection and corresponding Interest Period duration (see LIBOR Rate
definition above); and

 

iv.           whether the Automatic
Continuation Option will be in effect for such LIBOR Rate Loan.  The Automatic Continuation Option shall be in
effect for each LIBOR Rate Loan, unless otherwise specified by Borrower in
writing.

 

c.               Delivery of
Requests and Notices.  Delivery of a
Notice or Request for a LIBOR Rate Loan shall be made to the Bank at the
following address, or such other address designated by the Bank from time to
time:

 

Manufacturers
and Traders Trust Company

68 Exchange Street

Binghamton,
New York  13901

Attn: Susan A.
Burtis

 

Fax No. 
(607) 779-2346

Telephone No. 
(607) 779-5902

 

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

 

3

 

e.               Rights and Remedies
upon Default.  Upon the occurrence of any
Event of Default, the Bank without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law) to or upon the Borrower or any other person (all and each of
which demands, presentments, protests, advertisements and notices are hereby
waived), may exercise all rights and remedies under the Borrower’s agreements
with the Bank or its Affiliates, applicable law, in equity or otherwise and may
declare all or any part of any amounts due hereunder not payable on demand to
be immediately due and payable without demand or notice of any kind and
terminate any obligation it may have to grant any additional loan, credit or
other financial accommodation to the Borrower. 
All or any part of any amounts due hereunder whether or not payable on
demand, shall be immediately due and payable automatically upon the occurrence
of an Event of Default in sub-paragraph 3(d)(ix) above, or at the Bank’s
option, upon the occurrence of any other Event of Default.  The provisions hereof are not intended in any
way to affect any rights of the Bank with respect to any amounts due hereunder
which may now or hereafter be payable on demand.

 

4.              CONTINUATION AND
CONVERSION.

 

a.               Election.  An Authorized Person may, upon irrevocable
Request to the Bank in accordance with subsection (b) below, elect to
continue, as of the last day of the applicable Interest Period, any or a
portion (subject to the Minimum Borrowing Amount limitation) of any LIBOR Rate
Loan with the same or a different Interest Period, provided no partial
continuation of a LIBOR Rate Loan with a different Interest Period shall reduce
the outstanding principal amount of the remaining LIBOR Rate Loan with the same
Interest Period to less than the Minimum Borrowing Amount.

 

b.               Notice of
Continuation.

 

i.                  For
an election under Section 4(a) above, an Authorized Person must
deliver to the Bank, by 2:00 p.m. (Eastern Standard Time) on a New York
Business Day, a Notice of Continuation for an election under Section 4(a) (“Notice
of Continuation” or “Notice”), specifying:

 

(a)          the aggregate amount of
each LIBOR Rate Loan to be continued;

 

(b)         the applicable LIBOR Rate
selection and corresponding Interest Period duration for each LIBOR Rate Loan
to be continued (see LIBOR Rate definition above); and

 

(c)          whether the Automatic
Continuation Option will be in effect for each such LIBOR Rate Loan.  The Automatic Continuation Option shall be in
effect for each LIBOR Rate Loan, unless otherwise specified by Borrower in
writing.

 

ii.               For any election in
accordance with Section 4(b)(i) above, the Continuation Date shall be
the later of (A) the last day of the applicable Interest Period, or (B) two
(2) Joint Business Days following the date the Bank receives the Notice of
Continuation, except as otherwise determined by the Bank in its sole
discretion.  If a Notice is received
after 2:00 p.m. (Eastern Standard Time) on any New York Business Day, such
Notice will be deemed to have been received on the next New York Business Day.  Accordingly, as an example, if Borrower has a
LIBOR Rate Loan with a one month Interest Period ending on June 15 and
wants to continue the LIBOR Rate Loan with a two month Interest Period,
Borrower must deliver to the Bank an appropriate Notice of Continuation by no
later than 2:00 p.m. (Eastern Standard Time) on June 13 (assuming
that June 13 is a New York Business Day and June 14 and 15 are Joint
Business Days).

 

iii.            For LIBOR Rate Loans
with the Automatic Continuation Option in effect, the Bank shall, at the end of
each Interest Period, automatically continue such LIBOR Rate Loan with the same
Interest Period.

 

iv.           The Bank may take
action on any Notice in reliance upon any oral, telephonic, written or
teletransmitted Notice that the Bank in good faith believes to be valid and to
have been made by Borrower or on behalf of Borrower by an Authorized
Person.  No Notice may be delivered by
e-mail.  The Bank may act on the Notice
from any Authorized Person until the Bank shall have received from Borrower,
and had a reasonable time to act on, written notice revoking the authority of
such Authorized Person. The Bank shall incur no liability to Borrower or to any
other person as a direct or indirect result of acting on any Notice under this
Note.  The Bank, in its sole discretion,
may reject any Notice that is incomplete.

 

c.               Expiration of
Interest Period.  With respect to any
LIBOR Rate Loan for which an Automatic Continuation Option is not in effect, if
Borrower does not deliver to the Bank an appropriate Notice of Continuation (in
accordance with the terms hereof) at least two (2) Joint Business Days
before the end of an Interest Period, the Bank shall have the right (but not
the obligation) to immediately, and without notice, convert such LIBOR Rate
Loan into a Base Rate Loan and such Loan shall accrue interest at the Base Rate
until two (2) Joint Business Days after the Bank receives an appropriate
Notice (in accordance with the terms hereof) electing to convert the Loan from
a Base Rate Loan to a LIBOR Rate Loan.  A
Notice of Continuation received one (1) Joint Business Day before the end
of an Interest Period may not effectuate a continuation of such Loan as a LIBOR
Rate Loan as of the last day of the Interest Period.  Rather, such LIBOR Rate Loan may be converted
(in the manner described above) to a Base Rate Loan on the last day of the
Interest Period.  Such Notice of
Continuation, however, will be effective two (2) Joint Business Days from
the date it is received (or deemed to be received) by the Bank.

 

d.               Conversion upon
Default.  Unless the Bank shall
otherwise consent in writing, if (i) Borrower fails to pay when due, in
whole or in part, the indebtedness under the Note (whether by demand or
otherwise), or (ii) there exists any condition or event which with the
passage of time, the giving of notice or both shall constitute an event of
default under any of Borrower’s agreement with the Bank, if any, the Bank, in
its sole discretion, may (i) permit any outstanding LIBOR Rate Loans to
continue until the last day of the applicable Interest Period at which time
such Loan shall automatically be converted into a Base Rate Loan or (ii) convert
any outstanding LIBOR Rate Loans into a Base Rate Loan before the end of the
applicable Interest Period applicable to such LIBOR Rate Loan.  Nothing herein shall be construed to be a
waiver by the Bank to have any Loan 

 

4

 

accrue interest at the Default Rate of
interest (which shall be calculated from the higher of the LIBOR Rate or the
Base Rate) or the right of the Bank to charge and collect a Breakage Fee.

 

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

 

6.              INTENTIONALLY
OMITTED.

 

7.              BANK RECORDS
CONCLUSIVE.  The Bank shall set forth
on a schedule attached to this Note or maintained on computer, the date and
original principal amount of each Loan and the date and amount of each payment
to be applied to the Outstanding Principal Amount of this Note.  The Outstanding Principal Amount set forth on
any such schedule shall be presumptive evidence of the Outstanding Principal
Amount of this Note and of all Loans.  No
failure by the Bank to make, and no error by the Bank in making, any annotation
on any such schedule shall affect the Borrower’s obligation to pay the
principal and interest of each Loan or any other obligation of Borrower to the
Bank pursuant to this Note.

 

8.              PURPOSE.  Borrower certifies (a) that no Loan will
be used to purchase margin stock except with the Bank’s express prior written
consent for each such purchase and (b) that all Loans shall be used for a
business purpose, and not for any personal, family or household purpose.

 

9.              AUTHORIZATION.  Borrower, if a corporation, partnership,
limited liability company, trust or other entity, represents that it is duly
organized and in good standing or duly constituted in the state of its
organization and is duly authorized to do business in all jurisdictions
material to the conduct of its business; that the execution, delivery and
performance of this Note have been duly authorized by all necessary regulatory
and corporate or partnership action or by its governing instrument; that this
Note has been duly executed by an authorized officer, partner or trustee and
constitutes a binding obligation enforceable against Borrower and not in
violation of any law, court order or agreement by which Borrower is bound; and
that Borrower’s performance is not threatened by any pending or threatened
litigation.

 

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

 

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

 

b.               Inability to
Determine Rates.  If the Bank shall
determine that for any reason adequate and reasonable means do not exist for
ascertaining LIBOR for any requested Interest Period with respect to a proposed
LIBOR Rate Loan, the Bank will give notice of such determination to Borrower.  Thereafter, the Bank may not make or maintain
LIBOR Rate Loans, as the case may be, hereunder until the Bank revokes such
notice in writing.  Upon receipt of such
notice, Borrower may revoke any pending Request or Notice with respect to a
LIBOR Rate Loan.  If Borrower does not
revoke such Request or Notice, the Bank may make, or continue the Loans, as
proposed by Borrower, in the amount specified in the applicable Request or
Notice submitted by Borrower, but such Loans shall be made or continued as Base
Rate Loans instead of LIBOR Rate Loans, as the case may be.

 

c.               Illegality.  If the Bank shall determine that the
introduction of any law (statutory or common), treaty, rule, regulation,
guideline or determination of an arbitrator or of a governmental authority or
in the interpretation or administration thereof, has made it unlawful, or that
any central bank or other governmental authority has asserted that it is
unlawful for the Bank to make LIBOR Rate Loans, then, on notice thereof by the
Bank to Borrower, the Bank may suspend the making of LIBOR Rate Loans until the
Bank shall have notified Borrower that the circumstances giving rise to such
determination shall no longer exist.  If
the Bank shall determine that it is unlawful to maintain any LIBOR Rate Loans,
Borrower shall prepay in full all LIBOR Rate Loans then outstanding, together
with accrued interest, either on the last date of the Interest Period thereof
if the Bank may lawfully continue to maintain such LIBOR Rate Loans to such
day, or immediately, if the Bank may not lawfully continue to maintain such
LIBOR Rate Loans.  If Borrower is
required to prepay any LIBOR Rate Loan immediately as set forth in this
subsection, then concurrently with such prepayment, Borrower may borrow from
the Bank, in the amount of such repayment, a Base Rate Loan.

 

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

 

12.       NOTICES.  Any demand or notice hereunder or under any
applicable law pertaining hereto shall be in writing and duly given if delivered
to Borrower (at its address on the Bank’s records) or to the Bank (at the
address on page one and separately to the Bank officer responsible for
Borrower’s relationship with the Bank). 
Such notice or demand shall be deemed sufficiently given for all purposes
when delivered (i) by personal delivery and shall be deemed effective when
delivered, or (ii) by mail or courier and shall be deemed effective three (3) New
York Business Days after deposit in an official depository maintained by the
United States Post Office for the collection of mail or one (1) New York
Business Day after 

 

5

 

delivery to a nationally recognized overnight
courier service (e.g., Federal Express).  Notice by e-mail is not valid notice under
this or any other agreement between Borrower and the Bank.

 

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

 

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

 

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

 

16.       REVOLVING FACILITY.  This is a revolving credit facility and the
Bank’s obligation to make Loans under this Note shall be governed by the terms
of the Agreement as the same may be amended from time to time.  All amounts hereunder shall become
immediately due and payable on the Expiration Date; provided, however, that the
Outstanding Principal Amount of this Note and all accrued and unpaid interest
shall automatically become immediately due and payable upon the occurrence of
an Event of Default with regard to Borrower or any guarantor or endorser of
this Note.  Borrower hereby waives
protest, presentment and notice of any kind in connection with this Note.  The Bank may modify, restrict, suspend or
terminate the credit at any time without affective Borrower’s then existing
obligations under this Note.

 

Preauthorized Transfers from Deposit Account.  If a deposit account number is provided in
the following blank Borrower hereby authorizes the Bank to debit available
funds in Borrower’s deposit account #                                    with
the Bank automatically for any amount which becomes due under this Note or as
directed by an Authorized Person, by telephone.

 

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

 

	
   

  	
  HARDINGE INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /S/ EDWARD J. GAIO

  
	
   

  	
   

  	
  Name:

  	
  Edward J. Gaio

  
	
   

  	
   

  	
  Title:

  	
  Vice President and CFO

  
	
  /S/ DOUGLAS J. MALONE

  	
   

  	
   

  
	
  Signature of Witness

  	
   

  
	
   

  	
   

  
	
  Douglas J. Malone

  	
   

  	
   

  
	
  Typed Name of Witness

  	
   

  
						

 

 

ACKNOWLEDGMENT

 

	
  STATE OF NEW YORK

  	
  )

  
	
   

  	
  :SS.

  
	
  COUNTY OF CHEMUNG

  	
  )

  

 

On      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

  

 

6

 

FOR BANK USE ONLY

 

	
  Authorization Confirmed:

  	
   

  

Product Code: 22660

Disbursement of Funds:

 

	
  Credit A/C

  	
  #

  	
  Off Ck

  	
  #

  	
  Payoff Obligation

  	
  #

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $

  	
   

  	
  $

  	
   

  	
  $

  

 

7

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"}]]