8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  March 16, 2009

Hardinge Inc.

(Exact name of Registrant as specified in its charter)

New York	000-15760	16-0470200
(State or other jurisdiction of incorporation or organization)	Commission file number	(I.R.S. Employer Identification No.)

One Hardinge Drive, Elmira, NY 14902

(Address of principal executive offices) (Zip Code)

(607) 734-2281

(Registrant’s telephone number including area code)

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o    Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry Into a Material Definitive Agreement.

On March 16, 2009, Hardinge Inc. (“Hardinge” or the “Company”) entered into a new credit facility with Manufacturers and Traders Trust Company (“M&T Bank”) pursuant to which M&T Bank extended a $10 million term loan to Hardinge.  The term loan bears interest at one-month LIBOR plus 500 basis points until September 30, 2009 and, thereafter until maturity, one-month LIBOR plus 600 basis points, with a minimum rate of 5.5%.  The term loan matures on March 16, 2010.

The term loan is secured by substantially all of the assets of the Company, including a pledge of 66-2/3% of the Company’s interest in Hardinge Holdings GmbH, the holding company for Hardinge’s foreign subsidiaries.  The term loan is guaranteed by Hardinge Technology Systems, Inc., a wholly-owned subsidiary of the Company and owner of the real property comprising the Company’s world headquarters in Elmira, New York.  The real property is subject to a negative pledge agreement in favor of M&T Bank.

The new credit facility with M&T Bank does not include any financial covenants but does contain other customary representations, affirmative and negative covenants and events of default.

The proceeds of the term loan were used to repay approximately $8.0 million of indebtedness owed by Hardinge under a multi-currency secured credit facility entered into in June 2008 with a bank syndicate that did not include M&T Bank.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 above is incorporated herein by reference.

Item 9.01(d) Exhibits.

Exhibits	Description
10.1	Credit Agreement dated March 16, 2009 between Hardinge and M&T Bank.
10.2	Libor Term Note dated March 16, 2009 in the principal amount of $10,000,000 by Hardinge to M&T Bank.
10.3	General Security Agreement dated March 16, 2009 by Hardinge in favor of M&T Bank.
10.4	Continuing Guaranty dated March 16, 2009 by Hardinge Technology Systems, Inc. in favor of M&T Bank.
10.5	Negative Pledge Agreement dated March 16, 2009 by Hardinge Technology Systems, Inc. in favor of M&T Bank.
10.6	Post Closing Agreement dated March 16, 2009 by and among Hardinge, Hardinge Technology Systems, Inc. and M&T Bank.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HARDINGE INC.
	Registrant
Date: March 20, 2009	By:	/s/ EDWARD J. GAIO
		Edward J. Gaio
		Chief Financial Officer

3

EX-10.1

EXHIBIT 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

EX-10.2

EXHIBIT 10.2

LIBOR TERM NOTE

New York

March 16, 2009 $10,000,000.00

BORROWER (Name):  Hardinge Inc.

(Organizational Structure):  Corporation

(State Law organized under):  New York

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

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

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

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

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

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

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

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

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

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

h.“LIBOR Rate” shall mean (a) the greater of 5.0 percentage point(s) above x one-month  o two-month  o three-month 
o six-month LIBOR with an Interest Period of equal duration through September 29, 2009 and, thereafter, the greater of 6.0 percentage point(s) above x one-month  o two-month  o three-month  o six-month LIBOR with an Interest Period of equal duration from September 30, 2009 through  the Maturity Date, or (b)  5.5% (the “Interest Rate Floor”).  (Check only ONE box.  If no clear selection is made, one-month LIBOR shall apply.)

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

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

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

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

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

2.PAYMENT OF PRINCIPAL, INTEREST AND EXPENSES.

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

1

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

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

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

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

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

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

OR

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

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

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

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

h.Prepayment; Breakage Fee.

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

2

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

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

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

3.CONTINUATIONS AND CONVERSIONS.

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

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

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

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

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

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

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

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

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

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

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

3

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

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

5.EVENTS OF DEFAULT; REMEDIES.

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

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

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

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

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

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

4

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

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

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

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

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

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

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

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

5

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

HARDINGE INC.
By:	/S/	EDWARD J. GAIO
Name:		Edward J. Gaio
Title:		Vice President and CFO

/S/ SUSAN A. BURTIS

Signature of Witness

Susan A. Burtis

Typed Name of Witness

ACKNOWLEDGMENT

STATE OF NEW YORK           )

:SS.

COUNTY OF CHEMUNG        )

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

/S/ NANCY L. CURREN

Notary Public

Nancy L. Curren

FOR BANK USE ONLY

Authorization Confirmed:

Product Code: 22660

Disbursement of Funds:

Credit A/C	#	Off Ck	#	Payoff Obligation	#
	$		$		$

6

EX-10.3

EXHIBIT 10.3

GENERAL SECURITY AGREEMENT

New York

Debtor (Name):  Hardinge Inc.

(Organizational Structure):  Corporation

(State Law organized under):  New York

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

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

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

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

1.Security Interests.

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

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

2.Covenants.  Debtor covenants and agrees as follows:

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

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

1

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

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

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

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

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

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

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

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

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

2.11Additional Collateral.  Intentionally Omitted.

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

2

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

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

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

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

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

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

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

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

3

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

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

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

6.Certain Rights and Remedies.

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

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

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

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

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

4

7.Default.

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

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

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

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

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

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

5

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

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

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

10.Miscellaneous.

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

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

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

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

6

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

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

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

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

Dated: March 16, 2009	HARDINGE INC.
	By: /S/ EDWARD J. GAIO
	Name:	Edward J. Gaio
	Title:	Vice President and CFO

ACKNOWLEDGMENT

STATE OF NEW YORK	)
	: SS.
COUNTY OF CHEMUNG`	)

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

/S/ NANCY L. CURREN

Notary Public

Nancy L. Curren

FOR SECURED PARTY USE ONLY:

Authorization confirmed:

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

7

Exhibit A

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

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

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

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

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

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

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

g.liens reflected on Exhibit B hereto.

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

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

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

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

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

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

SCHEDULE 4(C)

EXISTING LIENS

Debtor	Secured Party	Jurisdiction	Filing Information	Collateral
Hardinge, Inc.	IBM Credit LLC	New York Secretary of State	200407205605560 07/20/2004	Certain leased equipment
Hardinge Machine Tools Limited	Hormann (UK) Limited	UC Companies House; England and Wales	Registered 02/09/2005	The deposit account and all money from time to time placed in the deposit account in accordance with a certain rent deposit deed
Hardinge Machine Tools Limited	HMT Trustees Limited, as Trustee of the Hardinge Machine Tools Limited Staff	UK Companies House; England and Wales	To be registered following completion	Debenture granting security over all assets to secure performance of obligations under deficit recovery plan in connection with £0.9 million deficit of the Hardinge Machine Tools Limited Staff Pensions Scheme
L. Kellenberger & Co. AG (as successor by merger to HTT Hauser Tripet Tschudin, Ag)	UBS AG	Switzerland	05/07/2003	Mortgage on real property in Biel, Switzerland
Hardinge Taiwan Precision Machinery Limited	Mega International Commercial Bank	Taiwan	06/2006	Mortgage on real property in Taiwan
Hardinge Inc.	Citicapital Commercial Leasing Corporation	New York Secretary of State	200511176009826 11/17/2005	Certain leased equipment

EX-10.4

	EXHIBIT 10.4

CONTINUING GUARANTY

(Business Organization)

New York

GUARANTOR:	Hardinge Technology Systems, Inc.
	Name
	One Hardinge Drive, Elmira, New York 14902
	Address of Chief Executive Office
	a x corporation	o general partnership	o limited partnership	o limited liability company	o
	organized under the laws of the State of New York
BORROWER:	Hardinge Inc.
	Name
	One Hardinge Drive, Elmira, New York 14902
	Address
BANK:	Manufacturers and Traders Trust Company, One M&T Plaza, Buffalo, New York 14240 Attention: Office of General Counsel.

1.    Guaranty.

(a)   Guarantor, intending to be legally bound, hereby unconditionally guarantees the full and prompt payment and performance of any and all of Borrower’s Obligations (as defined below) to the Bank when due, whether at stated maturity, by acceleration or otherwise.  As used in this Guaranty, the term “Obligations” shall mean any and all obligations, indebtedness and other liabilities of Borrower to the Bank now or hereafter existing, of every kind and nature and all accrued and unpaid interest thereon and all Expenses (as defined below) including without limitation, whether such obligations, indebtedness and other liabilities (i) are direct, contingent, liquidated, unliquidated, secured, unsecured, matured or unmatured; (ii) are pursuant to a guaranty or surety in favor of the Bank; (iii) were originally contracted with the Bank or with another party (including obligations under a guaranty or surety originally in favor of such other party); (iv) are contracted by Borrower alone or jointly with one or more other parties; (v) are or are not evidenced by a writing; (vi) are renewed, replaced, modified or extended; and (vii) are periodically extinguished and subsequently reincurred or reduced and thereafter increased.  Guarantor will pay or perform its obligations under this Guaranty upon demand.  This Guaranty is and is intended to be a continuing guaranty of payment (not collection) of the Obligations (irrespective of the aggregate amount thereof and whether or not the Obligations from time to time exceeds the amount of this Guaranty, if limited), independent of, in addition and without modification to, and does not impair or in any way affect, any other guaranty, indorsement, or other agreement in connection with the Obligations, or in connection with any other indebtedness or liability to the Bank or collateral held by the Bank therefor or with respect thereto, whether or not furnished by Guarantor.  Guarantor understands that the Bank can bring an action under this Guaranty without being required to exhaust other remedies or demand payment first from other parties.

(b)   Guarantor acknowledges the receipt of valuable consideration for this Guaranty and acknowledges that the Bank is relying on this Guaranty in making a financial accommodation to Borrower, whether a commitment to lend, extension, modification or replacement of, or forbearance with respect to, any Obligation, cancellation of another guaranty, purchase of Borrower’s assets, or other valuable consideration.

2.    Continuing, Absolute, Unconditional.  This Guaranty is irrevocable, absolute, continuing, unconditional and general without any limitation.  This Guaranty is limited in amount equal to the amount due under that certain LIBOR Term Note dated of even date herewith by Borrower in favor Bank (the “Note”), reasonable Expenses (as defined below) incurred with respect to the Note and all of the Expenses incurred with respect to this Guaranty (collectively, the “Guaranteed Amount”).

3.    Guarantor’s Waivers & Authorizations.

(a)   Guarantor’s obligations shall not be released, impaired or affected in any way including by any of the following, all of which Guarantor hereby waives (i) any bankruptcy, reorganization or insolvency under any law of Borrower or that of any other party, or by any action of a trustee in any such proceeding; (ii) any new agreements or obligations of Borrower or any other party with the Bank; (iii) any adjustment, compromise or release of any Obligations of Borrower, by the Bank or any other party; the existence or nonexistence or order of any filings, exchanges, releases, impairment or sale of, or failure to perfect or continue the perfection of a security interest in any collateral for the Obligations; (iv) any failure of Guarantor to receive notice of any intended disposition of such collateral; (v) any fictitiousness, incorrectness, invalidity or unenforceability, for any reason, of any instrument or other agreement which may evidence any Obligation; (vi) any composition, extension, stay or other statutory relief granted to Borrower including, without limitation, the expiration of the period of any statute of limitations with respect to any lawsuit or other legal proceeding against Borrower or any person in any way related to the Obligations or a part thereof or any collateral therefor; (vii) any change in form of organization, name, membership or ownership of Borrower or Guarantor; (viii) any refusal or failure of the Bank or any other person prior to the date hereof or hereafter to grant any additional loan or other credit accommodation to Borrower or the Bank’s or any other party’s receipt of notice of such refusal or failure; (ix) any setoff, defense or counterclaim of Borrower with respect to the obligations or otherwise arising, either directly or indirectly, in regard to the Obligations; or (x) any other circumstance that might otherwise constitute a legal or equitable defense to Guarantor’s obligations under this Guaranty.

1

(b)   The Guarantor waives acceptance, assent and all rights of notice or demand including without limitation (i) notice of acceptance of this Guaranty, of Borrower’s default or nonpayment of any Obligation, and of changes in Borrower’s financial condition; (ii) presentment, protest, notice of protest and demand for payment; (iii) notice that any Obligations has been incurred or of the reliance by the Bank upon this Guaranty; and (iv) any other notice, demand or condition to which Guarantor might otherwise be entitled prior to the Bank’s reliance on or enforcement of this Guaranty.  Guarantor further authorizes the Bank, without notice, demand or additional reservation of rights against Guarantor and without affecting Guarantor’s obligations hereunder, from time to time:  (i) to renew, refinance, modify, subordinate, extend, increase, accelerate, or otherwise change the time for payment of, the terms of or the interest on the Obligations or any part thereof;(ii) to accept and hold collateral from any party for the payment of any or all of the Obligations, and to exchange, enforce or refrain from enforcing, or release any or all of such collateral; (iii) to accept any indorsement or guaranty of any or all of the Obligations or any negotiable instrument or other writing intended to create an accord and satisfaction with respect to any or all of the Obligations; (iv) to release, replace or modify the obligation of any indorser or guarantor, or any party who has given any collateral for any of all of the Obligations, or any other party in any way obligated to pay any or all of the Obligations, and to enforce or refrain from enforcing, or compromise or modify, the terms of any obligation of any such indorser, guarantor or party; (v) to dispose of any and all collateral securing the Obligations in any manner as the Bank, in its sole discretion, may deem appropriate, and to direct the order and the enforcement of any and all indorsements and guaranties relating to the Obligations in the Bank’s sole discretion; and (vi) to determine the manner, amount and time of application of payments and credits, if any, to be made on all or any part of the Obligations including, without limitation, if this Guaranty is limited in amount, to make any such application to Obligations, if any, in excess of the amount of this Guaranty.

(c)   Notwithstanding any other provision in this Guaranty, Guarantor irrevocably waives, without notice, any right he or she may have at law or in equity (including without limitation any law subrogating Guarantor to the rights of the Bank) to seek contribution, indemnification or any other form of reimbursement from Borrower or any other obligor or guarantor of the Obligations for any disbursement made under this Guaranty or otherwise.

4.    Termination.  This Guaranty shall remain in full force and effect as to each Guarantor until actual receipt by the Bank officer responsible for Borrower’s relationship with the Bank as last identified by Bank to Guarantor of written notice of Guarantor’s intent to terminate (or Guarantor’s death or incapacity) plus the lapse of a reasonable time for the Bank to act on such notice (the “Receipt of Notice”);  provided, however, this Guaranty shall remain in full force and effect thereafter until all Obligations outstanding, or contracted or committed for (whether or not outstanding), before such Receipt of Notice by the Bank, and any extensions, renewals or replacements thereof (whether made before or after such Receipt of Notice), together with interest accruing thereon after such Receipt of Notice, shall be finally and irrevocably paid in full.  Discontinuance of this Guaranty as to one Guarantor shall not operate as a discontinuance hereof as to any other guarantor.  Payment of all of the Obligations from time to time shall not operate as a discontinuance of this Guaranty, unless a Receipt of Notice as provided above has been received by the Bank.  Guarantor agrees that, to the extent that Borrower makes a payment or payments to the Bank on the Obligations, or the Bank receives any proceeds of collateral to be applied to the Obligations, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or otherwise are required to be repaid to Borrower, its estate, trustee, receiver or any other party, including, without limitation, under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such repayment, the obligation or part thereof which has been paid, reduced or satisfied by such amount shall be reinstated and continued in full force and effect as of the date such initial payment, reduction or satisfaction occurred, notwithstanding any contrary action which may have been taken by the Bank in reliance upon such payment or payments.  As of the date any payment or proceeds of collateral are returned, the statute of limitations shall start anew with respect to any action or proceeding by the Bank against Guarantor under this Guaranty.  Likewise, any acknowledgment, reaffirmation or payment, by Borrower or any third party, of any portion of the Obligations, shall be deemed to be made as agent for the Guarantor, strictly for the purposes of tolling the running of (and/or preventing the operation of) the applicable statute of limitations with respect to any action or proceeding by the Bank against Guarantor under this Guaranty.

5.    Expenses.  Guarantor agrees to reimburse the Bank on demand for all the Bank’s expenses, damages and losses of any kind or nature, including without limitation costs of collection and actual attorneys’ fees and disbursements whether for internal or external counsel incurred by the Bank in attempting to enforce this Guaranty, collect any of the Obligations including any workout or bankruptcy proceedings or other legal proceedings or appeal, realize on any collateral, defense of any action under the prior paragraph or for any other purpose related to the Obligations (collectively, “Expenses”).  Expenses will accrue interest at the highest default rate in any instrument evidencing the Obligations until payment is actually received by the Bank.

6.    Financial and Other Information.  Guarantor authorizes the Bank from time to time to obtain, verify and review all financial data deemed appropriate by the Bank in connection with this Guaranty and the Obligations, including without limitation credit reports from agencies.  Guarantor understands this Guaranty and has satisfied itself as to its meaning and consequences and acknowledges that it has made its own arrangements for keeping informed of changes or potential changes affecting the Borrower including the Borrower’s financial condition.

7.    Security; Right of Setoff.  As further security for payment of the Obligations, Expenses and any other obligations of Guarantor to the Bank, Guarantor hereby grants to the Bank a security interest in all money, securities and other property of Guarantor in the actual or constructive possession or control of the Bank or its affiliates including without limitation all deposits and other accounts owing at any time by the Bank or any of its affiliates in any capacity to Guarantor in any capacity (collectively, “Property”).  The Bank shall have the right to set off Guarantor’s Property against any of Guarantor’s obligations to the Bank.  Such set-off shall be deemed to have been exercised immediately at the time the Bank or such affiliate elect to do so.  The Bank shall also have all of the rights and remedies of a secured party under the Uniform Commercial Code, as the same may be in effect in the State of New York, as amended from time to time, in addition to those under this Guaranty and other applicable law and agreements.

8.    No Transfer of Assets.  Guarantor shall not transfer, reinvest or otherwise dispose of its assets in a manner or to an extent that would or might impair Guarantor’s ability to perform its obligations under this Guaranty.  This limitation shall not be construed so as to prohibit transactions in the ordinary course of business between Guarantor and Borrower or between Guarantor and its subsidiaries or other subsidiaries of Borrower.

9.    Nonwaiver by the Bank; Miscellaneous.  This Guaranty is intended by Guarantor to be the final, complete and exclusive expression of the agreement between Guarantor and the Bank. This Guaranty may be assigned by the Bank, shall inure to the benefit of the Bank and its successors and assigns, and shall be binding upon Guarantor and his or her legal representative, successors and assigns and any participation may be granted by the Bank herein in connection with the assignment or granting of a participation by the Bank in the Obligations or any part thereof.  All rights and remedies of the Bank are cumulative, and no such right or remedy shall be exclusive of any other right or remedy.  This Guaranty does not supersede any other guaranty or

2

security granted to the Bank by Guarantor or others (except as to Guarantor’s Waiver of Subrogation rights above).  No single, partial or delayed exercise by the Bank of any right or remedy shall preclude exercise by the Bank at any time at its sole option of the same or any other right or remedy of the Bank without notice. Guarantor expressly disclaims any reliance on any course of dealing or usage of trade or oral representation of the Bank including, without limitation, representations to make loans to Borrower or enter into any other agreement with Borrower or Guarantor.  No course of dealing or other conduct, no oral agreement or representation made by the Bank or usage of trade shall operate as a waiver of any right or remedy of the Bank.  No waiver or amendment of any right or remedy of the Bank or release by the Bank shall be effective unless made specifically in writing by the Bank.  Each provision of this Guaranty 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.  Guarantor agrees that in any legal proceeding, a copy of this Guaranty kept in the Bank’s ordinary course of business may be admitted into evidence as an original.  Captions are solely for convenience and not part of the substance of this Guaranty.  If this Guaranty is limited pursuant to Paragraph 2 hereof, until the Obligations are indefeasibly paid in full, the Guaranteed Amount shall not be reduced in any manner whatsoever by any amounts which the Bank may realize before or after maturity of the Obligations (by acceleration, demand or otherwise), as a result of payments made by or on behalf of Borrower or by or on behalf of any other person or entity other than Guarantor primarily or secondarily liable for the Obligations or any part thereof, or otherwise credited to Borrower or such person or entity, or as a result of the exercise of the Bank’s rights with respect to any collateral for the Obligations or any part thereof.  Payments made to the Bank by Guarantor (other than, directly or indirectly, from collateral or other persons or entities liable for any portion of the Obligations) after maturity of the Obligations, by acceleration or otherwise, shall reduce the Guaranteed Amount.

10.  Joint and Several.  If there is more than one Guarantor, each Guarantor jointly and severally guarantees the payment and performance in full of all obligations under this Guaranty and the term “Guarantor” means each as well as all of them.  Guarantor also agrees that the Bank need not seek payment from any source other than the undersigned Guarantor.  This Guaranty is a primary obligation.  Guarantor’s obligations hereunder are separate and independent of Borrower’s, and a separate action may be brought against Guarantor whether or not action is brought or joined against or with Borrower or any other party.

11.  Authorization.  Guarantor certifies that it is an entity in the form described above duly organized and in good standing under the laws of the State of its organization and duly authorized to do business in each State material to the conduct of its business.  Guarantor has determined that the execution of this Guaranty will be in its best interests, to its direct benefit, incidental to its powers, and in furtherance of its duly acknowledged purposes and objectives.  Execution of this Guaranty by the persons signing below has been authorized by all necessary corporate action, including directors’ and shareholder consent or (as appropriate) is authorized by its partnership agreement or governing instrument.  Guarantor’s chief executive office is located at the above address.

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

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

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

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

		GUARANTOR:
DATE	March  16 , 2009	HARDINGE TECHNOLOGY SYSTEMS, INC.
TIN # 16-132-6427
		By: /S/ RICHARD L. SIMONS
		Name:	Richard L. Simons
		Title:	President

3

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 RICHARD L. SIMONS, 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

FOR BANK USE ONLY

Authorization Confirmed:

Signature

4

EX-10.5

EXHIBIT 10.5

NEGATIVE PLEDGE AGREEMENT

Pledgor: Hardinge Technology Systems, Inc.

Borrower:  Hardinge Inc.

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

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, Pledgor and Borrower hereby agree as follows:

1.            Until such time as all Indebtedness has been irrevocably paid in full, Pledgor will not cause or permit, whether upon the happening of any contingency or otherwise, any of Pledgor’s assets indicated below (check appropriate box(es) below):

o    all Pledgor’s personal property assets, including, without limitation, all accounts, chattel paper, investment property, deposit accounts, documents, equipment, farm products, fixtures, general intangibles (including intellectual property), instruments, inventory, causes of action (including tort claims), and all proceeds and products thereof,

xPledgor’s interest in the real property located at One Hardinge Drive, Elmira, New York, and/or as more particularly described on the attached Schedule A,

ocertain assets of Pledgor, more particularly described as follows or on the attached Schedule A:

whether now owned or hereafter acquired, and wherever located (collectively, the AProperty@), to be transferred or conveyed, or to become subject to any lien, mortgage, security interest, tax lien, warrant or any other encumbrance, except in favor of the Bank.

2.            “Indebtedness” shall mean either (check appropriate box below):

xany and all indebtedness owed by Borrower to the Bank, whether now existing or hereafter incurred, of every kind and character, direct or indirect, and whether such indebtedness is from time to time reduced and thereafter increased, or entirely extinguished and thereafter reincurred, including, without limitation:  (i) indebtedness not yet outstanding, but contracted for, or with respect to which any other commitment by the Bank exists; (ii) all interest provided in any instrument, document, or agreement which accrues on any indebtedness until payment of such indebtedness in full; (iii) any credit or financial accommodations extended by the Bank to Borrower after the commencement of a bankruptcy proceeding by or against Borrower under Title 11 of the United States Code, or otherwise, and (iv) any sums owed by Borrower to others which the Bank has obtained, or may obtain, by assignment or otherwise.

o     any and all indebtedness owed by Borrower to the Bank pursuant to a certain note dated                                     , 20         , in the original principal amount of $                                          , given by Borrower to the Bank, and any amendments, modifications or replacements thereto.

3.Borrower understands and acknowledges that the Bank is relying upon this Agreement as additional security in connection with the Indebtedness, and that any breach of this Agreement by Pledgor shall constitute an event of default under the terms of any agreement evidencing the Indebtedness and Borrower’s obligations for the payment thereof (collectively, the “Loan Documents”). Upon the breach of this Agreement by Pledgor, the Bank may take such actions and enforce such remedies as the Bank may deem necessary or appropriate, under the terms of any Loan Document or pursuant to applicable law.  Notwithstanding the foregoing, nothing in this Agreement shall be construed to alter the demand nature of the Indebtedness (if applicable) or any financial accommodation provided by the Bank to Borrower in connection therewith.

4.All the rights and remedies of the Bank pursuant to this Agreement and any other document executed by Pledgor or Borrower shall be cumulative, and no such right or remedy shall be exclusive of any other such right or remedy.

5.Pledgor agrees that the Bank, after the occurrence of an Event of Default under the Loan Documents, may record this Agreement in the real property records or other governmental offices wherever any Property is located.

6.If Pledgor and Borrower are not the same person or entity, then the term “Pledgor”, as used in this Agreement, shall be deemed to include, individually and collectively, Pledgor and Borrower.

WITNESS the due execution hereof as a SEALED instrument, and the delivery hereof to the Bank this 16th day of March, 2009.

HARDINGE TECHNOLOGY SYSTEMS, INC.
By:		/S/ RICHARD L. SIMONS
Name:			Richard L. Simons
Title:			President
HARDINGE INC.
By:	/S/ EDWARD J. GAIO
Name:				Edward J. Gaio
Title:				Vice President and CFO

ACKNOWLEDGMENTS

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 RICHARD L. SIMONS 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

ACKNOWLEDGMENTS

STATE OF NEW YORK	)
	: SS.
COUNTY OF CHEMUNG	)

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

/S/ NANCY L. CURREN

Notary Public

EX-10.6

EXHIBIT 10.6

POST CLOSING AGREEMENT Hardinge Holdings GmbH

THIS POST-CLOSING AGREEMENT (“Agreement”) is made as of March 16, 2009, by and between HARDINGE INC., a New York corporation having an address of One Hardinge Drive, Elmira, New York 14902 (“Borrower”), HARDINGE TECHNOLOGY SYSTEMS, INC., a New York corporation having an address of One Hardinge Drive, Elmira, New York 14902 (“Guarantor”), and MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation with banking offices at One M&T Plaza, Buffalo, New York 14240, Attention: Office of General Counsel (“Lender”).

Pursuant to the terms of a certain commitment letter dated March 13, 2009 (“Commitment Letter”), Lender agreed to make a loan to Borrower in the amount of Ten Million and 00/100 Dollars ($10,000,000.00) (the “Loan”).  The Loan will be evidenced by a note in the total principal amount of $10,000,000.00 by Borrower to the order of Lender (the “Note”).  The Note is secured by, among other things, a Credit Agreement, a Guaranty, a Negative Pledge Agreement, and a General Security Agreement, all of even date herewith (collectively with the Note, the “Loan Documents”).

A.Borrower acknowledges that as part of the consideration for the Loan, Lender is to receive a pledge of 2/3rds of the stock of Hardinge Holdings GmbH, a foreign subsidiary of Borrower (the “Holding Co.”) (the “Pledge”).  It is the understanding of the parties hereto that all of the stock in Borrower’s foreign subsidiaries is currently held by Holding Co.

B.Borrower and Guarantor acknowledge that Lender and its counsel have requested certain due diligence items in preparation for the Loan as set forth on Exhibit A hereto and that not all of the items have been provided as of the closing date.

C.Borrower acknowledges and agrees that Lender will not make the Loan in the absence of this Agreement.

NOW, THEREFORE, for and in consideration of Lender making the Loan to Borrower and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.The above recitals are true and correct and are incorporated herein by reference.

2.Borrower and Guarantor acknowledge and agree to provide any and all items on Exhibit A that have not been provided to Lender or Lender’s counsel prior to the closing date.  Such items shall be delivered within fifteen (15) days of the date hereof.  In addition, Borrower and Guarantor acknowledge and agree to provide any additional information and documentation that Lender may reasonably request in connection with the Loan and the subsequent Pledge.

3.Pledge.  Borrower acknowledges that it owns 100% of the stock of Holding Co.  which holds all of the foreign stock of the foreign subsidiaries of Borrower.  Borrower acknowledges and agrees that in consideration for the Loan, it agrees to execute within fifteen (15) days of the date hereof, a Pledge Agreement pledging 2/3rds of its stock in Holding Co. along with any and all other documents needed to

effectuate the Pledge.  Borrower further agrees that it shall provide and cause Holding Co. to provide all of the documentation pertaining to the formation, authority, stock holdings, etc. of Holding Co. as is required by Lender, in its reasonable judgment.  Borrower further agrees that if Lender or Lender’s counsel shall deem it necessary, Borrower shall cause Holding Co. to execute any and all documents necessary to effectuate the Pledge.  Borrower agrees to obtain an opinion letter from New York counsel in substantially the form attached hereto as Exhibit B regarding the authority and enforcement of the Pledge by Borrower.  Borrower shall obtain legal counsel in the foreign country or organization for Holding Co. to opine as to authority and enforceability of a Pledge by Holding Co. relative to the foreign stock or assets of Holding Co.

4.It is understood and agreed to by the parties hereto that the current stock certificates that Borrower is required to deliver to Lender are being held by JPMorgan Chase Bank in connection with the prior financing.  Borrower acknowledges and agrees that if it is unable to provide the certificates prior to or at the time of closing, it shall deliver those certificates immediately upon the release thereof by JPMorgan Chase Bank and within fifteen (15) days of the date hereof.

5.Borrower shall pay any and all expenses related to any post-closing items contained in this Agreement, including, but not limited to, expenses incurred in complying with Paragraph 3 herein and any Lender’s counsel fees for services rendered in connection with this Agreement incurred after March 17, 2009.

6.Event of Default.  Borrower’s and Guarantor’s failure to perform their obligations by the dates stated herein shall be an Event of Default under the Loan Documents.

IN WITNESS WHEREOF, the parties below have entered into this Agreement as of the day and year first above written.

BORROWER:
HARDINGE INC.
By:	/S/ EDWARD J. GAIO
	Name: Edward J. Gaio
	Title:   Chief Financial Officer
GUARANTOR:
HARDINGE TECHNOLOGY SYSTEMS, INC.
By:	/S/ RICHARD L. SIMONS
	Name: Richard L. Simons
	Title:  President

2

LENDER:
MANUFACTURERS AND TRADERS TRUST COMPANY
By:	/S/ SUSAN A. BURTIS
	Name: Susan A. Burtis
	Title:   Vice President

3

EXHIBIT A – LIST OF REQUIREMENTS

EXHIBIT A-1: REQUEST FOR INFORMATION SHEET

EXHIBIT A-2: CLOSING CHECKLIST

4

EXHIBIT A-1: REQUEST FOR INFORMATION SHEET

HARDINGE INC.

1.The following information as to the Borrower – Hardinge Inc.:

A.Full and proper name of Borrower and State of Formation

B.Address of Borrower

C.Federal Identification Number

D.Copy of Certificate of Incorporation and filing receipt, along with any amendments thereto

E.Copy of By-laws, along with any amendments thereto

F.Long Form Certificate of Good Standing, dated within (60) days of closing

G.Franchise tax search, dated within (60) days of closing

H.Name and title of person who will be executing bank documents

I.Name and title of second person to sign authorization for person in (H) above to sign documents

J.The following searches against Borrower:

· Bankruptcy search

· Judgment search

· Lien search

· UCC Search – in the State where entity was formed

K.SEC filing

L.Copies of all financing documents including loan payoff

M.Information as to whether publicly traded

N.Security Agreement Questionnaire

2.The following information as to: all material direct and indirect subsidiaries that are Guarantors or are pledging stock as collateral for the loan

A. Full and proper name

B.Jurisdiction of Formation

C.Address

D.Identification Number

E.Copy of Articles of Organization or applicable organizational document and filing receipt, and any amendments thereto

F.Copy of operational documents, and any amendments thereto

G.Long Form Certificate of Good Standing (showing Proof of Publication where required), dated within sixty (60) days of closing

H.Name and title of person who will be executing documents

IName and title of second person to sign authorization for person in (H) above to sign documents

J.The following searches (as applicable):

· Bankruptcy search

· Judgment search

· Lien search

· Franchise Tax Search

L.SEC filings or any similar filings in any other jurisdictions, if applicable

M.Information as to whether or not stock is publicly traded

5

N.For Guarantors:  List of all shareholders, the amount of voting shares they own and the total amount of outstanding shares of voting stock

3.The following information as to the property or properties known as the Company’s headquarters located at One Hardridge Drive, Elmira, Chemung County, New York:

A.Information regarding Owner and Proof of Ownership;

B.Title Search;

C.Tax Map Identification Number;

D.Copy of Negative Pledge Agreement from previous financing;

E.Information as to any tenants and copies of any leases.

4.HAZARD AND LIABILITY INSURANCE - requirements:

A.Hazard Insurance:  Evidence of Commercial Property Insurance on the Acord 28 Form

· Note:  Must be on the 2003 version of that certificate or must state in the fine print at the top of the form:  “THIS IS EVIDENCE THAT INSURANCE AS IDENTIFIED BELOW HAS BEEN ISSUED, IS IN FORCE, AND CONVEYS ALL RIGHTS AND PRIVILEGES AFFORDED UNDER THE POLICY”

· If this is not possible, we will need an Insurance Binder

B.Liability Insurance:  Certificate of Insurance on ACORD 25-S Form

· Note:  Must be on a version of that certificate that states in the fine print at the top of the form:  “THIS IS EVIDENCE THAT INSURANCE AS IDENTIFIED BELOW HAS BEEN ISSUED, IS IN FORCE, AND CONVEYS ALL RIGHTS AND PRIVILEGES AFFORDED UNDER THE POLICY”

· If this is not possible, we will need an Insurance Binder along with the Certificate of Insurance

C.Both Certificates must list Borrower as the insured

D.The amount of Hazard Insurance coverage must be for at least the amount of the loan

E.Both Certificates must list correct property address(es)

F.Both Certificates must contain a 30 day cancellation notice

· Note:  Must read as follows:  “SHOULD THE POLICY BE TERMINATED, THE COMPANY WILL GIVE THE ADDITIONAL INTEREST INDENTIFIED BELOW THIRTY (30) DAYS WRITTEN NOTICE, AND WILL SEND NOTIFICATION OF ANY CHANGES TO THE POLICY THAT WOULD AFFECT THAT INTEREST, IN ACCORDANCE WITH THE POLICY PROVISIONS AS REQUIRED BY LAW.”

G.Bank to be listed on the Hazard Insurance as “Loss Payee”

H.Bank to be listed on the Liability Insurance as “Additional Insured”

I.Bank name/address to be set forth as follows:

Manufacturers and Traders Trust Company

Its Successors and/or Assigns

M&T Center, One Fountain Plaza, 9th Floor

Buffalo, New York 14203-1495

5.Attorney Opinion Letter required – we will send you our required form after due diligence items are received and loan documents are finalized

6

6.The following information regarding the Marketable Securities to be collateralized:

A.Copies of Certificates to be pledged as marketable securities

7.Please note that more information and documentation may be required once the details of the transaction are clarified and this Request for Information is subject to change accordingly and is also subject to review by our client.

7

EXHIBIT A-2: CLOSING CHECKLIST

CLOSING CHECKLIST

Borrower:	Hardinge Inc.
Type of Entity:	New York corporation
Address:	One Hardinge Drive, Elmira, New York 14902
Federal I.D. #:	16-0470200
Corporate Guarantor:	Hardinge Technology Systems, Inc.
Type of Entity:	New York corporation
Address:	One Hardinge Drive, Elmira, New York 14902
Federal I.D.#:	16-1326427
Lender:	Manufacturers and Traders Trust Company (“Lender”)
Property:	One Hardinge Drive, Town of Horseheads/City of Elmira, Chemung County, NY
	Tax Map No. 69.09-4-62
Borrower’s Attorney:	Phillips Lytle LLP - Raymond H. Seitz, Esq. & David J. Murray (“Borrower”)
Lender’s Attorney:	Coughlin & Gerhart – Mark S. Gorgos (“C&G”)
Loan Officer:	Susan A. Burtis
Amount/Type of Loan:	$10,000,000.00 Term Loan
Closing Date:	March 16, 2009

	Document	Responsible Party	Req’d	Rec’d	Comments
1.	Original Executed Commitment Letter/CLB	Lender	X
2.	LIBOR Term Note - $10,000,000.00	C&G	X
3.	Credit Agreement	C&G	X
4.	Negative Pledge Agreement	C&G	X
5.	General Security Agreement	C&G	X
6.	Stock Pledge Agreement(s) (pledging 2/3rds of foreign stock)	C&G	X		Post-Closing Item
7.	Trading Rider (if necessary)	C&G	X		Post-Closing Item
8.	Irrevocable Stock Power (if necessary)	C&G	X		Post-Closing Item
9.	Federal Reserve Form U-1 (if necessary)	C&G	X		Post-Closing Item

8

	Document	Responsible Party	Req’d	Rec’d	Comments
10.	Post-Closing Agreement	C&G	X
11.	UCC-1 – General Security Agreement (NYS)	C&G	X
12.	UCC-3 Termination (JPMorgan Chase)	Borrower	X
13.	Error and Omissions Compliance Affidavit	C&G	X
14.	TIN Certification	C&G	X
15.	Company General Certificate with Borrowing Resolution	C&G	X
16.	Corporate Guaranty – Hardinge Technology Systems, Inc.	C&G	X
17.	Company General Certificate – Hardinge Technology Systems, Inc.	C&G	X
18.	Resolution to Guaranty	C&G	X
19.	Consent of Shareholders to Guaranty	C&G	X
20.	Disbursement Closing Statement	C&G	X
21.	JPMorgan Chase Credit Agreement	Borrower	X
22.	Payoff statement for JPMorgan Chase loan	Borrower	X
23.	Updated Title Search and underlying documents – One Hardinge Drive, Elmira, New York · Proof of Ownership · Title Search · Tax Map Identification Number · Tenancies	Borrower	X
24.	Tax Receipts (One Hardinge Drive, Elmira, New York)	Borrower	X
25.	Corporate Documents – Borrower (formation and authority)	Borrower	X
26.	UCC Search – Borrower	Borrower	X
27.	Bankruptcy Search – Borrower	Borrower	X
28.	Judgment Search – Borrower	Borrower	X

9

	Document	Responsible Party	Req’d	Rec’d	Comments
29.	Lien Search – Borrower	Borrower	X
30.	Franchise Tax Search – Borrower	Borrower	X
31.	SEC filing – Borrower	Borrower	X
32.	Security Agreement Questionnaire to be filled out and returned by Borrower	C&G	X
33.	Stock Detail – Borrower (including whether or not publicly traded and information of stock detail for foreign subsidiaries and Borrower’s holdings therein)	Borrower	X
34.	Copies of Certificates to be pledged as marketable securities	Borrower	X
35.	Corporate Documents – Hardinge Technology Systems, Inc. (formation and authority)	Borrower	X
36.	Corporate Documents – Hardinge Holdings Co., Gmbh (formation and authority)	Borrower	X
37.	Stock Detail – Hardinge Holdings Co., Gmbh (including whether or not publicly traded on any exchange and information of stock detail for foreign subsidiaries)	Borrower	X		Post-Closing Item
38.	SEC filings or similar filings in jurisdiction of formation for Hardinge Holdings Co., Gmbh	Borrower	X		Post-Closing Item
39.	Certificates of Insurance · Liability · Property /Builders Risk	Borrower	X
40.	Opinion Letter as of closing (New York counsel)	Borrower	X
41.	Opinion Letter regarding Stock Pledge (New York counsel)	Borrower	X		Post-Closing Item
42.	Opinion Letter regarding Stock Pledge (foreign counsel for Hardinge Holdings Co. Gmbh)	Borrower	X		Post-Closing Item
43.	Wire Authorization Form	Lender	X

10

EXHIBIT B – FORM OF OPINION LETTER

11