CLOSING DOCUMENTS
-----------------
CREDIT AGREEMENT
between
HARDINGE INC.
(the "Borrower")
and
MARINE MIDLAND BANK
(the "Bank")
Dated as of November 18, 1996
HARDINGE/MARINE MIDLAND
Closing List
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1. Credit Agreement dated 11/18/96
2. Authorization Letter on Hardinge letterhead
3. Certificate of Incumbency
4. Certified Resolution
5. Officer's Certificate
6. Opinion of Counsel as to Execution and Delivery of Documents
(▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP opinion letter attached)
7. Certificate of Good Standing
8. Promissory Note
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of November 18, 1996 between HARDINGE INC., a
corporation organized under the laws of New York (the "Borrower"), and MARINE
MIDLAND BANK, a banking corporation organized under the laws of New York (the
"Bank").
The Borrower desires that the Bank extend credit as provided herein and the
Bank is prepared to extend such credit. Accordingly, the Borrower and the Bank
agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. Definitions. As used in this Agreement the following terms
have the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and vice versa):
"Affiliate" means any Person: (a) which directly or indirectly controls,
or is controlled by, or is under common control with, the Borrower or any of its
Subsidiaries; (b) which directly or indirectly beneficially owns or holds 5 % or
more of any class of voting stock of the Borrower or any such Subsidiary; (c) 5%
or more of the voting stock of which is directly or indirectly beneficially
owned or held by the Borrower or such Subsidiary; or (d) which is a partnership
in which the Borrower or any of its Subsidiaries is a general partner. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Aggregate Consideration" shall mean (i) in the case of a purchase of a
company's equity securities, the total consideration paid for such securities
(including amounts paid to holders of options, warrants and convertible
securities) plus the principal amount of all indebtedness for borrowed money as
set forth on the most recent consolidated balance sheet of the company being
acquired prior to consummation of such sale, exchange or purchase, and (ii) in
the case of a purchase of assets, the total consideration paid for such assets
plus the principal amount of all indebtedness for borrowed money assumed by the
Borrower.
"Agreement" means this Credit Agreement, as amended or supplemented from
time to time. References to Articles, Sections, Exhibits, schedules and the like
refer to the Articles, Sections,
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Exhibits, schedules and the like of this Agreement unless otherwise indicated.
"Alternative Currency" shall mean at any time any of Canadian Dollars,
Deutsche Marks, French Francs, Pounds Sterling, Swiss Francs, and Yen, so long
as at such time (a) such Currency is dealt with in the London interbank deposit
market, (b) such Currency is freely transferrable and convertible into Dollars
in the London foreign exchange market, and (c) no central bank or other
governmental authorization in the country of issue of such Currency is required
to permit use of such Currency by any Bank for making any Loan hereunder and/or
to permit the Borrower to borrow and repay the principal thereof and to pay the
interest thereon, unless such authorization has been obtained. As of the date of
this Agreement, each Alternative Currency is dealt with in the London interbank
deposit market, each Alternative Currency is freely transferable and convertible
into Dollars in the London foreign exchange markets and no central bank or other
governmental authorization in the country of issue of such Alternative Currency
is required to permit the use of such currency by the Bank for making any Loan
hereunder and/or to permit the Borrower to borrow and repay the principal
thereof and to pay interest thereon.
"Amortization Date" means the first day of each calendar quarter,
commencing on the first such day occurring after the Revolving Credit
Termination Date, up to (and including) the Termination Date, provided that if
any such day is not a Banking Day, such day shall be the next succeeding Banking
Day (or, if such next succeeding Banking Day falls in the next calendar month,
the next preceding Banking Day).
"Authorization Letter" means the letter agreement executed by the Borrower
in the form of Exhibit B.
"Banking Day" means (a) any day on which commercial banks are not
authorized or required to close in New York City, and (b) whenever such day
relates to a Eurodollar Loan or notice with respect to any Eurodollar Loan, a
day on which foreign exchange trading is carried out in the London interbank
market in the Currency in which such Eurodollar Rate Loan is denominated.
"Basis Point" means one one-hundredth of one percent.
"Canadian Dollars" and the sign "C$" means the lawful currency of Canada.
"Capital Lease" means any lease which has been or should be capitalized on
the books of the lessee in accordance with GAAP.
"Closing Date" means November 18, 1996, the date this Agreement has been
executed by the Borrower and the Bank.
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"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commitment" means the obligation of the Bank to make Loans under this
Agreement in the aggregate principal amount of $20,000,000.00, as such amount
may be reduced or otherwise modified from time to time.
"Commitment Period" means the period from and including the date of this
Agreement to but excluding the first Amortization Date and thereafter each
period from and including an Amortization Date to but excluding the next
succeeding Amortization Date.
"Consolidated Capital Expenditures" means for any period, the Dollar amount
of gross expenditures (including obligations under Capital Leases) made for
fixed assets, real property, plant and equipment, and all renewals, improvements
and replacements thereto, (but not repairs thereof) incurred during such period
for the Borrower and its Consolidated Subsidiaries, as determined on a
consolidated basis in accordance with GAAP.
"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 Net Income" means for any period the net income of Borrower
and its Consolidated Subsidiaries for such period determined on a consolidated
basis without duplication, in accordance with GAAP.
"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.
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"Consolidated Total Unsubordinated Liabilities" means all items on a
consolidated basis, in accordance with GAAP consistently applied, which would
properly be included (a) on the liability side of the balance sheet (other than
Subordinated Debt, capital stock, capital Surplus and retained earnings), or (b)
as obligations under direct or indirect guarantees or obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise assure a creditor
against loss in respect of, indebtedness or obligations of others; provided,
however, excluded therefrom shall be all but 10% of the obligations resulting
from the sale, pledge or discount of customer notes by Borrower and its
Subsidiaries.
"Controlled Group" shall have the meaning assigned to such term in Section
6.02(e) hereof.
"Currency" means Dollars or any Alternative Currency.
"Debt" means, with respect to any Person: (a) indebtedness of such Person
for borrowed money; (b) obligations of such Person as lessee under Capital
Leases, (c) obligations under direct or indirect guarantees in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clause (a) and (b) above, (not
otherwise reserved for) and (d) defined benefit pension liabilities in respect
of unfunded vested benefits under plans covered by ERISA calculated consistently
with GAAP. Excluded from the term Debt shall be an amount equal to 90% of the
obligations of the Borrower and its Subsidiaries arising from the sale, pledge,
or discounting of customer notes.
"Default" means any event which with the giving of notice or lapse of time,
or both, would become an Event of Default.
"Default Rate" means, with respect to the principal of any Loan and, to the
extent permitted by law, any other amount payable by the Borrower under this
Agreement or any Note that is not paid when due (whether at stated maturity, by
acceleration or otherwise), a rate per annum during the period from and
including the due date, to, but excluding the date on which such amount is paid
in full equal to 2% above the Variable Rate as in effect from time to time plus
the Margin (if any) (provided that, if the amount so in default is principal of
a Eurodollar Loan and the due date thereof is a day other than the last day of
the Interest period therefor, the "Default Rate" for such principal shall be,
for the period from and including the due date and to but excluding the last day
of the Interest period therefor, 2% above the interest rate for such Loan as
provided in section 2.10 hereof and, thereafter, the rate provided for above in
this definition).
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"Deutsche Marks" and the sign "DM" means the lawful currency of the Federal
Republic of Germany.
"Dollar Equivalent" means with respect to any Loan denominated in an
Alternative Currency as at any date of determination thereof, the amount of
Dollars that would be required to purchase the amount of the Alternative
Currency of such Loan on the date two Business Days prior to the date of such
Loan, based on the arithmetic mean (rounded upwards, if necessary. to the
nearest one-one hundredth of one percent) of the spot selling rate at which the
Bank offers to sell such Alternative Currency for Dollars in the London foreign
exchange market at approximately 11:00 a.m. London time for delivery on the date
of such Loan.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Domestic Subsidiaries" means any Subsidiary formed and currently existing
under the laws of the United States of America or a State thereof.
"Earnings Before Interest and Taxes" means the net income of the Borrower
and its Consolidated Subsidiaries prior to the deduction of interest expense and
prior to the deduction for federal, state or foreign corporate income and
corporate franchise taxes.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
"Eurodollar Loan" means any Loan when and to the extent the interest rate
therefor is determined on the basis of the definition "LIBO Base Rate."
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"Eurodollar Note" means the promissory note provided for in Section 2.02(b)
hereof and all promissory notes delivered in substitution or exchange therefor,
in each case as the same shall be modified and supplemented and in effect from
time to time.
"Event of Default" has the meaning given such term in Section 9.01.
"Facility Documents" means this Agreement, the Notes, and the Authorization
Letter.
"Federal Funds Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight federal funds transactions as
published by the Federal Reserve Bank of New York for such day (or for any day
that is not a Banking Day, for the immediately preceding Banking Day).
"Forfeiture Proceeding" means any action, proceeding or investigation
affecting the Borrower or any of its Subsidiaries or Affiliates before any
court, governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or the receipt of notice by any such party
that any of them is a suspect in or a target of any governmental inquiry or
investigation, which may result in an indictment of any of them or the seizure
or forfeiture of any of their property.
"French Francs" and the sign "Ffr" means the lawful currency of the
Republic of France.
"Funded Debt" means, with respect to any Person, all Debt of such Person
for borrowed money.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, applied on a basis consistent with
those used in the preparation of the financial statements referred to in Section
5.05 (except for changes concurred in by the Borrower's independent public
accountants).
"Hazardous Materials" means any substance regulated under any Environmental
Laws.
"Interest Period" means the period commencing on the date a Loan is made
and ending, as the Borrower may select pursuant to Section 2.06: (a) in the case
of Variable Rate Loans, the period commencing on the date such Variable Rate
Loan is made and ending on the Quarterly Date next succeeding such date; (b) in
the case of Eurodollar Loans, on the numerically corresponding day in the first,
second, third, or sixth calendar month thereafter, provided that each such
Interest Period which commences on the last Banking Day of a calendar month (or
on any day for which
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there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Banking Day of the appropriate calendar month.
"Lending Office" means for each type of Loan, the lending office of the
Bank (or of an affiliate of the Bank) designated as such for such type of Loan
on its signature page hereof or such other office of the Bank (or of an
affiliate of the Bank) as it may from time to time specify to the Borrower as
the office by which its Loans of such type are to be made and maintained.
"Liens" shall have the meaning assigned to such term in Section 7.01
hereof.
"LIBO Base Rate" means with respect to any Eurodollar Loan the arithmetic
mean of the respective rates per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) quoted at approximately 11:00 a.m. London time by the
principal branch of the Bank two Banking Days prior to the first day of the
Interest Period for such Loan for the offering to leading banks in the London
interbank market of deposits in the Currency of the Eurodollar Loan in
immediately available funds, for a period, and in an amount, comparable to such
Interest Period and principal amount of the Eurodollar Loan. If the Bank is no
longer quoting on the London interbank market, the LIBO Base Rate shall be
determined by the Bank on the basis of quotes from a bank selected by the Bank
and approved by Borrower.
"LIBO Rate" means, for any Eurodollar Loan, a rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the sum of the
quotient of (a) the LIBO Base Rate for such Loan for the Interest Period
therefor, divided by (b) one minus the Reserve Requirement for such Loan for
such Interest Period.
"Loan" means a Revolving Credit Loan or a Term Loan or both, as the context
requires.
"Margin" means for each Variable Rate Loan and Eurodollar Loan the lowest
applicable margin on the table next following, computed as of each Quarterly
Date based upon Borrower's financial statements for the immediately preceding
four Quarterly Dates for income statement items and the most recent Quarterly
Date for balance sheet items.
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(a) Ratio of Funded Debt to Variable Rate Loans Eurodollar Loans
Earnings Before Interest & Taxes
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Equal to or less than 1.0 0 Basis Points 45 Basis Points
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Greater than 1.0 and less than or 0 Basis Points 55 Basis Points
equal to 2.0
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Greater than 2.0 and less than or 0 Basis Points 65 Basis Points
equal to 3.0
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Greater than 3.0 0 Basis Points 75 Basis Points
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"Multiemployer Plan" means a Plan defined as such in Section 3(37) of ERISA
to which contributions have been made by the Borrower or any ERISA Affiliate and
which is covered by Title IV of ERISA.
"Net Worth" means, at any date of determination thereof, the sum for the
Borrower and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP) of (a) the amount of common stock; plus (b)
the amount of any preferred stock that does not have any requirement for the
Borrower to purchase, redeem, retire or otherwise acquire the same; plus (c) the
amount of additional paid-in-capital and retained earnings (or, in the case of
an additional paid-in-capital or retained earnings deficit, minus the amount of
such deficit); plus (d) cumulative pension liability adjustments (or, in the
case of negative adjustments, minus the amount of such adjustments); plus (e)
cumulative foreign currency translation adjustments (or, in the case of negative
adjustments, minus the amount of such adjustments); plus (f) any other items
which under GAAP are included in shareholders equity (or, in the case of items
excluded from shareholders equity, minus such items); and minus (g) the cost of
treasury stock.
"Note" means collectively the Eurodollar Note and Variable Rate Note of the
Borrower in the form of Exhibit A-1 and A-2 hereto evidencing the Loans made by
the Bank hereunder.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
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"Plan" shall have the meaning assigned to such term in Section 6.02 (e)
hereof.
"Pounds Sterling" and the sign "(pound)" means the lawful currency of the
United Kingdom.
"Prime Rate" means that rate of interest from time to time announced by the
Bank at its principal office as its prime commercial lending rate.
"Principal Office" means the principal office of the Bank, located at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Quarterly Dates" shall mean the last day of March, June, September and
December in each year, the first of which shall be the first such day after the
date of this Agreement.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulatory Change" means, with respect to the Bank, any change after the
date of this Agreement in United States federal, state, municipal or foreign
laws or regulations (including without limitation Regulation D) or the adoption
or making after such date of any interpretations, directives or requests
applying to a class of banks including the Bank of or under any United States,
federal, state, municipal or foreign laws or regulations (whether or not having
the force of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof.
"Reserve Requirement" means, for any Interest Period for any Eurodollar
Loan, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during the
Interest Period for such Loan under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding $1,000,000,000.00
against in the case of Eurodollar Loans, "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall also reflect any other reserves required to be
maintained by such member banks by reason of any Regulatory Change against (i)
any category of liabilities which includes deposits by reference to which the
LIBO Base Rate for Eurodollar Loans is to be determined as provided in the
definition of "LIBO Base Rate" in this Section
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1.01 or (ii) any category of extensions of credit or other assets which include
Eurodollar Loans.
"Revolving Credit Loan" means any loan made pursuant to Section 2.01(a).
"Revolving Credit Termination Date" means November 1, 1999; provided that
if such date is not a Banking Day, such date shall be the next succeeding
Banking Day (or, if such next succeeding Banking Day falls in the next calendar
month, the next preceding Banking Day).
"Subordinated Debt" means Debt subordinated to the Bank on terms and
conditions satisfactory to the Bank.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by such Person.
"Swiss Francs" and the sign "Sfr" means the lawful currency of Switzerland.
"Tangible Net Worth" shall have the meaning assigned to such term in
Section 8.02 hereof.
"Term Loan" means the loan made by the Bank pursuant to Section 2.01(d).
"Term Note" means the promissory note provided for in Section 2.02(c)
hereof and all promissory notes delivered in substitution or exchange therefor,
in each case as the same shall be modified and supplemented and in effect from
time to time.
"Termination Date" means October 1, 2003; provided that if such date is not
a Banking Day, the Termination Date shall be the next succeeding Banking Day
(or, if such next succeeding Banking Day falls in the next calendar month, the
next preceding Banking Day).
"Unfunded Benefit Liabilities" means, with respect to any Plan, the amount
(if any) by which the present value of all benefit liabilities (within the
meaning of section 4001(a)(16) of ERISA) under the Plan exceeds the fair market
value of all Plan assets allocable to such benefit liabilities, as determined on
the most recent valuation date of the Plan and in accordance with the provisions
of ERISA for calculating the potential liability of the Borrower or any ERISA
Affiliate under Title IV of ERISA.
"Variable Rate" means, for any day, the higher of (a) the Federal Funds
Rate for such day plus fifty (50) Basis Points, and (b) the Prime Rate for such
day.
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"Variable Rate Loan" means any Loan when and to the extent the interest
rate for such Loan is determined in relation to the Variable Rate.
"Variable Rate Note" means the promissory note provided for in Section
2.02(a) hereof and all promissory notes delivered in substitution or exchange
therefor, in each case as the same shall be modified and supplemented and in
effect from time to time.
"Yen" and the sign "(Y)" means the lawful currency of Japan.
Section 1.02. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
ARTICLE 2. THE CREDIT.
Section 2.01. The Loans. (a) Subject to the terms and conditions of this
Agreement, the Borrower may borrow, repay and reborrow the aggregate amount of
the Bank's Commitment by means of Variable Rate Loans in Dollars and Eurodollar
Loans in any Currency and, the Bank agrees to make loans (the "Revolving Credit
Loans") to the Borrower from time to time from and including the date hereof to
but excluding the Revolving Credit Termination Date up to but not exceeding the
amount of its Commitment. The Revolving Credit Loans may be outstanding as
Variable Rate Loans or Eurodollar Loans (each a "type" of Loan). The Revolving
Credit Loans of each type, shall be made and maintained at the Bank's Lending
Office.
(b) Each Revolving Credit Loan shall be due and payable on the last day of
the Interest Period thereof and on the Revolving Credit Termination Date.
(c) For purposes of determining at the time of any borrowing whether the
amount of the borrowing would, together with all other outstanding Loans, exceed
the aggregate amount of the Bank's Commitment, and for purposes of determining
the unused portion of the Commitment, the amount of each Eurodollar Loan in an
Alternative Currency shall be deemed to be the Dollar Equivalent of the amount
of the Alternative Currency of such Eurodollar Loan on the date such
determination is made.
(d) The Bank agrees on the terms and conditions set forth in this Agreement
to make a loan (the "Term Loan") to the
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Borrower on the Revolving Credit Termination Date in a principal amount up to
but not exceeding the amount of the Commitment, as such amount may be reduced
pursuant to Section 2.07. The Term Loan may be outstanding as a Variable Rate
Loan, a Eurodollar Loan or a Fixed Rate Loan as provided in Section 2.10(c). The
Term Loan shall be repaid in 16 consecutive quarterly installments, each in an
amount equal to 1/16 of the original principal amount of the Term Loan. The
first such installment shall be due on the first Amortization Date.
Section 2.02. The Notes. (a) The Variable Rate Loans of the Bank shall be
evidenced by a single promissory note in favor of the Bank substantially in the
form of Exhibit A-1 hereto, dated the date of this Agreement, payable to the
order of the Bank and otherwise duly completed and executed by the Borrower.
(b) The Eurodollar Loans of the Bank shall be evidenced by a single
promissory note in favor of the Bank, substantially in the form of Exhibit A-2
hereto, dated the date of this Agreement, payable to the order of the Bank and
otherwise duly completed and executed by the Borrower.
(c) The Term Loan of the Bank shall be evidenced by a single promissory
note in favor of the Bank in the form of Exhibit A-3 hereto, dated the Revolving
Credit Termination Date, payable to the order of the Bank and otherwise duly
completed and executed by the Borrower.
(d) The date, amount, Currency (in the case of Eurodollar Loans), interest
rate and duration of Interest Period for each Loan made by the Bank to the
Borrower and each payment made on account of the principal thereof, shall be
recorded by the Bank on its books and, on the schedule attached to each Note or
any continuation thereof; provided, however, that the failure of the Bank to
make, or any error in making, any such recordation shall not affect the
obligations of Borrower to make a payment when due of any amount owing hereunder
or under such Note in respect of the Loans evidenced by such Note.
Section 2.03. Purpose. The Borrower shall use the proceeds of the Loans for
general corporate purposes and import/export letters of credit and foreign
exchange transactions. Subject to the limitations contained in Section 7.05,
proceeds of Loans to a maximum aggregate principal of $15,000,000.00 may be used
by the Borrower as Aggregate Consideration for acquisitions. Proceeds of Loans
to a maximum aggregate principal of $15,000,000.00 may be used by the Borrower
to repurchase shares of its common stock. Provided, however, and notwithstanding
any provision herein to the contrary, such proceeds shall not be used
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for the purpose, whether immediate, incidental or ultimate, of buying or
carrying "margin stock" within the meaning of Regulation U.
Section 2.04. Borrowing Procedures. The Borrower shall give the Bank notice
of each borrowing to be made hereunder as provided in Section 2.08. Not later
than 2:00 p.m. New York time on the date of such borrowing, the Bank shall,
through its Lending Office and subject to the conditions of this Agreement, make
the amount of the Loan to be made by it on such day available to the Bank at the
Principal Office and in immediately available funds for the account of the
Borrower. The amount so received by the Bank shall, subject to the conditions of
this Agreement, be made available to the Borrower, in immediately available
funds, by the Bank crediting an account of the Borrower designated by the
Borrower and maintained with the Bank at the Principal Office.
Section 2.05. Prepayments. The Borrower shall have the right to prepay
Loans at any time or from time to time in multiples of $150,000.00 to be applied
to principal in inverse order of maturity; provided that: (a) the Borrower shall
give the Bank notice of each such prepayment as provided in Section 2.08; (b)
Eurodollar Loans may not be prepaid, except that, if after the giving effect to
any reduction or termination of the Commitments pursuant to Section 2.07, the
outstanding aggregate principal amount of the Loans exceeds the aggregate amount
of the Commitments, the Borrower shall pay or repay the Loans on the date of
such reduction or termination in an aggregate principal amount equal to the
excess, together with interest thereon accrued to the date of such payment or
repayment and any amounts payable pursuant to Section 3.05 in connection
therewith; and (c) in the event the outstanding aggregate principal balance of
the Loans payable in Dollars and the Dollar Equivalent of all Loans payable in
Alternative Currency exceeds the aggregate amount of the Commitment, Borrower
shall pay the Loans in an aggregate principal amount equal to the excess,
together with interest thereon accrued to the date of payment.
Section 2.06. Interest Periods. In the case of each Loan, the Borrower
shall select an Interest Period of any duration in accordance with the
definition of Interest Period in Section 1.01, subject to the following
limitations: (a) no Interest Period may extend beyond an Amortization Date
unless, after giving effect thereto, the aggregate principal amount of
Eurodollar Loans having Interest Periods which end after such Amortization Date
shall be equal to or less than the principal amount to be outstanding hereunder
after such Amortization Date: (b) notwithstanding clause (a) above, no Interest
Period for a Eurodollar Loan shall have a
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duration less than one month and if any such proposed Interest Period would
otherwise be for a shorter period, such Interest Period shall not be available;
(c) if an Interest Period would end on a day which is not a Banking Day, such
Interest Period shall be extended to the next Banking Day, unless, in the case
of a Eurodollar Loan, such Banking Day would fall in the next calendar month in
which event such Interest Period shall end on the immediately preceding Banking
Day; and (d) up to the Revolving Credit Termination Date, no more than ten
Eurodollar Loans of the Bank may be outstanding at any one time.
Section 2.07. Changes of Commitment. (a) Unless theretofore reduced to such
amount pursuant to subsections (b) or (c) or (d) below, the amount of the
Commitments shall automatically reduce on each Amortization Date by an amount
equal to one-sixteenth (1/16th) of the outstanding principal balance of the
Loans on the Revolving Credit Termination Date. The amount of the Commitment
shall be reduced to zero on the Termination Date.
(b) The Borrower shall have the right to reduce or terminate the amount of
the Commitment at any time or from time to time, provided that: (i) the Borrower
shall give notice of each such reduction or termination to the Bank as provided
in Section 2.08, and (ii) each partial reduction shall be in an aggregate amount
at least equal to $1,000,000.00.
(c) On any day on or after the Revolving Credit Termination Date on which
the amount of the Commitment is greater than the principal amount of the Loan
outstanding on such day, the amount of the Commitment shall automatically reduce
to an amount equal to such outstanding principal amount.
(d) Each reduction of the amount of the Commitment pursuant to subsection
(b) or (c) above during any Commitment Period shall result in an automatic and
simultaneous reduction of the amount of the Commitment in an equal amount for
each subsequent Commitment Period.
(e) The Commitment once reduced or terminated may not be reinstated.
Section 2.08. Certain Notices. Notices by the Borrower to the Bank of each
borrowing pursuant to Section 2.04, each prepayment pursuant to Section 2.05 and
each reduction or termination of the Commitments pursuant to Section 2.07(b)
shall be irrevocable and shall be effective only if received by the Bank (a) in
the case of borrowings and (in the case of Variable Rate Loans) prepayments of,
(i) Variable Rate Loans, given before 10:00 a.m. New York time on the day of
borrowing; (ii) Eurodollar Loans
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in Dollars, given before 12:00 noon New York time three Banking Days prior
thereto; (iii) Eurodollar Loans in an Alternative Currency, given before 12:00
noon New York time four banking days prior thereto, and (b) in the case of
reductions or termination of the Commitment, given before 12:00 noon New York
time three Banking Days prior thereto. Each such notice shall specify the Loans
to be borrowed or prepaid, (subject to Section 2.09) the amount in Dollars (or,
in the case of Loans in Alternative Currencies, the Dollar Equivalent) and type
of the Loans to be borrowed or prepaid and the date of borrowing or prepayment
(which shall be a Banking Day), and, in the case of Eurodollar Loans, the
Currency or Currencies in which such Loans are to be made and, if required by
the Bank, the account of the Borrower maintained with a commercial bank in the
country in whose Currency such Eurodollar Loans are denominated. Each notice of
reduction or termination shall specify the amount of the Commitment to be
reduced or terminated.
Section 2.09. Minimum Amounts. Except for borrowings which exhaust the full
remaining amount of the Commitments, and prepayments (in the case of Variable
Rate Loans) which result in the prepayment of all Loans, each borrowing and
prepayment of principal shall be in an amount at least equal to $1,000,000.00
and shall be in incremental multiples of $500,000.00.
Section 2.10. Interest. (a) During each Interest Period, interest shall
accrue on the outstanding and unpaid principal amount of each Loan for the
period from and including the date of such Loan to but excluding the Revolving
Credit Termination Date at the following rates per annum: (i) for a Variable
Rate Loan, at a variable rate per annum equal to the Variable Rate plus any
Margin, and (ii) for a Eurodollar Loan, at a fixed rate equal to the LIBO Rate
plus the Margin. If the principal amount of any Loan and any other amount
payable by the Borrower hereunder or under a Note shall not be paid when due (at
stated maturity, by acceleration or otherwise), interest shall accrue at the
Default Rate on such amount to the full extent permitted by law from and
including such due date to but excluding the date such amount is paid in full.
(b) The interest rate on each Variable Rate Loan shall change when the
Variable Rate changes and interest on each such Loan shall be calculated on the
basis of a year of 365 days for the actual number of days elapsed. Interest on
each Eurodollar Loan shall be calculated on the basis of a year of 360 days for
the actual number of days elapsed. Promptly after the determination of any
interest rate provided for herein or any change therein, the Bank shall notify
the Borrower.
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(c) On and after the Revolving Credit Termination Date to and including the
Termination Date, interest shall accrue on the outstanding and unpaid principal
amount of the Term Loan at one of the following rates as selected by the
Borrower from time to time: (i) the variable rate described in Section
2.10(a)(i); or (ii) the fixed rate described in Section 2.10(a)(ii); or (iii) a
fixed rate equal to one percent (1.0%) above the yield on United States Treasury
Obligations for the interest period selected (in such case, a "Fixed Rate
Loan"); or (iv) such other rate as the Bank may offer from time to time.
(d) Accrued interest shall be due and payable in arrears upon any payment
of principal and on the last day of the Interest Period with respect thereto
and, in the case of an Interest Period greater than three months or 90 days, at
three-month (in the case of a Eurodollar Loan) intervals after the first day of
such Interest Period; provided that interest accruing at the Default Rate shall
be due and payable from time to time on demand of the Bank.
Section 2.11. Fees. The Borrower shall pay to the Bank a commitment fee on
the daily average unused Commitment of the Bank for the period from and
including the date hereof to the earlier of the date the Commitment is
terminated or the Revolving Credit Termination Date at a rate per annum equal to
three-eighths of one percent (.375%), calculated on the basis of a year of 360
days for the actual number of days elapsed. 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.
Section 2.12. Payments Generally. Except to the extent otherwise provided
herein, all payments of principal of and interest on Loans made in Dollars, and
other amounts (other than the principal of and interest on Eurodollar Loans made
in an Alternative Currency) payable by the Borrower under this Agreement and the
Notes shall be made in Dollars, and all payments of principal of and interest on
Eurodollar Loans made in an Alternative Currency shall be made in such
Alternative Currency, in immediately available funds not later than 1:00 p.m.
New York time on the date on which such payments shall become due (each such
payment made after such time on such due date to be deemed to have made on the
next succeeding Banking Day; provided that, when a new Loan is to be made by the
Bank on a date the Borrower is to repay any principal of an outstanding Loan in
the same Currency, the Bank shall apply the proceeds thereof to the payment of
the principal to be repaid and only an amount equal to the difference between
the principal to be borrowed and the principal to be repaid shall be made
available by the Bank to the Borrower as provided in Section 2.04 or paid by the
Borrower to the Bank
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pursuant to this Section 2.12, as the case may be. The Bank may (but shall not
be obligated to) debit the amount of any such payment which is not made by such
time to any ordinary deposit account of the Borrower with the Bank. The Borrower
shall, at the time of making each payment under this Agreement or the Notes,
specify to the Bank the principal or other amount payable by the Borrower under
this Agreement or the Notes to which such payment is to be applied (and in the
event that it fails to so specify, or if a Default or Event of Default has
occurred and is continuing, the Bank may apply such payment as it may elect in
its sole discretion (subject to Section 10. 16)). If the due date of any payment
under this Agreement or the Notes would otherwise fall on a day which is not a
Banking Day, such date shall be extended to the next succeeding Banking Day and
interest shall be payable for any principal so extended for the period of such
extension. Each payment received by the Bank hereunder or under any Note for the
account of the Bank shall be paid promptly to the Bank, in immediately available
funds, for the account of the Bank's Lending Office.
ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.01. Additional Costs. (a) The Borrower shall pay directly to the
Bank from time to time on demand such amounts as the Bank may reasonably
determine to be necessary to compensate it for any costs which the Bank
determines are attributable to its making or maintaining any Eurodollar Loans
under this Agreement or its Note or its obligation to make any such Loans
hereunder, or any reduction in any amount receivable by the Bank hereunder in
respect of any such Loans or such obligation (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Change, or any Reserve Requirement for any such
Loans attributable to the Bank not maintaining a Lending Office in the country
of an Alternative Currency, which: (i) changes the basis of taxation of any
amounts payable to the Bank under this Agreement or its Note(s) in respect of
any of such Loans (other than taxes imposed on the overall net income of the
Bank or of its Lending Office for any of such Loans by the jurisdiction in which
the Bank has its principal office or such Lending Office); or (ii) imposes or
modifies any reserve, special deposit, deposit insurance or assessment, minimum
capital, capital ratio or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities of, the
Bank (including any of such Loans or any deposits referred to in the definition
of "LIBO Base Rate" in Section 1.01); or (iii) imposes any other condition
affecting this Agreement or its Note (or any of such extensions of credit or
liabilities). The Bank will notify the Borrower of any event occurring after the
date of this Agreement which will entitle the Bank to compensation pursuant to
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this Section 3.01(a) as promptly as practicable after it obtains knowledge
thereof and determines to request such compensation. The amount payable to the
Bank shall be computed from the date of the occurrence giving rise to Additional
Cost, or the date that is 120 days prior to the date of demand by the Bank,
whichever is later. If the Bank requests compensation from the Borrower under
this section 3.01(a), or under section 3.01(c), the Borrower may, by notice to
the Bank, suspend the obligation of the Bank to make Loans of the type with
respect to which such compensation is requested (in which case the provisions of
section 3.04 shall be applicable). As of the date hereof there are no Additional
Costs due to the Bank attributable to the Bank's not maintaining a Lending
Office in the country of an Alternative Currency.
(b) Without limiting the effect of the foregoing provisions of this Section
3.01, in the event that, by reason of any Regulatory Change, the Bank either (i)
incurs Additional Costs based on or measured by the excess above a specified
level of the amount of a category of deposits or other liabilities of the Bank
which includes deposits by reference to which the interest rate on Eurodollar
Loans is determined as provided in this Agreement or a category of extensions of
credit or other assets of the Bank which includes Eurodollar Loans or (ii)
becomes subject to restrictions on the amount of such a category of liabilities
or assets which it may hold, then, if the Bank so elects by notice to the
Borrower, the obligation of the Bank to make Loans of such type hereunder shall
be suspended until the date such Regulatory Change ceases to be in effect (in
which case the provisions of Section 3.04 shall be applicable).
(c) Without limiting the effect of the foregoing provisions of this Section
3.01 (but without duplication), the Borrower shall pay directly to the Bank from
time to time on request such amounts as the Bank may reasonably determine to be
necessary to compensate the Bank for any costs which it determines are
attributable to the maintenance of capital by it or any of its Affiliates
pursuant to any future law or regulation of any jurisdiction or any
interpretation, directive or request (whether or not having the force of law and
whether in effect on the date of this Agreement or thereafter) of any court or
governmental or monetary authority in respect of its Loans hereunder or its
obligation to make Loans hereunder (such compensation to include, without
limitation, an amount equal to any reduction in return on assets or equity of
the Bank to a level below that which it could have achieved but for such law,
regulation, interpretation, directive or request). The Bank will notify the
Borrower if it is entitled to compensation pursuant to this Section 3.01(c) as
promptly as practicable after it determines to request such compensation. The
amount payable to the Bank shall be computed from the date of the occurrence
entitling the Bank to
-19-
compensation, or the date that is one hundred twenty (120) days prior to the
date of demand by the Bank, whichever is later.
(d) Determinations and allocations by the Bank for purposes of this Section
3.01 of the effect of any Regulatory Change pursuant to subsections (a) or (b),
or of the effect of capital maintained pursuant to subsection (c), on its costs
of making or maintaining Loans or its obligation to make Loans, or on amounts
receivable by, or the rate of return to, it in respect of Loans or such
obligation, and of the additional amounts required to compensate the Bank under
this Section 3.01, shall be conclusive, provided that such determinations and
allocations are made on a reasonable basis.
Section 3.02. Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if:
(a) the Bank determines (which determination shall be conclusive) that
quotations of interest rates for the relevant deposits referred to in the
definition of "LIBO Rate" in Section 1.01 are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining the rate of
interest for any type of Eurodollar Loans as provided in this Agreement; or
(b) the Bank determines (which determination shall be conclusive) and
notifies the Borrower (which notice shall include the Bank's calculation of
cost) that the relevant rates of interest referred to in the definition of "LIBO
Base Rate" in Section 1.01 upon the basis of which the rate of interest for any
type of Eurodollar Loans is to be determined do not adequately cover the cost to
the Bank of making or maintaining such Loans;
then the Bank shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Bank shall be under no obligation to make
Loans of such type.
Section 3.03. Illegality. Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for the Bank or its Lending
Office to honor its obligation to make or maintain Eurodollar Loans hereunder,
then the Bank shall promptly notify the Borrower thereof and the Bank's
obligation to make or maintain Eurodollar Loans hereunder shall be suspended
until such time as the Bank may again make and maintain such affected Loans (in
which case the provisions of Section 3.04 shall be applicable).
-20-
Section 3.04. Certain Variable Rate Loans pursuant to Sections 3.01 and
3.03. If the obligations of the Bank to make Loans of a particular type (Loans
of such type being herein called "Affected Loans" and such type being herein
called the "Affected Type") shall be suspended pursuant to Section 3.01 or 3.03,
all Loans which would otherwise be made by the Bank as Loans of the Affected
Type shall be made instead as Variable Rate Loans and, if an event referred to
in Section 3.01(b) or 3.03 has occurred and the Bank so requests by notice to
the Borrower , all Affected Loans of the Bank then outstanding shall be
automatically converted into Variable Rate Loans on the date specified by the
Bank in such notice, and, to the extent that Affected Loans are so made as (or
converted into) Variable Rate Loans, all payments of principal which would
otherwise be applied to the Bank's Affected Loans shall be applied instead to
its Variable Rate Loans.
Section 3.05. Certain Compensation. The Borrower shall pay to the Bank,
upon the request of the Bank, such amount or amounts as shall be sufficient (in
the reasonable opinion of the Bank) to compensate it for any loss, cost or
expense which the Bank reasonably determines is attributable to:
(a) any payment to the Bank of a Eurodollar Loan made by the Bank on a date
other than the last day of an Interest Period for such Loan (whether by reason
of acceleration or otherwise); or
(b) any failure by the Borrower to borrow a Eurodollar Loan to be made by
the Bank on the date specified therefor in the relevant notice under Section
2.04.
Without limiting the foregoing, such compensation shall include an amount
equal to the excess, if any, of: (i) the amount of interest which otherwise
would have accrued on the principal amount so paid or not borrowed for the
period from and including the date of such payment or failure to borrow to but
excluding the last day of the Interest Period for such Loan (or, in the case of
a failure to borrow, to but excluding the last day of the Interest Period for
such Loan which would have commenced on the date specified therefor in the
relevant notice) at the applicable rate of interest for such Loan provided for
herein; over (ii) the amount of interest (as reasonably determined by the Bank)
the Bank would have bid in the London interbank market (if such Loan is a
Eurodollar Loan) for deposits in the applicable Currency for amounts comparable
to such principal amount and maturities comparable to such period.
In addition, the Borrower shall pay to the Bank such amount as shall be
sufficient (in the reasonable opinion of the
-21-
Bank) to compensate it for any loss, cost or expense arising as a result of any
prepayment of the fixed rate portion of a Term Loan.
ARTICLE 4. CONDITIONS PRECEDENT.
Section 4.01. Documentary Conditions Precedent. The obligations of the Bank
to make the Loans constituting the initial borrowing are subject to the
condition precedent that the Bank shall have received on or before the date of
such Loans each of the following, in form and substance satisfactory to the Bank
and its counsel:
(a) the Notes duly executed by the Borrower;
(b) the Authorization Letter duly executed by the Borrower;
(c) a certificate of the Secretary or Assistant Secretary of the Borrower,
dated the closing Date, attesting to all corporate action taken by the Borrower,
including resolutions of its Board of Directors authorizing the execution,
delivery and performance of the Facility Documents to which it is a party and
each other document to be delivered pursuant to this Agreement;
(d) a certificate of the Secretary or Assistant Secretary of the Borrower,
dated the Closing Date, certifying the names and true signatures of the officers
of the Borrower authorized to sign the Facility Documents and the other
documents to be delivered by the Borrower under this Agreement;
(e) a certificate of a duly authorized officer of the Borrower, dated the
Closing Date, stating that the representations and warranties in Article 5 are
true and correct on such date as though made on and as of such date and that no
event has occurred and is continuing which constitutes a Default or Event of
Default;
(f) a favorable opinion of counsel for the Borrower, dated the Closing
Date, in substantially the form of Exhibit C and as to such other matters as the
Bank may reasonably request; (g) a recently dated certificate of the Secretary
of State of the State of Borrower's formation as to its good standing.
Section 4.02. Additional Conditions Precedent. The obligations of the Bank
to make any Loan (including the initial Loan) shall be subject to the further
conditions precedent that on the date of such Loan:
-22-
(a) the following statements shall be true: (i) the representations and
warranties contained in Article 5 are true and correct on and as of the date of
such Loan as though made on and as of such date; and (ii) no Default or Event of
Default has occurred and is continuing, or would result from such Loan; and
(b) the Bank shall have received such approvals, opinions or documents as
the Bank may reasonably request.
Section 4.03. Deemed Representations. Each notice of a Loan and acceptance
by the Borrower of the proceeds thereof shall constitute a representation and
warranty that the statements contained in Section 4.02(a) are true and correct
both on the date of such notice and, unless the Borrower otherwise notifies the
Bank prior to such borrowing, as of the date of such Loan.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants that:
Section 5.01. Incorporation, Good Standing and Due Qualification. The
Borrower and each of its Subsidiaries is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of its
incorporation, has all power and authority to carry on its business as now being
conducted and to own its properties and is duly licensed or qualified and in
good standing or a foreign corporation in each other jurisdiction in which its
properties are located or in which failure to qualify would materially and
adversely affect the conduct of its business or the enforceability of
contractual rights of the Borrower.
Section 5.02. Corporate Power and Authority: No Conflicts. The execution,
delivery and performance by the Borrower of the Facility Documents are within
the Borrower's corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (a) the Borrower's charter or by-laws,or
(b) any law or any contractual restriction or provision binding on or affecting
the Borrower.
Section 5.03. Governmental Approval. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
the Borrower of the Facility Documents to which the Borrower is a party.
-23-
Section 5.04. Legally Enforceable Agreements. Each Facility Document to
which Borrower is a party is, or when delivered hereunder will be, legal, valid
and binding obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms.
Section 5.05. Financial Statements. The balance sheets of the Borrower and
its Subsidiaries as at December 31, 1995, and the related statements of income
and retained earnings of the Borrower and its Subsidiaries for the fiscal year
then ended, and the unaudited balance sheets of the Borrower and its
Subsidiaries as at September 30, 1996 and the related statements of income and
retained earnings, copies of which have been furnished to the Bank, fairly
present the financial condition of the Borrower and its Subsidiaries at such
date and the results of the operations of the Borrower and its subsidiaries for
the period ended on such date, all in accordance with GAAP, and since September
30, 1996, there has been no material adverse change in such condition or
operations.
Section 5.06. Litigation. There is no pending or threatened action or
proceeding affecting the Borrower or any of its Subsidiaries before any court,
governmental agency or arbitrator, which may materially adversely affect the
financial condition or operations of the Borrower or any Subsidiary.
Section 5.07. Margin Stock. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System).
Section 5.08. Use of Loan Proceeds. No part of the proceeds of the Loans
will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, (a) to purchase or to carry margin stock or to
extend credit to others for the purpose of purchasing or carrying margin stock,
or to refund indebtedness originally incurred for such purpose, or (b) for any
purpose which violates or is inconsistent with the provisions of the Regulations
G, T, U or X of the Board of Governors of the Federal Reserve System.
Section 5.09. Tax Returns. Each of the Borrower and its Subsidiaries has
filed (or has obtained extensions of the time by which it is required to file)
all United States federal income tax returns and all other material tax returns
required to be
-24-
filed by it and has paid all taxes shown due on the returns so filed as well as
all other taxes, assessments and governmental charges which have become due,
except such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided.
Section 5.10. ERISA. Each member of the Controlled Group has fulfilled its
obligations under the minimum funding standards of ERISA and the Code with
respect to each Plan subject to the provisions thereof and is in compliance in
all material respects with the presently applicable provisions of ERISA and the
Code, and has not incurred any liability to the PBGC or a Plan under Title IV of
ERISA.
Section 5.11. Subsidiaries. The Borrower has no Subsidiaries other than
those set forth on Schedule I attached hereto as amended from time to time.
Section 5.12. Ownership and Liens. Each of the Borrower and its
Subsidiaries has good and marketable title to its material properties and assets
reflected on the balance sheet referred to in Section 5.05 hereof, except for
such properties and assets as have been disposed of since the date of such
balance sheet as no longer used or useful in the conduct of its business or as
have been disposed of in the ordinary course of business, and all such
properties and facets are free and clear of mortgages, pledges, liens, charges
and other encumbrances, except for mortgages on real estate located in
Switzerland in the approximate amount of 7,000,000 Swiss Francs and liens
incurred in the ordinary course of business, any encumbrances that do not
materially interfere with the use or operation of such property or assets and
except as required or permitted by the provisions hereof or as disclosed in the
balance sheet referred to in Section 5.05 hereof or otherwise disclosed to the
Bank.
Section 5.13. Hazardous Materials. Except as set forth in Schedule II
hereof, and qualified in each instance whereby a breach of this representation
set forth in this Section 5.13 would materially and adversely affect the
business, operations, assets or financial condition of the Borrower: the
Borrower is in compliance in all material respects with all Environmental Laws
governing Hazardous Materials and the Borrower has not used Hazardous Materials
on, from, or affecting any property now owned or occupied or hereafter owned or
occupied by the Borrower in any manner which violates Federal, state or local
laws, ordinances, rules, regulations, or policies governing the use, storage,
treatment, transportation, manufacture, refinement, handling,
-25-
production or disposal of Hazardous Materials, and that, to the best of the
Borrower's knowledge, no prior owner of any such property or any tenant,
subtenant, prior tenant or prior subtenant have used Hazardous Materials on,
from, or affecting such property in any manner which violates Federal, state or
local laws, ordinances, rules, regulations, or policies governing the use,
storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials, without limiting the foregoing,
the Borrower shall not cause or permit any property owned or occupied by it to
be used to generate, manufacture, refine, transport, treat, store, handle,
dispose, transfer, produce or process Hazardous Materials, except in compliance
with all applicable Federal, state and local laws or regulations, nor shall the
Borrower cause or permit, as a result of any intentional or unintentional act or
omission on its part or any tenant or subtenant, a release of Hazardous
Materials onto any property owned or occupied by the Borrower or onto any other
property, the Borrower shall comply with and ensure compliance by all tenants
and subtenants with all applicable Environmental Laws, whenever and by whomever
triggered, and shall obtain and comply with any and all approvals, registrations
or permits required thereunder.
Section 5.14. No Default on Other Agreements. Neither the Borrower or any
of its Subsidiaries is in default in any manner which would materially and
adversely affect the business, properties or assets, operations or condition
(financial or otherwise) of the Borrower in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party.
Section 5.15. Partnerships. Except as set forth on Schedule III, neither
the Borrower nor any of its Subsidiaries is a partner in any partnership.
Section 5.16. No Forfeiture. Neither the Borrower nor any of its
Subsidiaries or Affiliates is engaged in or proposes to be engaged in the
conduct of any business or activity which could result in a Forfeiture
Proceeding and no Forfeiture Proceeding against any of them is pending or
threatened, which would individually or in the aggregate materially and
adversely affect the business, operations, assets or financial condition of the
Borrower or any of its Subsidiaries.
Section 5.17. Solvency. (a) The present fair saleable value of the assets
of the Borrower after giving effect to all the transactions contemplated by the
Facility Documents and the
-26-
funding of all Commitments hereunder exceeds the amount that will be required to
be paid on or in respect of the existing debts and other liabilities (including
contingent liabilities) of the Borrower and its Subsidiaries as they mature.
(b) The property of the Borrower does not constitute unreasonably small
capital for the Borrower to carry out its business as now conducted and as
proposed to be conducted including the capital needs of the Borrower.
(c) The Borrower does not intend to, nor does it believe that it will,
incur debts beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be received by the Borrower, and of
amounts to be payable on or in respect of debt of the Borrower). The cash
available to the Borrower after taking into account all other anticipated uses
of the cash of the Borrower, is anticipated to be sufficient to pay all such
amounts on or in respect of debt of the Borrower when such amounts are required
to be paid.
(d) The Borrower does not believe that final judgments against it in
actions for money damages will be rendered at a time when, or in an amount such
that, the Borrower will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum reasonable amount
of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered). The cash available to the Borrower after
taking into account all other anticipated uses of the cash of the Borrower
(including the payments on or in respect of debt referred to in paragraph (c) of
this Section 5.17), is anticipated to be sufficient to pay all such judgments
promptly in accordance with their terms.
ARTICLE 6. AFFIRMATIVE COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank shall have any
Commitment under this Agreement, the Borrower shall, unless the Bank shall
otherwise consent in writing:
Section 6.01. Compliance with Laws, Corporate Existence. (a) Comply, and
cause each of its Subsidiaries to comply, in all material respects with all
applicable laws, rules, regulations and orders of any governmental authority,
the breach of which would materially and adversely affect the business,
operations, prospects or assets or the financial condition or otherwise of the
Borrower. Such compliance shall include, without limitation, paying before the
same become delinquent all taxes, assessments and governmental charges or levies
imposed upon it or on its income or profits or upon its property except to the
extent (i) such payment is being contested in good faith and by proper
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proceedings, and (ii) adequate reserves are being maintained with respect
thereto; and (b) do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence, rights, franchises, trade
names and preserve all of its property used or useful in the conduct of its
business and keep same in good repair and working condition except for property
it deems no longer useful.
Section 6.02. Reporting Requirements. Furnish directly to the Bank:
(a) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Borrower,
consolidated balance sheets of the Borrower and its Subsidiaries as of the end
of such quarter and statements of income and retained earnings and changes in
financial position of the Borrower and its Subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter, with a certification by the chief financial officer of the
Borrower that such financial statements fairly present the financial condition
and results Of operations of the Borrower in accordance with GAAP, at the dates
and for the periods set forth therein;
(b) as soon as available and in any event within 90 days after the end of
each fiscal year of the Borrower, a copy of the annual report for such year for
the Borrower and its Subsidiaries, containing consolidated and consolidating
financial statements for such year certified in a manner acceptable to the Bank
by Ernst & Young or other independent public accountants acceptable to the Bank;
(c) with the statements submitted under subsections (c) and (b) above, a
certificate signed by the chief financial officer of the Borrower or the
certified public accountants, as the case may be, stating (i) the requirements
of Section 4.02 hereof and (ii) the calculation of all financial covenants and
ratios required under Article 8 hereof;
(d) promptly after the sending or filing thereof, copies of all reports
which the Borrower sends to any of its security holders, and copies of all
reports and registration statements which the Borrower or any Subsidiary files
with the Securities and Exchange Commission or any national securities exchange;
(e) promptly after the filing or receiving thereof, if and when the
Borrower or any member of the Controlled Group (as defined below) (i) gives or
is required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA)
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with respect to any Plan (as defined below) under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give notice
of any such reportable event, a copy of the notice of such reportable event
given or required to be given to PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of ERISA, promptly followed by a
copy of such notice to the Bank; or (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate or appoint a trustee to administer
any Plan, promptly followed by a copy of such notice to the Bank.
As used in this Subsection 6.02(e), "Controlled Group" means all members of
a control group of corporations and all trades or businesses (whether or not
incorporated) under common control, which together with the Borrower, are
treated as a single employer under Section 414(b) or 414(c) of the Code of 1954,
and "Plan" means at any time an employee pension benefit plan which is covered
by Title IV of ERISA or is subject to the minimum funding standards under
Section 412 of the Code and is either (x) maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group, or (xx) maintained pursuant to a collective bargaining
agreement or similar arrangement under which more than one employer makes
contributions and to which the Borrower or any member of the Controlled Group is
then making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions,
(f) prior to the end of each fiscal year of the Borrower, a budget (in
format satisfactory to the Bank) for the succeeding fiscal year of the Borrower,
plus from time to time any revisions or modifications to such budget within 15
days of the adoption of such revision or modification; and
(g) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its subsidiaries as the Bank
may from time to time reasonably request.
Section 6.03. Notice of Proceedings. Promptly give notice in writing to the
Bank of all litigation, arbitral proceedings, regulatory proceedings and
Forfeiture Proceedings affecting the Borrower or any Subsidiary, except
litigation or proceedings which, if adversely determined, could not materially
and adversely affect the consolidated financial condition or the business taken
as a whole of the Borrower and its Subsidiaries.
Section 6.04. Insurance. The Borrower will, and will cause each Subsidiary
to, maintain insurance with insurance companies or associations rated "A-" or
better by A.M. Best &
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Company or a comparable rating agency in such amounts and against such risks as
is usually carried by owners of similar businesses and properties in the same
general areas in which the Borrower and its subsidiaries operate.
Section 6.05. Environmental Laws. Comply in all material respects with all
Environmental Laws and provide to the Bank all documentation in connection with
such compliance that the Bank may reasonably request.
Section 6.06. Access to Premises and Records. At any reasonable time and
from time to time, but only to the extent relevant to the loan transaction
hereunder and the Borrower's ability to perform under the Credit Agreement, upon
reasonable notice and during normal business hours, the Borrower shall permit
the Bank or any agent or representative thereof to examine the records and books
of account and visit the properties of the Borrower or its subsidiaries and to
discuss the affairs, finances and accounts of the Borrower and any Consolidated
Subsidiary with any of the Borrower's officers and directors.
Section 6.07. Notice of Default. In the event any financial officer of the
Borrower knows of any default or event of default under any agreement to which
the Borrower is a party or any Event of Default which shall have occurred or
knows of the occurrence of any event which, upon notice or lapse of time or
both, would constitute an Event of Default, promptly furnish to the Bank a
written statement as to such occurrence specifying the nature and extent thereof
and the action (if any) which is proposed to be taken with respect thereto.
Section 6.08. Subsidiaries. Give the Bank prompt written notice of the
creation, establishment or acquisition, in any manner, of any Subsidiary not
existing on the date hereof and will cause each newly formed or acquired
Domestic Subsidiary whose assets equal or exceed by amount 10% of the assets of
the Borrower, to jointly, severally and unconditionally guaranty payment of the
Loans and performance of all of the obligations of the Borrower created by this
Agreement.
Section 6.09. Material Adverse Changes. The Borrower shall promptly notify
the Bank of any litigation matter, investigation, audit, business development or
change in financial condition, which has resulted in, or which the Borrower or
its Subsidiaries reasonably believes will result in an Event of Default.
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ARTICLE 7. NEGATIVE COVENANTS.
So long as any of the Notes shall remain unpaid or the Bank shall have any
Commitment under this Agreement, the Borrower shall not without the written
consent of the Bank:
Section 7.01. Liens, Etc. Create or suffer to exist, or permit any of its
subsidiaries to create or suffer to exist, any Lien, or any other type of
preferential arrangement, upon or with respect to any of its properties, whether
now owned or hereafter acquired, or assign, or permit any of its subsidiaries to
assign, any right to receive income, in each case to secure any Debt of any
person or entity, other than:
(a) Liens securing the payment of taxes, assessments or governmental
charges or levies or the demands of suppliers, mechanics, carriers, warehousers,
landlords and other like Persons, provided that (i) they do not in the aggregate
materially reduce the value of any properties subject to the Liens or materially
interfere with their use in the ordinary conduct of the owning business, and
(ii) all claims which the Liens secure are being actively contested in good
faith and by appropriate proceedings;
(b) Liens incurred or deposits made in the ordinary course of business (i)
in connection with worker's compensation, unemployment insurance, social
security and other like laws, or (ii) to secure the performance of letters of
credit, bids, tenders, sales contract, leases, statutory obligations, surety,
appeal and performance bonds and other similar obligations, in each case not
incurred in connection with the borrowing of money, the obtaining of advances or
the payment of the deferred purchase price of property;
(c) attachment, judgment and other similar Liens arising in connection with
court proceedings provided that (i) execution and other enforcement are
effectively stayed, and (ii) all claims which the Liens secure are being
actively contested in good faith and by appropriate proceedings;
(d) Liens on property of a Subsidiary provided that they secure only
obligations owing to the Borrower or another Subsidiary;
(e) Liens related to lease obligations, and within the limitations,
described in Section 7.02;
(f) Liens against customer notes, which are created in connection with the
sale, pledge or discounting of such customer notes, provided that immediately
after giving effect thereto, the
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Borrower's aggregate liabilities on account of such Debt secured by such Liens
does not exceed $11,000,000.00; and
(g) Liens against property leased pursuant to Capital Leases, provided that
the aggregate amount of Debt secured by such Liens does not exceed
$3,000,000.00.
For the purposes of this Agreement, the term "Lien" shall mean any interest
in property securing any Debt or obligation owed to, or a claim by, a Person
other than the owner of the property, whether the interest is based on common
law, statute or contract (including the security interest or lien arising from a
mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes). The term "Lien" shall not
include minor reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions and other minor title exceptions affecting
property, provided that they do not constitute security for a monetary
obligation. For the purposes of this Agreement, the Borrower or a Subsidiary
shall be deemed to be the owner of any property which it has acquired or holds
subject to a conditional sale agreement, Capital Lease or other arrangement
pursuant to which title to the property has been retained by or vested in some
other Person for security purposes, and such retention or vesting shall be
deemed to be a Lien. In connection with any sale, pledge or discounting of
Borrower's or its subsidiaries' customer notes, a "Lien" or "Liens" shall be
deemed to exist to the extent of (i) the amount of any sums withheld from the
Borrower or any Subsidiary in any such transaction, plus (ii) the amount of any
obligation of the Borrower or any Subsidiary resulting from the non-payment of
any customer notes involved in any such transaction.
Section 7.02. Lease Obligations. Create or suffer to exist, or permit any
of its subsidiaries to create or suffer to exist, any obligations for the
payment of rental for any property under leases or agreements to lease other
than Capital Leases which would cause the liabilities of the Borrower and its
subsidiaries, on a consolidated basis, in respect of all such obligations to
exceed Five Million and 00/100ths Dollars ($5,000,000.00) payable in any period
of twelve (12) months.
Section 7.03. Prohibited Transactions. Use the proceeds of any Loan to
acquire any security in any transaction which is subject to Sections 13 and 14
of the Securities Exchange Act of 1934 or use the proceeds of any Loan to
otherwise acquire any public company other than on a friendly basis.
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Section 7.04. Margin Stock. Use the proceeds of any Loan to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
Section 7.05. 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 (any of the above being an "Acquisition"),
unless the Borrower is the surviving entity, the transaction is on a friendly
basis and immediately thereafter the Borrower is in compliance with all terms
and provisions of this Agreement and 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,
(d) the Borrower or any Subsidiary may sell, lease or otherwise dispose of
any of its assets (other than as permitted by clauses (a) to (c) inclusive),
provided that the aggregate net book value of all assets of the Borrower and its
Subsidiaries sold, leased or otherwise disposed of during any fiscal year of the
Borrower pursuant to this clause (d) shall not exceed 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 dispositions of assets pursuant to clause (b), (c) or
(d) shall be at fair market value.
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 February 29, 1996
shall not be greater than $10,000,000.00 in any consecutive twenty-four (24)
month period without the prior written consent of the Bank.
Section 7.06. Affiliate Transactions. Enter into or permit any Subsidiary
to enter into any transaction (including the purchase, sale or exchange of
Property or the rendering of any service) with any Affiliate except upon fair
and reasonable terms
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which are at least as favorable to the Borrower or the Subsidiary as would be
obtained in a comparable arms-length transaction with a non-Affiliate.
Section 7.07. Loans and Advances. Make or permit to exist any loans or
advances to any Person, except that loans or advances incurred in the normal
course of business, including employee advances and customer notes, are
permitted.
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 under which the maximum aggregate amount of indebtedness, dividend or
other obligation being guarantied can be mathematically determined at the time
of issuance. Each guaranty permitted by this Section 7.08 must comply with the
requirements of Section 8.01 (if it is included among Consolidated Current
Liabilities) and with the requirement of Sections 8.03 and 8.05.
Section 7.09. No Activities Leading to Forfeiture. Neither the Borrower nor
any of its Subsidiaries or Affiliates shall engage in or propose to be engaged
in the conduct of any business or activity which could result in a Forfeiture
Proceeding, which would, individually or in the aggregate, materially and
adversely affect the business, operations, assets or financial condition of the
Borrower or any of its Subsidiaries.
ARTICLE 8. FINANCIAL COVENANTS.
So long as any of the Notes shall remain unpaid or the Bank shall have any
Commitment under this Agreement:
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 $50,000,000.00. Consolidated Current Liabilities shall not include
the current portion of the indebtedness evidenced by the Notes or of any other
indebtedness maturing more than one year after the date of its creation.
Section 8.02. Net Worth. The Borrower shall maintain a Consolidated
Tangible Net Worth, at all times during each fiscal year of not less than the
amount set forth below opposite such fiscal year:
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Fiscal Year Ending
December 31 Amount
----------- ------
1996 $128,000,000
1997 $131,000,000
1998 $134,000,000
1999 $137,000,000
2000 $140,000,000
2001 $143,000,000
2002 $146,000,000
The term "Consolidated Tangible Net Worth" shall mean the total
shareholders' equity prior to any cumulative foreign currency translation
adjustments, minus intangible assets.
Section 8.03. Debt. The Borrower shall not create or suffer to exist, or
permit any of its Subsidiaries to create or suffer to exist, any Debt if,
immediately after giving effect to such Debt and the receipt and application of
any proceeds thereof, the aggregate amount of Debt of the Borrower and its
Subsidiaries, on a consolidated basis, would exceed 60% of the Consolidated
Tangible Net Worth of the Borrower and its Subsidiaries.
Section 8.04. Cash Flow. The Borrower shall maintain a Cash Flow Ratio at
all times of not less than 2.0 to 1.0.
"Cash Flow Ratio" means the ratio at each Quarterly Date equal to (a) the
sum of Consolidated Net Income plus depreciation, amortization and other noncash
expenses for the previous four consecutive fiscal quarters divided by (b) the
current portion (i.e., due within one (1) year) of long term Debt.
Section 8.05. Total Liabilities to Tangible Net Worth. The Borrower shall
not permit the ratio of Consolidated Total Unsubordinated Liabilities to
Consolidated Tangible Net Worth to be greater than .75 to 1.0 at any time.
ARTICLE 9. EVENTS OF DEFAULT.
Section 9.01. Events of Default. Any of the following events shall be an
"Event of Default":
(a) The Borrower shall fail to pay when due any Commitment fee due under
Section 2.11 or any installment of principal of, or interest on, any Note; or
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(b) Any representation or warranty made by the Borrower herein or in any
other Facility Document, or by the Borrower (or any of its officers) in
connection with this Agreement, or any other agreement to which the Bank and the
Borrower are parties, shall prove to have been incorrect in any material respect
when made; or
(c) The Borrower shall fail to perform or observe any other term, covenant
or agreement contained in this Agreement or in any other Facility Document on
its part to be performed or observed and any such failure shall remain
unremedied for 10 days after written notice thereof shall have been given to the
Borrower by the Bank; or
(d) The Borrower or any of its Subsidiaries shall fail to pay any Debt (but
excluding Debt evidenced by the Notes) of the Borrower or such Subsidiary as the
case may be, or any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; or any other default under
any agreement or instrument relating to any such Debt, or any other event, shall
occur and shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Debt, or any
such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof; or
(e) The Borrower or any of its Subsidiaries shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Borrower or
any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property; or the
Borrower or any of its Subsidiaries shall take any corporate action to authorize
any of the actions set forth above in this subsection (e); or
(f) Any judgment or order for the payment of money in excess of Two Million
Five Hundred Thousand Dollars ($2,500,000.00) shall be rendered against the
Borrower or any of its Subsidiaries, and either (i) enforcement proceedings
shall
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have been commenced by any creditor upon such judgment or order, or (ii) there
shall be any period of 10 consecutive days during which a state of enforcement
of such judgment or order, by reason of the pending appeal or otherwise, shall
not be in effect; or
(g) Any member of the Controlled Group shall fail to pay when due an amount
or amounts aggregating in excess of $250,000.00 which it shall have become
liable to pay to the PBGC or to a Plan under Title IV of ERISA, or notice of
intent to terminate a Plan or Plans having aggregate Unfunded Benefit
Liabilities in such amount or amounts which would at such time create a
liability in excess of liabilities of such Plan or Plans recognized prior
thereto on the Borrower's financial statements and which liability would cause a
violation of any of the covenants under Article 7 (collectively, a "Material
Plan") shall be filed under Title IV of ERISA by any member of the Controlled
Group, any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any Material Plan or a proceeding shall be
instituted by a fiduciary of any Material Plan against any member of the
Controlled Group to enforce Section 515 of ERISA and such proceeding shall not
have been dismissed within 30 days thereafter; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree adjudicating that
any Material Plan must be terminated;
(h) Any Forfeiture Proceeding shall have been commenced or the Borrower
shall have given the Bank written notice of the commencement of any Forfeiture
Proceeding, which would individually or in the aggregate, materially and
adversely affect the business, operations, assets or financial condition of the
Borrower or any of its Subsidiaries, or any Bank has a good faith basis to
believe that a Forfeiture Proceeding has been threatened or commenced, which
would, individually or in the aggregate, materially and adversely affect the
business, operations, assets or financial condition of the Borrower or any of
its subsidiaries.
Section 9.02. Remedies. If any Event of Default shall occur and be
continuing, the Bank may, by notice to the Borrower, (a) declare the Commitment
to be terminated, whereupon the same shall forthwith terminate, and (b) declare
the outstanding principal of the Notes, all interest thereon and all other
amounts payable under this Agreement and the Notes to be forthwith due and
payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided that, in the case of an Event of Default referred to in
Section 9.01(e) or Section 9.01(h) above, the Commitment shall be immediately
terminated, and the Notes, all interest thereon and all other
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amounts payable under this Agreement shall be immediately due and payable
without notice, presentment, demand, protest or other formalities of any kind,
all of which are hereby expressly waived by the Borrower.
ARTICLE 10. MISCELLANEOUS.
Section 10.01. Amendments and Waivers. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the Borrower and the Bank,
and any provision of this Agreement may be waived by the Bank; provided that no
amendment, modification or waiver shall, unless by an instrument signed by the
Bank: (a) increase or extend the term, or extend the time or waive any
requirement for the reduction or termination, of the Commitment, (b) extend the
date fixed for the payment of principal of or interest on any Loan or any fee
payable hereunder, (c) reduce the amount of any payment of principal thereof or
the rate at which interest is payable thereon or any fee payable hereunder, (d)
alter the terms of this Section 10.01, or (e) waive any of the documentary
conditions precedent set forth in Section 4.01 hereof. No failure on the part of
the Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof or preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
Section 10.02. Usury. Anything herein to the contrary notwithstanding, the
obligations of the Borrower under this Agreement and the Notes shall be subject
to the limitation that payments of interest shall not be required to the extent
that receipt thereof would be contrary to provisions of law applicable to the
Bank limiting rates of interest which may be charged or collected by the Bank.
Section 10.03. Expenses and Indemnification. In addition to the fees set
forth in Section 2.11 hereof, the Borrower shall reimburse the Bank on demand
for all costs, expenses, and charges (including, without limitation, fees and
charges of external legal counsel for the Bank and costs allocated by its
internal legal departments) incurred by the Bank in connection with the
enforcement of this Agreement or the Notes by reason of any Event of Default or
any event which, after the giving of notice or passage of time, or both, would
constitute an Event of Default. The Borrower agrees to indemnify and hold
harmless the Bank from and against any and all claims, damages, liabilities and
expenses (including, without limitation, fees and
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disbursements of counsel) (each an "Indemnified Liability") which may be
incurred by or asserted against the Bank in connection with or arising out of
any threatened or actual litigation, or proceeding related to any acquisition or
proposed acquisition by the Borrower, or by any Subsidiary, of all or any
portion of the stock of substantially all the assets of any Person whether or
not the Bank is a party thereto. The Borrower agrees that any Indemnified
Liability will be promptly paid to the Bank upon the written demand of the Bank.
Section 10.04. Survival. The obligations of the Borrower under Sections
3.01, 3.05 and 10.03 shall survive the repayment of the Loans and the
termination of the Commitments.
Section 10.05. Assignment, Participations.
(a) This Agreement shall be binding upon, and shall inure to the benefit
of, the Borrower, the Bank and their respective successors and assigns, except
that the Borrower may not assign or transfer its rights or obligations
hereunder.
(b) The Bank may, with the consent of the Borrower (which consent will not
be unreasonably withheld or delayed) assign all or any part of its Commitments,
its Note or Loans to another bank or other Person. Upon execution and delivery
by the assignee to the Borrower of an instrument in writing pursuant to which
such assignee agrees to become a "Bank" hereunder having the Commitment and
Loans specified in such instrument, and upon consent thereto by the Borrower, to
the extent required above, the assignee shall have, to the extent of such
assignment (unless otherwise provided in such assignment with the consent of the
Borrower), the obligations, rights and benefits of the Bank and the Bank shall,
to the extent of assignment, be released from the Commitment (or portion
thereof) so assigned.
(c) The Bank may sell or agree to sell to one or more banks or
other Persons a participation in all or any part of any Loans held by it, or in
its Commitment, in which event each purchaser of a participation (a
"Participant") shall not have any rights or benefits under this Agreement or any
Note (the participant's rights against the Bank in respect of such participation
to be those set forth in the agreements executed by the Bank in favor of the
Participant). All amounts payable by the Borrower to the Bank under Section 2
hereof in respect of Loans held by it and its Commitment, shall be determined as
if the Bank had not sold or agreed to sell any participations in such Loan and
Commitment, and as if the Bank were funding each of such Loan and Commitment in
the same way that it is funding the portion of such Loan and Commitment in which
no participations have been sold.
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The agreement executed by the Bank in favor of the Participant shall not give
the Participant the right to require the Bank to take or omit to take any action
hereunder except action directly relating to (i) the extension of the
Termination Date, (ii) the extension of a payment date with respect to any fees
payable hereunder or any portion of the principal of or interest on any amount
outstanding hereunder allocated to such participant, (iii) the reduction of the
principal amount outstanding hereunder, or (iv) the reduction of the rate of
interest payable on such amount or any amount of fees payable hereunder to a
rate or amount, as the case may be, below that which the Participant is entitled
to receive under its agreement with the Bank.
(d) In addition to the assignments and participations permitted under
paragraphs (b) and (c) above, the Bank may assign and pledge all or any portion
of its Loans and Note to (i) any affiliate of such Bank, or (ii) any Federal
Reserve Bank as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any operating circular issued by
such Federal Reserve Bank. No such assignment shall release the Bank from its
obligations hereunder.
(e) The Bank may furnish any information concerning the Borrower or any of
its Subsidiaries in the possession of the Bank from time to time to assignees
and participants (including prospective assignees and participants), provided
that the Bank shall require any assignee or participant (prospective or
otherwise) to agree in writing to maintain the confidentiality of such
information.
Section 10.06. Notices. Except as provided in Section 2.08 with respect to
the timing of certain notices required hereunder, all notices, requests and
other communications provided for herein (including, and not by way of
limitation, any modifications of, or waivers, requests or consents under, this
Agreement) shall be given or made in writing (including and not by way of
limitation by telecopy), or, with respect to notices given pursuant to Section
2.04 hereof, by telephone confirmed in writing by telex, telecopier or other
writing by the close of business on the day notice is given, delivered (or
telephoned, as the case may be) to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof); or, as to any
party, at such other address as shall be designated by such party in a notice to
each other party. Except as otherwise provided in this Agreement, notices to the
Bank and to the Borrower shall be given by telecopy, commercial overnight
courier service, ordinary mail, or telex addressed to such party at its address
on the signature page of this Agreement. Notices shall be effective: (i) if
given by mail, three (3) days after deposit in the mails with first class
postage prepaid, addressed as
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aforesaid; (ii) if given by telex, when the telex is transmitted to the telex
number as aforesaid, and (iii) in all other cases when delivered or received.
Provided, however, that notices to the Bank shall be effective upon receipt.
Section 10.07. Setoff. The Borrower agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim the
Bank may otherwise have, the Bank shall be entitled, at its option, to offset
balances (general or special, time or demand, provisional or final) held by it
for the account of the Borrower at any of the Bank's offices, in Dollars or in
any other currency, against any amount payable by the Borrower to the Bank under
this Agreement or the Bank's Note which is not paid when due (regardless of
whether such balances are then due to the Borrower), in which case it shall
promptly notify the Borrower; provided that the Bank's failure to give such
notice shall not affect the validity thereof. Payments by the Borrower hereunder
shall be made without setoff or counterclaim.
SECTION 10.08. JURISDICTION; IMMUNITIES. (a) THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES
FEDERAL COURT OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE NOTES, AND THE BORROWER IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE OR FEDERAL COURT. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF
ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF
SUCH PROCESS TO THE BORROWER AT ITS ADDRESS SPECIFIED IN SECTION 10.06. THE
BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. THE BORROWER FURTHER WAIVES ANY OBJECTION
TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH
STATE ON THE BASIS OF FORUM NON CONVENIENS. THE BORROWER WAIVES ANY RIGHT IT MAY
HAVE TO JURY TRIAL.
(b) Nothing in this Section 10.08 shall affect the right of the Bank to
serve legal process in any other manner permitted by law or affect the right of
the Bank to bring any action or proceeding against the Borrower or its property
in the courts of any other jurisdictions.
(c) To the extent that the Borrower has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether from service or notice, attachment prior to judgment, attachment in aid
of execution, execution or otherwise) with respect to itself or its property,
the Borrower
-41-
hereby irrevocably waives such immunity in respect of its obligations under
this Agreement and the Notes.
Section 10.09. Table of Contents; Headings. Any table of contents and the
headings and captions hereunder are for convenience only and shall not affect
the interpretation or construction of this Agreement.
Section 10.10. Severability. The provisions of this Agreement are intended
to be severable. If for any reason any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 10.11. Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing any such
counterpart.
Section 10.12. Integration. The Facility Documents set forth the entire
agreement among the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.
SECTION 10.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT EXCLUDING
ALL OTHER CONFLICT-OF-LAW RULES.
Section 10.14. Confidentiality. The Bank agrees (on behalf of itself and
each of its affiliates, directors, officers, employees and representatives) to
use reasonable precautions to keep confidential, in accordance with safe and
sound banking practices, any non-public information supplied to it by the
Borrower pursuant to this Agreement which is identified by the Borrower as being
confidential at the time the same is delivered to the Bank, provided that
nothing herein shall limit the disclosure of any such information (a) to the
extent required by statute, rule, regulation or judicial process, (b) to counsel
for
-42-
the Bank, (c) to bank examiners, auditors or accountants, (d) in connection
with any litigation to which the Bank is a party or (e) to any assignee or
participant (or prospective assignee or participant) so long as such assignee or
participant (or prospective assignee or participant) first executes and delivers
to the Bank a Confidentiality Agreement in substantially the form of Exhibit D
hereto; and provided finally that in no event shall the Bank be obligated or
required to return any materials furnished by the Borrower.
Section 10.15. Treatment of Certain Information. The Borrower (a)
acknowledges that services may be offered or provided to it (in connection with
this Agreement or otherwise) by the Bank or by one or more of its subsidiaries
or affiliates and (b) acknowledges that any information delivered to the Bank or
its subsidiaries or affiliates regarding the Borrower may be shared among the
Bank and such subsidiaries and affiliates. This Section 10.15 shall survive the
repayment of the Loans and the termination of the Commitment.
Section 10.16. Judgment Currency. This is an international loan transaction
in which the specification of Dollars or an Alternative Currency as the case may
be (the "Specified Currency"), any payment in New York City or the country of
the Specified Currency, as the case may be (the "Specified Place"), is of the
essence, and the Specified Currency shall be the currency of account in all
events relating to the Loans denominated in the Specified Currency. The payment
obligations of the Borrower under this Agreement and the Notes shall not be
discharged by an amount paid in another Currency or in another place, whether
pursuant to a judgment or otherwise, to the extent that the amount so paid on
conversion to the Specified Currency and transferred to the Specified Place
under normal banking procedures does not yield the amount of the Specified
Currency at the Specified Place due hereunder. If for the purpose of obtaining a
judgment in any court it is necessary to convert a sum due hereunder in the
Specified Currency into another Currency (the "Second Currency"), the rate of
exchange which shall be applied shall be that at which in accordance with the
normal banking procedures the Bank could purchase the Specified Currency with
the Second Currency on the Business Day next preceding that on which such
judgment is rendered. The obligation of the Borrower in respect of any sum due
from it to the Bank hereunder (an "Entitled Person") shall, notwithstanding the
rate of exchange actually applied in rendering such judgment, be discharged only
to the extent that on the Business Day following receipt by such Entitled Person
of any sum adjudged to be due hereunder or under the Notes in the Second
Currency, such Entitled Person may in accordance with normal banking procedures
purchase and transfer to the
-▇▇-
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ the Specified Currency with the amount of the Second Currency so
adjudged to be due; and the Borrower hereby, as a separate obligation and
notwithstanding any judgment, agrees to indemnify such Entitled Person against,
and to pay such Entitled Person on demand in the Specified Currency, any
difference between the sum originally due to such Entitled Person in the
Specified Currency in the amount of the Specified Currency so purchased and
transferred.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
HARDINGE INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, Chairman of the
Board and CEO
Address for Notices:
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
MARINE MIDLAND BANK
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Address for Notices:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (607)
Telecopier No.: (607)
EXHIBIT A-1
[Form of Variable Rate Loan Note]
PROMISS0RY NOTE
November 18, 1996
Elmira, New York
HARDINGE INC. (the "Borrower"), a corporation organized under
the laws of New York, for value received, hereby promises to pay to the order of
Marine Midland Bank (the "Bank") at its principal office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other place as required by the
Credit Agreement referred to below, the aggregate unpaid principal amount of the
Variable Rate Loans made by the Bank to the Borrower, in lawful money of the
United States of America or such other Currency as required by said Credit
Agreement and in immediately available funds on the dates and in the principal
amounts provided in the Credit Agreement. The Borrower also promises to pay
interest on the unpaid principal amount of each such Variable Rate Loan, in like
money and funds, for the period such balance is outstanding, at said principal
office at the rates of interest provided in the Credit Agreement and on the
dates and in the manner provided in said Credit Agreement.
The date and amount of each Variable Rate Loan made by the
Bank to the Borrower under the Credit Agreement referred to below, maturity date
and each payment of principal thereof shall be recorded by the Bank on its books
and, prior to any transfer of this Note (or, at the discretion of the Bank, at
any other time), endorsed by the Bank on the schedule attached hereto or any
continuation thereof; provided, however, the failure of the Bank to make any
such recordation or endorsement shall not affect the obligations of the Borrower
to make payment when due of any amount owing under the Credit Agreement or
hereunder in respect to the Variable Rate Loans made by the Bank.
This is one of the Variable Rate Notes referred to in that
certain Credit Agreement (as amended from time to time, the "Credit Agreement")
dated as of November 18, 1996 between the Borrower and the Bank and evidences
the Loans made by the Bank thereunder. All terms not defined herein shall have
the meanings given to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the
maturity of principal upon the occurrence of certain Events of Default and for
prepayment on the terms and conditions specified therein.
-2-
The Borrower waives presentment, notice of dishonor, protest
and any other notice or formality with respect to this Note. The Borrower waives
to the full extent permitted by applicable law the right to trial by jury in any
legal proceedings arising out of or relating to this Note.
This Note shall be governed by, and interpreted and construed
in accordance with, the laws of the State of New York, including Section 5-1401
of the New York General Obligations Law (or any similar successor provision
thereto) but excluding all other conflict-of-law rules.
HARDINGE INC.
By
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
Chairman of the Board
SCHEDULE OF VARIABLE RATE LOANS
Date Amount Currency Interest Duration Amount of Balance Notation
of Loan Rate of Balance Outstanding By
Interest
Period
EXHIBIT A-2
[Form of Eurodollar Loan Note]
PROMISS0RY NOTE
November 18, 1996
Elmira, New York
HARDINGE INC. (the "Borrower"), a corporation organized under
the laws of New York, for value received, hereby promises to pay to the order of
Marine Midland Bank (the "Bank") at its principal office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other place as required by the
Credit Agreement referred to below, the aggregate unpaid principal amount of the
Eurodollar Loans made by the Bank to the Borrower, in lawful money of the United
States of America or such other Currency as required by said Credit Agreement
and in immediately available funds on the dates and in the principal amounts
provided in the Credit Agreement. The Borrower also promises to pay interest on
the unpaid principal amount of each such Eurodollar Loan, in like money and
funds, for the period such balance is outstanding, at said principal office at
the rates of interest provided in the Credit Agreement and on the dates and in
the manner provided in said Credit Aqreement.
The date and amount of each Eurodollar Loan made by the Bank
to the Borrower under the Credit Agreement referred to below, maturity date and
each payment of principal thereof shall be recorded by the Bank on its books
and, prior to any transfer of this Note (or, at the discretion of the Bank, at
any other time), endorsed by the Bank on the schedule attached hereto or any
continuation thereof; provided, however, the failure of the Bank to make any
such recordation or endorsement shall not affect the obligations of the Borrower
to make payment when due of any amount owing under the Credit Agreement or
hereunder in respect to the Eurodollar Loans made by the Bank.
This is one of the Eurodollar Notes referred to in that
certain Credit Agreement (as amended from time to time, the "Credit Agreement")
dated as of November 18, 1996 between the Borrower and the Bank and evidences
the Loans made by the Bank thereunder. All terms not defined herein shall have
the meanings given to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the
maturity of principal upon the occurrence of certain Events of Default and for
prepayment on the terms and conditions specified therein.
-2-
The Borrower waives presentment, notice of dishonor, protest
and any other notice or formality with respect to this Note. The Borrower waives
to the full extent permitted by applicable law the right to trial by jury in any
lega1 proceedings arising out of or relating to this Note.
This Note shall be governed by, and interpreted and construed
in accordance with, the laws of the State of New York, including Section 5-1401
of the New York General Obligations Law (or any similar successor provision
thereto) but excluding all other conflict-of-law rules.
HARDINGE INC.
By
---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
Chairman of the Board
SCHEDULE OF EURODOLLAR LOANB
Date Amount Currency Interest Duration Amount of Balance Notation
of Loan Rate of Balance Outstanding By
Interest
Period
EXHIBIT A-3
[Form of Term Loan Note]
TERM NOTE
---------- ----,-------
Elmira, New York
HARDINGE INC. (the "Borrower"), a corporation organized under
the laws of New York, for value received, hereby promises to pay to the order of
Marine Midland Bank (the "Bank") at its principal office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other place as required by the
Credit Agreement referred to below, the aggregate unpaid principal amount of the
Term Loan made by the Bank to the Borrower on the Revolving Credit Termination
Date, in sixteen (16) consecutive quarterly installments as provided in the
Credit Agreement. The Borrower also promises to pay interest on the unpaid
principal amount of such Term Loan, in like money and funds, for the period such
balance is outstanding, at said principal office at the rates of interest
provided in the Credit Agreement and on the dates and in the manner provided in
said Credit Agreement. Any amount of principal hereof which is not paid when
due, whether at stated maturity, by acceleration, or otherwise, shall bear
interest from the date when due until said principal amount is paid in full,
payable on demand, at a rate per annum equal at all times to the Default Rate
provided in said Credit Agreement. Any change in the interest rate resulting
from a change in the Bank's Prime Rate shall be effective at the beginning of
the day on which such change in the Bank's Prime Rate becomes effective.
This Term Note is the Term Note referred to in that certain
Credit Agreement (as amended from time to time, the "Credit Agreement") dated as
of November 18, 1996 between the Borrower and the Bank and evidences the Term
Loan made by the Bank thereunder. All capitalized terms not defined herein shall
have the meanings given to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the
maturity of principal upon the occurrence of certain Events of Default and for
prepayment on the terms and conditions specified therein.
The Borrower waives presentment, notice of dishonor, protest
and any other notice or formality with respect to this Note. The Borrower waives
to the full extent permitted by applicable law the right to trial by jury in any
legal proceedings arisinq out of or relating to this Note.
-2-
This Note shall be governed by, and interpreted and construed
in accordance with, the laws of the State of New York, including Section 5-1401
of the New York General Obligations Law (or any similar successor provision
thereto) but excluding all other conflict-of-law rules.
HARDINGE INC.
By----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
Chairman of the Roard
EXHIBIT B
[Form of Authorization Letter]
_______ __, 1996
Re: Credit Agreement dated as of November 18, 1996
(the"Credit Agreement") between Hardinge Inc.
and Marine Midland Bank
-----------------------
Marine Midland Bank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In connection with the captioned Credit Agreement, we hereby
designate any one of the following persons to give to you instructions,
including notices required pursuant to the Agreement, orally or by telephone or
teleprocess:
NAME
----
▇▇▇▇▇▇ ▇. ▇▇▇▇, Chairman of the Board
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice President and Chief Financial Officer
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Treasurer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President - Finance
▇▇▇ ▇▇▇▇▇, Assistant Treasurer
Instructions may be honored on the oral, telephonic or
teleprocess instructions of anyone purporting to be any one of the
above-designated persons even if the instructions are for the benefit of the
person delivering them. We will furnish you with confirmation of each such
instruction either by telex (whether tested or untested) or in writing signed by
any person designated above (including any telecopy which appears to bear the
signature of any person designated above) on the same day that the instruction
is provided to you but your responsibility with respect to any instruction shall
not be affected by your failure to receive such confirmation or by its contents.
You shall be fully protected in, and shall incur no liability
to us for, acting upon any instructions which you in good faith believe to have
been given by any person designated above, and in no event shall you be liable
for special, consequential or punitive damages. In addition, we agree to hold
you and your agents harmless from any and all liability, loss and expense
arising directly or indirectly out of instructions that we provide to you in
connection with the Credit Agreement except for liability, loss or expense
occasioned by the gross negligence or willful misconduct of you or your agents.
Upon notice to us, you may, at your option, refuse to execute
any instruction, or part hereof, without incurring any responsibility for any
loss, liability or expense arising out of such refusal if you in good faith
believe that the person delivering the instruction is not one of the persons
designated above or if the instruction is not accompanied by an authentication
method that we have agreed to in writing.
We will promptly notify you in writing of any change in the
persons designated above and, until you have actually received such written
notice and have had a reasonable opportunity to act upon it, you are authorized
to act upon instructions, even though the person delivering them may no longer
be authorized.
Very truly yours,
HARDINGE INC.
By
--------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇,
Chairman of the Board
EXHIBIT C
[Letterhead of counsel to the Borrower]
[Closing Date]
Marine Midland Bank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to Hardinge Inc. ("the Borrower") in
connection with the execution and delivery of that certain Credit Agreement (the
"Credit Agreement") dated as of November 18, 1996 between the Borrower and
Marine Midland Bank, as Bank. Except as otherwise defined herein, all terms used
herein and defined in the Credit Agreement or any agreement delivered thereunder
shall have the meanings assigned to them therein.
In connection with the preparation of this Opinion, we have
examined originals or counterparts, executed on behalf of the Borrower, of the
Facility Documents and the exhibits attached thereto in originals or copies,
certified to our satisfaction, of such records, certificates and documents as we
deemed relevant and necessary as a basis for renderinq this Opinion.
Based upon the foregoing, and having regard to such legal
considerations as we deem relevant, we are of the opinion that:
1. The Borrower and, to the best of our knowledge, each of
its Subsidiaries, is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, has all
power and authority to carry on its business as presently being conducted and to
own its properties, and is duly licensed or qualified and in good standing as a
foreign corporation in each other jurisdiction in which its properties are
located or in which failure to qualify would materially and adversely affect
either the conduct of its business or the enforceability of contractual rights
of the Borrower.
-2-
2. The execution, delivery and performance by the Borrower of
the Facility Documents to which it is a party have been duly authorized by all
necessary corporate action and do not and will not: (a) require any consent or
approval of its stockholders; (b) contravene its charter or by-laws; (c)
contravene any law or, to the best of our knowledge, contractual restriction or
provision binding on or affecting the Borrower.
3. No authorization or approval or other action by, and no
notice to or filing with any governmental authority or requlatory body is
required for the due execution, delivery and performance by the Borrower of the
Facility Documents.
4. The Credit Agreement is, and the other Facility Documents
when executed thereunder will be, legal, valid and binding obligations
enforceable in accordance with their respective terms, except that (a) the
availability of equitable remedies may be limited by principles of equity, and
(b) enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting the enforcement of the rights of creditors generally.
5. Each Facility Document to which the Borrower is a party
is, or when delivered under the Credit Agreement will be, a legal, valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting the enforcement of
the rights of creditors generally.
6. Except as described in Schedule II to the Credit
Agreement, there is no pending, or to our knowledge threatened actions, suits or
proceedings against or affecting the Borrower or any of its Subsidiaries before
any court, governmental agency or arbitrator, which may, in any one case or in
the aggregate, materially adversely affect the financial condition or operations
of the Borrower or of any such Subsidiary, or the ability of the Borrower to
perform its obligations under the Facility Documents to which it is a party. We
do not address herein those matters described in ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
letter dated November 15, 1996 attached hereto.
Yours very truly,
SAYLES, EVANS, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
By
----------------------------
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, A Partner.
EXHIBIT D
CONFIDENTIALITY AGREEMENT
[Date]
Re: Credit Agreement dated as of
November 18, 1996 between
Hardinqe Inc. and Marine Midland Bank
-------------------------------------
[Insert Name and
Address of Prospective
Participant or Assignee]
Dear
-------------------
As a Bank, party to the above-referenced Credit Agreement (the
"Credit Agreement"), we have agreed with Hardinge Inc. (the "Borrower") pursuant
to Section 10.14 of the Credit Agreement to use reasonable precautions to keep
confidential, except as otherwise provided therein, all non-public information
identified by the Borrower as being confidential at the time the same is
delivered to us pursuant to the Credit Agreement.
As provided in said Section 10.14, we are permitted to provide
you, as a prospective [holder of a participation in the Loans (as defined in the
Credit Agreement)] [assignee Bank], with certain of such non-public information
subject to the execution and delivery by you, prior to receiving such non-public
information, of a Confidentiality Agreement in this form. Such information will
not be made available to you until your execution and return to us of this
Confidentiality Agreement.
Accordingly, in consideration of the foregoing, you agree (on
behalf of yourself and each of your affiliates, directors, officers, employees,
and representatives) that (A) such information will not be used by you except in
connection with the proposed [participation] [assignment] mentioned above and
(B) you shall use reasonable precautions, in accordance with your customary
procedures for handling confidential information and in accordance with safe and
sound bankinq Practices. to keep such
information confidential, provided that nothing herein shall limit the
disclosure of any such information (i) to the extent required by statute, rule,
regulation or judicial process, (ii) to your counsel or to counsel for any of
the Banks or the Agent, (iii) to bank examiners, auditors or accountants, (iv)
in connection with any litigation to which you or any one or more of the Banks
is a party; or (v) to the extent such information becomes publicly available
other than as a result of disclosure other than as a result of disclosure by a
Bank. Provided further, that, unless specifically prohibited by applicable law
or court order, you agree, prior to disclosure thereof, to notify the Borrower
of any request for disclosure of any such non-public information (x) by any
governmental agency or representative thereof (other than any such request in
connection with an examination of your financial condition by such governmental
agency) or (y) pursuant to legal process; and provided finally that in no event
shall you be obligated to return any materials furnished to you pursuant to this
Confidentiality Agreement.
Would you please indicate your agreement to the foregoing, by
signing at the place provided below the enclosed copy of this Confidentiality
Aqreement.
Very truly yours,
[Insert Name of Bankl
By:_________________________
The foregoing is agreed to
as of the date of this letter.
[Insert name of prospective
participant or assignee]
By:________________________
SCHELDULE I
Subsidiaries of Borrowrer
Jurisdiction Percentage
Name and Address of Incorporation of Ownership
---------------- ---------------- ------------
Hardinge Credlt Co., Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ New York 100%
Hardinge Technologies Systems Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ New York 100%
▇▇▇▇▇▇▇▇ Machine Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ New York 100%
Canadian Hardinge Machine
Tools, Ltd.
Toronto, Canada Canada 100%
Hardinge Machine Tools, Ltd.
Exeter, England United Kingdom 100%
Hardinge Brothers GmbH Federal Republic
Krefeld, Germany of Germany 100%
▇. ▇▇▇▇▇▇▇▇▇▇▇▇ & Co., AG
St. Gallen Switzerland 100%
▇▇▇▇▇▇▇▇▇▇▇▇ Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ New York 100%
Hardinge Shanghai Company, Ltd.
Shanghai China 100%
SCHEDULE II
Hazardous Materials
In December, 1992, Hardinge removed an underground waste oil tank at
its College Avenue facility. Environmental sampling following the removal of the
tank disclosed the presence of hydrocarbon contamination in surrounding soils.
An environmental consultant retained by Hardinge prepared a site assessment and
an action plan for on-site remediation which were adopted and approved by the
New York State Department of Environmental Conservation. The project is on site.
Remediation commenced in the Fall of 1995.
SCHEDULE III
Partnerships of Borrower
Egret Aviation Co. Ownership of airplane with three
Box 228 other companies
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[Hardinge Logo]
From the Office of
▇▇▇▇▇▇ ▇. ▇▇▇▇
President/Chief Executive Officer
November 18, 1996
Re: Credit Agreement dated as of November 18, 1996
(the "Credit Agreement") between Hardinge Inc.
and Marine Midland Bank
-----------------------
Marine Midland Bank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In connection with the captioned Credit Agreement, we hereby
designate any one of the following persons to give to you instructions,
including notices required pursuant to the Agreement, orally or by telephone or
teleprocess:
NAME
----
▇▇▇▇▇▇ ▇. ▇▇▇▇, Chairman of the Board
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice President
and Chief Financial Officer
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Treasurer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President - Finance
▇▇▇ ▇▇▇▇▇, Assistant Treasurer
Instructions may be honored on the oral, telephonic or
teleprocess instructions of anyone purporting to be any one of the
above-designated persons even if the instructions are for the benefit of the
person delivering them. We will furnish you with confirmation of each such
instruction either by telex (whether tested or untested) or in writing signed by
any person designated above (including any telecopy which appears to bear the
signature of any person designated above) on the same day that the instruction
is provided to you but your responsibility with respect to any instruction shall
not be affected by your failure to receive such confirmation or by its contents.
You shall be fully protected in, and shall incur no liability
to us for, acting upon any instructions which you in good faith believe to have
been given by any person designated above, and in no event shall you be liable
for special, consequential or punitive damages. In addition, we agree to hold
you and your agents harmless from any and all liability, loss and expense
arising directly or indirectly out of instructions that we provide to you in
connection with the Credit Agreement except for liability, loss or expense
occasioned by the gross negligence or willful misconduct of you or your agents.
Upon notice to us, you may, at your option, refuse to execute
any instruction, or part hereof, without incurring any responsibility for any
loss, liability or expense arising out of such refusal if you in good faith
believe that the person delivering the instruction is not one of the persons
designated above or if the instruction is not accompanied by an authentication
method that we have agreed to in writing.
We will promptly notify you in writing of any change in the
persons designated above and, until you have actually received such written
notice and have had a reasonable opportunity to act upon it, you are authorized
to act upon instructions, even though the person delivering them may no longer
be authorized.
Very truly yours,
HARDINGE INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇,
Chairman of the Board
HARDINGE INC.
I, J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, do hereby certify that I am the duly
elected and acting Secretary of Hardinge Inc., and that the following named
persons have been duly elected to the offices set forth opposite their
respective names and are now serving and acting as such officers and that the
signature opposite their respective names is the specimen signature of each such
person.
▇▇▇▇▇▇ ▇. ▇▇▇▇ Chairman of the Board
Chief Executive Officer /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Executive Vice President,
Chief Financial Officer and
Assistant Secretary /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Treasurer /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice President, Finance /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇ Secretary /s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------
IN WITNESS WHEREOF, I have hereunto set my hand and
the seal of Hardinge Inc. this 18th day of November, 1996.
/s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------
J.▇▇▇▇▇▇ ▇▇▇▇▇▇
HARDINGE INC.
Certified Resolution.
THIS IS TO CERTIFY that I, J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, am the duly
elected and acting Secretary of Hardinge Inc., a New York corporation with
offices at One ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇; that at a
meeting of the Board of Directors of said Corporation duly called and held on
October 22, 1996 at which a quorum was present and voting throughout, the
following resolutions were duly and unanimously adopted and have not been
amended or revoked at the date hereof.
RESOLVED that this Corporation borrow from Marine Midland Bank from
time to time on a revolving credit basis and otherwise an aggregate amount not
to exceed at any time outstanding $20,000,000 under and pursuant to a proposed
Commitment Letter from Marine Midland Bank dated September 18, 1996, copy of
which Commitment Letter shall be filed with the records of this meeting, and be
it further
RESOLVED that the form, terms and provisions of:
(a) said proposed Credit Agreement between this Corporation
and Marine Midland Bank, providing, among other things,
for the making by Marine Midland Bank to this
Corporation from time to time of advances (the
"Advances") in an aggregate amount not to exceed at any
time outstanding $20,000,000 upon the terms and
conditions therein set forth, which terms and
conditions are substantially similar to the present
Revolving Credit Agreement with The Chase Manhattan
Bank (National Association), and for the payment by
this Corporation of costs and expenses as therein
provided; and
(b) promissory notes (the "Notes") to be issued by this
Corporation to Marine Midland Bank pursuant to the
terms and conditions of said proposed Credit Agreement
to be entered into with Marine Midland Bank, a single
Note issued to the order of Marine Midland Bank
evidencing the indebtedness of this Corporation
resulting from each of the Advances made by Marine
Midland Bank to this Corporation and providing, among
other things, for
-2-
the repayment of such Advances, and payment of interest
thereon, as set forth above with respect thereto:
be, and the same hereby are, in all respects approved, and that the Chief
Executive Officer, Chief Financial Officer, Vice President - Finance, or
Treasurer of this Corporation be, and each of them hereby is, authorized, in the
name and on behalf of this Corporation, to execute and deliver said Credit
Agreement with Marine Midland Bank and said Notes, each in the form or
substantially in the form thereof as above described, with such additional
changes, additions and modifications thereto as the officer of this Corporation
executing the same shall approve, such approval to be conclusively evidenced by
his execution and delivery thereof; and be it further
RESOLVED that said Credit Agreement with Marine Midland Bank, as the
same is or may be amended or changed as above provided, together with a copy of
the Notes, be filed by the Secretary of this Corporation with the minutes of the
meetings of the Board of Directors of this Corporation; and be it further
RESOLVED that the Chief Executive Officer, Chief Financial Officer,
Vice President - Finance, Treasurer, the Secretary and Assistant Secretary of
this Corporation be, and each of them hereby is, authorized and empowered (any
one of them acting alone) to do or cause to be done all such acts or things and
to sign and deliver, or cause to be signed and delivered, all such documents,
instruments and certificates (including, without limitation, all notices and
certificates required or permitted to be given or made under the terms of the
Credit Agreement), in the name and on behalf of this Corporation or otherwise,
as such officer of this Corporation may deem necessary, advisable or appropriate
to effectuate or carry out the purposes and intent of the foregoing resolutions
and to perform the obligations of this Corporation under the agreements and
instruments referred to therein.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the seal of the Corporation this 18th day of November, 1996.
/s/ J.▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
(SEAL)
HARDINGE INC.
Officer's Certificate
The undersigned, being the duly elected Chairman of the Board
of Hardinge Inc., a corporation duly organized and existing under the laws of
the State of New York (the "Company") does hereby certify pursuant to Section
4.01 of the Credit Agreement between the Company and Marine Midland Bank, dated
as of November 18, 1996 (the "Credit Agreement") that the representations and
warranties contained in Article 5 of the Credit Agreement are true and correct
on the date hereof as though made on this date and that no event has occurred
and it is continuing which constitutes a Default, or Event of Default, as
defined under the Credit Agreement.
IN WITNESS WHEREOF, this Certificate has been duly executed
this 18th day of November, 1996.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇,
Chairman of the Board
[letterhead of Sayles,Evans, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇]
November 18, 1996
Marine Midland Bank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to Hardinge Inc. ("the Borrower") in
connection with the execution and delivery of that certain Credit Agreement (the
"Credit Agreement") dated as of November 18, 1996 between the Borrower and
Marine Midland Bank, as Bank. Except as otherwise defined herein, all terms used
herein and defined in the Credit Agreement or any agreement delivered thereunder
shall have the meanings assigned to them therein.
In connection with the preparation of this Opinion, we have
examined originals or counterparts, executed on behalf of the Borrower, of the
Facility Documents and the exhibits attached thereto in originals or copies,
certified to our satisfaction, of such records, certificates and documents as we
deemed relevant and necessary as a basis for renderinq this Opinion.
Based upon the foregoing, and having regard to such legal
considerations as we deem relevant, we are of the opinion that:
1. The Borrower and, to the best of our knowledge, each of
its Subsidiaries, is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, has all
power and authority to carry on its business as presently being conducted and to
own its properties, and is duly licensed or qualified and in good standing as a
foreign corporation in each other jurisdiction in which its properties are
located or in which failure to qualify would materially and adversely affect
either the conduct of its business or the enforceability of contractual rights
of the Borrower.
2. The execution, delivery and performance by the Borrower of
the Facility Documents to which it is a party have been duly authorized by all
necessary corporate action and do not and will not: (a) require any consent or
approval of its stockholders; (b) contravene its charter or by-laws; (c)
contravene any law or, to the best of our knowledge, contractual restriction or
provision binding on or affecting the Borrower.
3. No authorization or approval or other action by, and no
notice to or filing with any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Borrower of the
Facility Documents.
4. The Credit Agreement is, and the other Facility Documents
when executed thereunder will be, legal, valid and binding obligations
enforceable in accordance with their respective terms, except that (a) the
availability of equitable remedies may be limited by principles of equity, and
(b) enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting the enforcement of the rights of creditors generally.
5. Each Facility Document to which the Borrower is a party
is, or when delivered under the Credit Agreement will be, a legal, valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting the enforcement of
the rights of creditors qenerally.
6. Except as described in Schedule II to the Credit
Agreement, there is no pending, or to our knowledge threatened actions, suits or
proceedings against or affecting the Borrower or any of its Subsidiaries before
any court, governmental agency or arbitrator, which may, in any one case or in
the aggregate, materially adversely affect the financial condition or operations
of the Borrower or of any such Subsidiary, or the ability of the Borrower to
perform its obligations under the Facility Documents to which it is a party. We
do not address herein those matters described in ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
letter dated November 15, 1996 attached hereto.
Yours very truly,
SAYLES, EVANS, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
By /s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, A Partner.
[Letterhead of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇ Intellectual Property Group]
November 15, 1996
VIA FACSIMILE
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
SAYLES, EVANS, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Loan Disclosure
Our Ref: WWT/50377-226058
Dear Phil:
This will confirm our telephone conversation of today in which we
discussed the above matter and the requirement for disclosure in connection with
a loan application and closing.
To summarize, our review of the indemnity provision granted Hardinge,
Inc. by G.E.-Fanuc is sufficient to cover any significant potential liability
for sales that have occurred to the present time by G.E.-Fanuc to Hardinge, Inc.
We are also aware of the fact that IMS, a potential plaintiff, has granted at
least one patent license to a company situated relative to the market in a
position similar to Hardinge, Inc. In view of these facts, we do not believe
that there is any significant potential liability which need be disclosed on a
loan application at the present time since the potential for litigation over the
IMS patents against Hardinge, Inc. does not appear reasonably likely in the
foreseeable future.
In the event such a claim were made, there is the possibility that any
liability in the future can be avoided simply by purchasing the relevant
equipment from a licensed source.
I understand that ▇▇. ▇▇▇▇▇ ▇▇▇▇ is endeavoring to determine the terms
of such licenses that are available. Based on my discussion with ▇▇▇▇▇ and ▇▇.
▇▇▇▇▇▇ in Elmira, it appears that the cost of such a license will add only an
insignificant amount to the overall cost of the machines.
In view of all of the foregoing, we do not believe tbat an adverse
statement need be made on a loan application as to any potential llability
arising out of the controversy that G.E.-Fanuc is now engaged in.
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq. Page 2
SAYLES, EVANS, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇
November 15, 1996
Please don't hesitate to call should there be any questions.
Very truly yours,
/s/ W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
WWT/lfb
State of New York
Department of State SS:
I hereby certify, that HARDINGE INC. was formed by consolidation on 12/24/1937,
under the name of HARDINGE BROTHERS, INC., fixing the duration as perpetual, and
that a diligent examination has been made of the index of corporation papers
filed in this Department for a certificate, order, or record of a dissolution,
and upon such examination, no such certificate, order or record has been found,
and that so far as indicated by the records of this Department, such corporation
is a subsisting corporation. I further certify the following:
A Certificate of Amendment HARDINGE BROTHERS, INC., changing name to HARDINGE
INC., was filed 05/19/1995.
Restated Certificate was filed on 05/24/1995.
I further certify, that no other certificates have been filed by such
corporation.
[Seal of New York Department of State]
Witness my hand and the official seal
of Department of State at the City
of Albany, this 15th day of November
one thousand nine hundred and
ninety six
/S/ Special Deputy Secretary of State
-------------------------------------
Special Deputy Secretary of State
199611180080 36
PROMISSORY NOTE
November 18, 1996
Elmira, New York
HARDINGE INC. (the "Borrower"), a corporation organized under
the laws of New York, for value received, hereby promises to pay to the order of
Marine Midland Bank (the "Bank") at its principal office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other place as required by the
Credit Agreement referred to below, the aggregate unpaid principal amount of the
Variable Rate Loans made by the Bank to the Borrower, in lawful money of the
United States of America or such other Currency as required by said Credit
Agreement and in immediately available funds on the dates and in the principal
amounts provided in the Credit Agreement. The Borrower also promises to pay
interest on the unpaid principal amount of each such Variable Rate Loan, in like
money and funds, for the period such balance is outstanding, at said principal
office at the rates of interest provided in the Credit Agreement and on the
dates and in the manner provided in said Credit Agreement.
The date and amount of each Variable Rate Loan made by the
Bank to the Borrower under the Credit Agreement referred below, maturity date
and each payment of principal thereof shall be recorded by the Bank on its books
and, prior to any transfer of this Note (or, at the discretion of the Bank, at
any other time), endorsed by the Bank on the schedule attached hereto or any
continuation thereof; provided, however, the failure of the Bank to make any
such recordation or endorsement shall not affect the obligations of the Borrower
to make payment when due of any amount owing under the Credit Agreement or
hereunder in respect to the Variable Rate Loans made by the Bank.
This is one of the Variable Rate Notes referred to in that
certain Credit Agreement (as amended from time to time, the "Credit Agreement")
dated as of November 18, 1996 between the Borrower and the Bank and evidences
the Loans made by the Bank thereunder. All terms not defined herein shall have
the meanings given to them in the Credit Aqreement.
The Credit Agreement provides for the acceleration of the
maturity of principal upon the occurrence of certain Events of Default and for
prepayment on the terms and conditions specified therein.
The Borrower waives presentment, notice of dishonor, protest
and any other notice or formality with respect to this Note. The Borrower waives
to the full extent permitted by applicable law the right to trial by jury in any
legal proceedings arising out of or relating to this Note.
-2-
This Note shall be governed by, and interpreted and construed
in accordance with, the laws of the State of New York, including Section 5-1401
of the New York General Obligations Law (or any similar successor provision
thereto) but excluding all other conflict-of-law rules.
HARDINGE INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
Chairman of the Board
SCHEDULE OF VARIABLE RATE LOANS
Date Amount Currency Interest Duration Amount of Balance Notation
of Loan Rate of Payment Outstanding By
Interest
Period
PROMISSORY NOTE
November 18, 1996
Elmira, New York
HARDINGE INC. (the "Borrower"), a corporation organized under
the laws of New York, for value received, hereby promises to pay to the order of
Marine Midland Bank (the "Bank") at its principal office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other place as required by the
Credit Agreement referred to below, the aggregate unpaid principal amount of the
Eurodollar Loans made by the Bank to the Borrower, in lawful money of the United
States of America or such other Currency as required by said Credit Agreement
and in immediately available funds on the dates and in the principal amounts
provided in the Credit Agreement. The Borrower also promises to pay interest on
the unpaid principal amount of each such Eurodollar Loan, in like money and
funds, for the period such balance is outstanding, at said principal office at
the rates of interest provided in the Credit Agreement and on the dates and in
the manner provided in said Credit Agreement.
The date and amount of each Eurodollar Loan made by the Bank
to the Borrower under the Credit Agreement referred below, maturity date and
each payment of principal thereof shall be recorded by the Bank on its books
and, prior to any transfer of this Note (or, at the discretion of the Bank, at
any other time), endorsed by the Bank on the schedule attached hereto or any
continuation thereof; provided, however, the failure of the Bank to make any
such recordation or endorsement shall not affect the obligations of the Borrower
to make payment when due of any amount owing under the Credit Agreement or
hereunder in respect to the Eurodollar Loans made by the Bank.
This is one of the Eurodollar Notes referred to in that
certain Credit Agreement (as amended from time to time, the "Credit Agreement")
dated as of November 18, 1996 between the Borrower and the Bank and evidences
the Loans made by the Bank thereunder. All terms not defined herein shall have
the meanings given to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the
maturity of principal upon the occurrence of certain Events of Default and for
prepayment on the terms and conditions specified therein.
The Borrower waives presentment, notice of dishonor, protest
and any other notice or formality with respect to this Note. The Borrower waives
to the full extent permitted by applicable law the right to trial by jury in any
legal proceedings arising out of or relating to this Note.
-2-
This Note shall be governed by, and interpreted and construed
in accordance with, the laws of the State of New York, including Section 5-1401
of the New York General Obligations Law (or any similar successor provision
thereto) but excluding all other conflict-of-law rules.
HARDINGE INC.
By /s/▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
Chairman of the Board
SCHEDULE OF EURODOLLAR LOANS
Date Amount Currency Interest Duration Amount of Balance Notation
of Loan Rate of Payment Outstanding By
Interest
Period