EXHIBIT 10.2
FRAMEWORK AGREEMENT FOR CREDIT
PRODUCTS
between
L. Kellenberger & Co.AG
Maschinenfabrik, St. Gallen,
Heiligkreuzstrasse 28, 9008 St.
Gallen
(hereinafter referred to as “the
Borrower”)
And
CREDIT SUISSE
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Mailing address:
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P.O. Box 564, 9001 St. Gallen
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Contact address:
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St. Leonhardstrasse 3, 9000 St.
Gallen
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(the lender, hereinafter referred to as the
“Bank”)
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Amount of Credit Facility
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CHF 5’000’000.00
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Purpose of Credit Facility
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Working Capital Facility
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Utilization
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This credit facility can be used as a limit for
cash credits in the form of fixed advances in CHF and/or in any
other freely convertible foreign currencies with maximum terms of
up to 36 month(s)
Any extension of a fixed advance must be
requested by no later than two banking days before the fixed
advance expires.
Fixed advances may be granted without having to
comply with any specific requirements as to form; they will be
confirmed by the Bank in writing, but without a
signature.
The Bank reserves the right to refuse individual
transactions relating to the credit products above.
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Conditions for Utilization of the Credit
Facility
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This credit facility may not be used until all
collateral has been legally established in favour of the
Bank.
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Interest Rate
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Fixed advances
Interest rates may be agreed upon, including
orally, without any specific requirements as to form. The interest
rate is based, among other things, on the prevailing money and
capital market conditions (taking into account the term and
currency).
General
If the currently valid capital requirements are
increased through measures by authorities or provisions of law, the
Bank reserves the right to pass on the additional borrowing costs
that thereby result to the Borrower by increasing the interest
rate.
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Interest Due Date
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Interest falls due in each case upon the account
closing (cf. “Account Closings” below).
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The interest may be debited to an account of the
Borrower.
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Special Costs
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All costs that the Bank incurs on the basis of
the present Framework Agreement and the associated loan
arrangements, including any contingent liabilities of the Bank,
among other things, from pursuing or defending its rights, shall be
paid by the Borrower at the Bank’s first request.
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Account Closings
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Fixed advances are closed upon
maturity.
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Collateral
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·
CHF 150’000.00 charge on real
estate (“Namenschuldbrief”) ranked no 1, no prior
ranking,
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CHF 25’000.00 charge on real
estate (“Inhaberschuldbrief”), ranked no 2, prior
ranking CHF 150’000.00,
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CHF 1’500’000.00 charge
on real estate (“Inhaberschuldbrief”), ranked
no 3, prior ranking CHF 175’000.00, ranking equally with
CHF 4’500’000.00,
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CHF 1’500’000.00 charge
on real estate (“Inhaberschuldbrief”), ranked
no 3, prior ranking CHF 175’000.00, ranking equally with
CHF 4’500’000.00,
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CHF 1’500’000.00 charge
on real estate (“Inhaberschuldbrief”), ranked
no 3, prior ranking CHF 175’000.00, ranking equally with
CHF 4’500’000.00,
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CHF 1’500’000.00 charge
on real estate (“Inhaberschuldbrief”), ranked
no 3, prior ranking CHF 175’000.00, ranking equally with
CHF 4’500’000.00,
on the building at Heiligkreuzstrasse 28, 9008
St. Gallen, land register St. Fiden (SG), land register
No. 342, transferred to the Bank as collateral in accordance
with the “Security Agreement” (to be
signed).
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Financial Ratios
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The Borrower’s adherence to the following
financial ratios is mandatory:
Minimum Equity
The minimum equity means, (share capital, plus
reserves, plus retained earnings, minus long term intercompany
accounts, minus other intercompany accounts except intercompany
trade accounts) must at no time fall below 35% of the balance sheet
total assets (according to the auditors’ report in accordance
with Swiss Auditing Standards) during the entire term of the credit
relationship. The ratio resulting from minimum equity divided by
total assets.
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Borrower’s Affirmative
Obligations
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Obligation to provide
information
The Borrower is obliged to inform
the Bank without delay of current business developments and
significant changes in its management and in its direct and/or
indirect ownership/control as well as other significant changes
that could influence the Borrower’s financial
situation.
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In particular, the Borrower will
submit the following documents to the Bank:
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Quarterly:
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Statements including income
statement, bookings and actual backlog of the Borrower not later
than 60 days after the end of each quarter
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Annually:
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Annual report including balance
sheet, profit and loss statement as well as appendices and
auditor’s report of the Borrower within six months after the
end of each financial year
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Budget figures, including the
capital expenditure budget of the Borrower within the first month
of the budget year
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Group financial statements of
Hardinge Inc. with auditors’ report within six months after
the end of each financial year.
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Pari Passu
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The Borrower undertakes to provide
collateral for its current and future obligations vis-à-vis
third parties in their favour only if the Borrower simultaneously
provides the same collateral, or collateral accepted by the Bank as
being equivalent, for all current and future obligations under this
framework agreement.
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Borrower’s Negative
Obligations
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Negative Pledge Clause
The Borrower undertakes, to the
extent permitted by law, to refrain from providing new or
additional collateral in favour of a thrid party to secure existing
or future liabilities or the Borrower or a third party except
cash credits up to an amount of CHF 3’000’000.00
secured by charges on real estate
(“Schuldbrief”).
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Late Payment
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The Borrower will be in default with immediate
effect, without any reminder by the Bank, if he/she/it fails to
fulfill a payment obligation under this framework agreement and/or
any agreements based on the framework agreement when they fall
due.
In the event of late payment, the Bank is to
increase the interest rate by 2% p.a. as of the due date, but in
any case to charge a minimum rate of 5% p.a.
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Ordinary Termination
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·
Framework agreement
This framework agreement may be
terminated by either party at any time with immediate
effect.
Upon termination of the framework
agreement, all limits and other utilization options granted under
this framework agreement lapse; in particular, a loan that has not
been terminated will fall due for repayment within six weeks or on
a repayment date determined by the Bank. Where legally permissible,
the Bank may, at its discretion, give early notice on or terminate
any of its contingent liabilities.
Irrespective of termination of the
framework agreement, fixed
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advances shall continue to run until
their maturity; the following provisions on early termination and
an automatic acceleration of the due date remain reserved.
Following the termination of the framework agreement, no fixed
advances may be extended and no new fixed advances may be
claimed.
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General
The termination or maturity of a
credit product granted under this framework agreement does not
automatically result in the termination of this framework
agreement.
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Maturity of a Fixed Advance
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Subject to an extension or early termination,
each fixed advance automatically falls due for repayment upon its
maturity, without any need for a termination notice.
The Bank is entitled to debit a fixed advance
that is due for repayment to an account of the Borrower.
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Early Termination
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Upon the occurrence of one of the following
events, the Bank is entitled at any time to declare all fixed
advances (fixed term) and credit products with an agreed notice
period granted under this framework agreement, plus all accrued
interest, commission and fees, to be immediately due and payable,
on an accelerated basis:
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the Borrower is more than 30
calendar days in default on an interest payment or a repayment of
principal;
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the Borrower has breached any other
obligation under this framework agreement and/or under any
agreements based hereon and has failed or was unable to restore the
proper contractual situation within 30 calendar days after written
notice from the Bank;
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the credit facility is used
for a purpose other than the purpose mentioned above under
“Purpose of Credit Facility”;
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bankruptcy proceedings have been
instituted against the Borrower or a third party providing
collateral, one of them has been granted a debt restructuring
moratorium or deferral of bankruptcy, or one of them has concluded
a judicial or extrajudicial debt restructuring
agreement;
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there has been a change in direct or
indirect ownership/control in respect of the Borrower to the extent
of 50 % ownership/control except for internal restructuring action
within Hardinge Inc.;
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there has been a change in direct or
indirect ownership/control in respect of Hardinge Inc. to the
extent of 50% ownership/control;
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owing to default and/or maturity
clauses, another loan or similar obligation entered into by the
Borrower has been terminated early;
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in the Bank’s view, the
Borrower’s asset and/or revenue situation has deteriorated
significantly;
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the auditor’s report contains
a material qualification.
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The Bank is entitled at its discretion to
declare an acceleration of the
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due date of the loan, either immediately or at a
later point in time.
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Automatic Acceleration of Due Date in the event
of deficient cover
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If, in the Bank’s view, the existing
collateral is not sufficient to cover the outstanding loans and the
Borrower failed to remedy the situation to the extent required by
the Bank and within the deadline set by the Bank, all claims in
connection with this framework agreement automatically fall due for
immediate repayment on expiry of this deadline (subject to special
agreements in collateral agreements).
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Settlement of Costs in the Event of Early
Termination of Fixed Advances
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If any fixed advances granted under this
framework agreement are terminated early, the Bank will credit or
debit the Borrower with the interest gain or interest shortfall
accrued thereon. This is calculated based on the difference between
the contractual interest rate which applies at the time of
termination and the interest rate that, in the Bank’s view,
can be earned on an investment with the same residual term in the
money or capital markets at the time of termination, multiplied by
the outstanding credit amount and the residual term. Any surplus in
favor of the Borrower is set off against the fee described below
for the Bank’s time and expense.
In addition a flat fee of 0.1% of the loan
amount, but not less than CHF 1’000.00, is owed for the
Bank’s expenses.
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Credit Risk Hedging
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In order for the Bank to directly or
indirectly insure or hedge credit risk arising from this credit
relationship or collateral underlying the credit, the Bank may, at
any time, disclose data and information associated with the credit
relationship and the credit risk evaluation required for buying
credit protection or credit insurance from a third party. Such
hedging and insurance transactions do not entail a transfer of all
or any part of this credit relationship or its servicing to a third
party.
Data and information may be
disclosed to third parties in Switzerland or abroad, namely to
hedging or insurance providers, such as banks, financial
institutions, credit insurers, hedge funds or to other entities
offering credit protection. In the context of such hedging
transactions data and information may also be disclosed to other
parties involved within the scope of such hedging or insurance
transactions, such as rating agencies.
These third parties shall be obliged to keep
such transferred data and information confidential and to handle it
securely which is subject to the local legal and regulatory
provisions governing secrecy and data protection
obligations.
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Additional Agreements and Special Contractual
Terms
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The additional agreements that must be concluded
or have already been concluded in accordance with the terms of this
framework agreement and the agreed credit products (including the
special contractual terms applicable to the individual credit
products) form
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an integral part of this framework
agreement.
Should any provisions of this framework
agreement contradict those of the additional agreements and/or any
special contractual terms, then those provisions/contractual terms
shall take precedence over the provisions of this framework
agreement.
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General Conditions
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The Bank’s “General Conditions
including the Safe Custody Regulations” supplement this
framework agreement.
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Place of Performance
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The place of performance is the location of the
Swiss branch of the Bank with which the Borrower has a contractual
relationship. For Borrowers whose present or future domicile is
outside Switzerland, the place of performance shall also be the
place of debt enforcement (“special domicile” as
defined in Art. 50 par. 2 of the Federal Law on Debt Collection and
Bankruptcy).
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Applicable Law and Place of
Jurisdiction
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This framework agreement and the agreements
based on this framework agreement are governed by Swiss
law.
The Borrower recognizes the exclusive
jurisdiction of the courts of Zurich or of the location of
the branch of the Bank with which the contractual relationship
exists. The Bank also has the right to bring legal action against
the Borrower before any other competent court.
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Issuance/Signing of Agreement
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This framework agreement is being issued and
signed in duplicate. The Borrower and the Bank shall each receive
one specimen hereof.
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CREDIT SUISSE
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L. Kellenberger & Co. AG
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Maschinenfabrik, St. Gallenn
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[Borrower’s name/company name as per
commercial register]
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/s/ Armin Signer
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/s/ Christian Peters
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/s/ Peter Huersch
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Armin Signer
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Christian Peters
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Peter Huersch
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Borrower’s signature
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Zürich, 12. August 2009
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St. Gallen, 20 August 2009
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Place and date
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“General Conditions including Safe Custody
Regulations”
6
General Conditions
These General Conditions govern the
relationship between Credit Suisse AG (hereinafter referred to as
Bank) and its clients subject to any special agreement and the
established rules of banking practice.
For the sake of clarity, the Bank
uses only masculine pronouns in its forms. These are to be
understood as including both sexes.
Art. 1 Identity
check
The Bank undertakes to check
carefully the identity of its clients and their authorised agents.
The client is liable for any damage resulting from failure to
recognise falsifications or incorrect identification provided that
the Bank has exercised the degree of due care usual in banking
transactions.
Art. 2 Legal
incapacity
The client is liable for any damage
resulting from his incapacity to act provided that such incapacity
to act was not apparent to the Bank on exercising the degree of due
care usual in banking transactions. The client is liable in all
cases for any damage or loss resulting from incapacity on the part
of his authorised agent or other third party.
Art. 3 Communications from the
Bank
Communications from the Bank are
deemed to have been duly transmitted if sent to the last address
supplied to the Bank by the client.
Art. 4 Errors in
transmission
Damage resulting from the use of
postal services, fax, telephone, telex, e-mail and other means of
communication or transport, such as from loss, delay,
misunderstandings, mutilation or duplicate dispatch is to be borne
by the client provided that the Bank has exercised the degree of
due care usual in banking transactions.
Art. 5 Defective execution of
instructions
In the event of damage resulting
from the defective execution, late execution or non-execution of
instructions (with the exception of instructions relating to stock
exchange transactions), the Bank’s liability is limited to an
amount equal to the loss of interest, unless its attention has been
expressly directed to the risk of more extensive damage at the time
of and in respect of such instructions.
Art. 6 Saturday an official
holiday
In business transactions with the
Bank, Saturday shall be treated as an official Bank
holiday.
Art. 7 Complaints
Complaints by a client relating to
the execution of instructions as well as to other communications
must be lodged immediately up
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