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EXHIBIT 10.2
THIRD AMENDMENT TO TERM LOAN AGREEMENT
THIS THIRD AMENDMENT (the "Amendment"), dated as of April 5, 2002, is
made to that certain Term Loan Agreement, dated as of March 20, 2001, as the
same was amended by (i) that certain First Amendment to Term Loan Agreement,
dated as of October 1, 2001, and (ii) that certain Second Amendment to Term Loan
Agreement, dated as of March 20, 2002 (all of the foregoing being collectively
referred to herein as, the "Original Loan Agreement"), by and between HARDINGE
INC., a New York corporation (the "Borrower'), and KEYBANK NATIONAL ASSOCIATION,
a national banking association, (the "Lender").
RECITALS:
WHEREAS, the Lender has advised the Borrower that the Borrower may
become in violation of certain of the terms, covenants and conditions of the
Original Loan Agreement; and
WHEREAS, the Borrower has requested that the Lender modify the Original
Loan Agreement in order to avoid any such violations and the Lender is agreeable
to doing the same provided that (i) the "Loan" (as such term is defined in the
Original Loan Agreement) is restructured on terms and conditions satisfactory to
the Lender, (ii) the Borrower grant to the Lender a prior perfected security
interest in and to certain property of the Borrower, and (iii) certain changes
and modifications be made to the Original Loan Agreement, including, but not
limited to, a reduction in the principal amount of the Loan and certain
modifications to certain definitions and covenants therein contained, all as
more fully set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, the receipt and sufficiency of which are hereby
mutually acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. DEFINITIONS. All capitalized terms used and not otherwise defined in
this Amendment shall have the meanings ascribed to such terms in the Original
Loan Agreement. The Original Loan Agreement and the Amendment are sometimes
collectively referred to herein as the "Loan Agreement".
2. CERTAIN DEFINITIONS.
(a) SECTION 1.01 of the Original Loan Agreement is amended in
part by either amending and restating certain definitions or adding
certain definitions, as follows:
"Banks" shall mean the banks signatory to the Line of Credit and the
1996 Agreement from time to time.
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"Collateral" means all property which is, or may in the future be,
subject to the lien granted to the Lender by the Security Documents.
"Consolidated Current Assets" means all assets of the Borrower and its
Consolidated Subsidiaries, treated as current assets in accordance with
GAAP.
"Consolidated Current Liabilities" means all liabilities of the
Borrower and its Consolidated Subsidiaries, treated as current
liabilities in accordance with GAAP, including without limitation (a)
all obligations payable on demand or within one (1) year after the date
in which the determination is made, and (b) installment and sinking
fund payments required to be made within one (1) year after the date on
which determination is made, but excluding any such indebtedness
renewable or extendable at the option of the obligor under, or payable
from the proceeds of other indebtedness which may be incurred pursuant
to the provisions of any revolving credit agreements or other similar
agreement.
"Consolidated Subsidiary" means any Subsidiary whose accounts are or
are required to be consolidated with the accounts of the Borrower in
accordance with GAAP.
"Consolidated Tangible Net Worth" means Tangible Net Worth of the
Borrower and its Consolidated Subsidiaries, as determined on a
consolidated basis in accordance with GAAP.
"Fixed LIBOR Rate" shall mean with respect to each day during each
Interest Period pertaining to the Loan, a rate per annum (based on a
year of 360 days and actual days elapsed) determined for the first day
of each such Interest Period in accordance with the following formula
rounded upward to the nearest 1/16 of 1% plus three hundred (300) Basis
Points:
LIBOR Base Rate
----------------------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Floating Rate" shall mean a rate per annum (computed on the basis of a
year of 360 days and actual days elapsed) for each day equal to the
Prime Rate for such day as computed prior to 12:00 noon eastern time
plus fifty (50) Basis Points, such interest rate to change
automatically from time to time effective as of the effective date of
each change in the Prime Rate.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement, dated as of April 5, 2002, by and among JP Morgan, as Agent,
the Lender and the Borrower, as the same may hereafter be amended,
modified, restated or supplemented from time to time hereafter, wherein
the parties thereto agree among other things that, notwithstanding the
date, time, manner or order of perfection of any security interests,
attachments, judgments
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and/or liens granted to and/or obtained by the Lender or JPMorgan, as
Agent (or any of the Banks) in and to any of the Collateral, the Lender
and JPMorgan (and the Banks) agree that, as between themselves, their
respective claims to and interests in the Collateral shall be
equivalent and of equal priority, and that any proceeds derived from
the Collateral and/or from any attachments, judgments dispositions
and/or liens in Collateral shall be shared pari passu, with neither the
Lender, JPMorgan nor any of the Banks having any priority over the
other.
"JPMorgan" shall mean JPMorgan Chase Bank f/k/a The Chase Manhattan
Bank, successor by merger to The Chase Manhattan Bank (National
Association), and any successor thereto or assignee thereof.
"Line of Credit" shall mean that certain Credit Agreement, dated as of
August 1, 1997, by and among the Borrower, the Banks, and JPMorgan as
Agent, most recently amended by Amendment Number Four, dated as of
April 5, 2002.
"Line of Credit Commitment" shall mean the "Commitment" as such term is
defined in the Line of Credit.
"Loan Documents" shall mean the Loan Agreement, the Note, the Security
Documents, any Guarantees and the other agreements and instruments
extending, renewing, refinancing or refunding any indebtedness,
obligation or liability arising under any of the foregoing, in each
case as the same may be amended, modified, restated or supplemented
from time to time hereafter.
"1996 Agreement" shall mean the Credit Agreement among the Borrower,
the Banks and The Chase Manhattan Bank (National Association) as Agent
dated as of February 28, 1996 and most recently amended by Amendment
Number Five dated as of April 5, 2002.
"Note" shall mean the Term Loan Promissory Note of the Borrower to the
order of the Lender, dated March 20, 2001, in the principal amount of
$24,000,000.00, as the same is amended and restated by that certain
Amended and Restated Term Loan Promissory Note of the Borrower to the
order of the Lender, dated April 5, 2002, in the principal amount of
$23,000,000.00.
"Restructuring Fee" shall have the meaning set forth in Section 7 of
the Amendment.
"Security Agreement" shall mean that certain Security Agreement of the
Borrower, dated as of April 5, 2002 and executed and delivered pursuant
to the Amendment.
"Security Documents" shall mean, collectively, the Security Agreement,
any stock powers or other ancillary documents executed and delivered in
connection with the foregoing and any and all financing statements
filed in connection therewith, as each of the same may be amended,
continued, modified, restated or supplemented from time to time
hereafter.
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"Tangible Net Worth" shall mean the total shareholders' equity prior to
any cumulative foreign currency translation adjustments minus
intangible assets.
"Term Loan Maturity Date" shall mean the date specified in Section 2.01
(e) of the Loan Agreement as hereinafter set forth.
(b) SECTION 1.01 of the Original Loan Agreement is further
amended in part by deleting therefrom the following terms and
definitions: in their respective entireties: "Acquisition Agreement";
"Acquisition Date"; "Applicable Margin Ratio"; and "Arrangement Fee".
3. TERM LOAN.
(a) Subsection (a) of Section 2.01 of the Original Loan
Agreement is amended in its entirety as follows: "Subject to the terms
and conditions and relying upon the representations and warranties
herein set forth, the Lender agrees (such agreement being herein called
the Lender's "Term Loan Commitment") to make a loan (the "Term Loan")
to the Borrower on the date hereof in the aggregate principal amount of
$23,000,000.00."
(b) Subsection (c) of SECTION 2.01 of the Original Loan
Agreement is amended in its entirety as follows: "The Term Loan made by
the Lender shall be evidenced by the Note, in substantially the form
attached hereto as EXHIBIT A with the blanks appropriately completed,
payable to the order of the Lender in the principal amount equal to
$23,000,000.00."
(c) SECTION 2.01 of the Original Loan Agreement is amended by
adding thereto a new subsection (e) as follows:
"(e) TERM LOAN MATURITY DATE. The Term Loan Maturity
Date shall be March 1, 2008; provided, however, that
if the Borrower does not extend, renew or replace the
Line of Credit by no later than March 31, 2003 on
terms and conditions satisfactory and acceptable to
the Lender in its sole and absolute discretion then,
in such event, the Term Loan Maturity Date shall
automatically and without notice or further action on
the part of the Lender be August 1, 2003. Nothing
contained herein shall constitute or be deemed to
constitute a covenant, promise or agreement of any
kind or character, express or implied, on the part of
the Lender to consent or agree to any such extension,
renewal or replacement, or the terms and conditions
thereof.
4. INTEREST RATE. SECTION 2.02 of the Original Loan Agreement is
amended in its entirety as follows:
"FIXED LIBOR RATE. The unpaid principal amount of the Term
Loan shall bear interest for each day until due at the Fixed LIBOR Rate
for the Interest Period determined
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as of March 20, 2002 initially, and thereafter as of each subsequent
Regular Payment Date, commencing on June 20, 2002."
5. MANDATORY PREPAYMENT. SECTION 2.07 of the Original Loan Agreement is
amended in its entirety as follows:
"2.07 MANDATORY PREPAYMENTS.
(a) PREPAYMENTS FROM MORTGAGE PROCEEDS. In the event that
after the date of the Amendment the Borrower, any Subsidiary or
Affiliate incurs Indebtedness secured, in whole or in part, by any
mortgage, deed of trust, deed to secure debt, deed in lieu of a
mortgage or security interest, security interest, lien, assignment,
pledge, grant, transfer, conveyance (including, but not limited to,
land contract), hypothecation, encumbrance, restriction (including, but
not limited to, any negative pledge agreement) or equivalent, of any
kind, character or description, on any real property and/or any right,
title or interest therein owned or held by the Borrower or any
Subsidiary or Affiliate then, in any such event, the Borrower shall
simultaneously apply all of the proceeds of such financing or debt
placement, as the case may be (net of reasonable and customary
out-of-pocket costs and expenses) as follows: sixty-three and one-half
percent (63.5%) of such net proceeds shall be applied to the payment of
the outstanding principal under the Line of Credit and the
corresponding permanent reduction of the Line of Credit Commitment, and
thirty-six and one-half percent (36.5%) of such net proceeds shall be
applied to the prepayment of the outstanding principal balance of the
Loan. At such time, if any, as the outstanding principal under Line of
Credit has been paid in full and the Line of Credit Commitment has been
permanently reduced and eliminated in its entirety, the entire amount
of any such net proceeds shall be applied to the prepayment of the
outstanding principal balance of the Loan.
(b) PROVISIONS OF LOAN AGREEMENT APPLICABLE TO MANDATORY
PREPAYMENTS. Prepayments required by this SECTION 2.07 are subject to
all of the terms and conditions applicable to prepayments generally
pursuant to SECTION 2.05 and SECTION 2.10(B) hereof and to all of the
terms and conditions applicable to optional prepayments pursuant to
SECTION 2.06. If the Borrower is required to give notice of a
prepayment but for any reason fails to give a notice in accordance with
the provisions of this Agreement, the amount as to which the Borrower
is required to have given notice of prepayment shall nevertheless be
deemed due and payable as of the date on which it was required to have
been prepaid (for purposes of calculating interest on such amounts
pursuant to SECTION 2.09(C) hereof and otherwise)."
6. REPRESENTATIONS AND WARRANTIES. The Borrower hereby restates,
ratifies and confirms with respect to this Amendment, as of the date hereof,
each of the representations and warranties set forth in Article III of the
Original Loan Agreement as if each of the same was set forth fully herein.
7. CONDITIONS TO ENTERING INTO AMENDMENT. The obligation of the Lender
to enter into this Amendment and to restructure the Loan as of the date hereof
in accordance with the terms and conditions hereof is subject to the
satisfaction of the following conditions:
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(a) AGREEMENT; NOTE. The Lender shall have received an
executed counterpart of this Amendment, duly executed by the Borrower,
and an executed original Term Loan Note conforming to the requirements
hereof, duly executed by the Borrower.
(b) CORPORATE PROCEEDINGS. The Lender shall have received a
certificate by the Secretary of the Borrower, dated as of or prior to
the date hereof as to (i) true copies of the certificate of
incorporation and by-laws (or other constituent documents) of the
Borrower in effect on such date (which, in the case of the certificate
of incorporation or other constituent documents filed or required to be
filed with the Secretary of State or other Governmental Authority in
its jurisdiction of incorporation, shall be certified to be true,
correct and complete by such Secretary of the Borrower as of the date
hereof), (ii) true copies of all corporate (and, when necessary,
shareholder) action taken by the Borrower relative to this Amendment
and the other Loan Documents to which its is a party, and (iii) the
incumbency and signature of the respective officers of the Borrower
executing this Amendment and the other Loan Documents to which it is a
party, together with satisfactory evidence of the incumbency of each
such officer. The Lender shall have received certificates from the
appropriate Secretaries of State or other applicable Governmental
Authorities dated not more than thirty (30) days before the date hereof
showing the good standing of the Borrower in its state of organization.
(c) INSURANCE. The Lender shall have received a certificate
setting forth all casualty and liability policies of insurance in force
with respect to the Borrower, issued by an insurance agent reasonably
acceptable to the Lender, and from an insurance carrier rated "A-" or
better by A.M. Best & Company or a comparable rating agency, and
reasonably satisfactory in form, amounts, covered risks and substance
to the Lender.
(d) LEGAL OPINION OF COUNSEL TO BORROWER. The Lender shall
have received an opinion addressed to the Lender, dated the date
hereof, of Sayles & Evans, Elmira, New York, counsel to the Borrower,
as to such matters as may be requested by the Lender and in form and
substance reasonably satisfactory to the Lender.
(e) FEES, EXPENSES, ETC. All fees and other compensation to be
paid to the Lender pursuant hereto or pursuant to any other written
agreement on or prior to the date hereof shall have been paid or
received, and all invoiced expenses incurred by the Lender pursuant
hereto shall have been paid, including, but not limited to, the
Lender's Restructuring Fee in the amount of $48,000.
(f) REPRESENTATIONS AND WARRANTIES. Except with respect to the
representations and warranties expressly deemed made as of an earlier
date, each of the representations and warranties made by the Borrower
in this Amendment and in ARTICLE III of the Original Loan Agreement
shall be true and correct in all material respects on and as of such
date as if made on and as of such date, both before and after giving
effect to the Loan and the Lender shall have received a certificate by
a Responsible Officer of the Borrower, dated as of or prior to the date
hereof to such effect.
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(g) NO DEFAULTS. No Event of Default or Potential Default
shall have occurred and be continuing on such date or after giving
effect to the Loan.
(h) NO VIOLATIONS OF LAW, ETC. The restructuring of the Loan
as herein contemplated and the entering into of this Amendment shall
not cause the Borrower to violate or conflict with any Law in any
material respect.
(i) NO MATERIAL ADVERSE CHANGE. There shall not have occurred
a material adverse change in the business, operations, assets or
condition (financial or otherwise) of the Borrower or any of its
Subsidiaries since March 31, 2002. There shall not have occurred any
other event, act or condition that is likely to have a Material Adverse
Effect.
(j) LINE OF CREDIT AMENDMENTS. The Borrower shall have entered
into and closed the Fourth Amendment to, and constituting a portion of,
the Line of Credit on terms, covenants and conditions satisfactory to
the Lender in its sole and absolute discretion (including, but not
limited to, the terms, covenants and conditions of any and all
instruments, documents, agreements, certifications, affidavits and
opinions evidencing, securing, guaranteeing or otherwise delivered in
connection with such amendment). In addition to the foregoing, the
Borrower shall deliver or cause to have delivered to the Lender for its
review and approval complete and accurate copies of all drafts of such
amendment documents as well as copies of each of the final documents
delivered and fully executed by the parties thereto.
(k) INTERCREDITOR AGREEMENT. The Lender and JPMorgan shall
have executed and delivered the Intercreditor Agreement containing such
terms, covenants and conditions satisfactory to the Lender in its sole
and absolute discretion.
(l) PREPAYMENT OF LOAN. Effective March 20, 2002, the Borrower
shall have prepaid One Million and No/100 Dollars ($1,000,000.00) of
the principal amount of the "Loan", as such term was defined in the
Original Loan Agreement, such prepayment to be made from the proceeds
of an unsecured term loan by Chemung Canal Trust Company to the
Borrower in such principal amount (which loan shall provide for the
payment of interest only until September 30, 2003, at which time the
entire unpaid principal amount thereof, together with all accrued
unpaid interest thereon and all other sums due thereunder, shall be
paid in full).
(m) ADDITIONAL MATTERS. The Lender shall have received such
other certificates, opinions, documents and instruments as may
reasonably be requested by the Lender. All corporate and other
proceedings, and all other documents, instruments and other matters in
connection with the transactions contemplated by this Amendment and the
other Loan Documents shall be satisfactory in form and substance to the
Lender in its commercially reasonable judgment.
Borrower's execution and delivery of this Amendment shall constitute a
representation and warranty by the Borrower that the conditions set
forth in this SECTION 7 have been satisfied in all material respects as
of the date hereof.
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8. CERTAIN AFFIRMATIVE COVENANTS.
(a) SECTION 5.02 of the Original Loan Agreement is amended by
adding the following after the last sentence thereof: "Such insurance
shall include, but not be limited to, insurance against the risks of
product liability, personal injury, property damage, and workers'
compensation. Without limiting the generality of the foregoing, the
insurance required to be maintained by the Borrower and its domestic
Subsidiaries on their respective properties shall be in an amount equal
to the full replacement cost thereof, except to the extent, if any,
limited by applicable insurance law. Such insurance shall include
coverage against risks of fire and all other risks as fall within
"extended coverage" as that term is generally understood in the
insurance industry. Such insurance shall name the Lender as an
additional insured (excluding property insurance, where such insurance
shall name Lender as loss payee).
(b) The Original Loan Agreement is amended by adding thereto
the following sections under Article IV thereof ("Affirmative
Covenants"):
"5.11 MAINTENANCE OF PROPERTIES AND SECURITY INTEREST IN
COLLATERAL.
The Borrower shall keep all property used, useful or necessary
in its business (including, but not limited to, the Collateral) in good
working order, condition and repair and shall execute such
documentation and take such steps as the Lender may, in its sole
discretion, deem reasonable or necessary from time to time to protect
its security interests, in whole or in part, in and to any of the
Collateral. Without limiting the generality of the foregoing, the
Borrower hereby grants the Lender as agent the right to file in any
filing office in any Uniform Commercial Code jurisdiction any initial
financing statements, continuation statements and amendments thereto
that indicate any of the Collateral.
5.12 LANDLORD WAIVERS.
The Borrower will furnish the Lender within thirty (30) days
following the date of the Amendment fully completed and executed
landlord waivers and consents, substantially in the form set forth in
EXHIBIT B hereto, from all landlords at locations leased by the
Borrower and all domestic Subsidiaries as set forth on SCHEDULE 1
hereto. Borrower represents and warrants to Lender that all locations
set forth on SCHEDULE 1 are the only actively operating leased
locations of Borrower and all such domestic Subsidiaries. In the event
the Borrower or any Subsidiary enters into any leases after the date of
the Amendment, the Borrower shall deliver to the Lender, simultaneously
with the execution and delivery of any such lease, waivers and consents
from each landlord, substantially in the form set forth in EXHIBIT B
hereto.
5.13 L. KELLENBERGER & CO. AG AUTHORIZATION.
Within thirty (30) days after the date hereof, Borrower shall
furnish to Lender evidence reasonably satisfactory to Lender that L.
Kellenberger & Co. AG
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("Kellenberger") was duly authorized to execute and deliver the
Security Agreement and impose the lien thereunder on all Patents
identified therein and held by Kellenberger, and that such agreement
constitutes the legal, valid and binding obligation of Kellenberger, or
in lieu thereof, an opinion letter of Swiss Counsel, in form and
substance reasonably satisfactory to the Lender, confirming (i) the due
formation, organization and good standing of Kellenberger under the
laws of Switzerland, and (ii) that the execution and deliver of the
Security Agreement and the imposition of the lien thereunder on the
Patents held by Kellenberger were duly authorized by all necessary
corporate action, required no consent of any third party, do not
violate the provisions of any law or any agreements to which
Kellenberger is subject and constitute the legal valued and binding
obligation of Kellenberger.
5.14 ADDITIONAL GUARANTORS. If at any time during the term
hereof, Borrower shall create or acquire a domestic subsidiary, or if
any domestic subsidiary of Borrower existing as of the date hereof
shall acquire, have assigned to it or otherwise possess any assets,
then, in any such event, Borrower shall, within ten (10) days
thereafter and without demand therefor, cause each such subsidiary to
execute and deliver to Lender a guaranty of payment, in form and
substance reasonably satisfactory to Lender, together with a security
agreement in form and substance similar to the Security Agreement.
9. CERTAIN NEGATIVE COVENANTS.
(a) SECTION 6.01 of the Original Loan Agreement is amended in
its entirety to read as follows:
"6.01 FINANCIAL COVENANTS.
During the term hereof, the Borrower on a consolidated basis
shall not:
(a) Permit the ratio of Funded Debt to EBITDA measured as of
the last day of each fiscal quarter for the immediately
preceding twelve (12) months to be greater than (A) 3.75
to 1.0 for the fiscal quarter ending March 31, 2002, (B)
4.0 to 1.0 for the fiscal quarters ending June 30, 2002
and September 30, 2002, and (C) 4.2 to 1.0 for the fiscal
quarter ending December 31, 2002, (D) 4.0 to 1.0 for the
fiscal quarter ending March 31,2003; (E) 3.75 to 1.0 for
the fiscal quarter ending June 30, 2003 and (F) 2.5 to 1.0
thereafter.
(b) Permit the ratio of EBITDA to Interest, measured as of the
last day of each fiscal quarter for the immediately
preceding twelve (12) months, to be less than (A) 4.0 to
1.0 for the fiscal quarter ending March 31, 2002, (B) 3.0
to 1.0 for the fiscal quarter ending June 30, 2002, (C)
2.5 to 1.0 for the fiscal quarter ending September 30,
2002, (D) 3.0 to 1.0 for the fiscal quarters ending
December 31, 2002 and March 31, 2003 and (E) 3.25 to 1.0
for the fiscal quarter ending June 30, 2003.
(c) Permit the working capital of the Borrower (i.e. the
excess of Consolidated Current Assets over Consolidated
Current Liabilities) to be less than $85,000,000.00 at any
time through August 31, 2003 (in calculating working
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capital for the purposes of this covenant, the Lender
shall include in its calculation of Consolidated Current
Liabilities as of the following dates the following
amounts of principal indebtedness due and payable by the
Borrower in accordance with the terms and conditions of
the Note: from March 31, 2002 to and including June 29,
2002- $1,200,000; from June 30, 2002 to and including
September 29, 2002- $2, 400,000; from September 30, 2002
to and including December 30, 2002- $3,600,000 and from
December 31, 2002 and at all times thereafter $4,800,000.
No other principal portion of the Loan shall be included
in the Lender's calculation of Consolidated Current
Liabilities except to the extent, if any, that such other
principal portion, or any part thereof, may be classified
for accounting purposes as a current liability by virtue
of an event of default under the Loan).
(d) Permit the Consolidated Tangible Net Worth of the Borrower
to be less than $130,000,000 at any time through December
31, 2002 and less than $132,000,000 at any time through
August 31, 2003.
(e) Permit the Fixed Charge Coverage Ratio of the Borrower to
be less than 1.50 to 1.00 as of the fiscal quarter ending
September 30, 2003 and as at the end of each fiscal
quarter of the Borrower thereafter, measured quarterly as
of the period of the four (4) then most recently completed
quarters of the Borrower."
(b) SECTION 6.02 of the Original Loan Agreement is amended by
deleting from the first paragraph thereof the word "Debt" and inserting
in its place the word "Indebtedness". SECTION 6.02(D) of the Original
Loan Agreement is amended by deleting therefrom the following clause:
"Except as provided in (h) below,".
(c) SECTION 6.02(H) of the Original Loan Agreement is amended
in its entirety to read as follows: "Liens now or hereafter granted to
JPMorgan, as Agent, to securer the Line of Credit, the 1996 Agreement,
and any derivative and/or foreign currency exchange exposure or
liability of JPMorgan, provided, however, that in each and every
instance the Intercreditor Agreement (or any amendments or supplements
thereto or agreements in addition thereto, as the case may be),
containing such terms and conditions as the Lender shall require in its
sole and absolute discretion, has been executed and delivered by and to
the Lender;".
(d) SECTION 6.02 of the Original Loan Agreement is amended by
adding thereto the following additional subsections:
"(i) Liens granted to or in favor of the Lender; and
(j) Liens created in favor of any Person by or pursuant
to any mortgage, deed of trust, deed to secure
debt, deed in lieu of a mortgage or security
interest, security interest, lien, assignment,
pledge, grant, transfer, conveyance (including, but
not limited to, land contract), hypothecation,
encumbrance, restriction (including,
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but not limited to, any negative pledge agreement)
or equivalent, of any kind, character or
description, on any real property and/or any right,
title or interest therein owned or held by the
Borrower or any Subsidiary or Affiliate provided,
however, that the Borrower complies fully with the
requirements of SECTION 2.07(A) of the Loan
Agreement."
(e) SECTION 6.08 of the Original Loan Agreement is amended in
its entirety to read as follows:
Section 6.08 CONSOLIDATIONS, MERGERS, ACQUISITIONS AND SALES
OF ASSETS.
Consolidate or merge with or into, or sell, lease or otherwise
dispose of any of its assets to, any Person or acquire all or
any substantial portion of the properties, assets or shares of
stock of any other organization or permit any Subsidiary to do
any of the above except that:
a) any Subsidiary may consolidate or merge with the
Borrower or any wholly-owned subsidiary of the
Borrower;
b) the Borrower or any Subsidiary may sell, lease or
otherwise dispose of any of its inventory in the
ordinary course of business and any of its assets which
are obsolete, excess or unserviceable;
c) the Borrower or any Subsidiary may sell, pledge or
discount customer notes in accordance with the terms of
the Pledge Agreement (Customer Notes) (as defined
below);
d) the Borrower or any Subsidiary may sell, lease or
otherwise dispose of any of its assets (other than as
permitted by clauses (a)-(c) inclusive), provided that
the aggregate net value of all assets of the Borrower
and its Subsidiary sold, leased, or otherwise disposed
of during any fiscal year of the Borrower pursuant to
this clause (d) shall not exceed five percent (5%) of
the Consolidated Tangible Net Worth of the Borrower and
its Subsidiaries at the end of the preceding fiscal
year.
All sales, leases or disposition of assets pursuant to
clause (b), (c) or (d) shall be at fair market value.
(f) The Original Loan Agreement is amended by adding thereto
the following section under Article VI thereof ("Negative Covenants"):
"6.10 AMENDMENT TO LINE OF CREDIT AND CERTAIN OTHER DOCUMENTS.
The Borrower will not in any manner, express or implied,
amend, modify, waive, renew, extend, restate, replace or supplement the Line of
Credit or the 1996 Agreement (or cause or permit any of the same to be done) or
grant any further or additional Liens to or in favor of JPMorgan or the Banks
except on such terms, covenants and conditions as the Lender may
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approve in writing, which approval the Lender may grant, condition or withhold
in its sole and absolute discretion."
10. CERTAIN EVENTS OF DEFAULT.
(a) SECTION 7.01(d) of the Original Loan Agreement is amended by adding
after the last sentence thereof the following: "Without limiting the generality
of the foregoing, any default or event of default that occurs under and pursuant
to the terms of the Line of Credit or the 1996 Agreement shall constitute an
event of default hereunder."
(b) SECTION 7.01 of the Original Loan Agreement is amended by adding
thereto the following subsections:
"(i) The Borrower shall fail to maintain or cause to be
maintained any insurance required under the Loan Agreement or any other
Loan Document.
(j) The Borrower or any Subsidiary shall, except in the
ordinary course of business, sell, transfer, convey or assign any of
the Collateral, or any right, title or interest (legal or equitable)
therein without the prior written consent of the Lender (which may be
withheld, conditioned or delayed by the Lender in its sole and absolute
discretion.
(k) The commencement of a foreclosure or forfeiture action or
proceeding, whether civil or criminal, at law or in equity, including,
but not limited to, any non-judicial power of sale, or the occurrence
of any other event, which, in the Lender's sole and absolute
discretion, could result in the foreclosure, forfeiture or loss of any
of the Collateral or otherwise materially impair the Liens, or the
priority thereof, in favor of the Lender in and to any of the
Collateral."
11. MISCELLANEOUS. This Amendment is entered into pursuant to and in
accordance with SECTION 9.03 of the Original Loan Agreement. This Amendment may
be executed in counterparts, each of which shall be deemed an original and all
of which together shall constitute one and the same instrument. The Borrower
agrees to pay or cause to be paid and to save the Lender harmless against
liability for the payment of all reasonable out-of-pocket costs and expenses
(including, but not limited to, reasonable fees and expense of counsel,
including local counsel, in-house counsel, auditors, consulting engineers,
appraisers and all other professional, accounting, evaluation and consulting
costs) incurred by the Lender from time to time arising out of or relating to
the (i) the negotiation, preparation, execution and delivery of the Loan
Agreement and the other Loan Documents; (ii) the administration and performance
of the Loan Agreement and the other Loan Documents, (iii) any requested
amendments, modifications, supplements, waivers or consents (whether or not
ultimately entered into or granted) to the Loan Agreement or any Loan Document,
and (iv) the enforcement or preservation of rights under the Loan Agreement or
any Loan Document (including, but not limited to, any such costs or expenses
arising from or relating to (A) collection or enforcement of an outstanding Loan
or any other amount owing hereunder or thereunder by the Lender, and (B) any
litigation, proceeding, dispute, work-out, restructuring or rescheduling related
in any way to the Loan Agreement or the Loan Documents), and (c) enforcement of
any Guaranties or any Security Document. The Amendment shall be governed by,
construed and enforced in accordance with the laws of the
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State of New York, without regard or reference to its choice of law principles.
Except as expressly modified or amended herein, the Original Loan Agreement and
each of the other Loan Documents to which the Borrower is a party is hereby
restated, ratified and confirmed and shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have caused this Third Amendment to Term Loan Agreement to be
duly executed and delivered as of the date first above written.
HARDINGE INC.
By: /s/ Thomas T. Connelly
--------------------------------------
Thomas T. Connelly
Title: Treasurer
Address for Notices:
Hardinge Inc.
One Hardinge Drive
Elmira, New York 14902
Attn: Treasurer
Telephone: (607) 734-2281
Telecopier: (607) 734-5517
with a copy to:
Sayles & Evans
One West Church Street
Elmira, New York 14901
Attn: J. Philip Hunter, Esq.
Telephone: (607) 734-2271
Telecopier: (607) 734-1754
KEYBANK NATIONAL ASSOCIATION
By: /s/ Albert G. White, III
--------------------------------------
Albert G. White, III
Title: Senior Vice President
Address for Notices:
1200 Bausch & Lomb Plaza
Rochester, New York 14604
Attn: Albert G. White III
Senior Vice President, Corporate
Banking and Finance Group
Telephone: (716) 238-4143
Telecopier: (716) 238-4142
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with a copy to:
Boylan, Brown, Code, Vigdor & Wilson, LLP
2400 Chase Square
Rochester, New York 14604
Attn: Corporate Banking Group
Telephone: (716) 232-5300
Telecopier: (716) 232-3528
Term Loan Committed Amount: $23,000,000
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