Amendment No. 1 to
Credit Agreement
THIS AMENDMENT NO. 1 is dated as of August 1, 1997 and is to
the Credit Agreement dated as of November 18, 1996 between HARDINGE INC. (the
"Borrower") and MARINE MIDLAND BANK (the "Bank"). Capitalized terms used but not
defined in this Amendment shall have the meanings given to them in the Credit
Agreement.
The Credit Agreement shall be amended as follows:
1. Section 1.01 of the Credit Agreement shall be amended by
adding the following definitions:
"Change in Control" means (a) except as to (i) officers and
directors in office as of August 1, 1997, (ii) the Hardinge Inc.
Pension Plan, Hardinge Inc. Savings Plan, or other compensation plan of
Borrower, and (iii) Chemung Canal Trust Company, the acquisition of
ownership, directly or indirectly, beneficially or of record, by any
Person or group (within the meaning of the Securities Exchange Act of
1934 and Rule 13d-5 of the Securities and Exchange Commission as in
effect on the date hereof) of shares representing more than twenty-five
(25%) of the aggregate ordinary voting power represented by the issued
and outstanding capital stock of the Borrower, or (b) occupation of a
majority of the seats (other than vacant seats) on the board of
directors of the Borrower by Persons who were neither (i) nominated by
the board of directors of the Borrower nor (ii) appointed by the
directors so nominated.
"EBITDA" means Consolidated Net Income prior to the deduction
of interest expense, prior to the deduction for federal, state or
foreign corporate income and corporate franchise taxes and prior to the
deduction for depreciation and amortization.
2. Section 1.01 of the Credit Agreement shall be amended
by deleting the definition of Earnings Before Interest and Taxes.
3. The definition of "Margin" as set forth in Section 1.01 of
the Agreement shall be amended in its entirety to read as follows:
"Margin" means for each Variable Rate Loan and Eurodollar Loan
the lowest applicable margin on the table next following, computed
based upon Borrower's financial statements for the immediately
preceding four fiscal quarters for income statement items and the most
recent fiscal quarter for balance sheet items, calculated as of August
1, 1997 and recalculated on the first day of each Interest Period
thereafter.
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Ratio of Funded Debt to Variable Rate Loans Eurodollar Loans
EBITDA
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Less than or equal to 1.0 0 Basis Points 37.5 Basis Points
================================================================================
Greater than 1.0 and less than 0 Basis Points 50 Basis Points
or equal to 2.0
================================================================================
Greater than 2.0 0 Basis Points 75 Basis Points
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4. Section 2.11 shall be amended in its entirety to read as
follows:
Section 2.11 Fees. The Borrower shall pay the Bank a
commitment fee on the daily average unused Commitment of the Bank for
the period from and including August 1, 1997 to the earlier of the date
the Commitment is terminated or the Revolving Credit Termination date
at a rate per annum which shall vary based on the ratio of Funded Debt
to EBITDA, computed as of each Quarterly Date, as follows:
================================================================================
Ratio of Funded Debt to Fee
EBITDA
================================================================================
Less than or equal to 1.0 15 Basis Points
================================================================================
Greater than 1.0 and less than 20 Basis Points
or equal to 2.0
================================================================================
Greater than 2.0 25 Basis Points
================================================================================
The accrued commitment fee shall be due and payable in arrears upon any
reduction or termination of the Commitments and on each Quarterly Date
commencing on the first such date after the Closing Date.
5. Section 7.01 of the Agreement shall be amended by adding
paragraph (h) as follows:
(h) Liens not exceeding $5,000,000.00 in the aggregate against
personal property other than inventory and receivables.
6. The last paragraph of Section 7.05 of the Agreement shall
be amended in its entirety to read as follows:
Notwithstanding the foregoing, the total amount of Aggregate
Consideration paid by the Borrower for Acquisitions (net of amounts
paid for with the Borrower's stock) permitted under this section from
and after the Effective Date shall not be greater than $15,000,000.00
in any consecutive twenty-four (24) month period without the prior
written consent of the Bank.
7. Section 7.08 of the Agreement shall be amended in its
entirety to read as follows:
Section 7.08 Guaranties. Become or permit any Subsidiary to
become liable for or permit any of its property to become subject to
any guaranty except guaranties given in connection with the sale,
pledge or discounting of customer notes, provided that immediately
after giving effect thereto the Borrower's aggregate liability under
such guaranties (exclusive of guaranties to the Hardinge Inc. Pension
Plan) does not exceed $11,000,000.00. Each guaranty permitted by this
Section 7.08 must comply with the requirements of Section 8.01 (if and
to the extent it is included among Consolidated Current Liabilities)
and with the requirements of Section 8.03 (if and to the extent it is
included in Funded Debt).
8. Section 8.01 of the Agreement shall be amended in its
entirety to read as follows:
Section 8.01 Working Capital. The Borrower shall maintain at
all times an excess of Consolidated Current Assets over Consolidated
Current Liabilities of not less than $85,000,000.00.
9. The minimum Consolidated Tangible Net Worth required under
Section 8.02 of the Agreement shall be amended for the fiscal year ending
December 31, 1997 and thereafter as set forth below opposite such fiscal year:
Fiscal Year Ending
December 31 Amount
1997 135,000,000
1998 138,000,000
1999 141,000,000
2000 144,000,000
2001 147,000,000
2002 150,000,000
10. Section 8.03 of the Agreement shall be deleted and
replaced with the following:
Section 8.03 Funded Debt. Borrower shall maintain a ratio of
Funded Debt to EBITDA of not greater than 2.5 to 1, measured as of the
last day of each fiscal quarter for the immediately preceding twelve
(12) months.
11. Section 8.04 of the Agreement shall be deleted and
replaced with the following:
Section 8.04 Interest Coverage. Borrower shall maintain a
ratio of EBITDA to interest expense of not less than 3.0 to 1, measured
as of the last day of each fiscal quarter for the immediately preceding
twelve (12) months.
12. Section 8.05 of the Agreement shall be deleted in its
entirety.
13. Section 9.01 shall be amended by adding subparagraph (i)
as follows:
(i) A Change in Control shall occur.
Other than as set forth in this Amendment the terms and
conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the day and year first above written.
HARDINGE INC.
By: /s/ Robert E. Agan
Robert E. Agan, Chairman of the Board
and Chief Executive Officer
MARINE MIDLAND BANK
By: /s/ David L. Brooks
David L. Brooks, Vice President