BUSINESS LOAN AGREEMENT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Termination of Existence or Change in Control. &nb