Translation of Letter Dated March 16, 2000
From: Deutsche Bank, Mr. Bovermann and Mr. Jakobi
Blumenstrasse 13, 42849 Remscheid, Germany
To: IKS Klingelnberg GmbH, Mr. Thomas Meyer
In der Fleute 18, 42897 Remscheid, Germany
Confirmation of Financing
Dear Mr. Meyer:
We refer to our discussions in recent weeks, in which you advised us of your
intention to acquire Bohler Miller Messer & Sagen GmbH, Vienna, and also of your
intention to increase your equity stake in your Chinese joint venture to 80%.
Currently we have committed to IKS Klingelnberg GmbH and its subsidiaries lines
of credit of DEM 52 million in accordance with various credit agreements.
Approximately DEM 31.8 million of these lines have been used for long-term
loans.
We are pleased, within the framework of our General Conditions (AGB), to be able
to increase the above referenced lines of credit by the current purchase price
of "Bohler Miller Messer und Sagen GmbH, Vienna, equal to a converted amount of
approximately DEM 14.5 million; and by the price of the additional equity stake
in China, equal to approximately DEM 1.5 million, for a total increase of DEM
16.0 million. Up to DEM 7 million thereof may be used for long term purposes.
As a result the total credit lines for the IKS Klingelnberg GmbH group of
companies is DEM 68 million.
The existing collateral agreements are:
- DEM 5.0 Million first mortgage on the building in Bargteheide
- DEM 5.1 Million first mortgage on the building in Remscheid Bergisch-Born
- DEM 2.8 Million first mortgage on the building in Geringswalde
- Chattel mortgage on various machines of IKS Messerfabrik Geringswalde GmbH
- Declaration of Non-encumbrance for the investments held by IKS Klingelnberg
GmbH
In addition, you must also assign to us as collateral for the total line of
credit the current and future trade accounts receivables of the German companies
and Bohler Miller Messer
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und Sagen GmbH, Vienna, and assign to us the future inventories of the
previously mentioned companies.
The agreement that the equity of IKS Klingelnberg GmbH will not be lower than
30% of total assets and that gross cash flow will stay positive and remain
unchanged.
In addition we request you to provide us with quarterly reports and the annual
financial statements on a timely basis.
We hope that you will agree to this arrangement and look forward to continued
cooperation. We will contact you in the coming days regarding the specific
details on the credit contracts.
