Document:

EXHIBIT 10.7

AMENDMENT
NO. 2

 

THIS
AMENDMENT TO FACILITIES AND SUPPORT SERVICES AGREEMENT is
effective as of May 15, 2008 between Tecogen Inc., a Delaware corporation
(“Tecogen”), and American DG Energy Inc., a Delaware corporation (“ADG
Energy”).

 

NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereby
reaffirm all of the provisions of the Facilities and Support Services
Agreement, dated  January 1, 2006
(the “Agreement”), except that the following paragraphs shall be substituted
for the corresponding paragraphs in the Agreement.

 

1.             Office
and Infrastructure

 

Tecogen will provide to
ADG Energy the following office and infrastructure support services for a
period from the date of this Agreement through the Termination Date (as such
term is defined in Section 2 below):

 

(a)           Office
Space. Approximately 1,872 allocated square feet of space in Tecogen’s
offices located at 45 First Avenue, Waltham, Massachusetts 02451 (the “Building”),
which shall include three (3) offices and a shared conference room.
Tecogen will also provide ADG Energy with water, sewer, electrical, phones and
other utility services, heating, ventilation and air-conditioning, and cleaning
and janitorial services. Tecogen may change the space in the Building occupied
by ADG Energy from time to time during the term of this Agreement. Tecogen will
provide such space and services at a flat rate of $2,780.00 per month. If
additional space is provided, this flat fee will increase at an annual rate of
$15.93 per square foot for any additional office space and $12.96 per square
foot for any additional manufacturing space. Copy machine usage, office
supplies, postage and shipping, secretarial & receptionist services,
Internet service, telephone support and IT support are not included in the
monthly rate and will be billed separately.

 

(c)           Insurance and Employee
Benefit Plans. To the extent it is able to do under its then current plans
and policies, Tecogen will include ADG Energy as a covered entity under its
liability, property and casualty, workers compensation and other applicable
business insurance policies. Tecogen will allow ADG Energy employees to
participate in Tecogen’s medical and dental insurance plans, and other group insurance
plans for its employees, including life, AD&D, and short and long-term
disability plans. The costs of these insurance programs will be charged to ADG
Energy on an actual cost basis when available, or in the case of general
insurance be allocated to ADG Energy for it’s pro rata share of the premiums.
Management of the plans will be carried out jointly by both companies and with
no charge to each other.

 

(g)           Exclusivity: ADG Energy shall be granted exclusive
representation rights to the Tecogen Cogeneration Product in the New England
States, and Tecogen shall be granted exclusive representation rights to the ADG
Energy Cogeneration Product in California. The relevant portions of Tecogen’s
standard rep agreement shall apply except where in conflict with this
agreement. ADG Energy will be eligible for split commissions for cogeneration
and chiller products as presented in Tecogen’s standard rep agreement.

 

2.             Term

 

The term of the Agreement, as
amended hereby, commenced as of the effective date for one year, renewable
annually upon mutual written agreement.

 

IN
WITNESS WHEREOF, the parties hereto have caused this amendment to be duly
executed and delivered by their proper and duly authorized representatives as
of the day and year first above written.

 

Dated:
May 15, 2008 (but effective as set forth above).

 

	
  TECOGEN
  INC.

  	
   

  	
  AMERICAN
  DG ENERGY INC.

  
	
   

  	
   

  	
   

  
	
  By:
  /s/ Robert A. Panora

  	
   

  	
  By:
  /s/ Barry J. Sanders

  
	
  Title:
  President

  	
   

  	
  Title:
  PresidentEXHIBIT 10.8

AMENDMENT
NO. 3

 

THIS
AMENDMENT TO FACILITIES AND SUPPORT SERVICES AGREEMENT is
effective as of January 1, 2009 between Tecogen Inc., a Delaware
corporation (“Tecogen”), and American DG Energy Inc., a Delaware
corporation (“ADG Energy”).

 

NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereby
reaffirm all of the provisions of the Facilities and Support Services
Agreement, dated  January 1, 2006
(the “Agreement”), except that the following paragraphs shall be substituted
for the corresponding paragraphs in the Agreement.

 

1.             Office
and Infrastructure

 

Tecogen will provide to
ADG Energy the following office and infrastructure support services for a
period from the date of this Agreement through the Termination Date (as such
term is defined in Section 2 below):

 

(a)           Office Space.
Approximately 2,702 allocated square feet of space in Tecogen’s offices located
at 45 First Avenue, Waltham, Massachusetts 02451 (the “Building”), which
shall include six (6) offices, a shared conference room and manufacturing
space. Tecogen will also provide ADG Energy with water, sewer, electrical,
phones and other utility services, heating, ventilation and air-conditioning,
and cleaning and janitorial services. Tecogen may change the space in the
Building occupied by ADG Energy from time to time during the term of this
Agreement. Tecogen will provide such space and services at a flat rate of
$4,838.00 per month. If additional space is provided, this flat fee will
increase at an annual rate of $17.72 per square foot for any additional office
space and $16.68 per square foot for any additional manufacturing space. Copy
machine usage, office supplies, and shipping, secretarial &
receptionist services, Internet service, telephone support and IT support are
not included in the monthly rate and will be billed separately.

 

(c)           Insurance and Employee
Benefit Plans. To the extent it is able to do under its then current plans
and policies, Tecogen will include ADG Energy as a covered entity under its
liability, property and casualty, workers compensation and other applicable
business insurance policies. Tecogen will allow ADG Energy employees to
participate in Tecogen’s medical and dental insurance plans, and other group
insurance plans for its employees, including life, AD&D, and short and
long-term disability plans. The costs of these insurance programs will be
charged to ADG Energy on an actual cost basis when available, or in the case of
general insurance be allocated to ADG Energy for it’s pro rata share of the
premiums. Management of the plans will be carried out jointly by both companies
and with no charge to each other.

 

(g)           Exclusivity: ADG Energy shall be granted exclusive
representation rights to the Tecogen Cogeneration Product in the New England
States, and Tecogen shall be granted exclusive representation rights to the ADG
Energy Cogeneration Product in California. The relevant portions of Tecogen’s
standard rep agreement shall apply except where in conflict with this
agreement. ADG Energy will be eligible for split commissions for cogeneration
and chiller products as presented in Tecogen’s standard rep agreement.

 

2.             Term

 

The
term of the Agreement, as amended hereby, commenced as of the effective date
for one year, renewable annually upon mutual written agreement.

 

IN
WITNESS WHEREOF, the parties hereto have caused this amendment to be duly
executed and delivered by their proper and duly authorized representatives as
of the day and year first above written.

 

Dated:
January 2, 2009 (but effective as set forth above).

 

	
  TECOGEN
  INC.

  	
   

  	
  AMERICAN
  DG ENERGY INC.

  
	
   

  	
   

  	
   

  
	
  By:
  /s/ Robert A. Panora

  	
   

  	
  By:
  /s/ Barry J. Sanders

  
	
  Title:
  President

  	
   

  	
  Title:
  PresidentEXHIBIT 10.1

 

 

CREDIT AGREEMENT

New York

 

March 16, 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.

  	
  “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.

  
	
   

  	
   

  	
   

  
	
   

  	
  b.

  	
  “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.

  
	
   

  	
   

  	
   

  
	
   

  	
  c.

  	
  “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

  
	
   

  	
   

  	
   

  
	
   

  	
  d.

  	
  “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.

  
	
   

  	
   

  	
   

  
	
   

  	
  e.

  	
  “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.

  
	
   

  	
   

  	
   

  
	
   

  	
  f.

  	
  “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.

  
	
   

  	
   

  	
   

  
	
   

  	
  g.

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

  
	
   

  	
   

  	
   

  
	
   

  	
  h.

  	
  “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.

  
	
   

  	
   

  	
   

  
	
   

  	
  i.

  	
  “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.

  
	
   

  	
   

  	
   

  
	
   

  	
  j.

  	
  “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.

  
	
   

  	
   

  	
   

  
	
   

  	
  k.

  	
  “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.

  

 

1

 

	
   

  	
  l.

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

  
	
   

  	
   

  	
   

  
	
   

  	
  m.

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

  
	
   

  	
   

  	
   

  
	
   

  	
  n.

  	
  “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.

  
	
   

  	
   

  	
   

  
	
   

  	
  o.

  	
  “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).

  
	
   

  	
   

  	
   

  
	
   

  	
  p.

  	
  “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.

  
	
   

  	
   

  	
   

  
	
   

  	
  q.

  	
  “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.

  
	
   

  	
   

  	
   

  
	
   

  	
  r.

  	
  “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.

  
	
   

  	
   

  	
   

  
	
   

  	
  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.
  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.

  

 

2

 

	
  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.

  
	
   

  	
   

  	
   

  
	
   

  	
  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 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.

  

 

3

 

	
   

  	
  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) acquire substantially all of the assets of any other entity,
  (iii) do business under or otherwise use any name other than its true
  name or (iv) 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.

  
	
   

  	
   

  	
   

  
	
  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) any principal installments on the Obligations, or to pay any interest
  thereon or any fee or other amount payable under the Transaction Documents
  and such failure continues unremedied for a period of three (3) business
  days; (ii) default by the Borrower in the performance of any
  obligation, term or condition of this Agreement, the 

  

 

4

 

	
   

  	
   

  	
  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 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 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; (iv) the
  exercise, performance ,enforcement or protection of any of the rights of the
  Bank hereunder; or (v) 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 

  

 

5

 

	
   

  	
   

  	
  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 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.

  

 

6

 

	
   

  	
  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.

  

 

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.

 

	
   

  	
   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

  

 

7

 

ACKNOWLEDGMENT

 

	
  STATE OF NEW YORK

  	
  )

  
	
   

  	
  : SS.

  
	
  COUNTY OF CHEMUNG

  	
  )

  

 

On the 16th day of March in
the year 2009, before me, the undersigned, a Notary Public in and for said
State, personally appeared 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/ NANCY L.
  CURREN

  
	
   

  	
  Notary
  Public

  
	
   

  	
   

  
	
   

  	
  NANCY L.
  CURREN

  

 

 

ACKNOWLEDGMENT

 

	
  STATE OF NEW YORK

  	
  )

  
	
   

  	
  : SS.

  
	
  COUNTY OF CHEMING

  	
  )

  

 

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

 

	
   

  	
  /S/ NANCY L.
  CURREN

  
	
   

  	
  Notary
  Public

  
	
   

  	
   

  
	
   

  	
  NANCY L.
  CURREN

  

 

 

BANK USE ONLY

 

	
  Authorization Confirmed:

  	
   

  
	
   

  	
  Signature

  

 

8

 

SCHEDULE

 

Additional Representations and Warranties
(§2)

 

Additional Affirmative Covenants (§3)

 

Permitted Indebtedness (§4(a)):

 

1.     the
Obligations;

 

2.     Indebtedness
existing on the date hereof or incurred pursuant to a credit facility existing
on the date hereof and set forth in Schedule 6.01 of the Credit
Agreement dated as of June 13, 2008 among Borrower, Hardinge Holdings GMBH
(the “Swiss Borrower”), certain lenders and JPMorgan Chase Bank, N.A. as
Administrative Agent (the “JPMorgan Agreement”) and extensions, renewals and
replacements of any such Indebtedness with Indebtedness of a similar type that
does not increase the outstanding principal amount thereof;

 

3.     Indebtedness of the Borrower
to any Subsidiary and of any Subsidiary to the Borrower Borrower or any other
Subsidiary; provided that Indebtedness of any Subsidiary that is not a party
to the transaction contemplated by the JPMorgan Agreement to any Loan Party as
defined in the JPMorgan Agreement shall be subject to the limitations set forth
in Section 6.04(d) of the JPMorgan Agreement;

 

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

 

5.     Indebtedness of the Borrower
or any Subsidiary incurred to finance the acquisition, construction or
improvement of any fixed or capital assets, including Capital Lease Obligations
(as that term is defined in the JPMorgan Agreement) and any Indebtedness
assumed in connection with the acquisition of any such assets or secured by a
Lien (as that term is defined in the JPMorgan Agreement) on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements of
any such Indebtedness that do not increase the outstanding principal amount
thereof; provided that (i) such Indebtedness is incurred prior to
or within ninety (90) days after such acquisition or the completion of such
construction or improvement and (ii) the aggregate principal amount of
Indebtedness permitted by this clause shall not exceed $10,000,000 at any time
outstanding;

 

6.     Indebtedness
of the Borrower or any Subsidiary as an account party in respect of trade
letters of credit;

 

7.     Indebtedness of Foreign
Subsidiaries (as that term is defined in the JPMorgan Agreement) in an
aggregate principal amount not exceeding $7,500,000 at any time outstanding;

 

8.     Indebtedness of the Borrower
or any Subsidiary secured by a Lien (as that term is defined in the JPMorgan
Agreement) on any asset of the Borrower or any Subsidiary; provided that
the aggregate outstanding principal amount of Indebtedness permitted by this provision
shall not in the aggregate exceed $10,000,000 at any time; provided, further,
that any Subordinated Indebtedness (as that term is defined in the JPMorgan
Agreement) incurred in reliance on this provision shall be on terms and conditions
reasonably satisfactory to the Bank;

 

 

9.     Indebtedness with respect
to Swap Obligations (as that term is defined in the JPMorgan Agreement) permitted
under Section 6.05 of the JPMorgan Agreement or with respect to Banking
Services Obligations (as that term is defined in the JPMorgan Agreement);

 

10.   existing Indebtedness
incurred to finance the acquisition and/or construction of a proposed
manufacturing and distribution center in Taiwan or China so long as the
aggregate principal amount of such Indebtedness does not exceed $7,000,000 at
any time outstanding; and

 

11.   unsecured Indebtedness in an
aggregate principal amount not exceeding $10,000,000 at any time outstanding; provided,
that any Subordinated Indebtedness (as that term is defined in the JPMorgan
Agreement) incurred in reliance on this provision shall be on terms and
conditions reasonably satisfactory to the Bank.

 

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.     Liens (as that term is
defined in the JPMorgan Agreement) imposed by law for taxes that are not yet
due or being contested in compliance with Section 5.04 of the JPMorgan
Agreement;

 

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

 

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

 

4.     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;

 

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

 

6.     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 

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

 

7.     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;

 

6.     investments made in
compliance with the Investment Policy (as that term is defined in the JPMorgan
Agreement); and

 

7.     investments by the Borrower
and any Subsidiary existing on the date hereof in the capital stock or other
ownership interests of Subsidiaries.

 

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
outstanding at any one time.

 

Additional Financial Covenants (§5)

 

 

SCHEDULE
4(C)

 

EXISTING
LIENS

 

	
  Debtor

  	
   

  	
  Secured Party

  	
   

  	
  Jurisdiction

  	
   

  	
  Filing Information

  	
   

  	
  Collateral

  
	
  Hardinge, Inc.

  	
   

  	
  IBM Credit
  LLC

  	
   

  	
  New York

  Secretary of State

  	
   

  	
  200407205605560

  07/20/2004

  	
   

  	
  Certain
  leased equipment

  
	
  Hardinge
  Machine Tools Limited

  	
   

  	
  Hormann (UK)
  Limited

  	
   

  	
  UC Companies
  House;

  England and Wales

  	
   

  	
  Registered

  02/09/2005

  	
   

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

  
	
  Hardinge
  Machine Tools Limited

  	
   

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

  	
   

  	
  UK Companies
  House; England and Wales

  	
   

  	
  To be
  registered

  following completion

  	
   

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

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

  	
   

  	
  UBS AG

  	
   

  	
  Switzerland

  	
   

  	
  05/07/2003

  	
   

  	
  Mortgage on
  real property in Biel, Switzerland

  
	
  Hardinge
  Taiwan Precision Machinery Limited

  	
   

  	
  Mega
  International Commercial Bank

  	
   

  	
  Taiwan

  	
   

  	
  06/2006

  	
   

  	
  Mortgage on
  real property in Taiwan

  
	
  Hardinge
  Inc.

  	
   

  	
  Citicapital
  Commercial Leasing Corporation

  	
   

  	
  New York

  Secretary of State

  	
   

  	
  200511176009826

  11/17/2005

  	
   

  	
  Certain
  leased equipment

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