Alliance Agreement

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Exhibit 10.9

CONFIDENTIAL TREATMENT

        Note: Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Commission under Rule 24b-2. The omitted confidential material has been filed separately with the Commission. The location of the omitted confidential information is indicated herein with asterisks (****).

Alliance Agreement

        This Alliance Agreement (" Agreement ") is entered into as of the 3rd day of November, 2004, by and among Hardinge Inc., a New York corporation (" Hardinge ") and BPT IP, LLC, a Delaware limited liability company (" BPT ").

Preliminary Statement

        Hardinge, BPT Holdings, Inc. and Bridgeport Machines Limited, an English company (" BML "), previously entered into that certain Alliance Agreement dated October 29, 2002 (the " Original Alliance Agreement "). Hardinge and BPT now desire to enter into this Alliance Agreement, which supersedes and replaces the Original Alliance Agreement, which has been terminated by Hardinge, BPT and BML on the date hereof. Therefore, intending to be legally bound by this Agreement, and in consideration of the mutual promises set forth below, and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by the parties, Hardinge and BPT agree as follows:

Agreement

        Section 1.     Definitions.     As used in this Agreement, each of the defined terms set forth below has the following meaning:

         Accessory means an accessory product, the purpose of which is to augment the function of a Product, and does not include a Spare.

         Affiliate means, with respect to a particular entity, any other entity directly or indirectly controlling, controlled by or under common control with, such entity. For purposes of this definition, "control" means the ownership or control, by contract or otherwise, of more than 50% of the voting securities of an entity, or the right to appoint or elect a majority of the Board of Directors of an entity.

         Assets Sale Agreement means the agreement for the sale of certain assets dated the same date as this Agreement and made between BPT and Hardinge.

         Change of Control Transaction means any transaction or related series of transactions pursuant to which a third party may gain Control of a party, whether by merger, consolidation, issuance or acquisition of voting securities, sale of all or substantially all of the assets of a party, or otherwise.

         Control means and includes the direct or indirect ownership of all or substantially all of the assets of a party by any third party, the direct or indirect ownership or control, by contract or otherwise, of more than 50% of the voting securities of the acquired party, or the right to appoint or elect, whether directly or indirectly, a majority of the Board of Directors of a party.

         Copyrights means the United States copyrights listed on Schedule A to this Agreement, as that Schedule may be amended from time to time by the parties, and being copyrights that form part of the sale of intellectual property right by BPT to Hardinge pursuant to the terms of the Assets Sale Agreement.

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         Force Majeure Event is defined in Section 5.4.

         Governing Documents means with respect to any entity, (a) the articles or certificate of incorporation, formation or association, and bylaws of a corporation; (b) all shareholders' agreements, voting agreements, joint venture agreements, registration rights agreements or other agreements or documents relating to the organization, management or operation of such corporation or relating to the rights, duties and obligations of the shareholders of such corporation, or any operating agreement incorporating any or all of the foregoing elements; and (c) any amendment or supplement to any of the foregoing.

         Intellectual Property Rights means the Marks and Copyrights, collectively.

         Knee Mill Products means products falling under the description "Milling machines, knee-type, UK customs tariff codes 845951 00 (numerically controlled) and 845959 00 (other) as defined in section XVI of the UK Customs Tariff volume 2, section VI.

         Marks means the United States and Canadian trademarks and trade names listed on Schedule A to this Agreement, as that Schedule may be amended from time to time, and being trade marks and trade names that form part of the sale of intellectual property right by BPT to Hardinge pursuant to the terms of the Assets Sale Agreement.

         Net Sales means the gross sales price actually charged in the sale of a (i) Product, (ii) a Spare, (iii) an Accessory or (iv) any other item bearing any Mark, in each case within the Territory, less:

(i)

customary trade, quantity or **************, rebates, and non-affiliated brokers' or agents' commissions actually allowed and taken;

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Confidential treatment requested and the redacted material has been separately filed with the Commission.

(ii)

freight and other transportation costs, including insurance charges, and duties, tariffs, sales and excise taxes and other governmental charges based directly on sales, turnover or delivery of the specified Products and actually paid or allowed; and

(iii)

in the case of Products, Accessories and Spares only, amounts charged for Product Services sold at the same time as the specified Products, Accessories or Spares, provided that any such Product Services are separately charged and itemized.

For purposes of this Agreement, a "sale" shall be deemed to occur upon the earlier of (i) the date of an invoice for a Product, Accessory, Spare or other item bearing any Mark sold or transferred by Hardinge to any third party, or (ii) the date on which a Product, Accessory, Spare or other item bearing any Mark is shipped for delivery to any third party.

         Products means those products listed on Schedule B to this Agreement, as that Schedule may be amended from time to time.

         Product Services means service engineering and technical support services for Products, Spares and Accessories.

         Product Warranty means the warranty or warranties to be offered by Hardinge in connection with the sale of Products, Accessories or Spares, in the form attached as Schedule C .

         Representative means, with respect to a particular person, any director, officer, manager, employee, agent, consultant, adviser, accountant, financial adviser, legal counsel or other representative of that person.

         Royalties means the amount payable to BPT by Hardinge in connection with the sale of Products, Accessories, Spares and other items bearing any Mark, as set forth in Section 6.1 of this Agreement.

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         Spares means spare parts for Products and Accessories.

         Technical Information means all information owned by BPT to the extent that it is required for the manufacture of the Products, Accessories and Spares, including but not limited to blueprints, designs, schematics, drawing, specifications, computer source and object code, customer lists, and proprietary rights and assets of a similar nature.

         Territory means the United States of America, Canada and Mexico, and their respective territories and possessions.

         US GAAP means generally accepted accounting principles for financial reporting in the USA applied on a consistent basis during the term of this Agreement and in a manner consistent with Hardinge's previous practice.

        Section 2.     Staffing.     

        Hardinge shall use its reasonable efforts to employ or engage sufficient personnel during the term of this Agreement to ensure the successful distribution, sale and promotion of the Products, Accessories and Spares, and the provision of Product Services.

        Section 3.     Grant of Rights.     

        3.1     Rights To Manufacture.     Subject to the terms of this Agreement, BPT hereby grants and agrees to grant, and Hardinge hereby accepts, the exclusive worldwide right to manufacture Products, Accessories and Spares. While this Agreement remains in effect, BPT agrees that it will not, and will not permit any of its Affiliates to, nor will it grant to any third party any right to, manufacture Products, Accessories and Spares anywhere in the world.

        3.2     Rights to Sell.     Subject to the terms of this Agreement, BPT hereby grants and agrees to grant, and Hardinge hereby accepts, the exclusive worldwide right to sell Products, Accessories and Spares. While this Agreement remains in effect, BPT agrees that it will not, and will not permit any of its Affiliates to, and nor will it grant to any third party any right to, sell Products, Accessories and Spares anywhere in the world.

        3.3     Grant of Technical Information License.     Subject to the terms of this Agreement, BPT hereby grants and agrees to grant to Hardinge, and Hardinge hereby accepts, the exclusive right to use the Technical Information, to make, have made, use, import and sell Products, Accessories and Spares anywhere in the world. While this Agreement remains in effect, BPT agrees that it will not, and will not permit any of its Affiliates to, and nor will it grant to any third party any right to use the Technical Information anywhere in the world.

        3.4     Reservation.     Hardinge acknowledges and agrees that the Technical Information are and shall remain the sole and exclusive property of BPT, and that unless otherwise specifically and expressly granted to Hardinge pursuant to this Agreement any and all rights in and to the Technical Information are hereby irrevocably reserved to BPT. Hardinge further acknowledges and agrees that (i) no title in the Technical Information is transferred to Hardinge pursuant to this Agreement, (ii) it shall not use the Technical Information for any purpose other than the purposes set forth in this Agreement, (iii) it will not represent or assert to any third party any claim of ownership in or to the Technical Information, and (iv) it will not bring any action or assert any claim, or directly or indirectly assist any other person or entity to bring any action or assert any claim, challenging the ownership by BPT, or the validity, of the Technical Information, at any time during or after the term of this Agreement.

        3.5     Third Party Rights.     The parties acknowledge that it may be advisable for Hardinge to subcontract the manufacture or assembly of certain Products, Accessories or Spares, and that in connection with any such subcontract a third party manufacturer may require a license to some or all of the Technical Information. The parties hereby agree that they shall within 60 days after the date

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hereof mutually agree upon (i) a set of criteria for sub-licensing of the Technical Information by Hardinge to third parties (the "Sub-licensing Criteria") and (ii) the form of a sub-licensing agreement to be used by Hardinge in sub-licensing the Technical Information to third parties (the "Agreed Form Sub-Licensing Agreement"). Thereafter, Hardinge shall be entitled to sub-license the Technical Information to third parties who comply with the Sub-licensing Criteria and who enter into a sub-licensing agreement with Hardinge in the form, or substantially in the form, of the Agreed Form Sub-Licensing Agreement (and provided always that any such sub-licensing agreement provides for its own expiry automatically upon the termination of this Agreement for whatever reason). Hardinge shall give BPT prior written notice of any such proposed sub-licensing, and BPT shall be entitled to require reasonable evidence, prior to the grant of the relevant sub-license, that (i) the relevant third party complies with the Sub-Licensing Criteria and (ii) the proposed sub-licensing agreement is in the form, or substantially in the form, of the Agreed Form Sub-Licensing Agreement. Hardinge agrees diligently to monitor the compliance of any sub-licensee with the terms of its sub-licensing agreement and to take all actions within its power to ensure that such sub-licensee complies with the terms thereof. Any default (i) by Hardinge in the performance of its obligations pursuant to this clause 3.6, or (ii) by a sub-licensee in the performance of its obligations pursuant to its sub-licensing agreement, in each case which is not remedied within ninety (90) days after the earlier of (a) either the Hardinge program manager or other high-ranking Hardinge manager becoming aware of the default or (b) Hardinge receiving written notification from BPT of the default, shall be deemed to constitute a material default by Hardinge under this Agreement and shall entitle BPT to terminate for cause in accordance with section 7.3(b).

        3.6     Infringement Claims.     Hardinge agrees that it will promptly notify BPT in writing if it becomes aware of any infringement or possible infringement, or other misappropriation or illegal use, of any Technical Information in or outside of the Territory. BPT shall be responsible for, and shall have the sole discretion with respect to any prosecution or settlement of, any action brought by BPT to enforce its rights in the Technical Information. BPT shall be solely responsible for the settlement or abandonment of any proceeding brought by BPT pursuant to this Section 3.6, and shall have the right to retain all recoveries, damages and other remedies obtained as a result of any such proceeding. Hardinge agrees that it shall provide such cooperation as is reasonably requested by BPT with respect to any enforcement action brought by BPT, provided that BPT will reimburse Hardinge for any and all reasonable out of pocket expenses incurred by Hardinge in so cooperating with BPT.

        Section 4.     Product Manufacture, Design, Service and Promotion.     

        4.1     Manufacture of Products, Accessories and Spares.     The parties agree that Hardinge shall be responsible for the manufacture of Products, Accessories and Spares. Hardinge agrees that the Products, Accessories and Spares manufactured by, or for, Hardinge will be of good, merchantable quality commensurate with the quality of other Hardinge products comparable to the Products, Accessories and Spares. Hardinge agrees that it will maintain, or will cause to be maintained, manufacturing quality controls and processes with respect to the Products, Accessories and Spares which are no less rigorous than those maintained by Hardinge with respect to its own quality products. At all times during the term of this Agreement, Hardinge will use commercially reasonable efforts to (i) maintain or improve the quality and reliability of the Products, Accessories and Spares, (ii) maintain or enhance the specifications for the Products, Accessories and Spares in order to improve their marketability, and (iii) maintain or reduce the costs of manufacture of the Products, Accessories and Spares in order to increase sales volumes and profitability of the Products, Accessories and Spares. In furtherance of such obligations, Hardinge may implement changes to the designs and specifications of the Products, Accessories and Spares so long as (A) such changes do not degrade the form or function of the Products, Accessories and Spares, and (B) Hardinge maintains complete and accurate records and drawings of all such changes. Hardinge will provide BPT with a list of all changes implemented by Hardinge as BPT may request from time to time.

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        4.2     Design and Engineering Control.     Hardinge shall be responsible for providing production engineering, engineering drawings, and document control with respect to the Products, Accessories and Spares in accordance with its practices with respect to its own quality products.

        4.3     Ownership of Drawings and Other Documents.     The parties agree that all drawings, specifications, designs, blueprints and other documents of any kind or nature prepared by or at the direction of Hardinge pursuant to this Section 4, together with all copies, abridgements, summaries, and derivative works made or derived therefrom, shall be and remain the sole and exclusive property of BPT and shall promptly be returned by Hardinge to BPT on termination of this Agreement for any reason.

        4.4     Service and Warranties.     Hardinge will be responsible for the marketing and sale of the Products, Accessories and Spares, and for the provision of the Product Services, in the Territory. Hardinge agrees that it will perform such obligations at a level of quality comparable to that performed by Hardinge with respect to comparable Hardinge Products. Hardinge will offer the Product Warranty with respect to all Products, Accessories and Spares, and will service all Product Warranty claims at its sole cost and expense.

        4.5     Sales, Marketing and Distribution.     

        4.5.1     Promotion Efforts.     Subject to Section 4.6 below, Hardinge agrees to use its reasonable commercial efforts to promote and sell the Products, Accessories and Spares in the Territory in a manner consistent with such efforts undertaken by Hardinge with respect to its own quality products, including print advertising, attendance at trade shows in the Territory, direct mail campaigns, and other similar efforts previously or hereafter employed by Hardinge with respect to any of its products. Such efforts will be at the cost and expense of Hardinge.

        4.5.2     Telephone Orders.     Without limitation of the foregoing, Hardinge agrees that it will, until the earlier of (a) the termination of this Agreement and (b) 31 December, 2009, (i) maintain, advertise and promote a dedicated "800" customer services number to enable customers to order Products, Accessories and Spares or request Product Services via telephone during normal business hours, or such extended hours as Hardinge may maintain for any of its other products and services, and (ii) advertise and permit the ordering of Products, Accessories, Spares and Product Services through any other standard telephone or other ordering systems maintained by Hardinge for its own comparable products. Upon termination of this Agreement for any reason, Hardinge shall assign the "800" number set forth above to BPT or to such other person or entity as BPT may designate, at no cost or expense to BPT, unless such transfer is prohibited at such time by the relevant telephone carrier.

        4.5.3     Websites.     Hardinge currently maintains, and will maintain at all times during the term of this Agreement, a website for the promotion and sale of its products and services and the Products, Accessories, Spares and Product Services.

        4.6     Demonstration Products.     At all times during the term of this Agreement, Hardinge will maintain appropriate and commercially reasonable numbers of demonstration Products, Accessories and Spares necessary to support a marketing and sales effort for the Products, Accessories and Spares that is at least as active as that Hardinge employs in respect of its own products.

        Section 5.     Royalties on Products and Spares.     

        5.1     Royalties.     In consideration of the licenses and other rights granted to Hardinge pursuant to this Agreement, Hardinge hereby agrees to pay to BPT Royalties of:

(i)

**** % of the Net Sales of any Spares sold by Hardinge within the Territory;

(ii)

****% of the Net Sales of any Products sold by Hardinge within the Territory;

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(iii)

****% of the Net Sales of any Accessories sold by Hardinge within the Territory separately from the Products to which such Accessories relate; and

(iv)

****% of the Net Sales of any Accessories sold by Hardinge for use in conjunction with Products sold by Hardinge at the same time as such Accessories within the Territory,

provided that (i) Hardinge will not be obligated to pay any Royalty on sales of Product Services, and (ii) ********************************************************.

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Confidential treatment requested and the redacted material has been separately filed with the Commission.

        5.2     Minimum Royalties.     For two (2) periods of 12 months, commencing with the twelve month period beginning November 1, 2004 (each such twelve month period referred to below as a " Minimum Royalty Year "), Hardinge will pay to BPT an amount equal to the greater of (i) zero and (ii) U.S.$1,000,000 minus the amount of any Royalties paid (and for these purposes Royalties shall be deemed paid in an amount equal to the amount of any credit against Royalties granted pursuant to section 5.3.2) or payable in respect of Net Sales during such Minimum Royalty Year to BPT by Hardinge pursuant to Section 5.1 above. For two (2) periods of 12 months, commencing with the twelve month period beginning November 1, 2006 (each such twelve month period referred to below as a " Reduced Minimum Royalty Year ", and the Minimum Royalty Years and the Reduced Minimum Royalty Years together being the " Minimum Royalty Years "), Hardinge will pay to BPT an amount equal to the greater of (i) zero and (ii) U.S.$850,000 minus the amount of any Royalties paid (and for these purposes Royalties shall be deemed paid in an amount equal to the amount of any credit against Royalties granted pursuant to section 5.3.2) or payable in respect of Net Sales during such Reduced Minimum Royalty Year to BPT by Hardinge pursuant to Section 5.1 above

        5.3     Calculation and Payment of Royalties.     

        5.3.1     Royalty Payments.     Subject to Section 5.1, Royalties shall be calculated and paid to BPT within *********** days following the end of each ********* month period, commencing with the ********* month period beginning on **************** and, in the case of termination of this Agreement for any reason, shall be paid on the date of termination with respect to the period from the last Royalties payment date until the date of termination (and in the case of termination either by Hardinge pursuant to section 7.3 or by BPT pursuant to section 7.3(b), shall be paid on the date of expiry of the licenses in sections 31., 3.2 and 3.3 with respect to the period from the last Royalties payment date until the date of expiry of such licenses in accordance with section 7.6.5). Minimum Royalties which may be owed with respect to any Minimum Royalty Year shall be paid within ************ days of the last day of such Minimum Royalty Year. Payments will be made to BPT by wire transfer to an account or accounts designated by BPT from time to time for such purpose. No Royalties shall be payable on sales to BPT or its Affiliates.

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Confidential treatment requested and the redacted material has been separately filed with the Commission.

        5.3.2     Credit towards Royalties.     In each period of 12 months commencing with the 12 month period beginning November 1, 2004, Hardinge shall be granted a credit of US$100,000 against Royalties otherwise payable in respect of that 12 month period (provided that if the Royalties otherwise payable in respect of that 12 month period are less than US$100,000 the credit shall be of an amount equal to such Royalties). Such credit shall be applied towards Royalty payments as they arise in respect of such 12 month period pursuant to section 5.3.1.

        5.3.3     Royalty Calculations.     At the same time that it makes payment of Royalties (and, if applicable, Minimum Royalties), Hardinge shall deliver to BPT a true and complete accounting of

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all sales of Products, Accessories and Spares during the period for which Royalties are due, with a separate accounting of sales and receipts by country within the Territory, and by each model or version of Product, Accessory or Spare.

        5.3.4     Records.     Hardinge shall keep accurate and complete records in compliance with US GAAP applied on a consistent basis throughout the term of this Agreement and consistent with Hardinge's prior practice, in sufficient detail to permit the Royalties and Minimum Royalties payable under this Agreement to be determined. During the term of this Agreement and for a period of three (3) years following termination of this Agreement, Hardinge shall permit its books and records regarding the sale of Products, Accessories and Spares to be copied and audited or otherwise examined from time to time, upon reasonable notice from BPT, during normal business hours by BPT or any designated Representative of BPT. Such examination shall be made at BPT's expense, except that if such examination discloses an underpayment of ***** percent (****%) or more in the amount of Royalties due BPT, then Hardinge shall forthwith reimburse BPT for the cost of such examination, including any professional fees incurred by BPT, in addition to the amount of any unpaid Royalties.

        5.3.5     Foreign Payments.     If Hardinge receives payment in a currency other than currency which is legal tender in the United States of America in connection with a transaction giving rise to a payment obligation under this Agreement, then the payment required to be made by Hardinge under this Agreement shall be converted, prior to payment, into United States dollars at the applicable rate of exchange of Citibank, N.A., in New York, New York, on the last day of the payment period in which such transaction occurred.

        5.3.6     Overdue Payments.     Royalties due to BPT under this Agreement shall if not paid when due bear simple interest at the annual rate of **** %, calculated on the basis of the number of days actually elapsed in a 365 day year, beginning on the due date and ending on the day prior to the day on which payment is made in full. Interest accruing under this Section shall be due on demand. The accrual or receipt by BPT of interest under this Section shall not constitute a waiver by BPT of any right it may otherwise have to declare a breach of or default under this Agreement and to terminate this Agreement.

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Confidential treatment requested and the redacted material has been separately filed with the Commission.

        5.4     Force Majeure.     " Force Majeure Event " means an event beyond the control of Hardinge which prevents Hardinge, for more than sixty continuous (60) days from the date of such event or for more than sixty (60) days in any ninety (90) day period following the date of such event, from manufacturing seventy five per cent (75%) or more by dollar volume of the Products, Accessories and Spares that it was manufacturing immediately prior to the occurrence of such event (including fire, floods, terrorism, war, acts of war (whether war is declared or not), insurrections, riots, civil commotions or acts of God, but expressly excluding strikes, lockouts or other labor disturbances at Hardinge premises). If a Force Majeure Event occurs, all performance obligations of Hardinge shall be suspended for the duration of such event to the extent such obligations are affected by such Force Majeure Event. If a Force Majeure Event occurs in a Minimum Royalty Year, such Minimum Royalty Year, and any remaining Minimum Royalty Years thereafter, shall be adjusted forward by the duration of such Force Majeure Event. Hardinge shall provide BPT with prompt written notice of the occurrence of any event which would be a Force Majeure Event if it were to endure for more than sixty continuous (60) days.

        Section 6     Product Enhancements.     

        6.1     Product Enhancements.     BPT and Hardinge agree that enhancements of existing Products, Accessories and Spares (" Product Enhancements ") may be necessary or desirable. Hardinge shall be at liberty to make such Product Enhancements as it considers fit.

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        6.2     Costs of Product Enhancements.     If this Agreement is terminated for any reason (other than a termination by BPT pursuant to section 7.3):

        (a)   Hardinge will within 30 days after termination provide to BPT a detailed breakdown of the cumulative expenditure borne by Hardinge (including engineering support (which for the purposes of this section 6 will be charged at the rate of US$65 per recorded hour), prototype costs (excluding manufacturing overhead), and other direct out-of-pocket expenses) in respect of Product Enhancements after the date of this Agreement and broken down on a calendar year basis (the " Costs Breakdown ");

        (b)   The Costs Breakdown shall be deemed to have been accepted by BPT unless within 20 days after receiving it, BPT delivers to Hardinge notice to the contrary specifying (i) the item or items disputed and BPT's reasons for disputing the same. BPT and Hardinge shall use all reasonable efforts forthwith to resolve the matter or matters in dispute. If agreement is not reached within 10 days after receipt by Hardinge of such notice from BPT, the matter shall be referred to KPMG certified public accountants (the " Independent Accountants "), who shall then determine the matter in dispute and shall confirm the Costs Breakdow