HDNG Hardinge Inc. (delisted)

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

Dear Hardinge Shareholder:

        You are cordially invited to attend a special meeting (such meeting, including any adjournment or postponement thereof, the "Special Meeting") of the shareholders of Hardinge Inc., which we refer to as the "Company" or "Hardinge," to be held on [     ·     ], 2018, at [     ·     ] (local time) at [     ·     ], for the following purposes:

        1.     To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of February 12, 2018 (as amended from time to time, the "Merger Agreement"), by and among the Company, Hardinge Holdings, LLC, a Delaware limited liability company ("Parent"), and Hardinge Merger Sub, Inc., a New York corporation and a direct wholly owned subsidiary of Parent ("Acquisition Sub"), pursuant to which Acquisition Sub will merge with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly owned subsidiary of Parent, which we refer to as the "Merger Agreement Proposal." Parent and Acquisition Sub are affiliates of Privet Fund LP and Privet Fund Management LLC, which we refer to as "Privet" or the "Sponsor Entities." A copy of the Merger Agreement is attached as Annex A to the accompanying proxy statement.

        2.     To consider and vote on one or more proposals to adjourn the Special Meeting, if necessary or appropriate, including adjournments to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement Proposal, which we refer to as the "Adjournment Proposal."

        3.     To approve, by nonbinding, advisory vote, certain compensation arrangements for the Company's named executive officers in connection with the Merger, which we refer to as the "Advisory (Nonbinding) Merger-Related Compensation Proposal."

        4.     To transact any other business that may properly come before the Special Meeting, or any adjournment or postponement of the Special Meeting, by or at the direction of the Company's board of directors.

        These items of business are more fully described in the proxy statement accompanying this notice.

        The affirmative vote of the holders of two-thirds of the Shares outstanding and entitled to vote at the Special Meeting is necessary for the approval of the Merger Agreement Proposal. In connection with the Merger Agreement, on February 12, 2018, the Sponsor Entities, which collectively own approximately 10.6% of the issued and outstanding Shares, entered into a Support Agreement with the Company pursuant to which the Sponsor Entities have committed to vote their Shares in favor of, and take certain other actions in furtherance of, the transactions contemplated by the Merger Agreement, including the Merger. The affirmative vote of the holders of the majority of the Shares cast at the Special Meeting is necessary for the approval of the Adjournment Proposal and the Advisory (Nonbinding) Merger-Related Compensation Proposal.

        The record date for the Special Meeting is [     ·     ], 2018. Only shareholders of record at the close of business on that date are entitled to notice of and to vote at the Special Meeting or any adjournment or postponement thereof. Any shareholder entitled to attend and vote at the Special Meeting is entitled to appoint a proxy to attend and act on such shareholder's behalf.

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         Your vote is very important. To ensure your representation at the Special Meeting, please complete, date, sign and return the enclosed proxy card or submit your proxy through the Internet or by telephone. Please vote promptly regardless of whether you plan to attend the Special Meeting. Submitting a proxy now will not prevent you from being able to vote in person at the Special Meeting. The board of directors (with Messrs. Levenson and Rosenzweig recused due to their relationship with Privet) has approved the Merger Agreement and the transactions contemplated thereby, including the Merger, and recommends that you vote "FOR" the Merger Agreement Proposal, "FOR" the Adjournment Proposal and "FOR" the Advisory (Nonbinding) Merger-Related Compensation Proposal.

         Submitting your proxy through the Internet or by telephone is fast and convenient, and your proxy is immediately confirmed and tabulated. Using the Internet or telephone helps save the Company money by reducing postage and proxy tabulation costs.

By Order of the Board of Directors,

J. Philip Hunter
Secretary

Elmira, New York
Dated: [     ·     ], 2018

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SUMMARY TERM SHEET

        The following summary term sheet highlights selected information in this proxy statement and may not contain all of the information that may be important to you. Accordingly, we encourage you to read carefully this entire proxy statement, its annexes and the documents referred to or incorporated by reference in this proxy statement. Each item in this summary term sheet includes a page reference directing you to a more complete description of that topic. See " Where You Can Find More Information ."

Certain Defined Terms

        In this proxy statement, we refer to the Agreement and Plan of Merger, dated as of February 12, 2018, by and among Hardinge Holdings, LLC, Hardinge Merger Sub, Inc., and Hardinge Inc., as it may be amended from time to time, as the "Merger Agreement," and the merger of Hardinge Merger Sub, Inc. with and into Hardinge Inc. pursuant to the Merger Agreement as the "Merger." We refer to the Support Agreement, dated as of February 12, 2018, by and among Privet Fund LP, Privet Fund Management LLC, and Hardinge Inc., as it may be amended from time to time, as the "Support Agreement." We refer to the Securities Act of 1933, as amended, as the "Securities Act." In addition, we refer to (a) Hardinge Holdings, LLC as "Parent"; (b) Hardinge Merger Sub, Inc. as "Acquisition Sub"; (c) Privet Fund LP and Privet Fund Management LLC, collectively, as the "Sponsor Entities"; (d) the Sponsor Entities, Parent, Acquisition Sub and Privet Capital Investments II, LP, collectively, as the "Parent Group"; (e) Ryan Levenson as "Their Controlling Affiliate"; (f) the Parent Group and Their Controlling Affiliate, collectively, as the "Privet Filing Parties"; (g) Hardinge Inc. as the "Company," "Hardinge," "us," "our" or "we"; (h) the Strategic Alternatives Committee made up of the board of directors of Hardinge except for Messrs. Dougherty, Levenson and Rosenzweig as the "Committee"; (i) and the board of directors of Hardinge, with Messrs. Levenson and Rosenzweig recused due to their relationship with Privet, as the "Board." Mr. Levenson is the sole managing member of Privet Fund Management LLC, which is the general partner of Privet Fund LP and the manager of Parent. Parent is the sole shareholder and Mr. Levenson is the sole director of Acquisition Sub. Also, Mr. Levenson is the sole managing member of Privet Capital Management LLC, which is the sole general partner of Privet Capital Investments II, LP. Accordingly, Mr. Levenson directly or indirectly has the right to control the business and affairs of each member of the Parent Group.

        We refer to the special meeting of the shareholders of the Company to be held on [     ·     ], 2018, at [     ·     ] (local time) at [     ·     ], including any adjournment or postponement thereof, as the "Special Meeting," and [     ·     ], 2018, the record date for the Special Meeting, as the "Record Date."

Merger Consideration

        If the Merger is completed, each Share outstanding immediately prior to the effective time of the Merger (other than Shares held directly or indirectly by Parent or Acquisition Sub) will be converted into the right to receive $18.50 per Share in cash, which we refer to as the "Merger Consideration," without interest, less any applicable withholding taxes. Privet Fund LP has agreed to contribute the 1,315,090 Shares held by it as of the date of the Merger Agreement (and any subsequently acquired Shares) to Parent prior to the effective time of the Merger. Shares held by Parent or Acquisition Sub at the effective time of the Merger will remain outstanding after the effective time of the Merger and, as a result, will not be converted into the right to receive the Merger Consideration.

Treatment of Equity Awards

        At the effective time of the Merger, (1) all vested and unvested options to acquire shares of Company common stock will be cancelled and the holders will be entitled to receive the excess (if any) of the Merger Consideration over the exercise price per share for each share of Company common

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stock underlying such options, less applicable withholding taxes, and (2) all vested and unvested restricted stock units, performance stock units, restricted stock awards and director deferred stock units relating to shares of Company common stock will be cancelled and the holders will be entitled to receive the Merger Consideration in respect of each share of Company common stock subject to the award, less applicable withholding taxes. Any performance vesting conditions applicable to stock options and stock units of the Company will be deemed satisfied at closing at the greater of the target level and actual performance. Any Company options with an exercise price per share greater than or equal to the Merger Consideration will be cancelled for no consideration. For a further discussion, see " Special Factors—Certain Effects of the Merger—Treatment of the Shares" and "— Treatment of Equity Awards ."

Special Factors (page [     ·     ])

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Background of the Merger.   A description of the background of the Merger, including our discussions with Privet, is included in " Special Factors—Background of the Merger ."



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Recommendation of the Board; Fairness of the Merger.   The Board (with Messrs. Levenson and Rosenzweig recused due to their relationship with Privet), following the recommendation of its Committee, pursuant to resolutions approved at a meeting of the Board held on February 11, 2018, has unanimously (a) determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable to and in the best interests of the Company and its shareholders, (b) approved the adoption of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, and (c) recommended that the shareholders of the Company adopt the Merger Agreement, and directed that the Merger Agreement be submitted to the shareholders for their approval. In evaluating the Merger, the Committee and the Board consulted with the Company's management and legal and financial advisors and considered various material factors. For a description of the material factors considered by the Board in deciding to recommend approval of the proposal to adopt the Merger Agreement, see " Special Factors—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger ."



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Position of the Privet Filing Parties as to the Fairness of the Merger.   The Privet Filing Parties believe that the proposed Merger is substantively and procedurally fair to the Company's unaffiliated shareholders. However, none of the Privet Filing Parties nor any of their respective affiliates (other than the Company) has performed, or engaged a financial advisor to perform, any valuation or other analysis for purposes of assessing the fairness of the Merger to the Company and its unaffiliated shareholders. The belief of the Privet Filing Parties as to the procedural and substantive fairness of the Merger is based on the factors discussed in " Special Factors—Position of the Privet Filing Parties as to the Fairness of the Merger ."



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Opinion of BMO Capital Markets Corp.   On February 11, 2018, BMO Capital Markets Corp., which we refer to as "BMO," rendered an oral opinion to the Board, which was subsequently confirmed in a written opinion as of the same date, to the effect that, based upon and subject to the assumptions made, procedures followed, matters considered and limitations and qualifications upon the review undertaken by BMO, as of such date, the Merger Consideration of $18.50 per Share to be received by the common shareholders of the Company (other than the Specified Persons) in the Merger pursuant to the Merger Agreement was fair from a financial point of view, to such holders. For purposes of BMO's opinion, "Specified Persons" refers collectively to Privet Fund LP, Privet Fund Management LLC, Parent, Acquisition Sub and their respective affiliates, which are the same parties as the Privet Filing Parties. The full text of BMO's written opinion, dated February 11, 2018, is attached to this proxy statement as Annex C. You should read BMO's opinion carefully and in its entirety for a discussion of the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of

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the review undertaken by BMO in rendering its opinion. This summary is qualified in its entirety by reference to the full text of the opinion. BMO's opinion was directed to the Board, in its capacity as the Board, and addressed only the fairness from a financial point of view, as of the date of the opinion, to the common shareholders of the Company (other than the Specified Persons) of the per Share consideration to be received by them in the Merger pursuant to the Merger Agreement. The opinion did not address any other aspects or implications of the Merger, and did not address the relative merits of the Merger contemplated by the Merger Agreement as compared to other business or financial strategies that might have been available, nor did it address the underlying business decision to enter into the Merger Agreement or proceed with any other transaction contemplated by the Merger Agreement. BMO's opinion was not intended to, and does not, constitute advice or a recommendation as to how any shareholder should vote at the Special Meeting or take any other action with respect to the Merger. For more information regarding BMO and BMO's opinion, see " The Merger—Opinion of the BMO Capital Markets Corp ."

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Purpose and Reasons of the Company for the Merger.   The Company's purpose for engaging in the Merger is to enable its shareholders to receive the Merger Consideration, which represents a premium of (a) 26.7% over the volume weighted average price of the Shares for the three-month period ending on November 1, 2017, the last trading day prior to public announcement by Privet that it was evaluating a potential transaction to acquire the Company, (b) 12.1% over the closing price of the Shares on November 1, 2017, and (c) 8.3% over the closing price of the Shares on February 12, 2018, the last trading day prior to the announcement of the Merger.



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Certain Effects of the Merger.   At the effective time of the Merger, each Share outstanding immediately prior to the effective time of the Merger (other than Shares held directly or indirectly by Parent or Acquisition Sub) will be converted into the right to receive the Merger Consideration, less applicable withholding taxes, upon the terms and subject to the conditions set forth in the Merger Agreement, whereupon all such Shares will be automatically cancelled, will cease to be outstanding, and will cease to exist, and the holders of such Shares will cease to have any rights with respect thereto, other than the right to receive the Merger Consideration. Shares held by Parent or Acquisition Sub at the effective time of the Merger will remain outstanding after the effective time of the Merger and, as a result, will not be converted into the right to receive the Merger Consideration. For a further discussion of the effects of the Merger, see " Special Factors—Certain Effects of the Merger ."



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Interests of Executive Officers and Directors of the Company in the Merger.   In considering the recommendations of the Board with respect to the Merger, the Company's shareholders should be aware that the executive officers and directors have certain interests in the Merger that may be different from, or in addition to, the interests of the Company's shareholders generally. The Board was aware of these interests and considered them, among other matters, in making its recommendations. These interests include , among others, the accelerated vesting and payment of the Company's equity awards, certain severance and other separation benefits that may be payable following termination of an executive officer's employment after the effective time of the Merger under severance agreements or the Company's severance policy, as applicable, and the provision of indemnification and insurance arrangements pursuant to the Merger Agreement.

        These interests are discussed in more detail under " Special Factors—Interests of Executive Officers and Directors of the Company in the Merger. "

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Intent to Vote in Favor of the Merger.   Our directors and executive officers have informed us that, as of the date of this proxy statement, they intend to vote all of the Shares owned directly by them in favor of the adoption of the Merger Agreement and each of the other proposals. As of [     ·     ], 2018, the Record Date for the Special Meeting, our directors and executive officers

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directly owned, in the aggregate, [     ·     ] Shares entitled to vote at the Special Meeting, or collectively approximately [     ·     ]% of the outstanding Shares entitled to vote at the Special Meeting. In connection with the Merger Agreement, on February 12, 2018, the Sponsor Entities, which collectively own approximately 10.6% of the issued and outstanding Shares, entered into a Support Agreement with the Company pursuant to which the Sponsor Entities have committed to vote their Shares in favor of, and take certain other actions in furtherance of, the transactions contemplated by the Merger Agreement, including the Merger.

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Material U.S. Federal Income Tax Consequences of the Merger.   The receipt of cash in exchange for Shares pursuant to the Merger will generally be a taxable transaction for U.S. federal income tax purposes, and may also be a taxable transaction under applicable state, local or foreign income or other tax laws. You should consult your own tax advisor regarding the particular tax consequences to you of the exchange of Shares for cash pursuant to the Merger in light of your particular circumstances (including the application and effect of any state, local or foreign income and other tax laws). See the discussion under " Special Factors—Material U.S. Federal Income Tax Consequences of the Merger " beginning on page [     ·     ].



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Financing of the Merger.   The Merger is not subject to any financing condition. Parent estimates that the total amount of funds necessary to complete the Merger and the related transactions will be approximately $230 million. Parent expects this amount to be funded through a combination of the following:



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approximately $115 million from a new secured term loan;



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up to $85 million in new equity financing from affiliates of Parent; and



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approximately $30 million of cash on hand at the Company and its subsidiaries, described under " Special Factors—Financing of the Merger ."

        For a further discussion, see "Special Factors—Financing of the Merger."

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Litigation Relating to the Merger.   Currently, the Company is not aware of any pending litigation related to the Merger.

The Merger Agreement (page [     ·     ])

        A summary of the material provisions of the Merger Agreement, which is attached as Annex A to this proxy statement and which is incorporated by reference in this proxy statement, is described under " The Merger Agreement ." Among other things, the Merger Agreement includes the following terms:

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Effective Time of the Merger; Closing.   If our shareholders vote to adopt the Merger Agreement, the Merger will become effective as promptly as practicable following the satisfaction or written waiver of the other conditions to the Merger, including the receipt of all required regulatory approvals and consents. Assuming timely satisfaction of necessary closing conditions set forth in the Merger Agreement, we anticipate that the Merger will be completed by June 30, 2018. The Company, however, cannot assure completion of the Merger by any particular date, if at all.



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Conditions to the Completion of the Merger.   The closing of the Merger depends on a number of conditions being satisfied or waived. These conditions, which are described more fully in " The Merger Agreement—Conditions to the Completion of the Merger ," include:



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the approval of the Merger Agreement by the Company's shareholders;



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the expiration of any notification and waiting period requirements (or extension thereof) applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and the rules and regulations thereunder, which we refer to as the "HSR Act," which notification and waiting period the parties have

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determined does not apply to the Merger, shall have expired or early termination thereof shall have been granted;

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the absence of any law, statute, ordinance or ruling of any governmental authority prohibiting consummation of the Merger or making the consummation of the Merger illegal;



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the accuracy of each party's representations and warranties in the Merger Agreement (subject to materiality qualifications);



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the performance in all material respects by each party of all obligations required to be performed by it under the Merger Agreement;



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the delivery of an officers' certificate by each party with respect to representation and warranties and performance of obligations under the Merger Agreement; and



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no Company material adverse effect (as defined under the Merger Agreement) having occurred.



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Solicitation of Acquisition Proposals.   Pursuant to the Merger Agreement, the Company was permitted to actively solicit and consider Competing Proposals (as defined below in " The Merger Agreement—Solicitation of Acquisition Proposals ") from third parties until 11:59 p.m., New York time, on March 29, 2018, which we refer to as the "Go-Shop Period." As discussed in more detail in " Special Factors—Background of the Merger—Subsequent Events ," as of the date of filing of this proxy statement, no party had submitted a Competing Proposal that constituted or could lead to a Superior Proposal (as defined in " The Merger Agreement—Solicitation of Acquisition Proposals ") during the Go-Shop Period.



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Commencing at 12:01 a.m., New York time, on March 30, 2018, which we refer to as the "No-Shop Period Start Date," the Company will be required to cease all existing discussions or negotiations with any person with respect to any Competing Proposal, except as otherwise provided below, and may not solicit any Competing Proposals.



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If the Company or any of its subsidiaries receives a Competing Proposal (or a bona fide inquiry with respect thereto) after the No-Shop Period Start Date and prior to obtaining shareholder approval of the Merger Agreement Proposal, the Company will be permitted to engage in discussions and negotiations regarding such Competing Proposal if the Board determines in good faith (after consultation with the Company's outside legal and financial advisors) that such Competing Proposal is or could reasonably be expected to lead to a Superior Proposal.



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The Board is prohibited from taking certain actions enumerated in the Merger Agreement that would amount to a change in the recommendation of the Board to the shareholders to adopt the Merger Agreement Proposal, unless, prior to obtaining shareholder approval of the Merger Agreement Proposal, the Board determines in good faith, with respect to clause (a) in this paragraph, after consultation with outside legal advisors, and with respect to clause (b) below, after consultation with the Company's outside legal and financial advisors, that (a) the failure to make such change in the case of an intervening event would reasonably be expected to be inconsistent with the Board's fiduciary duties or (b) a Competing Proposal constitutes a Superior Proposal.



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Termination and Termination Fees.   The Merger Agreement contains certain termination rights, including the right of either party to terminate the Merger Agreement if the Merger has not occurred on or before August 31, 2018 and the right of the Company to terminate the Merger

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Agreement to accept a Superior Proposal, subject to specified exceptions and limitations, and provides that:

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Upon termination of the Merger Agreement by the Company or Parent in certain circumstances, including termination by the Company to accept a Superior Proposal, the Company will be required to pay Parent a termination fee of $8,535,000 and up to $3,658,000 in expense reimbursements.



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However, under specified conditions where the Merger Agreement is terminated in connection with an "excluded party" making an alternative acquisition proposal during the Go-Shop Period and the Company makes a change in the recommendation of the Board to the shareholders to adopt the Merger Agreement or terminates the Merger Agreement to enter into a definitive agreement with an excluded party on or before May 13, 2018, the Company termination fee will be reduced to $3,658,000 and the Company will be required to pay up to $3,658,000 in expense reimbursements.



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Upon termination of the Merger Agreement by the Company or Parent under specified conditions, Parent will be required to pay the Company a termination fee of $14,631,000 and up to $3,658,000 in expense reimbursements.



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If the Merger Agreement is terminated because the Company's shareholders do not approve the Merger Agreement at the Special Meeting, the Company will be required to pay Parent up to $2,438,000 in expense reimbursements.

        For further discussion of the rights of the parties to terminate the Merger Agreement and the circumstances in which certain termination fees will be payable, see " The Merger Agreement—Termination ."

Support Agreement (page [     ·     ])

        In connection with the Merger Agreement, on February 12, 2018, the Sponsor Entities, which collectively own approximately 10.6% of the issued and outstanding Shares, entered into a Support Agreement with the Company pursuant to which the Sponsor Entities have committed to vote their Shares in favor of, and take certain other actions in furtherance of, the transactions contemplated by the Merger Agreement, including the Merger. The Support Agreement will terminate upon the earliest to occur of (a) the effective time of the Merger, (b) a termination of the Merger Agreement in accordance with its terms, and (c) the written agreement of the parties to the Support Agreement.

Parties to the Merger (page [     ·     ])

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Hardinge Inc.   is a New York corporation. Hardinge Inc., together with its subsidiaries, designs, manufactures and distributes machine tools in the Americas, Europe and Asia. The Company operates through two segments: Metalcutting Machine Solutions, and Aftermarket Tooling and Accessories. It offers advanced computer-controlled Turning Machines, Grinding Machines, Machining Centers, System Integrations, Turnkey Solutions and post-sale support services including repair parts, training, in-field maintenance and repairs for machine solutions. Hardinge Inc. also engineers and supplies high precision, standard and specialty workholding devices, and other machine tool accessories. Customers served by Hardinge Inc. include industrial fortune 500 manufacturers, OEM's and their suppliers as well as small and medium-sized independent job shops. The Company sells its products directly and through distributors, agents and manufacturers' representatives. Hardinge Inc. was founded in 1890.



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Parent.   Hardinge Holdings, LLC is a Delaware limited liability company owned by Privet Fund LP and Privet Capital Investments II, LP and managed by Privet Fund Management LLC.

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Hardinge Holdings, LLC was formed under the laws of the State of Delaware on January 26, 2018.

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Acquisition Sub.   Hardinge Merger Sub, Inc. is a New York corporation and a wholly owned subsidiary of Parent. Hardinge Merger Sub, Inc. was incorporated under the laws of the State of New York on January 29, 2018.



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For more information, see " Parties to the Merger ."

Market Price of Common Stock and Dividends (page [     ·     ])

        The Shares are listed for trading on the Nasdaq Global Market, which we refer to as "NASDAQ," under the symbol "HDNG." We have not declared or paid any cash dividends on the Shares since June 9, 2017. During each of the fiscal quarters in the last two years including and prior to the second quarter of 2017, we paid a cash dividend in the amount of $0.02 per Share.

        The Merger Agreement does not permit us to pay any dividends on the Shares other than quarterly cash dividends without the prior written consent of Parent. The closing price of the Shares on November 1, 2017, the last trading day prior to public announcement by Privet that it was evaluating a potential transaction to acquire the Company, was $16.50 per Share. The closing price of the Shares on February 12, 2018, the last trading day before the public announcement of the Merger, was $17.08 per Share.

        On [     ·     ], 2018, the most recent practicable date before this proxy statement was distributed to our shareholders, the closing price for the Shares on NASDAQ was $[     ·     ] per Share. You are encouraged to obtain current market quotations for the Shares in connection with voting your Shares.

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

        The following questions and answers are intended to address briefly some commonly asked questions regarding the Merger, the Merger Agreement and the Special Meeting. These questions and answers may not address all questions that may be important to you as a shareholder of the Company. Please refer to the " Summary Term Sheet " and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement, all of which you should read carefully. See " Where You Can Find More Information ."

Q.

Why am I receiving this document?

A.

On February 12, 2018, the Company entered into the Merger Agreement. Pursuant to the Merger Agreement, Acquisition Sub will merge with and into the Company with the Company surviving the Merger as a wholly owned subsidiary of Parent. Parent and Acquisition Sub are beneficially owned by affiliates of Privet. A copy of the Merger Agreement is attached to this proxy statement as Annex A.

Pursuant to resolutions adopted at a meeting of the Board held on February 11, 2018, the Board, following the recommendation of the Committee, has (a) determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable to and in the best interests of the Company and its shareholders, (b) approved the adoption of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, (c) recommended that the shareholders of the Company adopt the Merger Agreement, and (d) directed that the Merger Agreement be submitted to the holders of the Shares for their adoption. In evaluating the Merger, the Committee and the Board consulted with the Company's management and outside legal and financial advisors and considered a number of factors.

The Company is soliciting proxies for the Special Meeting. You are receiving this proxy statement because you own Shares. This proxy statement contains important information about the proposed transaction and the Special Meeting, and you should read it carefully. The enclosed proxy card allows you to vote your Shares without attending the Special Meeting in person.

The Company is holding the Special Meeting so that our shareholders may vote on the proposal to approve the adoption of the Merger Agreement, the proposal to adjourn the Special Meeting, if necessary or appropriate, including adjournments to solicit additional proxies, and the nonbinding proposal regarding certain Merger-related executive compensation arrangements.

Your vote is extremely important, and we encourage you to submit your proxy as soon as possible. For more information on how to vote your Shares, please see the section of this proxy statement entitled " The Special Meeting ."

Q.

What is the proposed transaction and what effects will it have on the Company?

A.

The proposed transaction is the merger of Acquisition Sub with and into the Company pursuant to the Merger Agreement. If the Merger Agreement is adopted by our shareholders and the other closing conditions under the Merger Agreement are satisfied or waived, Acquisition Sub, a wholly owned subsidiary of Parent, will merge with and into the Company and the Company will continue as the surviving corporation. As a result of the Merger, the Company will become a wholly owned subsidiary of Parent and will no longer be a public company. In addition, following the consummation of the Merger, the registration of the Shares and the Company's reporting obligation under the Securities Exchange Act of 1934, as amended, which we refer to as the "Exchange Act," with respect to the Shares will be terminated upon application to the Securities and Exchange Commission, which we refer to as the "SEC," the Shares will no longer be listed on

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any exchange or quotation system, including NASDAQ, and price quotations will no longer be available. Following the consummation of the Merger, your Shares will represent only the right to receive the Merger Consideration, and you will no longer have any interest in our future earnings, growth or value.

Q.

What happens if the Merger is not completed?

A.

If the proposal to adopt the Merger Agreement is not adopted by our shareholders or if the Merger is not completed for any other reason, our shareholders will not receive any payment for their Shares in connection with the Merger. Instead, the Company will remain a public company and our Shares will continue to be listed and traded on NASDAQ, so long as the Company continues to meet the applicable listing requirements.

Q.

When and where is the Special Meeting?

A.

The Special Meeting of shareholders of the Company will be held on [     ·     ], 2018, at [     ·     ] (local time) at [     ·     ].

Q.

Who can vote at the Special Meeting?

A.

Shareholders of record as of the close of business on [     ·     ], 2018, the Record Date for the Special Meeting, are entitled to receive notice of and to attend and vote at, the Special Meeting, or any adjournment or postponement thereof. Each record holder of the Shares as of the Record Date is entitled to cast one vote on each matter properly brought before the Special Meeting for each Share that such holder owns of record as of the Record Date. If you are a shareholder of record, please be prepared to provide proper identification at the Special Meeting, such as a driver's license. If you wish to attend the Special Meeting and your Shares are held in "street name" by your broker, bank or other nominee, you will need to provide proof of ownership, such as a recent account statement or letter from your bank, broker or other nominee, along with proper identification. "Street name" holders who wish to vote at the Special Meeting will need to obtain a proxy executed in such holder's favor from the broker, bank or other nominee that holds their Shares of record. Seating will be limited at the Special Meeting.

Q.

What is the difference between being a "shareholder of record" and a "beneficial owner" of shares held in "street name"?

A.

If your Shares are registered directly in your name with our transfer agent, Computershare, you are considered, with respect to those Shares, the "shareholder of record." In that case, this proxy statement and your proxy card have been sent directly to you by the Company.

If your Shares are held through a bank, brokerage firm or other nominee, you are considered the "beneficial owner" of the Shares held in "street name." In that case, this proxy statement has been forwarded to you by your bank, brokerage firm or other nominee, which may be, with respect to those Shares, the shareholder of record. As the beneficial owner, you have the right to direct your bank, brokerage firm or other nominee as to how to vote your Shares by following their instructions for voting.

Q.

What am I being asked to vote on at the Special Meeting?

A.

You are being asked to consider and vote on the following:

•

A proposal to adopt the Merger Agreement, a copy of which is attached to this proxy statement as Annex A, which we refer to as the "Merger Agreement Proposal";

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•

One or more proposals to adjourn the Special Meeting, if necessary or appropriate, including adjournments to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement, which we refer to as the "Adjournment Proposal"; and



•

A nonbinding proposal regarding certain Merger-related executive compensation arrangements, as disclosed in the " Potential Change-in-Control Payments to Named Executive Officers " table contained in the section captioned " Special Factors—Interests of Executive Officers and Directors of the Company in the Merger—Golden Parachute Compensation ," which we refer to as the "Advisory (Nonbinding) Merger-Related Compensation Proposal."

Q.

What is a quorum?

A.

The representation of the holders of a majority of the Shares outstanding and entitled to vote, present in person or by proxy, at the Special Meeting will constitute a quorum for the purposes of the Special Meeting.

Q.

What vote is required for the Company's shareholders to adopt the Merger Agreement Proposal?

A.

The approval of the proposal to adopt the Merger Agreement and the transactions contemplated thereby, including the Merger, requires the affirmative vote of the holders of two-thirds of the Shares outstanding and entitled to vote at the Special Meeting.

As of [     ·     ], 2018, which is the Record Date, there were [     ·     ] Shares outstanding.

In connection with the Merger Agreement, on February 12, 2018, the Sponsor Entities, which collectively own 1,372,188, or approximately 10.6%, of the issued and outstanding Shares, have entered into a Support Agreement with the Company pursuant to which the Sponsor Entities have committed to vote their Shares in favor of, and take certain other actions in furtherance of, the transactions contemplated by the Merger Agreement, including the Merger.

Q.

What vote is required for the Company's shareholders to adopt the Adjournment Proposal?

A.

Approval of one or more proposals to adjourn the Special Meeting, if necessary or appropriate, including adjournments to solicit additional proxies, requires the affirmative vote of the holders of a majority of the Shares cast at a meeting of shareholders entitled to vote, whether or not a quorum is present.

Q.

What vote is required for the Company's shareholders to adopt the Advisory (Nonbinding) Merger-Related Compensation Proposal?

A.

Approval of the advisory (nonbinding) proposal regarding certain Merger-related executive compensation arrangements requires the affirmative vote of holders of a majority of the Shares cast at a meeting of shareholders entitled to vote.

Q.

How are the votes counted?

A.

For each of the Merger Agreement Proposal, the Adjournment Proposal and the Advisory (Nonbinding) Merger-Related Compensation Proposal, you may vote "FOR," "AGAINST" or "ABSTAIN." An abstention will have the same effect as an "AGAINST" vote for the Merger Agreement Proposal, and will have no effect with respect to the Adjournment Proposal and the Advisory (Nonbinding) Merger-Related Compensation Proposal, and will count for purposes of determining if a quorum is present at the Special Meeting.

Q.

How does the Board recommend that I vote?

A.

The Board recommends that you vote

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•

" FOR " the Merger Agreement Proposal;



•

" FOR " the Adjournment Proposal; and



•

" FOR " the Advisory (Nonbinding) Merger-Related Compensation Proposal.

You should read " Special Factors—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger " for a discussion of the factors that the Board considered in deciding to recommend the approval of the Merger Agreement. See also " Special Factors—Interests of Executive Officers and Directors of the Company in the Merger ."

Q.

How do I vote?

A.

If you are a shareholder of record as of the Record Date, you may vote your Shares on matters presented at the Special Meeting in any of the following ways:

•

in person—you may attend the Special Meeting and cast your vote there;

•

by proxy—shareholders of record have a choice of voting by proxy;

•

through the Internet (the website address for Internet voting is printed on your proxy card);

•

by using the toll-free telephone number noted on your proxy card; or

•

by completing, signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope.

If you are a beneficial owner of the Shares as of the Record Date, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you. Please note that if you are a beneficial owner and wish to vote in person at the Special Meeting, you must have a legal proxy from your bank, brokerage firm or other nominee.

The control number located on your proxy card is designed to verify your identity and allows you to vote your Shares and to confirm that your voting instructions have been properly recorded when submitting a proxy through the Internet or by telephone.

Please note that if you attend the Special Meeting in person, cameras, recording devices, cell phones and certain other electronic devices will not be permitted.

Q.

What is a proxy?

A.

A proxy is your legal designation of another person to vote your Shares. This written document describing the matters to be considered and voted on at the Special Meeting is called a proxy statement. The document used to designate a proxy to vote your Shares is called a proxy card.

Q.

If I am a shareholder of record, what happens if I do not vote or submit a proxy card?

A.

If you fail to vote, either in person or by proxy, your Shares will not be voted at the Special Meeting and will not be counted for purposes of determining whether a quorum exists.

Additionally, your failure to vote will (a) have the effect of counting "AGAINST" the Merger Agreement Proposal with respect to the approval threshold requiring the affirmative vote of the holders of two-thirds of the outstanding Shares entitled to vote at the Special Meeting, and (b) have no effect on the Adjournment Proposal or the Advisory (Nonbinding) Merger-Related Compensation Proposal.

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Q.

If my Shares are held in "street name" by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee vote my Shares for me?

A.

Your bank, brokerage firm or other nominee will only be permitted to vote your Shares if you instruct your bank, brokerage firm or other nominee as to how to vote. You should follow the procedures provided by your bank, brokerage firm or other nominee regarding the voting of your Shares. Under stock exchange rules applicable to banks, brokerage firms, and other nominees, absent your instructions, a bank, brokerage firm or other nominee does not have discretionary authority to vote on "non-routine" matters and we believe that all of the matters to be considered at the Special Meeting are "non-routine" for this purpose.

If you instruct your bank, brokerage firm or other nominee how to vote on at least one, but not all of the proposals to be considered at the Special Meeting, your Shares will be voted according to your instructions on those proposals for which you have provided instructions and will be counted as present for purposes of determining whether a quorum is present at the Special Meeting. In this scenario, a "broker non-vote" will occur with respect to each proposal for which you did not provide voting instructions to your bank, brokerage firm or other nominee.

A failure to provide instructions with respect to any of the proposals and a broker non-vote will have (a) the effect of an "AGAINST" vote on the Merger Agreement Proposal with respect to the approval threshold requiring the affirmative vote of the holders of two-thirds of the outstanding Shares entitled to vote at the Special Meeting, and (b) no effect on the Adjournment Proposal or the Advisory (Nonbinding) Merger-Related Compensation Proposal.

Q.

If a shareholder gives a proxy, how are the Shares voted?

A.

Regardless of the method you choose to submit a proxy, the individuals named on the enclosed proxy card will vote your Shares as you instruct. When completing the Internet or telephone processes or the proxy card, you may specify whether your Shares should be voted " FOR " or " AGAINST ," or to " ABSTAIN " from voting on, all, some or none of the specific items of business to come before the Special Meeting.

If you properly sign your proxy card but do not mark the boxes indicating how your Shares should be voted on a matter, the Shares represented by your properly signed proxy will be voted " FOR " the Merger Agreement Proposal, " FOR " the Adjournment Proposal and " FOR " the Advisory (Nonbinding) Merger-Related Compensation Proposal.

Q.

Can I change or revoke my vote?

A.

Yes. You have the right to revoke a proxy, including any proxy you may have given whether delivered through the Internet, by telephone or by mail, at any time before it is exercised, by submitting another proxy, including a proxy card, at a later date through any of the methods available to you, by giving written notice of revocation to our Secretary, which must be filed with our Secretary by the time the Special Meeting begins, or by attending the Special Meeting and voting in person. If your Shares are held in street name by your bank, broker or other nominee, please refer to the information forwarded by your bank, broker or other nominee for procedures on changing or revoking your proxy.

Only your latest submitted proxy will be considered. Please cast your vote " FOR " each of the proposals listed in this proxy statement by following the instructions provided, as promptly as possible.

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Q.

What do I do if I receive more than one proxy or set of voting instructions?

A.

If you hold Shares in "street name," or through more than one bank, brokerage firm or other nominee, and also directly as a record holder or otherwise, you may receive more than one proxy or set of voting instructions relating to the Special Meeting. These should each be executed and returned separately in accordance with the instructions provided in this proxy statement to ensure that all of your Shares are voted.

Q.

What happens if I sell my Shares before the Special Meeting?

A.

The Record Date for shareholders entitled to vote at the Special Meeting is prior to both the date of the Special Meeting and the consummation of the Merger. If you transfer your Shares before the Record Date, you will not be entitled to vote at the Special Meeting and will not be entitled to receive the Merger Consideration. If you transfer your Shares after the Record Date but before the Special Meeting you will, unless special arrangements are made, retain your right to vote at the Special Meeting but will transfer the right to receive the Merger Consideration to the person to whom you transfer your Shares. Unless special arrangements are made, the person to whom you transfer your Shares after the Record Date will not have a right to vote those Shares at the Special Meeting. Accordingly, it is important for you to vote your Shares, even if you transfer them after the Record Date.

Q.

Who will solicit and pay the cost of soliciting proxies?

A.

The Company has engaged D.F. King & Co., Inc. to assist in the solicitation of proxies for the Special Meeting. The Company has agreed to pay D.F. King & Co., Inc. a fee of $15,000, and to reimburse D.F. King & Co., Inc. for reasonable out-of-pocket expenses. The Company will indemnify D.F. King & Co., Inc. and its affiliates against certain claims, liabilities, losses, damages and expenses. The Company also will reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of the Shares for their expenses in forwarding solicitation materials to beneficial owners of our Shares and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, by email, through the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

Q.

What do I need to do now?

A.

Even if you plan to attend the Special Meeting, after carefully reading and considering the information contained in this proxy statement, please submit your proxy promptly to ensure that your Shares are represented at the Special Meeting. If you hold your Shares in your own name as the shareholder of record, please submit your proxy for your Shares by completing, signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope, by calling the telephone number printed on your proxy card or by following the Internet proxy instructions printed on your proxy card. If you decide to attend the Special Meeting and vote in person, your vote by ballot at the Special Meeting will revoke any proxy previously submitted. If you are a beneficial owner of the Shares, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you.

Q.

What is householding and how does it affect me?

A.

The SEC rules permit companies and intermediaries such as banks and brokers to satisfy delivery requirements with respect to two or more shareholders sharing the same address by delivering a single proxy statement or a single notice of Internet availability of proxy materials addressed to those shareholders. This process is commonly referred to as "householding." While the Company

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does not household, a number of brokerage firms with account holders who are the Company's shareholders may institute householding. Once you have received notice from your bank or broker that it will be householding materials to your address, householding generally will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement or notice of Internet availability of proxy materials, or if your household is receiving multiple copies of these documents and you wish to request that future deliveries be limited to a single copy, you should contact your bank or broker.

Q.

Who can help answer my other questions?

A.

If you have additional questions about the Merger, need assistance in submitting your proxy or voting your Shares, or need additional copies of the proxy statement or the enclosed proxy card, please contact:

D.F. King & Co., Inc.
48 Wall Street, 22 ^nd  Floor
New York, NY 10005
(888) 605-1958 (toll free)
(212) 269-5550 (call collect)
Email: HDNG@dfking.com

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SPECIAL FACTORS

        This discussion of the Merger is qualified by reference to the Merger Agreement, which is attached to this proxy statement as Annex A. You should read the entire Merger Agreement carefully because it is the legal document that governs the Merger.

        We are asking our shareholders to vote on the adoption of the Merger Agreement. If the Merger is completed, the holders of the Shares (other than the Specified Persons) will have the right to receive the Merger Consideration, less any applicable withholding taxes.

Background of the Merger

        As part of their ongoing evaluation of Hardinge's business and long-term strategic goals and plans, the Hardinge board of directors and senior management periodically review, consider and assess, in the context of Hardinge's operations, financial performance, prospects and industry conditions, various strategic alternatives available to Hardinge. These alternatives may from time to time include the continued execution of Hardinge's strategy as a stand-alone company and potential opportunities for business combinations, acquisitions, divestitures, strategic investments and collaborations and other financial and strategic alternatives. In addition, Hardinge frequently engages in active dialogue with its shareholders, including regarding its stock price performance, business and prospects and governance matters.

        In December 2014, Privet and certain of its affiliates filed a Schedule 13D with the SEC indicating that they had acquired 7.0% of the Shares. During the course of 2015, Privet and Hardinge engaged in a series of discussions regarding their views of the Company's business and strategic direction. On October 14, 2015, Hardinge and Privet entered into an agreement pursuant to which, among other things, the board of directors agreed to appoint Mr. Benjamin Rosenzweig to the Hardinge board of directors as a representative of Privet. Mr. Ryan Levenson was later appointed to the Hardinge board of directors on October 28, 2016. The agreement between Hardinge and Privet terminated upon the certification of the voting results of the Company's 2017 annual meeting.

        In August 2015, the Hardinge board of directors announced that it was exploring strategic alternatives to enhance shareholder value and that these alternatives could include, among other things, a possible sale, merger or other form of business combination or strategic transaction. In connection with that process, BMO Capital Markets Corp., which we refer to as BMO, contacted approximately 140 potential acquirers, including approximately 43 strategic companies operating in Hardinge's industry and other similar industries and 97 private equity sponsors. A number of potential acquirers entered into confidentiality agreements with Hardinge and received access to non-public due diligence information regarding the Company. Privet was invited to participate in the process and make a proposal but did not do so.

        During late 2015, after receiving access to due diligence information, 10 potential acquirers had made non-binding proposals for a potential acquisition of Hardinge. These non-binding proposals generally indicated a potential price in the range of approximately $8.56 to $12.50 per Share, subject to completion of additional due diligence and other conditions. At the direction of the Hardinge board of directors, BMO engaged in discussions with certain potential acquirers regarding the price that they would be willing to pay to acquire the Company. Following additional diligence, a number of the parties that made non-binding proposals declined to continue to affirm their previous proposals and, three revised non-binding proposals generally indicated a potential price in the range of approximately $6.33 to $8.60 per Share, subject to completion of confirmatory due diligence and other conditions. Two additional verbal, revised and preliminary non-binding proposals suggested values of no greater than $9.00 and $9.50 per Share, respectively, subject to completion of additional due diligence and other conditions. After considering the proposals during late 2015 and early 2016, the Hardinge board of directors concluded that the proposals did not represent an attractive value to the Company's

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shareholders and that it would not be in the best interest of the Company and its shareholders to pursue a sale of the Company at that time.

        On August 8, 2016, Privet and certain of its affiliates filed an amendment to their Schedule 13D with the SEC indicating that they beneficially owned 9.6% of the Shares. On August 11, 2017, they filed an amendment to their Schedule 13D indicating that they beneficially owned 10.6% of the Shares.

        On October 4, 2017, at a regularly scheduled meeting of the Hardinge board of directors, Mr. Levenson indicated to the other directors, in his capacity as a portfolio manager of Privet, that Privet was interested in exploring the feasibility of a transaction to acquire the Company. Mr. Levenson indicated that if the Company were to provide access to confidential due diligence information, Privet may be in a position to make a proposal to acquire the Company at a price in the "high 16s" per Share, with the potential for upside following completion of Privet's due diligence review. (The closing price of the Shares on NASDAQ on October 3, 2017 was $15.49 per Share.) Mr. Levenson further noted that Privet was in the process of engaging a financial advisor and was prepared to commence due diligence immediately to determine the feasibility of a transaction. The Privet representatives said they did not wish to participate in an auction as they believed that would be disruptive to the Company's business and that they believed the Company would be best served by negotiating a deal with Privet on an exclusive basis and then conducting a post-signing market check during a go-shop period. Following this indication, Messrs. Levenson and Rosenzweig recused themselves from the meeting. After Messrs. Levenson and Rosenzweig left the meeting, the other members of the Hardinge board of directors engaged in discussion regarding Privet's indication, including, among other things, a preliminary discussion of the possible terms presented by Mr. Levenson, the current financing markets, Privet's ability to finance a transaction and the Company's current and historical business prospects. The directors discussed with a representative of outside legal counsel who was present at the meeting their fiduciary duties in the context of an unsolicited, verbal indication of interest to take the Company private. Mr. Charles Dougherty, the President and Chief Executive Officer of Hardinge, then recused himself from the meeting, and the remaining directors continued the discussion and determined that it would be in the best interests of the Company and its shareholders to create a strategic alternatives committee of the Hardinge board of directors, which we refer to as the Committee, comprised solely of independent directors who are disinterested with respect to Privet, in order to assist the members of the Hardinge board of directors, with Messrs. Levenson and Rosenzweig recused due to their relationship with Privet (which we refer to in this proxy statement as the "Board"), with assessing Privet's indication as well as other options that may be available to the Company. The directors further noted that it would be advisable to engage legal and financial advisors to assist the Committee and the Board in connection with evaluating Privet's indication and other potential options.

        On October 10, 2017, Hardinge engaged Wachtell, Lipton, Rosen & Katz, which we refer to as Wachtell Lipton, to represent the Committee and the Board in connection with the proposal from Privet and other strategic alternatives.

        On October 13, 2017, representatives of Bryan Cave LLP, which we refer to as Bryan Cave, Privet's outside legal counsel in connection with the Merger, contacted representatives of Wachtell Lipton to discuss the draft non-disclosure agreement that had been sent to Privet earlier that week by a representative of Hardinge. During this conversation, the representatives of Bryan Cave noted that the non-disclosure agreement entered into between Hardinge and Privet on October 14, 2015 remained in effect and that Privet believed it was sufficient to require confidential treatment of any information provided to Privet in connection with evaluating a potential transaction, subject to amending the agreement to allow for disclosure of confidential information to Privet's financial advisor and potential financing sources.

        On October 18, 2017, the Board held a telephonic special meeting, with Messrs. Levenson and Rosenzweig not present for the meeting. Mr. Dougherty and representatives of each of Wachtell Lipton and BMO participated in the meeting. A representative of Wachtell Lipton provided the members of

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the Board with an overview of their fiduciary duties as directors, including fiduciary duties in connection with considering an acquisition proposal and a potential sale of the Company. During the meeting, the Board formally established the Committee and appointed Messrs. DiSantis, Quain and Tripeny as its members, with Mr. DiSantis serving as the chair. The members of the Committee noted that Messrs. Burkhart and Silver were welcome to attend any meeting of the Committee. Each of those five directors confirmed at the meeting that he was disinterested with respect to Privet. The Board instructed Mr. Dougherty that he and other members of management were not authorized to have any discussions with Privet regarding post-transaction employment without the Board's prior approval.

        The Board then engaged in further discussion regarding Privet's indication. A representative of BMO summarized for the directors recent conversations with representatives of Robert W. Baird & Co., which we refer to as Baird, Privet's financial advisor, including Baird's indication that Privet acknowledged that the Company would only consider a transaction that involved attractive economics and no financing contingencies. The directors engaged in discussion among themselves and with the Company's advisors about whether this was a good time to consider Privet's indication of interest, taking into account recent management and strategic changes in the Company, the Company's recent results, stock price history, prior efforts to sell the Company and the cyclicality of the machine tooling industry. Based on this discussion, it was the consensus of the Board that BMO should contact Privet and indicate that the Board would be open to considering an appropriate proposal (and related due diligence requests) if Privet were to make one.

        On October 19, 2017, a representative of BMO contacted Mr. Levenson to indicate that the Committee would consider a proposal if Privet were to make one. Mr. Levenson responded by reiterating that if Privet were to make a proposal to acquire the Company, Privet may be willing to consider a transaction with a purchase price in the "high $16s" per Share if the Company were to grant access to confidential due diligence information with the potential for upside following completion of Privet's due diligence review. Mr. Levenson requested that the Committee respond with a price at which it would be willing to engage in discussions and due diligence.

        On October 21, 2017, the Committee held a telephonic meeting, in which Mr. Burkhart and representatives of each of Wachtell Lipton and BMO also participated (Mr. Dougherty participated in part of the meeting). A representative of BMO summarized his October 19 conversation with Mr. Levenson. After discussion, it was the consensus of the directors that they should respond to Privet that it was the Committee's view that a price in the "high $16s" per Share was not a basis on which the Committee was willing to allow Privet and its potential lenders access to due diligence materials, and that if Privet wished to proceed, it should make a proposal at a higher, specific price for the Committee to consider. The directors directed BMO to prepare a preliminary financial analysis to assist the directors in considering any further indication that Privet may choose to make. The directors also asked management to make available to BMO the current 5-year financial plan that had been prepared by management, which the directors directed BMO to use in the requested preliminary financial analysis. After Mr. Dougherty and representatives of BMO recused themselves from the meeting, the Committee discussed the terms of a draft engagement letter with BMO and formally approved engaging BMO as financial advisor to the Committee and the Board in connection with exploration of a potential sale transaction.

        On October 22, 2017, a representative of BMO telephoned Mr. Levenson to indicate that Privet's prior indication was not acceptable but that the Committee would consider a proposal for a higher, specific price. Mr. Levenson indicated that Privet would consider the Committee's response and get back to BMO.

        On October 31, 2017, Mr. Levenson telephoned a representative of BMO to indicate that Privet was requesting to commence due diligence on the basis of a non-binding indication of interest of $17.25 per Share. Mr. Levenson indicated that Privet was not requesting a response from the Committee to

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the indicative price at that time, but only a view as to whether Privet and its advisors and potential financing sources would be permitted to commence due diligence on that basis.

        On November 1, 2017, the Committee met telephonically to discuss Privet's revised indication of interest. Messrs. Burkhart and Silver and representatives of each of Wachtell Lipton and BMO participated in the meeting (Mr. Dougherty participated in part of the meeting). At the request of the Committee, representatives of BMO provided a verbal summary of a preliminary financial analysis relating to Privet's indication, which was circulated in written form to the Board (other than Mr. Dougherty) following the meeting. The financial analysis of BMO at this meeting was prepared taking into account the 5-year forecast prepared by management that BMO was previously directed to consider. See " —Prospective Financial Information—November 2017 Business Plan ." The members of the Committee discussed management projections, noting that these did not reflect the cyclicality of the Company's business, and the preliminary financial analysis of BMO, as well as the separate indications made to BMO and Wachtell Lipton by Privet's financial and legal advisors that there was potential for upside to Privet's initial proposal following completion of its due diligence review. The Committee also noted that because Privet would be required to disclose its interest in pursuing a transaction in an amendment to its Schedule 13D filed publicly with the SEC, and the Company could disclose that it was willing to give Privet and its advisors and potential financing sources access to due diligence information, that would effectively announce to the market that the Committee was willing to receive offers if any were to be made. Following this discussion, it was the consensus of the Committee that the Company should grant due diligence access to Privet and its advisors and potential financing sources for purposes of further evaluating a potential transaction. The Committee directed Wachtell Lipton to communicate to Bryan Cave that the Committee was prepared to move forward with due diligence on the basis of the revised indication.

        On November 2, 2017, representatives of Wachtell Lipton contacted representatives of Bryan Cave to inform them of the Committee's decision. The respective representatives also discussed the terms of a draft amendment to the existing confidentiality agreement between Hardinge and Privet to permit financial advisors and debt financing sources of Privet approved by Hardinge to receive confidential information in connection with Privet's evaluation of a potential transaction, which amendment was executed later that day. Representatives of Bryan Cave and Wachtell Lipton discussed Privet's previous request to the Board to grant Privet exclusivity, and Wachtell Lipton reported that the Company declined to grant Privet exclusivity.

        Later on November 2, 2017, Privet filed an amendment to its Schedule 13D in which it indicated that Privet and its advisors and potential financing sources had been granted access to confidential due diligence information by the Company and were commencing an evaluation of a negotiated transaction to acquire 100% of the Shares not already owned by them at the price of $17.25 per Share. Later that day, the Company issued a press release confirming that the Board had formed the Committee and, in order to allow Privet to begin to evaluate a potential transaction, agreed to provide Privet and its advisors and potential financing sources access to confidential information regarding Hardinge. In the press release, the Company noted that consistent with its fiduciary duties and in consultation with its independent financial and legal advisors, the Committee would carefully review Privet's indication of interest in the context of all relevant factors and determine the course of action that it believes is in the best interests of Hardinge and its shareholders.

        During early November 2017, Hardinge and its advisors began making available to Privet and its advisors and potential financing sources non-public due diligence information regarding the Company. Privet and its advisors and potential financing sources then began conducting due diligence, which continued until the entry into the Merger Agreement in February 2017. The due diligence process also included multiple calls with representatives of Hardinge, its advisors, customers and vendors and site visits to Hardinge facilities.

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        On November 6, 2017, the Committee held a meeting to receive updates regarding the status of Privet's due diligence, its discussions with potential debt financing sources and shareholder feedback and market reactions in light of Privet's indication. Messrs. Burkhart and Silver and representatives of each of Wachtell Lipton and BMO participated in the meeting and Mr. Doug Malone, the Chief Financial Officer of the Company, participated in part of the meeting. At the meeting, a representative of BMO noted that BMO had not received any inquiries from other potential acquirers regarding a transaction with the Company following Privet's public announcements.

        On November 14, 2017, the Committee held a telephonic meeting with Messrs. Silver and Burkhart with representatives of each of Wachtell Lipton and BMO participating. The Committee discussed a request by Privet to expand the list of potential debt financing sources permitted to receive confidential information regarding the Company. On November 14 and 15, discussions took place among representatives of the Committee and Privet regarding Privet's request to expand the list of potential debt financing sources. At subsequent meetings on November 17 and November 19, 2017, the Committee met to further discuss Privet's request and considered potential benefits and risks associated with expanding the group of potential debt financing sources. Following these meetings, the Committee directed BMO and Wachtell Lipton to inform Baird and Bryan Cave, respectively, that it would not object to Privet providing confidential information to the additional requested financing sources.

        During the November 19 meeting of the Committee, the Committee also continued discussions that it had engaged in at prior meetings regarding the potential benefits and risks of contacting other potential acquirers during the course of Privet's due diligence process. The Committee noted that Privet's Schedule 13D amendment and the Company's press release regarding Privet's indication had been public for over two weeks and no inquiries from other potential acquirers had been received, which was confirmed by representatives of BMO. Representatives of BMO confirmed that 18 months earlier when BMO had contacted a number of potential strategic acquirers regarding a potential transaction no definitive proposals were made, and any tentative indications of interest received were at a significantly lower valuation than the current valuation indicated by Privet. It was also the Committee's view that if Privet were to learn that the Company solicited other proposals and was ultimately unsuccessful in doing so, the Committee's leverage for negotiating the highest possible price with Privet could be significantly diminished. The risk that another party would request to conduct due diligence but ultimately not make a proposal after doing so, thereby delaying the process with Privet, was also discussed. The Committee further noted that Privet had previously indicated it would be willing to agree to a post-signing go-shop period during which the Company would be permitted to seek other proposals after entering into a definitive agreement. Based on this discussion, it was the consensus of the Committee that calls to other potential acquirers should not be made at this time, but that BMO should prepare a robust list of potential acquirers that could be contacted during any go-shop period.

        On December 10, 2017, representatives of Bryan Cave sent a draft of the Merger Agreement to representatives of Wachtell Lipton. The draft of the Merger Agreement did not include a post-signing go-shop period during which the Company would be permitted to solicit alternative acquisition proposals. The draft also provided for a termination fee payable by the Company to Privet in certain circumstances (including to terminate the merger agreement to accept a superior proposal) equal to 5% of the equity value of the transaction plus Privet's expenses in connection with the transaction. It also provided that the Company would be required to reimburse all of Privet's expenses in the event that the Company's shareholders did not approve the proposal to adopt the Merger Agreement. A reverse termination fee payable by Privet to the Company in certain circumstances equal to 5% of the equity value of the transaction plus the Company's and its affiliates' expenses in connection with the transaction was also included in the draft.

        On December 12, 2017, the Committee held a telephonic meeting to discuss the status of Privet's due diligence process. Messrs. Burkhart and Silver and representatives of each of Wachtell Lipton and BMO participated in the meeting. During that meeting, the Committee discussed with representatives

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of Wachtell Lipton the terms of the draft Merger Agreement that was received on December 10. Among other things, the Committee discussed various provisions relating to the directors' fiduciary duties in connection with a transaction and the termination fees and expense reimbursement payable in certain circumstances. The Committee noted that the December 10 draft did not include a go-shop period. After discussion, it was the consensus of the Committee that a go-shop period would be required to be included if Hardinge were to enter into any transaction with Privet without first contacting other potential acquirers. The Committee directed the representatives of Wachtell Lipton to prepare a revised draft of the Merger Agreement that reflected the views of the Committee discussed at the meeting, including a go-shop period, lower termination fees, and no expense reimbursement for Privet in the event that shareholders did not approve the proposal to adopt the Merger Agreement (other than in the case of a competing proposal or a recommendation change).

        On December 21, 2017, representatives of Wachtell Lipton sent a revised draft of the Merger Agreement to representatives of Bryan Cave that reflected the direction of the Committee given to Wachtell Lipton at the prior meeting, including providing for a go-shop period. Representatives of Wachtell Lipton spoke with representatives of Bryan Cave after sending the revised draft of the Merger Agreement. Wachtell Lipton indicated that the go-shop was a critical point to the Committee. The negotiation of the terms of the draft Merger Agreement continued between Hardinge and Privet and representatives of Wachtell Lipton and Bryan Cave, based on direction by the Committee at the December 12 meeting and subsequent meetings, until the entry into the Merger Agreement on February 12, 2018.

        On January 9, 2018, the Committee held a telephonic meeting to discuss the status of Privet's due diligence process and its discussions with potential lenders. Messrs. Burkhart and Silver and representatives of each of Wachtell Lipton and BMO participated in the meeting. During the meeting, representatives of BMO indicated that they had been informed by representatives of Baird that Privet had selected one party, White Oak Global Advisors, LLC, which we refer to as White Oak, to act as its debt financing source for a potential transaction. Representatives of Wachtell Lipton also summarized for the Committee the key terms included in a revised draft of the Merger Agreement that they received from Bryan Cave on January 5, including that Privet had agreed to a post-signing go-shop period as requested by the Committee. The representatives of Wachtell Lipton noted, however, that the duration of the go-shop period was only 30 days and that the draft did not provide for a reduced termination fee payable by the Company with respect to proposals made in the go-shop period as compared to the termination fee of 4% of the equity value of the transaction plus all expenses of Privet payable by the Company in certain circumstances, including to accept a superior proposal made after the go-shop period. It was also noted that the draft continued to provide for reimbursement of all of Privet's expenses in the event that the Company shareholders did not approve the proposal to adopt the Merger Agreement. The Committee discussed the key issues in the latest draft of the Merger Agreement and informed Wachtell Lipton of its views on those topics.

        On January 17 and January 23, 2018, the Committee held telephonic meetings, in which Messrs. Burkhart and Silver and representatives of each of Wachtell Lipton and BMO participated. At these meetings, the Committee discussed the status of Privet's due diligence process, which representatives of BMO indicated that Baird had informed them was nearing completion, and key terms of the draft financing commitments between Privet and White Oak that had been provided to Wachtell Lipton for review. The Committee discussed with representatives of Wachtell Lipton a number of proposed revisions designed to reduce the conditionality of the draft financing commitments and directed Wachtell Lipton to provide those comments to Bryan Cave.

        On January 23, 2018, representatives of Baird contacted representatives of BMO to provide an update regarding Privet's status in evaluating a potential transaction with Hardinge. During that conversation, the representatives of Baird indicated that based on Privet's due diligence completed to date and its evaluation of potential financing terms for a transaction, if Privet were to make a proposal to acquire the Company, it may propose a price of $17.75 per Share.

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        On January 25, 2018, the Committee met telephonically to discuss the most recent indication made by Privet. Messrs. Burkhart and Silver and representatives of each of Wachtell Lipton and BMO participated in the meeting. The Committee noted that the indication was below the current trading price of the Shares (which had traded up substantially since Privet announced its intention to explore a transaction) and discussed considerations related to that fact. Representatives of BMO made a presentation to the Committee regarding the ownership of the Shares, the Company's float, and certain selected precedent negative one-day premium transactions. As part of the Committee's discussion, the members of the Committee reiterated their concerns about the exposure of the machine-tooling industry to seasonality and its vulnerability to economic downturns, the cyclicality of the Company's business and the prospects of a downturn in the future. It was the consensus of the Committee that it should analyze the potential sale of the Company in light of multiple potential scenarios for the projected financial performance of the business. The Committee expressed the belief that an informed view regarding any proposal should take into consideration various different assumptions as to whether the recent sales growth of the business would continue over the next several years (as reflected in the November 2017 business plan discussed at the November 1 Committee meeting), or whether a cyclical downturn would be expected to occur in the longer term or in the nearer to medium term. At the request of the Committee, Mr. DiSantis indicated that he would direct the Company's management team to prepare assumptions for the projected performance of the business in these three scenarios to be considered by the Committee.

        On January 31, 2018, the Committee (other than Mr. Tripeny, who had expressed his view to Mr. DiSantis prior to the meeting, and was debriefed by Mr. DiSantis after the meeting) held a telephonic meeting with Messrs. Burkhart and Silver participating. The Committee engaged in discussion regarding the three potential scenarios that had been prepared by management at the direction of the Committee following the prior meeting. One scenario (the "upside case") assumed that the net sales of the business would continue to grow through 2022. A second scenario (the "base case") assumed that more modest growth would continue through 2021 but net sales would essentially flatten by 2022. A third scenario (the "downside case") assumed that the same modest growth as in the second scenario would occur in 2018 and 2019, but a cyclical downturn in net sales would occur in 2020 followed by modest recovery in 2021 and 2022. See " —Prospective Financial Information—2018 Projections ." The directors engaged in discussion regarding the three scenarios. It was their consensus that the base case best reflected their expectations based on their business judgment and experience in the industry for the likely performance of the business over the next five years. Following discussion, the Committee requested that Mr. DiSantis direct BMO to prepare a financial analysis regarding Privet's most recent indication that takes into account each of the three scenarios for discussion at a future meeting.

        On February 2, 2018, a representative of Hardinge (who was not involved in discussions regarding a potential transaction with Privet) had a telephone conversation with a representative of a private foreign company operating in a similar industry to that of Hardinge, which company we refer to as Party A. During that conversation, which otherwise addressed ordinary course business matters, the representative of Party A indicated that Party A could be interested in exploring a transaction with Hardinge. Later that day, Mr. DiSantis, members of the Company's management team and representatives of Wachtell Lipton and BMO were informed of the statement made by the representative of Party A.

        On February 5, 2018, the Board (with Mr. Dougherty recused) held a telephonic meeting, with representatives of each of Wachtell Lipton and BMO participating. After an update regarding the current status of Privet's due diligence process, the Committee then received a presentation from BMO containing certain financial information regarding the Company and the financial aspects of a potential transaction with Privet, including the historic trading price of the Shares over time, trading multiples of certain selected public companies, implied multiples in certain precedent transactions and a discounted cash flow analysis of the Company based on the three financial cases that had been prepared by management at the direction of the Committee.

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        Following that discussion, the members of the Committee continued the discussion from the January 31 meeting regarding the financial cases prepared by management and it was again their consensus that the "base" case represented the most likely scenario for the Company. The Committee directed BMO to use and rely upon that case in any future analysis to be prepared for the Committee. The members of the Committee engaged in discussion regarding their views as to an appropriate price for selling the Company, if any, that would be in the best interests of the Company and its shareholders, and the most advisable strategy for negotiating with Privet. After discussions at this meeting, including regarding the financial scenarios previously prepared by management for discussion at prior meetings and the preliminary financial analysis discussed by BMO, as well as the Committee's views regarding the Company's expected future performance over the next five years, the members of the Committee expressed support for considering a transaction with Privet at an appropriate price. However, the Committee did not believe, if Privet were to make a proposal of $17.75 per Share, that $17.75 represented an acceptable price in such a transaction. Based on their discussion, it was the consensus of the Committee that representatives of BMO should indicate to Baird that there would not be consensus among the directors with respect to entering into a transaction with Privet at a price below $19.00 per Share.

        The directors then discussed the statements made by a representative of Party A on the prior Friday, which Mr. DiSantis had summarized at the beginning of the meeting. A representative of BMO summarized the limited information publicly available regarding Party A, and indicated that he had contacted a representative of Party A over the weekend to follow up regarding its previous statements. The representative of BMO further noted that the representative of Party A indicated in response that he was not aware that Hardinge was a publicly traded company, rather than a machine tool brand, and was not aware of the November public announcement regarding Privet's interest in evaluating a proposal to acquire the Company. The representative of BMO noted that he had directed Party A to Hardinge's public filings with the SEC for further information about Hardinge and the representative of Party A indicated that he would contact BMO if Party A wished to discuss the matter further. After discussion of the potential benefits and risks of further engaging with Party A at this time, and noting that the Company would be permitted to contact Party A during the go-shop period if a transaction were agreed to with Privet, it was the consensus of the Committee that it would be in the best interests of the Company and its shareholders to continue to focus on determining whether Privet would propose acceptable terms for an acquisition of the Company in the coming days. The Committee directed BMO to keep it informed of any further communications from Party A (of which there were none prior to entry into the Merger Agreement).

        At the February 5 Board meeting, it was noted that although Messrs. Burkhart and Silver were not formally members of the Committee, they had each attended nearly every meeting of the Committee and participated actively in its discussions. After Messrs. Burkhart and Silver reconfirmed to the other directors present at the meeting that they were disinterested with respect to Privet, the other directors present at the meeting unanimously resolved to appoint Messrs. Burkhart and Silver as members of the Committee.

        Following the Board meeting earlier that evening, representatives of BMO contacted representatives of Baird. Representatives of BMO indicated that a price of $17.75 per share would not be acceptable and that there would not be consensus among the directors with respect to entering into a transaction with Privet at a price below $19.00 per Share.

        Later that night, the representatives of Baird contacted the representatives of BMO to indicate that they had spoken to Privet regarding their conversation earlier that evening. The representatives of Baird indicated that Privet believed that a price of $17.75 per Share was a strong outcome for Hardinge shareholders and Privet had not expected to pay in excess of $18.00 per Share. However, the representatives of Baird indicated that to attempt to reach agreeable terms, Privet would consider offering a price as high as $18.10 per Share.

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        During the morning of February 6, 2018, representatives of each of Wachtell Lipton and Bryan Cave had a call to discuss the status of open issues in the Merger Agreement, a revised draft of which Wachtell Lipton had sent to Bryan Cave on January 31. During that conversation, the representatives of Bryan Cave indicated that Privet would agree to the 45-day go-shop period that was proposed in Wachtell Lipton's most recent draft of the Merger Agreement. Representatives of Bryan Cave also indicated that Privet would not agree to a transaction in which it would not be reimbursed for certain of its expenses in the event that the Company shareholders did not approve the proposal to adopt the merger agreement (even in the absence of a competing proposal or a recommendation change by the Board). In conveying this position, as well as the indication that Privet would not agree to a transaction that did not include a meaningful termination fee and expense reimbursement in the event a proposal made during the go-shop period was accepted, representatives of Bryan Cave indicated that Privet had incurred substantial expense over the prior months evaluating a potential transaction.

        During the afternoon of February 6, 2018, the Committee held a telephonic meeting, with representatives of each of Wachtell Lipton and BMO participating. The Committee discussed Privet's consideration of an offer up to $18.10 per Share and, after discussion, directed representatives of BMO to reiterate to Baird the message conveyed the prior day that there would not be consensus among the directors with respect to entering into a transaction with Privet at a price below $19.00 per Share. Representatives of Wachtell Lipton provided an update regarding open issues in the draft Merger Agreement and other transaction documents, including those discussed with representatives of Bryan Cave earlier that day, and the Committee gave Wachtell Lipton its views regarding those issues.

        Later that night, representatives of BMO contacted representatives of Baird to communicate the consensus of the Committee that was reached at the prior meeting. Representatives of Baird indicated that they would communicate the Committee's position to Privet.

        Later on the night of February 6, Mr. DiSantis was in Atlanta, where Mr. Levenson resides, for business matters unrelated to Hardinge or a transaction with Privet. Mr. Levenson contacted Mr. DiSantis that evening and requested to meet with Mr. DiSantis to further explain Privet's position. During a brief meeting that night, Mr. Levenson informed Mr. DiSantis that Privet was unwilling to pay $19.00 per Share, and that if the Committee was not in a position to consider a lower price, then Privet would not continue to consider a transaction. Mr. Levenson further indicated that Privet would consider a price lower than $19.00 per Share if such a price could be acceptable to Hardinge and that Privet may consider a price modestly higher than $18.10 per Share. Mr. DiSantis listened to Mr. Levenson and reiterated that there was not consensus among the members of the Committee with respect to entering into a transaction with Privet at a price below $19.00 per Share, but indicated that he would inform the Committee of Mr. Levenson's position.

        On February 7, 2018, the Committee held a telephonic meeting, with representatives of each of Wachtell Lipton and BMO participating. During the meeting, Mr. DiSantis summarized his conversation with Mr. Levenson the prior night. The Committee engaged in discussion regarding Privet's ability to enter into a transaction at a price of $19.00 per Share or higher and their views of the business and prospects of Hardinge. Based on that discussion and the discussions at prior Committee meetings, the Committee reached a consensus that it should consider an offer between $18.10 per Share and $19.00 per Share that represented the best price Privet was willing to pay. The Committee directed the representatives of BMO to indicate to representatives of Baird that the Committee had reached a consensus that it would be willing to consider a transaction with Privet at a price of $18.75 per Share, subject to acceptable terms in the Merger Agreement.

        During the evening of February 7, representatives of BMO contacted representatives of Baird and conveyed the consensus reached by the Committee at the prior meeting. Later that night, after discussion with Privet, representatives of Baird contacted representatives of BMO and indicated that Privet was not willing to pay a price of $18.75 per Share. Representatives of Baird indicated that Privet may be able to offer a price of $18.25 per Share. They further suggested that Privet may be able to

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consider a price between the parties' two latest indications of $18.25 per Share and $18.75 per Share if there were a price in that range that the Committee would be willing to propose and subject to acceptable terms in the Merger Agreement.

        On February 8, 2018, the Committee met telephonically, with representatives of each of BMO and Wachtell Lipton participating, to discuss the conversations between representatives of each of BMO and Baird the prior evening. It was the judgment of the Committee based on that discussion that Privet would be willing to agree to a price above $18.25 per Share. The Committee directed representatives of BMO to reject $18.25 per Share and request that Privet present for the Committee's consideration the best price that Privet would be willing to pay.

        Following the meeting of the Committee, a representative of BMO contacted a representative of Baird to communicate to Privet that the Committee was not willing to agree to a price of $18.25 per Share. Later that night, the representative of Baird contacted the representative of BMO to indicate that, after discussion with Privet, the best and final offer that Privet was willing to make to acquire Hardinge was a price of $18.50 per Share. The representative of Baird indicated that Privet was unwilling and unable to pay any higher price.

        On February 9, 2018 and over the course of the following weekend, representatives of Wachtell Lipton and Bryan Cave held discussions regarding certain open issues in the draft Merger Agreement and the other transaction documents, including the post-signing go-shop covenant and the amounts of the termination fees in the Merger Agreement. During the course of these discussions, representatives of Bryan Cave continued to reiterate in response to the Committee's proposals that Privet was unwilling to agree to a transaction that did not include some level of expense reimbursement in the event that the Company's shareholders did not approve the proposal to adopt the Merger Agreement (even in the absence of a competing proposal or a recommendation change by the Board). Representatives of Bryan Cave also indicated that Privet was unwilling to agree to anything lower than a 1.5% termination fee and expense reimbursement capped at 1.5% (in each case measured as a percentage of the equity value of the transaction) in the event that the Company terminated the Merger Agreement to enter into another transaction in respect of a proposal that was made during the go-shop period. After further discussion of these positions between representatives of Wachtell Lipton and members of the Committee, and based upon Privet's indications that it would not enter into a Merger Agreement that did not contain these terms it was agreed that the Merger Agreement would provide for such termination fees and expense reimbursement but that the expense reimbursement if shareholders do not approve the proposal to adopt the Merger Agreement in the absence of a competing proposal or recommendation change would be capped at 1% of the equity value of the transaction. In addition, in the event the Merger Agreement was terminated as a result of Parent's breach of certain provisions the Committee required that Parent pay the Company a reverse termination fee of $14,631,000 and reimburse the Company's and its affiliates' expenses up to $3,658,000. The Company also required Privet Fund LP to guarantee Parent's obligations under the Merger Agreement, including Parent's obligation to pay the reverse termination fee.

        On February 11, 2018, the Committee and the Board held a joint telephonic meeting, together with representatives of each of Wachtell Lipton and BMO, to discuss and review the draft Merger Agreement and to consider the proposed transaction, including the indication of $18.50 per Share by Privet (of which representatives of BMO had informed the Board prior to the meeting). Messrs. Levenson and Rosenzweig were not present at the meeting and Mr. Dougherty was not present for the first portion of the meeting. Representatives of Wachtell Lipton reviewed the duties of the directors and the terms of the draft Merger Agreement. It was noted that certain terms of the Merger Agreement remained open for negotiation and the Committee directed Wachtell Lipton to keep them apprised of any significant developments. Representatives of BMO reviewed with the Committee BMO's financial analysis of the consideration proposed in the Merger. BMO then rendered its oral opinion, which was subsequently confirmed in writing, to the Board to the effect that, as of that date, and based upon and subject to the factors, procedures, assumptions, qualifications and limitations set

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forth in its written opinion, the consideration of $18.50 per share in cash to be received by the Company's common shareholders (other than the Specified Persons) in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to those shareholders. Following discussion, including of the factors summarized in "— Reasons for the Merger; Recommendation of the Board; Fairness of the Merger ," the members of the Committee unanimously determined that the Merger was fair to, and in the best interests of, the Company and its shareholders, and recommended that the Board approve the entry into the Merger and the Merger Agreement. Following this discussion, Mr. Dougherty joined the meeting and engaged in a discussion with the other members of the Board regarding the terms of the proposed transaction and the Merger Agreement. The Board then unanimously (for avoidance of doubt, with Messrs. Levenson and Rosenzweig not present due to their relationship with Privet) (i) determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable and in the best interests of the Company and its shareholders, (ii) approved the adoption of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, and (iii) recommended that the shareholders of the Company adopt the Merger Agreement. Following this discussion, representatives of BMO discussed an overview of the expected process for the post-signing go-shop period, including potential third parties to be contacted.

        Later that night, following the meeting of the Board, Bryan Cave indicated to Wachtell Lipton that Privet's debt financing commitments would be in effect for up to 150 days from the date of the Merger Agreement, rather than until the "outside date" in the Merger Agreement at which either party could terminate without any other reason. That evening and continuing into the next day, representatives of Privet, Bryan Cave, Wachtell Lipton, Baird and BMO engaged in a number of discussions regarding the duration of Privet's financing commitment from White Oak. During these discussions, Privet indicated to Wachtell Lipton that White Oak may be willing to consider extending the term of the financing commitment but such an extension would take some time due to the nature of its internal diligence and approval policies. As a result, it was agreed between the parties and their advisors that, subject to the consideration and approval of the Board, the draft Merger Agreement would be revised to provide that if the debt financing commitments had not been extended by the date they were to expire, the Company would be permitted to terminate the Merger Agreement and receive the agreed reverse termination fee from Privet.

        During the early evening of February 12, 2018, the Board held a telephonic meeting with representatives of each of Wachtell Lipton and BMO participating to discuss these developments. After discussion, it was the consensus of the Board that the proposed changes to the Merger Agreement were acceptable, including in light of the alternative of potentially delaying entry into a transaction by several days while Privet negotiated revised financing commitments with White Oak, at which time there would be no assurance that Privet would continue to offer a price of $18.50 per Share or any price at all.

        During the evening of February 12, 2018, the parties executed the Merger Agreement and the other transaction documents. Shortly thereafter, Hardinge issued a press release announcing the transaction and Privet filed an amendment to its Schedule 13D to announce the transaction.

Subsequent Events

        Under the terms of the Merger Agreement, Hardinge and its advisors are permitted to actively solicit and negotiate Competing Proposals from third parties during a go-shop period that began on February 12, 2018 and expires at 11:59 p.m. New York time on March 29, 2018. See " The Merger Agreement—Solicitation of Acquisition Proposals ." To date, BMO, at the direction of the Committee, has undertaken a broad solicitation effort, contacting 55 potential acquirers, comprised of 31 strategic parties (including Party A) and 24 financial parties. As of the date of this preliminary proxy statement, 3 of the prospective buyers contacted during the go-shop period have entered into a non-disclosure agreement with the Company, and no prospective buyers have submitted a Competing Proposal. Party

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A indicated after being contacted by BMO during the go-shop period that it was not interested in considering making a proposal to acquire the Company.

        On February 22, 2018, Parent and Acquisition Sub entered into an amendment to the Debt Commitment Letter with White Oak to extend to August 27, 2018 (taking into account all extension periods that may be available if certain conditions are met) the date upon which the Debt Commitment Letter and the commitments thereunder will automatically terminate in the event that the debt financing contemplated thereby has not been funded. See " The Debt Commitment Letter ."

Reasons for the Merger; Recommendation of the Board; Fairness of the Merger

        At the meeting of the Board on February 11, 2018, the Board, (with Messrs. Levenson and Rosenzweig recused due to their relationship with Privet) based on the recommendation of the Committee, unanimously (i) determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable and in the best interests of the Company and its shareholders, (ii) approved the adoption of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, and (iii) recommended that the shareholders of the Company adopt the Merger Agreement. The Board believes that the Merger is fair to the Company's "unaffiliated security holders," as defined under Rule 13e-3 of the Exchange Act.

        In evaluating the Merger, the Committee and the Board consulted with the Company's legal and financial advisors, as well as the Company's management team, and considered the following potentially positive factors, which are not intended to be exhaustive and are not presented in any relative order of importance:

•

the Merger Consideration of $18.50 per Share represented a premium of (i) 51.9% over the volume weighted average price of the Shares for the twelve-month period ending on November 1, 2017, the last trading day prior to public announcement by Privet that it was evaluating a potential transaction to acquire the Company; (ii) 37.2% over the volume weighted average price of the Shares for the six-month period ending on November 1, 2017; (iii) 26.7% over the volume weighted average price of the Shares for the three-month period ending on November 1, 2017, (iv) 12.1% over the closing price of the Shares on November 1, 2017 and (v) 7.2% over the closing price of the Shares on February 9, 2018, the last trading day prior to the Board's approval of the Merger;



•

the fact that the price of the Shares was trading near its highest levels over the prior five years, which the Committee and the Board believed reflected increased risk of decline in the trading price of the Shares in the medium- to long-term, based on the prospects for the machine tool industry in general, including the prospects for a cyclical industry downturn in the near future;



•

information with respect to the Company's business, operations, financial condition, earnings and prospects, the Company's long-range plans, and the risk in achieving those prospects and plans, as well as industry, economic and market conditions and trends, including the Board's view of the Company's exposure to the cyclical nature of the machine tool industry, the impact on the Company of general, macro-economic developments and other risks and uncertainties discussed in the Company's public filings with the SEC;



•

the Board's belief that the Merger Agreement and the transactions contemplated thereby, including the Merger, were more favorable to the Company and its unaffiliated shareholders than other strategic alternatives available to the Company, taking into account the Company's stand-alone business plan and long-term prospects, and their associated benefits and risks (as more fully described under " Special Factors—Background of the Merger ");



•

the prior auction process that Hardinge undertook in 2015, including that the highest nonbinding and written, preliminary indication of interest received at that time was a price of $8.60 per Share and was subject to due diligence and other contingencies, and the Board's belief that the

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participants in that auction process would not now be interested in acquiring the Company at a price per Share that would be near or in excess of the $18.50 per Share Merger Consideration;

•

that, although Privet had publicly indicated on November 2, 2017 that it was evaluating potentially acquiring the Company, and that the Company had not granted Privet exclusivity and was free to consider indications from any other party, no potential acquirer other than Privet made a proposal to acquire the Company before the Merger Agreement was executed on February 12, 2018, three and a half months after Privet's public announcement, and the Board's belief that, if they were interested in exploring a transaction with the Company, potential acquirers would have approached the Company after Privet's public announcement and the Company's announcement that it was willing to allow Privet to conduct due diligence;



•

Privet's representation to the Company that the $18.50 per Share Merger Consideration was its best and final offer, that such offer represented a significant increase as compared to its initial indication of a price in the "high $16s" per Share, and the conclusion reached by the Committee, after discussions with the Company's advisors and negotiations with Privet, that the Merger Consideration of $18.50 per Share was likely the highest price per Share that Privet was willing to pay;



•

the fact that the Merger Consideration of $18.50 per Share in cash and the other terms and conditions of the Merger Agreement resulted from arm's-length negotiations between the Committee and Parent;



•

the current and historical market prices of the Shares, including those set forth in the table under " Other Important Information Regarding the Company—Market Price of Common Stock and Dividends ," taking into account the market performance of the Shares relative to the common stock of other participants in the industry in which the Company operates and general market indices;



•

that Privet's agreement to pay $18.50 per Share and the go-shop process (as more fully described under " The Merger Agreement ") together would likely result in a sale of the Company at the highest price per Share that was reasonably attainable;



•

that the per Share Merger Consideration consists solely of cash, providing the Company's shareholders with certainty of value and liquidity;



•

the oral opinion of BMO, which was subsequently confirmed by delivery of a written opinion, dated February 11, 2018, to the Board as to the fairness, from a financial point of view and as of the date of the opinion, to the Company's common shareholders (other than the Specified Persons) of the Merger Consideration to be received by those shareholders in the Merger pursuant to the Merger Agreement, which opinion was based on and subject to the assumptions made, procedures followed, matters considered and limitations and qualifications upon the review undertaken (as more fully described under " Special Factors—Opinion of BMO Capital Markets Corp. ");



•

the likelihood of the Merger being completed, based on, among other matters:



•

the absence of a financing condition in the Merger Agreement;



•

Parent having obtained committed debt financing in connection with the transaction and the obligation of Parent to use reasonable best efforts to obtain the debt financing;



•

the Company's ability, under circumstances specified in the Merger Agreement, to seek specific performance of Parent's obligation to cause the Merger to occur;



•

the requirement that, in the event of a failure of the Merger to be consummated under certain circumstances, Parent pay the Company a termination fee of $14,631,000 and reimburse certain expenses of the Company and its affiliates up to $3,658,000 (as more fully described under " The Merger Agreement—Termination—Termination Fees ");

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•

the requirement that Parent use reasonable best efforts to obtain any regulatory approvals required to consummate the Merger; and



•

the scope of the conditions in the Merger Agreement to the consummation of the Merger, including that there were no anticipated substantive issues expected in connection with required regulatory approvals;



•

the terms and conditions of the Merger Agreement, including:



•

the Company's right to solicit offers with respect to alternative acquisition proposals during a 45-day Go-Shop Period and the Board's view that the Go-Shop Period would invite additional parties to make proposals and could lead to a "superior proposal" if another party were interested;



•

the Company's right, from the end of the Go-Shop Period and prior to the time the Company's shareholders approve the proposal, to adopt the Merger Agreement, subject to certain conditions and requirements, to consider and respond to unsolicited acquisition proposals or engage in discussions or negotiations with third parties making such acquisition proposals and to terminate the Merger Agreement to accept a "superior proposal," and pay Parent a termination fee of $8,535,000 and reimburse certain expenses of Parent and its affiliates up to $3,658,000, or a reduced termination fee of $3,658,000 and certain expenses up to $3,658,000 if the termination is in connection with the Company's entry into a definitive agreement with an "excluded party" that makes an alternative acquisition proposal during the Go-Shop Period in certain circumstances (as more fully described under " The Merger Agreement—Termination—Termination Fees ");



•

the belief of the Board that the Company's termination fees were reasonable in light of, among other matters, the benefit of the Merger to the Company's shareholders;



•

that the terms of the Merger Agreement provide the Company with sufficient operating flexibility to conduct its business in the ordinary course until the earlier of the consummation of the Merger or the termination of the Merger Agreement; and



•

the ability of the Company to seek specific performance to prevent certain breaches of the Merger Agreement by Parent and Acquisition Sub;



•

that the Sponsor Entities agreed in the Support Agreement to vote their Shares in favor of, and take certain other actions in furtherance of, the transactions contemplated by the Merger Agreement, including the Merger (as more fully described under " Support Agreement ");



•

the Guaranty, provided by Privet Fund LP, guaranteeing Parent's obligations under the Merger Agreement with respect to payment of the Parent termination fee and certain other obligations;



•

the Board's belief that it was fully informed about the extent to which the interests of Privet in the Merger differ from those of the Company's other shareholders;



•

the financial and other terms and conditions of the Merger Agreement and the transactions contemplated thereby, including the Merger, resulting from extensive negotiations conducted at the direction of the Committee, with the assistance of experienced legal and financial advisors, during a process that occurred over the course of nearly four months;



•

Privet's representation in the Merger Agreement that there are no agreements between Privet and management of the Company or any member of the Board relating to the compensation and retention of the Company's management or the operations of the Company after the Merger; and



•

the potential limitations on management's ability to pursue and execute long-term strategic objectives and growth plans as a public company.

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        The Committee and the Board believe that sufficient procedural safeguards were and are present to ensure the fairness of the Merger and to permit the Committee and the Board to represent effectively the interests of the unaffiliated shareholders, and in light of such procedural safeguards the Committee and the Board did not consider it necessary to retain an unaffiliated representative to act solely on behalf of our unaffiliated shareholders for purposes of negotiating the terms of the Merger Agreement or preparing a report concerning the fairness of the Merger Agreement and the Merger. These procedural safeguards include the following:

•

that from the time on October 4, 2017 when Privet indicated that it would consider a proposal for the acquisition of the Company, the members of the Board who were partners or employees of Privet recused themselves and were excluded from all deliberations with respect to the negotiation, evaluation or approval of the Merger Agreement and the Merger and the consideration of other strategic alternatives, deferring all decisions relating to the Merger and the Company's potential strategic alternatives to the Committee (which from and after February 5, 2018 represented a majority of the Board), which had the power to review, identify and negotiate the terms and conditions of any strategic transaction alternative opportunities related to potential strategic alternatives and make recommendations to the Board regarding what action, if any, should be taken by the Company with respect to any strategic alternatives (including rejecting any strategic alternative if deemed appropriate by the Committee);



•

that a majority of the members of the board of directors of Hardinge, including each of the members of the Committee, were disinterested in Privet's proposal to acquire the Company;



•

that the members of the Committee are not officers or employees of the Company and the members of the Committee are not representatives of Privet, and are not expected to have an economic interest in the Company or the surviving corporation following the completion of the Merger;



•

that the Committee and the Board received the advice and assistance of experienced legal and financial advisors;



•

that the consummation of the Merger requires the affirmative vote of the holders of two-thirds of outstanding Shares entitled to vote at the Special Meeting and that, even taking into account the Sponsor Entities' commitment to vote their Shares in favor of the proposal to adopt the Merger Agreement, the approval of the holders of a majority of the outstanding Shares entitled to vote at the Special Meeting, other than those owned by the Sponsor Entities, would be required to approve such proposal;



•

the various terms of the Merger Agreement, including that the Merger Agreement, contains go-shop provisions and the ability of the Company to terminate the Merger Agreement under certain circumstances to accept a "superior proposal" (each as more fully described under " The Merger Agreement "), that are intended to help ensure that the Company's shareholders receive the highest price per Share reasonably available;



•

that, at the direction of the Committee, with the assistance of legal and financial advisors, extensive negotiations occurred with Privet regarding the Merger Consideration that resulted in an increase in the Merger Consideration from a potential transaction in the "high $16s" per Share to $18.50 per Share, and the other terms of the Merger and the Merger Agreement, including the go-shop period, the operating covenants and the amount of the termination fees;



•

that the members of the Committee met at least 19 times during the course of approximately four months to review potential transactions and other options, including the proposal from and negotiations with Privet, the inquiry from Party A, and other options (including the stand-alone business plan) potentially available to the Company;

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•

that the Committee and Board made their evaluation of the Merger Agreement and the Merger based upon the factors discussed in this proxy statement and with the full knowledge of the interests of Privet in the Merger; and



•

the ability of the Board, under certain circumstances, to change, qualify, withhold, withdraw or modify its recommendation that shareholders vote to adopt the Merger Agreement.

        The Committee and the Board also considered the following uncertainties, risks and potentially negative factors in their deliberations concerning the Merger, which are not intended to be exhaustive and are not presented in any relative order of importance:

•

that, following the completion of the Merger, the Company will no longer exist as an independent public company and that the consummation of the Merger and receipt of the Merger Consideration, while providing relative certainty of value, will not allow the Company's shareholders to participate in potential further growth in the Company's assets, future earnings growth, future appreciation in value of the Shares or any future dividends after the Merger;



•

the Merger Consideration of $18.50 per Share represented a premium of only 7.2% over the closing price of the Shares on February 9, 2018, the last trading day prior to the Board's approval of the Merger;



•

the fact that even though the machine tooling industry is very sensitive to cyclical variations, it is possible there may not be a cyclical downturn for several years;



•

the risk that the transactions contemplated by the Merger Agreement, including the Merger, and the financing for the transaction, may not be consummated in a timely manner or at all, and the consequences thereof, including (i) the potential loss of value to the Company's shareholders, (ii) the potential negative impact on the operations and prospects of the Company, including the risk of loss of key personnel, and (iii) the market's perception of the Company's prospects could be adversely affected if such transactions were delayed or were not consummated;



•

the restrictions imposed by the Merger Agreement on the Company's solicitation of acquisition proposals from third parties after the Go-Shop Period, and that prospective bidders may perceive Parent's right under the Merger Agreement to negotiate with the Company to match the terms of any "superior proposal" prior to the Company being able to terminate the Merger Agreement and accept a "superior proposal" to be a deterrent to making alternative proposals;



•

that the Sponsor Entities' ownership interest in the Company would likely be taken into account by third parties considering whether to make alternative proposals during the Go-Shop Period;



•

that, if the Merger Agreement is terminated in connection with the Company's entry into a definitive agreement with respect to a "superior proposal," the Sponsor Entities have not agreed to vote their Shares in favor of such "superior proposal," which may be taken into account by third parties considering whether to make alternative proposals during the Go-Shop Period;



•

the possibility that the Company may be required to pay Parent and its affiliates a termination fee of $8,535,000 and reimburse certain expenses of Parent up to $3,658,000 (as more fully described under " The Merger Agreement—Termination—Termination Fees "), under certain circumstances, including to accept a "superior proposal";



•

the possibility that the Company may be required to reimburse Parent and its affiliates in respect of their expenses up to $2,438,000 in the event that the Company's shareholders do not approve the proposal to adopt the Merger Agreement, even if the termination fees described above would not be payable (as more fully described under " The Merger Agreement—Termination—Termination Fees ");



•

that at the time of entry into the Merger Agreement, Parent's debt financing commitment could have been terminated by the lender as soon as June 12, 2018 and automatically extended to July 12, 2018 in certain circumstances, as compared to the "outside date" in the Merger

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Agreement of August 31, 2018 (on February 22, 2018, Parent and Acquisition Sub entered into an amendment to the Debt Commitment Letter with White Oak to extend the date upon which the Debt Commitment Letter and the commitments thereunder will automatically terminate in the event that the debt financing contemplated thereby has not been funded to August 27, 2018, taking into account all extension periods that may be available if certain conditions are met, as described in " The Debt Commitment Letter ");

•

the risk that the debt financing contemplated by the debt commitment letters will not be obtained, resulting in Parent not having sufficient funds to complete the transaction;



•

that the Company's remedy in the event of the failure of the Merger to close as a result of a financing failure or Parent's debt financing commitment failing to be in effect after July 12, 2018 is generally limited to receipt of a $14,631,000 termination fee payable by Parent and reimbursement of certain expenses of the Company and its affiliates by Parent up to $3,658,000;



•

that Parent and Acquisition Sub are newly formed entities with essentially no assets and the Guaranty, provided by Privet Fund LP, guarantees Parent's obligations under the Merger Agreement only with respect to payment of the Parent termination fee and certain other obligations, and is subject to a cap of $85,000,000;



•

the understanding that some of the Company's directors and executive officers have other interests in the Merger in addition to their interests as shareholders of the Company, including the manner in which they would be affected by the Merger (as discussed under " Special Factors—Interests of Executive Officers and Directors of the Company in the Merger ");



•

the possible effects of the pendency or consummation of the transactions contemplated by the Merger Agreement, including the potential for suits, actions or proceedings in respect of the Merger Agreement or the transactions contemplated by the Merger Agreement, the risk of any loss or change in the relationship of the Company and its subsidiaries with their respective employees, agents, customers and other business relationships, and any possible effect on the Company's ability to attract and retain key employees, including that employees might choose not to remain employed with the Company prior to the completion of the Merger;



•

the restrictions placed on the conduct of the Company's business prior to the completion of the Merger pursuant to the terms of the Merger Agreement, which could delay or prevent the Company from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of the Company absent the pending completion of the Merger;



•

that appraisal rights under the New York Business Corporation Law do not apply with respect to the Merger;



•

that the receipt of cash in exchange for Shares pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes;



•

the risks and potentially negative factors described in " Special Factors—Certain Effects of the Merger " and " Special Factors—Certain Effects on the Company if the Merger Is Not Completed ," respectively; and



•

that the Company's directors, officers and employees have expended and will expend extensive efforts attempting to complete the transactions contemplated by the Merger Agreement and such persons have experienced and will experience significant distractions from their work during the pendency of such transactions and that the Company has incurred and will incur substantial costs in connection with such transactions, even if such transactions are not consummated.

        The Committee and the Board concluded that the uncertainties, risks and potentially negative factors relevant to the Merger were outweighed by the potential benefits of the Merger.

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        In the course of reaching their decision to approve and declare advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, the Committee and the Board did not consider the liquidation value of the Company, and did not believe it to be a relevant methodology, because the Company will continue to operate its business following the Merger, the Company is a viable, going concern, and they considered determining a liquidation value to be impracticable given the significant execution risk involved in any breakup of the Company. Further, the Committee and the Board did not consider net book value as a factor because they believed that net book value is not a material indicator of the value of the Company as a going concern but rather is indicative of historical costs and because net book value does not take into account the prospects of the Company, market conditions, trends in the industry in which the Company operates or the business risks inherent in that industry. The Committee and the Board did not seek to determine a pre-Merger going concern value for the Shares to determine the fairness of the Merger Consideration to the Company's unaffiliated shareholders. The Committee and the Board were not aware of any firm offer for a merger, sale of all or a substantial part of the Company's assets, or a purchase of a controlling amount of the Company securities having been received by the Company from anyone other than a person disclosing its offer or purchase in reports filed with the SEC in the two years preceding the signing of the Merger Agreement.

        The foregoing discussion is not exhaustive, but is intended to summarize the material information and factors considered by the Committee and the Board in their consideration of the transactions contemplated by the Merger Agreement, including the Merger. The Committee and the Board (with Messrs. Levenson and Rosenzweig recused due to their relationship with Privet) reached the unanimous decision to approve the entry into the Merger Agreement and recommend its adoption by the Company's shareholders in light of the factors described above and other factors that the Committee and the Board believed were appropriate. In view of the variety of factors and the quality and amount of information considered, the Board did not find it practicable to and did not quantify or otherwise assign relative weights to the specific factors considered in reaching their determinations. In addition, each individual member of the Committee may have given different weight to different factors. The Committee and the Board conducted an overall review of the factors described above, including through discussions with the Company's management and legal and financial advisors, and considered the factors overall to be favorable to, and to support, their determinations. It should be noted that this explanation of the reasoning of the Committee and the Board and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in the section entitled " Cautionary Statement Concerning Forward-Looking Information ."

Position of the Privet Filing Parties as to the Fairness of the Merger

        Under the SEC rules governing "going private" transactions, each of the Privet Filing Parties is an affiliate of the Company engaged in the "going private" transaction and, therefore, is required to express its position as to the fairness of the proposed Merger to the Company's "unaffiliated security holders," as defined under Rule 13e-3 of the Exchange Act. The Privet Filing Parties are making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The views of the Privet Filing Parties should not be construed as a recommendation to any unaffiliated shareholder as to how that shareholder should vote on the Merger Agreement proposal. The "Privet Filing Parties" means (a) Hardinge Holdings, LLC, (b) Hardinge Merger Sub, Inc., (c) Privet Capital Investments II, LP ("Privet Capital II"), (d) Privet Fund LP, (e) Privet Fund Management LLC, and (f) Ryan Levenson.

        The Privet Filing Parties believe that the Merger (which is the Rule 13e-3 transaction for which a Schedule 13E-3 Transaction Statement was filed with the SEC) is fair to the Company's unaffiliated shareholders on the basis of the factors described in " Special Factors—Purpose and Reasons of the Privet Filing Parties for the Merger " and the additional factors described below.

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        The Privet Filing Parties did not participate in the deliberations of the Board regarding, or receive advice from the Company's legal or financial advisors as to, the fairness of the proposed Merger to the Company's unaffiliated shareholders. The Privet Filing Parties have not performed, or engaged a financial advisor to perform, any valuation or other analysis for the purpose of assessing the fairness of the Merger to the Company's unaffiliated shareholders. However, based on the knowledge and analysis by the Privet Filing Parties of available information regarding the Company, as well as discussions with members of the Company's senior management regarding the Company and its business and the factors considered by, and the analysis and resulting conclusions of, the Board discussed in this proxy statement in " Special Factors—Purpose and Reasons of the Company for the Merger ," the Privet Filing Parties believe that the Merger is substantively and procedurally fair to the Company's unaffiliated shareholders. In particular, the Privet Filing Parties based their belief on the following factors, among others, which are not presented in any relative order of importance:

•

the Merger Consideration represents a premium of (a) 26.7% over the volume weighted average price of the Shares for the three-month period ending on November 1, 2017, the last trading day prior to the public announcement by Privet that it was evaluating a potential transaction to acquire the Company, (b) 12.1% over the closing price of the Shares on November 1, 2017, and (c) 8.3% over the closing price of the Shares on February 12, 2018, the last trading day prior to the public announcement of the Merger;



•

the Merger Consideration is all cash, which provides certainty of value and liquidity to the unaffiliated shareholders;



•

consummation of the Merger will allow the unaffiliated shareholders not to be exposed to risks and uncertainties relating to the prospects of the Company following completion of the Merger;



•

the Privet Filing Parties have obtained a binding commitment letter from a lender to provide debt financing in connection with the Merger with a limited number of conditions to the consummation of the debt financing, there is no financing condition to Parent's and Acquisition Sub's obligation to consummate the Merger under the Merger Agreement and the Privet Filing Parties are obligated to use their reasonable best efforts to obtain the debt financing (see " Financing of the Merger " and " Debt Commitment Letter " below);



•

the Board hired an investment banker and conducted a comprehensive process to explore strategic alternatives for the Company beginning in August 2015, pursuant to which the Board received indications of interest from a number of financial and strategic buyers reflecting share price consideration materially lower than the Merger Consideration (see " Background of the Merger ");



•

the Merger Agreement and the transactions contemplated thereby (including the Merger Consideration) were extensively negotiated by members of the Committee;



•

the Merger is conditioned on receipt of the affirmative vote of the holders of two-thirds of outstanding Shares entitled to vote at the Special Meeting and, even taking into account the Sponsor Entities' commitment to vote their Shares in favor of the proposal to adopt the Merger Agreement, the approval of the holders of a majority of the outstanding Shares entitled to vote at the Special Meeting, other than those owned by the Sponsor Entities, would be required to approve such proposal;



•

the Merger Agreement provides for a 45-day post-signing Go-Shop Period, during which the Company—with the assistance of its legal and financial advisors—may actively initiate, solicit and encourage the making of Competing Proposals from third parties, provide nonpublic information to such third parties (subject to entry into acceptable confidentiality agreements), and enter into or participate in any negotiations with such third parties regarding such Competing Proposals;

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•

the Company is permitted to continue negotiations with certain parties that make a qualifying offer prior to March 29, 2018 and, subject to customary requirements included in the Merger Agreement, enter into or recommend a transaction with a person or group that makes a Superior Proposal;



•

after the end of the Go-Shop Period at 11:59 p.m. New York time on March 29, 2018, the Merger Agreement further permits the Company to provide information and participate in negotiations with respect to unsolicited acquisition proposals in circumstances described in the Merger Agreement and to terminate the Merger Agreement to accept a Superior Proposal and in the case of an intervening event;



•

if the Company accepts a Competing Proposal within 45 days following the end of the Go-Shop Period with a party that made a qualifying offer prior to the end of the Go-Shop Period, the termination fee that the Company is required to pay is reduced from $8,535,000 to $3,658,000, plus up to $3,658,000 in Parent's expenses in each case;



•

the requirement that, in the event of a failure of the Merger to be consummated under certain circumstances, Parent must pay the Company a reverse termination fee of up to $14,631,000, plus up to $3,658,000 in the Company's expenses, without the Company being required to establish any damages, which payment obligation is guaranteed by Privet Fund LP (as defined below in " The Merger Agreement—Guaranty ");



•

the fact that the Board received an opinion of BMO Capital Markets Corp., dated February 11, 2018, to the effect that, based upon and subject to the assumptions made, matters considered and limitations and qualifications upon the review undertaken by BMO, as of such date, the Merger Consideration of $18.50 per Share to be received by the common shareholders of the Company (other than the Specified Persons) in the Merger pursuant to the Merger Agreement was fair from a financial point of view, to such holders (as more fully described under " Special Factors—Opinion of BMO Capital Markets Corp. "); and



•

the Merger and the Merger Agreement were unanimously approved by the Board (with Messrs. Levenson and Rosenzweig recused due to their relationship with Privet), following the recommendation of the Committee, and the Board (with Messrs. Levenson and Rosenzweig recused due to their relationship with Privet) unanimously determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement were fair, advisable to and in the best interests of the Company and its shareholders.

        The Privet Filing Parties did not consider the liquidation value of the Company to be a relevant valuation methodology and, therefore, did not appraise the assets of the Company to determine the liquidation value because (a) of the impracticability of determining a liquidation value given the significant execution risk involved in any breakup, (b) the Privet Filing Parties considered the Company to be a viable going concern, and (c) the Company will continue to operate its business following the Merger. The Privet Filing Parties did not consider net book value, which is an accounting concept, because, in the Privet Filing Parties' view, net book value is neither indicative of the Company's market value nor its value as a going concern, but rather is an indicator of historical costs. The Privet Filing Parties did not seek to establish a pre-Merger going concern value for the Company because, following the Merger, the Company will have a different capital structure, cost profile and operating strategy, among other things. However, to the extent that the closing price for the Company's Shares on NASDAQ on November 1, 2017, the last trading day prior to the public announcement by Privet that it was evaluating a potential transaction to acquire the Company, and on February 12, 2018, the last trading day prior to the public announcement of the signing of the Merger Agreement, reflected the per Share going concern value of the Company, the Merger Consideration represented a premium of approximately 12.1% and 8.3%, respectively, to the going concern value of the Company.

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        The foregoing discussion of the information and factors considered by the Privet Filing Parties in connection with their evaluation of the Merger and their belief that the Merger is substantively and procedurally fair to the Company's unaffiliated shareholders is not intended to be exhaustive but includes all material factors considered. The Privet Filing Parties did not find it practicable to assign, nor did they assign, relative weight to the individual factors considered in reaching their conclusions. The Privet Filing Parties believe that these factors provide a reasonable basis for their belief that the proposed Merger is fair to the Company's unaffiliated shareholders. This belief should not, however, be construed as a recommendation to any of the Company's shareholders to approve the Merger Agreement, and the Privet Filing Parties do not make any recommendation as to how shareholders of the Company should vote their Shares on the Merger Agreement Proposal.

Opinion of BMO Capital Markets Corp.

        The Board has engaged BMO to act as its financial advisor in connection with the proposed Merger. In selecting BMO, we considered, among other things, the fact that BMO is a reputable investment banking firm with substantial experience advising companies in the industrial manufacturing sector and in providing strategic advisory services in general. On February 11, 2018, BMO rendered an oral opinion to the Board, which was subsequently confirmed in a written opinion as of the same date, to the effect that, based upon and subject to the assumptions made, matters considered and limitations and qualifications upon the review undertaken by BMO, as of such date, the Merger Consideration of $18.50 per Share to be received by the common shareholders of the Company (other than the Specified Persons) in the Merger pursuant to the Merger Agreement was fair from a financial point of view, to such holders.

         The full text of BMO's written opinion, dated February 11, 2018, is attached to this proxy statement as Annex C. You should read BMO's opinion carefully and in its entirety for a discussion of, among other things, the scope of the review undertaken and the assumptions made, procedures followed, matters considered and qualifications and limitations upon the review undertaken by BMO in connection with its opinion. This summary is qualified in its entirety by reference to the full text of the opinion. BMO's opinion was directed to the Board, in its capacity as the Board, and addressed only the fairness from a financial point of view, as of the date of the opinion, to the holders of our Shares (other than the Specified Persons) of the Merger Consideration to be received by those shareholders in the Merger pursuant to the Merger Agreement. For purposes of BMO's opinion, "Specified Persons" refers collectively to Privet Fund LP, Privet Fund Management LLC, Parent, Acquisition Sub and their respective affiliates.

        In connection with rendering its opinion, BMO, among other things:

•

reviewed a draft, dated February 10, 2018, of the Merger Agreement;



•

reviewed certain publicly available business and financial information relating to the Company that BMO deemed to be relevant;



•

reviewed certain information relating to the Company's historical, current and future operations, financial condition and prospects made available to BMO by the Company, including financial projections prepared by management of the Company relating to the Company for the fiscal years ending 2017 through 2022, which we refer to as the 2018 Projections "base case" or in this section simply as the "Projections" (see Special Factors—Prospective Financial Information—2018 Projections );



•

conducted discussions with members of senior management of the Company and certain of its representatives and advisors concerning their view of the Company's businesses, operations, financial condition and prospects, the Merger and related matters;

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•

reviewed certain financial and stock market information for the Company and for selected publicly traded companies that BMO deemed to be relevant;            



•

reviewed the financial terms, to the extent publicly available, of selected acquisitions of companies in the Company's industry which BMO deemed to be relevant;



•

performed a discounted cash flow analysis for the Company based on the Projections;            



•

reviewed the current and historical market prices and trading volume for the Shares, and the current and historical market prices of the publicly traded securities of certain other companies that BMO deemed to be relevant;



•

reviewed a certificate addressed to BMO from senior management of the Company which contains, among other things, representations regarding the accuracy of the information, data and other materials (financial or otherwise) provided to, or discussed with, BMO by or on behalf of the Company; and



•

performed other studies and analyses, and conducted discussions as BMO deemed appropriate.

        BMO assumed and relied upon, without independent verification, the accuracy and completeness of all information supplied or otherwise made available to it by the Company or its representatives or advisors, or obtained by it from other sources. BMO has not independently verified (nor assumed any obligation to verify) any such information, undertaken an independent valuation or appraisal of the assets or liabilities (contingent, derivative, off-balance sheet or otherwise) of the Company, Parent or Acquisition Sub nor has it been furnished with any such valuation or appraisal. BMO has not evaluated the solvency or fair value of either Sponsor Entity, Parent, Acquisition Sub or the Company under any state or federal laws relating to bankruptcy, insolvency or similar matters. BMO also has assumed that all material governmental, regulatory or other approvals and consents required in connection with the consummation of the Merger would be obtained and that in connection with obtaining any necessary governmental, regulatory or other approvals and consents, no restrictions, terms, or conditions would be imposed that would be material to its analysis. BMO has assumed that the final Merger Agreement would not differ in any material respect from the draft of the Merger Agreement it reviewed. BMO has also assumed that the Merger would be consummated in accordance with the terms of the Merger Agreement, without any waiver, modification or amendment of any terms, condition or agreement that would be material to its analysis, that the representations and warranties of each party contained in the Merger Agreement would be true and correct in all material respects, that each party would perform all of the covenants and agreements required to be performed by it under the Merger Agreement and that all conditions to the consummation of the Merger would be satisfied without waiver or modification. With respect to the Projections, it has been advised by the Company, and has assumed, without independent investigation, that the Projections have been reasonably prepared and reflect the best currently available estimates and good faith judgment of Company management of the expected future competitive, operating and regulatory environments and related financial performance of the Company. BMO expresses no opinion with respect to the Projections, or the assumptions on which they are based. BMO has relied upon and assumed, without independent verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Company since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to it that would be material to its analyses or its opinion, and that there was no information or any facts that would make any of the information reviewed by it incomplete or misleading. Furthermore, it has not assumed any obligation to conduct, and has not conducted, any physical inspection of the properties or facilities of the Company, either Sponsor Entity, Parent or Acquisition Sub.

        BMO's opinion is necessarily based upon financial, economic, market and other conditions and circumstances as they existed and could be evaluated, and the information made available to it, as of

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the date of its opinion. BMO has not undertaken, and is under no obligation, to update, revise, reaffirm or withdraw its analysis, or otherwise comment on or consider events occurring or coming to its attention after the date of its opinion, including potential changes in U.S. trade, tax or other laws, regulations and government policies and the enforcement thereof as have been or may be proposed or effected, and the potential effects such changes may have on the Merger or the participants in the Merger or their respective businesses, assets, liabilities, financial condition, results of operations, cash flows or prospects. Certain financial information relied upon by BMO for purposes of its opinion reflect assumptions provided by Company management regarding the tax rates applicable to the Company's taxable income including management's assessment regarding the likely potential impact of any changes referenced in the immediately preceding sentence.

        BMO's opinion does not constitute a recommendation as to any action the Committee, the Board or any other party should take in connection with the Merger or the other transactions contemplated by the Merger Agreement or any aspect thereof and is not a recommendation to any director of the Company, any shareholder or any other party on how to act or vote with respect to the Merger or related transactions and proposals or any other matter. BMO's opinion relates solely to the fairness, from a financial point of view, to the holders of Shares (other than the Specified Persons) of the Merger Consideration to be received by such shareholders in the Merger pursuant to the Merger Agreement as of the date of BMO's opinion. It expresses no opinion as to the relative merits of the Merger and any other transactions or business strategies discussed by the Board or the Committee as alternatives to the Merger or the decision of the Board or the Committee to proceed with the Merger, nor does it express any opinion on the structure, terms or effect of any other aspect of the Merger or the other transactions contemplated by the Merger Agreement. In addition, it does not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation payable to or to be received by any of the Company's officers, directors or employees, or any class of such persons, in connection with the Merger relative to the Merger Consideration to be received by holders of the Shares. BMO's opinion does not address any of the legal, tax or accounting aspects of the Merger. With the Board's consent, BMO has relied upon the fact that the Company has received legal, tax and accounting advice and assumed, without independent verification, that all such advice was correct. In its written opinion, BMO noted that the credit, financial and stock markets have been experiencing unusual volatility, and BMO expressed no opinion or view as to any potential effects of such volatility on the Merger, the Company or the Sponsor Entities, and the opinion did not purport to address potential developments in any such markets.

        The summary set forth below does not purport to be a complete description of the financial analyses performed by BMO, but describes, in summary form, the material elements of the presentation that BMO made to the Committee on February 11, 2018, in connection with BMO's opinion. The following also contains a summary of the material financial analyses performed by BMO in arriving at its opinion. These summaries of financial analyses alone do not constitute a complete description of the financial analyses BMO employed in reaching its conclusion.

        BMO's opinion was only one of many factors considered by the Committee in evaluating the proposed merger. Neither BMO's opinion nor its financial analyses were determinative of the Merger Consideration or of the views of the Board, the Committee or the Company's management with respect to the Merger Consideration or the Merger. Under the terms of BMO's engagement as financial advisor to the Committee, the Company agreed that BMO was acting as an independent contractor and that BMO was not acting as an agent or a fiduciary of the Committee, the Board, the Company or its shareholders, creditors, or other constituencies, or any other person or entity. None of the analyses performed by BMO were assigned a greater significance by BMO than any other, nor does the order of analyses described represent relative importance or weight given to those analyses by BMO. The summary text describing each financial analysis does not constitute a complete description of BMO's financial analyses, including the methodologies and assumptions underlying the analyses and, if viewed

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in isolation, could create a misleading or incomplete view of the financial analyses performed by BMO. The summary text set forth below does not represent and should not be viewed by anyone as constituting conclusions reached by BMO with respect to any of the analyses performed by it in connection with its opinion. Rather, BMO made its determination as to the fairness, from a financial point of view, to the Company's shareholders (other than the Specified Persons) of the Merger Consideration to be received by those shareholders in the Merger pursuant to the Merger Agreement on the basis of its experience and professional judgment after considering the results of all of the analyses performed.

        Except as otherwise noted, the information utilized by BMO in its analyses, to the extent that it is based on market data, is based on market data as it existed on or before February 9, 2018, the last trading day prior to the date of BMO's opinion, and is not necessarily indicative of current market conditions. The analyses described below do not purport to be indicative of actual future results, or to reflect the prices at which any securities may trade in the public markets, which may vary depending upon various factors, including changes in interest rates, dividend rates, market conditions, economic conditions and other factors that influence the price of securities.

        In conducting its analysis, BMO used three primary methodologies to review the valuation of the Company on a stand-alone basis to assess the fairness, from a financial point of view, to the Company's common shareholders (other than the Specified Persons) of the Merger Consideration to be received by those shareholders in the Merger pursuant to the Merger Agreement. Specifically, BMO conducted a selected publicly traded companies analysis, a precedent transaction analysis and a discounted cash flow analysis. No individual methodology was given a specific weight, nor can any methodology be viewed individually. Additionally, no company or transaction used in any analysis as a comparison is identical to the Company or the Merger, and they all differ in material ways. Accordingly, an analysis of the results described below is not mathematical; rather it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading value of the selected companies or precedent transactions to which they are being compared. As a consequence, mathematical derivations (such as the high, low, mean and median) of financial data are not by themselves meaningful and in selecting the ranges of multiples to be applied were considered in conjunction with experience and the exercise of judgment. BMO used these analyses to determine the impact of various operating metrics on the implied value per common share of the Company. Each of these analyses yielded a range of implied values, and therefore, those implied value ranges developed from these analyses were viewed by BMO collectively and not individually.

February 11, 2018 Discussion Materials

Selected Publicly Traded Companies Analysis

        BMO reviewed and compared certain publicly available financial information, ratios and market multiples relating to the Company with equivalent publicly available data for companies that share similar business characteristics with the Company to derive an implied equity value reference range for the Company. BMO reviewed nine publicly traded North American industrial manufacturing companies with enterprise values between $100 million and $1 billion and market capitalizations below $550 million. BMO analyzed the ratio of enterprise value (which we refer to as "EV") to adjusted earnings before interest, taxes, depreciation and amortization (which we refer to as "adjusted EBITDA") and adjusted EV (including the Company's tax effected unfunded pension liability, which we refer to as "adjusted EV") to adjusted EBITDA plus pension expense (which we refer to as "adjusted EBITDAP") for each of the last 12 months publicly available (which we refer to as "LTM") and for estimated calendar year 2017 based on consensus Wall Street analyst research (which we refer to as "Street consensus") for each of these companies for comparison purposes. The multiples for each of the selected companies were calculated using their respective closing prices on February 9, 2018, the

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last trading day prior to the date of BMO's opinion, and were based on the most recent publicly available information and Street consensus estimates, with the exception of Key Technology, Inc., which was calculated using its unaffected share price from January 24, 2018 (the day prior to the announcement of its acquisition by Duravant LLC). The selected companies and corresponding data were as follows:

        For purposes of this analysis, BMO derived a range of multiples for each metric using the mean and median multiples from the selected publicly traded companies. For informational purposes only, and not relied upon in reaching any conclusions, BMO also reviewed the high and low multiples from the selected publicly traded companies. The following table reflects the results of this analysis:

        This analysis indicated the following implied per share equity value reference range for each Share, as compared to the Merger Consideration:

        No company utilized in the selected publicly traded companies analysis is identical to the Company. In evaluating selected publicly traded companies, BMO made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters which are beyond the Company's control, such as the impact of competition on the Company and the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of the Company or the industry, or in the financial markets in general.

Analysis of Selected Precedent Transactions

        BMO also performed an analysis of selected precedent transactions involving publicly traded North American industrial manufacturing companies that shared certain characteristics with the Merger. Based on publicly available information, BMO identified 14 publicly announced and (with the exception of the acquisition of Key Technology, Inc. by Duravant LLC, which is still pending) completed transactions involving North American industrial manufacturing companies with enterprise values

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between $100 million and $1 billion occurring since January 1, 2012. BMO analyzed EV to LTM adjusted EBITDA (for the 12-month period prior to the public announcement of each respective transaction) for each of these transactions for comparison purposes. The selected transactions and corresponding data were as follows:

        For purposes of this analysis, BMO derived a range of multiples for each metric using the mean and median multiples from the selected precedent transactions. For informational purposes only, and not relied upon in reaching any conclusions, BMO also reviewed the high and low multiples from the selected precedent transactions. The following table reflects the results of this analysis:

        This analysis indicated the following implied per share equity value reference range for each Share, as compared to the Merger Consideration:

        No company or transaction utilized as a comparison in the analysis of selected precedent transactions is identical to the Company or directly comparable to the Merger in business mix, timing and size. Accordingly, an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning differences in financial and operating characteristics and other

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factors that would affect the value of the companies to which the Company is being compared. In evaluating the selected precedent transactions, BMO made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters that are beyond the Company's control, such as the impact of competition on the Company and the industry generally, industry growth and the absence of any adverse material change in the financial conditions and prospects of the Company or the industry or the financial markets in general.

Discounted Cash Flow Analysis

        BMO performed a discounted cash flow analysis to calculate the estimated present value of the unlevered free cash flows that the Company's management forecasted the Company would generate for the fiscal years 2018 through 2022 in the Projections. See "—Special Factors—Prospective Financial Information—2018 Projections (Base Case)." BMO calculated terminal values for the Company by applying perpetuity growth rates ranging from 2% to 4% and estimates of the Company's weighted average cost of capital ranging from 14% to 16%. This analysis indicated the following implied per share equity value reference range for each Share, as compared to the Merger Consideration:

Preliminary Discussion Materials

        In addition to the February 11, 2018 financial presentation provided to the Committee and the Board in connection with BMO's opinion, dated February 11, 2018, as summarized above, BMO also provided, for informational purposes, preliminary discussion materials to the Committee as summarized below.

        The preliminary financial considerations and other information in the preliminary discussion materials reflected market data as of dates proximate to such materials and were based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and information, including tax information relating to the Company, made available to BMO as of, the date of such materials. Accordingly, to the extent preliminary financial analyses or information were included in such preliminary discussion materials, such preliminary financial analyses or information may have differed from the February 11, 2018 financial presentation as a result of, among other things, changes in the Company's internal financial forecasts, estimates and assumptions, such financial, economic, monetary, market and other conditions and circumstances and other information. BMO also continued to refine various aspects of such preliminary financial considerations and other information. The February 11, 2018 financial presentation superseded the preliminary discussion materials. The preliminary discussion materials did not constitute an opinion of, or recommendation by, BMO with respect to a possible transaction or otherwise.

        The February 5, 2018 preliminary discussion materials were substantially similar to the February 11, 2018 financial presentation and contained, among other things, a preliminary selected companies analysis, a preliminary precedent transactions analysis and preliminary discounted cash flow analyses, which preliminary analyses generally used the same methodologies as described above under the heading "— February 11, 2018 Financial Presentation. "

        The January 25, 2018 preliminary discussion materials contained, among other things, an illustrative ownership summary regarding the Shares, a turn of float analysis and a summary of negative one-day premium precedent transactions.

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        The November 1, 2017 preliminary discussion materials were substantially similar to the February 11, 2018 financial presentation and contained, among other things, a preliminary selected companies analysis, a preliminary precedent transactions analysis and preliminary discounted cash flow analyses, which preliminary analyses generally used the same methodologies as described above under the heading "— February 11, 2018 Financial Presentation. "

Miscellaneous

        In connection with BMO's services as the Company's financial advisor, based on the Merger Consideration of $18.50 per Share, the Company will be required to pay to BMO an aggregate fee of approximately $3.23 million, $750,000 of which was payable upon delivery of BMO's opinion, and the remainder and majority of which is payable upon consummation of the Merger. In addition, the Company has agreed to reimburse BMO for certain of its expenses and to indemnify BMO and related persons against various potential liabilities, including certain liabilities that may arise under the federal securities laws.

        In the two years prior to the date of BMO's opinion, BMO did not have any material relationships, nor were any material relationships mutually understood to be contemplated (other than in connection with the potential sale of the Company including this engagement), in which any compensation was received or was intended to be received by BMO as a result of any such relationship with the Company, Parent or Acquisition Sub in connection with the provision of any financial advisory or financing services by BMO to the Company, Parent or Acquisition Sub.

        BMO, as part of its investment banking business, is engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities and private placements. In the ordinary course of business, certain of BMO's employees and affiliates, as well as investment funds in which they may have financial interests or with which they may co-invest, may acquire, hold or sell, long or short positions, or trade, in debt, equity, and other securities and financial instruments (including loans and other obligations) of, or investments in, the Company, the Privet, Parent, Acquisition Sub or any other party that may be involved in the Merger and their respective affiliates or any currency or commodity that may be involved in the Merger. BMO or its affiliates may provide investment and corporate banking services to the Company, Privet, Parent, Acquisition Sub and their respective affiliates in the future, for which BMO or its affiliates may receive customary fees. BMO provides a full range of financial advisory and securities services and, in the course of its normal trading activities, may from time to time effect transactions and hold securities, including, without limitation, derivative securities, of the Company, Privet, Parent, Acquisition Sub or their respective affiliates for its own account and for the accounts of customers.

Purpose and Reasons of the Company for the Merger

        The Company's purpose for engaging in the Merger is to enable its shareholders to receive the Merger Consideration, which represents a premium of (a) 26.7% over the volume weighted average price of the Shares for the three-month period ending on November 1, 2017, the last trading day prior to public announcement by Privet that it was evaluating a potential transaction to acquire the Company, (b) 12.1% over the closing price of the Shares on November 1, 2017, and (c) 8.3% over the closing price of the Shares on February 12, 2018, the last trading day prior to the announcement of the Merger. The Board believes that the Merger provides the best opportunity to maximize shareholder value. The Company has determined to undertake the Merger at this time based on the analyses, determinations and conclusions of the Committee and the Board described in detail above under " Special Factors—Reasons for the Merger; Recommendation of the Board; Fairness of the Merger ."

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Purpose and Reasons of the Privet Filing Parties for the Merger

        Under the SEC rules governing "going private" transactions, each of the Privet Filing Parties is an affiliate of the Company engaged in the "going private" transaction and, therefore, each is required to express its purposes and reasons for the Merger to the Company's "unaffiliated security holders," as defined under Rule 13e-3 of the Exchange Act. The Privet Filing Parties are making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The Privet Filing Parties have undertaken to pursue the transaction at this time in light of the opportunities they perceive to enhance the Company's financial performance and competitive position as described below.

        For Acquisition Sub, the purpose of the Merger is to effectuate the transactions contemplated by the Merger Agreement. For the other Privet Filing Parties, the purpose of the Merger is to allow them to acquire control of the Company and bear the rewards and risks of ownership of the Company after its Shares cease to be publicly traded.

        The Privet Filing Parties did not consider any alternatives for achieving these purposes. The transaction has been structured as a cash merger to provide the Company's unaffiliated shareholders with cash for their Shares and to provide a prompt and orderly transfer of ownership of the Company in a single step, without the necessity of financing separate purchases of Shares in a tender offer and implementing a second-step merger to acquire any Shares not tendered into any such tender offer, and without incurring any additional transaction costs associated with such activities.

Plans for the Company After the Merger

        Following the consummation of the Merger, Parent anticipates that the Company will continue to conduct its operations and business substantially as they are currently conducted, except that the Company will be a wholly owned subsidiary of Parent and will cease to be a public company. Pursuant to the Merger Agreement, the Shares will be delisted from NASDAQ and will cease to be registered under the Exchange Act (via termination of registration pursuant to Section 12(g) of the Exchange Act). At the effective time of the Merger, the directors of Acquisition Sub immediately prior to the effective time will become the directors of the Company, and the officers of the Company immediately prior to the effective time will remain the officers of the Company, in each case until their successor is elected or appointed and qualified or until the earlier of his or her death, resignation or removal, as the case may be.

        As of the date of this proxy statement, other than the Merger, the Privet Filing Parties have no current plans or proposals or negotiations that would relate to or result in an extraordinary transaction involving the Company's business or management, such as a merger, reorganization, liquidation, relocation of any operations, sale or transfer of a material amount of assets, or the incurrence of any indebtedness (except in connection with consummation of the Merger). Following the Merger, the Privet Filing Parties will continuously evaluate and review the Company's business and operations and may propose or develop new plans or proposals that they consider to be in the best interests of the Privet Filing Parties and their equity holders, including any of the types of extraordinary transactions described above.

Certain Effects of the Merger

        If the Merger Agreement is adopted by the requisite vote of the Company's shareholders and all other conditions to the closing of the Merger are either satisfied or waived, Acquisition Sub will merge with and into the Company, with the Company surviving the Merger.

Treatment of the Shares

        At the effective time of the Merger, each Share outstanding immediately prior to the effective time of the Merger (other than Shares held directly or indirectly by Parent or Acquisition Sub) will be converted into the right to receive the Merger Consideration, less applicable withholding taxes, upon

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the terms and subject to the conditions set forth in the Merger Agreement, whereupon all such Shares will be automatically cancelled, will cease to be outstanding and will cease to exist, and the holders of such Shares will cease to have any rights with respect thereto, other than the right to receive the Merger Consideration, Shares held by Parent or Acquisition Sub at the effective time of the Merger will remain outstanding after the effective time of the Merger and, as a result, will not be converted into the right to receive the Merger Consideration.

Treatment of Equity Awards

        At the effective time of the Merger, (a) all vested and unvested options to acquire shares of Company common stock will be cancelled and the holders will be entitled to receive the excess (if any) of the Merger Consideration over the exercise price per share for each share of Company common stock underlying such options, less applicable withholding taxes, and (b) all vested and unvested restricted stock units, performance stock units, restricted stock awards and director deferred stock units relating to shares of Company common stock will be cancelled and the holders will be entitled to receive the Merger Consideration in respect of each share of Company common stock subject to the award, less applicable withholding taxes. Any performance vesting conditions applicable to stock options and stock units of the Company will be deemed satisfied at closing at the greater of the target level and actual performance. Any Company options with an exercise price per Share greater than or equal to the Merger Consideration will be cancelled for no consideration.

Benefits of the Merger for the Company's Unaffiliated Shareholders

        The primary benefit of the Merger to the unaffiliated shareholders will be their right to receive the Merger Consideration of $18.50 per Share, less applicable withholding taxes, as described above, which represents a premium of (a) 26.7% over the volume weighted average price of the Shares for the three-month period ending on November 1, 2017, the last trading day prior to public announcement by Privet that it was evaluating a potential transaction to acquire the Company, (b) 12.1% over the closing price of the Shares on November 1, 2017, and (c) 8.3% over the closing price of the Shares on February 12, 2018, the last trading day prior to the announcement of the Merger. Additionally, such shareholders will avoid the risk after the Merger of any possible decrease in our future earnings, growth or value.

Detriments of the Merger to the Company's Unaffiliated Shareholders

        The primary detriments of the Merger to our unaffiliated shareholders include the lack of an interest of such shareholders in the potential future earnings, growth or value realized by the Company after the Merger.

Certain Effects of the Merger for Parent

        Following the Merger, it is contemplated that all of the equity interests in the Company will be owned by Parent. If the Merger is completed, Parent, and Privet by virtue of its control of Parent, will be the sole beneficiaries of our future earnings, growth and value, if any, and they will be the only ones entitled to vote on corporate matters affecting the Company.

        Additionally, following the Merger, the Company will be a private company, wholly owned by Parent and any additional investors permitted by Parent, and, as such, will be relieved of the requirements applicable to companies having publicly traded equity securities, including the pressure to meet analyst forecasts and the requirements and restrictions on trading that our directors, officers and beneficial owners of more than 10% of the Shares face as a result of the provisions of Section 16 of the Exchange Act. In addition, registration of the Shares under the Exchange Act will be terminated, which will reduce the information required to be furnished by the Company to our shareholders and the SEC. Parent, and Privet by virtue of its control of Parent, will benefit from any regulatory compliance cost savings realized by the Company after it becomes a private company.

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        As of December 31, 2017, the Company recorded deferred tax assets of (a) $26.2 million in respect of accrued federal net operating loss carryforwards, and (b) $22.4 million in respect of accrued state net operating loss carryforwards, that the Company expected (on a more-likely-than-not basis) to be able to utilize to offset future tax liabilities prior to the expiration of such net operating loss carryforwards. After the completion of the Merger, the Company again will evaluate the facts and circumstances to determine the extent (if any) to which such asset may be utilizable. Because utilization of the net operating losses after the Merger will depend on the income and other deductions of the Company after the Merger, which cannot be determined in advance, no assurance can be given as to when, or the extent to which (if at all), such utilization will occur after the Merger. As a result of Parent's ownership interests in the Company following the completion of the Merger, Parent, and Privet by virtue of its control of Parent, will become the beneficiary of any such utilization.

        The primary detriments of the Merger to Parent include the fact that all of the risk of any possible decrease in the earnings, growth or value of the Company following the Merger will be borne by Parent and any additional permitted investors. Additionally, the equity investment of Parent and any additional investors permitted by them in the Company will be illiquid, with no public trading market for such securities.

        The directors of Acquisition Sub immediately prior to the effective time of the Merger will be the directors of the surviving corporation, in each case, until their successor is elected or appointed and qualified or until the earlier of his or her death, resignation or removal, as the case may be. The officers of the Company immediately prior to the effective time of the Merger will be the officers of the surviving corporation, in each case, until their successor is elected or appointed and qualified or until the earlier of his or her death, resignation or removal, as the case may be. The certificate of incorporation and bylaws of Acquisition Sub immediately prior to the effective time of the Merger will be certificate of incorporation and bylaws of the surviving corporation.

        The Sponsor Entities beneficially own approximately 10.6% of the issued and outstanding Shares. Following consummation of the Merger, Parent, which is beneficially owned by the Sponsor Entities, will own 100% of the Shares and will have a corresponding interest in our net book value and net earnings or losses. Each shareholder of the Sponsor Entities and Privet Capital Investments II, LP will have an indirect interest in our net book value and net earnings or losses in proportion to such shareholder's ownership interest in the Sponsor Entities. Our net income for the fiscal year ended December 31, 2017 was approximately $5,846,000 and our net book value per Share as of December 31, 2017 was approximately $13.80. Net book value per Share as of December 31, 2017 was computed by dividing total equity of $178,925,832 by the total Shares outstanding on that date of 12,963,164. The table below sets forth the direct and indirect interests in the Company's net book value per Share and net earnings of the Sponsor Entities, the Privet Filing Parties and Mr. Levenson before the Merger and the Sponsor Entities, the Privet Filing Parties and Mr. Levenson immediately after the Merger, assuming the Merger is financed with $85 million in new equity financing from affiliates of Parent.

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Certain Effects on the Company if the Merger Is Not Completed

        If the Merger Agreement is not adopted by the Company's shareholders or if the Merger is not completed for any other reason, Hardinge's shareholders will not receive any payment for their Shares in connection with the Merger. Instead, Hardinge will remain an independent public company, and the Shares will continue to be quoted on NASDAQ, for so long as it continues to meet eligibility listing standards. In addition, if the Merger is not completed, the Company expects that management will operate Hardinge's business in a manner similar to that in which it is being operated today and that Hardinge's shareholders will continue to be subject to the same risks and opportunities to which they are currently subject, including, without limitation, risks related to the machine tools industry in which Hardinge operates and adverse economic conditions.

         Failure to complete the Merger could negatively impact our business and the market price of the Shares.

        Furthermore, if the Merger is not completed, and depending on the circumstances that would have caused the Merger not to be completed, the price of the Shares may decline significantly. If that were to occur, it is uncertain when, if ever, the price of the Shares would return to the price at which the Shares trade as of the date of this proxy statement. Accordingly, if the Merger is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of your Shares. If the Merger is not completed, the Board will continue to evaluate and review the Company's business operations, properties, dividend policy, share repurchase policy and capitalization, among other things, make such changes as are deemed appropriate and continue to seek to identify strategic alternatives to enhance shareholder value. If the Merger Agreement is not adopted by the Company's shareholders or if the Merger is not completed for any other reason, there can be no assurance that any other transaction acceptable to Hardinge will be offered or that Hardinge's business, prospects or results of operation will not be adversely impacted.

        If the Merger is not completed for any reason, we will be subject to a number of material risks, including the disruption to our business resulting from the announcement of the signing of the Merger Agreement, the diversion of management's attention from our day-to-day business, and the substantial restrictions imposed by the Merger Agreement on the operation of our business during the period before the completion of the Merger, which may make it difficult for us to achieve our business goals if the Merger does not occur.

Failure to complete the Merger could trigger the payment of a termination fee and/or the obligation to reimburse expenses.

        If the Merger Agreement is terminated, under specified conditions, Hardinge would be required to pay Parent a termination fee in an amount equal to $8,535,000, and reimburse expenses of Parent and its affiliates up to $3,658,000. If the Merger Agreement is terminated in connection with a Superior Proposal with an excluded party in certain circumstances, the Company would be required to pay Parent a termination fee of $3,658,000, and reimburse expenses of Parent and its affiliates up to $3,658,000. If the Merger Agreement is terminated because the Company's shareholders do not approve the Merger Agreement at the Special Meeting, the Company will be required to reimburse expenses of Parent and its affiliates up to $2,438,000.

        Upon termination of the Merger Agreement by the Company or Parent under specified conditions, Parent will be required to pay the Company a termination fee of $14,631,000, and reimburse expenses of the Company and its subsidiaries up to $3,658,000. See " The Merger Agreement—Termination—Termination Fees ."

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