EXHIBIT 10.1


 


AMENDMENT NO. 3


TO


AMENDED AND RESTATED REVOLVING
CREDIT AND TERM LOAN AGREEMENT


 


THIS
AMENDMENT NO. 3 (“Amendment No. 3”)
dated as of this 22nd day of December, 2005 to the Amended and Restated
Revolving Credit and Term Loan Agreement among HARDINGE
INC. (the “Borrower”),
the Banks signatory thereto (the “Banks”), MANUFACTURERS AND TRADERS TRUST COMPANY, as Agent and Lead
Arranger, JPMORGAN CHASE BANK, N.A., as
Syndication Agent, and KEYBANK NATIONAL
ASSOCIATION, as Documentation Agent.


 


THIS
AMENDMENT NO. 3 IS MADE WITH REFERENCE TO THE FOLLOWING FACTS:


 


R.1                               The
Borrower, the Banks, the Agent, the Syndication Agent and the Documentation
Agent entered into an Amended and Restated Revolving Credit and Term Loan
Agreement dated on or about January 28, 2005 (as amended from time to
time, the “Loan Agreement”).


 


R.2                               Pursuant
to the terms of Amendment No. 1 to the Amended and Restated Revolving
Credit and Term Loan Agreement dated February 11, 2005, the Borrower, the
Banks, the Agent, the Syndication Agent and the Documentation Agent amended Section 6.09
of the Loan Agreement.


 


R.3                               Pursuant
to the terms of Amendment No. 2 to the Amended and Restated Revolving
Credit and Term Loan Agreement dated July 16, 2005, the Borrower, the
Banks, the Agent, the Syndication Agent and the Documentation Agent amended
various provisions of the Loan Agreement concerning the pledge of stock and
related collateral of the Borrower’s foreign subsidiary known as Hardinge
Taiwan Limited.


 


R.4                               The
Borrower, the Banks, the Agent, the Syndication Agent and the Documentation
Agent now desire to further amend certain of the others sections of the Loan
Agreement as outlined in this Amendment No. 3.


 


R.5                               The
Borrower, the Banks, the Agent, the Syndication Agent and the Documentation
Agent also now desire to include provisions within the Loan Agreement for a new
$20,000,000.00 bridge loan credit facility.


 





















 


NOW, THEREFORE, the parties agree as follows:


 


1.                                       Definitions.  Except as otherwise set forth herein, as used
in this Amendment No. 3, the terms defined in the Loan Agreement shall
have the meanings assigned to them in the Loan Agreement.


 


2.                                       Amendments.
As of the “Amendment No. 3 Effective Date” (as such term is defined in Section 2.9
below):


 


2.1                                 In
Article I of the Loan Agreement, the definition of “Aggregate Commitment”
shall be modified to read as follows:


 


“Aggregate
Commitment” means, on any date of determination, the aggregate
amount on such date of the Commitments of all of the Banks.  On the Amendment No. 3 Effective Date,
the Aggregate Commitment shall be increased by the amount of the Aggregate
Bridge Loan Commitment.


 


2.2                                 In
Article I of the Loan Agreement, under the definition of “Compliance
Certificate” the reference to Section 6.02(c) is changed to Section 6.02(d) and
the phrase “in connection with both the Existing Revolving Loans and the
Existing Term Loans” in the last lines under the definition of “Guaranty” is
deleted and replaced with the following language: “...which guaranties were
originally delivered in connection with the Existing Revolving Loans and the
Existing Term Loans...”


 


2.3                                 In
Article I of the Loan Agreement, the definition of “Commitment” shall be
modified to read as follows:


 


“Commitment”
means, with respect to a Bank, its respective Revolving Credit Commitment, Term
Loan Commitment and Bridge Loan Commitment (if any).


 


2.4                                 In
Article I of the Loan Agreement, the following sentence shall be included
as a new last sentence for the definition of “Interest Period”:


 


Interest Periods related
to the Bridge Loans shall be limited to one-month periods and no Interest
Period applicable to the Bridge Loans may expire on a date that is later than
the Bridge Loans Maturity Date.


 


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2.5                                 In
Article I of the Loan Agreement, the definition of “Loan” or “Loans” shall
be modified to read as follows:


 


“Loan”
or “Loans” means, as the context may
require, Revolving Loans, Term Loans and/or Bridge Loans.


 


2.6                                 In
Article I of the Loan Agreement, the definition of “Notes” shall be
modified to read as follows:


 


“Notes”
means, collectively, the Revolving Credit Notes, the Swing Line Note, the Term
Loan Notes and the Bridge Loan Notes, and “Note” means
any of the Notes.


 


2.7                                 In
article I of the Loan Agreement, sub-section (d) of the
definition of “Pro Rata Share” shall be re-lettered as sub-section (e) and
the following shall be inserted as a new sub-section (d) for said
definition:


 


(d)                                 with
respect to a Bank’s obligation to make Bridge Loans and prior to the
acceleration of all amounts due under the Notes in accordance with Section 9.02,
to receive payment of principal, interest, fees, costs and expenses with
respect thereto: (i) prior to the Aggregate Bridge Loan Commitment being
terminated or reduced to zero, the percentage obtained by dividing: (x) such
Bank’s Bridge Loan Commitment, by (y) the Aggregate Bridge Loan Commitment, and
(ii) from and after the time that the Aggregate Bridge Loan Commitment has
been terminated or reduced to zero, the percentage obtained by dividing: (x)
the aggregate unpaid principal amounts of such Bank’s Bridge Loan Credit
Exposure due under the terms of the Bridge Loan Notes delivered to such Bank by
the Borrower under the terms of this Agreement, by (y) the Aggregate Bridge
Loan Commitment.


 


2.8                                 In
Article I of the Loan Agreement, the definition of Required Lenders shall
be modified to read as follows:


 


“Required
Banks” means, (a) at any time while no Obligations are
outstanding, Banks having Commitments equal to at least 66 2/3% of the Aggregate Commitments and, (b) at
any time while any Obligations remain outstanding and unpaid, Banks having a
Revolving Credit Exposure, unpaid principal with respect to their Bridge Loans
and unpaid principal with respect to their Term Loans which constitute at least
66 2/3% of the sum of (i) the Aggregate Revolving Credit Exposure and (ii) the
unpaid principal amount of all outstanding Term Loans and Bridge Loan.


 


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2.9                                 In
Article I of the Loan Agreement, the following definitions shall be added:


 


“Additional
Technical Information” shall mean and refer to the technical
information required for the manufacture of the products, accessories and
spares, including but not limited to blueprints, designs, schematics, drawings,
specifications, computer source and object codes, customer lists and other
proprietary rights and assets of a similar nature, all as described with
particularity in the Bridgeport Acquisition Documents.


 


“Aggregate
Bridge Loan Commitment” means, on any date of determination, the
aggregate amount on such date of the Bridge Loan Commitments of all of the
Banks.  On the Amendment No. 3
Effective Date, the Aggregate Bridge Loan Commitment is $20,000,000.00.


 


“Amendment
No. 3 Effective Date” means December 22, 2005, or, if
later, the date on which the conditions contained in Section 5 of
Amendment No. 3 have been satisfied (or waived in accordance with Section 11.01
of the Loan Agreement).


 


“Bridge
Loan Commitment” means, with respect to each Bank, the commitment
and obligation of such Bank to make Bridge Loans under the terms of this
Agreement, in an aggregate principal amount not to exceed the amount set forth
opposite such Bank’s name on Schedule IX,
or in an Assignment and Assumption Agreement executed by it, in all cases as
such amount may be reduced from time to time in accordance with the terms
hereof.


 


“Bridge
Loan Credit Exposure” means, with respect to any Bank at any
time, the sum of the outstanding principal amount of such Bank’s Bridge Loans.


 


“Bridge
Loans” has the meaning given to such term in Section 2.15(a) hereof.


 


“Bridge
Loans Maturity Date” means June 30, 2006.


 


“Bridge
Loan Notes” means the various Bridge Loan Notes of the Borrower
to each of the Banks in an aggregate amount not to exceed the principal amount
of their respective Bridge Loan Commitment, in the form of Exhibit J
hereto evidencing the Bridge Loans made by the Banks hereunder (each a “Bridge Loan Note”) as the same may
be amended, modified, extended, renewed, restated, consolidated and replaced
from time to time.


 


“Bridgeport
Acquisition Documents” means the various agreements and
instruments executed by and between the Borrower and BPT IP, LLC including but
not limited to that certain Alliance Agreement dated November, 2004 whereby
among other things, BP IP, LLC granted to the Borrower an option to purchase
the 


 


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Additional Technical
Information on or before December 31, 2005 as described with particularity
in Section 7.6.3 of the Alliance Agreement.


 


“ROC
Joint Venture Agreement” means the Joint Venture Agreement dated
as of February 12, 1999 by and among the Borrower and the ROC
Shareholders, as the same may have been amended, modified or restated from time
to time or any time.


 


“ROC
Shareholders” shall mean and refer to the ROC Shareholders
identified under the terms of the Joint Venture Agreement (as such agreement
was in effect on February 12, 1999) as Mr. R.M. Yang, Ms. Shain
Wu, Mr. Paul Ling and Ms. J. R. Ho.


 


“Taiwanese
Property” has the meaning given to such term is Section 2.15(h) of
the Loan Agreement.


 


2.10                           Section 2.01
of the Loan Agreement shall be amended to include a new sub-section (c) which
shall read as follows:


 


(c)                                  Bridge Loans.  Subject to the terms and conditions set
forth in this Agreement, each Bank agrees to make Bridge Loans to the Borrower
from time to time from the Amendment No. 3 Effective Date until the Bridge
Loans Maturity Date in an aggregate principal amount that will not result in: (i) such
Bank’s Bridge Loan Credit Exposure exceeding such Bank’s Bridge Loan
Commitment, and (ii) the aggregate Bridge Loan Credit Exposure of all
Banks exceeding the Aggregate Bridge Loan Commitment.  With the advance of each Bridge Loan, the
Aggregate Bridge Loan Commitment of the Banks shall immediately be reduced by
the same principal amount thereof.


 


2.11                           The
payment application provisions outlined in Section 2.05 of the Loan
Agreement shall be modified to read as follows:


 


(i)                                     first,
to the payment of any outstanding costs and expenses incurred by the Agent in
protecting, preserving or enforcing rights under this Agreement and the other
Loan Documents and in any event including all costs and expenses of a character
which the Borrower has agreed to pay under Section 11.03 hereof (such
funds to be retained by the Agent for its own account unless it has previously
been reimbursed for such costs and expenses by the Banks, in which event such
amounts shall be remitted to the Banks to reimburse them for payments theretofore
made to the Agent);


 


(ii)                                  second,
to the payment of any outstanding interest or other fees or indemnification
amounts due with respect to the Obligations represented by the Bridge Loan
Notes, ratably as among the Agent and the Banks in accord 


 


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with the amount of
such interest and other fees or indemnification amounts owing each;


 


(iii)                               third, to the payment of
any outstanding interest or other fees or indemnification amounts due with
respect to all Obligations other than the Obligations represented by the Bridge
Loan Notes, ratably as among the Agent and the Banks in accord with the amount
of such interest and other fees or indemnification amounts owing each


 


(iv)                              fourth,
to the payment of the principal of the Swing Loans;


 


(v)                                 fifth,
to the payment of the principal of the Bridge Loans;


 


(vi)                              sixth,
to the payment of all other Obligations in accordance with each Bank’s Pro Rata
Share (including required payments into the Facility Letter of Credit Shortfall
Collateral Account), except that the JPMorgan Obligations shall be only to a
maximum amount of $8,000,000 and the Bank Product Obligations of Subsidiaries
of the Borrower that are not Credit Parties shall be only to a maximum of
$3,000,000;


 


(vii)                           seventh, to payment of any
remaining unpaid JPMorgan Obligations and Bank Product Obligations; and


 


(viii)                        eighth, to the Borrower or to
whoever the Agent reasonably determines to be lawfully entitled thereto.


 


2.12                           All
references contained in Section 2.12 to the prepayment of the Term Loans
and Revolving Loans shall be modified to read, “Term Loans, Revolving Loans and
Bridge Loans (if any)”.


 


2.13                           The
last sentence of sub-section 2.12(c) shall be deleted in it entirety
and replaced with the following language:


 


The Agent shall apply any
such mandatory prepayment first to the Bridge Loans (if any) and then to the
Term Loans.


 


2.14                           In
addition to the changes described in Paragraphs 2.10 and 2.11 above, Section 2.12
of the Loan Agreement shall also be modified to include the following language
for a new sub-section (e):


 


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(e)                                  Subject
to and without waiver of the mandatory prepayment provisions of this Agreement,
the Bridge Loans may be prepaid at any time or from time to time (subject to
any applicable fees, including any LIBOR breakage fees).


 


2.15                           Article 2
of the Loan Agreement shall be amended to include a new Section 2.15 which
shall read as follows:


 


Section 2.15                            Amount
and Terms of the Bridge Loans.


 


(a)                                  As
of the Effective Date, the Banks agree, on the terms and conditions hereinafter
set forth, to make loans (the “Bridge Loans”)
to Borrower, in the aggregate principal amount of Twenty Million and 00/100
Dollars ($20,000,000.00).


 


(b)                                 Borrower’s
obligation to repay the Bridge Loans shall be evidenced by its promissory notes
in substantially the form of Exhibit J to this Agreement, with
blanks appropriately completed.  Bridge
Loan Notes shall be delivered by the Borrower to each of the Banks in
connection with each advance made under the Bridge Loan Commitment (the amount
of which shall be determined on the basis of the percentage of each Bank’s
respective Bridge Loan Commitment), provided, however, that the aggregate
amount of all of the respective Banks’ Bridge Loan Notes shall not at any time
or from time to time exceed the Aggregate Bridge Loan Commitment.


 


(c)                                  Except
for Borrowings which exhaust the full remaining amount of the Aggregate Bridge
Loan Commitment available to the Borrower, all Bridge Loans shall be in an
amount equal to at least One Million and 00/100 Dollars ($1,000,000.00).


 


(d)                                 Unless
earlier due or terminated pursuant to Sections 2.12 (including as set forth in Section 2.15(h) below
and, 9.02), the entire outstanding principal amount of the Bridge Loans shall
be due and payable, and the Bridge Loan Commitment shall terminate on the
Bridge Loans Maturity Date.


 


(e)                                  Interest
shall accrue and the Borrower shall pay interest to the Banks pursuant to and
in accordance with the terms of Section 2.7 of this Agreement.


 


(f)                                    Interest
on the Bridge Loans shall be paid in immediately available funds to the Agent,
in the case of Base Rate Loans on the first day of each month and in the case
of LIBOR Loans, on the last day of the Interest Period with respect thereto.  All remaining accrued interest shall be due
and payable on the Bridge Loans Maturity Date.


 


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(g)                                 Borrower
shall make each payment under this Agreement and under the Bridge Loan Notes in
accordance with the provisions of Section 2.05 of this Agreement.  Without limiting the generality of the
foregoing statement, each payment under this Agreement shall be made by the
Borrower not later than 11:00 a.m. New York time on the date when due, in
lawful money of the United States, and payable to the Agent at its Principal
Office in immediately available funds. 
Borrower hereby authorizes the Agent, if and to the extent payment is
not made when due under this Agreement and under the Bridge Loan Notes, to charge
from time to time against any account of Borrower with the Agent any amount so
due.  Whenever any payment to be made
under this Agreement or under the Bridge Loan Notes shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest.


 


(h)                                 The
proceeds of the Bridge Loans shall be used by Borrower to finance: (i) the
purchase of the Additional Technical Information in accordance with the terms
of the Bridgeport Acquisition Agreement, (ii) the purchase by the Borrower
of the ROC Shareholders under and pursuant to the terms of the ROC Joint
Venture Agreement, and (iii) the Borrower’s purchase of the lands located
at and commonly known as 305 Nan-Kang Sub-section Lin-Tze Section, Nanto
County, Taiwan and the buildings thereon (including a four-floor office
building and a factory with two floors above the ground level and one basement
below the ground level)(with the lands and improvements located thereon being
collectively referred to herein as the “Taiwanese Property”)
under and pursuant to the terms of the ROC Joint Venture Agreement and in the
Lease Agreement attached thereto as an exhibit thereof.  Borrower will not, directly or indirectly,
use any part of such proceeds for the purpose of purchasing or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System or to extend credit to any person for the purpose of
purchasing or carrying any such margin stock, or for any purpose which
violates, or is inconsistent with, Regulation X of such Board of Governors.


 


(i)                                     Prior
to the disbursement of the proceeds of any Bridge Loan the President, Treasurer,
Controller or Chief Financial Officer shall certify to the Agent, in writing in
a form and substance satisfactory to the Agent: (i) as to the use of
proceeds for said Bridge Loans, (ii) that the proposed use of proceeds is
and shall at all times be in compliance with the terms and conditions of this
Agreement, and (iii) that the consummation of the relevant acquisition
shall be completed in accordance with the terms and conditions of the relevant
agreements or instruments as acknowledged and permitted hereby.  Notwithstanding the foregoing, wherever herein an acquisition is permitted
in accordance with the terms of an agreement or instrument, neither Borrower
nor any of its Subsidiaries 


 


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may
materially modify, amend, or waive any of the terms or condition thereof after
the date hereof without notice thereof to, and the written consent of the
Agent.


 


(j)                                     Although
no specific reference is made within the below noted-sections to the Bridge
Loans and without limiting the general applicability of the other provisions of
this Agreement, the provisions of Section 3 as well as the provisions of
Sections 2.04, 2.05 (as modified by the terms of this Amendment No. 3),
2.06, 2.07, 2.08, 2.10 and 2.12 (as modified by the terms of this Amendment No. 3)
shall apply to the Bridge Loans.


 


(k)                                  On
the Amendment No. 3 Effective Date, the Agent shall have received from the
Borrower an upfront fee of twenty five (25) basis points on the amount by which
each Bank’s Commitment is increased pursuant to this Amendment No. 3,
which fees shall be for the account of each Bank.


 


2.16                           Section 7.01
of the Loan Agreement shall be modified to include the following new sub-section (a)(xi):


 


(a)...


 


(xi)                                Provided
that the Borrower is at all times in compliance with the terms and conditions
of the Loan Agreement, no Default or Event of Default exists, and no event or
condition has occurred or is continuing which with the giving of notice, lapse
of time or other condition would constitute a Default or Event of Default, the
Borrower and/or its Subsidiaries may incur, assume or permit to exist Debt in
connection with the mortgage of the Taiwanese Property; provided, however,
that: (a) the aggregate amount of any such mortgage Debt shall not at any
one time or from time to time exceed $6,000,000.00, (b) said mortgage Debt
shall be secured only by a mortgage on the Taiwanese Property or a
sale/leaseback transaction affecting the Taiwanese Property, and (c) all
net proceeds (with net proceeds being defined as the proceeds available to the
Borrower after the payment of the Purchase Price for the Taiwanese Property in
accordance with the terms of the ROC Joint Venture Agreement and the Lease
Agreement attached thereto, and the payment of any reasonable costs and
expenses incurred in connection with the Borrower’s purchase of the Taiwanese
Property) received by the Borrower or any of its Subsidiaries (whether directly
or indirectly) in connection with incurrence of such mortgage Debt shall be
paid over to the Agent within five (5) Business Days and shall be applied
by the Agent as a mandatory prepayment under the terms of the Loan
Agreement.  In all events, if completed
in accordance with the terms of this Agreement, any resulting liens and encumbrances
on the Taiwanese Property shall be considered a permitted Subsidiary Real
Property Lien under the terms of Section 5.12(a) of the Agreement.


 


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2.17                           Section 7.06
of the Loan Agreement shall be modified to include the following new sub-section (e):


 


(e)                                  Provided
that the Borrower is at all times in compliance with the terms and conditions
of the Loan Agreement, no Default or Event of Default exists, and no event or
condition has occurred or is continuing which with the giving of notice, lapse
of time or other condition would constitute a Default or Event of Default, the
Borrower shall be permitted to: (i) acquire the minority interests of
Hardinge Taiwan Limited that are currently owned by the ROC Shareholders in
accordance with the terms of the ROC Joint Venture Agreement, (ii) purchase
the Taiwanese Property in accordance with the terms of the ROC Joint Venture
Agreement, and (iii) acquire the Additional Technical Information in
accordance with the terms of the Bridgeport Acquisition Documents.


 


2.18                           Section 8.01
of the Loan Agreement shall be deleted in its entirety and the following
language shall be inserted in replacement therefore:


 


Section 8.01                            Leverage Ratio.  The Borrower shall maintain a Leverage Ratio
as measured as of each Quarterly Date of not greater than: (a) 3.50 to
1.00 for the Fiscal Year quarters ending on December 31, 2005 and March 31,
2006, (b) 3.25 to 1.00 for the Fiscal Year quarters ending on June 30,
2006, and (c) for the Fiscal Year quarter ending on September 30,
2006 and for each Fiscal Year quarter thereafter, 3.00 to 1.00.


 


2.19                           Section 8.02
of the Loan Agreement shall be deleted in its entirety and the following
language shall be inserted in replacement therefore:


 


Section 8.02                            Consolidated Tangible Net Worth.  The Borrower shall maintain a Consolidated
Tangible Net Worth as measured as of each Quarterly Date of not less than the
sum of: (1) 85% of the Consolidated Tangible Net Worth as of December 31,
2004, (b) an additional $500,000.00 as of each successive Quarterly Date
after the Effective Date, and (c) 90% of the Net Cash Proceeds received by
the Borrower or any of its Subsidiaries after the Effective Date from any
Equity Issuances.


 


2.20                           Article 8
of the Loan Agreement shall be modified to include the following new Section 8.04:


 


Section 8.04                            Calculations.  Whenever appropriate and without
duplication, calculations made pursuant to this Article 8 shall give
effect, on a pro-forma basis, to the acquisitions of the Additional Technical
Information and the minority interests of the ROC Shareholders made during the
quarter or year to which the required compliance relates, as if such
acquisitions had been consummated on the first day of the applicable reporting
period.


 


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3.                                       Additional
and Supplemental Representations, Warranties and Covenants of the Borrower.  Borrower hereby represents, warrants and
covenants (as appropriate) to the Agent, in its capacity as an Agent and as a
Bank, and on behalf of the Banks that:


 


3.1                                 Corporate
Authority.  The execution, delivery
and performance by the Borrower of this Amendment No. 3 and all other Loan
Documents in connection herewith, including the Notes for the Bridge Loans, and
the consummation of the transactions contemplated hereby and thereby, have been
duly authorized by all necessary corporate action and does not and will not
require any consent or approval of its shareholders, which has not been
obtained, or contravene its certificate of incorporation or by-laws, as amended
to date.


 


3.2                                 Legally
Enforceable Amendment.  Amendment No. 1,
Amendment No. 2, this Amendment No. 3, the Loan Agreement, as
amended, and other Loan Documents are all legal, valid and binding obligations
of the Borrower or other Credit Parties who executed them, enforceable against
the Borrower or such other Credit Parties who executed, in accordance with
their respective terms, except to the extent that such enforcement might be
limited by applicable bankruptcy, insolvency or other similar laws affecting
creditors’ rights generally.


 


3.3                                 Compliance
with Terms and Conditions of the Joint Venture Agreement.  With each Bridge Loan extended for or in
connection with the Borrower’s purchase of the minority interests owned by the
ROC Shareholders and/or the purchase of the Taiwanese Property, the Borrower
shall represent and warrant to the Agent and the Banks that it has complied
with the requirements of the ROC Joint Venture Agreement and/or the Lease
Agreement referenced in and attached to the ROC Joint Venture Agreement as an Exhibit thereto.


 


3.4                                 Compliance
with Terms and Conditions of the Bridgeport Acquisition Documents and
Termination of Royalty Payments. 
With each Bridge Loan extended for or in connection with the Borrower’s
purchase of the Additional Technical Information, the Borrower shall represent
and warrant to the Agent and the Banks that it has complied with the
requirements of the Bridgeport Acquisition Documents.  In addition, the Borrower shall represent and
warrant to the Agent and the Banks that other than the payment of any royalties
due under the terms of the Bridgeport Acquisition Documents for transactions
completed prior to the date of the Borrower’s purchase of the Additional
Technical Information, then on and after the date of the Borrower’s purchase of
the 


 


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Additional Technical
Information, no further royalty payments shall be due and owing to the any of
the parties under the Bridgeport Acquisition Documents.


 


3.5                                 Reaffirmation
of Existing Representations and Warranties; Confirmation of Information
Contained on Schedules.  The Borrower
hereby covenants that the representations, warranties and covenants set fort in
the Loan Agreement and in the other Loan Documents are true and complete on and
as of the Amendment No. 3 Effective Date. 
The Borrower also hereby covenants that: (a) the information
contained on the Schedules and Exhibits attached to the Loan Agreement and the
other Loan Documents is true and complete on and as of the Amendment No. 3
Effective Date and that updates to the Schedules and Exhibits shall be provided
pursuant to the terms of the Post Closing Deliveries Agreement described in Section 5.5
below.


 


3.6                                 Events
of Default.  With the exception of
any Default(s) or Event(s) of Default waived under Section 4 of this
Amendment No. 3, no Event of Default, Default or event which, with the
giving of notice or passage of time, or both, would become a Default or an
Event of Default has occurred and is continuing.


 


3.7                                 Material
Adverse Change.  There has been no
material adverse change in the condition (financial or otherwise), business or
operations of the Borrower or any Subsidiary.


 


4.                                       Waivers;
Consent of the Agent, Banks, Syndication Agent and Documentation Agent.  In consideration for the Borrower’s delivery
of this Amendment No. 3 and the payment of the upfront fees relative to
the Bridge Loans as described in Section 2.15 (k), the Agent, Lead
Arranger, Syndication Agent, Documentation Agent and the Banks, hereby grant
the following waivers and consents to the Borrower:


 


4.1                                 Capital
Expenditures.  Subject to the terms
and conditions of the Loan Agreement and provided that the Borrower is at all
times in compliance with the terms and conditions of the Loan Agreement, no
Default or Event of Default exists, and no event or condition has occurred or
is continuing which with the giving of notice, lapse of time or other condition
would constitute a Default or Event of Default, the Borrower shall be permitted
to exclude from the determination of Capital Expenditures after the date
hereof: (a) the costs associated with the closing of the transactions
contemplated by this Amendment No. 3 (which costs shall specifically
include the costs associated with the closing of the transactions described in Section 7.06(e) above),
and (b) the 


 


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acquisition costs for the
JD Edwards software incurred or to be incurred during Fiscal Years 2005 and
2006, as previously represented to the Banks in writing by Borrower, provided,
however, that the acquisitions costs for said JD Edwards software shall
not, without the prior written consent of the Agent, exceed $4,000,000.00.


 


4.2                                 Consolidated
Tangible Net Worth Covenant.  It is
understood and agreed by the Agent, Lead Arranger, Syndication Agent,
Documentation Agent and the Banks, that the Borrower does not anticipate that
it will be in compliance with the Consolidated Tangible Net Worth Covenant set
forth in Section 8.02 of the Loan Agreement for the Quarterly Date of December 31,
2005.  If the Borrower is in fact in
violation of said covenant measurement as of said Quarterly Date, the Agent,
Lead Arranger, Syndication Agent, Documentation Agent and the Banks hereby
collectively waive the Borrower’s non-compliance with this financial covenant
for the measurement period ending on the Quarterly Date of December 31,
2005.


 


4.3                                 Limited
Waivers.  The waivers and consents
set forth in this Paragraph 4 of Amendment No. 3 are limited precisely as
written and shall not be deemed to be consent to or a waiver of any other term
or condition of the Loan Agreement or any of the other terms and conditions
contained in any other Loan Documents nor shall such waivers or consents
prejudice any right or rights which the Bank may now have or may have in the
future under or in connection with the Loan Agreement and/or any of the other
Loan Documents.


 


5.                                       Effectiveness.  This Amendment No. 3 shall be of no
force or effect unless and until the date on which all of the following
conditions are met (with such date being hereinafter referred to as the
Amendment No. 3 Effective Date):


 


5.1                                 Counterparts.  The Agent shall have each received
counterparts of this Amendment No. 3 duly executed by the Borrower, each
of the Banks, the Agent and Lead Arranger, the Syndication Agent and the
Documentation Agent.


 


5.2                                 Reaffirmation
Agreement.  The Agent shall have
received an original Reaffirmation Agreement as executed by the Borrower and
the Guarantors, whereby the Borrower and (as applicable) the Guarantors shall
reaffirm their existing obligations under the terms of the Security Documents,
Guaranty and/or Guaranty Supplement.


 


13





















 


5.3                                 Opinion.  The Agent, on behalf of the Banks, shall have
received an opinion of Sayles & Evans, counsel for the Borrower and
its Subsidiaries, in form and content reasonably satisfactory to the Agent and
its counsel.


 


5.4                                 Payment
of the Upfront Fees.  The Agent shall
have received from the Borrower the upfront commitment fees described in Section 2.15(k)
of the Loan Agreement.


 


5.5                                 Post
Closing Deliveries Agreement.  The
Agent shall have received a fully executed Post Closing Deliveries Agreement
whereby the Borrower shall agree to deliver to the Agent certain required items
within the time frames delineated within the Post Closing Deliveries Letter.


 


5.6                                 Borrower
Due Diligence Documents.  The Agent
shall have received a certificate of the secretary of Borrower with attached
supporting documents as follows:


 


(i)                                     Resolutions
duly adopted by the Board of Directors of Hardinge authorizing the execution,
delivery and performance of the Borrower’s obligations under this Amendment No. 3
and any Bridge Loan Notes delivered in connection herewith;


 


(ii)                                  An
Incumbency Certificate;


 


(iii)                               Copies
of the Certificate of Incorporation and By-Laws of Borrower and any amendments
thereto; and


 


(iv)                              Appropriate
good standing and lien searches for the Borrower as determined by Agent.


 


5.7                                 Certifications.  The Agent shall have received from the
Borrower certifications together with copies of the ROC Joint Venture Agreement
and the Bridgeport Acquisition Documents, indicating that the Borrower has
provided the Agent with true and complete copies of the ROC Joint Venture Agreement
and Bridgeport Acquisition Documents, together with copies of all amendments,
addendums or other modifications thereto.


 


5.8                                 Reimbursement
of the Agent.  As consideration for
the delivery of this Amendment No. 3 by the Agent, Lead Arranger, Syndication
Agent, Documentation Agent and the Banks, the Borrower shall reimburse,
indemnify and hold Agent harmless for the reasonable fees and actual costs and
expenses incurred by the Agent for the services of legal professionals engaged
by the Agent in connection with the negotiation and preparation of this
Amendment No. 3.  With 


 


14





















 


respect to any amount
required to be reimbursed by the Borrower pursuant to the foregoing provision
of this Paragraph 5.8, it is hereby agreed that the Agent may charge any such
amount to the Revolving Credit on the dates such reimbursement is made.


 


6.                                       Miscellaneous.  The amendments set forth in this Amendment No. 3
are limited precisely as written and shall not be deemed to be a consent to any
waiver of or modification of any other term or condition of the Loan Agreement
or any of the instruments or agreements referred to therein, or prejudice any
right or rights which the Bank may now have or may have in the future under or
in connection with the Loan Agreement, or any of the instruments or agreements
referred to herein.  Except as expressly
provided in Amendment No. 1, Amendment No. 2 and in this Amendment No. 3,
the Loan Agreement and the Loan Documents shall remain unchanged and in full
force and effect, except that each reference in the Loan Agreement, and in any
of the other Loan Documents, and in any agreements, certificates and notices
simultaneously herewith or hereafter executed under or pursuant to the Loan
Agreement or the other Loan Documents, to the “Loan Agreement”, “this Agreement”,
“hereof”, “herein” and similar terms referring to the Loan Agreement and other
Loan Documents, shall be deemed to refer to the Loan Agreement and the other
Loan Documents as amended by Amendment No. 1, Amendment No. 2 and
this Amendment No. 3.


 


This Amendment No. 3
shall be interpreted and construed according to its fair meaning and neither
for or against any party hereto, irrespective of which party caused the same to
be drafted.  Each of the parties hereto
hereby acknowledges that it has been or has had the opportunity to be
represented by an attorney in connection with the preparation and execution of
this Amendment No. 3.


 


Other than the
understandings, agreements, representations and warranties made in connection
with the Loan Agreement, Amendment No. 1 and Amendment No. 2, all
other prior understandings, agreement, representations and warranties, whether
oral or written, between the Borrower and the Agent and/or the Borrower and the
Banks are merged into this Amendment No. 3, which Amendment No. 3
completely expresses their full agreement and has been entered into after full
investigation, neither party relying upon any statement made by anyone else
that is not set forth in this Amendment No 3.


 


15





















 


This Amendment No. 3
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed in such state,
without regard to conflict of laws principles.


 


This section headings
in this Amendment No. 3 are inserted for convenience only and shall not be
considered a part of this instrument.


 


This Amendment No. 3
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signature thereto and hereto were upon the same
instrument.


 


[remainder
of page left intentionally blank; signature pages to follow]


 


16





















 


IN WITNESS WHEREOF,
the parties have caused this Amendment No. 3 to be executed as of the date
first above written.


 


 


	
   

  	
  HARDINGE INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ J. PATRICK ERVIN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  J. Patrick Ervin

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board,
  Chief

  Executive Officer and President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MANUFACTURERS AND TRADERS TRUST

  COMPANY, as Agent, Lead Arranger and as a Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ SUSAN A.BURTIS

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Susan A. Burtis

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.,
  as

  Syndication Agent and as a Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ CHRISTINE M.
  DESCHAMPS

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Christine M. Deschamps

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
											



 


17





















 


	
   

  	
  KEYBANK NATIONAL ASSOCIATION,
  as

  Documentation Agent and as a Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ CARL J. LUGER, JR.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Carl J. Luger, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NBT BANK, NATIONAL ASSOCIATION,
  as a

  Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ RONALD G. GOODWIN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Ronald G. Goodwin

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						



 


18





















 


EXHIBIT J


 


FORM OF
BRIDGE LOAN NOTE


 


[REPLACEMENT] BRIDGE LOAN NOTE


 


	
  $                             

  	
                              ,
  200  

  



 


HARDINGE INC. (the “Borrower”), a corporation
organized under the laws of New York, for value received, hereby promises to
pay to the order of
                                   
(the “Bank”) the
principal sum of
                                                                      
Dollars ($                          ),
in lawful money of the United States of America and in immediately available
funds on June 30, 2006 an amount equal to the outstanding principal
hereunder and expenses.  Borrower also
promises to pay interest on the unpaid principal balance hereof, for the period
such balance is outstanding, in like money, at the rates of interest as
provided in the Agreement described below, on the date(s) and in the manner
provided in said Agreement.


 


This Bridge Loan Note is one of the Bridge
Loan Notes referred to in that certain Amended and Restated Credit and Term
Loan Agreement (as amended from time to time, the “Agreement”) dated as of January 28, 2005, made
among Borrower the Banks signatory thereto, Manufacturers and Traders Trust
Company, as Agent and Lead Arranger, JPMorgan Chase Bank, N.A., as Syndication
Agent, and KeyBank National Association, as Documentation Agent, and evidences
a Bridge Loan made thereunder.  All
capitalized terms not defined herein shall have the meanings given to them in
the Agreement.


 


Borrower waives presentment, notice of
dishonor, protest and any other notice or formality with respect to this Bridge
Loan Note.


 


This Bridge Loan Note may only be modified or
amended by a written instrument executed Borrower and Bank in accordance with
the terms of the Agreement.  This Bridge
Loan Note shall be governed by the laws of the State of New York.


 


	
  HARDINGE INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  



 


19





















 


SCHEDULE IX


 


Bridge Loan Commitment Amounts


 


 


	
   

  	
   

  	
  Commitment

  	
   

  	
  Bridge

  	
   

  
	
  Bank

  	
   

  	
  Percentage

  	
   

  	
  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Manufacturers and Traders Trust Company

  	
   

  	
  0.357142857143 

  	
   

  	
  7,142,857.14

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  0.285714285714 

  	
   

  	
  5,714,285.71

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KeyBank, National Association

  	
   

  	
  0.214285714286 

  	
   

  	
  4,285,714.29

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NBT Bank, National Association

  	
   

  	
  0.142857142857 

  	
   

  	
  2,857,142.86

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  1.000000000000 

  	
   

  	
  20,000,000.00

  	
   

  



 


20