EXHIBIT 10.1
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
Mailing address: P.O. Box 564, 9001 St.
Gallen
Contact address: St. Leonhardstrasse 3, 9000 St.
Gallen
(the lender, hereinafter referred to as the
“Bank”)
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Amount of Credit Facility
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CHF 7’500’000.00
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Utilization
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This credit facility can be used as
follows
·
as margin cover for over-the-counter
(OTC) trades concluded by the Bank up to the total amount of CHF
7’500’000.00 with maximum terms of 12 months
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as a guarantee limit up to the total
amount of CHF 7’500’000.00
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as a documentary credit limit up to
the total amount of CHF 7’500’000.00
The Bank reserves the right to refuse individual
transactions relating to the credit products above.
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OTC Forex Transactions
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Prior to concluding an “OTC forex
transaction” the Bank may request that the Swiss master
agreement for over-the-counter (OTC) derivatives (“OTC master
agreement”) be agreed between the Borrower and the Bank in
legally binding fashion.
There is, however, no obligation on the part of
the Bank to enter into any “OTC forex transactions”
(cf. “OTC master agreement”).
The “OTC master agreement” also
applies to any other “OTC derivatives” which are
concluded independently of and outside the scope of this framework
agreement between the Bank and the Borrower.
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Interest Rate
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All debits to an account of the Borrower (see
“Debiting of Accounts” below) that lead to a negative
balance of account will incur interest payable by the Borrower from
the date of the debit.
The interest rate is determined by the Bank
based, among other things, on the prevailing money and capital
market conditions and
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the Bank’s risk assessment of the
Borrower.
The Bank may at any time and with immediate
effect adjust the interest rate without any separate notice to
reflect changes in the money and capital market conditions and/or
changes in the Bank’s risk assessment.
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Commissions
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For the utilization of the loan in the form of a
current account overdraft, a credit commission is payable by the
Borrower as of the end of each quarter, in the amount of 0.25% per
quarter on the average outstanding loan amount.
For the contingent liabilities (e.g. guarantees,
documentary credits and bills of exchange) the commissions fixed by
the Bank are owed.
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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 others from pursuing or defending its rights, shall be met by
the Borrower at the Bank’s first request.
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Financial Ratios
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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 will 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
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 third party to secure existing
or future liabilities of 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.
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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
fulfil a payment obligation under this framework agreement and/or
any agreements based on the framework agreement when it falls
due.
In the event of late payment, the Bank is
entitled to increase the interest rate by 2% p.a. as of the due
date, in case of a current account overdraft calculated on the
outstanding amount(s), 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 under this
framework agreement lapse.
Where legally permissible, the Bank
may, at its discretion, give early notice on or terminate any of
its contingent liabilities into which it has entered.
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A credit limit, in particular a
current account overdraft, may be terminated or reduced by either
party at any time with immediate effect.
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Debiting of Accounts
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All payments by the Bank on the basis and as a
result of the obligations that it has entered into by virtue of
this framework agreement will be debited to an account of the
Borrower. Any negative balance of account resulting therefrom as
well as any interest (see “Interest” above), shall
become immediately due and payable by the Borrower at any
time.
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Release from Contingent Liabilities/Cash
Cover
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If this framework agreement and/or a credit line
for contingent liabilities is terminated, the Bank is entitled to
request the Borrower to release it from its current contingent
liabilities (e.g. by discharge) within 30 calendar days of the
termination.
If the Bank cannot or can only be partially
released from the liability within the above deadline or if a
release of the Bank in full is proven to be impossible from the
outset, the Borrower is obliged to pay the total countervalue of
the outstanding contingent liabilities plus the interest,
commissions, fees, expenses and other costs specified by the Bank
in Swiss francs to an account designated by the Bank at the
Bank’s first demand, to the preclusion of any protests or
objections. Upon payment into this account, the corresponding
account credit shall be deemed to have been pledged to the Bank by
the Borrower to indemnify the Bank against any recourse based on
the existing contingent liabilities.
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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 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 actions
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 due date of the loan, either
immediately or at a later point in time.
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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 loan products (including the
special contractual terms applicable to the individual loan
products) form an integral part 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 is also 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 subject to and shall be
construed in accordance with 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.
This framework agreement replaces the Framework
Agreement For Loans dated 12.12.2008, but shall not effect any
novation of the Borrower’s existing debts as defined in Art.
116 of the Swiss Code of Obligations.
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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 upon receipt of the communication
concerned and at the latest within the particular period specified
by the Bank. If the Bank fails to send a communication which the
client expects, the client must nevertheless lodge his complaint as
if he had received the communication by ordinary mail. Any damage
arising from delay in making a complaint is to be borne by the
client. Objections concerning account or safekeeping account
statements must be submitted within one month of receipt. Upon
expiry of this period the statement is deemed to have been
approved.
Art. 8 Right of lien and
set-off
The Bank has a right of lien on all
assets it holds for the account of a client whether in its own
custody or placed elsewhere and a right of set-off as regards all
funds credited to a client’s account in respect of all claims
which the Bank may have against the client, irrespective
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