<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 10, 1997
REGISTRATION NO. 333-35597
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MT INVESTORS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3596 13-3668641
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
<TABLE>
<S> <C>
IM LANGACHER WILLIAM P. DONNELLY
P.O. BOX MT-100 MT INVESTORS INC.
CH 8606 GREIFENSEE, SWITZERLAND PARK AVENUE TOWER
011-41-1-944-22-11 65 EAST 55TH STREET, 27TH FLOOR
(ADDRESS, INCLUDING ZIP CODE, AND NEW YORK, NY 10022
TELEPHONE NUMBER, INCLUDING AREA CODE, (212) 644-5900
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) (NAME, ADDRESS, INCLUDING ZIP CODE,
AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
------------------------
Copies to:
<TABLE>
<S> <C>
TIMOTHY E. PETERSON, ESQ. JAMES C. SCOVILLE, ESQ.
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON DEBEVOISE & PLIMPTON
4 CHISWELL STREET 875 THIRD AVENUE
LONDON, EC1Y 4UP, ENGLAND NEW YORK, NEW YORK 10022
(011-44-171) 972-9600 (212) 909-6000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
------------------
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. /x/
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE PRICE PER OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(1)(2) FEE(2)(3)
<S> <C> <C> <C> <C>
Common Stock, $.01 par value......... 38,336,801 $16.00 $613,388,816 $185,876
</TABLE>
(1) Includes shares of Common Stock that may be sold pursuant to the
Underwriters' over-allotment options.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(3) Of this amount $185,876 was previously paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
The registrant's name is currently MT Investors Inc. However, the name of
the registrant will be changed to Mettler-Toledo International Inc. prior to the
consummation of the Offerings to which this registration statement relates. For
marketing purposes, the preliminary Prospectus contained in this registration
statement uses the name Mettler-Toledo International Inc.
This registration statement contains three forms of Prospectus: one to be
used in connection with a United States and Canadian offering of the
registrant's Common Stock (the "U.S. Prospectus"), one to be used in connection
with a concurrent international offering of the Common Stock (the "International
Prospectus") and one to be used in connection with the solicitation of consents
with respect to the merger of Mettler-Toledo Holding Inc., a wholly owned
subsidiary of the registrant, with and into the registrant (the "Merger
Prospectus" and, together with the U.S. Prospectus and the International
Prospectus, the "Prospectuses"). The International Prospectus will be identical
to the U.S. Prospectus except that it will have a different front cover page,
underwriting section and back cover page. The Merger Prospectus will be
identical to the U.S. Prospectus except that it will have alternate pages with
respect to the following: the front cover page, a new page to replace
"Prospectus Summary -- The Offerings" with "Prospectus Summary -- The Merger,"
the first page of "Risk Factors," the last page of "Risk Factors," "The Company"
pages, the "Use of Proceeds" page, a new page to replace "Dilution" with "The
Merger," additional pages regarding "Solicitation of Consents," "Comparison of
Shareholder Rights," "Description of Existing Capital Stock," "Principal
Shareholders" and "Certain Federal Income Tax Consequences of the Merger" in
replacement of "Underwriting" and the addition of Appendices. The U.S.
Prospectus is included herein and is followed by the alternate pages to be
used in the International Prospectus and the alternate pages to be used in the
Merger Prospectus. The front cover page, underwriting section and back cover
page for the International Prospectus included herein have all been labeled
"Alternate Page for International Prospectus." The alternate pages for the
Merger Prospectus included herein have each been labeled "Alternate Page for
Merger Prospectus."
i
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED NOVEMBER 10, 1997
PROSPECTUS [LOGO]
6,666,667 SHARES
METTLER-TOLEDO INTERNATIONAL INC.
COMMON STOCK
------------------------
All of the shares of Common Stock offered hereby are being sold by
Mettler-Toledo International Inc. ('Mettler-Toledo' or the 'Company'). Of the
6,666,667 shares of Common Stock offered hereby, 5,333,334 shares are being
offered for sale initially in the United States and Canada by the U.S.
Underwriters and 1,333,333 shares are being offered for sale initially in a
concurrent offering outside the United States and Canada by the International
Managers. The initial public offering price and the underwriting discount per
share will be identical for both Offerings. Up to 833,333 shares of Common Stock
offered hereby are being reserved for sale at the initial public offering price
to certain employees of the Company and certain other persons. See
'Underwriting.'
Prior to the Offerings, there has been no public market for the Common
Stock. It is currently estimated that the initial public offering price will be
between $14.00 and $16.00 per share. For a discussion relating to factors to be
considered in determining the initial public offering price, see 'Underwriting.'
The Common Stock has been accepted for listing on the New York Stock
Exchange under the symbol 'MTD,' subject to official notice of issuance.
SEE 'RISK FACTORS' BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
Per Share................................... $ $ $
Total(3).................................... $ $ $
</TABLE>
(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including certain liabilities under the Securities Act of 1933,
as amended. See 'Underwriting.'
(2) Before deducting expenses payable by the Company estimated at $2.5 million.
The Underwriters have agreed to pay certain expenses of the Company incurred
in connection with the Offerings estimated at $ .
(3) The Company has granted the U.S. Underwriters and the International Managers
options to purchase up to an additional 800,000 shares and 200,000 shares of
Common Stock, respectively, in each case exercisable within 30 days after
the date hereof, solely to cover over-allotments, if any. If such options
are exercised in full, the total Price to Public, Underwriting Discount and
Proceeds to Company will be $ , $ and $ , respectively. See
'Underwriting.'
------------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Common Stock will be made in New York, New York on or
about , 1997.
------------------------
MERRILL LYNCH & CO.
BT ALEX. BROWN
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
------------------------
The date of this Prospectus is , 1997.
<PAGE>
[PICTURES OF PRODUCTS WITH THE FOLLOWING CAPTIONS:]
METTLER TOLEDO
No. 1 in weighing instruments and a leader in related measurement technologies
Laboratory
Industrial/Retail
METTLER TOLEDO
Sales and service operations
Manufacturing sites
METTLER TOLEDO
A determining factor in every lab
Laboratory
pH Meters are used to measure acidity of solutions.
Titrators provide accurate measures of concentration in various industries.
Moisture Analyzers monitor reliability of production in the food and other
industries.
Analytical/Precision Balances are vital to research & development and quality
control in almost any industry.
Thermal Analysis Systems facilitate consistency of material characteristics in
the plastics and other industries.
Automatic Lab Reactors assist chemical engineers in optimizing new production
processes.
METTLER TOLEDO
Leading solutions for industrial and retail weighing applications
Industrial/Retail
Integrated Dimensioning and weighing products allow complete and accurate
freight tariff calculation for the cargo industry.
Checkweighers automatically weigh goods and control the packaging process in the
pharmaceutical, food and other industries.
Truck Scale Systems are utilized in highway enforcement and also to check
incoming goods.
Counting Scale Systems facilitate inventory control and automate shipping and
receiving applications.
Metal Detectors provide important safety and quality checks in the food and
pharmaceutical industries.
Retail Scale Systems are networked with scanners, cash registers and backroom
equipment and provide perishable goods information to in-store computers.
Prepacking Systems weigh and label products and can be networked with weighing
technology at the counter, check-out and backoffice.
Sustained technology leadership
METTLER TOLEDO's new Brickstone weighing sensor reduces manufacturing costs as
well as the time and expense of design changes.
METTLER TOLEDO
------------------------
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS. THESE STATEMENTS ARE
SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES, CERTAIN OF WHICH ARE BEYOND THE
COMPANY'S CONTROL. SEE 'RISK FACTORS--FORWARD-LOOKING STATEMENTS AND ASSOCIATED
RISKS' AND 'MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.'
CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF COMMON STOCK TO COVER
SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE 'UNDERWRITING.'
METTLER-TOLEDO(REGISTERED), METTLER(REGISTERED), INGOLD(REGISTERED),
GARVENS(REGISTERED), OHAUS(REGISTERED), DIGITOL(REGISTERED) AND
SAFELINE(REGISTERED) ARE REGISTERED TRADEMARKS OF THE COMPANY AND
BRICKSTONE(TRADEMARK), SPIDER(TRADEMARK), MENTOR SC(TRADEMARK),
MULTIRANGE(TRADEMARK), TRUCKMATE(TRADEMARK), SIGNATURE(TRADEMARK) AND
POWERPHASE(TRADEMARK) ARE TRADEMARKS OF THE COMPANY.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the related notes, appearing elsewhere in this Prospectus. Unless
otherwise indicated, industry data contained herein is derived from publicly
available industry trade journals, government reports and other publicly
available sources, which the Company has not independently verified but which
the Company believes to be reliable, and where such sources are not available,
from Company estimates, which the Company believes to be reasonable, but which
cannot be independently verified. As used in this Prospectus, '$' refers to U.S.
dollars, 'SFr' refers to Swiss francs, 'pounds ' refers to British pounds
sterling and 'CDN' refers to Canadian dollars. Unless otherwise stated or where
the context otherwise requires, (i) references herein to the 'Company' or
'Mettler-Toledo' refer to Mettler-Toledo International Inc. and its direct and
indirect subsidiaries and (ii) all information herein gives effect to the
Reorganization (as defined below) and assumes no exercise of the Underwriters'
over-allotment options.
THE COMPANY
GENERAL
Mettler-Toledo is a leading global supplier of precision instruments. The
Company is the world's largest manufacturer and marketer of weighing instruments
for use in laboratory, industrial and food retailing applications. In addition,
the Company holds one of the top three market positions in several related
analytical instruments such as titrators, thermal analysis systems, pH meters,
automatic lab reactors and electrodes. Through its recent acquisition (the
'Safeline Acquisition') of Safeline Limited ('Safeline'), the Company is also
the world's largest manufacturer and marketer of metal detection systems for
companies that produce and package goods in the food processing, pharmaceutical,
cosmetics, chemicals and other industries. The Company focuses on high
value-added segments of its markets by providing innovative instruments, by
integrating these instruments into application-specific solutions for customers,
and by facilitating the processing of data gathered by its instruments and the
transfer of this data to customers' management information systems.
Mettler-Toledo services a worldwide customer base through its own sales and
service organization and has a global manufacturing presence in Europe, the
United States and Asia. The Company generated pro forma 1996 net sales of $889.6
million (giving effect to the Safeline Acquisition) which were derived 49% in
Europe, 40% in North and South America and 11% in Asia and other markets.
The Company believes that in 1996 the global market for the Company's
products and services was approximately $6.0 billion. Weighing instruments are
among the most broadly used measuring devices, and their results are often used
as the basis of commercial transactions. Analytical instruments are critical to
the research and development and quality control efforts of end-users, while
metal detection systems provide important quality and safety checks in
production and packaging. The Company's products are used in laboratories as an
integral part of research and quality control processes, in industry for various
manufacturing processes such as quality control, materials preparation, filling,
counting and dimensioning, and in food retailing for preparation, portioning and
inventory control. Customers include pharmaceutical, biotechnology, chemicals,
cosmetics, food and beverage, metals, electronics, logistics, transportation and
food retailing businesses, as well as schools, universities and government
standards laboratories.
MARKET LEADERSHIP
The Company believes that it maintains a leading position in each of its
markets. In the weighing instruments market, Mettler-Toledo is the only company
to offer products for laboratory, industrial and food retailing applications
throughout the world and believes that it holds a market share more than two
times greater than that of its nearest competitor. The Company believes that in
1996 it had an approximate 40% market share of the global market for laboratory
balances including the largest market share in each of Europe, the United States
and Asia (excluding Japan), and the number two position in Japan. In the
industrial and food retailing markets, the Company believes it has the largest
market share in Europe and the United States. In Asia, Mettler-Toledo has
substantial, rapidly growing industrial and food retailing businesses supported
by an established manufacturing presence in China. The Company also holds one of
the top three global market positions in several analytical instruments such as
titrators, thermal analysis systems, electrodes, pH meters and automatic lab
3
<PAGE>
reactors. The Company recently enhanced its leading positions in precision
instruments through the addition of Safeline's market leading metal detection
products, which can be used in conjunction with the Company's checkweighing
instruments for important quality and safety checks in the food processing,
pharmaceutical, cosmetics, chemicals and other industries. Mettler-Toledo
attributes its worldwide market leadership positions to the following
competitive strengths:
Global Brand and Reputation. The Mettler-Toledo brand name is identified
worldwide with accuracy, reliability and innovation. Customers value these
characteristics because precision instruments, particularly weighing and
analytical instruments, significantly impact customers' product quality,
productivity, costs and regulatory compliance. Furthermore, precision
instruments generally constitute a small percentage of customers' aggregate
expenditures. As a result, the Company believes customers tend to emphasize
accuracy, product reliability, technical innovation, service quality, reputation
and past experience with a manufacturer's products when making their purchasing
decisions for weighing and other precision instruments and experience high
switching costs if they attempt to change vendors. A recent independent survey
concluded that 'Mettler-Toledo' was one of the three most recognized brand names
in the laboratory. The Company's brand name is so well recognized that
laboratory balances are often generically referred to as 'Mettlers.' The
strength of this brand name has allowed the Company to successfully extend its
laboratory product line to include titrators, thermal analysis systems,
electrodes, pH meters and automatic lab reactors.
Technological Innovation. Mettler-Toledo has a long and successful track
record of innovation, as demonstrated by the invention of the single-pan
analytical balance in 1945 and the introduction of the first fully electronic
precision balance in 1973. The Company has continued to be at the forefront of
technology with recent innovations in both weighing and related instrumentation,
including its new digital load cell, its ID 20 terminal (the first personal
computer interface to be certified by weights and measures regulators), its
Brickstone weighing sensor technology, its GOBI moisture determination
instrument, a new automatic lab reactor, the Zero Metal-Free Zone metal detector
and its new PILAR (Parallel Infrared Laser Array) dimensioning equipment. As
with many of the Company's recent innovations, the Company's new Brickstone
weighing sensor technology provides greater accuracy, while also significantly
reducing manufacturing costs and the time and expense of design changes by
reducing from approximately 100 to approximately 50 the number of parts in the
sensor. The Company believes it is the global leader in its industry in
providing innovative instruments, in integrating its instruments into
application-specific solutions for customers, and in facilitating the processing
of data gathered by its instruments and the transfer of this data to customers'
management information systems. Mettler-Toledo's technological innovation
efforts benefit from the Company's manufacturing expertise in sensor technology,
precision machining and electronics, as well as its strength in software
development.
Comprehensive, High Quality Product Range. Mettler-Toledo manufactures a
more comprehensive range of weighing instruments than any of its competitors.
The Company's broad product line addresses a wide range of weighing applications
across and within many industries and regions. Furthermore, the Company's
analytical instruments and metal detection systems complement its weighing
products, enabling the Company to offer integrated solutions. The Company
manufactures its products in its modern manufacturing facilities, most of which
are ISO 9001 certified. Mettler-Toledo's broad range of high quality products
and the ability to provide integrated solutions allows the Company to leverage
its sales and service organization, product development activities and
manufacturing and distribution capabilities.
Global Sales and Service. The Company has the only global sales and
service organization among weighing instruments manufacturers. At September 30,
1997, this organization consisted of approximately 3,000 employees organized
into locally-based, customer-focused groups that provide prompt service and
support to the Company's customers and distributors in virtually all major
markets around the world. The local focus of the Company's sales and service
organization enables the Company to provide timely, responsive support to
customers worldwide and provides feedback for manufacturing and product
development. This global infrastructure also allows the Company to capitalize on
growth opportunities in emerging markets.
Largest Installed Base. The Company believes that it has the largest
installed base of weighing instruments in the world. From this installed base,
the Company obtains service contracts which provide a strong, stable source of
recurring service revenue. Service revenue represented approximately 17% of net
sales in 1996, of which approximately 8% is derived solely from service
contracts and repairs with the remainder derived from the sale of spare parts.
The Company believes that its installed base of weighing instruments represents
a
4
<PAGE>
competitive advantage with respect to repeat purchases and purchases of related
analytical instruments and metal detection systems, because customers tend to
remain with an existing supplier that can provide accurate and reliable products
and related services. In addition, switching to a new instrument supplier
entails additional costs to the customer for training, spare parts, service and
systems integration requirements. Close relationships and frequent contact with
its broad customer base also provide the Company with sales leads and new
product and application ideas.
Geographical, Product and Customer Diversification. The Company's revenue
base is diversified by geographic region, product range and customer. The
Company's broad range of product offerings is utilized in many different
industries, including, among others, chemicals, pharmaceuticals, food
processing, food retailing and transportation. The Company supplies customers in
over 100 countries, and no one customer accounted for more than 2% of 1996 net
sales. The Company's diverse revenue base reduces its exposure to regional or
industry-specific economic conditions, and its presence in many different
geographic markets, product markets and industries enhances its attractiveness
as a supplier to multinational customers.
GROWTH STRATEGY
Prior to its acquisition on October 15, 1996 (the 'Acquisition') in a
transaction sponsored by management and AEA Investors Inc. ('AEA Investors'),
Mettler-Toledo operated as a division of Ciba-Geigy AG ('Ciba'). In connection
with the Acquisition, Mettler-Toledo began implementing a strategy to enhance
its position as global market leader by accelerating new product introductions,
capitalizing on market opportunities, focusing on expansion in emerging markets,
pursuing selected acquisitions and reengineering its operations in order to
reduce its overall cost structure. These initiatives have contributed to an
improvement in operating income (gross profit less research and development and
selling, general and administrative expenses) before amortization and non-
recurring costs ('Adjusted Operating Income') from $37.0 million (5.9% of net
sales) for the nine months ended September 30, 1996 to $52.6 million (8.3% of
net sales) for the nine months ended September 30, 1997, an increase of 42%.
New Product Introductions. The Company intends to continue to invest in
product innovation in order to provide technologically advanced products to its
customers for existing and new applications. Over the last three calendar years,
the Company invested approximately $170.0 million in research and development
and customer engineering, which has resulted in a pipeline of innovative and new
products, significant reductions in product costs and reduced time to market for
new products. Examples of new product introductions planned for the remainder of
1997 and 1998 include: industrial and retail products that apply open-system
architecture, a higher performance titrator, a higher performance modular
thermal analysis system and new density and refractometry measurement
technology. In addition, the Company is also focused on innovations that reduce
manufacturing costs. For example, the Company is extending the utilization of
its high-accuracy, low-cost Brickstone weighing sensor technology through much
of its weighing instrument product line. The Company attributes a significant
portion of its recent margin improvement to its research and development
efforts.
Capitalize on Market Opportunities. Mettler-Toledo believes it is well
positioned to capitalize on potential market opportunities including: (i) the
integration of weighing instruments into data management software systems to
automate processes and/or improve process control; (ii) the development of
integrated solutions that combine weighing instruments and related technologies
directly into manufacturing processes; (iii) the harmonization of national
weighing standards among countries, particularly in the European Union; and (iv)
the standardization of manufacturing and laboratory practices through programs
such as ISO 9001, Good Laboratory Practices and Good Manufacturing Practices.
The Company believes that these trends, together with the Company's brand name,
global presence and the pipeline of planned new products, will allow it to
increase its penetration of developed markets such as Europe, the United States
and Japan.
Further Expansion in Emerging Markets. The Company believes that global
recognition of the Mettler-Toledo brand name and the Company's global sales,
service and manufacturing capabilities position it to take advantage of
continued growth opportunities in emerging markets. These growth opportunities
have been driven by economic development and global manufacturers' utilization
of additional and more sophisticated weighing instruments as they shift
production to these markets. The primary focus to date of the Company's emerging
market expansion has been in Asia. In Asia (excluding Japan), the Company is the
market leader in laboratory weighing instruments and has substantial and rapidly
growing industrial and food retailing businesses. The
5
<PAGE>
Company maintains two profitable operations in China: first, a 60% owned joint
venture which manufactures and sells industrial and food retailing products and,
second, a wholly owned facility which manufactures and distributes laboratory
products. Both of these operations serve the domestic and export markets.
Recently, the Company has opened direct marketing organizations in Taiwan,
Korea, Hong Kong, Thailand and Malaysia. The Company is also expanding its sales
and service presence in Latin America and other emerging markets. The Company
believes that its brand name, its global marketing and manufacturing
infrastructure and its already substantial sales in Asia and Latin America
position it to take advantage of further growth opportunities in emerging
markets.
Pursue Selected Acquisition Opportunities. Mettler-Toledo plans to
actively pursue additional complementary product lines and distribution
channels. In the laboratory market, the Company intends to leverage its existing
laboratory distribution system through the acquisition of complementary product
lines and the development of integrated laboratory solutions. In the industrial
and food retailing markets, the Company plans to pursue the acquisition of
related products and technologies that allow for the integration of weighing
with other customer operations and information systems. The Company began
implementing this strategy through the May 1997 acquisition of Safeline, which
had calendar year 1996 revenues of $40.4 million and is the world's leading
supplier of metal detection systems for companies that produce and package goods
in the food processing, pharmaceutical, cosmetics, chemicals and other
industries. Safeline's metal detection systems enable the Company to offer
integrated solutions for quality control and data management to these
industries. The Company believes that by taking advantage of its brand name and
global sales and service organization it can expand the distribution of acquired
product lines and operate acquired businesses more effectively.
Reengineering and Cost Reductions. The Company's recent increase in
profitability has been achieved in part through: (i) focusing research and
development efforts on product cost reductions; (ii) achieving greater
flexibility in, and a targeted reduction of, the Company's workforce, including
a reduction of approximately 170 personnel in 1996; (iii) consolidating
manufacturing facilities, including the closure of the Westerville, Ohio
facility; and (iv) moving production to lower-cost manufacturing facilities. The
Company has also started implementing a number of additional operational changes
such as the restructuring of its ordering process, product delivery and parts
inventory management in Europe, the consolidation of worldwide precision balance
manufacturing, the realignment of industrial product manufacturing in Europe and
the consolidation of the Company's North American laboratory, industrial and
food retailing businesses into a single marketing organization. The Company
believes that these new initiatives, as well as its continuing efforts to reduce
product costs through research and development and the move of production to
lower-cost manufacturing facilities, will place the Company in a position to
build on its recent improvement in profitability. Furthermore, the Company
believes that it can leverage its existing infrastructure, particularly the
recent investments made in Asia, to obtain continued sales growth without
significant additions to its overall cost base.
ACQUISITION AND SAFELINE ACQUISITION
Acquisition. On October 15, 1996, the Company acquired the Mettler-Toledo
Group from Ciba in a transaction sponsored by management and AEA Investors. As
of September 30, 1997, 688 of the Company's employees, including executive
officers and key management employees, owned 1,990,550 shares of Common Stock
and held options to purchase 3,537,063 additional shares of Common Stock,
collectively representing on a fully diluted basis and after giving effect to
the Offerings an aggregate ownership interest of approximately 13.5%. In
addition, at the request of the Company, the Underwriters have reserved up to
833,333 shares to be sold in the Offerings to certain employees of the Company
and certain other persons. See 'Management' and 'Security Ownership of Certain
Beneficial Owners and Management.'
Safeline Acquisition. On May 30, 1997, the Company acquired Safeline for
pounds 61.0 million (approximately $100.0 million at May 30, 1997), plus up to
an additional pounds 6.0 million (approximately $10.0 million at May 30, 1997)
for a contingent earn-out payment. In October 1997, the Company made an
additional payment, representing a post-closing adjustment, of pounds 1.9
million (approximately $3.1 million at October 3, 1997). Such amount will be
accounted for as additional purchase price. Safeline, based in Manchester, U.K.,
is the world's largest manufacturer and marketer of metal detection systems for
companies that produce and package goods in the food processing, pharmaceutical,
cosmetics, chemicals and other industries. Safeline's metal detectors can also
be used in conjunction with the Company's checkweighing products for important
quality and safety checks in these industries. From 1992 to 1996, Safeline's net
sales increased at a compounded annual growth rate of
6
<PAGE>
approximately 30%, in part due to the introduction of new products such as the
first digital electronic and Zero Metal-Free Zone metal detectors. Safeline had
net sales and Adjusted Operating Income of $40.4 million and $9.9 million,
respectively, for the year ended December 31, 1996.
CONCURRENT TRANSACTIONS
Credit Agreement Refinancing. In connection with the Offerings, the
Company intends to refinance its existing credit facility (the 'Credit
Agreement') by entering into a new credit facility (the 'New Credit Agreement')
with certain financial institutions. The Company expects that it will have pro
forma borrowings under the New Credit Agreement of $383.9 million (representing
an increase of $71.3 million) as of September 30, 1997 and borrowings of $38.0
million under various other credit arrangements. Of the borrowings under the New
Credit Agreement, $200.0 million will be in the form of a term loan and the
remainder will be outstanding under a revolving credit facility. The Company's
revolving credit facility commitment will increase from $170.0 million to $420.0
million under the New Credit Agreement, and this commitment will include a
$100.0 million acquisition facility. Additional borrowings under the New Credit
Agreement will be used, together with the net proceeds from the Offerings, to
repurchase the Notes (as defined below) and to pay related premiums and fees and
expenses. As a result of the Refinancing (as defined below), the Company expects
to realize significantly lower interest expense. See 'Use of Proceeds' and
'Capitalization.'
Note Repurchase. As part of the Refinancing, the Company has commenced a
tender offer (the 'Note Repurchase') for all of the 9 3/4% Senior Subordinated
Notes due 2006 (the 'Notes') of the Company's wholly owned subsidiary,
Mettler-Toledo, Inc. As of October 17, 1997, all of the Notes had been
irrevocably tendered. The Company will use net proceeds from the Offerings and
additional borrowings under the New Credit Agreement to finance the Note
Repurchase. In connection with the Note Repurchase the Company has obtained the
requisite consents to remove substantially all of the restrictive covenants and
certain other provisions from the Indenture governing the Notes. The refinancing
of the Credit Agreement and the Note Repurchase are collectively referred to as
the 'Refinancing.' See 'Use of Proceeds' and 'Capitalization.' In connection
with the refinancing of the Credit Agreement and the Note Repurchase, the
Company anticipates that it will record an extraordinary loss of approximately
$30.0 million representing the premium expected to be paid in connection with
the purchase of the Notes and the write-off of related capitalized debt issuance
fees resulting from the Refinancing.
Reorganization. The name of the Company is currently MT Investors Inc.
Mettler-Toledo, Inc. is currently a wholly owned subsidiary of Mettler-Toledo
Holding Inc. ('Holding') which in turn is a wholly owned subsidiary of the
Company. Mettler-Toledo, Inc. and Holding are the primary assets of the Company.
Concurrently with the Offerings (i) Holding will be merged with and into the
Company (the 'Merger'), with the Company being the surviving corporation, (ii)
as part of the Merger, the Company will convert each share of its existing Class
A, Class B and Class C common stock into 12.58392 shares of Common Stock, and
(iii) the Company will change its name to Mettler-Toledo International Inc. In
the Merger, holders who would receive fractional shares will instead receive a
cash payment at the public offering price. These transactions are referred to as
the 'Reorganization.'
7
<PAGE>
THE OFFERINGS
The offering of 5,333,334 shares of the Company's Common Stock, par value
$.01 per share, in the United States and Canada (the 'U.S. Offering') and the
offering of 1,333,333 shares of the Common Stock outside the United States and
Canada (the 'International Offering') are collectively referred to herein as the
'Offerings.'
<TABLE>
<S> <C>
Common Stock Offered by the Company (1)... 6,666,667 shares
Common Stock to be Outstanding After the
Offerings (1)(2)........................ 37,336,801 shares
Use of Proceeds........................... The net proceeds to be received by the Company from the Offerings,
together with amounts borrowed under the New Credit Agreement, will
be used to repurchase the Notes and to pay related premiums and fees
and expenses. See 'Use of Proceeds.'
New York Stock Exchange Symbol............ 'MTD'
</TABLE>
- ------------------------
(1) Excludes 1,000,000 shares which are subject to the over-allotment options
granted by the Company to the Underwriters in connection with the Offerings.
(2) Excludes 4,258,122 shares that may be issued upon the exercise of options
granted pursuant to the Company's Stock Option Plan (the 'Stock Plan').
RISK FACTORS
Prospective purchasers of the Common Stock should carefully consider all of
the information contained in this Prospectus before making an investment in the
Common Stock. In particular, prospective purchasers should carefully consider
the factors set forth herein under 'Risk Factors.' These risks include the
effect of the Company's substantial indebtedness on operations and liquidity;
risks associated with currency fluctuations; risks associated with international
operations; risks associated with competition and improvements in technology by
competitors; risks due to significant sales to the pharmaceutical and chemicals
industries; risks relating to future acquisitions; reliance on key management;
risk of liability under environmental laws; potentially adverse effect on stock
price due to shares eligible for future sale; dilution; restrictions on payment
of dividends; certain anti-takeover provisions in the Company's certificate of
incorporation; and the absence of a prior public market for the Common Stock.
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The summary historical financial information set forth below for the years
ended December 31, 1993, 1994 and 1995, for the period from January 1, 1996 to
October 14, 1996, and for the period from October 15, 1996 to December 31, 1996
is derived from the Company's financial statements, which were audited by KPMG
Fides Peat, independent auditors. The financial information for all periods
prior to October 15, 1996, the date of the Acquisition, is combined financial
information of the Mettler-Toledo Group (the 'Predecessor Business'). The
summary historical financial information at September 30, 1997 and for the nine
months ended September 30, 1996 and 1997 is derived from the unaudited interim
consolidated financial statements of the Predecessor Business and of the
Company, which, in the opinion of management, include all adjustments necessary
for a fair presentation of the results for the unaudited periods. Operating
results for the nine months ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1997. The summary pro forma financial information gives effect to the
Acquisition, the Safeline Acquisition, the Offerings and the Refinancing
(assuming all of the Notes are repurchased) and does not purport to represent
what the Company's results of operations actually would have been if such
transactions had occurred as of such dates. The combined historical data of the
Predecessor Business and the consolidated historical data of the Company are not
comparable in many respects due to the Acquisition and the Safeline Acquisition.
See 'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and 'Unaudited Pro Forma Financial Information' and the Consolidated
Financial Statements and accompanying notes included herein. The financial
information presented below was prepared in accordance with U.S. generally
accepted accounting principles ('U.S. GAAP').
8
<PAGE>
<TABLE>
<CAPTION>
METTLER-TOLEDO
PREDECESSOR BUSINESS INTERNATIONAL INC.
-------------------------------------------- --------------------------------
YEAR ENDED DECEMBER 31, JANUARY 1 OCTOBER 15 TO 1996
------------------------------ TO OCTOBER DECEMBER 31, PRO FORMA
1993 1994 1995 14, 1996 1996 (A)(B)(C)
-------- -------- -------- ----------- --------------- --------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(F):
Net sales.......................... $728,958 $769,136 $850,415 $ 662,221 $ 186,912 $ 889,567
Cost of sales...................... 443,534 461,629 508,089 395,239 136,820(b) 523,783
-------- -------- -------- ----------- --------------- --------------
Gross profit....................... 285,424 307,507 342,326 266,982 50,092 365,784
Research and development........... 46,438 47,994 54,542 40,244 9,805 50,608
Selling, general and
administrative.................... 209,692 224,978 248,327 186,898 59,353 252,085
Amortization....................... 2,917 6,437 2,765 2,151 1,065 6,526
Purchased research and
development....................... -- -- -- -- 114,070(c) --
Interest expense................... 15,239 13,307 18,219 13,868 8,738 29,572
Other charges (income), net(g)..... 14,110 (7,716) (9,331) (1,332) 17,137 14,036
-------- -------- -------- ----------- --------------- --------------
Earnings (loss) before taxes,
minority interest and
extraordinary item................ (2,972) 22,507 27,804 25,153 (160,076) 12,957
Provision for taxes................ 3,041 8,676 8,782 10,055 (938) 7,130
Minority interest.................. 1,140 347 768 637 (92) 593
-------- -------- -------- ----------- --------------- --------------
Earnings (loss) before
extraordinary item................ (7,153) 13,484 18,254 14,461 (159,046) 5,234
Extraordinary item-debt
extinguishment.................... -- -- -- -- -- --
-------- -------- -------- ----------- --------------- --------------
Net earnings (loss)................ $ (7,153) $ 13,484 $ 18,254 $ 14,461 $ (159,046) $ 5,234
-------- -------- -------- ----------- --------------- --------------
-------- -------- -------- ----------- --------------- --------------
Earnings (loss) per common
share(i):
Weighted average number of common
shares.......................... 32,333,344 39,000,011
Earnings (loss) per common share
before extraordinary item....... $ (4.92) $ 0.13
Extraordinary item................ -- --
--------------- --------------
Earnings (loss) per common
share........................... $ (4.92) $ 0.13
--------------- --------------
--------------- --------------
OTHER DATA:
Local currency net sales
growth(j)......................... 7% 6% 3%
Gross profit before non-recurring
costs as a percentage of net
sales(k).......................... 39.2% 40.0% 40.3% 40.3% 44.0% 41.1%
Adjusted Operating Income(l)....... $ 29,294 $ 34,535 $ 39,457 $ 39,840 $ 17,912 $ 67,875
Adjusted Operating Income as a
percentage of net sales(l)........ 4.0% 4.5% 4.6% 6.0% 9.6% 7.6%
Depreciation and amortization
expense........................... $ 29,591 $ 34,118 $ 33,363 $ 21,663 $ 8,990 $ 34,393
Capital expenditures............... 25,122 24,916 25,858 16,649 11,928 29,417
<CAPTION>
PREDECESSOR METTLER-TOLEDO
BUSINESS INTERNATIONAL INC.
------------ -------------------------------------
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------------
1997
1997 PRO FORMA
1996 (D)(E) (A)(D)(E)
------------ ----------------- ---------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(F):
Net sales.......................... $ 624,733 $ 633,743 $ 652,776
Cost of sales...................... 374,121 359,080(d) 369,442
------------ ----------------- ---------------
Gross profit....................... 250,612 274,663 283,334
Research and development........... 37,930 34,494 34,769
Selling, general and
administrative.................... 175,645 189,594 190,776
Amortization....................... 2,038 4,449 5,404
Purchased research and
development....................... -- 29,959(e) --
Interest expense................... 12,579 28,199 21,617
Other charges (income), net(g)..... (226) 7,316 7,293
------------ ----------------- ---------------
Earnings (loss) before taxes,
minority interest and
extraordinary item................ 22,646 (19,348) 23,475
Provision for taxes................ 8,901 7,296 10,710
Minority interest.................. 609 375 380
------------ ----------------- ---------------
Earnings (loss) before
extraordinary item................ 13,136 (27,019) 12,385
Extraordinary item-debt
extinguishment.................... -- (9,552)(h) --
------------ ----------------- ---------------
Net earnings (loss)................ $ 13,136 $ (36,571) $ 12,385
------------ ----------------- ---------------
------------ ----------------- ---------------
Earnings (loss) per common
share(i):
Weighted average number of common
shares.......................... 32,333,344 39,000,011
Earnings (loss) per common share
before extraordinary item....... $ (0.84) $ 0.32
Extraordinary item................ (0.29) --
----------------- ---------------
Earnings (loss) per common
share........................... $ (1.13) $ 0.32
----------------- ---------------
----------------- ---------------
OTHER DATA:
Local currency net sales
growth(j)......................... 3% 6% 7%
Gross profit before non-recurring
costs as a percentage of net
sales(k).......................... 40.1% 43.7% 43.4%
Adjusted Operating Income(l)....... $ 37,037 $ 52,629 $ 57,789
Adjusted Operating Income as a
percentage of net sales(l)........ 5.9% 8.3% 8.9%
Depreciation and amortization
expense........................... $ 20,668 $ 22,233 $ 23,422
Capital expenditures............... 14,985 13,299 13,550
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
---------------------------
HISTORICAL PRO FORMA(M)
---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital.................... $ 89,003 $ 89,003
Total assets....................... 768,177 762,470
Long-term third-party debt......... 429,033 361,903
Other long-term liabilities(n)..... 90,307 90,307
Shareholders' equity (deficit)..... (36,261) 21,743
</TABLE>
- ------------------
(a) Represents the unaudited pro forma consolidated statement of operations of
the Company for fiscal year 1996 and the nine months ended September 30,
1997, assuming the Acquisition, the Safeline Acquisition, the Offerings and
the Refinancing (assuming all of the Notes are repurchased) occurred on
January 1, 1996. Certain other one-time charges incurred during 1996 have
not been excluded from the unaudited pro forma consolidated statement of
operations for the year ended December 31, 1996. These charges consist of
certain non-recurring items for (i) advisory fees associated with the
reorganization of the Company's structure of approximately $4,800 and (ii)
restructuring charges of approximately $12,600. The Company has
(Footnotes continued on next page)
9
<PAGE>
(Footnotes continued from previous page)
estimated that the restructurings will result in annual cost savings of
approximately $8,300, of which approximately $2,000 was realized in 1996.
Such cost savings consist primarily of lower employee salary and benefit
costs and fixed manufacturing costs. In addition, at the time of the
Acquisition, the Company estimated it would incur additional selling,
general and administrative expenses of $1,300 annually as a result of the
Acquisition. If adjustments had been made to the unaudited pro forma
consolidated statement of operations for the year ended December 31, 1996 to
remove these non-recurring charges and to reflect the net unrealized cost
savings, Adjusted Operating Income would have been approximately $73,000 and
net earnings would have been approximately $19,000. The 1997 period includes
a non-recurring charge of $3,300 to close three facilities in North America.
This restructuring program will require an additional charge of
approximately $3,000 in the fourth quarter of 1997. The Company estimates
that these closures, when complete, will provide savings of approximately
$2,500 annually and will allow the Company to sell two facilities from which
the Company estimates it will realize, after 1998, proceeds in excess of
$5,000. The Company believes the fair market value of these facilities
approximates their respective book values. If adjustments had been made to
the unaudited pro forma consolidated statement of operations for the nine
months ended September 30, 1997 to remove this non-recurring charge, net
earnings would have been approximately $15,700. See 'Unaudited Pro Forma
Financial Information.'
(b) In connection with the Acquisition, the Company allocated $32,194 of the
purchase price to revalue certain inventories (principally work-in-progress
and finished goods) to fair value (net realizable value). Substantially all
such inventories were sold during the period October 15, 1996 to December
31, 1996. The charges associated with this revaluation have been excluded
from the pro forma financial information.
(c) In conjunction with the Acquisition, the Company allocated, based upon
independent valuations, $114,070 of the purchase price to purchased research
and development in process. This amount was recorded as an expense
immediately following the Acquisition. This expense has been excluded from
the pro forma financial information.
(d) In connection with the Safeline Acquisition, the Company allocated $2,054 of
the purchase price to revalue certain inventories (principally
work-in-progress and finished goods) to fair value (net realizable value).
Substantially all such inventories were sold during the second quarter of
1997. The charges associated with this revaluation have been excluded from
the pro forma financial information.
(e) In conjunction with the Safeline Acquisition, the Company allocated, based
upon independent valuations, $29,959 of the purchase price to purchased
research and development in process. This amount was recorded as an expense
immediately following the Safeline Acquisition. This expense has been
excluded from the pro forma financial information.
(f) Income statement information for the year ended December 31, 1992 is not
available, except that net sales were $769,000. Approximately 75% of the
decrease in net sales in 1993 compared to 1992 resulted from appreciation of
the U.S. dollar against the Company's other principal trading currencies.
(g) Other charges (income), net generally includes interest income, foreign
currency transactions (gains) losses, (gains) losses from sales of assets
and other charges (income). In 1993, the amount shown includes costs
associated with the closure of a manufacturing facility in Cologne, Germany,
the restructuring of certain manufacturing operations and an early
retirement program in the United States. For the period January 1, 1996 to
October 14, 1996, the amount shown includes employee severance and other
exit costs associated with the closing of the Company's Westerville, Ohio
facility. For the period October 15, 1996 to December 31, 1996, the amount
shown includes employee severance benefits associated with the Company's
general headcount reduction programs in Europe and North America and the
realignment of the analytical and precision balance business in Switzerland.
For the period ended September 30, 1997, the amount shown (8% including
Safeline's results) includes a restructuring charge of $3,300 to close three
facilities in North America. See Note 17 to the audited consolidated
financial statements (the 'Audited Consolidated Financial Statements') and
Note 1 to the unaudited interim consolidated financial statements (the
'Unaudited Interim Consolidated Financial Statements') included herein.
(h) Represents a one-time charge for the write-off of capitalized debt issuance
fees and related expenses associated with the Company's previous credit
facility.
(i) Historical loss per common share has been computed assuming the number of
common shares issued in connection with the Reorganization, including common
share equivalents, were outstanding during the periods presented. Pro forma
earnings per share for 1996 and the nine months ended September 30, 1997
have been computed using the treasury stock method assuming the number of
common shares issued in the Reorganization and the Offerings, including
common share equivalents, were outstanding during the periods presented.
Common share equivalents result from outstanding options to purchase Common
Stock.
(j) Local currency net sales growth is adjusted for the exit from certain
systems businesses. Pro forma local currency net sales growth assumes that
the Safeline Acquisition occurred on January 1, 1995. For the nine months
ended September 30, 1997, local currency net sales increased 6% absent the
Safeline Acquisition (8% including Safeline's results). Assuming the
Safeline Acquisition had occurred on January 1, 1996, local currency net
sales growth would have been 7% for the three months ended September 30,
1997.
(k) Non-recurring costs represent costs associated with selling inventories
revalued to fair value in connection with the Acquisition and the Safeline
Acquisition. See Notes (b) and (d) above.
(l) Adjusted Operating Income is defined as operating income (gross profit less
research and development and selling, general and administrative expenses)
before amortization and non-recurring costs. Non-recurring costs which have
been excluded are the costs set forth in Note (k) above and for the period
from October 15, 1996 to December 31, 1996, and in pro forma 1996, advisory
fees associated with the reorganization of the Company's structure of
approximately $4,800.
(m) The pro forma Balance Sheet Data at September 30, 1997 gives effect to the
Offerings and the Refinancing (assuming all of the Notes are repurchased) as
if they had occurred on such date.
(n) Consists primarily of obligations under various pension plans and plans that
provide post-retirement medical benefits. See Note 15 to the Audited
Consolidated Financial Statements included herein.
10
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should consider carefully the following risk factors
before purchasing the Common Stock offered hereby. This Prospectus contains
forward-looking statements. These statements are subject to a number of risks
and uncertainties, certain of which are beyond the Company's control. See
'--Forward-Looking Statements and Associated Risks' and 'Management's Discussion
and Analysis of Financial Condition and Results of Operations.'
EFFECT OF SUBSTANTIAL INDEBTEDNESS ON OPERATIONS AND LIQUIDITY
In connection with the Acquisition and the Safeline Acquisition, the
Company incurred a significant amount of indebtedness. At September 30, 1997,
the Company's consolidated indebtedness (excluding unused commitments) on a pro
forma basis giving effect to the Offerings and the Refinancing would have been
approximately $421.9 million. The Company will have additional borrowing
capacity on a revolving credit basis under the New Credit Agreement and under
local working capital facilities for acquisitions and other purposes. The
Company is required to make scheduled principal payments on the term loans under
the New Credit Agreement. See 'Capitalization' and 'Description of Certain
Indebtedness.' The Company's ability to comply with the terms of the New Credit
Agreement and its other debt obligations to make cash payments with respect to
such obligations and to satisfy its other debt or to refinance any of such
obligations will depend on the future performance of the Company, which, in
turn, is subject to prevailing economic and competitive conditions and certain
financial, business and other factors beyond its control. See 'Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources' and 'Description of Certain
Indebtedness.'
The Company's high degree of leverage could have important consequences
including but not limited to the following: (i) the Company's ability to obtain
additional financing for acquisitions, capital expenditures, working capital or
general corporate purposes may be impaired in the future; (ii) a substantial
portion of the Company's cash flow from operations must be dedicated to the
payment of principal and interest on borrowings under the New Credit Agreement
and the Company's other indebtedness, thereby reducing the funds available to
the Company for its operations and other purposes, including investments in
research and development and capital spending; (iii) certain of the Company's
borrowings are and will continue to be at variable rates of interest, which
exposes the Company to the risk of increased interest rates; and (iv) the
Company may be substantially more leveraged than certain of its competitors,
which may place the Company at a relative competitive disadvantage and may make
the Company more vulnerable to a downturn in general economic conditions or its
business or changing market conditions and regulations. See 'Description of
Certain Indebtedness.'
The New Credit Agreement will contain and the Company's other debt
obligations contain a number of covenants that, among other things, will
restrict the ability of the Company to incur additional indebtedness, dispose of
certain assets, make capital expenditures and otherwise restrict corporate
activities. See 'Description of Certain Indebtedness.' The Company's ability to
comply with such covenants may be affected by events beyond its control,
including prevailing economic, financial and industry conditions. A failure to
comply with the covenants and restrictions contained in the New Credit
Agreement, the Company's other debt obligations or any agreements with respect
to any additional financing could result in an event of default under its debt
agreements.
RISKS ASSOCIATED WITH CURRENCY FLUCTUATIONS
Swiss franc-denominated expenses represent a much greater percentage of the
Company's operating expenses than Swiss franc-denominated sales represent of
total net sales. Some of the Company's manufacturing costs in Switzerland relate
to products that are sold outside of Switzerland, including many technologically
sophisticated products requiring highly skilled personnel. Moreover, a
substantial percentage of the Company's research and development expenses and
general and administrative expenses are incurred in Switzerland. Appreciation of
the Swiss franc against the Company's major trading currencies (i.e., the U.S.
dollar, certain major European currencies and the Japanese yen) has a negative
impact on the Company's income from operations, whereas depreciation of the
Swiss franc has a positive impact.
The Company's operations are conducted by subsidiaries in many countries,
and the results of operations and the financial position of each of those
subsidiaries is reported in the relevant foreign currency and then translated
into U.S. dollars at the applicable foreign currency exchange rate for inclusion
in the Company's
11
<PAGE>
consolidated financial statements. As exchange rates between these foreign
currencies and the U.S. dollar fluctuate, the translation effect of such
fluctuations may have a material adverse effect on the Company's results of
operations or financial position as reported in U.S. dollars. However, the
effect of these changes on income from operations generally offsets in part the
effect on income from operations of changes in the exchange rate between the
Swiss franc and other currencies described in the preceding paragraph.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
The Company does business in numerous countries, including emerging markets
in Asia, Latin America and Eastern Europe. In addition to currency risks
discussed above, the Company's international operations are subject to the risk
of new and different legal and regulatory requirements in local jurisdictions,
tariffs and trade barriers, potential difficulties in staffing and managing
local operations, credit risk of local customers and distributors, potential
difficulties in protecting intellectual property, risk of nationalization of
private enterprises, potential imposition of restrictions on investments,
potentially adverse tax consequences, including imposition or increase of
withholding and other taxes on remittances and other payments by subsidiaries,
and local economic, political and social conditions, including the possibility
of hyper-inflationary conditions, in certain countries. The Company is
increasing its presence in China, Latin America and Eastern Europe. As a result,
inflationary conditions in these countries could have an increasingly
significant effect on the Company's operating results.
The conversion into foreign currency of funds earned in local currency
through the Company's operations in the People's Republic of China and the
repatriation of such funds require certain governmental approvals. Failure to
obtain such approvals could result in the Company being unable to convert or
repatriate earnings from its Chinese operations, which may become an
increasingly important part of the Company's international operations.
COMPETITION; IMPROVEMENTS IN TECHNOLOGY
The markets in which the Company operates are highly competitive. Weighing
instruments markets are fragmented both geographically and by application,
particularly the industrial and food retailing market. As a result, the Company
competes with numerous regional or specialized competitors, many of which are
well-established in their respective markets. Some competitors are divisions of
larger companies with potentially greater financial and other resources than the
Company. The Company has, from time to time, experienced price pressures from
competitors in certain product lines and geographic markets.
The Company's competitors can be expected to continue to improve the design
and performance of their products and to introduce new products with competitive
price and performance characteristics. Although the Company believes that it has
certain technological and other advantages over its competitors, realizing and
maintaining these advantages will require the continued productive investment by
the Company in research and development, sales and marketing and customer
service and support. There can be no assurance that the Company will have
sufficient resources to continue to make such investments or that the Company
will be successful in maintaining such advantages.
SIGNIFICANT SALES TO PHARMACEUTICAL AND CHEMICALS INDUSTRIES
The Company's products are used extensively in the pharmaceutical and
chemicals industries. Consolidation in these industries has had an adverse
impact on the Company's sales in prior years. A prolonged downturn or any
additional consolidation in these industries could adversely affect the
Company's operating results.
RISKS RELATING TO FUTURE ACQUISITIONS
The Company may in the future pursue acquisitions of complementary product
lines, technologies or businesses. Future acquisitions by the Company may result
in potentially dilutive issuances of equity securities, the incurrence of debt
and contingent liabilities and amortization expenses related to goodwill and
other intangible assets, which could materially adversely affect the Company's
profitability. In addition, acquisitions involve numerous risks, including
difficulties in the assimilation of the operations, technologies and products of
the acquired companies, the diversion of management's attention from other
business concerns and the potential loss of key employees of the acquired
company. There are currently no understandings or agreements with respect to any
material acquisition, nor can there be any assurances that the Company will be
able to identify and successfully complete and integrate potential acquisitions
in the future. In the event that any such acquisition
12
<PAGE>
does occur, however, there can be no assurance as to the effect thereof on the
Company's business or operating results.
RELIANCE ON KEY MANAGEMENT
Robert F. Spoerry, the Company's Chief Executive Officer, has an employment
contract with the Company and the Company is negotiating employment agreements
with all other key management employees of the Company. In addition, various
members of management own a portion of the shares of Common Stock of the Company
and have options to purchase additional shares of such Common Stock. See
'Security Ownership of Certain Beneficial Owners and Management.' Nonetheless,
there is no assurance that such individuals will remain with the Company. If,
for any reason, such key personnel do not continue to be active in the Company's
management, operations could be adversely affected. The Company has no key man
life insurance policies with respect to any of its senior executives.
ENVIRONMENTAL MATTERS
The Company is subject to various environmental laws and regulations in the
jurisdictions in which it operates, including those relating to air emissions,
wastewater discharges, the handling and disposal of solid and hazardous wastes
and the remediation of contamination associated with the use and disposal of
hazardous substances. The Company, like many of its competitors, has incurred,
and will continue to incur, capital and operating expenditures and other costs
in complying with such laws and regulations in both the United States and
abroad. The Company is currently involved in, or has potential liability with
respect to, the remediation of past contamination in certain of its presently
and formerly owned and leased facilities in both the United States and abroad.
In addition, certain of the Company's present and former facilities have or had
been in operation for many decades and, over such time, some of these facilities
may have used substances or generated and disposed of wastes which are or may be
considered hazardous. It is possible that such sites, as well as disposal sites
owned by third parties to which the Company has sent wastes, may in the future
be identified and become the subject of remediation. Accordingly, although the
Company believes that it is in substantial compliance with applicable
environmental requirements, it is possible that the Company could become subject
to additional environmental liabilities in the future that could result in a
material adverse effect on the Company's results of operations or financial
condition. See 'Business--Environmental Matters.'
POTENTIAL ADVERSE EFFECT ON MARKET PRICE DUE TO SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Common Stock in the public
market or the perception that such sales could occur could adversely affect
prevailing market prices for the Common Stock. Upon completion of the
Reorganization and the Offerings, the Company will have outstanding 37,336,801
shares of Common Stock. All shares of Common Stock will be freely tradeable
without restriction under the Securities Act of 1933, as amended (the
'Securities Act'), except to the extent such shares are subject to the agreement
with the Underwriters described below and for any such shares which are held by
an 'affiliate' of the Company. In connection with the Offerings the Company, the
Company's executive officers and directors and substantially all of the existing
shareholders of the Company will agree not to dispose of any shares of Common
Stock for a period of 180 days from the date of this Prospectus without the
consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated ('Merrill Lynch')
on behalf of the Underwriters subject to certain exceptions. Upon expiration of
the lockup period, all shares will be eligible for sale in the public market,
with shares held by 'affiliates' (as such term is defined under the Securities
Act) of the Company subject to compliance with the volume limitations and other
restrictions of Rules 144 and 145 under the Securities Act. In addition,
promptly after the closing of the Offerings, the Company intends to file a
registration statement under the Securities Act covering the sale of shares of
Common Stock reserved for issuance or sale under the Company's Stock Plan. Upon
completion of the Reorganization, there will be outstanding options to purchase
a total of 4,258,122 shares of Common Stock. The sale of such shares could have
an adverse effect on the Company's ability to raise equity capital in the public
markets. See 'Shares Eligible for Future Sale.'
13
<PAGE>
DILUTION
Investors purchasing shares of Common Stock in the Offerings will incur
substantial and immediate dilution of $19.37 per share in the pro forma net
tangible book value of the Common Stock from the initial public offering price.
These investors will incur additional dilution upon the exercise of outstanding
stock options. See 'Dilution.'
RESTRICTIONS ON PAYMENT OF DIVIDENDS; ABSENCE OF DIVIDENDS
The New Credit Agreement will restrict, among other things, the ability of
the Company to pay dividends. The Company does not anticipate paying any cash
dividends on the Common Stock in the foreseeable future. See 'Dividend Policy'
and 'Description of Certain Indebtedness.'
CERTAIN ANTI-TAKEOVER PROVISIONS
The Company's amended and restated certificate of incorporation (the
'Amended and Restated Certificate of Incorporation') and amended by-laws (the
'Amended By-laws') will contain certain provisions that could make more
difficult the acquisition of the Company by means of a tender offer, proxy
contest or otherwise. The Amended and Restated Certificate of Incorporation will
authorize the issuance of preferred stock without shareholder approval and upon
such terms as the Board of Directors may determine. The rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights of
holders of preferred stock that may be issued in the future. In addition, the
Amended By-laws will contain advance notice procedures for shareholders to
nominate candidates for election as directors and for shareholders to submit
proposals for consideration at shareholder meetings. The Company has no present
plans to issue shares of preferred stock. Under certain circumstances, Section
203 of the Delaware General Corporation Law makes it more difficult for an
'interested stockholder' (generally a 15% stockholder) to effect various
business combinations with a corporation for a three-year period. See
'Description of Capital Stock.'
ABSENCE OF PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the Offerings, there has been no public market for the Common
Stock. Although the Common Stock has been accepted for listing on the NYSE
subject to official notice of issuance, there can be no assurance that an active
trading market for the Common Stock will develop or be sustained following the
Offerings or that the market price of the Common Stock will not decline below
the initial public offering price. The initial public offering price will be
determined by negotiation among the Company and the Underwriters based upon
several factors and may not be indicative of future market prices. The price at
which the Common Stock will trade will depend upon a number of factors,
including, but not limited to, the Company's historical and anticipated
operating results and general market and economic conditions, some of which
factors are beyond the Company's control. Factors such as quarterly fluctuations
in the Company's financial and operating results, announcements by the Company
or others and developments affecting the Company, its products, its customers,
the markets in which it competes or the industry generally, also could cause the
market price of the Common Stock to fluctuate substantially. In addition, the
stock market has from time to time experienced extreme price and volume
fluctuations. These broad market fluctuations may adversely affect the market
price of the Common Stock. See 'Underwriting.'
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Prospectus includes forward-looking statements that reflect the
Company's current views with respect to future events and financial performance,
including capital expenditures, planned product introductions, research and
development expenditures, potential future growth, including potential
penetration of developed markets and potential growth opportunities in emerging
markets, potential future acquisitions, potential cost savings from planned
employee reductions and restructuring programs, estimated proceeds from and
timing of asset sales, planned operational changes and research and development
efforts, strategic plans and future cash sources and requirements. These
forward-looking statements are subject to certain risks and uncertainties,
including those identified in 'Risk Factors,' which could cause actual results
to differ materially from historical results or those anticipated. The words
'believe,' 'expect,' 'anticipate' and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of their dates. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
14
<PAGE>
THE COMPANY
GENERAL
Mettler-Toledo is a leading global supplier of precision instruments. The
Company is the world's largest manufacturer and marketer of weighing instruments
for use in laboratory, industrial and food retailing applications. In addition,
the Company holds one of the top three market positions in several related
analytical instruments such as titrators, thermal analysis systems, pH meters,
automatic lab reactors and electrodes. Through the recent acquisition of
Safeline, the Company is also the world's largest manufacturer and marketer of
metal detection systems for companies that produce and package goods in the food
processing, pharmaceutical, cosmetics, chemicals and other industries. The
Company focuses on high value-added segments of its markets by providing
innovative instruments, by integrating these instruments into
application-specific solutions for customers, and by facilitating the processing
of data gathered by its instruments and the transfer of this data to customers'
management information systems. Mettler-Toledo services a worldwide customer
base through its own sales and service organization and has a global
manufacturing presence in Europe, the United States and Asia. The Company
generated pro forma 1996 net sales of $889.6 million (giving effect to the
Safeline Acquisition) which were derived 49% in Europe, 40% in North and South
America and 11% in Asia and other markets.
The mailing address of the Company's principal executive offices is Im
Langacher, P.O. Box MT-100, CH-8606, Greifensee, Switzerland. Its telephone
number is 41-1-944-22-11.
ACQUISITION AND SAFELINE ACQUISITION
Acquisition. The Company was incorporated in December 1991. It was
recapitalized in connection with the October 15, 1996 acquisition of the
Mettler-Toledo Group from Ciba in a transaction sponsored by management and AEA
Investors. The Company paid cash consideration of approximately SFr 505.0
million (approximately $402.0 million at October 15, 1996), including dividends
of approximately SFr 109.4 million (approximately $87.1 million at October 15,
1996), paid approximately $185.0 million to settle amounts due to Ciba and its
affiliates and incurred expenses in connection with the Acquisition and related
financing of approximately $29.0 million. The Company primarily financed the
Acquisition with (i) borrowings under a credit agreement in the amount of $307.0
million, (ii) the issuance of $135.0 million of the Notes and (iii) an equity
contribution of $190.0 million primarily from AEA Investors, its
shareholder-investors and executive officers and other employees of the Company.
In connection with the Acquisition, the Company agreed that it would not, in the
18-month period following the closing of the Acquisition, without the prior
written consent of Ciba, engage in certain extraordinary dispositions, including
certain sales of assets or equity of any company in the Mettler-Toledo Group,
mergers or similar business combinations (except certain transactions the
aggregate net proceeds of which do not exceed SFr 80.0 million (approximately
$64.0 million at October 15, 1996) in a 12-month period). Consummation of the
Offerings does not require the consent of Ciba.
Safeline Acquisition. On May 30, 1997, the Company acquired Safeline for
pounds 61.0 million (approximately $100.0 million at May 30, 1997), plus up to
an additional pounds 6.0 million (approximately $10.0 million at May 30, 1997)
for a contingent earn-out payment. In October 1997, the Company made an
additional payment, representing a post-closing adjustment, of pounds 1.9
million (approximately $3.1 million at October 3, 1997). Such amount will be
accounted for as additional purchase price. Safeline, based in Manchester, U.K.,
is the world's largest manufacturer and marketer of metal detection systems for
companies that produce and package goods in the food processing, pharmaceutical,
cosmetics, chemicals and other industries. Safeline's metal detectors can also
be used in conjunction with the Company's checkweighing products for important
quality and safety checks in these industries. From 1992 to 1996, Safeline's
sales net increased at a compounded annual growth rate of approximately 30%, in
part due to the introduction of new products such as the first digital
electronic and Zero Metal-Free Zone metal detectors. Safeline had net sales and
Adjusted Operating Income of $40.4 million and $9.9 million, respectively, for
the year ended December 31, 1996.
CONCURRENT TRANSACTIONS
Credit Agreement Refinancing. In connection with the Offerings, the
Company intends to refinance its Credit Agreement by entering into the New
Credit Agreement. The Company expects that it will have pro forma borrowings
under the New Credit Agreement of $383.9 million (representing an increase of
$71.3 million) as of September 30, 1997 and borrowings of $38.0 million under
various other credit arrangements. Of the borrowings
15
<PAGE>
under the New Credit Agreement, $200.0 million will be in the form of a term
loan and the remainder will be outstanding under a revolving credit facility.
The Company's revolving credit facility commitment will increase from $170.0
million to $420.0 million under the New Credit Agreement, and this commitment
will include a $100.0 million acquisition facility. Additional borrowings under
the New Credit Agreement will be used, together with the net proceeds from the
Offerings, to repurchase the Notes and to pay related premiums and fees and
expenses. As a result of the Refinancing, the Company expects to realize
significantly lower interest expense. See 'Use of Proceeds' and
'Capitalization.'
Note Repurchase. As part of the Refinancing, the Company has commenced a
tender offer for all of the Notes, and all of the Notes have been irrevocably
tendered. The Company will use net proceeds from the Offerings and additional
borrowings under the New Credit Agreement to finance the Note Repurchase. See
'Use of Proceeds' and 'Capitalization.' In connection with the Note Repurchase,
the Company has obtained the requisite consents to remove substantially all of
the restrictive covenants and certain other provisions from the Indenture
governing the Notes. In connection with the refinancing of the Credit Agreement
and the Note Repurchase, the Company anticipates that it will record an
extraordinary loss of approximately $30.0 million representing the premium
expected to be paid in connection with the purchase of the Notes and the
write-off of related capitalized debt issuance fees resulting from the
Refinancing.
Reorganization. The name of the Company is currently MT Investors Inc.
Mettler-Toledo, Inc. is currently a wholly owned subsidiary of Holding which in
turn is a wholly owned subsidiary of the Company. Mettler-Toledo, Inc. and
Holding are the primary assets of the Company. Concurrently with the Offerings
(i) Holding will be merged with and into the Company, with the Company being the
surviving corporation, (ii) as part of the Merger, the Company will convert each
share of its existing Class A, Class B and Class C common stock into 12.58392
shares of Common Stock and (iii) the Company will change its name to
Mettler-Toledo International Inc. In the Merger, holders who would receive
fractional shares will instead receive a cash payment at the public offering
price.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the
6,666,667 shares of Common Stock in the Offerings after deducting the
underwriting discounts and estimated expenses of the Offerings are estimated to
be approximately $90.75 million ($104.74 million if the Underwriters'
over-allotment options are exercised in full), based on an assumed initial
public offering price of $15.00 per share (which represents the midpoint of the
estimated range of the initial public offering price). The Company intends to
use the net proceeds from the Offerings, together with amounts borrowed under
the New Credit Agreement, to repurchase the Notes and to pay related premiums
and fees and expenses.
The Notes bear interest at a rate of 9 3/4% per annum and will mature on
October 1, 2006. The Notes were originally issued in order to finance a portion
of the Acquisition.
DIVIDEND POLICY
The Company has never paid any dividends on its common stock and does not
anticipate paying any cash dividends on the Common Stock in the foreseeable
future. The current policy of the Company's Board of Directors is to retain
earnings to finance the operations and expansion of the Company's business. In
addition, the Company's New Credit Agreement will restrict the Company's ability
to pay dividends to its shareholders. Any future determination to pay dividends
will depend on the Company's results of operations, financial condition, capital
requirements, contractual restrictions and other factors deemed relevant by the
Board of Directors. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources' and
'Description of Certain Indebtedness.'
16
<PAGE>
DILUTION
The net tangible book value (deficit) of the Company as of September 30,
1997 was approximately $(218.2) million, or $(7.11) per share of Common Stock.
Net tangible book value (deficit) per share represents an amount equal to the
Company's total assets (excluding intangible assets) less its total liabilities
(including minority interest), divided by the number of shares of Common Stock
outstanding. After giving effect to the Offerings at an assumed initial public
offering price of $15.00 per share (the midpoint of the estimated range of the
initial public offering price) and the application by the Company of the
estimated net proceeds therefrom, the pro forma net tangible book value
(deficit) of the Company at September 30, 1997 would have been approximately
$(163.2) million, or $(4.37) per share of Common Stock. See 'Unaudited Pro Forma
Financial Data' and 'Use of Proceeds.' This represents an immediate increase in
net tangible book value of $2.74 per share to the existing shareholders and an
immediate net tangible book value dilution of $19.37 per share to new investors
purchasing shares in the Offerings. The following table illustrates this
dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share......................... $ 15.00
Net tangible book value (deficit) per share at September 30, 1997..... $ (7.11)
Increase in net tangible book value per share attributable to new
investors.......................................................... 2.74
-------
Pro forma net tangible book value (deficit) per share after the
Offerings............................................................. (4.37)
-------
Dilution per share to new investors..................................... $ 19.37
-------
-------
</TABLE>
The foregoing computations assume no exercise of stock options or the
Underwriters' over-allotment options. As of September 30, 1997, there were
outstanding stock options to purchase an aggregate of 3,537,063 shares of Common
Stock at an average exercise price of approximately $7.95 per share. If all of
the foregoing stock options had been exercised at September 30, 1997, the net
tangible book value (deficit) per share of Common Stock at such date would have
been $(5.56) and the pro forma net tangible book value per share would have been
$(3.31), representing an immediate dilution to new investors of $18.31 per share
and an immediate increase in net tangible book value of $3.80 per share to the
existing shareholders.
The following table summarizes, as of September 30, 1997, the number of
shares of Common Stock purchased from the Company, the total consideration paid
and the average price per share paid by the existing shareholders and new
shareholders, adjusted to give effect to the sale of the shares of Common Stock
offered hereby and before deducting the underwriting discounts and estimated
offering expenses payable by the Company:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders...................... 30,670,134 82.1% $189,895,654 65.5% $ 6.19
New investors.............................. 6,666,667 17.9 100,000,005 34.5 15.00
---------- ------- ------------ -------
Total................................. 37,336,801 100.0% $289,895,659 100.0%
---------- ------- ------------ -------
---------- ------- ------------ -------
</TABLE>
17
<PAGE>
CAPITALIZATION
The following table sets forth (i) the short-term debt and capitalization
of the Company at September 30, 1997 as adjusted for the Reorganization and (ii)
the pro forma short-term debt and capitalization of the Company on such date
after giving effect to the Refinancing (assuming all of the Notes are
repurchased) and the Offerings at an assumed initial public offering price of
$15.00 per share (the midpoint of the estimated range of the initial public
offering price) and the application by the Company of the estimated net proceeds
therefrom. See 'Use of Proceeds,' 'Unaudited Pro Forma Financial Information'
and 'Selected Historical Financial Information.'
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
------------------------
AS ADJUSTED PRO FORMA
----------- ---------
(DOLLARS IN THOUSANDS
EXCEPT PER SHARE DATA)
<S> <C> <C>
Short-term debt, including current maturities of long-term debt (a):
Bank and other loans........................................................ $ 6,923 $ 6,923
Short-term portion of term loans under credit agreements.................... 7,831 11,250
Revolving credit facility under credit agreements........................... 41,805 41,805
----------- ---------
Total short-term debt.................................................... $ 56,559 $ 59,978
----------- ---------
----------- ---------
Long-term debt(a):
Revolving credit facility under credit agreements........................... -- $142,105
Term loans under credit agreements.......................................... $ 262,985 188,750
Other long-term debt........................................................ 31,048 31,048
Senior Subordinated Notes................................................... 135,000 --
----------- ---------
Total long-term debt..................................................... 429,033 361,903
Shareholders' equity (deficit):
Common stock, par value $0.01, authorized 125,000,000 shares; issued
30,670,134 (excluding 64,467 shares held in treasury), as adjusted; and
issued 37,336,801 (excluding 64,467 shares held in treasury) on a pro
forma basis (b).......................................................... 307 373
Additional paid-in capital.................................................. 187,704 278,388
Accumulated deficit (c)..................................................... (195,617) (228,363)
Currency translation adjustments............................................ (28,655) (28,655)
----------- ---------
Total shareholders' equity (deficit)..................................... (36,261) 21,743
----------- ---------
Total capitalization................................................ $ 392,772 $383,646
----------- ---------
----------- ---------
</TABLE>
- ------------------
(a) At September 30, 1997, on a pro forma basis after giving effect to the
Offerings and the Refinancing, the Company and its subsidiaries would have
had total availability of approximately $236,100 (including a $100,000
acquisition facility) under the revolving credit facility of the New Credit
Agreement and local working capital facilities.
(b) At September 30, 1997, on a pro forma basis after giving effect to the
Reorganization, but does not include shares of Common Stock that may be
issued upon exercise of options granted pursuant to the Stock Plan.
(c) The increase in pro forma accumulated deficit reflects charges of
approximately $32,700 to be incurred in connection with the Refinancing,
including the refinancing of the existing Credit Agreement and the premiums
to be paid to repurchase the Notes in the Note Repurchase, the write-off of
capitalized debt issuance fees and a non-recurring charge in connection with
the termination of the management services agreement with AEA Investors. See
'Unaudited Pro Forma Financial Information.'
18
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial statements of the
Company have been prepared to give effect to (i) the Acquisition, (ii) the
Safeline Acquisition, (iii) the Reorganization and (iv) the Offerings and
Refinancing (assuming all of the Notes are repurchased). The accompanying
unaudited pro forma consolidated balance sheet at September 30, 1997 has been
prepared as if (iii) and (iv) were consummated as of that date. The accompanying
unaudited pro forma consolidated statements of operations for the year ended
December 31, 1996 and the nine months ended September 30, 1997 give effect to
items (i), (ii), (iii) and (iv) as if they had occurred at January 1, 1996.
Pro forma adjustments are applied to the historical financial statements of
the Predecessor Business and the Company to account for the Acquisition and
Safeline Acquisition under the purchase method of accounting. Under purchase
accounting, the Acquisition and Safeline Acquisition costs were allocated to the
Company's assets and liabilities based on their relative fair values. The
Company allocated a portion of the purchase prices for the Acquisition and
Safeline Acquisition to (i) in-process research and development projects and
(ii) the revaluation of inventories. In the case of in-process research and
development, the amounts allocated were expensed immediately following the
acquisitions. In the case of inventories, the revalued amounts were expensed in
periods following the acquisitions as the inventories were sold. These one-time
non-cash charges have been excluded from the accompanying unaudited pro forma
consolidated statements of operations due to their non-recurring nature and
their direct relationship to the Acquisition and Safeline Acquisition.
Certain other one-time charges incurred during 1996 have not been excluded
from the accompanying unaudited pro forma statement of operations for the year
ended December 31, 1996. These charges consist of certain non-recurring items
for (i) advisory fees associated with the reorganization of the Company's
structure of approximately $4.8 million and (ii) restructuring charges of
approximately $12.6 million. The Company has estimated that the restructurings
will result in annual cost savings of approximately $8.3 million, of which
approximately $2.0 million was realized in 1996. Such cost savings consist
primarily of lower employee salary and benefit costs and fixed manufacturing
costs. In addition, at the time of the Acquisition, the Company estimated it
would incur additional selling, general and administrative expenses of $1.3
million annually as a result of the Acquisition. If adjustments had been made to
the unaudited pro forma consolidated statement of operations for the year ended
December 31, 1996 to remove these non-recurring charges and to reflect the net
unrealized cost savings, Adjusted Operating Income would have been approximately
$73.0 million and net earnings would have been approximately $19.0 million. The
1997 period includes a non-recurring charge of $3.3 million to close three
facilities in North America. This restructuring program will require an
additional charge of approximately $3.0 million in the fourth quarter of 1997.
The Company estimates these closures, when complete, will provide savings of
approximately $2.5 million annually and will allow the Company to sell two
facilities from which the Company estimates it will realize, after 1998,
proceeds in excess of $5.0 million. The Company believes the fair market value
of these facilities approximates their respective book values. If adjustments
had been made to the unaudited pro forma consolidated statement of operations
for the nine months ended September 30, 1997 to remove this non-recurring
charge, net earnings would have been approximately $15.7 million.
The unaudited pro forma consolidated financial statements have been
prepared based upon the historical consolidated financial statements of the
Predecessor Business and the Company, which have been prepared in accordance
with U.S. GAAP. The unaudited pro forma consolidated financial statements should
be read in conjunction with the Audited Consolidated Financial Statements, the
Unaudited Interim Consolidated Financial Statements, 'Management's Discussion
and Analysis of Financial Condition and Results of Operations' and other
financial information included elsewhere in this Prospectus. The historical
financial information regarding Safeline is unaudited. These unaudited pro forma
consolidated financial statements and related notes are provided for
informational purposes only and do not purport to be indicative of the results
which would have actually been obtained had the acquisitions and other events
been completed on the dates indicated or which may be expected to occur in the
future.
19
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
----------------------------------------------------------------------------------------------------
METTLER-TOLEDO
PREDECESSOR INTERNATIONAL INC.
BUSINESS OCTOBER 15,
JANUARY 1, 1996 1996 TO SAFELINE PRO FORMA
TO DECEMBER 31, ACQUISITION SAFELINE ACQUISITION BEFORE OFFERING
OCTOBER 14, 1996 1996 ADJUSTMENTS HISTORICAL(A) ADJUSTMENTS AND REFINANCING
---------------- ------------------ ----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net sales..................... $662,221 $ 186,912 $40,434 $ 889,567
Cost of sales................. 395,239 136,820 $ (32,194)(b) 23,918 523,783
-------- ------------------ ----------- ------------- ----------- ---------------
Gross profit................ 266,982 50,092 32,194 16,516 365,784
Research and development...... 40,244 9,805 559 50,608
Selling, general and
administrative.............. 186,898 59,353 786(c) 6,048 253,085
Amortization.................. 2,151 1,065 1,471(d) $ 1,839(d) 6,526
Purchased research and
development................. 114,070 (114,070)(e) --
Interest expense.............. 13,868 8,738 16,109(f) (865)(i) 37,850
Other charges (income), net... (1,332) 17,137 (1,769)(g) 14,036
-------- ------------------ ----------- ------------- ----------- ---------------
Earnings (loss) before taxes
and minority interest..... 25,153 (160,076) 129,667 9,909 (974) 3,679
Provision for taxes........... 10,055 (938) (9,335)(h) 3,480 346(h) 3,608
Minority interest............. 637 (92) 48 593
-------- ------------------ ----------- ------------- ----------- ---------------
Earnings (loss)............. $ 14,461 $ (159,046) $ 139,002 $ 6,381 $(1,320) $ (522)
-------- ------------------ ----------- ------------- ----------- ---------------
-------- ------------------ ----------- ------------- ----------- ---------------
Pro forma earnings per
common share (n):
Weighted average number of
common shares........... 32,333,344 32,333,344
Earnings per common
share................... $ (4.92) $ (0.02)
------------------ ---------------
------------------ ---------------
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1996
----------------------------
OFFERING AND
REFINANCING
ADJUSTMENTS PRO FORMA(M)
------------ ------------
<S> <C> <C>
Net sales..................... $ 889,567
Cost of sales................. 523,783
------------ ------------
Gross profit................ 365,784
Research and development...... 50,608
Selling, general and
administrative.............. $ (1,000)(j) 252,085
Amortization.................. 6,526
Purchased research and
development.................
Interest expense.............. (8,278)(k) 29,572
Other charges (income), net... 14,036
------------ ------------
Earnings (loss) before taxes
and minority interest..... 9,278 12,957
Provision for taxes........... 3,522 (l) 7,130
Minority interest............. 593
------------ ------------
Earnings (loss)............. $ 5,756 $ 5,234
------------ ------------
------------ ------------
Pro forma earnings per
common share (n):
Weighted average number of
common shares........... 39,000,011
Earnings per common
share................... $ 0.13
------------
------------
</TABLE>
20
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
--------------------------------------------------------------------------------------------------
METTLER-TOLEDO SAFELINE PRO FORMA OFFERING AND
INTERNATIONAL INC. SAFELINE ACQUISITION BEFORE OFFERING REFINANCING
HISTORICAL HISTORICAL (a) ADJUSTMENTS AND REFINANCING ADJUSTMENTS PRO FORMA(m)
------------------ --------------- ----------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales................... $ 633,743 $19,033 $ 652,776 $ 652,776
Cost of sales............... 359,080 12,416 $(2,054)(b) 369,442 369,442
------------------ ------- ----------- --------------- ------ ------------
Gross profit.............. 274,663 6,617 2,054 283,334 283,334
Research and development.... 34,494 275 34,769 34,769
Selling, general and
administrative............ 189,594 1,932 191,526 $ (750)(j) 190,776
Amortization................ 4,449 955 (d) 5,404 5,404
Purchased research and
development............... 29,959 (29,959)(e) --
Interest expense............ 28,199 4 (537)(i) 27,666 (6,049)(k) 21,617
Other charges (income),
net....................... 7,316 (23) 7,293 7,293
------------------ ------- ----------- --------------- ------ ------------
Earnings (loss) before
taxes and minority
interest................ (19,348) 4,429 31,595 16,676 6,799 23,475
Provision for taxes......... 7,296 1,638 907 (h) 9,841 869 (l) 10,710
Minority interest........... 375 5 380 380
------------------ ------- ----------- --------------- ------ ------------
Earnings (loss) before
extraordinary item...... $ (27,019) $ 2,786 $30,688 $ 6,455 $5,930 $ 12,385
------------------ ------- ----------- --------------- ------ ------------
------------------ ------- ----------- --------------- ------ ------------
Pro forma earnings per
common share (n):
Weighted average number
of common shares...... 32,333,344 32,333,344 39,000,011
Earnings per common
share................. $ (0.84) $ 0.20 $ 0.32
------------------ --------------- ------------
------------------ --------------- ------------
</TABLE>
21
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1997
(DOLLARS IN THOUSANDS)
(a) Represents the unaudited historical results for Safeline for the year ended
December 31, 1996 and for the period January 1, 1997 to May 30, 1997 as if
the Safeline Acquisition occurred on January 1, 1996.
(b) For the year ended December 31, 1996, the Company allocated $32,194 of the
purchase price in connection with the Acquisition to revalue certain
inventories (principally work-in-progress and finished goods) to fair value
(net realizable value). For the nine months ended September 30, 1997, the
Company allocated $2,054 of the Safeline Acquisition purchase price to
revalue certain inventories (principally work-in-progress and finished
goods) to fair value (net realizable value). Substantially all such
inventories revalued in connection with the Acquisition were sold during the
period from October 15, 1996 to December 31, 1996 and substantially all such
inventories revalued in connection with the Safeline Acquisition were sold
during the second quarter of 1997. Adjustments have been made to exclude
such amounts from the unaudited pro forma consolidated statements of
operations due to their non-recurring nature and their direct relationship
to the Acquisition and Safeline Acquisition.
(c) Represents an annual management fee of $1,000 (of which $214 was incurred in
the period from October 15, 1996 to December 31, 1996) to be paid to AEA
Investors for various services provided to the Company.
(d) For the year ended December 31, 1996, principally represents adjustments to
reflect additional amortization of goodwill and other intangible assets
arising from the Acquisition and the Safeline Acquisition. For the nine
months ended September 30, 1997, principally represents adjustments to
reflect additional amortization of goodwill and other intangible assets
arising from the Safeline Acquisition. See Note 1 to the Audited
Consolidated Financial Statements and the unaudited Interim Consolidated
Financial Statements included herein.
(e) In connection with the Acquisition and the Safeline Acquisition, the Company
allocated $114,070 and $29,959, respectively, of the respective purchase
prices to in-process research and development. Such amounts were expensed
immediately following the acquisitions. Adjustments have been made to
exclude such amounts from the unaudited pro forma consolidated statements of
operations due to their non-recurring nature and their direct relationship
to the Acquisition and Safeline Acquisition.
(f) Represents the net increase in interest expense, including amortization of
debt issuance fees and other fees, of $16,109 in connection with the
Acquisition.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
Elimination of historical interest expense on refinanced debt.............. $ (22,606)
Interest on revolving credit facility...................................... 1,796
Interest on term loans..................................................... 18,759
Interest on Notes.......................................................... 13,163
Amortization of debt issuance fees and other............................... 4,997
-----------------
Net increase............................................................. $ 16,109
-----------------
-----------------
</TABLE>
(g) Represents elimination of historical interest income of $4,003 less foreign
currency exchange losses incurred in connection with the Acquisition of
$5,772. The foreign currency exchange losses have been excluded from the
unaudited pro forma consolidated statements of operations due to their
non-recurring nature and their direct relationship to the Acquisition.
(h) Represents adjustments to the provision for taxes to reflect the Company's
estimated effective income tax rate considering the income tax effects of
the pre-tax pro forma adjustments, related financing structure changes and
other adjustments.
(i) Reflects the net changes in interest expense and related capitalized debt
issuance fees associated with the Safeline Acquisition and the related
refinancing.
22
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, 1996 1997
----------------- -----------------
<S> <C> <C>
Elimination of interest expense on refinanced
Acquisition debt.............................................. $ (38,715) $ (28,199)
Interest on revolving credit facility........................... 1,861 1,284
Interest on term loan........................................... 19,452 13,976
Interest on Notes............................................... 13,163 9,872
Amortization of debt issuance fees and other.................... 3,374 2,530
----------------- -----------------
Net change.................................................... $ (865) $ (537)
----------------- -----------------
----------------- -----------------
</TABLE>
The differences in the net change of interest expense for the year ended
December 31, 1996 and the nine months ended September 30, 1997 can be
attributed to the impact of changes in foreign currency exchange rates on
interest expense related to debt that is denominated in various currencies
other than the U.S. dollar.
(j) Reflects the elimination of the AEA Investors management fee of $1,000 ($750
for the nine months ended September 30, 1997) which will be discontinued
upon consummation of the Offerings. Additionally, the Company will incur a
non-recurring charge of $2,500 in the fourth quarter of 1997 in connection
with the termination of the management services agreement with AEA
Investors. This one-time charge has been excluded from the unaudited pro
forma consolidated statements of operations.
(k) Reflects the net changes in interest expense arising from the Offerings and
the Refinancing. In connection with Offerings and Refinancing, the Company
will refinance amounts outstanding under the Credit Agreement and repurchase
the Notes. The pro forma interest expense assumes that all of the Notes are
repurchased pursuant to the Company's tender offer for the Notes. As of
October 17, 1997 all of the Notes had been irrevocably tendered.
The Company anticipates that it will record an extraordinary expense for the
early extinguishment of debt and the write-off of capitalized debt issuance
fees of approximately $30,000 during the fourth quarter of 1997. This
extraordinary expense is excluded from the unaudited pro forma consolidated
statements of operations.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, 1996 1997
----------------- -----------------
<S> <C> <C>
Elimination of pro forma interest expense before Offerings
and Refinancing............................................... $ (37,850) $ (27,666)
Interest on revolving credit facility........................... 12,861 9,336
Interest on term loan........................................... 13,604 9,950
Amortization of debt issuance fees and other.................... 3,107 2,331
----------------- -----------------
Net change.................................................... $ (8,278) $ (6,049)
----------------- -----------------
----------------- -----------------
</TABLE>
For each 1/8% per annum variance in interest rates for the revolving credit
facility and term loan borrowings under the New Credit Agreement, interest
expense would change by approximately $343 and $233 for the year ended
December 31, 1996 and the nine months ended September 30, 1997,
respectively.
The differences in the net change of interest expense for the year ended
December 31, 1996 and the nine months ended September 30, 1997 can be
attributed to the impact of changes in foreign currency exchange rates on
interest expense related to debt that is denominated in various currencies
other than the U.S. dollar.
(l) Adjustment to provision for taxes reflects the Company's estimated
effective income tax rate at a stated level of pro forma earnings before
tax for the year ended December 31, 1996 and the nine months ended
September 30, 1997.
(m) Certain one-time charges incurred during 1996 have not been excluded from
the accompanying unaudited pro forma consolidated statement of operations
for the year ended December 31, 1996. These charges consist of certain
non-recurring items for (i) advisory fees associated with the reorganization
of the Company's structure of approximately $4,800 and (ii) restructuring
charges of approximately $12,600. The Company has estimated that the
restructurings will result in annual cost savings of approximately $8,300,
of
23
<PAGE>
which approximately $2,000 was realized in 1996. Such cost savings consist
primarily of lower employee salary and benefit costs and fixed manufacturing
costs. In addition, at the time of the Acquisition, the Company estimated it
would incur additional selling, general and administrative expenses of
$1,300 annually as a result of the Acquisition. If adjustments had been made
to the unaudited pro forma consolidated statement of operations for the year
ended December 31, 1996 to remove these non-recurring charges and to reflect
the net unrealized cost savings, Adjusted Operating Income would have been
approximately $73,000 and net earnings would have been approximately
$19,000. The 1997 period includes a non-recurring charge of $3,300 to close
three facilities in North America. This restructuring program will require
an additional charge of approximately $3,000 in the fourth quarter of 1997.
The Company estimates that these closures, when complete, will provide
savings of approximately $2,500 annually and will allow the Company to sell
two facilities from which the Company estimates it will realize, after 1998,
proceeds in excess of $5,000. The Company believes that the fair market
value of these facilities approximates their respective book values. If
adjustments had been made to the unaudited pro forma consolidated statement
of operations for the nine months ended September 30, 1997 to remove this
non-recurring charge, net earnings would have been approximately $15,700.
(n) Historical earnings (loss) per common share has been computed assuming the
number of common shares issued in connection with the Reorganization,
including common share equivalents, were outstanding during the period
presented. Pro forma earnings per common share has been computed using the
treasury stock method assuming the number of common shares issued in
connection with the Reorganization and the Offerings, including common share
equivalents, were outstanding during the periods presented. Common share
equivalents result from outstanding options to purchase Common Stock.
24
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1997
-------------------------------------------------------
METTLER-TOLEDO METTLER-TOLEDO
INTERNATIONAL INC. PRO FORMA INTERNATIONAL INC.
HISTORICAL ADJUSTMENTS PRO FORMA
------------------ ----------- ------------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................... $ 33,158 $ 33,158
Trade accounts receivable, net................................ 148,826 148,826
Inventories................................................... 106,129 106,129
Deferred taxes................................................ 10,956 10,956
Other current assets.......................................... 21,975 21,975
---------- ----------- ----------
Total current assets........................................ 321,044 321,044
Property, plant and equipment, net.............................. 233,480 233,480
Excess of cost over net assets acquired, net.................... 181,902 $ 3,059(a) 184,961
Long-term deferred taxes........................................ 4,825 4,825
Other assets.................................................... 26,926 (8,766)(b) 18,160
---------- ----------- ----------
Total assets................................................ $768,177 $ (5,707) $762,470
---------- ----------- ----------
---------- ----------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Trade accounts payable........................................ $ 27,226 $ 27,226
Accrued and other liabilities................................. 135,096 135,096
Taxes payable................................................. 27,940 27,940
Deferred taxes................................................ 8,621 8,621
Bank and other loans.......................................... 56,559 $ 3,419(c) 59,978
---------- ----------- ----------
Total current liabilities................................... 255,442 3,419 258,861
Long-term debt due to third parties............................. 429,033 (135,000)(c) 361,903
67,870(c)
Long-term deferred taxes........................................ 26,001 26,001
Other long-term liabilities..................................... 90,307 90,307
---------- ----------- ----------
Total liabilities........................................... 800,783 (63,711) 737,072
Minority interest............................................... 3,655 3,655
Shareholders' equity (deficit):
Common stock, $0.01 par value per share:
Class A non-voting, authorized 2,235,896 shares; issued
1,898,795 (excluding 3,984 shares held in treasury) at
September 30, 1997; pro forma for the Reorganization and
the Offerings, no shares authorized or issued............ 19 (19)(d) --
Class B voting, authorized 1,000 shares; issued 1,000 at
September 30, 1997; pro forma for the Reorganization and
the Offerings, no shares authorized or issued............ 1 (1)(d) --
Class C non-voting, authorized 541,859 shares; issued
537,453 (excluding 1,139 shares held in treasury) at
September 30, 1997; pro forma for the Reorganization and
the Offerings, no shares authorized or issued............ 5 (5)(d) --
Common Stock, no shares authorized or issued at September
30, 1997; pro forma for the Reorganization and the
Offerings, authorized 125,000,000 shares; issued
37,336,801 (excluding 64,467 shares held in treasury).... -- 307(d) 373
66(e)
Additional paid-in capital.................................... 187,986 90,402(e) 278,388
Accumulated deficit........................................... (195,617) (32,746)(f) (228,363)
Currency translation adjustment............................... (28,655) (28,655)
---------- ----------- ----------
Total shareholders' equity (deficit)........................ (36,261) 58,004 21,743
---------- ----------- ----------
Total liabilities and shareholders' equity (deficit)............ $768,177 $ (5,707) $762,470
---------- ----------- ----------
---------- ----------- ----------
</TABLE>
25
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(IN THOUSANDS)
(a) Represents an additional payment made in October 1997 in connection with the
Safeline Acquisition of pounds 1,892 (approximately $3,059 at October 3,
1997). Such amount will be accounted for as additional purchase price.
(b) Represents the net effect of the elimination of unamortized debt issuance
fees related to the early retirement of both the Notes and terms loans under
the existing Credit Agreement and the capitalization of debt issuance fees
in connection with borrowings under the New Credit Agreement.
(c) Represents the repayment of the Notes of $135,000 and the Company's net
change in borrowings under the New Credit Agreement in connection with the
Offerings and Refinancing.
(d) Represents adjustments to give effect to the Reorganization.
(e) Represents the expected proceeds to be received in connection with the
Offerings of $100,000 less underwriting discount and other related fees
totaling approximately $9,250.
(f) Reflects the extraordinary loss in connection with the refinancing of the
Credit Agreement, early repayment premium on the Notes, write-off of
capitalized debt issuance fees and a non-recurring charge in connection with
the termination of the management services agreement with AEA Investors of
approximately $32,700.
26
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
The selected historical financial information set forth below at December
31, 1994, 1995 and 1996, for the years ended December 31, 1993, 1994 and 1995,
for the period from January 1, 1996 to October 14, 1996, and for the period from
October 15, 1996 to December 31, 1996 is derived from the Company's financial
statements, which were audited by KPMG Fides Peat, independent auditors. The
financial information for all periods prior to October 15, 1996, the date of the
Acquisition, is combined financial information of the Mettler-Toledo Group (the
'Predecessor Business'). The summary historical financial information at
September 30, 1997 and for the nine months ended September 30, 1996 and 1997 is
derived from the unaudited interim consolidated financial statements of the
Predecessor Business and of the Company, which, in the opinion of management,
include all adjustments necessary for a fair presentation of the results for the
unaudited periods. Operating results for the nine months ended September 30,
1997 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1997. The combined historical data of the Predecessor
Business and the consolidated historical data of the Company are not comparable
in many respects due to the Acquisition and the Safeline Acquisition. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' below and the consolidated financial statements and accompanying
notes included herein. The financial information presented below was prepared in
accordance with U.S. GAAP.
<TABLE>
<CAPTION>
METTLER-TOLEDO METTLER-TOLEDO
INTERNATIONAL PREDECESSOR INTERNATIONAL
PREDECESSOR BUSINESS INC. BUSINESS INC.
-------------------------------------------- -------------- ----------- --------------
JANUARY 1 OCTOBER 15 NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, TO TO SEPTEMBER 30,
------------------------------ OCTOBER 14, DECEMBER 31, ----------------------------
1993 1994 1995 1996 1996 1996 1997
-------- -------- -------- ----------- -------------- ----------- --------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA(A):
Net sales................... $728,958 $769,136 $850,415 $ 662,221 $ 186,912 $ 624,733 $ 633,743
Cost of sales............... 443,534 461,629 508,089 395,239 136,820(b) 374,121 359,080(d)
-------- -------- -------- ----------- -------------- ----------- --------------
Gross profit................ 285,424 307,507 342,326 266,982 50,092 250,612 274,663
Research and development.... 46,438 47,994 54,542 40,244 9,805 37,930 34,494
Selling, general and
administrative............ 209,692 224,978 248,327 186,898 59,353 175,645 189,594
Amortization................ 2,917 6,437 2,765 2,151 1,065 2,038 4,449
Purchased research and
development............... -- -- -- -- 114,070(c) -- 29,959(e)
Interest expense............ 15,239 13,307 18,219 13,868 8,738 12,579 28,199
Other charges (income),
net(f).................... 14,110 (7,716) (9,331) (1,332) 17,137 (226) 7,316
-------- -------- -------- ----------- -------------- ----------- --------------
Earnings (loss) before
taxes, minority interest
and extraordinary item.... (2,972) 22,507 27,804 25,153 (160,076) 22,646 (19,348)
Provision for taxes......... 3,041 8,676 8,782 10,055 (938) 8,901 7,296
Minority interest........... 1,140 347 768 637 (92) 609 375
-------- -------- -------- ----------- -------------- ----------- --------------
Earnings (loss) before
extraordinary item........ (7,153) 13,484 18,254 14,461 (159,046) 13,136 (27,019)
Extraordinary item--debt
extinguishment............ -- -- -- -- -- -- (9,552)(g)
-------- -------- -------- ----------- -------------- ----------- --------------
Net earnings (loss)......... $ (7,153) $ 13,484 $ 18,254 $ 14,461 $ (159,046) $ 13,136 $ (36,571)
-------- -------- -------- ----------- -------------- ----------- --------------
-------- -------- -------- ----------- -------------- ----------- --------------
Loss per common share(h):
Weighted average number of
common shares............. 32,333,344 32,333,344
Loss per common share
before extraordinary
item.................... $ (4.92) $ (0.84)
Extraordinary item........ -- (0.29)
-------------- --------------
Loss per common share..... $ (4.92) $ (1.13)
-------------- --------------
-------------- --------------
BALANCE SHEET DATA (AT END OF
PERIOD)(A):
Cash and cash equivalents... $ 63,802 $ 41,402 $ 60,696 $ 33,158
Working capital............. 132,586 136,911 103,697 89,003
Total assets................ 683,198 724,094 771,888 768,177
Long-term third party
debt...................... 862 3,621 373,758 429,033
Net borrowing from Ciba and
affiliates(i)............. 177,651 203,157 -- --
Other long-term
liabilities(j)............ 83,964 84,303 96,810 90,307
Shareholders' equity
(deficit)(k).............. 228,194 193,254 12,426 (36,261)
OTHER DATA:
Local currency net sales
growth(l)................. 7% 6% 3% 6%
Gross profit before
non-recurring costs as a
percentage of net
sales(m).................. 39.2% 40.0% 40.3% 40.3% 44.0% 40.1% 43.7%
Adjusted Operating
Income(n)................. $ 29,294 $ 34,535 $ 39,457 $ 39,840 $ 17,912 $ 37,037 $ 52,629
Adjusted Operating Income as
a percentage
of net sales(n)........... 4.0% 4.5% 4.6% 6.0% 9.6% 5.9% 8.3%
Depreciation and
amortization expense...... $ 29,591 $ 34,118 $ 33,363 $ 21,663 $ 8,990 $ 20,668 $ 22,233
Capital expenditures........ 25,122 24,916 25,858 16,649 11,928 14,985 13,299
</TABLE>
(Footnotes on next page)
27
<PAGE>
(Footnotes from previous page)
- ------------------
(a) Balance sheet information at December 31, 1992 and 1993 is not available.
Income statement information for the year ended December 31, 1992 is not
available, except that net sales were $769,000. Approximately 75% of the
decrease in net sales in 1993 compared to 1992 resulted from appreciation
of the U.S. dollar against the Company's other principal trading
currencies.
(b) In connection with the Acquisition, the Company allocated $32,194 of the
purchase price to revalue certain inventories (principally work-in-progress
and finished goods) to fair value (net realizable value). Substantially all
such inventories were sold during the period October 15, 1996 to December
31, 1996.
(c) In conjunction with the Acquisition the Company allocated, based upon
independent valuations, $114,070 of the purchase price to purchased
research and development in process. This amount was recorded as an expense
immediately following the Acquisition.
(d) In connection with the Safeline Acquisition, the Company allocated $2,054
of the purchase price to revalue certain inventories (principally
work-in-progress and finished goods) to fair value (net realizable value).
Substantially all such inventories were sold during the second quarter of
1997.
(e) In conjunction with the Safeline Acquisition, the Company allocated, based
upon independent valuations, $29,959 of the purchase price to purchased
research and development in process. This amount was recorded as an expense
immediately following the Safeline Acquisition.
(f) Other charges (income), net generally includes interest income, foreign
currency transactions (gains) losses, (gains) losses from sales of assets
and other charges (income). In 1993, the amount shown includes costs
associated with the closure of a manufacturing facility in Cologne,
Germany, the restructuring of certain manufacturing operations and an early
retirement program in the United States. For the period January 1, 1996 to
October 14, 1996, the amount shown includes employee severance and other
exit costs associated with the closing of the Company's Westerville, Ohio
facility. For the period October 15, 1996 to December 31, 1996, the amount
shown includes employee severance benefits associated with the Company's
general headcount reduction programs, in Europe and North America and the
realignment of the analytical and precision balance business in
Switzerland. For the period ended September 30, 1997, the amount shown
includes a restructuring charge of $3,300 to close three facilities in
North America. See Note 17 to the Audited Consolidated Financial Statements
and Note 1 to the Unaudited Interim Consolidated Financial Statements
included herein.
(g) Represents a one-time charge for the write-off of capitalized debt issuance
fees and related expenses associated with the Company's previous credit
facility.
(h) Loss per common share has been computed using the treasury stock method
assuming the number of common shares issued in the Reorganization,
including common share equivalents, were outstanding during the periods
presented. Common share equivalents result from outstanding options to
purchase Common Stock.
(i) Includes notes payable and long-term debt payable to Ciba and affiliates
less amounts due from Ciba and affiliates. See Notes 3 and 11 to the
Audited Consolidated Financial Statements included herein.
(j) Consists primarily of obligations under various pension plans and plans
that provide post-retirement medical benefits. See Note 15 to the Audited
Consolidated Financial Statements included herein.
(k) Shareholders' equity for the Predecessor Business consists of the combined
net assets of the Mettler-Toledo Group.
(l) Local currency net sales growth is adjusted for the exit from certain
systems businesses. For the nine months ended September 30, 1997, local
currency net sales increased 6% absent the Safeline Acquisition (8%
including Safeline's results).
(m) Non-recurring costs represent costs asssociated with selling inventories
revalued to fair value in connection with the Acquisition and the Safeline
Acquisition. See Notes (b) and (d) above.
(n) Adjusted Operating Income is operating income (gross profits less research
and development and selling, general and administrative expenses) before
amortization and non-recurring costs. Non-recurring costs which have been
excluded are the costs set forth in Note (m) above and advisory fees
associated with the reorganization of the Company's structure of
approximately $4,800.
28
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the Audited
Consolidated Financial Statements and the unaudited interim consolidated
financial statements (the 'Interim Consolidated Financial Statements') included
herein.
GENERAL
The financial statements for periods ended prior to October 15, 1996
reflect the combined operations of the Mettler-Toledo Group, while the financial
statements for periods after October 15, 1996 reflect the consolidated
operations of the Company after accounting for the Acquisition using the
purchase method of accounting. See Note 1 to the Audited Consolidated Financial
Statements included herein. Operating results subsequent to the Acquisition are
not comparable in many respects to the operating results prior to the
Acquisition and the Safeline Acquisition. Financial information is presented in
accordance with U.S. GAAP.
The Company operates a global business, with net sales that are diversified
by geographic region, product range and customer. The Company believes that it
has achieved its market leadership positions through its continued investment in
product development, the maintenance and, in some instances, expansion, of its
existing position in established markets and its pursuit of new markets. Net
sales in local currency (adjusted for the exit from certain systems businesses)
have increased in both the laboratory and industrial and food retailing product
lines, increasing by 8% in the first nine months of 1997 and by 3% and 6% in
1996 and 1995, respectively. Net sales in U.S. dollars increased by 1% in the
first nine months of 1997, as the strengthening of the U.S. dollar versus the
Company's major trading currencies reduced U.S. dollar reported sales. Net sales
in U.S. dollars were unchanged in 1996 and increased by 11% in 1995. The
Company's growth in 1997 has benefited from recent investments to establish
distribution and manufacturing infrastructure in certain emerging markets,
particularly in Asia. Net sales in Asia and other emerging markets in local
currency increased by 31% in the first nine months of 1997 over the
corresponding period in the prior year. The Company believes that its growth
over the next several years will come primarily from the needs of customers in
developed markets to continue to automate their research and development and
manufacturing processes and from the needs of customers in emerging markets to
continue modernizing these same processes through the use of increasingly
sophisticated instruments.
During the periods presented, the Company increased its gross profit
margins before non-recurring costs from 40.0% in 1994 to 43.7% for the first
nine months of 1997 and increased its Adjusted Operating Income (gross profit
less research and development and selling, general and administrative expenses
before amortization and non-recurring costs) as a percentage of net sales from
4.5% in 1994 to 8.3% for the nine months ended September 30, 1997. These
increases were achieved despite the Company's continued investments in product
development and in its distribution and manufacturing infrastructure. The
Company believes that a significant portion of these increases can be attributed
to its strategy to reduce costs and reengineer its operations. This strategy has
a number of key elements, such as ongoing efforts to direct more of its research
and development activities to the reduction of product costs, to re-engineer
manufacturing, distribution, sales and administrative processes, and to
consolidate operations and re-deploy resources to lower cost facilities.
Examples of recent efforts to implement the different elements of this strategy
include the introduction of several products in 1997 with significantly reduced
manufacturing costs compared to their predecessors, the closure of the
Westerville, Ohio manufacturing facility in 1996, completion of a targeted
workforce reduction of approximately 170 personnel, closure of three North
American facilities as described below and the opening of a new laboratory
manufacturing facility in Shanghai, China in 1997 with significant production
and research and development capabilities. The Company is currently implementing
several additional reengineering and cost reduction projects, including the
consolidation of worldwide precision balance manufacturing, the restructuring of
its ordering process, product delivery and parts inventory management in Europe,
the realignment of industrial product manufacturing in Europe and the
consolidation of the Company's North American laboratory, industrial and food
retailing businesses into a single marketing organization.
On May 30, 1997, the Company acquired Safeline for pounds 61.0 million
(approximately $100.0 million at May 30, 1997), plus up to an additional pounds
6.0 million (approximately $10.0 million at May 30, 1997) for a contingent
earn-out payment. In October 1997, the Company made an additional payment,
representing a post-
29
<PAGE>
closing adjustment, of pounds 1.9 million (approximately $3.1 million at October
3, 1997). Such amount will be accounted for as additional purchase price.
Safeline, based in Manchester, U.K., is the world's largest manufacturer and
marketer of metal detection systems for companies that produce and package goods
in the food processing, pharmaceutical, cosmetics, chemicals and other
industries. Safeline's metal detectors can also be used in conjunction with the
Company's checkweighing products for important quality and safety checks in
these industries. From 1992 to 1996, Safeline's sales increased at a compounded
annual growth rate of approximately 30%, in part due to the introduction of new
products such as the first digital electronic and Zero Metal-Free Zone metal
detectors. Safeline had net sales and Adjusted Operating Income of $40.4 million
and $9.9 million, respectively, for the year ended December 31, 1996. The
Safeline Acquisition was financed by pounds 47.3 million (approximately $77.4
million at May 30, 1997) loaned under the Credit Agreement together with the
issuance of pounds 13.7 million (approximately $22.4 million at May 30, 1997) of
seller loan notes which mature May 30, 1999.
In September 1997, the Company recorded a restructuring charge of
approximately $3.3 million. The Company expects to recognize an additional
restructuring charge of approximately $3.0 million during the fourth quarter
ending December 31, 1997 for restructuring activities not initiated until
October of this year. Both charges are in connection with the closure of three
facilities in North America and are comprised primarily of severance and other
related benefits and costs of exiting facilities, including lease termination
costs and write-down of existing assets to their expected net realized value.
The Company expects these actions will be completed in 1998 and that the two
owned facilities will be sold after that period. In connection with the closure
of these facilities, the Company expects to involuntarily terminate
approximately 70 employees. The Company is undertaking these actions as part of
its efforts to reduce costs through reengineering. When complete, these actions
will enable the Company to close certain operations and realize cost savings
estimated at approximately $2.5 million on an annual basis. The Company also
estimates that it will receive, after 1998, upon the sale of the two facilities
which the Company owns proceeds in excess of $5.0 million. The Company believes
that the fair market value of these facilities approximates their respective
book values.
RESULTS OF OPERATIONS
The following table sets forth certain items in the statements of
operations in U.S. dollars as well as in percentages of net sales for the years
ended December 1, 1994 and 1995, for the period from January 1, 1996 to October
14, 1996, for the period from October 15, 1996 to December 31, 1996, pro forma
for the year 1996 and actual for the nine months ended September 30, 1996 and
1997. The pro forma information gives effect to the Acquisition, the Safeline
Acquisition, the Offerings and the Refinancing and does not purport to represent
the Company's actual results if such transactions had occurred on the dates
specified. The statement of operations data for the nine months ended September
30, 1997 include Safeline results from May 31, 1997. The pro forma information
is presented in order to facilitate management's discussion and analysis.
30
<PAGE>
<TABLE>
<CAPTION>
METTLER-TOLEDO
PREDECESSOR BUSINESS INTERNATIONAL INC.
------------------------------------- ------------------------------------
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED JANUARY 1, OCTOBER 15,
DECEMBER 31, 1996 TO 1996 TO
-------------------- OCTOBER 14, DECEMBER 31, PRO FORMA
1994 1995 1996 1996(B)(C) 1996(A)(B)(C)
-------- -------- -------------- ------------------ ---------------
(DOLLARS IN THOUSANDS)
<C> <C> <C> <C> <C> <C>
Net sales............................... $769,136 $850,415 $662,221 $ 186,912 $ 889,567
Cost of sales........................... 461,629 508,089 395,239 136,820 523,783
-------- -------- -------------- ---------- ---------------
Gross profit............................ 307,507 342,326 266,982 50,092 365,784
Research and development(e)............. 47,994 54,542 40,244 9,805 50,608
Selling, general and administrative..... 224,978 248,327 186,898 59,353 252,085
Amortization............................ 6,437 2,765 2,151 1,065 6,526
Purchased research and development...... -- -- -- 114,070
Interest expense........................ 13,307 18,219 13,868 8,738 29,572
Other charges (income), net(d).......... (7,716) (9,331) (1,332) 17,137 14,036
-------- -------- -------------- ---------- ---------------
Earnings (loss) before taxes, minority
interest and extraordinary item....... $ 22,507 $ 27,804 $ 25,153 $ (160,076) $ 12,957
-------- -------- -------------- ---------- ---------------
-------- -------- -------------- ---------- ---------------
<CAPTION>
PREDECESSOR METTLER-TOLEDO
BUSINESS INTERNATIONAL
----------- INC.
-------------
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1996 1997(B)(C)
----------- -------------
<S> <C> <C>
Net sales............................... $ 624,733 $ 633,743
Cost of sales........................... 374,121 359,080
----------- -------------
Gross profit............................ 250,612 274,663
Research and development(e)............. 37,930 34,494
Selling, general and administrative..... 175,645 189,594
Amortization............................ 2,038 4,449
Purchased research and development...... 29,959
Interest expense........................ 12,579 28,199
Other charges (income), net(d).......... (226) 7,316
----------- -------------
Earnings (loss) before taxes, minority
interest and extraordinary item....... $ 22,646 $ (19,348)
----------- -------------
----------- -------------
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
--------------------------------------------------------------------------
METTLER-TOLEDO
PREDECESSOR BUSINESS INTERNATIONAL INC.
------------------------------------- ----------------------------------
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED JANUARY 1, OCTOBER 15,
DECEMBER 31, 1996 TO 1996 TO
-------------------- OCTOBER 14, DECEMBER 31, PRO FORMA
1994 1995 1996 1996(B)(C) 1996(A)(B)(C)
-------- -------- -------------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Net sales............................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales........................... 60.0 59.7 59.7 73.2 58.9
-------- -------- ------- ------- -------------
Gross profit............................ 40.0 40.3 40.3 26.8 41.1
Research and development(e)............. 6.2 6.4 6.1 5.2 5.7
Selling, general and
administrative........................ 29.3 29.2 28.2 31.8 28.3
Amortization............................ 0.8 0.3 0.3 0.6 0.7
Purchased research and development...... -- -- -- 61.0 --
Interest expense........................ 1.7 2.1 2.1 4.7 3.3
Other charges (income), net............. (1.0) (1.1) (0.2) 9.2 1.6
-------- -------- ------- ------- -------------
Earnings (loss) before taxes, minority
interest and extraordinary item....... 2.9% 3.3% 3.8% (85.6%) 1.5%
-------- -------- ------- ------- -------------
-------- -------- ------- ------- -------------
<CAPTION>
PREDECESSOR METTLER-TOLEDO
BUSINESS INTERNATIONAL
------------ INC.
-------------
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1996 1997(B)(C)
------------ -------------
<S> <C> <C>
Net sales............................... 100.0% 100.0%
Cost of sales........................... 59.9 56.7
------------ -------------
Gross profit............................ 40.1 43.3
Research and development(e)............. 6.1 5.4
Selling, general and
administrative........................ 28.1 29.9
Amortization............................ 0.3 0.7
Purchased research and development...... -- 4.7
Interest expense........................ 2.0 4.4
Other charges (income), net............. -- 1.2
------------ -------------
Earnings (loss) before taxes, minority
interest and extraordinary item....... 3.6% (3.1%)
------------ -------------
------------ -------------
</TABLE>
- ------------------
(a) Represents the unaudited pro forma consolidated statement of operations of
the Company for 1996, assuming the Acquisition, the Safeline Acquisition,
the Offerings and the Refinancing (assuming all of the Notes are
repurchased) occurred on January 1, 1996.
(b) In connection with the Acquisition and the Safeline Acquisition, the Company
allocated $32,194 and $2,054, respectively, of the purchase prices to
revalue certain inventories (principally work-in-progress and finished
goods) to fair value (net realizable value). Substantially all such
inventories revalued in connection with the Acquisition were sold during the
period October 15, 1996 to December 31, 1996, and substantially all such
inventories revalued in connection with the Safeline Acquisition were sold
in the second quarter of 1997. The expense related to inventory revalued in
connection with the Acquisition has been excluded from the 1996 pro forma
information.
(c) In conjunction with the Acquisition and the Safeline Acquisition, the
Company allocated, based upon independent valuations, $114,070 and $29,959,
respectively, of the purchase prices to purchased research and development
in process. These amounts were expensed immediately following the
Acquisition and the Safeline Acquisition, respectively. The amount of this
expense related to the Acquisition has been excluded from the 1996 pro forma
information.
(d) Other charges (income), net generally includes interest income, foreign
currency transactions (gains) losses, (gains) losses from sales of assets
and other charges (income). For the period January 1, 1996 to October 14,
1996 the amount shown includes employee severance and other exit costs
associated with the closing of its Westerville, Ohio facility. For the
period October 15, 1996 to December 31, 1996 the amount shown includes
employee severance benefits associated with the Company's general headcount
reduction programs in Europe and North America, and the realignment of the
analytical and precision balance business in Switzerland. For the period
ended September 30, 1997, the amount shown includes a restructuring charge
of $3,300 to close three facilities in North America. See Note 17 to the
Audited Consolidated Financial Statements and Note 1 to the Unaudited
Interim Consolidated Financial Statements included herein.
(e) Total research and development expenses including costs associated with
customer-specific engineering projects, which are included in cost of sales
for financial reporting purposes, were 7.2% in 1994, 7.3% in 1995, 6.6% in
1996 and 6.7% and 5.8% for the nine months ended September 30, 1996 and
1997, respectively.
31
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1996
Net sales were $633.7 million for the nine months ended September 30, 1997,
compared to $624.7 million for the corresponding period in the prior year, an
increase of 1%. Results were negatively impacted by the strengthening of the
U.S. dollar against other currencies. Net sales in local currencies during the
nine-month period increased 8% (6% absent the Safeline Acquisition). Most
recently, during the three months ended September 30, 1997, net sales in local
currencies increased 16% (10% absent the Safeline Acquisition).
Net sales in local currencies during the nine months ended September 30,
1997 in Europe increased 2% versus the corresponding period in the prior year,
despite weak European economies which adversely affected sales to industrial
customers. Net sales in local currencies during the nine-month period in the
Americas increased 8%, principally due to improved market conditions for sales
to industrial and food retailing customers. Net sales in local currencies in the
nine-month period in Asia and other markets increased 31%, primarily as a result
of the establishment of additional direct marketing and distribution in the
region. During the three months ended September 30, 1997, sales trends in each
of Europe, the Americas and Asia were more favorable compared to sales trends in
the first two quarters of 1997.
The operating results for Safeline (which were included in the Company's
results from May 31, 1997) had the effect of increasing the Company's net sales
by $15.7 million for the nine months ended September 30, 1997. Additionally,
Safeline's operating results had the effect of increasing the Company's Adjusted
Operating Income by $4.3 million for the same period. The Company recorded
non-cash purchase accounting adjustments for purchased research and development
($30.0 million) and the sale of inventories revalued to fair value ($2.1
million) during such period.
Gross profit before non-recurring costs as a percentage of net sales
increased to 43.7% for the nine months ended September 30, 1997, compared to
40.1% for the corresponding period in the prior year. Gross profit in the 1997
period includes the previously noted $2.1 million non-cash charge associated
with the excess of the fair value over the historic value of inventory acquired
in the Safeline Acquisition. Including this charge, the gross profit percentage
for the nine-month period is 43.3%. The improved gross profit percentage
reflects the benefits of reduced product costs arising from the Company's
research and development efforts, ongoing productivity improvements and the
depreciation of the Swiss franc against the Company's other principal trading
currencies.
Research and development expenses as a percentage of net sales decreased to
5.4% for the nine months ended September 30, 1997, compared to 6.1% for the
corresponding period in the prior year; however, the local currency spending
level remained relatively constant period to period.
Selling, general and administrative expenses as a percentage of net sales
increased to 29.9% for the nine months ended September 30, 1997, compared to
28.1% for the corresponding period in the prior year. This increase is primarily
a result of establishing additional direct marketing and distribution in Asia.
Adjusted Operating Income was $52.6 million, or 8.3% of sales, for the nine
months ended September 30, 1997 compared to $37.0 million, or 5.9% of sales, for
the nine months ended September 30, 1996, an increase of 42%. The 1997 period
excludes non-recurring costs of $2.1 million for the revaluation of inventories
to fair value in connection with the Safeline Acquisition. Most recently, during
the three months ended September 30, 1997, Adjusted Operating Income increased
74% (44% absent the Safeline Acquisition).
As previously noted, in connection with the Safeline Acquisition, $30.0
million of the purchase price was attributed to purchased research and
development in process. Such amount was expensed immediately following the
Safeline Acquisition. The technological feasibility of the products being
developed had not been established as of the date of the Safeline Acquisition.
The Company expects that the projects underlying these research and development
efforts will be substantially complete over the next two years.
Interest expense increased to $28.2 million for the nine months ended
September 30, 1997, compared to $12.6 million for the corresponding period in
the prior year. The increase was principally due to additional acquisition
related debt.
Other charges, net of $7.3 million for the nine months ended September 30,
1997 compared to other income, net of $0.2 million for the corresponding period
in the prior year. Such decrease is principally a result of a $3.3 million
32
<PAGE>
restructuring charge to close three facilities in North America and the related
involuntary terminations, as well as lower interest income and an increase in
foreign currency losses.
The provision for taxes is based upon the Company's projected annual
effective tax rate for the related period before non-recurring acquisition and
restructuring adjustments. Such adjustments are then tax affected at the
marginal tax rate in the period in which they occur. The increase in effective
tax rate from September 30, 1996 to September 30, 1997 is due to additional
non-tax deductible goodwill and the Company's estimated earning levels.
The net loss before extraordinary item of $27.0 million for the nine months
ended September 30, 1997 compared to net earnings of $13.1 million for the
corresponding period in the prior year. Excluding the previously noted
non-recurring charges for purchased research and development, the revaluation of
inventories to fair value and the restructuring of North American operations,
net earnings would have been $7.6 million for the nine months ended September
30, 1997. Such lower earnings in the 1997 period are principally the result of
higher interest expense due to Acquisition related debt, which more than offset
higher Adjusted Operating Income.
The extraordinary item--debt extinguishment of $9.6 million represents a
one-time charge for the write-off of capitalized debt issuance fees and related
expenses associated with the Company's previous credit facility. See 'Liquidity
and Capital Resources.'
FOR THE PERIOD FROM JANUARY 1, 1996 TO OCTOBER 14, 1996, THE PERIOD FROM OCTOBER
15, 1996 TO DECEMBER 31, 1996 AND PRO FORMA 1996 COMPARED TO YEAR ENDED DECEMBER
31, 1995
Net sales for the period from January 1, 1996 to October 14, 1996 and for
the period from October 15, 1996 to December 31, 1996 were $662.2 million and
$186.9 million, respectively. Pro forma 1996 net sales were $889.6 million, or
$849.1 million excluding Safeline results, compared to actual net sales of
$850.4 million in 1995. Net sales (pro forma excluding Safeline) in local
currency increased 3%, excluding the impact of reductions of the systems
business, but were offset by a strengthening of the U.S. dollar, the Company's
reporting currency, relative to the local currencies of the Company's
operations. The flat sales (pro forma excluding Safeline) in 1996 compared to
actual 1995 resulted from slightly lower sales from products in the industrial
and food retailing markets, offset by strong performance by the product lines in
the laboratory market. The growth in the laboratory market was across
substantially all product lines and geographical regions as sales in local
currency (excluding Safeline) increased 7% compared to the previous year. In
particular, new product introductions in titration, thermal and reaction
calorimetry as well as new Ohaus products for the education, laboratory and
light industrial market helped to increase laboratory market sales. The slight
decline in industrial and food retailing sales resulted from overall weakness in
the European market where the Company has been able to retain its market share.
This market weakness has persisted in early 1997.
Net sales (pro forma excluding Safeline) in Europe in local currency
decreased 2% in 1996 compared to actual 1995 due to a weaker second half of the
year in 1996 in all major markets, and especially in key countries such as
Germany, France and the United Kingdom. Net sales (pro forma excluding Safeline)
in the Americas in local currency increased by 5% over actual 1995 due to growth
in the United States and Latin America and double digit expansion in laboratory
measurement instruments other than balances and in related service. Net sales
(pro forma excluding Safeline) in Asia and other markets in local currency
increased by 8% over actual 1995, primarily as a result of significantly
increased sales in the Shanghai operation and strong sales in Japan and
Australia.
Gross profit for the period from January 1, 1996 to October 14, 1996 and
for the period from October 15, 1996 to December 31, 1996 was $267.0 million and
$50.1 million, respectively. Pro forma 1996 gross profit was $365.8 million or
$349.3 million (excluding Safeline results). This compares to $342.3 million in
actual 1995. Pro forma gross profit as a percentage of sales increased to 41.1%
in 1996 from 40.3% in actual 1995. The increased gross profit margin resulted
principally from operational improvements and the depreciation of the Swiss
franc against the Company's other principal trading currencies. See 'Effect of
Currency on Results of Operations.'
33
<PAGE>
Selling, general and administrative expenses and research and development
expenses for the period from January 1, 1996 to October 14, 1996 and for the
period from October 15, 1996 to December 31, 1996 were $227.1 million and $69.2
million, respectively. Pro forma 1996 selling, general and administrative and
research and development expenses totaled $302.7 million or $296.1 million
excluding Safeline. This compares to $302.9 million in actual 1995. Pro forma
selling, general and administrative expenses and research and development
expenses as a percentage of net sales decreased to an aggregate of 34.0% in 1996
from 35.6% in actual 1995. The cost decreases resulted primarily from the
currency effect of the depreciation of the Swiss franc against the Company's
other major trading currencies and the Company's cost control efforts. These
cost decreases were partially offset by non-recurring legal and advisory fees of
$4.8 million.
In connection with the Acquisition, the Company allocated, based upon
independent valuations, $114.1 million of the purchase price to purchased
research and development in process. Such amount was expensed immediately
following the Acquisition.
Interest expense for the period from January 1, 1996 to October 14, 1996
and for the period from October 15, 1996 to December 31, 1996 was $13.9 million
and $8.7 million, respectively. Pro forma interest expense increased to $29.6
million in 1996 from $18.2 million in actual 1995, principally due to a higher
debt level as a result of the Acquisition and the Safeline Acquisition. Interest
expense since the Acquisition and the Safeline Acquisition is materially
different. See 'Liquidity and Capital Resources.'
Other income, net for the period January 1, 1996 to October 14, 1996 of
$1.3 million includes interest income of $3.4 million and severance and other
exit costs of $1.9 million associated with the closing of its Westerville, Ohio
facility. Other charges, net for the period October 15, 1996 to December 31,
1996 of $17.1 million principally represent (i) losses on foreign currency
transactions of $8.3 million of which $5.7 million were incurred in connection
with the Acquisition, (ii) employee severance benefits associated with the
Company's general headcount reduction programs in Europe and North America of
$4.6 million which were announced during such period, and (iii) the realignment
of the analytical and precision balance business in Switzerland of $6.2 million
which was internally announced in December 1996. In connection with such
programs the Company reduced its workforce by approximately 170 employees in
1996 and intends to further reduce its workforce by approximately 70 employees
in 1997. The Company anticipates that as a result of the foregoing it will
achieve cost savings in the range of $8.3 million. Such cost savings consist
primarily of lower employee salary and benefit costs and fixed manufacturing
costs. In addition, at the time of the Acquisition, the Company estimated it
would incur additional selling, general and administrative expenses of $1.3
million annually as a result of the Acquisition.
Earnings before taxes and minority interest for the period from January 1,
1996 to October 14, 1996 was $25.2 million. Loss before taxes and minority
interest for the period from October 15, 1996 to December 31, 1996 was $160.1
million. This loss includes non-recurring costs of $114.1 million for the
allocation of purchase price to in-process research and development projects,
$32.2 million for the revaluation of inventories to fair value, $9.9 million of
other charges (an additional $1.9 million of other charges was incurred by the
Predecessor Business in 1996) and $4.8 million for non-recurring legal and
advisory fees. Pro forma earnings before taxes and minority interest would have
been $13.0 million in 1996. Pro Forma Adjusted Operating Income would have been
$67.9 million in 1996, or $58.0 million (excluding Safeline), compared to $39.5
million in actual 1995.
Net earnings for the period from January 1, 1996 to October 14, 1996 were
$14.5 million. The net loss for the period from October 15, 1996 to December 31,
1996 was $159.0 million. Pro forma net earnings of $5.2 million in 1996 compared
to net earnings of $18.3 million in actual 1995.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Net sales were $850.4 million in 1995 compared to $769.1 million in 1994,
an increase of 11%. Net sales in local currency increased 5%; the remaining 6%
of the increase resulted from changes in currency exchange rates. In 1994 the
Company discontinued certain items in its systems and laboratory measurement
instruments product lines. Excluding the effect of these discontinued items, net
sales in local currency would have increased 6%. Sales growth in local currency
reflected steady growth across all major product lines in laboratory, industrial
and food retailing markets as a result of favorable economic conditions and
market share gains in selected geographic
34
<PAGE>
markets. Sales were helped by the expansion of the Company's line of titrators
and the introduction of a family of standard industrial programmable terminals
for weighing instruments.
Net sales in Europe in local currency increased 7% in 1995 over 1994,
consistent with the continuing recovery from the 1993 recession and market share
gains in selected regions and product lines. Southern Europe contributed
significantly to the increase. Net sales in the Americas in local currency
decreased 1% in 1995 from 1994. Results in the Americas reflect reduced demand
in the United States for laboratory instruments in the wake of consolidation in
the pharmaceutical and chemical industries and unusually high demand for retail
equipment in 1994 as a result of a new labeling law that caused food retailers
to buy additional retail weighing and labeling equipment. Net sales in Asia and
other markets in local currency increased 23% in 1995 over 1994, primarily as a
result of continued economic growth and the Company's increased market share in
selected markets. Sales were also helped by the recovery in China from the poor
market conditions of 1994.
Gross profit as a percentage of net sales increased slightly to 40.3% in
1995 from 40.0% in 1994. These results were achieved despite the appreciation of
the Swiss franc against the Company's other principal trading currencies, which
has the effect of increasing overall manufacturing costs due to the Company's
significant manufacturing operations in Switzerland. Improved manufacturing
productivity contributed to the increase, including the favorable effects of the
Company's mid-1994 closure of its Cologne, Germany plant, partially offset by
higher raw materials costs.
Selling, general and administrative expenses and research and development
expenses were relatively constant as a percentage of net sales. Cost increases
resulting from the currency effect of the significant appreciation of the Swiss
franc against the Company's other major trading currencies were offset by the
Company's cost control efforts. Adjusted Operating Income for 1995 was $39.5
million in 1995 compared to $34.5 million for 1994.
Interest expense rose to $18.2 million in 1995 from $13.3 million in 1994,
an increase of 37%, principally due to higher interest rates from the conversion
of a loan from Ciba from short term to long term. Interest expense since the
Acquisition is materially different. See 'Liquidity and Capital Resources.'
Other income, net increased to $9.3 million in 1995 from $7.7 million in 1994.
The higher level of other income, net resulted principally from increased gain
on foreign currency transactions.
Earnings before taxes and minority interest were $27.8 million in 1995
compared to $22.5 million in 1994. Net earnings increased to $18.3 million in
1995 from $13.5 million in 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Acquisition was financed principally through capital contributions of
$190.0 million before related expenses from the Company, borrowings under the
Credit Agreement of $307.0 million and the issuance of 9 3/4% Senior
Subordinated Notes due 2006 of $135.0 million. The Safeline Acquisition was
financed by pounds 47.3 million ($77.4 million at May 30, 1997) loaned under the
Credit Agreement together with the issuance of pounds 13.7 million ($22.4
million at May 30, 1997) of seller loan notes which mature May 30, 1999.
Prior to the Acquisition, the Company's cash and other liquidity was used
principally to fund capital expenditures, working capital requirements, debt
service and dividends to Ciba. Following the Acquisition and the Safeline
Acquisition, the annual interest expense associated with the borrowings under
the Credit Agreement and the Notes, as well as scheduled principal payments of
term loans under the Credit Agreement, have significantly increased the
Company's liquidity requirements.
The Company's capital expenditures totaled $24.9 million in 1994, $25.9
million in 1995, $29.4 million (pro forma) in 1996 and $13.6 million (pro forma)
for the nine months ended September 30, 1997. Capital expenditures are primarily
for machinery, equipment and the purchase and expansion of facilities, including
the purchase of land for, and construction of, the Company's Shanghai
manufacturing facility. Capital expenditures for 1997, as a percentage of sales,
are expected to remain relatively constant with historical expenditures. In
connection with the transfer of the Japanese laboratory business from a former
agent to a subsidiary of the Company, the Company agreed to make total payments
of approximately SFr 8.0 million, of which only approximately SFr 1.0 million
remains to be paid. See 'Business--Customers and Distribution.'
35
<PAGE>
The Credit Agreement provides for term loan borrowings in an aggregate
principal amount of approximately $133.8 million, SFr 171.5 million and pounds
26.7 million that are scheduled to mature in 2002 and 2004, a Canadian revolver
with availability of CDN $26.3 million (approximately CDN $20.9 million of which
has been drawn as of September 30, 1997) which is scheduled to mature in 2002,
and a multi-currency revolving credit facility with availability of $151.0
million (approximately $26.7 million of which has been drawn as of September 30,
1997), which is scheduled to mature in 2002. The Company had borrowed $312.6
million under the Credit Agreement as of September 30, 1997. Under the Credit
Agreement, amounts outstanding under the loans amortize in quarterly
installments. In addition, the Credit Agreement obligates the Company to make
mandatory prepayments in certain circumstances with the proceeds of asset sales
or issuance of capital stock or indebtedness and with certain excess cash flow.
The Credit Agreement imposes certain restrictions on the Company and its
subsidiaries, including restrictions on the ability to incur indebtedness, make
investments, grant liens, sell financial assets and engage in certain other
activities. The Company must also comply with certain financial covenants. The
Credit Agreement is secured by certain assets of the Company. In connection with
the Offerings, the Company is refinancing the Credit Agreement. See 'Description
of Certain Indebtedness--New Credit Agreement.'
In connection with the Company's refinancing on May 29, 1997 of its
previous credit facility, the Company recorded an extraordinary item-debt
extinguishment of $9.6 million, representing a one-time charge for the write-off
of capitalized debt issuance fees and related expenses associated with the
previous credit facility.
The Notes will mature in 2006. The Notes may be required to be purchased by
the Company upon a Change of Control (as defined) and in certain circumstances
with the proceeds of asset sales. The Notes are subordinated to the indebtedness
under the Credit Agreement. The Indenture governing the Notes imposes certain
restrictions on the Company and its subsidiaries, including restrictions on the
ability to incur indebtedness, make investments, grant liens and engage in
certain other activities. See 'Description of Certain Indebtedness--Senior
Subordinated Notes.' The Company has commenced a tender offer for all of the
Notes, and all of the Notes have been irrevocably tendered. In connection with
the tender offer, the Company has obtained the requisite consents to remove
substantially all of the restrictive covenants and certain other provisions from
the Indenture governing the Notes. See 'Description of Certain
Indebtedness--Senior Subordinated Notes.'
Under the Credit Agreement and the Indenture, Mettler-Toledo, Inc. is
prohibited from paying dividends to Mettler-Toledo Holding Inc., subject to
certain limited exceptions. Mettler-Toledo, Inc.'s obligations under the Credit
Agreement and Notes are guaranteed by Mettler-Toledo Holding Inc.
At September 30, 1997, approximately $128.5 million of the borrowings under
the Credit Agreement and all of the borrowings under the Notes were denominated
in U.S. dollars. The balance of the borrowings under the Credit Agreement and
under local working capital facilities were denominated in certain of the
Company's other principal trading currencies. At September 30, 1997, the Company
had $222.1 million of other debt incurred by its various operating subsidiaries
primarily denominated in various currencies. Changes in exchange rates between
the currencies in which the Company generates cash flow and the currencies in
which its borrowings are denominated will affect the Company's liquidity. See
'Effect of Currency on Results of Operations.'
In connection with the Offerings, the Company intends to refinance the
Credit Agreement by entering into the New Credit Agreement. The Company expects
that it will have pro forma borrowings under the New Credit Agreement of $383.9
million (representing an increase of $71.3 million) as of September 30, 1997 and
borrowings of $38.0 million under various other credit arrangements. Of the
borrowings under the New Credit Agreement, $200.0 million will be term loans and
the remainder will be outstanding under a revolving credit facility. The
Company's revolving credit facility commitment will increase from $170.0 million
to $420.0 million under the New Credit Agreement, and this commitment includes a
$100.0 million acquisition facility. Increased borrowings under the New Credit
Agreement and the net proceeds from the Offerings will be used, together with
the net proceeds from the Offerings, to repurchase the Notes and to pay related
premiums and fees and expenses. See 'Use of Proceeds' and 'Capitalization.'
The Company's cash provided by operating activities decreased from $57.9
million in the nine months ended September 30, 1996 to $30.3 million in the nine
months ended September 30, 1997. The decline resulted principally from higher
interest costs resulting from the Acquisition and the Safeline Acquisition.
At September 30, 1997, consolidated debt, net of cash, was $452.4 million.
36
<PAGE>
The Company continues to explore potential acquisitions to expand its
product portfolio and improve its distribution capabilities. In connection with
any acquisition, the Company may incur additional indebtedness.
The Company currently believes that cash flow from operating activities,
together with borrowings available under the New Credit Agreement and local
working capital facilities, will be sufficient to fund currently anticipated
working capital needs and capital spending requirements as well as debt service
requirements for at least several years, but there can be no assurance that this
will be the case.
EFFECT OF CURRENCY ON RESULTS OF OPERATIONS
The Company's operations are conducted by subsidiaries in many countries,
and the results of operations and the financial position of each of those
subsidiaries is reported in the relevant foreign currency and then translated
into U.S. dollars at the applicable foreign exchange rate for inclusion in the
Company's consolidated financial statements. Accordingly, the results of
operations of such subsidiaries as reported in U.S. dollars can vary
significantly as a result of changes in currency exchange rates. Specifically, a
strengthening of the U.S. dollar versus other currencies reduces net sales and
earnings as translated into U.S. dollars, whereas a weakening of the U.S. dollar
has the opposite effect.
Swiss franc-denominated costs represent a much greater percentage of the
Company's total expenses than Swiss franc-denominated sales represent of total
sales. In general, an appreciation of the Swiss franc versus the Company's other
major trading currencies, especially the principal European currencies, has a
negative impact on the Company's results of operations and a depreciation of the
Swiss franc versus the Company's other major trading currencies, especially the
principal European currencies has a positive impact on the Company's results of
operations. The effect of these changes generally offsets in part the effect the
translation effect on earnings before interest and taxes of changes in exchange
rate between the U.S. dollar and other currencies described in the preceding
paragraph.
TAXES
The Company is subject to taxation in many jurisdictions throughout the
world. The Company's effective tax rate and tax liability will be affected by a
number of factors, such as the amount of taxable income in particular
jurisdictions, the tax rates in such jurisdictions, tax treaties between
jurisdictions, the extent to which the Company transfers funds between
jurisdictions and income is repatriated, and future changes in law. Generally,
the tax liability for each legal entity is determined either (i) on a
non-consolidated basis or (ii) on a consolidated basis only with other entities
incorporated in the same jurisdiction, in either case without regard to the
taxable losses of non-consolidated affiliated entities. As a result, the Company
may pay income taxes in certain jurisdictions even though the Company on an
overall basis incurs a net loss for the period.
ENVIRONMENTAL MATTERS
The Company is subject to various environmental laws and regulations in the
jurisdictions in which it operates. The Company, like many of its competitors,
has incurred, and will continue to incur, capital and operating expenditures and
other costs in complying with such laws and regulations in both the United
States and abroad. The Company does not currently anticipate any material
capital expenditures for environmental control technology. Some risk of
environmental liability is inherent in the Company's business, and there can be
no assurance that material environmental costs will not arise in the future.
However, the Company does not anticipate any material adverse effect on its
results of operations or financial condition as a result of future costs of
environmental compliance.
INFLATION
Inflation can affect the costs of goods and services used by the Company.
The competitive environment in which the Company operates limits somewhat the
Company's ability to recover higher costs through increased selling prices.
Moreover, there may be differences in inflation rates between countries in which
the Company incurs the major portion of its costs and other countries in which
the Company sells its products, which may limit the Company's ability to recover
increased costs, if not offset by future increase of selling prices. The
Company's growth strategy includes expansion in China, Latin America and Eastern
Europe, which have experienced
37
<PAGE>
inflationary conditions. To date, inflationary conditions have not had a
material effect on the Company's operating results. However, as the Company's
presence in China, Latin America and Eastern Europe increases, these
inflationary conditions could have a greater impact on the Company's operating
results.
SEASONALITY
The Company's business has historically experienced a slight amount of
seasonal variation, with sales in the first fiscal quarter slightly lower than,
and sales in the fourth fiscal quarter slightly higher than, sales in the second
and third fiscal quarters. This trend has a somewhat greater effect on income
from operations than on net sales due to the effect of fixed costs.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISKS
Prior to 1997, the Company entered into currency forward and option
contracts primarily as a hedge against anticipated foreign currency exposures
and not for speculative purposes. Such contracts, which are types of financial
derivatives, limit the Company's exposure to both favorable and unfavorable
currency fluctuations. These contracts are adjusted to reflect market values as
of each balance sheet date, with the resulting unrealized gains and losses being
recognized in financial income or expense, as appropriate. At August 31, 1997,
all remaining derivative instruments met the requirements of hedge accounting.
During 1997, the Company has entered into certain interest rate swap and
cap agreements. See Note 2 to the unaudited Interim Consolidated Financial
Statements included herein.
NEW ACCOUNTING STANDARDS
Beginning January 1, 1996 the Company adopted Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 121 ('SFAS
121'), 'Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of.' SFAS 121 requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In addition, SFAS 121
requires that long-lived assets and certain identifiable intangibles to be
disposed of be reported at the lower of carrying amount or fair value less cost
to sell. Adoption of SFAS 121 had no effect on the Company's financial
statements.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 ('SFAS 128'), 'Earnings per Share.'
The Company does not expect SFAS 128 to have a material effect on its earnings
per share.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Prospectus includes forward-looking statements that reflect the
Company's current views with respect to future events and financial performance,
including capital expenditures, planned product introductions, research and
development expenditures, potential future growth, including potential
penetration of developed markets and potential growth opportunities in emerging
markets, potential future acquisitions, potential cost savings from planned
employee reductions and restructuring programs, estimated proceeds from and
timing of asset sales, planned operational changes and research and development
efforts, strategic plans and future cash sources and requirements. These
forward-looking statements are subject to certain risks and uncertainties,
including those identified in 'Risk Factors,' which could cause actual results
to differ materially from historical results or those anticipated. The words
'believe,' 'expect,' 'anticipate' and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of their dates. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
38
<PAGE>
INDUSTRY
GENERAL
The Company believes that in 1996 the global market for the Company's
products and services was approximately $6.0 billion. Weighing instruments are
among the most broadly used measuring devices, and their results are often used
as the basis of commercial transactions. Analytical instruments are critical to
the research and development and quality control efforts of end-users, while
metal detection systems provide important quality and safety checks for
companies that produce and package goods in the food processing, pharmaceutical,
cosmetics, chemicals and other industries. The Company's products are used in
laboratories as an integral part of the research and quality control processes,
in industry for various manufacturing processes such as quality control,
materials preparation, filling, counting and dimensioning, and in food retailing
for preparation, portioning and inventory control. Customers include
pharmaceutical, biotechnology, chemicals, cosmetics, food and beverage, metals,
electronics, logistics, transportation and food retailing businesses, as well as
schools, universities and government standards laboratories. The Company does
not manufacture or sell household weighing products, bulkweigh fillers or
continuous weighing products, and those markets are not discussed herein.
Weighing instruments often comprise a relatively small component of a
customer's aggregate expenditures but perform important functions in quality
control, process control and research and can improve productivity. As a result,
the Company believes customers tend to emphasize accuracy, product reliability,
technical innovation, service quality, reputation and past experience with a
manufacturer's products when making their purchasing decisions for weighing and
other precision instruments. Weighing equipment manufacturers also provide a
significant amount of service and support to their customers, including repair,
calibration, certification and preventive maintenance, which generate recurring
revenues. The Company believes that customers often continue to purchase from
their existing vendor due to the additional costs for training, spare parts,
service and systems integration associated with switching to or adding other
brands of weighing equipment to their operations. The market for weighing
instruments, particularly those used in industrial and food retailing
applications, has traditionally been fragmented both geographically and by type
of application. Many manufacturers have a strong market position in their home
countries but a much smaller presence in other markets. Similarly, manufacturers
have tended to be focused on a particular application or group of applications.
The Company believes that the developed markets (Europe, North America and
Japan) that it serves have recently experienced modest growth rates in demand
for weighing instruments. Laboratory market growth has been influenced by demand
in the principal end-user industries and customer replacement of older products
with new products designed to be integrated into an automated laboratory
environment. In the industrial and food retailing market, growth has been driven
by the increasing use of weighing applications in the control and regulation of
manufacturing and logistics processes, customers' needs to upgrade to
network-ready weighing equipment, and general growth in end-user industries.
Emerging markets, such as Asia (excluding Japan), have experienced higher growth
rates than the overall market. Growth in these markets has come from the
establishment and growth of industries requiring additional and more
sophisticated weighing instruments and systems.
End-users of laboratory analytical instruments require exceptionally high
levels of performance and reliability due to the application of these
instruments in critical steps of research and development and quality control.
In addition, analytical instruments in most cases constitute a small percentage
of customers' aggregate expenditures, are material to customers' development
efforts and can have a significant impact on users' overall productivity. As a
result, the Company believes reputation, technical leadership, service and
proven results are critical to end-user decisions to choose an equipment
supplier. In many cases, once a manufacturer's equipment is adopted in the
laboratory and test methods are established using a particular instrument, the
costs and/or risks of switching to a different manufacturer of instruments can
be high. Customers are therefore reluctant to switch suppliers and are more
likely to buy replacement products from the manufacturer of the initial system,
which leads to stable customer relationships and a potential recurring revenue
stream for the vendor. The Company believes that there are significant potential
growth opportunities in its analytical instruments markets, including: growth in
end-use markets such as pharmaceuticals, food and beverage, consumer products,
environmental
39
<PAGE>
testing and chemicals; increased research and development spending in major
customer segments such as the pharmaceutical and biotech industries; and
increased customer emphasis on productivity and automation.
The end-users of metal detection equipment are typically companies in the
food processing, pharmaceutical, cosmetics, chemicals and other industries that
must ensure that their products are free from contamination by metal particles.
Selling product that is contaminated by metal can have severe consequences for
these companies, resulting in potential litigation and product recalls.
Consequently, the Company believes that purchasers of metal detectors value
accuracy and stability of their detectors. The Company believes that there is
also a high degree of brand loyalty from customers, as switching brands requires
retraining line operators in the use of new equipment and altering quality
assurance and calibration routines. The Company believes these characteristics
lead to a high level of recurring and follow-on revenues from existing
customers. The Company believes that in developed markets, demand for metal
detectors is experiencing substantial growth as a result of both increasing
consumer and regulatory focus on product safety. Furthermore, the Company
believes exports of food products to industrialized nations from lesser
developed countries will contribute to rapid growth in demand for metal
detectors in emerging markets.
INDUSTRY TRENDS
Over the last five years, the markets for the Company's precision
instruments have experienced increasing customer demand for products with
sophisticated data handling and storage capabilities that can be integrated into
management information systems. In the laboratory market, weighing and
analytical instruments are now capable of storing a large number of results,
performing statistical analyses and transmitting results to computers and
laboratory information management systems. Laboratory customers have also
demanded instruments that improve research productivity by adding automation.
For example, titrators have been increasingly paired with auto-samplers, which
allow a technician to set up dozens of samples for testing automatically. The
industrial and food retailing market has experienced a similar trend, as small
groceries are replaced by supermarkets and hypermarkets. Retail counter-top
scales (for the weighing of perishable goods) now include database and network
functions. This enables the scale to download price information from the store's
master price database and provide information on sales by article, which can be
integrated into the store's inventory control system. The store's master
ordering system is then able to calculate shrinkage and store inventory levels
based on the weight of goods processed and automatically reorder perishable
goods via electronic data interchange when inventory levels reach a pre-set
reorder point. In manufacturing, weighing instruments also have become
integrated into manufacturing plants' information systems as the primary means
for the tracking and control of inventory. As they have become more integrated
into the manufacturing process, weighing instruments also have been combined
with dimensioning equipment as well as with multiple input/output devices:
bar-code readers, printers and data-storage devices. Similarly, metal detection
systems can be integrated with checkweighers to provide important safety and
quality checks of consumer products and are linked to customers' management
information systems to provide key process control data.
Another trend in the weighing instruments market is regional and global
harmonization of weighing and measurement standards. Weights and measures were
historically regulated at the national level. As a result, products had to meet
numerous different national regulatory requirements. More recently, certain
European national requirements have been harmonized by the European Union, and
many other national requirements have been harmonized by the Organisation
Internationale de Metrologie Legale, which sets international weights and
measures standards. Harmonization has facilitated the ability of multinational
weighing instrument manufacturers to manufacture products that meet all relevant
regulatory requirements and the development of broader-based markets for their
product lines. In recent years, some governments have begun to privatize the
inspection of weighing instruments used in commercial transactions.
ISO-certified manufacturers of weighing instruments, such as Mettler-Toledo,
whose after-sales service technicians already perform similar services for
customers, are well situated to take over the inspection process from
governments wishing to privatize this function.
As laboratory and manufacturing requirements and standards become more
widely adopted, the accuracy of weighing instruments, analytical instruments and
metal detection systems and the ability to certify the accuracy of results
become increasingly important to purchasers. For example, ISO 9001 standards and
Good Laboratory Practices and Good Manufacturing Practices, which are
voluntarily adopted by participating companies, require the development of
compliance procedures that must be adhered to throughout the relevant laboratory
or
40
<PAGE>
production process. These procedures include periodic calibration and
certification of measurement instruments. Certified instruments must be utilized
throughout the process, and each step in the process must be accurately recorded
in accordance with specified procedures so that results can be accurately traced
and reproduced. An example of this trend is the increasing adoption of ISO 9001
quality guidelines by food processors, which require all production processes to
be properly monitored for contamination by metal and other foreign substances.
BUSINESS
GENERAL
Mettler-Toledo is a leading global supplier of precision instruments. The
Company is the world's largest manufacturer and marketer of weighing instruments
for use in laboratory, industrial and food retailing applications. In addition,
the Company holds one of the top three market positions in several related
analytical instruments such as titrators, thermal analysis systems, pH meters,
automatic lab reactors and electrodes. Through its recent acquisition of
Safeline, the Company is also the world's largest manufacturer and marketer of
metal detection systems for companies that produce and package goods in the food
processing, pharmaceutical, cosmetics, chemicals and other industries. The
Company focuses on high value-added segments of its markets by providing
innovative instruments, by integrating these instruments into
application-specific solutions for customers, and by facilitating the processing
of data gathered by its instruments and the transfer of this data to customers'
management information systems. Mettler-Toledo services a worldwide customer
base through its own sales and service organization and has a global
manufacturing presence in Europe, the United States and Asia. The Company
generated pro forma 1996 net sales of $889.6 million (giving effect to the
Safeline Acquisition) which were derived 49% in Europe, 40% in North and South
America and 11% in Asia and other markets.
HISTORY
The Company traces its roots to the invention of the single-pan analytical
balance by Dr. Erhard Mettler and the formation of Mettler Instruments AG
('Mettler') in 1945. During the 1970s and 1980s, Mettler expanded from
laboratory balances into industrial and food retailing products, and it
introduced the first fully electronic precision balance in 1973. The Toledo
Scale Company ('Toledo Scale') was founded in 1901 and developed a leading
market position in the industrial weighing market in the United States. During
the 1970s, Toledo Scale expanded into the food retailing market. Following the
1989 acquisition of Toledo Scale by Mettler, the name of the Company was changed
to Mettler-Toledo to reflect the combined strengths of the two companies and to
capitalize on their historic reputations for quality and innovation. During the
past 15 years, the Company has grown through other acquisitions that
complemented the Company's existing geographic markets and products. In 1986,
Mettler acquired the Ingold Group of companies, manufacturers of electrodes, and
Garvens Kontrollwaagen AG, a maker of dynamic checkweighers. Toledo Scale
acquired Hi-Speed Checkweigher Co., in 1981. In 1990, the Company acquired Ohaus
Corporation, a manufacturer of laboratory balances.
The Company was incorporated in December 1991, and was recapitalized in
connection with the October 15, 1996 acquisition of the Mettler-Toledo Group
from Ciba in a transaction sponsored by management and AEA Investors. See Note 1
to the Audited Consolidated Financial Statements included herein for further
information with respect to the Acquisition. On May 30, 1997, the Company
purchased Safeline, the world's leading supplier of metal detection systems for
companies that produce and package goods in the food processing, pharmaceutical,
cosmetics, chemicals and other industries.
MARKET LEADERSHIP
The Company believes that it maintains a leading position in each of its
markets. In the weighing instruments market, Mettler-Toledo is the only company
to offer products for laboratory, industrial and food retailing applications
throughout the world and believes that it holds a market share more than two
times greater than that of its nearest competitor. The Company believes that in
1996 it had an approximate 40% market share of the global market for laboratory
balances including the largest market share in each of Europe, the United States
and Asia (excluding Japan), and the number two position in Japan. In the
industrial and food retailing markets, the Company believes it has the largest
market share in Europe and the United States. In Asia, Mettler-
41
<PAGE>
Toledo has substantial, rapidly growing industrial and food retailing businesses
supported by an established manufacturing presence in China. The Company also
holds one of the top three global market positions in several analytical
instruments such as titrators, thermal analysis systems, electrodes, pH meters
and automatic lab reactors. The Company recently enhanced its leading positions
in precision instruments through the addition of Safeline's market leading metal
detection products, which can be used in conjunction with the Company's
checkweighing instruments for important quality and safety checks in the food
processing, pharmaceutical, cosmetics, chemicals and other industries.
Mettler-Toledo attributes its worldwide market leadership positions to the
following competitive strengths:
Global Brand and Reputation. The Mettler-Toledo brand name is identified
worldwide with accuracy, reliability and innovation. Customers value these
characteristics because precision instruments, particularly weighing and
analytical instruments, significantly impact customers' product quality,
productivity, costs and regulatory compliance. Furthermore, precision
instruments generally constitute a small percentage of customers' aggregate
expenditures. As a result, the Company believes customers tend to emphasize
accuracy, product reliability, technical innovation, service quality, reputation
and past experience with a manufacturer's products when making their purchasing
decisions for weighing and other precision instruments and experience high
switching costs if they attempt to change vendors. A recent independent survey
concluded that 'Mettler-Toledo' was one of the three most recognized brand names
in the laboratory. The Company's brand name is so well recognized that
laboratory balances are often generically referred to as 'Mettlers.' The
strength of this brand name has allowed the Company to successfully extend its
laboratory product line to include titrators, thermal analysis systems,
electrodes, pH meters and automatic lab reactors.
Technological Innovation. Mettler-Toledo has a long and successful track
record of innovation, as demonstrated by the invention of the single-pan
analytical balance in 1945 and the introduction of the first fully electronic
precision balance in 1973. The Company has continued to be at the forefront of
technology with recent innovations in both weighing and related instrumentation,
including its new digital load cell, its ID 20 terminal (the first personal
computer interface to be certified by weights and measures regulators), its
Brickstone weighing sensor technology, its GOBI moisture determination
instrument, a new automatic lab reactor, the Zero Metal-Free Zone metal detector
and its new PILAR (Parallel Infrared Laser Array) dimensioning equipment. As
with many of the Company's recent innovations, the Company's new Brickstone
weighing sensor technology provides greater accuracy while also significantly
reducing manufacturing costs and the time and expense of design changes by
reducing from approximately 100 to approximately 50 the number of parts in the
sensor. The Company believes it is the global leader in its industry in
providing innovative instruments, in integrating its instruments into
application-specific solutions for customers, and in facilitating the processing
of data gathered by its instruments and the transfer of this data to customers'
management information systems. Mettler-Toledo's technological innovation
efforts benefit from the Company's manufacturing expertise in sensor technology,
precision machining and electronics, as well as its strength in software
development.
Comprehensive, High Quality Product Range. Mettler-Toledo manufactures a
more comprehensive range of weighing instruments than any of its competitors.
The Company's broad product line addresses a wide range of weighing applications
across and within many industries and regions. Furthermore, the Company's
analytical instruments and metal detection systems complement its weighing
products, enabling the Company to offer integrated solutions. The Company
manufactures its products in its modern manufacturing facilities, most of which
are ISO 9001 certified. Mettler-Toledo's broad range of high quality products
and the ability to provide integrated solutions allows the Company to leverage
its sales and service organization, product development activities and
manufacturing and distribution capabilities.
Global Sales and Service. The Company has the only global sales and
service organization among weighing instruments manufacturers. At September 30,
1997, this organization consisted of approximately 3,000 employees organized
into locally-based, customer-focused groups that provide prompt service and
support to the Company's customers and distributors in virtually all major
markets around the world. The local focus of the Company's sales and service
organization enables the Company to provide timely, responsive support to
customers worldwide and provides feedback for manufacturing and product
development. This global infrastructure also allows the Company to capitalize on
growth opportunities in emerging markets.
Largest Installed Base. The Company believes that it has the largest
installed base of weighing instruments in the world. From this installed base,
the Company obtains service contracts which provide a strong,
42
<PAGE>
stable source of recurring service revenue. Service revenue represented
approximately 17% of net sales in 1996, of which approximately 8% is derived
from service contracts and repairs with the remainder derived from the sale of
spare parts. The Company believes that its installed base of weighing
instruments represents a competitive advantage with respect to repeat purchases
and purchases of related analytical instruments and metal detection systems,
because customers tend to remain with an existing supplier that can provide
accurate and reliable products and related services. In addition, switching to a
new instrument supplier entails additional costs to the customer for training,
spare parts, service and systems integration requirements. Close relationships
and frequent contact with its broad customer base also provide the Company with
sales leads and new product and application ideas.
Geographical, Product and Customer Diversification. The Company's revenue
base is diversified by geographic region, product range and customer. The
Company's broad range of product offerings is utilized in many different
industries, including, among others, chemicals, pharmaceuticals, food
processing, food retailing and transportation. The Company supplies customers in
over 100 countries, and no one customer accounted for more than 2% of 1996 net
sales. The Company's diverse revenue base reduces its exposure to regional or
industry-specific economic conditions, and its presence in many different
geographic markets, product markets and industries enhances its attractiveness
as a supplier to multinational customers.
GROWTH STRATEGY
Prior to its acquisition on October 15, 1996 in a transaction sponsored by
management and AEA Investors, Mettler-Toledo operated as a division of Ciba. In
connection with the Acquisition, Mettler-Toledo began implementing a strategy to
enhance its position as global market leader by accelerating new product
introductions, capitalizing on market opportunities, focusing on expansion in
emerging markets, pursuing selected acquisitions and reengineering its
operations in order to reduce its overall cost structure. These initiatives have
contributed to an improvement in Adjusted Operating Income from $37.0 million
(5.9% of net sales) for the nine months ended September 30, 1996 to $52.6
million (8.3% of net sales) for the nine months ended September 30, 1997, an
increase of 42%.
New Product Introductions. The Company intends to continue to invest in
product innovation in order to provide technologically advanced products to its
customers for existing and new applications. Over the last three calendar years,
the Company invested approximately $170.0 million in research and development
and customer engineering, which has resulted in a pipeline of innovative and new
products, significant reductions in product costs and reduced time to market for
new products. Examples of new product introductions planned for the remainder of
1997 and 1998 include: industrial and retail products that apply open-system
architecture, a higher performance titrator, a higher performance modular
thermal analysis system and new density and refractometry measurement
technology. In addition, the Company is also focused on innovations that reduce
manufacturing costs. For example, the Company is extending the utilization of
its high-accuracy, low-cost Brickstone weighing sensor technology through much
of its weighing instrument product line. The Company attributes a significant
portion of its recent margin improvement to its research and development
efforts.
Capitalize on Market Opportunities. Mettler-Toledo believes it is well
positioned to capitalize on potential market opportunities including: (i) the
integration of weighing instruments into data management software systems to
automate processes and/or improve process control; (ii) the development of
integrated solutions that combine weighing instruments and related technologies
directly into manufacturing processes; (iii) the harmonization of national
weighing standards among countries, particularly in the European Union; and (iv)
the standardization of manufacturing and laboratory practices through programs
such as ISO 9001, Good Laboratory Practices and Good Manufacturing Practices.
The Company believes that these trends, together with the Company's brand name,
global presence and the pipeline of planned new products, will allow it to
increase its penetration of developed markets such as Europe, the United States
and Japan.
Further Expansion in Emerging Markets. The Company believes that global
recognition of the Mettler-Toledo brand name and the Company's global sales,
service and manufacturing capabilities position it to take advantage of
continued growth opportunities in emerging markets. These growth opportunities
have been driven by economic development and global manufacturers' utilization
of additional and more sophisticated weighing instruments as they shift
production to these markets. The primary focus to date of the Company's emerging
market expansion has been in Asia. In Asia (excluding Japan), the Company is the
market leader in laboratory
43
<PAGE>
weighing instruments and has substantial and rapidly growing industrial and food
retailing businesses. The Company maintains two profitable operations in China:
first, a 60% owned joint venture which manufactures and sells industrial and
food retailing products and, second, a wholly owned facility which manufactures
and distributes laboratory products. Both of these operations serve the domestic
and export markets. Recently, the Company has opened direct marketing
organizations in Taiwan, Korea, Hong Kong, Thailand and Malaysia. The Company is
also expanding its sales and service presence in Latin America and other
emerging markets. The Company believes that its brand name, its global marketing
and manufacturing infrastructure and its already substantial sales in Asia and
Latin America position it to take advantage of further growth opportunities in
emerging markets.
Pursue Selected Acquisition Opportunities. Mettler-Toledo plans to
actively pursue additional complementary product lines and distribution
channels. In the laboratory market, the Company intends to leverage its existing
laboratory distribution system through the acquisition of complementary product
lines and the development of integrated laboratory solutions. In the industrial
and food retailing markets, the Company plans to pursue the acquisition of
related products and technologies that allow for the integration of weighing
with other customer operations and information systems. The Company began
implementing this strategy through the May 1997 acquisition of Safeline, which
had calendar year 1996 revenues of $40.4 million and is the world's leading
supplier of metal detection systems for companies that produce and package goods
in the food processing, pharmaceutical, cosmetics, chemicals and other
industries. Safeline's metal detection systems enable the Company to offer
integrated solutions for quality control and data management to these
industries. The Company believes that by taking advantage of its brand name and
global sales and service organization it can expand the distribution of acquired
product lines and operate acquired businesses more effectively.
Reengineering and Cost Reductions. The Company's recent increase in
profitability has been achieved in part through: (i) focusing research and
development efforts on product cost reductions; (ii) achieving greater
flexibility in, and a targeted reduction of, the Company's workforce, including
a reduction of approximately 170 personnel in 1996; (iii) consolidating
manufacturing facilities, including the closure of the Westerville, Ohio
facility; and (iv) moving production to lower-cost manufacturing facilities. The
Company has also started implementing a number of additional operational changes
such as the restructuring of its ordering process, product delivery and parts
inventory management in Europe, the consolidation of worldwide precision balance
manufacturing, the realignment of industrial product manufacturing in Europe and
the consolidation of the Company's North American laboratory, industrial and
food retailing businesses into a single marketing organization. The Company
believes that these new initiatives, as well as its continuing efforts to reduce
product costs through research and development and the move of production to
lower-cost manufacturing facilities, will place the Company in a position to
build on its recent improvement in profitability. Furthermore, the Company
believes that it can leverage its existing infrastructure, particularly the
recent investments made in Asia, to obtain continued sales growth without
significant additions to its overall cost base.
PRODUCTS
Laboratory
The Company manufactures and markets a complete range of laboratory
balances, as well as other selected laboratory measurement instruments, such as
titrators, thermal analysis systems, electrodes, pH meters and automatic lab
reactors, for laboratory applications in research and development, quality
assurance, production and education. Laboratory products accounted for
approximately 40% of the Company's net sales in 1996 (including revenues from
related after-sale service). The Company believes that it has an approximate 40%
share of the global market for laboratory balances and is among the top three
producers worldwide of titrators, thermal analysis systems, electrodes, pH
meters and automatic lab reactors. The Company believes it has the leading
market share for laboratory balances in each of Europe, the United States and
Asia (excluding Japan) and the number two position in Japan.
Balances. The balance is the most common piece of equipment in the
laboratory. The Company believes that it sells the highest performance
laboratory balances available on the market, with weighing ranges up to 32
kilograms and down to one ten-millionth of a gram. The Mettler-Toledo name is
identified worldwide with accuracy, reliability and innovation. A recent
independent survey concluded that 'Mettler-Toledo' was one of the three most
recognized names in the laboratory. The Company's brand name is so well
recognized that
44
<PAGE>
laboratory balances are often generically referred to as 'Mettlers.' This
reputation, in management's judgment, constitutes one of the Company's principal
competitive strengths.
In order to cover a wide range of customer needs and price points,
Mettler-Toledo markets precision balances, semimicrobalances, microbalances and
ultramicrobalances in three principal product tiers offering different levels of
functionality. High-end balances provide maximum automation of calibration,
application support and additional functions. Mid-level balances provide a more
limited but still extensive set of automated features and software applications,
while basic level balances provide simple operations and a limited feature set.
The Company also manufactures mass comparators, which are used by weights and
measures regulators as well as laboratories to ensure the accuracy of reference
weights. Due to the wide range of functions and features offered by the
Company's products, prices vary significantly. A typical mid-range precision
balance is priced at approximately $2,500 and a typical microbalance is priced
at approximately $14,000.
The Company regularly introduces new features and updated models in its
lines of balances. For example, the Company's DeltaRange models permit weighing
of light and heavy samples on the same balance without the need for difficult
adjustments, a function particularly useful in dispensing and formula weighing.
High-end balances are equipped with fully automatic calibration technology.
These balances are carefully calibrated many times in controlled environments,
with the results of the calibrations incorporated into built-in software, so
that adjustments to ambient temperature and humidity can automatically be made
at any time. The Company also offers universal interfaces that offer
simultaneous connection of up to five peripheral devices. The customer can then
interface one balance with, for example, a computer for further processing of
weighing data, a printer for automatically printing results and a bar-code
reader for sample identification.
In addition to Mettler-Toledo branded products, the Company also
manufactures and sells balances under the brand name 'Ohaus.' Ohaus branded
products include mechanical balances and electronic balances for the educational
market and other markets in which customers are interested in lower cost, a more
limited set of features and less comprehensive support and service.
Titrators. Titrators measure the chemical composition of samples. The
Company's high-end titrators are multi-tasking models, which can perform two
determinations simultaneously. They permit high sample throughputs and have
extensive expansion capability and flexibility in calculations, functions and
parameters. Lower-range models permit common determinations to be stored in a
database for frequent use. Titrators are used heavily in the food and beverage
industry. A typical titrator is priced at approximately $12,000.
Thermal Analysis Systems. Thermal analysis systems measure different
properties, such as weight, dimension and energy flow, at varying temperatures.
The Company's thermal analysis products include full computer integration and a
significant amount of proprietary software. Thermal analysis systems are used
primarily in the plastics and polymer industries. A typical thermal analysis
system is priced at approximately $50,000.
pH Meters. A pH meter measures acidity in a laboratory sample and is the
second most widely used measurement instrument in the laboratory, after the
balance. The Company manufactures desktop models and portable models. Desktop
models are microprocessor-based instruments, offering a wide range of features
and self-diagnostic functions. Portable models are waterproof, ultrasonically
welded and ergonomically designed, and permit later downloading of data to a
computer or printer using an interface kit and custom software. pH meters are
used in a wide range of industries. A typical pH meter is priced at
approximately $1,200.
Automatic Lab Reactors and Reaction Calorimeters. Automatic lab reactors
and reaction calorimeters are used to simulate an entire chemical manufacturing
process in the laboratory before proceeding to production, in order to ensure
the safety and feasibility of the process. The Company's products are fully
computer-integrated, with a significant software component, and offer wide
flexibility in the structuring of experimental processes. Automatic lab reactors
and reaction calorimeters are typically used in the chemical and pharmaceutical
industries. A typical lab reactor is priced at approximately $140,000.
Electrodes. The Company manufactures electrodes for use in a variety of
laboratory instruments and in-line process applications. Laboratory electrodes
are consumable goods used in pH meters and titrators, which may be replaced many
times during the life of the instrument. In-line process electrodes are used to
monitor production processes, for example, in the beverage industry. A typical
in-line process electrode is priced at approximately $160.
45
<PAGE>
Other Instruments. The Company sells density and refractometry
instruments, which measure chemical concentrations in solutions. These
instruments are sourced through a marketing joint venture with a third-party
manufacturer, but are sold under the Mettler-Toledo brand name. In addition, the
Company manufactures and sells moisture analyzers, which precisely determine the
moisture content of a sample by utilizing an infrared dryer to evaporate
moisture.
Industrial and Food Retailing
Weighing instruments are among the most broadly used measurement devices in
industry and food retailing. The Company's industrial and food retailing
weighing and related products include bench and floor scales for standard
industrial applications, truck and railcar scales for heavy industrial
applications, checkweighers (which determine the weight of goods in motion),
metal detectors, dimensioning equipment and scales for use in food retailing
establishments, and specialized software systems for industrial and perishable
goods management processes. Increasingly, many of the Company's industrial and
food retailing products can integrate weighing data into process controls and
information systems. The Company's industrial and food retailing products are
also sold to original equipment manufacturers ('OEMs'), which incorporate the
Company's products into larger process solutions and comprehensive food
retailing checkout systems. At the same time, the Company's products themselves
include significant software content and additional functions including
networking, printing and labeling capabilities and the incorporation of other
measuring technologies such as dimensioning. The Company works with customer
segments to create specific solutions to their weighing needs. The Company has
also recently worked closely with the leading manufacturer of postal meters to
develop a new generation of postal metering systems.
Industrial and food retailing products accounted for approximately 60% of
the Company's net sales in 1996 (including revenues from related after-sale
service). The Company believes that it has the largest market share in the
industrial and food retailing market in each of Europe and the United States. In
Asia, the Company has a substantial, rapidly growing industrial and food
retailing business supported by an established manufacturing presence in China.
The Company believes that it is the only company with a true global presence
across industrial and food retailing weighing applications.
Standard Industrial Products. The Company offers a complete line of
standard industrial scales, such as bench scales and floor scales, for weighing
loads from a few grams to loads of several thousand kilograms in applications
ranging from measuring materials in chemical production to weighing mail and
packages. Product lines include the 'Spider' range of scales, often used in
receiving and shipping departments in counting applications; 'TrimWeigh' scales,
which determine whether an item falls within a specified weight range, and are
used primarily in the food industry; 'Mentor SC' scales, for counting parts; and
precision scales for formulating and mixing ingredients. The Company's
'MultiRange' products include standardized software which uses the weight data
obtained to calculate other parameters, such as price or number of pieces. The
modular design of these products facilitates the integration of the Company's
weighing equipment into a computer system performing other functions, like
inventory control or batch management. Prices vary significantly with the size
and functions of the scale, generally ranging from $1,000 to $20,000.
Heavy Industrial Products. The Company's primary heavy industrial products
are scales for weighing trucks or railcars (i.e., weighing bulk goods as they
enter a factory or at a toll station). The Company's truck scales, such as the
'DigiTol TRUCKMATE,' generally have digital load cells, which offer significant
advantages in serviceability over analog load cells. Heavy industrial scales are
capable of measuring weights up to 500 tons and permit accurate weighing under
extreme environmental conditions. The Company also offers advanced computer
software that can be used with its heavy industrial scales to permit a broad
range of applications. Truck scales prices generally range from $20,000 to
$50,000.
Dynamic Checkweighing. The Company offers solutions to checkweighing
requirements in the food processing, pharmaceutical, chemicals and cosmetic
industries, where accurate filling of packages is required, and in the
transportation and package delivery industries, where tariffs are levied based
on weight. Customizable software applications utilize the information generated
by checkweighing hardware to find production flaws, packaging and labeling
errors and nonuniform products, as well as to sort rejects and record the
results. Mettler-Toledo checkweighing equipment can accurately determine weight
in dynamic applications at speeds of up to several hundred units per minute.
Checkweighers generally range in price from $8,000 to $40,000.
46
<PAGE>
Metal Detection Systems. Metal detection systems control the removal of
product that is identified as contaminated by metal during the manufacturing
process in the food processing, pharmaceutical, cosmetics, chemicals and other
industries. Metal detectors therefore provide manufacturers with vital
protection against metal contamination arising from their own production
processes or from use of contaminated raw materials. Metal detectors are most
commonly utilized in conjunction with checkweighers as components of integrated
packaging lines in the food processing, pharmaceutical and other industries.
Prices for metal detection systems generally range from $5,000 to $20,000.
Dimensioning Equipment. The Company recently introduced automated
dimensioning equipment that is utilized in the shipping industry to measure
package volumes. These products employ a patented Parallel Infrared Laser Array
('PILAR') technology and are integrated with industrial scales to combine
volume-based and weight-based tariff calculations. Prices for integrated
dimensioning/weighing systems range from $5,000 to $20,000.
Food Retailing Products. Supermarkets, hypermarkets and other food retail
establishments make use of multiple weighing applications for the handling of
perishable goods from backroom to checkout counter. For example, perishable
goods are weighed on arrival to determine payment to suppliers and some of these
goods are repackaged, priced and labeled for sale to customers. Other goods are
kept loose and selected by customers and either weighed at the produce or
delicatessen counter or at the checkout counter.
The Company offers stand-alone scales for basic counter weighing and
pricing, price finding, and printing. In addition, the Company offers network
scales and software, which can integrate backroom, counter, self-service and
checkout functions, and can incorporate weighing data into a supermarket's
overall perishable goods management system. Backroom products include dynamic
weighing products, labeling and wrapping machines, perishable goods management
and data processing systems. In some countries in Europe, the Company also sells
slicing and mincing equipment. Prices for food retailing scales generally range
from $800 to $5,000, but are often sold as part of comprehensive weighing
solutions.
Systems. The Company's systems business consists of software applications
for drum filling in the food and chemical industries and batching systems in the
glass industry. The software systems control or modify the manufacturing
process.
CUSTOMERS AND DISTRIBUTION
The Company's business is geographically diversified, with pro forma 1996
net sales (giving effect to the Safeline Acquisition) derived 49% in Europe, 40%
in North and South America and 11% in Asia and other markets. The Company's
customer base is also diversified by industry and by individual customer. The
Company's largest single customer accounted for no more than 2% of 1996 net
sales.
Laboratory
Principal customers for laboratory products include chemical,
pharmaceutical and cosmetics manufacturers; food and beverage makers; the
metals, electronics, plastics, transportation, packaging, logistics and rubber
industries; the jewelry and precious metals trade; educational institutions; and
government standards labs. Balances and pH meters are the most widely used
laboratory measurement instruments and are found in virtually every laboratory
across a wide range of industries. Other products have more specialized uses.
The Company's laboratory products are sold in more than 100 countries
through a worldwide distribution network. The Company's extensive direct
distribution network and its dealer support activities enable the
Company to maintain a significant degree of control over the distribution of its
products. In markets where there are strong laboratory distributors, such as the
United States, the Company uses them as the primary marketing channel for lower-
and mid-price point products. This strategy allows the Company to leverage the
strength of both the Mettler-Toledo brand and the laboratory distributors'
market position into sales of other laboratory measurement instruments. The
Company provides its distributors with a significant amount of technical and
sales support. High-end products are handled by the Company's own sales force.
There has been recent consolidation among distributors in the United States
market. While this consolidation could adversely affect the Company's U.S.
distribution, the Company believes its leadership position in the market gives
it a competitive advantage when dealing with its U.S. distributors. Asian
distribution is primarily through distributors, while European distribution is
primarily through direct sales. European and Asian distributors are generally
fragmented on a
47
<PAGE>
country-by-country basis. The Company negotiated a transfer of the laboratory
business in Japan from its former agent to a subsidiary of the Company effective
January 1, 1997. In addition, the Company began to distribute laboratory
products directly in certain other Asian countries.
Ohaus branded products are generally positioned in alternative distribution
channels to those of Mettler-Toledo branded products. In this way, the Company
is able to fill a greater number of distribution channels and increase
penetration of its existing markets. Since the acquisition of Ohaus in 1990, the
Company has expanded the Ohaus brand beyond its historical U.S. focus. Ohaus
branded products are sold exclusively through distributors.
Industrial and Food Retailing
Customers for Mettler-Toledo industrial products include chemical companies
(e.g., formulating, filling and bagging applications), food companies (e.g.,
packaging and filling applications), electronics and metal processing companies
(e.g., piece counting and logistical applications), pharmaceutical companies
(e.g., formulating and filling applications), transportation companies (e.g.,
sorting, dimensioning and vehicle weighing applications) and auto body paint
shops, which mix paint colors based on weight. The Company's products for these
industries share weighing technology, and often minor modifications of existing
products can make them useful for applications in a variety of industrial
processes. The Company also sells to OEMs which integrate the Company's modules
into larger process control applications, or comprehensive packaging lines. OEM
applications often include software content and technical support, as the
Company's modules must communicate with a wide variety of other process modules
and data management functions. The Company's products are also purchased by
engineering firms, systems integrators and vertical application software
companies.
Customers for metal detection systems are typically food processing,
pharmaceutical, cosmetics and chemicals manufacturers who must ensure that their
products are free from contamination by metal particles. Selling product that is
contaminated by metal can have severe consequences for these companies,
resulting in potential litigation and product recalls. Metal detection systems
are most commonly utilized in conjunction with checkweighers as components of
integrated packaging lines as important safety checks before food and other
products are delivered to customers. Other applications of metal detection
systems include pipeline detectors for dairy and other liquids, gravity fall
systems for grains and sugar and throat detection systems for raw material
monitoring.
Customers for food retailing products include supermarkets, hypermarkets
and smaller food retailing establishments. The North American and European
markets include many large supermarket chains. In most of the Company's markets,
food retailing continues to shift to supermarkets and hypermarkets from 'mom and
pop' grocery stores. While supermarkets and hypermarkets generally buy less
equipment per customer, they tend to buy more advanced products that require
more electronic and software content. In emerging markets, however, the highest
growth is in basic scales. As with industrial products, the Company also sells
food retailing products to OEMs for inclusion in more comprehensive checkout
systems. For example, the Company's checkout scales are incorporated into
scanner-scales, which can both weigh perishable goods and also read bar codes on
other items. Scanner-scales are in turn integrated with cash registers to form a
comprehensive checkout system.
The Company's industrial products are sold in more than 100 countries and
its food retailing products in 20 countries. In the industrial and food
retailing markets, the Company distributes directly to customers (including
OEMs) and through distributors. In the United States, direct sales slightly
exceed distributor sales. Distributors are highly fragmented in the U.S. In
Europe, direct sales predominate, with distributors used in certain cases. As in
its laboratory distribution, the Company provides significant support to its
distributors.
SALES AND SERVICE
Market Organizations
The Company has over 30 geographically-focused market organizations ('MOs')
around the world that are responsible for all aspects of the Company's sales and
service. The MOs are local marketing and service organizations designed to
maintain close relationships with the Company's customer base. Each MO has the
flexibility to adapt its marketing and service efforts to account for different
cultural and economic conditions.
48
<PAGE>
MOs also work closely with the Company's producing organizations (described
below) by providing feedback on manufacturing and product development
initiatives and relaying innovative product and application ideas.
The Company has the only global sales and service organization among
weighing instruments manufacturers. At September 30, 1997, this organization
consisted of approximately 3,000 employees in sales, marketing and customer
service (including related administration) and after-sales technical service.
This field organization has the capability to provide service and support to the
Company's customers and distributors in virtually all major markets across the
globe. Sales managers and representatives interact across product lines and
markets in order to serve customers that have a wide range of weighing needs,
such as pharmaceutical companies that purchase both laboratory and industrial
products. The Company classifies customers according to their potential for
sales and the appropriate distribution channel is selected to service the
customer as efficiently as possible. Larger accounts tend to have dedicated
sales representatives. Other representatives are specialized by product line.
Sales representatives call directly on end-users either alone or, in regions
where sales are made through distributors, jointly with distributors. The
Company utilizes a variety of advertising media, including trade journals,
catalogs, exhibitions and trade shows. The Company also sponsors seminars,
product demonstrations and customer training programs. An extensive database on
markets helps the Company to gauge growth opportunities, target its message to
appropriate customer groups and monitor competitive developments.
After-Sales Service
The Company employs service technicians who provide contract and repair
services in all countries in which the Company's products are sold. Service
(representing service contracts, repairs and replacement parts) accounted for
approximately 17% of the Company's total net sales in 1996 (service revenue is
included in the laboratory and industrial and food retailing sales percentages
given above). Management believes that service is a key part of its product
offering and helps significantly in generating repeat sales. Moreover, the
Company believes that it has the largest installed base of weighing instruments
in the world. The close relationships and frequent contact with its large
customer base provide the Company with sales opportunities and innovative
product and application ideas. A global service network also is an important
factor in the ability to expand in emerging markets. Widespread adoption of
quality laboratory and manufacturing standards and the privatization of weights
and measures certification represent favorable trends for the Company's service
business, as they tend to increase demand for on-site calibration services.
The Company's service contracts provide for repair services within various
guaranteed response times, depending on the level of service selected. Many
contracts also include periodic calibration and testing. Contracts are generally
one year in length, but may be longer. The Company's own employees directly
provide all service on the Company's products. If the service contract also
includes products of other manufacturers, the Company will generally perform
calibration, testing and basic repairs directly, and contract out more
significant repair work. As application software becomes more complex, the
Company's service efforts increasingly include installation and customer
training programs as well as product service.
Warranties on Mettler-Toledo products are generally one year. Based on past
experience, the Company believes its reserves for warranty claims are adequate.
RESEARCH AND DEVELOPMENT; MANUFACTURING
Producing Organizations
The Company is organized into a number of producing organizations ('POs'),
which are specialized centers responsible for product development, research and
manufacturing. At September 30, 1997, POs included approximately 3,800 employees
worldwide, and consisted of product development teams whose members are from
marketing, development, research, manufacturing, engineering and purchasing. POs
also often seek customer input to ensure that the products developed are
tailored to market needs. The Company has organized POs in order to reduce
product development time, improve its customer focus, reduce costs and maintain
technological leadership. The POs work together to share ideas and best
practices. Some employees are in both MOs and POs. The Company is currently
implementing a number of projects that it believes will result in increased
productivity and lower costs. For example, the Company is restructuring the
order and product delivery process in Europe to enable the Company to deliver
many of its products to its customers directly from the
49
<PAGE>
manufacturing facility within several days, which minimizes the need to store
products in decentralized warehouses. In addition, the Company is centralizing
its European spare parts inventory management system.
Research and Product Development
The Company closely integrates research and development with marketing,
manufacturing and product engineering. The Company has nearly 600 professionals
in research and development and product engineering. The Company's principal
product development activities involve applications improvements to provide
enhanced customer solutions, systems integration and product cost reduction.
However, the Company also actively conducts research in basic weighing
technologies. As part of its research and development activities, the Company
has frequent contact with university experts, industry professionals and the
governmental agencies responsible for weights and measures, analytical
instruments and metal detectors. In addition, the Company's in-house development
is complemented by technology and product development alliances with customers
and OEMs.
A recent example of innovation at the Company is the Brickstone weighing
sensor technology, which eliminates many of the complex mechanical linkages in a
weighing sensor and reduces the number of parts in the sensor from approximately
100 to approximately 50. The Brickstone sensor permits more accurate weighing,
lower manufacturing costs and cheaper and faster design changes. Brickstone
technology has been incorporated into certain of the Company's products, and the
Company is extending the utilization of its Brickstone technology through much
of its weighing instrument product lines.
The Company has been spending an increasing proportion of its research and
development budget on software development. Software development for weighing
applications includes application-specific software, as well as software
utilized in sensor mechanisms, displays, and other common components, which can
be leveraged across the Company's broad product lines.
The Company spent $50.0 million on research and development in 1996
(excluding research and development purchased in connection with the
Acquisition), $54.5 million in 1995 and $48.0 million in 1994, which the Company
believes was more than any of its competitors. Including costs associated with
customer-specific engineering projects, which are included in cost of sales for
financial reporting purposes, the Company spent approximately 6.6% of net sales
on research and development in 1996. Application-specific projects include the
Company's recently developed thermal analysis system, memory cards used in
titrators to perform industry-specific processes, and software for use in truck
scales.
Manufacturing
The Company's manufacturing strategy is to produce directly those
components that require its specific technical competence, or for which
dependable, high-quality suppliers cannot be found. The Company contracts out
the manufacture of its other component requirements. Consequently, much of the
Company's manufacturing capability consists of assembly of components sourced
from others. The Company utilizes a wide range of suppliers and it believes its
supply arrangements to be adequate. From time to time the Company relies on one
supplier for all of its requirements of a particular component, but in such
cases the Company believes adequate alternative sources would be available if
necessary. Supply arrangements for electronics are generally made globally. For
mechanical components, the Company generally uses local sources to optimize
materials flow.
The Company's manufacturing operations emphasize product quality. Most of
its products require very strict tolerances and exact specifications. The
Company utilizes an extensive quality control system that is integrated into
each step of the manufacturing process. This integration permits field service
technicians to trace important information about the manufacture of a particular
unit, which facilitates repair efforts and permits fine-tuning of the
manufacturing process. Many of the Company's measuring instruments are subjected
to an extensive calibration process that allows the software in the unit to
automatically adjust for the impact of temperature and humidity.
The Company has seven manufacturing plants in the U.S., four in
Switzerland, two in Germany, one in the U.K. and two in China, of which one is a
joint venture in which the Company owns a 60% interest and the other, the
Shanghai facility, was completed and commenced production of laboratory products
at the end of 1996. Laboratory products are produced mainly in Switzerland and
to a lesser extent in the United States and China, while industrial and food
retailing products are produced in all five countries. The Company's metal
detectors are
50
<PAGE>
produced in the U.K. The Company has manufacturing expertise in sensor
technology, precision machining and electronics, as well as strength in software
development. Furthermore, most of the Company's manufacturing facilities have
achieved ISO 9001 certification. The Company believes its manufacturing capacity
is sufficient to meet its present and currently anticipated needs.
Backlog
Manufacturing turnaround time is generally sufficiently short so as to
permit the Company to manufacture to fill orders for most of its products, which
helps to limit inventory costs. Backlog is therefore generally a function of
requested customer delivery dates and is typically no longer than one to two
months.
EMPLOYEES
As of September 30, 1997, the Company had approximately 6,800 employees
throughout the world, including more than 3,500 in Europe, more than 2,500 in
North and South America, and more than 700 in Asia and other countries.
Management believes that its relations with employees are good. The Company has
not suffered any material employee work stoppage or strike in its worldwide
operations during the last five years. Labor unions do not represent a
meaningful number of the Company's employees.
In certain of its facilities, the Company has instituted a flexible
workforce environment, in which hours vary depending on the quantity of
workload. The Company believes that this flexible working environment enhances
employees' involvement, thus increasing productivity, and improves efficient
payroll management by permitting the Company to adjust staffing to match
workload to a greater degree without changing the size of the overall workforce.
INTELLECTUAL PROPERTY
The Company holds more than 1,100 patents and trademarks, primarily in the
United States, Switzerland, Germany and Japan and, to a lesser extent, in China.
The Company's products generally incorporate a wide variety of technological
innovations, many of which are protected by patents and many of which are not.
Moreover, products are generally not protected as a whole by individual patents.
Accordingly, no one patent or group of related patents is material to the
Company's business. The Company also has numerous trademarks and considers the
Mettler-Toledo name and logo to be material to its business. The Company
regularly protects against infringement of its intellectual property.
REGULATION
The Company's products are subject to regulatory standards and approvals by
weights and measures regulatory authorities in the countries in which it sells
its products. Weights and measures regulation has been harmonized across the
European Union. The Company's food processing and food retailing products are
subject to regulation and approvals by relevant governmental agencies, such as
the United States Food and Drug Administration. Products used in hazardous
environments may also be subject to special requirements. All of the Company's
electrical components are subject to electrical safety standards. The Company
believes that it is in compliance in all material respects with applicable
regulations.
ENVIRONMENTAL MATTERS
The Company is subject to various environmental laws and regulations in the
jurisdictions in which it operates, including those relating to air emissions,
wastewater discharges, the handling and disposal of solid and hazardous wastes
and the remediation of contamination associated with the use and disposal of
hazardous substances. The Company wholly or partly owns, leases or holds a
direct or indirect equity interest in a number of properties and manufacturing
facilities around the world, including the United States, Europe, Canada,
Mexico, Brazil, Australia and China. The Company, like many of its competitors,
has incurred, and will continue to incur, capital and operating expenditures and
other costs in complying with such laws and regulations in both the United
States and abroad.
The Company is currently involved in, or has potential liability with
respect to, the remediation of past contamination in certain of its presently
and formerly owned and leased facilities in both the United States and abroad.
In addition, certain of the Company's present and former facilities have or had
been in operation for many decades and, over such time, some of these facilities
may have used substances or generated and disposed of wastes which are or may be
considered hazardous. It is possible that such sites, as well as disposal sites
owned
51
<PAGE>
by third parties to which the Company has sent wastes, may in the future be
identified and become the subject of remediation. Accordingly, although the
Company believes that it is in substantial compliance with applicable
environmental requirements and the Company to date has not incurred material
expenditures in connection with environmental matters, it is possible that the
Company could become subject to additional environmental liabilities in the
future that could result in a material adverse effect on the Company's financial
condition or results of operations.
The Company is involved in litigation concerning remediation of hazardous
substances at its operating facility in Landing, New Jersey. On or about July
1988, an affiliate of Ciba ('AGP') purchased 100% of the outstanding stock of
Metramatic Corporation ('Metramatic'), a manufacturer of checkweighing equipment
located in Landing, from GEI International Corporation ('GEI'). GEI agreed to
indemnify and hold harmless AGP for certain pre-closing environmental
conditions, including those resulting in cleanup responsibilities required by
the New Jersey Department of Environmental Protection ('NJDEP') pursuant to the
New Jersey Environmental Cleanup Responsibility Act ('ECRA'). ECRA is now the
Industrial Site Recovery Act. Pursuant to a 1988 NJDEP administrative consent
order naming GEI and Metramatic as respondents, GEI has spent approximately $2
million in the performance of certain investigatory and remedial work addressing
groundwater contamination at the site. However, implementation of a final remedy
has not yet been completed, and, therefore, future remedial costs are currently
unknown. In 1992, GEI filed a suit against various parties including Hi-Speed
Checkweigher Co., Inc., a wholly owned subsidiary of the Company that currently
owns the facility, to recover certain costs incurred by GEI in connection with
the site. Based on currently available information and the Company's rights of
indemnification from GEI, the Company believes that its ultimate allocation of
costs associated with the past and future investigation and remediation of this
site will not have a material adverse effect on the Company's financial
condition or results of operations.
In addition, the Company is aware that Toledo Scale, the former owner of
Toledo Scale or the Company has been named a potentially responsible party under
CERCLA or analogous state statutes at the following third-party owned sites with
respect to the alleged disposal at the sites by Toledo Scale during the period
it was owned by such former owner: Granville Solvents Site, Granville, Ohio;
Aqua-Tech Environmental, Inc. Site, Greer, South Carolina; and Seaboard Chemical
Company Site, Jamestown, North Carolina. The former owner has also been named in
a lawsuit seeking contribution pursuant to CERCLA with respect to the Caldwell
Trucking Site, New Jersey based on the alleged disposal at the site by Toledo
Scale during the former owner's period of ownership. Pursuant to the terms of
the stock purchase agreement between Mettler and the former owner of Toledo
Scale, the former owner is obligated to indemnify Mettler for various
environmental liabilities. To date, with respect to each of the foregoing sites,
the former owner has undertaken the defense and indemnification of Toledo Scale.
Based on currently available information and the Company's contractual rights of
indemnification, the Company believes that the costs associated with the
investigation and remediation of these sites will not have a material adverse
effect on the Company's financial condition or results of operations.
COMPETITION
The markets in which the Company operates are highly competitive. Because
of the fragmented nature of certain of the Company's weighing instruments
markets, particularly the industrial and food retailing weighing instruments
markets, both geographically and by application, the Company competes with
numerous regional or specialized competitors, many of which are well-established
in their markets. Some competitors are less leveraged than the Company and/or
are divisions of larger companies with potentially greater financial and other
resources than the Company. Although the Company believes that it has certain
competitive advantages over its competitors, realizing and maintaining these
advantages will require continued investment by the Company in research and
development, sales and marketing and customer service and support. The Company
has, from time to time, experienced price pressures from competitors in certain
product lines and geographic markets.
In the United States, the Company believes that the principal competitive
factors in its markets on which purchasing decisions are made are accuracy and
durability, while in Europe accuracy and service are the most important factors.
In emerging markets, where there is greater demand for less sophisticated
products, price is a more important factor than in developed markets.
Competition in the United States laboratory market is also influenced by the
presence of large distributors through which the Company and its competitors
sell many of their products.
52
<PAGE>
PROPERTIES
The following table lists the Company's principal operating facilities,
indicating the location, primary use and whether the facility is owned or
leased.
<TABLE>
<CAPTION>
LOCATION PRINCIPAL USE(1) OWNED/LEASED
- ------------------------------------------------------ ----------------------------------- ----------------
<S> <C> <C>
Europe:
Greifensee/Nanikon, Switzerland..................... Production, Corporate Headquarters Owned
Uznach, Switzerland................................. Production Owned
Urdorf, Switzerland................................. Production Owned
Schwerzenbach, Switzerland.......................... Production Leased
Albstadt, Germany................................... Production Owned
Giessen, Germany.................................... Production Owned
Giessen, Germany.................................... Sales and Service Owned
Steinbach, Germany.................................. Sales and Service Owned
Viroflay, France.................................... Sales and Service Owned
Beersel, Belgium.................................... Sales and Service Owned
Tiel, Netherlands................................... Sales and Service Owned
Leicester, England.................................. Sales and Service Leased
Manchester, England................................. Production, Sales and Service Leased
Americas:
Worthington, Ohio................................... Production Owned
Spartanburg, South Carolina......................... Production Owned
Franksville, Wisconsin.............................. Production Owned
Ithaca, New York.................................... Production Owned
Wilmington, Massachusetts........................... Production Leased
Florham Park, New Jersey............................ Production Leased
Tampa, Florida...................................... Production, Sales and Service Leased
Hightstown, New Jersey.............................. Sales and Service Owned
Burlington, Canada.................................. Sales and Service Owned
Mexico City, Mexico................................. Sales and Service Leased
Other:
Shanghai, China..................................... Production Building Owned;
Land Leased
Changzhou, China(2)................................. Production Building Owned;
Land Leased
Melbourne, Australia................................ Sales and Service Leased
</TABLE>
- ------------------
(1) The Company also conducts research and development activities at certain of
the listed facilities in Switzerland, Germany, the United States and, to a
lesser extent, China.
(2) Held by a joint venture in which the Company owns a 60% interest.
The Company believes its facilities are adequate for its current and
reasonably anticipated future needs.
LEGAL PROCEEDINGS
The Company is subject to routine litigation incidental to its business.
The Company is currently not involved in any legal proceeding that it believes
could have a material adverse effect upon its financial condition or results of
operations. See 'Environmental Matters' for information concerning legal
proceedings relating to certain environmental claims.
The Company has received a Notice of Proposed Adjustment from the Internal
Revenue Service disallowing $20.4 million of intercompany interest deductions
taken by the Company in its 1994 and 1995 tax returns when the Company was a
subsidiary of Ciba. The Company is indemnified under the acquisition agreement
with Ciba against any loss that may arise from the proposed adjustment. However,
the Company believes that such deductions were properly made and intends to
assist Ciba in contesting the proposed adjustment.
53
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are set forth below.
All directors hold office until the annual meeting of shareholders following
their election or until their successors are duly elected and qualified.
Officers are appointed by the Board of Directors and serve at the discretion
thereof.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Philip Caldwell...................................... 77 Chairman of the Board of Directors
Robert F. Spoerry.................................... 43 President, Chief Executive Officer and Director
William P. Donnelly.................................. 36 Vice President, Chief Financial Officer, Treasurer
and Assistant Secretary
Karl M. Lang......................................... 50 Head, Laboratory Division
Lukas Braunschweiler................................. 41 Head, Industrial and Retail (Europe)
John D. Robechek..................................... 49 Head, Industrial and Retail (Americas)
Peter Burker......................................... 51 Head, Human Resources
Thomas Rubbe......................................... 43 Head, Logistics and Information Systems
Reginald H. Jones.................................... 80 Director
John D. Macomber..................................... 69 Director
John M. Manser....................................... 50 Director
Laurence Z.Y. Moh.................................... 71 Director
Thomas P. Salice..................................... 37 Director
Alan W. Wilkinson.................................... 41 Director
</TABLE>
Philip Caldwell has been Chairman of the Board of Directors since October
1996. Mr. Caldwell has been Senior Managing Director of Lehman Brothers Inc. and
its predecessor, Shearson Lehman Brothers Holdings Inc., since 1985. During a 32
year career at Ford Motor Company, Mr. Caldwell was Chairman of the Board of
Directors and Chief Executive Officer from 1980 to 1985 and a Director from 1973
to 1990. Mr. Caldwell is also a Director of Lehman Brothers Inc., Zurich Holding
Company of America, Inc., American Guarantee & Liability Insurance Company, The
Mexico Fund, Waters Corporation and Russell Reynolds Associates, Inc. He has
served as a Director of the Chase Manhattan Corporation, the Chase Manhattan
Bank, N.A., Digital Equipment Corporation, Federated Department Stores Inc., the
Kellogg Company, Shearson Lehman Brothers Holdings Inc., CasTech Aluminum Group,
Inc., Specialty Coatings International Inc., and Zurich Reinsurance Centre
Holdings, Inc.
Robert F. Spoerry has been President and Chief Executive Officer of the
Company since 1993. He served as Head, Industrial and Retail (Europe) of the
Company from 1987 to 1993. Mr. Spoerry has been a Director since October 1996.
William P. Donnelly has been Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary of the Company since April 1, 1997. From 1993
until joining the Company, he held various senior financial and management
positions, including most recently Group Vice President and Chief Financial
Officer, with Elsag Bailey Process Automation, a global manufacturer of
instrumentation and analytical products, and developer of distributed control
systems. Prior to 1993, Mr. Donnelly was associated with the international
accounting firm of Price Waterhouse.
Karl M. Lang has been Head, Laboratory Division of the Company since 1994.
From 1991 to 1994 he was based in Japan as a representative of senior management
with responsibility for expansion of the Asian operations.
Lukas Braunschweiler has been Head, Industrial and Retail (Europe) of the
Company since 1995. From 1992 until 1995 he held various senior management
positions with the Landis & Gyr Group, a manufacturer of electrical meters.
Prior to August 1992 he was a Vice President in the Technology Group of Saurer
Group, a manufacturer of textile machinery.
John D. Robechek has been Head, Industrial and Retail (Americas) of the
Company and President of Mettler-Toledo, Inc., a U.S.-based subsidiary of the
Company, since 1995. From 1990 through 1994 he served as Senior Vice President
and managed all of the Company's U.S. subsidiaries.
54
<PAGE>
Peter Burker has been Head, Human Resources of the Company since 1994. From
1992 to 1994 he was Mettler-Toledo's General Manager in Spain, and from 1989 to
1991 he headed the Company's operations in Italy.
Thomas Rubbe has been Head, Logistics and Information Systems of the
Company since 1995. From 1990 to 1995 he was head of Controlling, Finance and
Administration with the Company's German marketing organization.
Reginald H. Jones has been a Director since October 1996. Mr. Jones retired
as Chairman of the Board of Directors of General Electric Company ('General
Electric') in April 1981. At General Electric, he served as Chairman of the
Board of Directors and Chief Executive Officer from December 1972 through April
1981, President from June 1972 to December 1972 and a Director from August 1971
to April 1981. Mr. Jones is also a Director of ASA Limited and Birmingham Steel
Corporation.
John D. Macomber has been a Director since October 1996. He has been a
principal of JDM Investment Group since 1992. He was Chairman and President of
the Export-Import Bank of the United States (an agency of the U.S. Government)
from 1989 to 1992. From 1973 to 1986 Mr. Macomber was Chairman and Chief
Executive Officer of Celanese Corporation. Prior to that, Mr. Macomber was a
Senior Partner of McKinsey & Company. Mr. Macomber is also a Director of Textron
Inc., Bristol-Myers Squibb Company, Xerox Corporation, Lehman Brothers Holdings
Inc., Pilkington plc and Brown Group, Inc.
John M. Manser has been a Director since August 1997. He is the Treasurer
of the Worldwide Life Science Group of Novartis, which has its headquarters in
Switzerland. He has been with Novartis (and its predecessor Ciba-Geigy) since
1981.
Laurence Z. Y. Moh has been a Director since October 1996. He is Chairman
Emeritus of Universal Furniture Limited, which he founded in 1959.
Thomas P. Salice has been a Director since October 1996. Mr. Salice is a
Managing Director of AEA Investors and has been associated with AEA Investors
since June 1989. Mr. Salice is also a Director of Waters Corporation.
Alan W. Wilkinson has been a Director since October 1996. Mr. Wilkinson has
been a Managing Director of AEA Investors since September 1989. Prior to his
association with AEA Investors, Mr. Wilkinson was a Vice President in the
Merchant Banking and Mergers and Acquisitions divisions of Lehman Brothers Inc.
EXECUTIVE COMPENSATION
The following table sets forth for the years ended December 31, 1996 and
1995 the compensation paid to or accrued for services performed by the Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company who were serving as executive officers at December 31,
1996 (collectively, the 'Named Executive Officers').
55
<PAGE>
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ------------
------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSIITION YEAR SALARY BONUS(2) COMPENSATION OPTIONS(#) COMPENSATION
- ------------------------------------ ---- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Spoerry, President and 1996 $435,135 $276,521 $8,857(3) $124,431
Chief Executive Officer........... 1995 289,343 85,871 -- 300(4) 54,346(5)
Fred Ort, 1996 207,221 99,325 -- -- 52,745
Corporate Controller.............. 1995 227,284 69,701 -- 70,804(5)
Karl M. Lang, 1996 212,997 88,375 -- -- 61,901
Head, Laboratory.................. 1995 228,427 38,071 -- 60,321(5)
Lukas Braunschweiler, 1996 210,893 66,162 -- -- 62,482
Head, Industrial and Retail 1995 228,427 25,381 -- 50,460(5)
(Europe)..........................
John D. Robechek, Head, Industrial 1996 233,754 88,137 -- -- 6,215
and Retail (Americas)............. 1995 225,000 40,563 -- 6,168(6)
</TABLE>
- ------------------
(1) Amounts paid in Swiss francs (all amounts except those paid to Mr. Robechek)
converted to U.S. dollars at a rate of SFr 1.182 to $1.00 for 1995 and SFr
1.2355 to $1.00 for 1996, in each case the average exchange rate during such
year.
(2) Does not include Ciba bonuses to the Named Executive Officers for services
rendered to Ciba in connection with its efforts to sell the Company.
(3) Represents additional compensation paid to fully offset, after payment of
all taxes and social security contributions, interest charged to Mr. Spoerry
on a loan to Mr. Spoerry from Mettler-Toledo AG, a subsidiary of the
Company. See 'Certain Relationships and Related Transactions.'
(4) Option to purchase the specified number of shares of Ciba common stock at an
exercise price of SFr 750 ($665 at the date of grant) per share. The fair
market value at the date of grant was SFr 764 ($678) per share.
(5) Represents Company contributions to the Mettler-Toledo Fonds (a Swiss
pension plan similar to a defined contribution plan under U.S. law). Fifty
percent of the amount shown is a required employee contribution under the
plan which the Company has contributed on behalf of the Named Executive
Officers, and the other 50% is a required matching employer contribution.
(6) Includes $1,024 for 1995 and $1,071 for 1996 for the value of group life
insurance over $50,000, $4,500 for the Company's contribution to Mr.
Robechek's 401(k) plan account and $644 for Mr. Robechek's profit sharing
payout under the Company's Performance Dividend Plan.
Stock Options. The following table sets forth information concerning the
grant of stock options under the Company's Stock Option Plan to each of the
Named Executive Officers during 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS/SARS ASSUMED ANNUAL RATES OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE/BASE APPRECIATION FOR OPTION/SAR TERM(2)
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION ------------------------------------
NAME GRANTED(1) FISCAL YEAR ($/SH)(1) DATE 5% ($) 10%($)
- --------------------------- ------------ ------------ ------------- ---------- ----------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Spoerry.......... 1,047,976 29.85 7.95 2006 5,237,372 13,272,528
Fred Ort................... 78,599 2.24 7.95 2006 392,808 995,452
Karl M. Lang............... 209,597 5.97 7.95 2006 1,046,858 2,652,944
Lukas Braunschweiler....... 209,597 5.97 7.95 2006 1,046,858 2,652,944
John D. Robechek........... 209,597 5.97 7.95 2006 1,046,858 2,652,944
</TABLE>
(Footnotes on next page)
56
<PAGE>
(Footnotes from previous page)
- ------------------
(1) The exercise prices and the number of securities underlying the options in
each case give effect to the Reorganization.
(2) The assumed annual rates of appreciation over the term of the option are set
forth in accordance with rules and regulations adopted by the Securities and
Exchange Commission and do not represent the Company's estimate of stock
appreciation price.
Option Exercises and Holdings. No options to purchase Common Stock were
exercised by the Named Executive Officers in 1996. The following table sets
forth information with respect to the aggregate number of unexercised options to
purchase Common Stock granted to the Named Executive Officers and held by them
as of December 31, 1996, and the value of unexercised in-the-money options
(i.e., options that had a positive spread between the exercise price and the
fair market value of the Common Stock) as of December 31, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND OPTION/SAR VALUES AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT FISCAL IN-THE-MONEY OPTIONS/SARS
SHARES ACQUIRED VALUE YEAR-END(#)(1) AT FISCAL YEAR-END($)(2)
ON EXERCISE REALIZED ---------------------------- ----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Spoerry........... 0 0 0 1,047,976 0 0
Fred Ort.................... 0 0 0 78,599 0 0
Karl M. Lang................ 0 0 0 209,597 0 0
Lukas Braunschweiler........ 0 0 0 209,597 0 0
John D. Robechek............ 0 0 0 209,597 0 0
</TABLE>
- ------------------
(1) The numbers of securities underlying the options give effect to the
Reorganization.
(2) Estimated value, as determined by the Company, at December 31, 1996 does not
exceed the exercise price.
EMPLOYMENT AGREEMENTS
Mettler-Toledo AG, a subsidiary of the Company, entered into an employment
agreement (the 'Agreement') with Robert F. Spoerry (the 'Executive') dated as of
October 30, 1996. The Agreement provides for annual base salary of SFr 560,000
(approximately $435,135 at December 31, 1996), which may be increased from time
to time in accordance with the Company's normal business practices, and for
participation in the Company's bonus plan. In addition, the Agreement provides
for payment of the amount necessary, after payment of all taxes and social
security contributions, to fully offset the interest charged to the Executive on
a certain loan to the Executive. See 'Certain Relationships and Related
Transactions' for a description of the loan. The Agreement prohibits the
Executive from competing with the Company for a period of twenty-four months
after termination of employment. The Agreement may be terminated without cause,
on thirty-six months notice during which period the Executive is entitled to
full compensation under the Agreement.
The Company is negotiating employment agreements with the other Named
Executive Officers. Base salary of executive officers under these agreements in
the aggregate will not be materially different from historical practice. The
agreements will also include bonuses contingent on meeting performance
objectives in amounts to be determined.
COMPENSATION OF DIRECTORS
Members of the Board of Directors of the Company who are officers of the
Company or employees of AEA Investors have not received additional compensation
for being on the Board or its committees. The non-executive directors were given
a one-time opportunity to purchase stock in the Company upon their election to
the Board. Mr. Caldwell purchased 35,940 shares of common stock and each of
Messrs. Jones, Macomber and Moh
57
<PAGE>
purchased 23,972 shares of common stock. It is anticipated that members of the
Board of Directors of the Company initially will receive no cash compensation
for their service on the Board or its committees, but the members will receive
reimbursement for traveling costs and other out-of-pocket expenses incurred in
attending board and committee meetings. The Board of Directors may determine in
the future to pay cash compensation to non-executive directors.
RETIREMENT PLANS
Mr. Robechek is covered under two pension plans, the Mettler-Toledo
Retirement Plan and the Mettler-Toledo Supplemental Retirement Income Plan.
Benefits under these plans are determined by career average compensation rather
than final compensation. The annual accrual for each year under both plans is
the difference of 2% of annual compensation in a plan year and 0.6% of the
lesser of annual compensation or covered compensation (defined under the plans
as the average of the Social Security Taxable Wage Bases in effect for each
calendar year during the 35-year period ending on the last day of a given plan
year). The Mettler-Toledo Retirement Plan includes all compensation up to the
qualified plan limitations under the Internal Revenue Code of 1986, as amended
($150,000 per year in 1996), and the Mettler-Toledo Supplemental Retirement
Income Plan pays for benefits in excess of these limits. The accrued annual
benefit payable to Mr. Robechek under the Mettler-Toledo Retirement Plan is
$45,693 and the accrued annual benefit under the Mettler-Toledo Supplemental
Plan is $11,329, for a total annual retirement benefit of $57,022.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors served on the Company's Compensation Committee
during the fiscal year ended December 31, 1996: Reginald H. Jones, Laurence Z.
Y. Moh and Thomas P. Salice. Mr. Salice also served as an officer of the Company
and certain of its subsidiaries during such fiscal year. Mr. Salice is an
officer of AEA Investors, a shareholder of the Company. See 'Certain
Relationships and Related Transactions' for a description of relationships
between AEA Investors and the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AEA Investors and the Company entered into a management agreement (the
'Management Agreement') pursuant to which AEA Investors has provided management,
consulting and financial services to the Company. Services covered by the
Management Agreement include such areas as the preparation and evaluation of
strategic, operating, financial and capital plans and the development and
implementation of compensation and other incentive programs. Such services are
provided by the executive staff of AEA Investors. In consideration of such
services, AEA Investors is entitled to an annual fee of $1.0 million, plus
reimbursement for certain expenses and indemnification against certain
liabilities. The agreement further provides that in the event the Company
employs any employee of AEA Investors as an officer of the Company or otherwise,
and such employment includes a substantial amount of such employee's time, the
Company will compensate such employee at a reasonable rate. The Company believes
that the terms of these management arrangements are as favorable as could be
obtained from an unaffiliated third party. It is expected that the Management
Agreement will be terminated upon consummation of the Offerings contemplated
hereby. In consideration of services by AEA Investors in arranging, structuring
and negotiating the terms of the Acquisition, the Company paid AEA Investors
transaction fees of $5.5 million and reimbursed AEA Investors for certain
related expenses. In connection with the termination of the Management
Agreement, the Company will pay AEA Investors $2.5 million and will reimburse
AEA Investors for certain related expenses.
Management and other employees of the Company have contributed
approximately $12 million of the equity of the Company. For information
regarding the number of shares purchased by each Named Executive Officer, see
'Security Ownership of Certain Beneficial Owners and Management.'
On October 7, 1996, in order to fund a portion of the purchase price for
the shares purchased by Mr. Spoerry, Mettler-Toledo AG entered into a loan
agreement with Mr. Spoerry, in the amount of SFr 1.0 million (approximately
$742,000 at December 31, 1996). The loan bears interest at a rate of 5% and is
payable upon demand, which may not be made until seven years after the date of
the loan.
58
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock immediately prior to the Offering and as
adjusted to reflect the sale of the shares of Common Stock pursuant to the
Offering, by (a) each person who is known to the Company to be the beneficial
owner of more than five percent of the Company's Common Stock, (b) each director
of the Company, (c) each of the Named Executive Officers and (d) all directors
and executive officers of the Company as a group. Except as otherwise indicated,
the persons or entities listed below have sole voting and investment power with
respect to all shares of Common Stock owned by them, except to the extent such
power may be shared with a spouse.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
THE OFFERINGS THE OFFERINGS(1)
---------------------- ----------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT(2) NUMBER PERCENT(2)
- ----------------------------------------------------------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
5% SHAREHOLDERS:
Finlayson Fund Investments PTE LTD ............................ 2,900,921 9.46% 2,900,921 7.77%
Temasek Holdings (Private) Limited
8 Shenton Way
#38-03 Treasury Building
Singapore 0106
National Union Fire Insurance Company of Pittsburgh, PA ....... 2,239,611 7.30 2,239,611 6.00
c/o AIG Global Investment Corp.
175 Water Street - 24th Floor
New York, NY 10038
FORMA Investments Limited ..................................... 1,705,385 5.56 1,705,385 4.57
Woodbourne Hall
P.O. Box 3162
Main Street
Road Town, Tortola
British Virgin Islands
Nassau Capital Funds L.P. ..................................... 1,586,203 5.17 1,586,203 4.25
22 Chambers Street
Princeton, NJ 08542
Ciba-Geigy AG ................................................. 1,537,038 5.01 1,537,038 4.12
c/o Novartis International S.A.
S-210.1737
Lichtstrasse 35
CH-4056 Basel
Switzerland
DIRECTORS:
Philip Caldwell(3)............................................. 102,383 * 102,383 *
Robert F. Spoerry(4)........................................... 644,384 2.09 644,384 1.72
Reginald H. Jones.............................................. 46,598 * 46,598 *
John D. Macomber............................................... 43,742 * 43,742 *
John M. Manser................................................. -- -- -- --
Laurence Z. Y. Moh............................................. 356,779 1.16 356,779 0.96
Thomas P. Salice(3)............................................ 556,058 1.81 556,058 1.49
Alan W. Wilkinson(3)........................................... 556,058 1.81 556,058 1.49
NAMED EXECUTIVE OFFICERS:
Fred Ort(5).................................................... 92,177 * 92,177 *
Karl M. Lang(6)................................................ 118,377 * 118,377 *
Lukas Braunschweiler(7)........................................ 118,377 * 118,377 *
John D. Robechek(3)(8)......................................... 107,530 * 107,530 *
All directors and executive officers as a
group (15 persons)(9)....................................... 2,958,063 9.53 2,958,063 7.84
</TABLE>
(Footnotes on next page)
59
<PAGE>
(Footnotes from previous page)
- ------------------
* The percentage of shares of Common Stock beneficially owned does not exceed
one percent of the outstanding shares of Common Stock.
(1) Assumes no exercise of the Underwriters' over-allotment options and no
purchases by any such persons in the Offerings.
(2) Calculations of percentage of beneficial ownership are based on 30,670,134
shares of Common Stock outstanding prior to the Offerings and 37,336,801
shares of Common Stock outstanding after the Offerings, and in each case
assume the exercise by only the named shareholder of all options for the
purchase of Common Stock held by such shareholder which are exercisable
within 60 days of the date hereof.
(3) Includes shares held by, or in trust for, members of such individual's
family for which Messrs. Caldwell, Salice, Wilkinson and Robechek disclaim
beneficial ownership. Does not include shares held by AEA Investors, of
which Messrs. Salice and Wilkinson are officers.
(4) Mr. Spoerry is also a Named Executive Officer. Includes 209,597 shares of
Common Stock issuable upon exercise of options that are exercisable within
60 days from the date hereof.
(5) Includes 15,717 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from the date hereof.
(6) Includes 41,917 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from the date hereof.
(7) Includes 41,917 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from the date hereof.
(8) Includes 41,917 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from the date hereof.
(9) Includes William P. Donnelly, who became Vice President, Chief Financial
Officer, Treasurer and Assistant Secretary on April 1, 1997, and Fred Ort,
who ceased to be an executive officer on April 1, 1997.
DESCRIPTION OF CERTAIN INDEBTEDNESS
The following statements are brief summaries of certain provisions of the
New Credit Agreement and the Company's Senior Subordinated Notes. Copies of the
New Credit Agreement and the Indenture which governs the Senior Subordinated
Notes are incorporated by reference as exhibits to the Registration Statement of
which this Prospectus is a part. The following description does not purport to
be complete and is subject in all respects to applicable Delaware law and to the
provisions of the New Credit Agreement and the Indenture.
NEW CREDIT AGREEMENT
The Company intends to refinance its existing Credit Agreement by entering
into the New Credit Agreement as part of the Refinancing. The New Credit
Agreement will provide for a variety of floating rate loans with interest based
on LIBOR. The Company's wholly owned subsidiaries Mettler-Toledo, Inc. ('M-T,
Inc.'), Mettler-Toledo Holding AG, Mettler-Toledo (Canada) Inc. and Safeline
Holding Company will be borrowers under the New Credit Agreement, and the
Company will be a guarantor under the New Credit Agreement. The Company expects
that it will have pro forma borrowings under the New Credit Agreement of $383.9
million (representing an increase of $71.3 million) as of September 30, 1997 and
borrowings of $38.0 million under various other credit arrangements. Of the
borrowings under the New Credit Agreement, $200.0 million will be in the form of
a term loan and the remainder will be outstanding under a revolving credit
facility. The Company's revolving credit facility commitment will increase from
$170.0 million to $420.0 million under the New Credit Agreement, and this
commitment will include a $100.0 million acquisition facility. Merrill Lynch
served as the Arranger and Documentation Agent and Credit Suisse First Boston
Corporation served as co-agent in connection with the Company's Credit Agreement
in November 1996 and May 1997 and are acting in similar roles in connection with
the New Credit Agreement. See 'Underwriting.'
Maturity, Amortization and Mandatory Prepayments
The term loans and the revolving credit facility will mature in May 2004.
Beginning in 1998, amounts outstanding under the term loan will amortize on a
quarterly basis in annual amounts ranging from $15.0 million to a maximum of
$40.0 million.
60
<PAGE>
The term loans will be subject to mandatory prepayments in an amount equal
to, subject to certain exceptions, (i) 75% of annual Excess Cash Flow (as
defined in the New Credit Agreement), (ii) the net proceeds received from
certain sales of assets, (iii) the net proceeds from the issuance of debt, and
(iv) 50% of the net proceeds from the issuance of equity.
Security and Guarantees
The obligations of the Mettler-Toledo Holding AG under the New Credit
Agreement will be (i) secured by a first priority security interest in all of
the material assets of the Mettler-Toledo Holding AG, (ii) guaranteed, to the
extent permitted by applicable law by all of the direct and indirect
subsidiaries of the Mettler-Toledo Holding AG, with certain exceptions, and each
such guarantee is, to the extent permitted by applicable law and with certain
exceptions, secured by a first priority security interest in all of the material
assets of each such guarantor, and (iii) guaranteed by the Company and its
direct and indirect U.S. subsidiaries, and each such guarantee will be secured
by a first priority security interest in all of the material assets of each such
guarantor, except that each such guarantor has pledged only 65% of the stock of
any non-U.S. subsidiary held by it. The obligations of M-T, Inc. under the New
Credit Agreement will be (i) secured by a first priority security interest in
all of the material assets of M-T, Inc., except that M-T, Inc. will pledge only
65% of the stock of each non-U.S. subsidiary held by it, (ii) guaranteed by each
direct and indirect U.S. subsidiary of M-T, Inc., and each such guarantee is
secured by a first priority security interest in all of the material assets of
each such guarantor, and (iii) guaranteed by the Company, and such guarantee is
secured by a first priority security interest in all of the stock of M-T, Inc.
held by the Company. The obligations of Safeline Holding Company are also
secured by limited guarantees and pledges.
Covenants and Events of Default
The New Credit Agreement will contain covenants that, among other things,
limit the Company's and its subsidiaries' ability to incur liens; merge,
consolidate or dispose of assets; make loans and investments; incur
indebtedness; engage in certain transactions with affiliates; incur certain
contingent obligations; pay dividends and other distributions; or make capital
expenditures. The New Credit Agreement also will require the Company to maintain
a minimum net worth and a minimum fixed charge coverage ratio, and to maintain a
ratio of total debt to EBITDA below a specified maximum.
The New Credit Agreement will contain customary events of default,
including, without limitation, nonpayment of principal, interest, fees or other
amounts when due; violation of covenants; breach of any representation or
warranty; cross-default and cross-acceleration; Change in Control (as defined in
the New Credit Agreement); bankruptcy events; material judgments; certain ERISA
matters; and invalidity of loan documents or security interests.
SENIOR SUBORDINATED NOTES
General. M-T, Inc. issued $135.0 million of 9 3/4% Senior Subordinated
Notes due 2006 in connection with the Acquisition pursuant to an Indenture among
M-T, Inc., Holding, and United States Trust Company of New York, as trustee.
Note Repurchase. The Company has commenced a tender offer for all of the
Notes. The proposed aggregate consideration is 112.6% of the principal amount
plus accrued interest to the date of repurchase, consisting of a purchase price
of 111.6% and a fee of 1% for each Noteholder that timely delivered a written
consent that the Company solicited from the Noteholders. As of October 17, 1997,
all of the Notes have been irrevocably tendered. The Company will use net
proceeds from the Offerings and additional borrowings under the New Credit
Agreement to finance the Note Repurchase. In connection with the Note
Repurchase, the Company has obtained the requisite consents to remove
substantially all of the restrictive covenants and certain other provisions from
the Indenture governing the Notes. The tender offer is scheduled to terminate on
November 11, 1997, unless extended.
Principal Maturity and Interest. The Notes are limited in aggregate
principal amount to $135.0 million and will mature on October 1, 2006. Interest
on the Notes accrues at 9 3/4% per annum and is payable semiannually in arrears
on April 1 and October 1 of each year commencing April 1, 1997.
Guarantees. The Notes are unsecured senior subordinated general
obligations of M-T, Inc. and are unconditionally guaranteed on a senior
subordinated and unsecured basis by Holding. The Indenture also provides that
certain U.S. subsidiaries of M-T, Inc. are required to guarantee payment of the
Notes under certain circumstances.
61
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following statements are brief summaries of certain provisions with
respect to the Company's capital stock which will be contained in the Amended
and Restated Certificate of Incorporation and Amended By-laws, copies of which
are incorporated by reference as exhibits to the Registration Statement. The
following description does not purport to be complete and is subject in all
respects to applicable Delaware law and to the provisions of the Amended and
Restated Certificate of Incorporation and Amended By-laws.
Concurrently with the Offerings, the Company will consummate the
Reorganization. The authorized capital stock of the Company will consist of
125,000,000 shares of Common Stock, par value $.01 per share, and 10,000,000
shares of preferred stock, par value $.01 per share (the 'Preferred Stock').
Immediately following the consummation of the Offerings, there will be
37,336,801 shares of Common Stock outstanding, 4,258,122 shares of Common Stock
issuable upon exercise of outstanding options and no shares of Preferred Stock
outstanding. Prior to the consummation of the Offerings, there were 857 holders
of the Company's Common Stock.
COMMON STOCK
Holders of Common Stock will be entitled to one vote for each share held of
record on all matters to be submitted to a vote of the shareholders (including
the election of directors) and have no preemptive, subscription or redemption
rights. Holders of Common Stock do not have cumulative voting rights, and
therefore holders of a majority of the shares voting for the election of
directors can elect all of the directors. In such event, the holders of the
remaining shares will not be able to elect any directors.
Subject to preferences that may be applicable to any outstanding shares of
Preferred Stock, holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared from time to time by the Board of
Directors of the Company out of funds legally available therefor. All
outstanding shares of Common Stock are, and the shares to be sold by the Company
in the Offerings when issued and paid for will be, fully paid and nonassessable.
In the event of any liquidation, dissolution or winding-up of the affairs of the
Company, holders of Common Stock will be entitled to share ratably in the assets
of the Company remaining after payment or provision for payment of all of the
Company's debts and obligations and liquidation payments to holders of
outstanding shares of Preferred Stock.
Prior to the Offering, there has been no public market for the Common
Stock. The Common Stock has been accepted for listing on the NYSE under the
symbol 'MTD,' subject to official notice of issuance. In order to meet the
requirements for listing of the Common Stock on the NYSE, the representatives of
the Underwriters have assured the NYSE that the distribution of the shares of
Common Stock offered hereby will meet or exceed the listing requirements of the
NYSE.
PREFERRED STOCK
The Board of Directors, without further shareholder authorization, will be
authorized to issue shares of Preferred Stock in one or more series and to
determine and fix the rights, preferences and privileges of each series,
including dividend rights and preferences over dividends on the Common Stock and
one or more series of the Preferred Stock, conversion rights, voting rights (in
addition to those provided by law), redemption rights and the terms of any
sinking fund therefor, and rights upon liquidation, dissolution or winding up,
including preferences over the Common Stock and one or more series of the
Preferred Stock. Although the Company has no present plans to issue any shares
of Preferred Stock following the consummation of the Offerings, the issuance of
shares of Preferred Stock, or the issuance of rights to purchase such shares,
may have the effect of delaying, deferring or preventing a change in control of
the Company or an unsolicited acquisition proposal.
CERTAIN PROVISIONS OF THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION, AMENDED BY-LAWS AND DELAWARE LAW
The Amended and Restated Certificate of Incorporation, Amended By-laws and
Delaware law contain provisions that could make more difficult the acquisition
of the Company by means of a tender offer, a proxy contest or otherwise. Such
provisions could have the effect of discouraging open market purchases of the
Common Stock because they may be considered disadvantageous by a shareholder who
desires to participate in a business combination or elect a new director.
62
<PAGE>
Section 203 of Delaware Law. The Company is a Delaware corporation and is
subject to Section 203 ('Section 203') of the Delaware General Corporation Law
(the 'DGCL'). In general, Section 203 prevents an 'interested stockholder'
(defined as a person who, together with affiliates and associates, beneficially
owns, or if an affiliate or associate of the corporation did beneficially own
within the last three years, 15% or more of a corporation's outstanding voting
stock) from engaging in a 'business combination' (as defined) with a Delaware
corporation for three years following the time such person became an interested
stockholder unless (i) before such person became an interested stockholder, the
board of directors of the corporation approved the transaction in which the
interested stockholder became an interested stockholder or approved the business
combination; (ii) upon consummation of the transaction that resulted in the
interested stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding shares owned by
persons who are both officers and directors of the corporation, and shares held
by certain employee stock ownership plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer); or (iii) following the
transaction in which such person became an interested stockholder, the business
combination is approved by the board of directors of the corporation and
authorized at a meeting of stockholders by the affirmative vote of the holders
of at least two-thirds of the outstanding voting stock of the corporation not
owned by the 'interested stockholder.' A 'business combination' generally
includes mergers, stock or asset sales involving 10% or more of the market value
of the corporation's assets or stock, certain stock transactions and certain
other transactions resulting in a financial benefit to the interested
stockholder or an increase in their proportionate share of any class or series
of a corporation. The existence of Section 203 of the DGCL could have the effect
of discouraging an acquisition of the Company or stock purchasers in furtherance
of an acquisition.
Limitation on Directors' Liabilities and Indemnification. The Amended and
Restated Certificate of Incorporation provides that to the fullest extent
permitted by the DGCL as it currently exists, a director of the Company shall
not be liable to the Company or its shareholders for monetary damages for breach
of fiduciary duty as a director. Under the current DGCL, liability of a director
may not be limited (i) for any breach of the director's duty of loyalty to the
Company or its shareholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) in
respect of certain unlawful dividend payments or stock redemptions or
repurchases and (iv) for any transaction from which the director derives an
improper personal benefit. The effect of this provision of the Company's Amended
and Restated Certificate of Incorporation is to eliminate the rights of the
Company and its shareholders (through shareholders' derivative suits on behalf
of the Company) to recover monetary damages against a director for breach of the
fiduciary duty of care as director (including breaches resulting from negligent
or grossly negligent behavior) except in the situations described in clauses (i)
through (iv) above. The provision does not exonerate the directors from
liability under federal securities laws or limit or eliminate the rights of the
Company or any stockholder to seek non-monetary relief such as an injunction or
rescission in the event of a breach of a director's duty of care. In addition,
the Amended By-laws provide that the Company shall indemnify its directors,
officers, employees and agents to the fullest extent permitted by DGCL.
Advance Notice for Shareholder Nomination of Directors and Shareholder
Proposals. The Amended By-laws establish an advance notice procedure with
regard to the nomination, other than by or at the direction of the Board of
Directors or a committee thereof, of candidates for election as directors (the
'Nomination Procedure') and with regard to other matters to be brought by
shareholders before an annual meeting of shareholders of the Company (the
'Business Procedure').
The Nomination Procedure requires that a shareholder give prior written
notice, in proper form, of a planned nomination for the Board of Directors to
the Secretary of the Company. The requirements as to the form and timing of that
notice are specified in the Amended By-laws. If the Chairman of the Board of
Directors determines that a person was not nominated in accordance with the
Nomination Procedure, such person will not be eligible for election as a
director.
Under the Business Procedure, a shareholder seeking to have any business
conducted at an annual meeting must give prior written notice, in proper form,
to the Secretary of the Company. The requirements as to the form and timing of
that notice are specified in the Amended By-laws. If the Chairman of the Board
of Directors
63
<PAGE>
determines that the other business was not properly brought before such meeting
in accordance with the Business Procedure, such business will not be conducted
at such meeting.
Although the Amended By-laws do not give the Board of Directors any power
to approve or disapprove shareholder nominations for the election of directors
or of any business desired by shareholders to be conducted at an annual meeting,
the Amended By-laws (i) may have the effect of precluding a nomination for the
election of directors or precluding the conduct of business at a particular
annual meeting if the proper procedures are not followed or (ii) may discourage
or deter a third party from conducting a solicitation of proxies to elect its
own slate of directors or otherwise attempting to obtain control of the Company,
even if the conduct of such solicitation or such attempt might be beneficial to
the Company and its shareholders.
REGISTRATION RIGHTS
Current holders of the Company's Common Stock (other than certain members
of senior management) have rights to require the Company to register such shares
of Common Stock for resale pursuant to subscription agreements pursuant to which
they acquired their shares. After securities of the Company have been sold
pursuant to a registration statement under the Securities Act, upon the request
of persons owning at least 25% of the sum of all outstanding shares of Common
Stock which are then 'restricted securities' (as defined by Rule 144 under the
Securities Act) and which have a value of at least $5,000,000, the Company would
be required to register the sale of such securities, subject to certain
limitations and requirements. The Company is not required to file any
registration statement within six months of the effective date of any earlier
registration statement and is not required to file more than three registration
statements pursuant to such requests. In addition, under certain circumstances,
should the Company file a registration statement with the Securities and
Exchange Commission registering shares of the Common Stock of the Company, the
owners of restricted securities would be entitled to include their restricted
securities in such registration.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock will be ChaseMellon
Shareholder Services L.L.C.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to the Offerings, there has been no public market for the shares of
Common Stock. The Company can make no predictions as to the effect, if any, that
sales of shares or the availability of shares for sale will have on the market
price prevailing from time to time. Nevertheless, future sales of substantial
amounts of Common Stock in the public market could adversely affect market
prices of the Common Stock.
Upon the closing of the Offerings the Company expects to have 37,336,801
shares of Common Stock outstanding (assuming that the Underwriters do not
exercise their over-allotment options). Except to the extent such shares are
subject to the agreement with the Underwriters described below, shares of Common
Stock will be freely tradable without restriction or further registration under
the Securities Act, unless held by an 'affiliate' of the Company as that term is
defined in the Securities Act, which shares will be subject to the resale
limitations of Rules 144 and 145.
In general, under Rules 144 and 145 as currently in effect, a shareholder
(or shareholders whose shares are aggregated) who is an 'affiliate' of the
Company is entitled to sell within any three-month period a number of shares
that does not exceed the greater of one percent of the outstanding Common Stock
or the average weekly trading volume in the Common Stock during the four
calendar weeks preceding the date on which notice of such sale is filed pursuant
to Rule 144. The holder may only sell such shares through unsolicited brokers'
transactions. Sales under Rules 144 and 145 are also subject to certain
provisions regarding the manner of sale, notice requirements and the
availability of current public information about the Company. A shareholder (or
shareholders whose shares are aggregated) who is not an affiliate of the Company
for at least 90 days prior to a proposed transaction is entitled to sell such
shares under Rule 144 without regard to the limitations described above. Holders
which were affiliates of the Company at the time of the Reorganization may sell
free of restrictions one year from the date of the Reorganization.
Notwithstanding the foregoing, in connection with the Offerings, the
Company, the Company's executive officers and directors and substantially all of
the existing shareholders of the Company will agree, subject to
64
<PAGE>
certain exceptions, not to directly or indirectly (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase any option or contract
to sell, grant any option, right or warrant for the sale of, or otherwise
dispose of or transfer any shares of Common Stock or any securities convertible
into or exchangeable or exercisable for Common Stock, or file any registration
statement under the Securities Act with respect to any of the foregoing or (ii)
enter into any swap or other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of ownership
of the Common Stock whether any such swap or transaction is to be settled by
delivery of Common Stock or other securities, in cash or otherwise, without the
prior written consent of Merrill Lynch on behalf of the Underwriters for a
period of 180 days after the date of this Prospectus, other than (i) the sale to
the Underwriters of the shares of Common Stock in connection with the Offerings,
(ii) upon the exercise of outstanding stock options, (iii) the issuance of
options pursuant to the Stock Plan, or (iv) the filing of a registration
statement on Form S-8 under the Securities Act relating to Common Stock of the
Company issued pursuant to the Company's Stock Plan.
The Company intends to file a registration statement on Form S-8 under the
Securities Act to register approximately 6,500,000 shares of Common Stock which
are reserved for issuance under the Company's Stock Plan. The Form S-8 will
include, in some cases, shares for which an exemption under Rule 144 or Rule 701
would also be available, thus permitting the resale of shares issued under the
stock option plan by non-affiliates in the public market, without restriction
under the Securities Act. Such registration statement is expected to become
effective immediately upon filing whereupon shares registered thereunder will
become eligible for sale in the public market, subject to vesting and, in
certain cases, subject to the lock-up agreements described above. At the date of
this Prospectus, options to purchase 4,258,122 shares of Common Stock are
outstanding under the Stock Plan.
65
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX
CONSIDERATIONS FOR NON-UNITED STATES HOLDERS
The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of Common Stock
applicable to Non-U.S. Holders of such Common Stock. A 'Non-U.S. Holder' is a
person other than (i) a citizen or resident of the United States, (ii) a
corporation or partnership created or organized in the United States or under
the laws of the United States or of any state (other than any partnership
treated as foreign under U.S. Treasury regulations), or (iii) an estate or trust
whose income is includable in gross income for United States federal income tax
purposes regardless of source.
An individual may, subject to certain exceptions, be deemed to be a
resident alien (as opposed to a non-resident alien) by virtue of being present
in the United States for at least 31 days in the calendar year and for an
aggregate of at least 183 days during a three-year period ending in the current
calendar year (counting for such purposes all of the days present in the current
year, one-third of the days present in the immediately preceding year, and
one-sixth of the days present in the second preceding year). Resident aliens are
subject to tax as if they were U.S. citizens.
This discussion does not consider specific facts and circumstances that may
be relevant to a particular Non-U.S. Holder's tax position (including the fact
that in the case of a Non-U.S. Holder that is a partnership, the U.S. tax
consequences of holding and disposing of shares of Common Stock may be affected
by certain determinations made at the partner level) and does not consider U.S.
state and local or non-U.S. tax consequences. This discussion also does not
consider the tax consequences for any person who is a shareholder, partner or
beneficiary of a holder of the Common Stock. Further, it does not consider
Non-U.S. Holders subject to special tax treatment under the federal tax laws
(including but not limited to banks and insurance companies, dealers in
securities and holders of securities held as part of a 'straddle,' 'hedge,' or
'conversion transaction'). The following discussion is based on provisions of
the U.S. Internal Revenue Code of 1986, as amended (the 'Code'), the applicable
Treasury regulations promulgated and proposed thereunder, and administrative and
judicial interpretations as of the date hereof, all of which are subject to
change either retroactively or prospectively. The following summary is included
herein for general information. ACCORDINGLY, EACH PROSPECTIVE NON-U.S. HOLDER IS
URGED TO CONSULT A TAX ADVISOR WITH RESPECT TO THE U.S. FEDERAL TAX CONSEQUENCES
OF HOLDING AND DISPOSING OF COMMON STOCK, AS WELL AS ANY TAX CONSEQUENCES THAT
MAY ARISE UNDER THE LAWS OF ANY U.S. STATE, LOCAL OR OTHER U.S. OR NON-U.S.
TAXING JURISDICTION.
DIVIDENDS
In general, dividends paid to a Non-U.S. Holder of Common Stock will be
subject to withholding of U.S. federal income tax at a 30% rate or such lower
rate as may be specified by an applicable income tax treaty. Non-U.S. Holders
should consult their tax advisors regarding their entitlement to benefits under
a relevant income tax treaty.
Dividends that are effectively connected with a Non-U.S. Holder's conduct
of a trade or business in the United States or, if an income tax treaty applies,
attributable to a permanent establishment, or, in the case of the individual, a
'fixed base,' in the United States ('U.S. trade or business income') are
generally subject to U.S. federal income tax on a net income basis at regular
graduated rates, but are not generally subject to the 30% withholding tax if the
Non-U.S. Holder files the appropriate U.S. Internal Revenue Service ('IRS') form
with the payor (which form, under U.S. Treasury regulations generally effective
for payments made after December 31, 1998 (the 'Final Regulations'), will
require the Non-U.S. Holder to provide a U.S. taxpayer identification number).
Any U.S. trade or business income received by a Non-U.S. Holder that is a
corporation may also, under certain circumstances, be subject to an additional
'branch profits tax' at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty.
Under currently applicable U.S. Treasury regulations, dividends paid to an
address in a foreign country are presumed (absent actual knowledge to the
contrary) to be paid to a resident of such country for purposes of the
withholding discussed above and for purposes of determining the applicability of
a tax treaty rate. Under the Final Regulations, however, a Non-U.S. Holder of
Common Stock who wishes to claim the benefit of an applicable treaty rate
generally will be required to satisfy applicable certification and other
requirements. In
66
<PAGE>
addition, under the Final Regulations, in the case of Common Stock held by a
foreign partnership, (x) the certification requirement will generally be applied
to the partners of the partnership and (y) the partnership will be required to
provide certain information, including a United States taxpayer identification
number. The Final Regulations also provide look-through rules for tiered
partnerships.
A Non-U.S. Holder of Common Stock that is eligible for a reduced rate of
U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any
excess amounts withheld by filing an appropriate claim for a refund with the
IRS.
DISPOSITION OF COMMON STOCK
A Non-U.S. Holder generally will not be subject to U.S. federal income tax
in respect of gain recognized on a disposition of Common Stock unless: (i) the
gain is U.S. trade or business income (in which case, the branch profits tax
described above may also apply to a corporate Non-U.S. Holder), (ii) the
Non-U.S. Holder is an individual who holds the Common Stock as a capital asset
within the meaning of Section 1221 of the Code, is present in the United States
for 183 or more days in the taxable year of the disposition and meets certain
other requirements, (iii) the Non-U.S. Holder is subject to tax pursuant to the
provision of the U.S. tax law applicable to certain United States expatriates or
(iv) the Company is or has been a 'U.S. real property holding corporation' for
federal income tax purposes at any time during the shorter of the five-year
period ending on the date of disposition and such period that the Common Stock
was held. The tax with respect to stock in a 'U.S. real property holding
corporation' does not apply to a Non-U.S. Holder whose holdings, direct and
indirect, at all times during the applicable period, constitute 5% or less of
the Common Stock, provided that the Common Stock is regularly traded on an
established securities market. Generally, a corporation is a 'U.S. real property
holding corporation' if the fair market value of its 'U.S. real property
interests' equals or exceeds 50% of the sum of the fair market value of its
worldwide real property interests plus its other assets used or held for use in
a trade or business. The Company is not, and does not anticipate becoming, a
'U.S. real property holding corporation' for U.S. federal income tax purposes.
FEDERAL ESTATE TAXES
Common Stock owned or treated as owned by an individual who is a Non-U.S.
Holder at the time of death will be included in the individual's gross estate
for U.S. federal estate tax purposes, unless an applicable estate tax treaty
provides otherwise. Such individual's estate may be subject to U.S. federal
estate tax on the property includable in the gross estate for U.S. federal
estate tax purposes.
U.S. INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX
Under U.S. Treasury Regulations, the Company may be required to report
annually to the IRS and to each Non-U.S. Holder the amount of dividends paid to
such holder and any tax withheld with respect to such dividends. The information
reporting requirements apply regardless of whether withholding is required.
Copies of the information returns reporting such dividends and withholding may
also be made available to the tax authorities in the country in which the Non
U.S.-Holder is a resident under the provisions of an applicable income tax
treaty or agreement.
Under certain circumstances, the IRS requires 'information reporting' and
'backup withholding' at a rate of 31% with respect to certain payments on Common
Stock. Under currently applicable law, Non-U.S. Holders of Common Stock
generally will be exempt from IRS reporting requirements and U.S. backup
withholding with respect to dividends payable on Common Stock. Under the Final
Regulations, however, a Non-U.S Holder of Common Stock that fails to certify its
Non-U.S. Holder status in accordance with the requirements of the Final
Regulations may be subject to U.S. backup withholding at a rate of 31% on
payments of dividends.
The payment of the proceeds of the disposition of Common Stock by a holder
to or through the U.S. office of a broker or through a non-U.S. branch of a U.S.
broker generally will be subject to information reporting and backup withholding
at a rate of 31% unless the holder either certifies its status as a Non-U.S.
Holder under penalties of perjury or otherwise establishes an exemption. The
payment of the proceeds of the disposition by a Non-U.S. Holder of Common Stock
to or through a non-U.S. office of a non-U.S. broker will not be subject to
backup withholding or information reporting unless the non-U.S. broker has
certain U.S. relationships. In the
67
<PAGE>
case of the payment of proceeds from the disposition of Common Stock effected by
a foreign office of a broker that is a U.S. person or a 'U.S. related person,'
existing regulations require information reporting on the payment unless the
broker receives a statement from the owner, signed under penalty of perjury,
certifying its non-U.S. status or the broker has documentary evidence in its
files as to the Non-U.S. Holder's foreign status and the broker has no actual
knowledge to the contrary. For this purpose, a 'U.S. related person' is (i) a
'controlled foreign corporation' for U.S. federal income tax purposes or (ii) a
foreign person 50% or more of whose gross income from all sources for the
three-year period ending with the close of its taxable year preceding the
payment (or for such part of the period that the broker has been in existence)
is derived from activities that are effectively connected with the conduct of a
U.S. trade or business.
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be refunded (or credited against the holder's U.S. federal
income tax liability, if any) provided that the required information is
furnished to the IRS.
68
<PAGE>
UNDERWRITING
Merrill Lynch, Pierce, Fenner & Smith Incorporated ('Merrill Lynch'), BT
Alex. Brown Incorporated, Credit Suisse First Boston Corporation and Goldman,
Sachs & Co. are acting as representatives (the 'U.S. Representatives') of each
of the Underwriters named below (the 'U.S. Underwriters'). Subject to the terms
and conditions set forth in a U.S. purchase agreement (the 'U.S. Purchase
Agreement') among the Company and the U.S. Underwriters, and concurrently with
the sale of 1,333,333 shares of Common Stock to the International Managers (as
defined below), the Company has agreed to sell to the U.S. Underwriters, and
each of the U.S. Underwriters severally and not jointly has agreed to purchase
from the Company the number of shares of Common Stock set forth opposite its
name below.
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITER SHARES
---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..................................................................
BT Alex. Brown Incorporated................................................................
Credit Suisse First Boston Corporation.....................................................
Goldman, Sachs & Co........................................................................
---------
Total......................................................................... 5,333,334
---------
---------
</TABLE>
The Company has also entered into an international purchase agreement (the
'International Purchase Agreement') with certain underwriters outside the United
States and Canada (the 'International Managers' and, together with the U.S.
Underwriters, the 'Underwriters') for whom Merrill Lynch International, BT Alex.
Brown International, a Division of Bankers Trust International PLC, Credit
Suisse First Boston (Europe) Limited and Goldman Sachs International are acting
as lead managers (the 'Lead Managers'). Subject to the terms and conditions set
forth in the International Purchase Agreement, and concurrently with the sale of
5,333,334 shares of Common Stock to the U.S. Underwriters pursuant to the U.S.
Purchase Agreement, the Company has agreed to sell to the International
Managers, and the International Managers severally have agreed to purchase from
the Company, an aggregate of 1,333,333 shares of Common Stock. The initial
public offering price per share and the total underwriting discount per share of
Common Stock are identical under the U.S. Purchase Agreement and the
International Purchase Agreement.
In the U.S. Purchase Agreement and the International Purchase Agreement,
the several U.S. Underwriters and the several International Managers,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant to
such agreement are purchased. Under certain circumstances, under the U.S.
Purchase Agreement and the International Purchase Agreement, the commitments of
non-defaulting Underwriters may be increased. The closings with respect to the
sale of shares of Common Stock to be purchased by the U.S. Underwriters and the
International Managers are conditioned upon one another.
The U.S. Representatives have advised the Company that the U.S.
Underwriters propose initially to offer the shares of Common Stock to the public
at the initial public offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in excess
of $ per share of Common Stock. The U.S. Underwriters may allow, and such
dealers may re-allow, a discount not in excess of $ per share of Common
Stock on sales to certain other dealers. After the initial public offering, the
public offering
69
<PAGE>
price, concession and discount may be changed. The Underwriters have agreed to
pay certain expenses of the Company incurred in connection with the Offerings
estimated at $ .
The Company has granted options to the U.S. Underwriters, exercisable for
30 days after the date of this Prospectus, to purchase up to an aggregate of
800,000 additional shares of Common Stock at the initial public offering price
set forth on the cover page of this Prospectus, less the underwriting discount.
The U.S. Underwriters may exercise these options solely to cover
over-allotments, if any, made on the sale of the Common Stock offered hereby. To
the extent that the U.S. Underwriters exercise these options, each U.S.
Underwriter will be obligated, subject to certain conditions, to purchase a
number of additional shares of Common Stock proportionate to such U.S.
Underwriter's initial amount reflected in the foregoing table. The Company also
has granted options to the International Managers, exercisable for 30 days after
the date of this Prospectus, to purchase up to an aggregate of 200,000
additional shares of Common Stock to cover over-allotments, if any, on terms
similar to those granted to the U.S. Underwriters.
At the request of the Company, the Underwriters have reserved for sale, at
the initial public offering price, up to 833,333 of the shares offered hereby to
be sold to certain employees of the Company and certain other persons. The
number of shares of Common Stock available for sale to the general public will
be reduced to the extent such persons purchase such reserved shares. Any
reserved shares which are not orally confirmed for purchase within one day of
the pricing of the Offerings will be offered by the Underwriters to the general
public on the same terms as the other shares offered hereby.
The Company, the Company's executive officers and directors and
substantially all of the existing shareholders of the Company will agree,
subject to certain exceptions, not to directly or indirectly (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale of,
or otherwise dispose of or transfer any shares of Common Stock or any securities
convertible into or exchangeable or exercisable for Common Stock, or file any
registration statement under the Securities Act with respect to any of the
foregoing or (ii) enter into any swap or other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Common Stock whether any such swap or transaction is to be
settled by delivery of Common Stock or other securities, in cash or otherwise,
without the prior written consent of Merrill Lynch on behalf of the Underwriters
for a period of 180 days after the date of this Prospectus other than (i) the
sale to the Underwriters of the shares of Common Stock in connection with the
Offerings, (ii) upon the exercise of outstanding stock options, (iii) the
issuance of options pursuant to the Stock Plan, or (iv) the filing of a
registration statement on Form S-8 under the Securities Act relating to Common
Stock of the Company issued pursuant to the Company's Stock Plan. See 'Shares
Eligible for Future Sale.'
The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement (the 'Intersyndicate Agreement') that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement, the
U.S. Underwriters and the International Managers are permitted to sell shares of
Common Stock to each other for purposes of resale at the initial public offering
price, less an amount not greater than the selling concession. Under the terms
of the Intersyndicate Agreement, the U.S. Underwriters and any dealer to whom
they sell shares of Common Stock will not offer to sell or sell shares of Common
Stock to persons who are non-U.S. or non-Canadian persons or to persons they
believe intend to resell to persons who are non-U.S. or non-Canadian persons,
and the International Managers and any dealer to whom they sell shares of Common
Stock will not offer to sell or sell shares of Common Stock to U.S. persons or
to Canadian persons or to persons they believe intend to resell to U.S. or
Canadian persons, except in the case of transactions pursuant to the
Intersyndicate Agreement.
Prior to the Offerings, there has been no public market for the Common
Stock of the Company. The initial public offering price will be determined
through negotiations between the Company and the U.S. Representatives and the
Lead Managers. The factors considered in determining the initial public offering
price, in addition to prevailing market conditions, are price-earnings ratios of
publicly traded companies that the U.S. Representatives believe to be comparable
to the Company, certain financial information of the Company, the history of,
and the prospects for, the Company and the industry in which it competes, and an
assessment of the Company's management, its past and present operations, the
prospects for, and timing of, future revenues of the Company, the present state
of the Company's development, and the above factors in relation to market values
and various valuation measures of other companies engaged in activities similar
to the Company. There can be no assurance
70
<PAGE>
that an active trading market will develop for the Common Stock or that the
Common Stock will trade in the public market subsequent to the Offerings at or
above the initial public offering price.
The Common Stock has been accepted for listing on the New York Stock
Exchange under the symbol 'MTD,' subject to official notice of issuance. In
order to meet the requirements for listing of the Common Stock on that exchange,
the U.S. Underwriters and the International Managers have undertaken to sell
lots of 100 or more shares to a minimum of 2,000 beneficial owners.
The Company has agreed to indemnify the U.S. Underwriters and the
International Managers against certain liabilities, including certain
liabilities under the Securities Act, or to contribute to payments the U.S.
Underwriters and International Managers may be required to make in respect
thereof.
Until the distribution of the Common Stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters and
certain selling group members to bid for and purchase the Common Stock. As an
exception to these rules, the U.S. Representatives are permitted to engage in
certain transactions that stabilize the price of the Common Stock. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Common Stock.
If the Underwriters create a short position in the Common Stock in
connection with the Offerings, i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus, the U.S.
Representatives may reduce that short position by purchasing Common Stock in the
open market. The U.S. Representatives may also elect to reduce any short
position by exercising all or part of the over-allotment option described above.
The U.S. Representatives may also impose a penalty bid on certain
Underwriters and selling group members. This means that if the U.S.
Representatives purchase shares of Common Stock in the open market to reduce the
Underwriters' short position or to stabilize the price of the Common Stock, they
may reclaim the amount of the selling concession from the Underwriters and
selling group members who sold those shares as part of the Offerings.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of the Common Stock to the extent that it
discourages resales of the Common Stock.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the U.S.
Representatives will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
The Underwriters have from time to time provided investment banking
financial advisory services to the Company and AEA Investors and its affiliates,
for which they have received customary compensation, and may continue to do so
in the future. Merrill Lynch served as lead manager and Credit Suisse First
Boston Corporation served as a co-manager of the offering of the Notes in
October 1996, Merrill Lynch served as the Arranger and Documentation Agent and
Credit Suisse First Boston Corporation served as co-agent in connection with the
Company's Credit Agreement in November 1996 and May 1997 for which they received
customary compensation, and are acting in similar roles in connection with the
New Credit Agreement for which they will receive customary compensation. Credit
Suisse First Boston Corporation and Merrill Lynch and its affiliates were
lenders under the Credit Agreement and will be lenders under the New Credit
Agreement.
71
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the validity of the Common Stock
offered hereby will be passed upon for the Company by Fried, Frank, Harris,
Shriver & Jacobson (a partnership including professional corporations), London,
England. Certain legal matters relating to the Offerings will be passed upon for
the Underwriters by Debevoise & Plimpton, New York, New York. A partnership in
which partners of Fried, Frank, Harris, Shriver & Jacobson are partners is a
shareholder of the Company.
INDEPENDENT AUDITORS
The consolidated financial statements of MT Investors Inc. and subsidiaries
(as defined in Note 1 to the Audited Consolidated Financial Statements) as of
December 31, 1995 and 1996 and for each of the years ended December 31, 1994 and
1995 and for the period January 1, 1996 to October 14, 1996 and for the period
October 15, 1996 to December 31, 1996, included in this Prospectus, have been
audited by KPMG Fides Peat, independent auditors, as set forth in their reports
appearing elsewhere herein and are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 with respect to the Common Stock offered hereby under the Securities Act.
This Prospectus, which constitutes part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
items of which are omitted as permitted by the rules and regulations of the
Commission. For further information pertaining to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement, including
the exhibits thereto and the financial statements, notes and schedules filed as
a part thereof. Statements contained in this Prospectus regarding the contents
of any contract or other document referred to herein or therein are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement or
such other document, each such statement being qualified in all respects by such
reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and, in accordance therewith, files reports,
proxy statements and other information with the Commission. Such reports, proxy
statements and other information, as well as the Registration Statement and the
exhibits and schedules thereto, may be inspected, without charge, at the public
reference facility maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at Seven World Trade Center, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material may also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Such materials can also be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005 or on the Commission's site on the Internet at
http://www.sec.gov.
72
<PAGE>
MT INVESTORS INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS:
Independent Auditors' Report............................................................................. F-2
Consolidated Balance Sheets as of December 31, 1995 and 1996............................................. F-3
Consolidated Statements of Operations for the years ended December 31, 1994 and 1995 and
for the period January 1, 1996 to October 14, 1996 and for the period October 15, 1996 to December 31,
1996.................................................................................................. F-4
Consolidated Statements of Changes in Net Assets / Shareholders' Equity for the years ended December 31,
1994 and 1995 and for the period January 1, 1996 to October 14, 1996 and
for the period October 15, 1996 to December 31, 1996.................................................. F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1994 and 1995 and for the period
January 1, 1996 to October 14, 1996 and for the period October 15, 1996 to December 31, 1996.......... F-7
Notes to Audited Consolidated Financial Statements....................................................... F-8
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS:
Interim Consolidated Balance Sheets as of December 31, 1996 and September 30, 1997....................... F-27
Interim Consolidated Statements of Operations for the nine months ended September 30, 1996 and 1997...... F-28
Interim Consolidated Statements of Changes in Net Assets / Shareholders' Equity for the nine months ended
September 30, 1996 and 1997........................................................................... F-29
Interim Consolidated Statements of Cash Flows for the nine months ended September 30, 1996 and 1997...... F-31
Notes to the Interim Consolidated Financial Statements................................................... F-32
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
MT Investors Inc.
We have audited the accompanying consolidated balance sheets of MT Investors
Inc. and subsidiaries (as defined in Note 1 to the Audited Consolidated
Financial Statements) as of December 31, 1995 and 1996 and the related
consolidated statements of operations, net assets / shareholders' equity and
cash flows for each of the years ended December 31, 1994 and 1995 and for the
period January 1, 1996 to October 14, 1996, the Predecessor periods, and for the
period October 15, 1996 to December 31, 1996, the Successor period. These
Audited Consolidated Financial Statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
Audited Consolidated Financial Statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the Audited Consolidated Financial Statements referred to above
present fairly, in all material respects, the consolidated financial position of
MT Investors Inc. and subsidiaries as of December 31, 1995 and 1996, and the
consolidated results of their operations and their cash flows for each of the
years ended December 31, 1994 and 1995 and for the period January 1, 1996 to
October 14, 1996, the Predecessor periods, and for the period October 15, 1996
to December 31, 1996, the Successor period, in conformity with generally
accepted accounting principles in the United States of America.
As more fully described in Note 1 to the Audited Consolidated Financial
Statements, MT Investors Inc. acquired the Mettler-Toledo Group as of October
15, 1996 in a business combination accounted for as a purchase. As a result of
the acquisition, the Audited Consolidated Financial Statements for the Successor
period are presented on a different basis of accounting than that of the
Predecessor periods, and therefore are not directly comparable.
KPMG FIDES PEAT
Zurich, Switzerland
April 18, 1997
F-2
<PAGE>
MT INVESTORS INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................................... $ 41,402 $ 60,696
Due from Ciba and affiliates....................................................... 33,072 --
Trade accounts receivable, less allowances of $9,292 in 1995 and $8,388 in 1996.... 159,218 151,161
Inventories........................................................................ 110,986 102,526
Deferred taxes..................................................................... 6,180 7,565
Other current assets............................................................... 21,469 17,268
------------ ------------
Total current assets 372,327 339,216
Property, plant and equipment, net................................................... 241,018 255,292
Excess of cost over net assets acquired, net of accumulated amortization of $17,268
in 1995 and $982 in 1996........................................................... 84,425 135,490
Long-term deferred taxes............................................................. 14,312 3,916
Other assets......................................................................... 12,012 37,974
------------ ------------
Total assets.................................................................. $724,094 $771,888
------------ ------------
------------ ------------
LIABILITIES AND NET ASSETS / SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable............................................................. $ 34,389 $ 32,797
Accrued and other liabilities...................................................... 107,118 115,314
Taxes payable...................................................................... 11,737 17,580
Deferred taxes..................................................................... 7,698 9,132
Bank and other loans............................................................... 29,513 80,446
Notes payable to Ciba and affiliates............................................... 91,132 --
------------ ------------
Total current liabilities..................................................... 281,587 255,269
Long-term debt payable to Ciba and affiliates........................................ 145,097 --
Long-term debt due to third parties.................................................. 3,621 373,758
Long-term deferred taxes............................................................. 13,502 30,467
Other long-term liabilities.......................................................... 84,303 96,810
------------ ------------
Total liabilities............................................................. 528,110 756,304
Minority interest.................................................................... 2,730 3,158
Net assets / shareholders' equity:
Common stock, $0.01 par value per share:
Class A non-voting, authorized 2,233,117 shares; issued 1,899,779 at December
31, 1996....................................................................... -- 19
Class B voting, authorized 1,000 shares; issued 1,000 at December 31, 1996...... -- 1
Class C non-voting, authorized 541,859 shares; issued 537,735 at December 31,
1996........................................................................... -- 5
Additional paid-in capital......................................................... -- 188,084
Accumulated deficit................................................................ -- (159,046)
Capital employed................................................................... 162,604 --
Currency translation adjustment.................................................... 30,650 (16,637)
------------ ------------
Total net assets / shareholders' equity....................................... 193,254 12,426
------------ ------------
Commitments and contingencies........................................................
Total liabilities and net assets / shareholders' equity.............................. $724,094 $771,888
------------ ------------
------------ ------------
</TABLE>
See the accompanying notes to the audited consolidated financial statements
F-3
<PAGE>
MT INVESTORS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
--------------------------------------------------- ----------------
TWELVE MONTHS TWELVE MONTHS FOR THE PERIOD FOR THE PERIOD
ENDED ENDED JANUARY 1, 1996 OCTOBER 15, 1996
DECEMBER 31, DECEMBER 31, TO OCTOBER 14, TO DECEMBER 31,
1994 1995 1996 1996
------------- ------------- --------------- ----------------
<S> <C> <C> <C> <C>
Net sales................................. $ 769,136 $ 850,415 $ 662,221 $ 186,912
Cost of sales............................. 461,629 508,089 395,239 136,820
------------- ------------- --------------- ----------------
Gross profit......................... 307,507 342,326 266,982 50,092
Research and development.................. 47,994 54,542 40,244 9,805
Selling, general and administrative....... 224,978 248,327 186,898 59,353
Amortization.............................. 6,437 2,765 2,151 1,065
Purchased research and development........ -- -- -- 114,070
Interest expense.......................... 13,307 18,219 13,868 8,738
Other charges (income), net............... (7,716) (9,331) (1,332) 17,137
------------- ------------- --------------- ----------------
Earnings (loss) before taxes and
minority interest.................. 22,507 27,804 25,153 (160,076)
Provision for taxes....................... 8,676 8,782 10,055 (938)
Minority interest......................... 347 768 637 (92)
------------- ------------- --------------- ----------------
Net earnings (loss).................. $ 13,484 $ 18,254 $ 14,461 $ (159,046)
------------- ------------- --------------- ----------------
------------- ------------- --------------- ----------------
Loss per common share:
Weighted average number of common
shares............................. 32,333,344
Loss per common share................ $ (4.92)
----------------
----------------
</TABLE>
See the accompanying notes to the audited consolidated financial statements
F-4
<PAGE>
MT INVESTORS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS / SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PREDECESSOR
--------------------------------------
FOR THE TWELVE MONTH PERIODS ENDED
DECEMBER 31, 1994 AND 1995 AND FOR THE
PERIOD JANUARY 1, 1996 TO OCTOBER 14,
1996
--------------------------------------
CURRENCY
CAPITAL TRANSLATION
EMPLOYED ADJUSTMENT TOTAL
-------- ---------- --------
<S> <C> <C> <C>
Net assets at December 31, 1993........................................ $202,643 $ (9,122) $193,521
Capital transactions with Ciba and affiliates.......................... 2,002 -- 2,002
Net earnings........................................................... 13,484 -- 13,484
Change in currency translation adjustment.............................. -- 19,187 19,187
-------- ---------- --------
Net assets at December 31, 1994........................................ 218,129 10,065 228,194
Capital transactions with Ciba and affiliates.......................... (73,779) -- (73,779)
Net earnings........................................................... 18,254 -- 18,254
Change in currency translation adjustment.............................. -- 20,585 20,585
-------- ---------- --------
Net assets at December 31, 1995........................................ 162,604 30,650 193,254
Capital transactions with Ciba and affiliates.......................... (88,404) -- (88,404)
Net earnings........................................................... 14,461 -- 14,461
Change in currency translation adjustment.............................. -- (6,538) (6,538)
-------- ---------- --------
Net assets at October 14, 1996......................................... $ 88,661 $ 24,112 $112,773
-------- ---------- --------
-------- ---------- --------
</TABLE>
See the accompanying notes to the audited consolidated financial statements
F-5
<PAGE>
MT INVESTORS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS/SHAREHOLDERS'
EQUITY--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SUCCESSOR
---------------------------------------------------------------------------------------
FOR THE PERIOD FROM OCTOBER 15, 1996 TO DECEMBER 31, 1996
---------------------------------------------------------------------------------------
COMMON STOCK
----------------------------------------------------------
CLASS A CLASS B CLASS C ADDITIONAL
------------------- ------------------ ----------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
--------- -------- -------- -------- ------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at October 15, 1996...... -- $ -- 1,000 $ 1 -- $ -- $ -- $ --
New issuance of shares........... 1,899,779 19 -- -- 537,735 5 188,084 --
Net loss......................... -- -- -- -- -- -- -- (159,046)
Change in currency translation
adjustment..................... -- -- -- -- -- -- -- --
--------- --- -------- --- ------- --- ------------ -------------
Balance at December 31, 1996..... 1,899,779 $ 19 1,000 $ 1 537,735 $ 5 $188,084 $ (159,046)
--------- --- -------- --- ------- --- ------------ -------------
--------- --- -------- --- ------- --- ------------ -------------
<CAPTION>
SUCCESSOR
--------------------------
FOR THE PERIOD FROM
OCTOBER 15, 1996 TO
DECEMBER 31, 1996
--------------------------
CURRENCY
TRANSLATION
ADJUSTMENT TOTAL
------------- ----------
<S> <C> <C>
Balance at October 15, 1996...... $ -- $ 1
New issuance of shares........... -- 188,108
Net loss......................... -- (159,046)
Change in currency translation
adjustment..................... (16,637) (16,637)
------------- ----------
Balance at December 31, 1996..... $ (16,637) $ 12,426
------------- ----------
------------- ----------
</TABLE>
See the accompanying notes to the audited consolidated financial statements
F-6
<PAGE>
MT INVESTORS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------------------------------------------- ----------------
TWELVE MONTHS TWELVE MONTHS FOR THE PERIOD FOR THE PERIOD
ENDED ENDED JANUARY 1, 1996 OCTOBER 15, 1996
DECEMBER 31, DECEMBER 31, TO OCTOBER 14, TO DECEMBER 31,
1994 1995 1996 1996
------------- ------------- --------------- ----------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss).......................... $13,484 $18,254 $14,461 $ (159,046)
Adjustments to reconcile net earnings
(loss) to net cash provided by operating
activities:
Depreciation............................. 27,681 30,598 19,512 7,925
Amortization............................. 6,437 2,765 2,151 1,065
Write-off of purchased research and
development and cost of sales
associated with revaluation of
inventories............................ -- -- -- 146,264
Net gain on disposal of long-term
assets................................. (1,396) (1,053) (768) --
Deferred taxes........................... 740 (551) (1,934) (4,563)
Minority interest........................ 347 768 637 (92)
Increase (decrease) in cash resulting
from changes in:
Trade accounts receivable, net....... (7,410) (9,979) 9,569 (10,159)
Inventories.......................... (574) (607) 1,276 3,350
Other current assets................. 1,636 (3,058) 14,748 (10,605)
Trade accounts payable............... (1,123) 1,437 (3,065) 3,415
Accruals and other liabilities,
net................................ (5,728) 13,095 5,948 32,030
------------- ------------- ------- ----------------
Net cash provided by operating
activities....................... 34,094 51,669 62,535 9,584
------------- ------------- ------- ----------------
Cash flows from investing activities:
Proceeds from sale of property, plant and
equipment.................................. 12,454 4,000 1,606 736
Purchase of property, plant and equipment.... (24,916) (25,858) (16,649) (11,928)
Acquisition of Mettler-Toledo from Ciba...... -- -- -- (314,962)
Investments in other long term assets, net... 162 (7,484) (1,632) 4,857
------------- ------------- ------- ----------------
Net cash used in investing
activities....................... (12,300) (29,342) (16,675) (321,297)
------------- ------------- ------- ----------------
Cash flows from financing activities:
Borrowings of third party debt............... -- 3,983 -- 414,170
Repayments of third party debt............... (311) -- (13,464) --
Proceeds from issuance of common stock....... -- -- -- 188,108
Ciba and affiliates borrowings
(repayments)............................... (9,187) (15,693) (26,589) (184,666)
Capital transactions with Ciba and
affiliates................................. 2,002 (37,361) (7,716) (80,687)
------------- ------------- ------- ----------------
Net cash provided by (used in)
financing activities............. (7,496) (49,071) (47,769) 336,925
------------- ------------- ------- ----------------
Effect of exchange rate changes on cash and
cash equivalents............................. 10,040 4,344 (3,394) (615)
------------- ------------- ------- ----------------
Net increase (decrease) in cash and cash
equivalents.................................. 24,338 (22,400) (5,303) 24,597
Cash and cash equivalents:
Beginning of period.......................... 39,464 63,802 41,402 36,099
------------- ------------- ------- ----------------
End of period................................ $63,802 $41,402 $36,099 $ 60,696
------------- ------------- ------- ----------------
------------- ------------- ------- ----------------
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest................................... $13,225 $18,927 $ 6,524 $ 17,874
Taxes...................................... 9,370 9,970 9,385 2,470
Non-cash financing and investing activities:
Due to Ciba for capital transactions......... -- 36,418 -- --
</TABLE>
See the accompanying notes to the audited consolidated financial statements
F-7
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS UNLESS OTHERWISE STATED)
1. BASIS OF PRESENTATION AND ACQUISITION
MT Investors Inc. ('MT Investors') was incorporated by AEA Investors Inc.
('AEA') in December 1991. It was recapitalized to effect the acquisition of the
Mettler-Toledo Group from Ciba-Geigy AG ('Ciba') and its wholly owned
subsidiary, AG fur Prazisionsinstrumente ('AGP'). Pursuant to the terms of a
stock purchase agreement dated April 2, 1996 between MT Investors, AGP and Ciba,
on October 15, 1996 MT Investors acquired the Mettler-Toledo Group in a
transaction more fully described below. Between the date of formation and
October 15, 1996, MT Investors had no substantive operations.
In the accompanying Audited Consolidated Financial Statements the terms
'Mettler-Toledo' or the 'Company' when used in situations pertaining to periods
prior to October 15, 1996 refer to the combined group of businesses sold by Ciba
and when used in situations pertaining to periods subsequent to October 15, 1996
refer to MT Investors Inc. and its consolidated subsidiaries. The combined
historical financial information of the business acquired from Ciba prior to the
acquisition on October 15, 1996 are referred to as 'Predecessor' while the
consolidated financial information of the Company subsequent to the date of
acquisition are referred to as 'Successor.'
The accompanying Audited Consolidated Financial Statements have been
prepared in accordance with United States generally accepted accounting
principles.
MT Investors acquired the Company on October 15, 1996 from a subsidiary of
Ciba for cash consideration of SFr 504,996 (approximately $402,000) including
dividends of SFr 109,406 (approximately $87,100) which were paid to Ciba by the
Company in conjunction with the acquisition. In addition, the Company incurred
expenses in connection with the acquisition and related financing of
approximately $29,000, including approximately $5,500 paid to AEA Investors, and
paid approximately $185,000 to settle amounts due to Ciba and affiliates. The
Company has accounted for the acquisition using the purchase method of
accounting. Accordingly, the costs of the acquisition were allocated to the
assets acquired and liabilities assumed based upon their respective fair values.
The excess of the cost of the acquisition over the fair value of the net assets
acquired of approximately $137,500 is being amortized over 32 years. Because of
this purchase price allocation, the accompanying financial statements of
Successor are not directly comparable to those of the Predecessor.
The following unaudited pro forma summary presents the consolidated results
of operations of the Company as if the acquisition had been completed as of the
beginning of each of the periods presented, after giving effect to certain
adjustments, including the depreciation and amortization of the assets acquired
based upon their fair values, increased interest expense from the financing of
the acquisition and income tax effects. The Company allocated a portion of the
purchase price to (i) in-process research and development projects, that have
economic value (see Note 2) and (ii) the revaluation of inventories (see Note
4). These adjustments have not been reflected in the following pro forma summary
due to their unusual and non-recurring nature. This pro forma summary does not
necessarily reflect the results of operations as they would have been if the
acquisition had been completed as of the beginning of such periods and is not
necessarily indicative of the results which may be obtained in the future.
<TABLE>
<CAPTION>
PRO FORMA FINANCIAL INFORMATION
----------------------------------------------------------
PREDECESSOR SUCCESSOR
----------------------------------- -------------------
YEAR ENDED FOR THE PERIOD FROM FOR THE PERIOD FROM
DECEMBER 31, JANUARY 1, 1996 TO OCTOBER 15, 1996
1995 OCTOBER 14, 1996 DECEMBER 31, 1996
------------ ------------------- -------------------
<S> <C> <C> <C>
Net sales................................................. $850,415 $ 662,221 $ 186,912
Net loss.................................................. (5,396) (3,181) (3,182)
Loss per common share(1).................................. N/A N/A (0.10)
</TABLE>
- ------------------
N/A--Not applicable
(1) The loss per common share for the Successor has been computed assuming the
common shares issued in the Acquisition were outstanding at the beginning of
the period.
F-8
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
1. BASIS OF PRESENTATION AND ACQUISITION--(CONTINUED)
The foregoing pro forma financial information does not reflect the
anticipated benefits to be derived in the future from the Company's 1996
employee reduction programs.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Mettler-Toledo is a manufacturer and marketer of weighing instruments for
use in laboratory, industrial and food retailing applications. The Company also
manufacturers and sells certain related laboratory measurement instruments. The
Company's manufacturing facilities are located in Switzerland, the United
States, Germany and China. The Company's principal executive offices are located
in Greifensee, Switzerland.
Principles of Consolidation
The Audited Consolidated Financial Statements include all of the entities
of the Company. All intercompany transactions and balances have been eliminated.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments with original
maturity dates of three months or less.
Inventories
Inventories are valued at the lower of cost or market. Cost, which includes
direct materials, labor and overhead plus indirect overhead, is determined using
the first in, first out (FIFO) or weighted average cost methods and to a lesser
extent the last in, first out (LIFO) method.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated
depreciation. Depreciation is charged on a straight line basis over the
estimated useful lives of the assets as follows:
<TABLE>
<S> <C>
Buildings and improvements................. 15 to 50 years
Machinery and equipment.................... 3 to 12 years
Computer software.......................... 3 years
Leasehold improvements..................... Shorter of useful life or lease term
</TABLE>
Beginning January 1, 1996 the Company adopted Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 121 (SFAS
121), 'Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of.' SFAS 121 requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In addition, SFAS 121
requires that long-lived assets and certain identifiable intangibles to be
disposed of be reported at the lower of carrying amount or fair value less cost
to sell. Adoption of SFAS 121 had no material effect on the Audited Consolidated
Financial Statements.
Excess of cost over net assets acquired
The excess of purchase price over the fair value of net assets acquired, is
amortized on a straight-line basis over 32 years being the expected period to be
benefited. The Company assesses the recoverability of such amount by determining
whether the amortization of the balance over its remaining life can be recovered
from the undiscounted future operating cash flows of the acquired operation. The
amount of impairment, if any, is measured based on projected discounted future
operating cash flows using a discount rate reflecting the
F-9
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Company's average cost of funds. The assessment of the recoverability of the
excess of cost over net assets acquired will be impacted if estimated future
operating cash flows are not achieved.
Deferred Financing Costs
Debt financing costs, which were incurred by the Company in connection with
borrowings incurred in connection with the acquisition discussed at Note 1, are
deferred and amortized, over the life of the underlying indebtedness using the
interest method.
Taxation
The Company files its own tax returns in each jurisdiction in which it
operates. Prior to the acquisition discussed in Note 1, in certain jurisdictions
the Company filed its tax returns jointly with other Ciba subsidiaries. The
Company had a tax sharing arrangement with Ciba in these countries to share the
tax burden or benefits. Such arrangement resulted in each company's tax burden
or benefit equating to that which it would have incurred or received if it had
been filing a separate tax return.
Taxes are accounted for under the asset and liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates in the respective jurisdictions in which the
Company operates that are expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred income tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Generally, deferred taxes are not provided on the unremitted earnings of
subsidiaries outside of the United States because it is expected that these
earnings are permanently reinvested. Such earnings may become taxable upon the
sale or liquidation of these subsidiaries or upon the remittance of dividends.
Deferred taxes are provided in situations where the Company's subsidiaries plan
to make future dividend distributions.
Research and Development
Research and development costs are expensed as incurred. Research and
development costs, including customer engineering (which represents research and
development charged to customers and, accordingly, is included in cost of
sales), amounted to approximately $55,600, $62,400, $45,100 and $11,100 for the
years ended 1994 and 1995 and for the period from January 1, 1996 to October 14,
1996 and for the period from October 15, 1996 to December 31, 1996,
respectively. In connection with the acquisition discussed in Note 1 the Company
allocated, based upon independent valuations, $114,070 of the purchase price to
purchased research and development in process. Such amount was recorded as an
expense in the period from October 15, 1996 to December 31, 1996.
Currency Translation and Transactions
The reporting currency for the Audited Consolidated Financial Statements of
the Company is the United States dollar (USD). The functional currency for the
Company's operations is generally the applicable local currency. Accordingly,
the assets and liabilities of companies whose functional currency is other than
the USD are included in the consolidation by translating the assets and
liabilities into the reporting currency at the exchange rates applicable at the
end of the reporting year. The statements of operations and cash flows of such
non-USD functional currency operations are translated at the monthly average
exchange rates during the year. Translation gains or losses are accumulated as a
separate component of net assets/shareholders' equity. Currency transaction
gains or losses arising from transactions of Mettler-Toledo companies in
currencies other than the functional currency are included in operations at each
reporting period.
F-10
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Derivative Financial Instruments
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. Derivative financial
instruments in the form of currency forward and option contracts are entered
into by the Company primarily as a hedge against anticipated currency exposures.
Such contracts limit the Company's exposure to both favorable and unfavorable
currency fluctuations. These contracts are adjusted to reflect market values as
of each balance sheet date, with the resulting unrealized gains and losses being
recognized in financial income or expense, as appropriate.
Fair Value of Financial Instruments
The carrying amount of cash and cash equivalents, accounts receivable,
other current assets and current liabilities approximates fair market value
because of the short term maturity of these financial instruments. It is not
practical to determine the fair value of balances with Ciba due to the related
party nature of these financial instruments. See Note 5 and Note 12 for the fair
values of the Company's derivative financial instruments and third party debt,
respectively. Other financial instruments are not significant to the Audited
Consolidated Financial Statements.
Stock Based Compensation
The Company applies Accounting Principles Board Opinion No. 25 'Accounting
for Stock Issued to Employees' and related interpretations in accounting for its
stock option plan.
Loss per Common Share
Loss per common share has been computed using the treasury stock method
based upon the weighted average number of common shares, including common share
equivalents, outstanding during the Successor period. Common share equivalents
result from outstanding options to purchase common stock. Pursuant to Securities
and Exchange Commission Staff Accounting Bulletin No. 83, all common shares and
common share equivalents issued and options granted by the Company at a price
less than the initial public offering price during the twelve months preceding
the initial filing of the Registration Statement have been included in the loss
per common share calculation as if they were outstanding during the period
presented.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, 'Earnings per Share.' The Company has
yet to determine the effect of this statement on its earnings per share.
Concentration of Credit Risk
The Company's revenue base is widely diversified by geographic region and
by individual customer. The Company's products are utilized in many different
industries, although extensively in the pharmaceutical and chemical industries.
The Company performs ongoing credit evaluations of its customers' financial
condition and, generally, requires no collateral from its customers.
Revenue Recognition
Revenue is recognized when title to a product has transferred or services
have been rendered. Revenues from service contracts are recognized over the
contract period.
Use of Estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, as well as disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results may differ from those
estimates.
F-11
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
3. DUE FROM CIBA AND AFFILIATES, NET
The amount due from Ciba, net was comprised of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
<S> <C> <C>
Cash pool deposits......................................................... $ 22,239 $ --
Due from AGP, 6.5%, revolving repayment terms.............................. 10,833 --
------------ ------------
$ 33,072 $ --
------------ ------------
------------ ------------
</TABLE>
Prior to the acquisition discussed in Note 1, certain Mettler-Toledo
companies participated in an arrangement with Ciba whereby excess cash was
pooled into an account maintained by Ciba. The net deposit with Ciba in
connection with this arrangement bore interest at the short-term money market
rates available to Ciba.
Prior to the acquisition Ciba also performed certain limited administrative
services on behalf of the Company. The cost of such services, which was not
charged to the Company nor included in the Audited Consolidated Financial
Statements, was not significant.
4. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
<S> <C> <C>
Raw materials and parts.................................................... $ 45,523 $ 41,015
Work-in-progress........................................................... 38,191 31,534
Finished goods............................................................. 30,149 29,982
------------ ------------
113,863 102,531
LIFO reserve............................................................... (2,877) (5)
------------ ------------
$110,986 $102,526
------------ ------------
------------ ------------
</TABLE>
At December 31, 1995 and 1996, 8.8% and 13.2% respectively, of the
Company's inventories (certain U.S. companies only) were valued using the LIFO
method of accounting. There were no material liquidations of LIFO inventories
during the periods presented.
In connection with the acquisition discussed in Note 1, the Company
allocated approximately $32,200 of the purchase price to revalue certain
inventories (principally work-in-process and finished goods) to fair value (net
realizable value). Substantially all of such inventories were sold during the
period from October 15, 1996 to December 31, 1996.
5. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISKS
The Company may be exposed to credit losses in the event of nonperformance
by the counterparties to its currency forward and option contracts. The Company
has no reason to believe, however, that such counterparties will not be able to
fully satisfy their obligations under these contracts.
At December 31, 1995, the Company had contracts maturing during 1996 to
purchase the equivalent of approximately $23,300 and to sell the equivalent of
approximately $27,900 in various currencies. At December 31, 1996, the Company
had contracts maturing during 1997 to sell the equivalent of approximately
$135,000 in various currencies in exchange for Swiss francs. These contracts
were used to limit its exposure to
F-12
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
5. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISKS--(CONTINUED)
currency fluctuations on anticipated future cash flows, primarily for the
delivery of United States dollars, German marks, French francs, British pounds
and Japanese yen in exchange for Swiss francs.
At December 31, 1995 and 1996, the fair value of such financial
instruments, which the Company recognized as net unrealized gains (losses), was
approximately $2,400 and $(5,100), respectively.
6. OTHER CURRENT ASSETS
Other current assets consisted of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
<S> <C> <C>
Prepaid expenses........................................................... $ 4,703 $ 5,302
Other (including in 1995 net gains on derivative financial instruments).... 16,766 11,966
------------ ------------
$ 21,469 $ 17,268
------------ ------------
------------ ------------
</TABLE>
7. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net, consisted of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
<S> <C> <C>
Land....................................................................... $ 31,535 $ 63,514
Buildings and leasehold improvements....................................... 186,608 120,173
Machinery and equipment.................................................... 237,457 75,675
Computer software.......................................................... 5,373 3,067
------------ ------------
460,973 262,429
Less accumulated depreciation and amortization............................. (219,955) (7,137)
------------ ------------
$241,018 $255,292
------------ ------------
------------ ------------
</TABLE>
8. OTHER ASSETS
Other assets consisted of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
<S> <C> <C>
Deferred financing fees, net of accumulated amortization of $820 in 1996... $ -- $ 22,015
Bank deposits--restricted cash............................................. 4,697 5,960
Secured loans.............................................................. 2,911 2,805
Other...................................................................... 4,404 7,194
------------ ------------
$ 12,012 $ 37,974
------------ ------------
------------ ------------
</TABLE>
Bank deposits--restricted cash at December 31, 1995 and 1996 principally
represented deposits collateralizing a letter of credit given by a financial
institution in connection with one of the Company's subsidiaries in the Peoples
Republic of China. Other assets at December 31, 1996 included a loan due from
the Company's Chief Executive Officer of approximately $740. Such loan bears an
interest rate of 5% and is payable upon demand, which may not be made until 7
years after the date of the loan.
F-13
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
9. BANK AND OTHER LOANS
Bank and other loans consisted of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
<S> <C> <C>
Current maturities of long-term debt....................................... $ -- $ 8,968
Borrowings under revolving credit facility................................. -- 51,928
Other short-term borrowings................................................ 19,408 19,550
Borrowings under line of credit............................................ 10,105 --
------------ ------------
$ 29,513 $ 80,446
------------ ------------
------------ ------------
</TABLE>
The weighted average interest rate at December 31, 1995 on the borrowings
under the line of credit was approximately 8.0%. The weighted average interest
rate at December 31, 1996 on the borrowings under the revolving credit facility
was approximately 4.1%. The Company had available revolving lines of credit and
swingline facilities for short-term financing of approximately $75,000 at
December 31, 1996 (See Note 12).
10. ACCRUED AND OTHER LIABILITIES
Accrued and other liabilities consisted of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
<S> <C> <C>
Accrued payroll and vacation............................................... $ 26,400 $ 26,239
Social benefits and payroll taxes.......................................... 9,563 9,218
Severance and other cost provisions........................................ 1,890 12,783
Interest................................................................... 4,731 6,858
Losses on derivative financial instruments................................. -- 5,137
Other taxes payable........................................................ 8,190 5,402
Warranty................................................................... 6,420 6,803
Other liabilities.......................................................... 49,924 42,874
------------ ------------
$107,118 $115,314
------------ ------------
------------ ------------
</TABLE>
Warranties on Mettler-Toledo products are generally for one year. The
Company provides for warranty costs, which have not been significant, based on
historical experience.
11. DEBT PAYABLE TO CIBA AND AFFILIATES
The Company's debt obligations to Ciba and affiliates consisted of the
following:
Short-term borrowings are summarized as follows:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
<S> <C> <C>
Unsecured notes payable:
AGP, 4.25%, due February 29, 1996.......................................... $ 26,517 $ --
Due to Ciba for capital transactions....................................... 36,418 --
Other unsecured short-term debt to Ciba, varying interest rates and
maturities............................................................... 28,197 --
------------ ------------
$ 91,132 $ --
------------ ------------
------------ ------------
</TABLE>
F-14
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
11. DEBT PAYABLE TO CIBA AND AFFILIATES--(CONTINUED)
Long-term obligations are summarized as follows:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
<S> <C> <C>
Unsecured notes payable to Ciba and affiliates:
AGP, 8.4%, due October 14, 1996.......................................... $122,000 $ --
AGP, 6%, due October 14, 1996............................................ 20,000 --
Other unsecured long-term debt to Ciba, varying interest rates and
maturities............................................................ 3,097 --
------------ ------------
$145,097 $ --
------------ ------------
------------ ------------
</TABLE>
Interest expense on debt payable to Ciba and affiliates for the years ended
December 31, 1994 and 1995 and for the period January 1, 1996 to October 14,
1996 was $10,506, $15,693, and $10,955, respectively.
12. DEBT PAYABLE TO THIRD PARTIES
Long-term debt payable to third parties consist of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
<S> <C> <C>
9.75% Senior Subordinated Notes due October 1, 2006........................ $ -- $135,000
Credit Agreement:
Term A Loans, interest at LIBOR plus 2.5% (4.38% at December 31, 1996)
payable in quarterly installments beginning March 31, 1997 due December
31, 2002................................................................. -- 92,730
Term B Loans, interest at LIBOR plus 3.00% (8.53% at December 31, 1996)
payable in quarterly installments beginning March 31, 1997 due December
31, 2003................................................................. -- 75,000
Term C(CH) and C(US) Loans, interest at LIBOR plus 3.25% (8.78% at
December 31, 1996) payable in quarterly installments beginning March 31,
1997 due December 31, 2004............................................... -- 72,000
Revolving credit facility................................................ -- 51,928
Other...................................................................... 3,621 27,546
------------ ------------
3,621 454,204
Less current maturities.................................................... -- 80,446
------------ ------------
$ 3,621 $373,758
------------ ------------
------------ ------------
</TABLE>
To provide a portion of the financing required for the acquisition and for
working capital and for general corporate purposes thereafter, in October, 1996
Mettler-Toledo Holding Inc., a wholly owned subsidiary of the Company, entered
into a credit agreement with various banks.
Loans under the credit agreement consist of: (i) Term A Loans in an
aggregate principal amount of SFr. 125,000 ($92,730 at December 31, 1996), (ii)
Term B Loans in an aggregate principal amount of $75,000, (iii) Term C(CH) loans
in an aggregate principal amount of $32,000, and (iv) Term C(US) Loans in an
aggregate principal amount of $40,000 (the Term A Loans, the Term B Loans, the
Term C(CH) Loans and Term C(US) Loans are referred to collectively as the 'term
loans'), and (v) a multi-currency revolving credit facility that may be borrowed
in an aggregate principal amount of $140,000, and includes letter of credit and
swingline
F-15
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
12. DEBT PAYABLE TO THIRD PARTIES--(CONTINUED)
subfacilities available to certain subsidiaries (the 'revolving facility' and
together with the term loans, the 'credit facilities').
Loans under the revolving facility may be repaid and reborrowed and are due
in full on February 18, 1997. The Company is required to pay a facility fee
equal to 0.05% per annum on the amount of the revolving facility and letter of
credit fees on the aggregate face amount of letters of credit under the
revolving facility. At December 31, 1996 the Company had available approximately
$75,000 of additional borrowing capacity.
The credit agreement contains covenants that, among other things, limit the
Company's ability to incur liens; merge, consolidate or dispose of assets; make
loans and investments; incur indebtedness; engage in certain transactions with
affiliates; incur certain contingent obligations; pay dividends and other
distributions; prepay the Notes; or make capital expenditures. The credit
agreement also requires the Company to maintain a minimum net worth and a
minimum fixed charge coverage ratio, and to maintain a ratio of total debt to
EBITDA below a specified maximum.
The aggregate maturities of long-term obligations during each of the years
1998 through 2001 are approximately $12,800, $15,600, $19,300 and $23,000,
respectively.
The estimated fair value of the Company's Senior Subordinated Notes at
December 31, 1996 was approximately $142,000. The estimated fair value of the
obligations under the credit agreement approximate fair value due to the
variable rate nature of the obligations. Fair value estimates are made at a
specific point in time, based on relevant market information and information
about the financial instrument. Fair value estimates were based on the amount of
future cash flows discounted using the Company's current borrowing rate for
loans of comparable maturity. These estimates are subjective in nature and
involve uncertainties and matters of significant judgment and, therefore, cannot
be determined with precision. Changes in assumptions could significantly affect
the estimates.
13. SHAREHOLDERS' EQUITY
As of December 31, 1996, the authorized capital stock of the Company
consisted of 2,775,976 shares of common stock, $.01 par value of which 2,233,117
shares were designated as Class A common stock, 1,000 shares were designated as
Class B common stock and 541,859 shares were designated as Class C common stock.
As of December 31, 1996, the Company had outstanding 1,899,779 shares of Class A
common stock, 1,000 shares of Class B common stock and 537,735 shares of Class C
common stock. Additionally, 333,117 shares of Class A common stock are reserved
for the Company's stock option plan (See Note 14).
Holders of the Company's common stock have no preemptive, subscription or
redemption rights. Except as described below, the Company's three classes of
common stock have identical rights under the Company's Certificate of
Incorporation and By-laws.
Dividends or distributions in connection with the liquidation, dissolution
or winding up of the affairs of the Company or not paid out of the current and
accumulated earnings and profits shall be paid in the following manner. First,
exclusively to the holders of the shares of Class A common stock, ratably to
each such holder, until the sum of all dividends and distributions to each
holder of Class A common stock equals $100 for each share of Class A common
stock held by such holder. After each holder of shares of Class A common stock
shall have received dividends and distributions totaling $100, then exclusively
to the holders of the shares of Class B common and Class C common stock ratably
to each such holder until the sum of all dividends and distributions to each
holder of Class B common stock and/or Class C common stock equals $100 for each
share of Class B common stock and/or Class C common stock held by such holder.
After each holder of Class B common stock and Class C common stock shall have
received such dividends and distributions, then to all holders of Class A common
stock, Class B common stock and/or Class C common stock, ratably to each holder
of such shares.
Class A and C common stock shareholders have no voting rights.
F-16
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
13. SHAREHOLDERS' EQUITY--(CONTINUED)
The foregoing share amounts do not give effect to the conversion of each
share of Class A, B and C common stock into 12.58392 shares of Common Stock
which will be effective concurrent with the Offerings described elsewhere in
this Prospectus (the 'Reorganization') (See Note 20).
14. STOCK OPTION PLAN
Effective October 15, 1996, MT Investors adopted a stock option plan to
provide certain key employees and/or directors of the Company additional
incentive to join and/or remain in the service of the Company as well as to
maintain and enhance the long-term performance and profitability of the Company.
The plan reserves 333,117 shares of Class A non-voting common stock of MT
Investors.
Under the terms of the plan, options granted shall be nonqualified and the
exercise price, as determined by the committee, shall not be less than 100% of
the fair market value of the share of such common stock on the date of grant.
Options may not be exercised until the fifth anniversary of the date of grant,
subject to certain acceleration clauses and expire on October 15, 2006.
Stock option activity is shown below (per share average option price
amounts in whole dollars):
<TABLE>
<CAPTION>
OPTION PRICE
--------------------
NUMBER PER SHARE TOTAL
OF SHARES AVERAGE PRICE
--------- --------- -------
<S> <C> <C> <C>
Granted during the period October 15, 1996,
to December 31, 1996................................................ 278,988 $ 100.00 $27,899
Exercised............................................................. -- -- --
Forfeited............................................................. -- -- --
--------- --------- -------
Outstanding at December 31, 1996...................................... 278,988 $ 100.00 $27,899
--------- --------- -------
--------- --------- -------
Shares exerciseable at December 31, 1996.............................. -- $ -- $ --
--------- --------- -------
--------- --------- -------
</TABLE>
As of the date granted, the weighted-average grant-date fair value of the
options was approximately $25.00 per share. Such weighted-average grant-date
fair value was determined using an option pricing model assuming: (i) an
expected option life of seven years, (ii) no dividends are expected to be paid
in the foreseeable future, and (iii) a risk free interest rate of 4%.
The Company applies Accounting Standards Board Opinion No. 25 and related
interpretations in accounting for its plans. Accordingly, no compensation cost
has been recognized for its stock option plan as all options have been issued at
fair market value. The Company's net loss for the period October 15, 1996 to
December 31, 1996 would not have been materially different had compensation cost
been determined consistent with Financial Accounting Standards Board's Statement
of Financial Accounting Standards No. 123 'Accounting for Stock Based
Compensation.'
The foregoing share and per share amounts do not give effect to the
Reorganization whereby each outstanding option to purchase shares of the
Company's Class A common stock will convert into 12.58392 outstanding options to
purchase shares of Common Stock (See Note 20).
15. BENEFIT PLANS
Mettler-Toledo maintains a number of retirement plans for the benefit of
its employees.
Certain companies sponsor defined contribution plans. Benefits are
determined and funded annually based upon the terms of the plans. Contributions
under these plans amounted to $9,042, $9,413, $9,484 and $2,496 in 1994, 1995,
for the period January 1, 1996 to October 14, 1996 and for the period October
15, 1996 to December 31, 1996, respectively.
F-17
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
15. BENEFIT PLANS--(CONTINUED)
Certain companies sponsor defined benefit plans. Benefits are also provided
to employees under defined benefit plans primarily based upon years of service
and employees' compensation for certain periods during the last years of
employment.
The following table sets forth the funded status and amounts recognized in
the Audited Consolidated Financial Statements for the Company's principal
defined benefit plans at December 31, 1995 and 1996:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
---------------------------- ----------------------------
DECEMBER 31, DECEMBER 31,
1995 1996
---------------------------- ----------------------------
ACCUMULATED ACCUMULATED
ASSETS EXCEED BENEFITS ASSETS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of accumulated benefit
obligations:
Vested benefits............................. $ 8,582 $ 90,698 $10,211 $ 97,639
Non-vested benefits......................... 90 3,122 16 2,280
------------- ----------- ------------- -----------
8,672 93,820 10,227 99,919
------------- ----------- ------------- -----------
Projected benefit obligations................. 10,737 100,820 12,458 108,504
Plan assets at fair value..................... 10,546 40,091 13,336 50,609
------------- ----------- ------------- -----------
Projected benefit obligations in excess of
(less than) plan assets..................... 191 60,729 (878) 57,895
Unrecognized prior service (cost) benefit..... (183) 252 -- --
Unrecognized net (losses) gains............... (188) (247) 22 1,479
Unrecognized transition obligations........... -- (3,851) -- --
------------- ----------- ------------- -----------
(Prepaid) accrued pension costs............... $ (180) $ 56,883 $ (856) $ 59,374
------------- ----------- ------------- -----------
------------- ----------- ------------- -----------
</TABLE>
The (prepaid) accrued pension costs are recognized in the accompanying
Audited Consolidated Financial Statements as other long-term assets and other
long term liabilities, respectively.
The assumed discount rates and rates of increase in future compensation
level used in calculating the projected benefit obligations vary according to
the economic conditions of the country in which the retirement plans are
situated. The range of rates used for the purposes of the above calculations are
as follows:
<TABLE>
<CAPTION>
1995 1996
------------- -------------
<S> <C> <C>
Discount rates........................................................ 6.5% to 8.0% 6.0% to 8.5%
Compensation increase rates........................................... 2.5% to 6.0% 2.0% to 6.5%
</TABLE>
The expected long term rates of return on plan assets ranged between 9.5%
and 11.0% in 1994, 9.5% and 10.0% for 1995, and 7.0% and 10.0% for 1996.
The assumptions used above have a significant effect on the reported
amounts of projected benefit obligations and net periodic pension cost. For
example, increasing the assumed discount rate would have the effect of
decreasing the projected benefit obligation and increasing unrecognized net
gains.
Increasing the assumed compensation increase rate would increase the
projected benefit obligation and decrease unrecognized net gains. Increasing the
expected long-term rate of return on investments would decrease unrecognized net
gains.
Plan assets relate principally to the Company's U.S. companies and consist
of equity investments, obligations of the U.S. Treasury or other governmental
agencies, and other interest-bearing investments.
F-18
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
15. BENEFIT PLANS--(CONTINUED)
Net periodic pension cost for all of the plans above includes the following
components:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------------------------------------------- ----------------
TWELVE MONTHS TWELVE MONTHS FOR THE PERIOD FOR THE PERIOD
ENDED ENDED JANUARY 1, 1996 OCTOBER 15, 1996
DECEMBER 31, DECEMBER 31, TO OCTOBER 14, TO DECEMBER 31,
1994 1995 1996 1996
------------- ------------- --------------- ----------------
<S> <C> <C> <C> <C>
Service cost (benefits earned during
the period)........................ $ 3,833 $ 3,668 $ 3,850 $ 1,013
Interest cost on projected benefit
obligations........................ 6,426 7,561 6,540 1,721
Actual return on plan assets......... (2,725) (8,653) (6,079) (1,600)
Net amortization and deferral........ (170) 5,137 2,485 --
------------- ------------- --------------- --------
Net periodic pension expense......... $ 7,364 $ 7,713 $ 6,796 $ 1,134
------------- ------------- --------------- --------
------------- ------------- --------------- --------
</TABLE>
The Company's U.S. operations provide postretirement medical benefits to
their employees. Employee contributions for medical benefits are related to
employee years of service.
The following table sets forth the status of the U.S. postretirement plans
and amounts recognized in the Company's Audited Consolidated Financial
Statements at December 31, 1995 and 1996:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
<S> <C> <C>
Accumulated postretirement benefit obligations:
Retire................................................................... $ 27,682 $ 25,894
Fully eligible........................................................... 1,196 3,033
Other.................................................................... 2,361 3,098
------------ ------------
31,239 32,025
Unrecognized net loss...................................................... (6,261) (540)
Unrecognized prior service benefit......................................... 692 --
Unrecognized transition obligation......................................... (1,389) --
------------ ------------
Accrued postretirement benefit cost........................................ $ 24,281 $ 31,485
------------ ------------
------------ ------------
</TABLE>
Net periodic postretirement benefit cost for the above plans includes the
following components:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------------------------------------------- ----------------
TWELVE MONTHS TWELVE MONTHS FOR THE PERIOD FOR THE PERIOD
ENDED ENDED JANUARY 1, 1996 OCTOBER 15, 1996
DECEMBER 31, DECEMBER 31, TO OCTOBER 14, TO DECEMBER 31,
1994 1995 1996 1996
------------- ------------- --------------- ----------------
<S> <C> <C> <C> <C>
Service cost (benefits earned during
the period)........................ $ 333 $ 285 $ 431 $ 114
Interest cost on projected benefit
obligations........................ 2,193 2,371 1,795 472
Net amortization and deferral........ 82 99 343 --
------------- ------------- --------------- --------
Net periodic postretirement benefit
cost............................... $ 2,608 $ 2,755 $ 2,569 $ 586
------------- ------------- --------------- --------
------------- ------------- --------------- --------
</TABLE>
The accumulated postretirement benefit obligation and net periodic
postretirement benefit cost were principally determined using discount rates of
7.3% in 1994 and 1995, and 7.6% in 1996, and health care cost trend rates
ranging from 9.5% to 12.25% in 1994, 1995, and 1996 decreasing to 5.0% in 2005.
The health care cost trend rate assumption has a significant effect on the
accumulated postretirement benefit obligation and net periodic postretirement
benefit cost. For example, in 1996 the effect of a one-percentage-point
F-19
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
15. BENEFIT PLANS--(CONTINUED)
increase in the assumed health care cost trend rate would be an increase of
$3,064 on the accumulated postretirement benefit obligations and an increase of
$71 on the aggregate of the service and interest cost components of the net
periodic benefit cost.
16. TAXES
The sources of the Company's earnings (loss) before taxes and minority
interest were as follows:
<TABLE>
<CAPTION>
PREDECESSOR
--------------------------------------------------
TWELVE MONTHS TWELVE MONTHS FOR THE PERIOD
ENDED ENDED JANUARY 1, 1996
DECEMBER 31, DECEMBER 31, TO OCTOBER 14,
1994 1995 1996
------------- ------------- ----------------
<S> <C> <C> <C>
Switzerland............................................ $ 9,855 $11,431 $ 21,241
Non-Switzerland........................................ 12,652 16,373 3,912
------------- ------------- ----------------
Earnings before taxes and minority interest............ $22,507 $27,804 $ 25,153
------------- ------------- ----------------
------------- ------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
SUCCESSOR
----------------
FOR THE PERIOD
OCTOBER 15, 1996
TO DECEMBER 31,
1996
----------------
<S> <C>
United States.......................................................................... $ (37,293)
Non-United States...................................................................... (122,783)
----------------
Earnings before taxes and minority interest............................................ $ (160,076)
----------------
----------------
</TABLE>
The provision (benefit) for taxes consists of:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -------
<S> <C> <C> <C>
Predecessor:
Year ended December 31, 1994:
Switzerland Federal..................................................... $ 1,182 $ (32) $ 1,150
Switzerland Canton (State) and Local.................................... 1,215 (53) 1,162
Non-Switzerland......................................................... 5,538 826 6,364
------- -------- -------
$ 7,935 $ 741 $ 8,676
------- -------- -------
------- -------- -------
Year ended December 31, 1995:
Switzerland Federal..................................................... $ 513 $ (92) $ 421
Switzerland Canton (State) and Local.................................... 481 (505) (24)
Non-Switzerland......................................................... 8,339 46 8,385
------- -------- -------
$ 9,333 $ (551) $ 8,782
------- -------- -------
------- -------- -------
For the period January 1, 1996 to October 14, 1996:
Switzerland Federal..................................................... $ 2,152 $ (172) $ 1,980
Switzerland Canton (State) and Local.................................... 4,305 (344) 3,961
Non-Switzerland......................................................... 5,532 (1,418) 4,114
------- -------- -------
$11,989 $ (1,934) $10,055
------- -------- -------
------- -------- -------
Successor:
For the period October 15, 1996 to December 31, 1996:
United States Federal................................................... $ 475 $ (1,556) $(1,081)
United States State and Local........................................... 696 (183) 513
Non-United States....................................................... 2,454 (2,824) (370)
------- -------- -------
$ 3,625 $ (4,563) $ (938)
------- -------- -------
------- -------- -------
</TABLE>
F-20
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
16. TAXES--(CONTINUED)
The provision for tax expense (benefit) for the years ended December 31,
1994 and 1995 and for the period January 1, 1996 to October 14, 1996 where the
Company operated as a group of businesses owned by Ciba differed from the
amounts computed by applying the Switzerland federal income tax rate of 9.8% to
earnings before taxes and minority interest as a result of the following:
<TABLE>
<CAPTION>
PREDECESSOR
-------------------------------------------------
TWELVE MONTHS TWELVE MONTHS FOR THE PERIOD
ENDED ENDED JANUARY 1, 1996
DECEMBER 31, DECEMBER 31, TO OCTOBER 14,
1994 1995 1996
------------- ------------- ---------------
<S> <C> <C> <C>
Expected tax........................................... $ 2,206 $ 2,725 $ 2,465
Switzerland Canton (state) and local income taxes, net
of federal income tax benefit........................ 1,048 (21) 3,573
Non-deductible intangible amortization................. 249 248 205
Change in valuation allowance.......................... (716) 1,603 1,235
Non-Switzerland income taxes in excess of 9.8%......... 5,591 4,968 2,291
Other, net............................................. 298 (741) 286
------------- ------------- ---------------
Total provision for taxes.............................. $ 8,676 $ 8,782 $10,055
------------- ------------- ---------------
------------- ------------- ---------------
</TABLE>
The provision for tax expense (benefit) for the period October 15, 1996 to
December 31, 1996, subsequent to the reorganization of the Company under MT
Investors Inc. and the acquisition described in Note 1, differed from the
amounts computed by applying the United States federal income tax rate of 35% to
the loss before taxes and minority interest.
<TABLE>
<CAPTION>
SUCCESSOR
----------------
FOR THE PERIOD
OCTOBER 15, 1996
TO DECEMBER 31,
1996
----------------
<S> <C>
Expected tax........................................................................... $(56,027)
United States state and local income taxes, net of federal income tax benefit.......... 333
Non-deductible purchased research and development...................................... 39,925
Non-deductible intangible amortization................................................. 336
Change in valuation allowance.......................................................... 4,662
Benefits of Non-United States income taxes less than 35%............................... 10,037
Other, net............................................................................. (204)
----------------
Total provision for taxes.............................................................. $ (938)
----------------
----------------
</TABLE>
F-21
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
16. TAXES--(CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented
below:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
<S> <C> <C>
Deferred tax assets:
Inventory................................................................ $ 9,706 $ 7,974
Accrued and other liabilities............................................ 6,129 7,046
Deferred loss on sale of subsidiaries.................................... 7,807 7,907
Accrued postretirement benefit costs..................................... 9,227 11,334
Accrued pension costs.................................................... 6,276 7,709
Net operating loss carryforwards......................................... 10,140 15,817
Other.................................................................... 3,000 408
------------ ------------
Total deferred tax assets.................................................. 52,285 58,195
Less valuation allowance................................................... (21,166) (46,714)
------------ ------------
Total deferred tax assets less valuation allowance......................... 31,119 11,481
------------ ------------
Deferred tax liabilities:
Inventory................................................................ 5,952 5,618
Property, plant and equipment............................................ 21,675 31,123
Other.................................................................... 4,200 2,858
------------ ------------
Total deferred tax liabilities............................................. 31,827 39,599
------------ ------------
Net deferred tax liability................................................. $ 708 $ 28,118
------------ ------------
------------ ------------
</TABLE>
The net change in the total valuation allowance, including changes
resulting from translation of such amounts from the local functional currencies
to the reporting currency and the effect of the acquisition discussed in Note 1,
for the years ended December 31, 1994 and 1995 and for the period January 1,
1996 to October 14, 1996 and for the period October 15, 1996 to December 31,
1996 was a decrease of $716 for the year ended December 31, 1994, an increase of
$1,603 for the year ended December 31, 1995, an increase of $1,111 for the
period January 1, 1996 to October 14, 1996 and an increase of $24,437 for the
period October 15, 1996 to December 31, 1996. Of the increase in the valuation
allowance of $24,437 during the period October 15, 1996 to December 31, 1996,
$19,882 was recognized as an increase in goodwill resulting from the acquisition
discussed in Note 1. Should a reduction of such valuation allowance be justified
in the future, the amount of any reduction would accordingly reduce goodwill.
The Company has established valuation allowances primarily for net
operating losses, deferred losses on the sale of subsidiaries as well as
postretirement and pension costs as follows:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
<S> <C> <C>
Summary of valuation allowances:
Cumulative net operating losses.......................................... $ 10,140 $ 15,817
Deferred losses on sale of subsidiaries.................................. 7,807 7,907
Accrued postretirement benefit costs..................................... -- 10,786
Accrued pension costs.................................................... -- 7,336
Other.................................................................... 3,219 4,868
------------ ------------
Total valuation allowance................................................ $ 21,166 $ 46,714
------------ ------------
------------ ------------
</TABLE>
At December 31, 1996, the Company had net operating loss carryforwards in
various countries for income tax purposes of $59,076. Of this amount, $25,131
had no expiration date, relating to subsidiaries in Sweden,
F-22
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
16. TAXES--(CONTINUED)
Belgium, Australia, United Kingdom, Austria, Brazil and France. Additionally,
there were operating losses at that date in various other countries in the
amount of $33,945 which expire in varying amounts through 2011.
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment.
17. OTHER CHARGES (INCOME), NET
Other charges (income) consist of the following for the years ended
December 31:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
-------------------------------------------------- ----------------
TWELVE MONTHS TWELVE MONTHS FOR THE PERIOD FOR THE PERIOD
ENDED ENDED JANUARY 1, 1996 OCTOBER 15, 1996
DECEMBER 31, DECEMBER 31, TO OCTOBER 14, TO DECEMBER 31,
1994 1995 1996 1996
------------- ------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Interest income...................... $(4,386) $(5,388) $ (3,424) $ (1,079)
Foreign currency transactions, net... (478) (3,242) 220 8,324
Severance and other exit costs....... -- -- 1,872 10,762
Other................................ (2,852) (701) -- (870)
------------- ------------- -------- ----------------
Total................................ $(7,716) $(9,331) $ (1,332) $ 17,137
------------- ------------- -------- ----------------
------------- ------------- -------- ----------------
</TABLE>
Severance and other exit costs for the period January 1, 1996 to October
14, 1996 of $1,872 represent employee severance of $1,545 and other exit costs
of $327 associated with the closing of its Westerville, Ohio facility. Severance
costs for the period October 15, 1996 to December 31, 1996 principally represent
employee severance benefits associated with (i) the Company's general headcount
reduction programs, in Europe and North America, of $4,557 which were announced
during such period, and (ii) the realignment of the analytical and precision
balance business in Switzerland of $6,205 which was internally announced in
December, 1996. In connection with such programs the Company reduced its
workforce by 168 employees in 1996 and intends to further reduce its workforce
by approximately 70 employees.
Other income in 1994 and 1995 primarily relates to gains from sales of
property, and in 1994 to a gain on sale of a cost basis investment.
18. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases certain of its facilities and equipment under operating
leases. The future minimum lease payments under non-cancelable operating leases
are as follows at December 31, 1996:
<TABLE>
<CAPTION>
1997........................................................... $11,582
<S> <C>
1998........................................................... 8,521
1999........................................................... 5,494
2000........................................................... 2,236
2001........................................................... 1,298
Thereafter..................................................... 1,447
-------
Total........................................................ $30,578
-------
-------
</TABLE>
Rent expense for operating leases amounted to $16,493, $13,034 and $3,430
in 1995 and for the period January 1, 1996 to October 14, 1996 and for the
period October 15, 1996 to December 31, 1996, respectively.
Legal
The Company is party to various legal proceedings, including certain
environmental matters, incidental to the normal course of business. Management
does not expect that any of such proceedings will have a material adverse effect
on the Company's financial condition or results of operations.
F-23
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
19. GEOGRAPHIC SEGMENT INFORMATION
The tables below shows the Company's operations by geographic region.
Transfers between geographic regions are priced to reflect consideration of
market conditions and the regulations of the countries in which the transferring
entities are located.
<TABLE>
<CAPTION>
TRANSFERS
BETWEEN TOTAL EARNINGS
TWELVE MONTHS ENDED NET SALES BY NET SALES BY GEOGRAPHIC NET SALES BEFORE INTEREST
DECEMBER 31 1994 DESTINATION ORIGIN AREAS BY ORIGIN AND TAXES
- --------------------------------- ------------ ------------ ---------- --------- ---------------
<S> <C> <C> <C> <C> <C>
Switzerland (1).................. $ 31,992 $ 89,495 $ 133,583 $ 223,078 $10,516
Germany.......................... 126,527 133,772 37,056 170,828 10,034
Other Europe..................... 215,230 192,557 776 193,333 1,665
------------ ------------ ---------- --------- ---------------
Total Europe..................... 373,749 415,824 171,415 587,239 22,215
United States.................... 269,034 300,244 29,877 330,121 10,111
Other Americas................... 56,628 33,204 64 33,268 939
------------ ------------ ---------- --------- ---------------
Total Americas................... 325,662 333,448 29,941 363,389 11,050
Asia and other................... 69,725 19,864 75 19,939 238
Eliminations..................... -- -- (201,431) (201,431) (2,553)
------------ ------------ ---------- --------- ---------------
Totals........................... $769,136 $769,136 $ -- $ 769,136 $30,950
------------ ------------ ---------- --------- ---------------
------------ ------------ ---------- --------- ---------------
</TABLE>
<TABLE>
<CAPTION>
TRANSFERS
BETWEEN TOTAL EARNINGS
TWELVE MONTHS ENDED NET SALES BY NET SALES BY GEOGRAPHIC NET SALES BEFORE INTEREST TOTAL
DECEMBER 31, 1995 DESTINATION ORIGIN AREAS BY ORIGIN AND TAXES ASSETS
- -------------------------------- ------------ ------------ ---------- --------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Switzerland (1)................. $ 41,820 $102,712 $ 159,453 $ 262,165 $ 6,316 $ 593,955
Germany......................... 151,974 158,393 47,379 205,772 14,799 196,460
Other Europe.................... 247,802 228,939 799 229,738 2,080 123,431
------------ ------------ ---------- --------- --------------- ---------
Total Europe.................... 441,596 490,044 207,631 697,675 23,195 913,846
United States................... 263,945 298,053 29,578 327,631 7,363 257,956
Other Americas.................. 52,966 32,732 131 32,863 950 14,474
------------ ------------ ---------- --------- --------------- ---------
Total Americas.................. 316,911 330,785 29,709 360,494 8,313 272,430
Asia and other.................. 91,908 29,586 97 29,683 2,331 31,777
Eliminations.................... -- -- (237,437) (237,437) 3,554 (493,959)
------------ ------------ ---------- --------- --------------- ---------
Totals.......................... $850,415 $850,415 $ -- $ 850,415 $37,393 $ 724,094
------------ ------------ ---------- --------- --------------- ---------
------------ ------------ ---------- --------- --------------- ---------
</TABLE>
<TABLE>
<CAPTION>
TRANSFERS
FOR THE PERIOD BETWEEN TOTAL EARNINGS
JANUARY 1, 1996 TO NET SALES BY NET SALES BY GEOGRAPHIC NET SALES BEFORE INTEREST
OCTOBER 14, 1996 DESTINATION ORIGIN AREAS BY ORIGIN AND TAXES
- -------------------------------- ------------ ------------ ---------- --------- ---------------
<S> <C> <C> <C> <C> <C>
Switzerland (1)................. $ 32,282 $ 74,303 $ 126,423 $ 200,726 $17,299
Germany......................... 104,961 114,015 35,583 149,598 9,631
Other Europe.................... 186,823 171,061 840 171,901 1,928
------------ ------------ ---------- --------- ---------------
Total Europe.................... 324,066 359,379 162,846 522,225 28,858
United States................... 217,636 246,180 22,753 268,933 8,508
Other Americas.................. 47,473 25,925 3 25,928 618
------------ ------------ ---------- --------- ---------------
Total Americas.................. 265,109 272,105 22,756 294,861 9,126
Asia and other.................. 73,046 30,737 265 31,002 1,241
Eliminations.................... -- -- (185,867) (185,867) (3,408)
------------ ------------ ---------- --------- ---------------
Totals.......................... $662,221 $662,221 $ -- $ 662,221 $35,817
------------ ------------ ---------- --------- ---------------
------------ ------------ ---------- --------- ---------------
</TABLE>
F-24
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
19. GEOGRAPHIC SEGMENT INFORMATION--(CONTINUED)
<TABLE>
<CAPTION>
TRANSFERS
FOR THE PERIOD BETWEEN TOTAL EARNINGS
OCTOBER 15, 1996 TO NET SALES BY NET SALES BY GEOGRAPHIC NET SALES BEFORE INTEREST TOTAL
DECEMBER 31, 1996 DESTINATION ORIGIN AREAS BY ORIGIN AND TAXES(2) ASSETS
- ----------------------------------- ------------ ------------ ---------- --------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
Switzerland (1).................... $ 8,415 $ 15,892 $ 39,570 $ 55,462 $ (99,233) $432,387
Germany............................ 29,688 29,117 10,965 40,082 (5,209) 170,845
Other Europe....................... 58,598 59,688 485 60,173 (4,971) 126,063
------------ ------------ ---------- --------- --------------- --------
Total Europe....................... 96,701 104,697 51,020 155,717 (109,413) 729,295
United States...................... 56,405 64,109 6,731 70,840 (32,519) 477,762
Other Americas..................... 13,436 7,371 3 7,374 (753) 17,730
------------ ------------ ---------- --------- --------------- --------
Total Americas..................... 69,841 71,480 6,734 78,214 (33,272) 495,492
Asia and other..................... 20,370 10,735 28 10,763 (1,919) 48,245
Eliminations....................... -- -- (57,782) (57,782) 511 (501,144)
------------ ------------ ---------- --------- --------------- --------
Totals............................. $186,912 $186,912 $ -- $ 186,912 $(144,093) $771,888
------------ ------------ ---------- --------- --------------- --------
------------ ------------ ---------- --------- --------------- --------
</TABLE>
- ------------------
(1) Includes Corporate.
(2) The effect of non-recurring acquisition charges arising from in-process
research and development projects ($114.1 million) and the revaluation of
inventories to fair value ($32.2 million) by region are as follows:
Europe........................... $108,100
Americas......................... 36,000
Asia/Rest of World............... 2,200
--------
--------
20. SUBSEQUENT EVENTS (UNAUDITED)
Reorganization
Concurrently with the Offerings described elsewhere in this Prospectus (i)
Mettler-Toledo Holding, Inc. will be merged with and into MT Investors (the
'Merger'), with MT Investors being the surviving corporation, (ii) as part of
the Merger, MT Investors will convert each share of its existing Class A, Class
B and Class C common stock, into 12.58392 shares of Common Stock and (iii) MT
Investors will change its name to Mettler-Toledo International Inc. In the
Merger, holders who would receive fractional shares will instead receive a cash
payment at the public offering price.
The following table presents the Company's actual shareholders' equity at
December 31, 1996 and pro forma shareholders' equity at such date after giving
effect to the Reorganization. Concurrent with the Reorganization, the Company
will increase its authorized shares of Common Stock to 125,000,000 shares.
<TABLE>
<CAPTION>
ACTUAL PRO FORMA
--------- ---------
<S> <C> <C>
Common stock, $0.01 par value per share:
Class A non-voting, authorized 2,233,117 shares; issued 1,899,779..................... $ 19 --
Class B voting, authorized 1,000 shares; issued 1,000................................. 1 --
Class C non-voting, authorized 541,859 shares; issued 537,735......................... 5 --
Common Stock, authorized 125,000,000 shares; issued 30,686,065 shares................. -- $ 307
Additional paid-in capital.............................................................. 188,084 187,802
Accumulated deficit..................................................................... (159,046) (159,046)
Currency translation adjustment......................................................... (16,637) (16,637)
--------- ---------
Total shareholders' equity......................................................... $ 12,426 $ 12,426
--------- ---------
--------- ---------
</TABLE>
F-25
<PAGE>
MT INVESTORS INC.
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
20. SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
At December 31, 1996, after giving effect to the Reorganization, the
Company has outstanding 3,510,763 options to purchase Common Stock at a per
share average price of $7.95.
Preferred Stock
The Board of Directors, without further shareholder authorization, will be
authorized to issue up to 10 million shares of preferred stock, par value $0.01
per share (the 'Preferred Stock') in one or more series and to determine and fix
the rights, preferences and privileges of each series, including dividend rights
and preferences over dividends on the Common Stock and one or more series of the
Preferred Stock, conversion rights, voting rights (in addition to those provided
by law), redemption rights and the terms of any sinking fund therefor, and
rights upon liquidation, dissolution or winding up, including preferences over
the Common Stock and one or more series of the Preferred Stock. Although the
Company has no present plans to issue any shares of Preferred Stock following
the consummation of the Offerings, the issuance of shares of Preferred Stock, or
the issuance of rights to purchase such shares, may have the effect of delaying,
deferring or preventing a change in control of the Company or an unsolicited
acquisition proposal.
F-26
<PAGE>
MT INVESTORS INC.
INTERIM CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SUCCESSOR SUCCESSOR
------------ -------------
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................................... $ 60,696 $ 33,158
Trade accounts receivable, net.................................................... 151,161 148,826
Inventories....................................................................... 102,526 106,129
Deferred taxes.................................................................... 7,565 10,956
Other current assets.............................................................. 17,268 21,975
------------ -------------
Total current assets......................................................... 339,216 321,044
Property, plant and equipment, net.................................................. 255,292 233,480
Excess of cost over net assets acquired, net........................................ 135,490 181,902
Long-term deferred taxes............................................................ 3,916 4,825
Other assets........................................................................ 37,974 26,926
------------ -------------
Total assets................................................................. $771,888 $ 768,177
------------ -------------
------------ -------------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Trade accounts payable............................................................ $ 32,797 $ 27,226
Accrued and other liabilities..................................................... 115,314 135,096
Taxes payable..................................................................... 17,580 27,940
Deferred taxes.................................................................... 9,132 8,621
Bank and other loans.............................................................. 80,446 56,559
------------ -------------
Total current liabilities.................................................... 255,269 255,442
Long-term debt due to third parties................................................. 373,758 429,033
Long-term deferred taxes............................................................ 30,467 26,001
Other long-term liabilities......................................................... 96,810 90,307
------------ -------------
Total liabilities............................................................ 756,304 800,783
Minority interest................................................................... 3,158 3,655
Shareholders' equity (deficit):
Common stock, $0.01 par value per share:
Class A non-voting, authorized 2,233,117 shares at December 31, 1996 and
2,235,896 at September 30, 1997; issued 1,899,779 at December 31, 1996 and
1,898,795 (excluding 3,984 shares held in treasury) at September 30, 1997..... 19 19
Class B voting, authorized 1,000 shares; issued 1,000 at December 31, 1996 and
September 30, 1997............................................................ 1 1
Class C non-voting, authorized 541,859 shares; issued 537,735 at December 31,
1996 and 537,453 (excluding 1,139 shares held in treasury) at September 30,
1997.......................................................................... 5 5
Additional paid-in capital........................................................ 188,084 187,986
Accumulated deficit............................................................... (159,046) (195,617)
Currency translation adjustment................................................... (16,637) (28,655)
------------ -------------
Total shareholders' equity (deficit)......................................... 12,426 (36,261)
------------ -------------
Total liabilities and shareholders' equity (deficit)................................ $771,888 $ 768,177
------------ -------------
------------ -------------
</TABLE>
See the accompanying notes to the interim consolidated financial statements
F-27
<PAGE>
MT INVESTORS INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------- -------------
SEPTEMBER 30, SEPTEMBER 30,
1996 1997
------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net sales....................................................................... $ 624,733 $ 633,743
Cost of sales................................................................... 374,121 359,080
------------- -------------
Gross profit.................................................................. 250,612 274,663
Research and development........................................................ 37,930 34,494
Selling, general and administrative............................................. 175,645 189,594
Amortization.................................................................... 2,038 4,449
Purchased research and development.............................................. -- 29,959
Interest expense................................................................ 12,579 28,199
Other charges (income), net..................................................... (226) 7,316
------------- -------------
Earnings (loss) before taxes
minority interest and extraordinary item................................... 22,646 (19,348)
Provision for taxes............................................................. 8,901 7,296
Minority interest............................................................... 609 375
------------- -------------
Earnings (loss) before extraordinary item..................................... 13,136 (27,019)
Extraordinary item--debt extinguishment......................................... -- (9,552)
------------- -------------
Net earnings (loss)........................................................... $ 13,136 $ (36,571)
------------- -------------
------------- -------------
Loss per common share:
Weighted average number of common shares...................................... 32,333,344
Loss per common share before extraordinary item............................... $ (0.84)
Extraordinary item............................................................ (0.29)
-------------
Loss per common share......................................................... $ (1.13)
-------------
-------------
</TABLE>
See the accompanying notes to the interim consolidated financial statements
F-28
<PAGE>
MT INVESTORS INC.
INTERIM CONSOLIDATED STATEMENTS OF CHANGES
IN NET ASSETS / SHAREHOLDERS' EQUITY (DEFICIT)
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
----------------------------------
NINE MONTHS ENDED SEPTEMBER 30,
1996
----------------------------------
CURRENCY
CAPITAL TRANSLATION
EMPLOYED ADJUSTMENT TOTAL
-------- ---------- --------
<S> <C> <C> <C>
Net assets at December 31, 1995.................................... $162,604 $ 30,650 $193,254
Capital transactions with Ciba and affiliates...................... (88,404) -- (88,404)
Net earnings....................................................... 13,136 -- 13,136
Change in currency translation adjustment.......................... -- (6,301) (6,301)
-------- ---------- --------
Net assets at September 30, 1996................................... $ 87,336 $ 24,349 $111,685
-------- ---------- --------
-------- ---------- --------
</TABLE>
See the accompanying notes to the interim consolidated financial statements
F-29
<PAGE>
MT INVESTORS INC.
INTERIM CONSOLIDATED STATEMENTS OF CHANGES
IN NET ASSETS / SHAREHOLDERS' EQUITY (DEFICIT)
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SUCCESSOR
------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 1997
------------------------------------------------------------------------------------------------------
COMMON STOCK
----------------------------------------------------------
CLASS A CLASS B CLASS C ADDITIONAL CURRENCY
------------------- ------------------ ----------------- PAID-IN ACCUMULATED TRANSLATION
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT
--------- -------- -------- -------- ------- -------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1996................... 1,899,779 $ 19 1,000 $ 1 537,735 $ 5 $188,084 $(159,046) $ (16,637)
New issuance of shares... 3,000 -- -- -- 857 -- 300 -- --
Net loss................. -- -- -- -- -- -- -- (36,571) --
Change in currency
translation
adjustment............. -- -- -- -- -- -- -- -- (12,018)
Purchase of treasury
stock.................. (3,984) -- -- -- (1,139) -- (398) -- --
--------- --- -------- --- ------- --- ------------ ------------- -------------
Balance at September 30,
1997................... 1,898,795 $ 19 1,000 $ 1 537,453 $ 5 $187,986 $(195,617) $ (28,655)
--------- --- -------- --- ------- --- ------------ ------------- -------------
--------- --- -------- --- ------- --- ------------ ------------- -------------
<CAPTION>
SUCCESSOR
------------------
NINE MONTHS ENDED
SEPTEMBER 30, 1997
------------------
TOTAL
--------
<S> <C>
Balance at December 31,
1996................... $ 12,426
New issuance of shares... 300
Net loss................. (36,571)
Change in currency
translation
adjustment............. (12,018)
Purchase of treasury
stock.................. (398)
--------
Balance at September 30,
1997................... $(36,261)
--------
--------
</TABLE>
See the accompanying notes to the interim consolidated financial statements
F-30
<PAGE>
MT INVESTORS INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------- -------------
SEPTEMBER 30, SEPTEMBER 30,
1996 1997
------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss)............................................................. $ 13,136 $ (36,571)
Adjustments to reconcile net earnings (loss) to net cash provided by
operating activities:
Depreciation............................................................ 18,630 17,784
Amortization............................................................ 2,038 4,449
Write-off of purchased research and development and cost of sales
associated with revaluation of inventories........................... -- 32,013
Extraordinary item--debt extinguishment................................. -- 9,552
Net gain on disposal of long-term assets................................ (768) (126)
Deferred taxes.......................................................... (1,211) (6,804)
Minority interest....................................................... 272 375
Increase (decrease) in cash resulting from changes in:
Trade accounts receivable, net........................................ 9,707 (920)
Inventories........................................................... (502) (4,715)
Other current assets.................................................. (29,261) (3,404)
Trade accounts payable................................................ (3,525) (7,344)
Accruals and other liabilities, net................................... 49,408 25,987
------------- -------------
Net cash provided by operating activities.......................... 57,924 30,276
------------- -------------
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment............................. 1,254 15,913
Purchase of property, plant and equipment....................................... (14,985) (13,299)
Purchase of Safeline Limited.................................................... -- (74,908)
Investments in other long term assets, net...................................... (2,869) (6,679)
------------- -------------
Net cash used in investing activities.............................. (16,600) (78,973)
------------- -------------
Cash flows from financing activities:
Borrowings of third party debt.................................................. -- 314,657
Repayments of third party debt.................................................. (13,464) (289,392)
Proceeds from issuance of common stock.......................................... -- 300
Purchase of treasury stock...................................................... -- (398)
Ciba and affiliates repayments.................................................. (26,589) --
Capital transactions with Ciba and affiliates................................... (7,716) --
------------- -------------
Net cash provided by (used) in financing activities................ (47,769) 25,167
------------- -------------
Effect of exchange rate changes on cash and cash equivalents...................... (1,879) (4,008)
------------- -------------
Net increase (decrease) in cash and cash equivalents.............................. (8,324) (27,538)
Cash and cash equivalents:
Beginning of period............................................................. 41,402 60,696
------------- -------------
End of period................................................................... $ 33,078 $ 33,158
------------- -------------
------------- -------------
</TABLE>
See the accompanying notes to the interim consolidated financial statements
F-31
<PAGE>
MT INVESTORS INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS UNLESS OTHERWISE STATED)
1. BASIS OF PRESENTATION
The accompanying interim consolidated financial statements have been
prepared in accordance with United States generally accepted accounting
principles on a basis which reflects the interim consolidated financial
statements of MT Investors Inc. ('MT Investors'). MT Investors was incorporated
by AEA Investors Inc. ('AEA') in December 1991. It was recapitalized to effect
the acquisition (the 'Acquisition') of the Mettler-Toledo Group from Ciba-Geigy
AG ('Ciba') and its wholly owned subsidiary, AG fur Prazisionsinstrumente
('AGP'). Pursuant to the terms of a stock purchase agreement dated April 2, 1996
between MT Investors, AGP and Ciba, on October 15, 1996 MT Investors acquired
the Mettler-Toledo Group in a business combination accounted for as a purchase.
Between the date of formation and October 15, 1996, MT Investors had no
substantive operations.
In the accompanying interim consolidated financial statements the terms
'Mettler-Toledo' or the 'Company' when used in situations pertaining to periods
prior to October 15, 1996 refer to the combined group of businesses sold by Ciba
and when used in situations pertaining to periods subsequent to October 15, 1996
refer to MT Investors and its consolidated subsidiaries. The combined historical
financial information of the business acquired from Ciba prior to the
Acquisition on October 15, 1996 are referred to as 'Predecessor' while the
consolidated financial information of the Company subsequent to the date of the
Acquisition are referred to as 'Successor'. Because of purchase price accounting
for the Acquisition and the additional interest expense from debt incurred to
finance the Acquisition, the accompanying interim financial statements of the
Successor are not directly comparable to those of the Predecessor.
The accompanying interim consolidated financial statements of the Company
have been prepared without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. The accompanying interim consolidated financial
statements as of September 30, 1997 and for the nine months ended September 30,
1996 and 1997 should be read in conjunction with the December 31, 1995 and 1996
Audited Consolidated Financial Statements and the notes thereto included
elsewhere in this Registration Statement.
The accompanying unaudited interim consolidated financial statements
reflect all adjustments (consisting of only normal recurring adjustments) which,
in the opinion of management, are necessary for a fair statement of the results
of the interim periods presented. Operating results for the nine months ended
September 30, 1997 are not necessarily indicative of the results to be expected
for the full year ending December 31, 1997.
Debt refinancing
On May 29, 1997, the Company refinanced its previous credit facility and
entered into the Company's current credit facility (the 'Credit Agreement'). The
Credit Agreement provides for term loan borrowings in an aggregate principal
amount of approximately $133.8 million, SFr 171.5 million and pounds 26.7
million, that are scheduled to mature between 2002 and 2004, a Canadian
revolving credit facility with availability of CDN $26.3 million and a
multi-currency revolving credit facility with availability of $151.0 million.
The revolving credit facilities are scheduled to mature in 2002.
The Company recorded an extraordinary item--debt extinguishment of $9.6
million representing a one time charge for the write-off of capitalized debt
issuance fees and related expenses associated with the Company's previous credit
facility.
Safeline acquisition
On May 30, 1997, the Company purchased (the 'Safeline Acquisition') the
entire issued share capital of Safeline Limited ('Safeline'), a manufacturer of
metal detection systems based in Manchester in the United Kingdom, for
approximately pounds 61.0 million (approximately $100.0 million), plus up to an
additional pounds 6.0 million ($10.0 million) for a contingent earn-out payment.
In October 1997, the Company made an additional payment, representing a
post-closing adjustment, of pounds 1.9 million (approximately $3.1 million at
October 3, 1997). Such
F-32
<PAGE>
MT INVESTORS INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
1. BASIS OF PRESENTATION--(CONTINUED)
amount will be accounted for as additional purchase price. Under the terms of
the agreement the Company paid approximately pounds 47.3 million ($77.4 million)
of the purchase price in cash, provided by amounts loaned under its Credit
Agreement, with the remaining balance of approximately pounds 13.7 million
($22.4 million) paid in the form of seller loan notes which mature May 30, 1999.
In connection with the Safeline Acquisition the Company incurred expenses of
approximately $2.0 million which have been accounted for as part of the purchase
price.
The Company has accounted for the Safeline Acquisition using the purchase
method of accounting. Accordingly, the costs of the Safeline Acquisition were
allocated to the assets acquired and liabilities assumed based upon their
respective fair values. Approximately $30.0 million of the purchase price was
attributed to purchased research and development in process. Such amount was
expensed immediately in the second quarter of 1997. The technological
feasibility of the products being developed had not been established as of the
date of the Safeline Acquisition. The Company expects that the projects
underlying these research and development efforts will be substantially complete
over the next two years. The Company spends more than $40.0 million annually on
research and development; however, ultimately achieving technological
feasibility cannot be assured for these projects or others. In addition, the
Company allocated approximately $2.1 million of the purchase price to revalue
certain finished goods inventories to fair value. Substantially all of such
inventories were sold in the second quarter of 1997. The excess of the cost of
the Safeline Acquisition over the fair value of the net assets acquired of
approximately $62.0 million is being amortized over 30 years. The purchase price
allocation is subject to adjustment. The results of operations and cash flows of
Safeline have been consolidated with those of the Company from the date of the
Safeline Acquisition.
Restructuring charge
The Company recorded a restructuring charge of approximately $3.3 million
during the third quarter ended September 30, 1997. The Company expects to
recognize an additional restructuring charge of approximately $3.0 million
during the fourth quarter ending December 31, 1997 for restructuring activities
not initiated until October of this year. Both charges are in connection with
the closure of three facilities in North America and are comprised primarily of
severance and other related benefits and costs of existing facilities, including
lease termination costs and write-down of existing assets to their expected net
realizable value. The Company expects these actions will be completed in 1998
and that the two owned facilities will be sold after that period. In connection
with the closure of these facilities, the Company expects to involuntarily
terminate approximately 70 employees. The Company is undertaking these actions
as part of its efforts to reduce costs through reengineering. When complete,
these actions will enable the Company to close certain operations and realize
cost savings estimated at approximately $2.5 million on an annual basis.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Mettler-Toledo is a manufacturer and marketer of weighing instruments for
use in laboratory, industrial and food retailing applications. The Company also
manufactures and sells certain related laboratory measurement instruments. The
Company's manufacturing facilities are located in Switzerland, the United
States, Germany, the U.K. and China.
Inventories
Inventories are valued at the lower of cost or market. Cost, which includes
direct materials, labor and overhead plus indirect overhead, is determined using
either the first in, first out (FIFO) or weighted average cost method. Two
companies in the U.S. use the last in, first out (LIFO) cost method.
F-33
<PAGE>
MT INVESTORS INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Inventories consisted of the following at December 31, 1996 and September 30,
1997:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
Raw materials and parts.............................................. $ 41,015 $ 41,843
Work in progress..................................................... 31,534 33,206
Finished goods....................................................... 29,982 31,204
------------ -------------
102,531 106,253
LIFO reserve......................................................... (5) (124)
------------ -------------
$102,526 $ 106,129
------------ -------------
------------ -------------
</TABLE>
Interest Rate Agreements
In July 1997, the Company entered into three year interest rate cap
agreements to limit the impact of increases in interest rates on $150.0 million
of U.S. dollar based debt. These agreements 'cap' the effects of an increase in
three month LIBOR above 8.5%. In addition, the Company has entered into three
year interest rate swap agreements which swap the interest obligation associated
with $100.0 million of U.S. dollar based debt from variable to fixed. The fixed
rate associated with the swap is 6.09% plus the Company's normal interest
margin. The swap is effective at three month LIBOR rates up to 7.00%.
In August 1997, the Company entered into certain three year interest rate
swap agreements that fix the interest obligation associated with SFr 112.5
million of Swiss Franc based debt at rates varying between 2.17% and 2.49%.
The Company has designated such interest rate agreements as hedges of
certain of its long-term debt payable and recognizes interest differentials as
adjustments to interest expense in the period they occur. Premiums paid on
interest rate cap agreements are amortized over the terms of the agreements.
Loss per Common Share
Loss per common share has been computed using the treasury stock method
based upon the weighted average number of common shares, including common share
equivalents, outstanding during the Successor period. Common share equivalents
result from outstanding options to purchase common stock. Pursuant to Securities
and Exchange Commission Staff Accounting Bulletin No. 83, all common shares and
common share equivalents issued and options granted by the Company at a price
less than the initial public offering price during the twelve months preceding
the initial filing of the Registration Statement have been included in the loss
per common share calculation as if they were outstanding during the period
presented.
Stock Option Plan
At September 30, 1997, the Company has outstanding 281,078 options to
purchase the Company's Class A common stock at a per share average price of
$100.00. After giving effect to the Reorganization (See Note 3), the Company has
outstanding 3,537,063 options to purchase common stock at a per share average
price of $7.95.
3. SUBSEQUENT EVENTS
Reorganization
Concurrently with the Offerings described elsewhere in this Prospectus (i)
Mettler-Toledo Holding, Inc. will be merged with and into MT Investors (the
'Merger'), with MT Investors being the surviving corporation, (ii) as part of
the Merger, MT Investors will convert each share of its existing Class A, Class
B and Class C
F-34
<PAGE>
MT INVESTORS INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
3. SUBSEQUENT EVENTS--(CONTINUED)
common stock, into 12.58392 shares of Common Stock and (iii) MT Investors will
change its name to Mettler-Toledo International Inc. In the Merger, holders who
would receive fractional shares will instead receive a cash payment at the
public offering price.
The following table presents the Company's actual shareholders' deficit at
September 30, 1997 and pro forma shareholders' deficit at such date after giving
effect to the Reorganization. Concurrent with the Reorganization, the Company
will increase its authorized shares of Common Stock to 125,000,000 shares.
<TABLE>
<CAPTION>
ACTUAL PRO FORMA
--------- ---------
<S> <C> <C>
Shareholders' deficit:
Common stock, $0.01 par value per share:
Class A non-voting, authorized 2,235,896 shares; issued 1,898,795 (excluding 3,984
shares held in treasury).......................................................... $ 19 --
Class B voting, authorized 1,000 shares; issued 1,000.............................. 1 --
Class C non-voting, authorized 541,859 shares; issued 537,453 (excluding 1,139
shares held in treasury).......................................................... 5 --
Common stock, authorized 125,000,000 shares; issued 30,670,134 (excluding 64,467
shares held in treasury) on a pro forma basis..................................... -- $ 307
Additional paid-in capital............................................................ 187,986 187,704
Accumulated deficit................................................................... (195,617) (195,617)
Currency translation adjustment....................................................... (28,655) (28,655)
--------- ---------
Total shareholders' deficit...................................................... $ (36,261) $ (36,261)
--------- ---------
--------- ---------
</TABLE>
Stock Option Plan
In October 1997, the Company granted, under its stock option plan, 57,300
options to purchase the Company's Class A common stock at a per share average
price of $200. After giving effect to the Reorganization, the total number of
options granted in October 1997 is 721,059 at a per share average price of
$15.89.
Preferred Stock
The Board of Directors, without further shareholder authorization, will be
authorized to issue up to 10 million shares of preferred stock, par value $0.01
per share (the 'Preferred Stock') in one or more series and to determine and fix
the rights, preferences and privileges of each series, including dividend rights
and preferences over dividends on the Common Stock and one or more series of the
Preferred Stock, conversion rights, voting rights (in addition to those provided
by law), redemption rights and the terms of any sinking fund therefor, and
rights upon liquidation, dissolution or winding up, including preferences over
the Common Stock and one or more series of the Preferred Stock. Although the
Company has no present plans to issue any shares of Preferred Stock following
the consummation of the Offerings, the issuance of shares of Preferred Stock, or
the issuance of rights to purchase such shares, may have the effect of delaying,
deferring or preventing a change in control of the Company or an unsolicited
acquisition proposal.
F-35
<PAGE>
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 11
The Company.................................... 15
Use of Proceeds................................ 16
Dividend Policy................................ 16
Dilution....................................... 17
Capitalization................................. 18
Unaudited Pro Forma Financial
Information.................................. 19
Selected Historical Financial Information...... 27
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 29
Industry....................................... 39
Business....................................... 41
Management..................................... 54
Certain Relationships and Related
Transactions................................. 58
Security Ownership of Certain Beneficial Owners
and Management............................... 59
Description of Certain Indebtedness............ 60
Description of Capital Stock................... 62
Shares Eligible for Future Sale................ 64
Certain United States Federal Tax
Considerations For Non-United States
Holders...................................... 66
Underwriting................................... 69
Legal Matters.................................. 72
Independent Auditors........................... 72
Available Information.......................... 72
Index to Financial Statements.................. F-1
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
6,666,667 SHARES
[LOGO]
METTLER-TOLEDO
INTERNATIONAL INC.
COMMON STOCK
------------------------
PROSPECTUS
------------------------
MERRILL LYNCH & CO.
BT ALEX. BROWN
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
, 1997
------------------------------------------------------
------------------------------------------------------
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED NOVEMBER 10, 1997
PROSPECTUS [LOGO]
6,666,667 SHARES
METTLER-TOLEDO INTERNATIONAL INC.
COMMON STOCK
------------------------
All of the shares of Common Stock offered hereby are being sold by
Mettler-Toledo International Inc. ('Mettler-Toledo' or the 'Company'). Of the
6,666,667 shares of Common Stock offered hereby, 1,333,333 shares are being
offered for sale initially outside of the United States and Canada by the
International Managers and 5,333,334 shares are being offered for sale initially
in a concurrent offering in the United States and Canada by the U.S.
Underwriters. The initial public offering price and the underwriting discount
per share will be identical for both Offerings. Up to 833,333 shares of Common
Stock offered hereby are being reserved for sale at the initial public
offering price to certain employees of the Company and certain other persons.
See 'Underwriting.'
Prior to the Offerings, there has been no public market for the Common
Stock. It is currently estimated that the initial public offering price will be
between $14.00 and $16.00 per share. For a discussion relating to factors to be
considered in determining the initial public offering price, see 'Underwriting.'
The Common Stock has been accepted for listing on the New York Stock
Exchange under the symbol 'MTD,' subject to official notice of issuance.
SEE 'RISK FACTORS' BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
Per Share................................... $ $ $
Total(3).................................... $ $ $
</TABLE>
(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including certain liabilities under the Securities Act of 1933,
as amended. See 'Underwriting.'
(2) Before deducting expenses payable by the Company estimated at $2.5 million.
The Underwriters have agreed to pay certain expenses of the Company incurred
in connection with the Offerings estimated at $ .
(3) The Company has granted the International Managers and the U.S. Underwriters
options to purchase up to an additional 200,000 shares and 800,000 shares of
Common Stock, respectively, in each case exercisable within 30 days after
the date hereof, solely to cover over-allotments, if any. If such options
are exercised in full, the total Price to Public, Underwriting Discount and
Proceeds to Company will be $ , $ and $ , respectively. See
'Underwriting.'
------------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Common Stock will be made in New York, New York on or
about , 1997.
------------------------
MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL
CREDIT SUISSE FIRST BOSTON
GOLDMAN SACHS INTERNATIONAL
------------------------
The date of this Prospectus is , 1997.
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
UNDERWRITING
Merrill Lynch International, BT Alex. Brown International, a Division of
Bankers Trust International PLC, Credit Suisse First Boston (Europe) Limited and
Goldman Sachs International are acting as lead managers (the 'Lead Managers')
for each of the International Managers named below (the 'International
Managers'). Subject to the terms and conditions set forth in an international
purchase agreement (the 'International Purchase Agreement') among the Company
and the International Managers, and concurrently with the sale of 5,333,334
shares of Common Stock to the U.S. Underwriters (as defined below), the Company
has agreed to sell to the International Managers, and each of the International
Managers severally and not jointly has agreed to purchase from the Company the
number of shares of Common Stock set forth opposite its name below.
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGER SHARES
- ------------------------------------------------------------------------------------------- ---------
<S> <C>
Merrill Lynch International................................................................
BT Alex. Brown International,
a Division of Bankers Trust International PLC............................................
Credit Suisse First Boston (Europe) Limited................................................
Goldman Sachs International................................................................
---------
Total......................................................................... 1,333,333
---------
---------
</TABLE>
The Company has also entered into a U.S. purchase agreement (the 'U.S.
Purchase Agreement') with certain underwriters in the United States and Canada
(the 'U.S. Underwriters' and, together with the International Managers, the
'Underwriters') for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated
('Merrill Lynch'), BT Alex. Brown Incorporated, Credit Suisse First Boston
Corporation and Goldman, Sachs & Co. are acting as representatives (the 'U.S.
Representatives'). Subject to the terms and conditions set forth in the U.S.
Purchase Agreement, and concurrently with the sale of 1,333,333 shares of Common
Stock to the International Managers pursuant to the International Purchase
Agreement, the Company has agreed to sell to the U.S. Underwriters, and the U.S.
Underwriters severally have agreed to purchase from the Company, an aggregate of
5,333,334 shares of Common Stock. The initial public offering price per share
and the total underwriting discount per share of Common Stock are identical
under the International Purchase Agreement and the U.S. Purchase Agreement.
In the International Purchase Agreement and the U.S. Purchase Agreement,
the several International Managers and the several U.S. Underwriters,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant to
such agreement are purchased. Under certain circumstances, under the
International Purchase Agreement and the U.S. Purchase Agreement, the
commitments of non-defaulting Underwriters may be increased. The closings with
respect to the sale of shares of Common Stock to be purchased by the
International Managers and the U.S. Underwriters are conditioned upon one
another.
The Lead Managers have advised the Company that the International Managers
propose initially to offer the shares of Common Stock to the public at the
initial public offering price set forth on the cover page of this Prospectus,
and to certain dealers at such price less a concession not in excess of $
per share of Common Stock. The International Managers may allow, and such
dealers may reallow, a discount not in excess of $ per share of Common
Stock on sales to certain other dealers. After the initial public offering, the
public offering
69
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
price, concession and discount may be changed. The Underwriters have agreed to
pay certain expenses of the Company incurred in connection with the Offerings
estimated at $ .
The Company has granted options to the International Managers, exercisable
for 30 days after the date of this Prospectus, to purchase up to an aggregate of
200,000 additional shares of Common Stock at the initial public offering price
set forth on the cover page of this Prospectus, less the underwriting discount.
The International Managers may exercise these options solely to cover
over-allotments, if any, made on the sale of the Common Stock offered hereby. To
the extent that the International Managers exercise these options, each
International Manager will be obligated, subject to certain conditions, to
purchase a number of additional shares of Common Stock proportionate to such
International Manager's initial amount reflected in the foregoing table. The
Company also has granted options to the U.S. Underwriters, exercisable for 30
days after the date of this Prospectus, to purchase up to an aggregate of
800,000 additional shares of Common Stock to cover over-allotments, if any, on
terms similar to those granted to the International Managers.
At the request of the Company, the Underwriters have reserved for sale, at
the initial public offering price, up to 833,333 of the shares offered hereby to
be sold to certain employees of the Company and certain other persons. The
number of shares of Common Stock available for sale to the general public will
be reduced to the extent such persons purchase such reserved shares. Any
reserved shares which are not orally confirmed for purchase within one day of
the pricing of the Offerings will be offered by the Underwriters to the general
public on the same terms as the other shares offered hereby.
The Company, the Company's executive officers and directors and
substantially all of the existing shareholders of the Company will agree,
subject to certain exceptions, not to directly or indirectly (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale of
or otherwise dispose of or transfer any shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock, whether now
owned or thereafter acquired by the person executing the agreement or with
respect to which the person executing the agreement thereafter acquires the
power of disposition, or file a registration statement under the Securities Act
with respect to the foregoing or (ii) enter into any swap or other agreement
that transfers, in whole or in part, the economic consequence of ownership of
the Common Stock whether any such swap or transaction is to be settled by
delivery of Common Stock or other securities, in cash or otherwise, without the
prior written consent of Merrill Lynch on behalf of the Underwriters for a
period of 180 days after the date of this Prospectus. See 'Shares Eligible for
Future Sale.'
The International Managers and the U.S. Underwriters have entered into an
intersyndicate agreement (the 'Intersyndicate Agreement') that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement, the
International Managers and the U.S. Underwriters are permitted to sell shares of
Common Stock to each other for purposes of resale at the initial public offering
price, less an amount not greater than the selling concession. Under the terms
of the Intersyndicate Agreement, the U.S. Underwriters and any dealer to whom
they sell shares of Common Stock will not offer to sell or sell shares of Common
Stock to persons who are non-U.S. or non-Canadian persons or to persons they
believe intend to resell to persons who are non-U.S. or non-Canadian persons,
and the International Managers and any dealer to whom they sell shares of Common
Stock will not offer to sell or sell shares of Common Stock to U.S. persons or
to Canadian persons or to persons they believe intend to resell to U.S. or
Canadian persons, except in the case of transactions pursuant to the
Intersyndicate Agreement.
Prior to the Offerings, there has been no public market for the Common
Stock of the Company. The initial public offering price will be determined
through negotiations between the Company and the U.S. Representatives and the
Lead Managers. The factors considered in determining the initial public offering
price, in addition to prevailing market conditions, are price-earnings ratios of
publicly traded companies that the U.S. Representatives believe to be comparable
to the Company, certain financial information of the Company, the history of,
and the prospects for, the Company and the industry in which it competes, and an
assessment of the Company's management, its past and present operations, the
prospects for, and timing of, future revenues of the Company, the present state
of the Company's development and the above factors in relation to market values
and various valuation measures of other companies engaged in activities similar
to the Company. There can be no assurance that an active trading market will
develop for the Common Stock or that the Common Stock will trade in the public
market subsequent to the Offerings at or above the initial public offering
price.
70
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
The Common Stock has been accepted for listing on the New York Stock
Exchange under the symbol 'MTD,' subject to official notice of issuance. In
order to meet the requirements for listing of the Common Stock on that exchange,
the U.S. Underwriters and the International Managers have undertaken to sell
lots of 100 or more shares to a minimum of 2,000 beneficial owners.
The Company has agreed to indemnify the International Managers and the U.S.
Underwriters against certain liabilities, including certain liabilities under
the Securities Act, or to contribute to payments the U.S. Underwriters and the
International Managers may be required to make in respect thereof.
Until the distribution of the Common Stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters and
certain selling group members to bid for and purchase the Common Stock. As an
exception to these rules, the U.S. Representatives are permitted to engage in
certain transactions that stabilize the price of the Common Stock. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Common Stock.
If the Underwriters create a short position in the Common Stock in
connection with the Offerings, i.e. if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus, the U.S.
Representatives may reduce that short position by purchasing Common Stock in the
open market. The U.S. Representatives may also elect to reduce any short
position by exercising all or part of the over-allotment option described above.
The U.S. Representatives may also impose a penalty bid on certain
Underwriters and selling group members. This means that if the U.S.
Representatives purchase shares of Common Stock in the open market to reduce the
Underwriters' short position or to stabilize the price of the Common Stock, they
may reclaim the amount of the selling concession from the Underwriters and
selling group members who sold those shares as part of the Offerings.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of the Common Stock to the extent that it
discourages resales of the Common Stock.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the U.S.
Representatives will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
Each International Manager has agreed that (i) it has not offered or sold
and, prior to the expiration of the period of six months from the Closing Date,
will not offer or sell any shares of Common Stock to persons in the United
Kingdom, except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which do not
constitute an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Common Stock in, from or
otherwise involving the United Kingdom; and (iii) it has only issued or passed
on and will only issue or pass on in the United Kingdom any document received by
it in connection with the issuance of Common Stock to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.
No action has been or will be taken in any jurisdiction (except in the
United States) that would permit a public offering of the shares of Common
Stock, or the possession, circulation or distribution of this Prospectus or any
other material relating to the Company or shares of Common Stock in any
jurisdiction where action for that purpose is required. Accordingly, the shares
of Common Stock may not be offered or sold, directly or indirectly, and neither
this Prospectus nor any other offering material or advertisements in connection
with the shares of Common Stock may be distributed or published, in or from any
country or jurisdiction except in compliance with any applicable rules and
regulations of any such country or jurisdiction.
71
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.
The Underwriters have from time to time provided investment banking
financial advisory services to the Company and AEA Investors and its affiliates,
for which they have received customary compensation, and may continue to do so
in the future. Merrill Lynch served as lead manager and Credit Suisse First
Boston Corporation served as a co-manager of the offering of the Notes in
October 1996, Merrill Lynch served as the Arranger and Documentation Agent and
an affiliate of Credit Suisse First Boston Corporation served as co-agent in
connection with the Company's Credit Agreement in November 1996 and May 1997 for
which they received customary compensation, and are acting in similar roles in
connection with the New Credit Agreement for which they will receive customary
compensation. An affiliate of Credit Suisse First Boston Corporation and Merrill
Lynch and its affiliates were lenders under the Credit Agreement and will be
lenders under the New Credit Agreement.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Common Stock
offered hereby will be passed upon for the Company by Fried, Frank, Harris,
Shriver & Jacobson (a partnership including professional corporations), London,
England. Certain legal matters relating to the Offerings will be passed upon for
the Underwriters by Debevoise & Plimpton, New York, New York. A partnership in
which partners of Fried, Frank, Harris, Shriver & Jacobson are partners is a
shareholder of the Company.
INDEPENDENT AUDITORS
The consolidated financial statements of MT Investors Inc. and subsidiaries
(as defined in Note 1 to the Audited Consolidated Financial Statements) as of
December 31, 1995 and 1996 and for each of the years ended December 31, 1994 and
1995 and for the period January 1, 1996 to October 14, 1996 and for the period
October 15, 1996 to December 31, 1996, included in this Prospectus, have been
audited by KPMG Fides Peat, independent auditors, as set forth in their reports
appearing elsewhere herein and are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 with respect to the Common Stock offered hereby under the Securities Act.
This Prospectus, which constitutes part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
items of which are omitted as permitted by the rules and regulations of the
Commission. For further information pertaining to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement, including
the exhibits thereto and the financial statements, notes and schedules filed as
a part thereof. Statements contained in this Prospectus regarding the contents
of any contract or other document referred to herein or therein are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement or
such other document, each such statement being qualified in all respects by such
reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and, in accordance therewith, files reports,
proxy statements and other information with the Commission. Such reports, proxy
statements and other information, as well as the Registration Statement and the
exhibits and schedules thereto, may be inspected, without charge, at the public
reference facility maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at Seven World Trade Center, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material may also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Such materials can also be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005 or on the Commission's site on the Internet at
http://www.sec.gov.
72
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 11
The Company.................................... 15
Use of Proceeds................................ 16
Dividend Policy................................ 16
Dilution....................................... 17
Capitalization................................. 18
Unaudited Pro Forma Financial
Information.................................. 19
Selected Historical Financial Information...... 27
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 29
Industry....................................... 39
Business....................................... 41
Management..................................... 54
Certain Relationships and Related
Transactions................................. 58
Security Ownership of Certain Beneficial Owners
and Management............................... 59
Description of Certain Indebtedness............ 60
Description of Capital Stock................... 62
Shares Eligible for Future Sale................ 64
Certain United States Federal Tax
Considerations For Non-United States
Holders...................................... 66
Underwriting................................... 69
Legal Matters.................................. 72
Independent Auditors........................... 72
Available Information.......................... 72
Index to Financial Statements.................. F-1
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
6,666,667 SHARES
[LOGO]
METTLER-TOLEDO INTERNATIONAL INC.
COMMON STOCK
------------------------
PROSPECTUS
------------------------
MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL
CREDIT SUISSE FIRST BOSTON
GOLDMAN SACHS INTERNATIONAL
, 1997
------------------------------------------------------
------------------------------------------------------
<PAGE>
[ALTERNATE PAGE FOR MERGER PROSPECTUS]
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED NOVEMBER 10, 1997
PROSPECTUS [LOGO]
30,670,134 SHARES
METTLER-TOLEDO INTERNATIONAL INC.
COMMON STOCK
------------------------
This Prospectus is being furnished to the holders of common stock of MT
Investors Inc., a Delaware corporation (the 'Company'), in connection with the
solicitation by the Board of Directors of the Company of the written consent of
shareholders in lieu of a meeting to approve the merger (the 'Merger') of the
Company with its wholly owned subsidiary, Mettler-Toledo Holding Inc., a
Delaware corporation ('Holding'), pursuant to an Agreement of Merger (the
'Merger Agreement'), between Holding and the Company. Pursuant to the Merger,
Holding would be merged with and into the Company, with the Company being the
surviving corporation. The affirmative vote or written consent of the holders of
shares of the Class B common stock, par value $.01, of the Company (the 'Class B
Shareholders') representing a majority of the outstanding shares of Class B
common stock is required to approve and adopt the Merger Agreement. The Class A
common stock and Class C common stock of the Company are non-voting common stock
and, therefore, the affirmative vote or written consent of the holders of such
stock is not required to approve the Merger. All holders of the Company's common
stock who do not provide their affirmative vote for or written consent to the
Merger are entitled to appraisal rights under Delaware law as set forth herein.
A copy of the Merger Agreement has been provided with this Prospectus.
The Merger Agreement provides that each share of the three classes of
common stock of the Company, the Class A common stock, Class B common stock and
Class C common stock, each with a par value of $.01, will be converted into and
represent the right to receive shares of common stock of the Company, $.01 par
value (the 'Common Stock'). A more detailed description of the Merger is set
forth in this Prospectus.
The Company is also concurrently conducting an underwritten public offering
(the 'Offerings') of shares of Common Stock and has granted the Underwriters in
connection therewith options to purchase additional shares to cover over-
allotments. The Offerings are conditioned on, among other things, the
consummation of the Merger, although consummation of the Merger is not
conditioned on the consummation of the Offerings. No assurances can be made that
the Offerings will be consummated.
------------------------
The Common Stock has been accepted for listing on the New York Stock Exchange
under the symbol 'MTD,'
subject to official notice of issuance.
------------------------
See 'Risk Factors' beginning on page 11 for a discussion of certain factors
that should be considered by the Company's shareholders.
------------------------
THE COMMON STOCK TO BE ISSUED IN THE MERGER HAS NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------------
The approximate date on which this Prospectus will first be delivered to the
Company's shareholders will be November , 1997
<PAGE>
[ALTERNATE PAGE FOR MERGER PROSPECTUS]
CONCURRENT TRANSACTIONS
Credit Agreement Refinancing. In connection with the Offerings, the
Company intends to refinance its existing credit facility (the 'Credit
Agreement') by entering into a new credit facility (the 'New Credit Agreement')
with certain financial institutions. The Company expects that it will have pro
forma borrowings under the New Credit Agreement of $383.9 million (representing
an increase of $71.3 million) as of September 30, 1997 and borrowings of $38.0
million under various other credit arrangements. Of the borrowings under the New
Credit Agreement, $200.0 million will be in the form of a term loan and the
remainder will be outstanding under a revolving credit facility. The Company's
revolving credit facility commitment will increase from $170.0 million to $420.0
million under the New Credit Agreement, and this commitment will include a
$100.0 million acquisition facility. Additional borrowings under the New Credit
Agreement will be used, together with the net proceeds from the Offerings, to
repurchase the Notes (as defined below) and to pay related premiums and fees and
expenses. As a result of the Refinancing (as defined below), the Company expects
to realize significantly lower interest expense. See 'Capitalization.'
Note Repurchase. As part of the Refinancing, the Company has commenced a
tender offer (the 'Note Repurchase') for all of the 9 3/4% Senior Subordinated
Notes due 2006 (the 'Notes') of the Company's wholly owned subsidiary,
Mettler-Toledo, Inc. As of October 17, 1997, all of the Notes had been
irrevocably tendered. The Company will use net proceeds from the Offerings and
additional borrowings under the New Credit Agreement to finance the Note
Repurchase. In connection with the Note Repurchase the Company has obtained the
requisite consents to remove substantially all of the restrictive covenants and
certain other provisions from the Indenture governing the Notes. The refinancing
of the Credit Agreement and the Note Repurchase are collectively referred to as
the 'Refinancing.' See 'Capitalization.' In connection with the refinancing of
the Credit Agreement and the Note Repurchase, the Company anticipates that it
will record an extraordinary loss of approximately $30.0 million representing
the premium expected to be paid in connection with the purchase of the Notes and
the write-off of related capitalized debt issuance fees resulting from the
Refinancing.
THE MERGER
The Boards of Directors of the Company and its direct wholly owned
subsidiary, Holding, have authorized and directed their officers to enter into a
merger agreement and consummate a merger pursuant to which Holding will be
merged with and into the Company, with the Company being the surviving
corporation. Delaware law requires that, in addition to such board approval, the
affirmative vote of a majority of the outstanding stock of each of Holding and
of the Company entitled to vote thereon is required to adopt the Merger
Agreement. The Company as the sole shareholder of Holding has approved the
Merger. Since only the holders of Class B common stock of the Company have
voting rights, the affirmative vote or written consent of holders representing a
majority of the outstanding shares of Class B common stock is required to
approve the Merger. All holders of the Company's common stock who do not provide
their affirmative vote or written consent for the Merger are afforded appraisal
rights under Delaware law unless they have otherwise waived such rights. Upon
shareholder approval and consummation of the Merger, all capital stock of
Holding would be canceled and the equity securities of the Company would become
the only outstanding equity securities of the Company. In the Merger, each share
of the three classes of the Company's common stock would be converted into and
represent the right to receive 12.58392 shares of Common Stock of the Company,
except that the holders of such stock would receive a cash payment at a market
price in lieu of any fractional shares that would be required to be issued in
connection therewith. In the Merger, the Company's certificate of incorporation
and by-laws will be amended as set forth herein. See 'The Merger.' No approval
of any federal or state regulatory authority is required to consummate the
Merger.
The Merger will be effective upon filing of the Certificate of Merger with
the Secretary of State of the State of Delaware. This is expected to occur prior
to consummation of the Offerings if shareholder consent is obtained.
The receipt of shares of Common Stock issued pursuant to the Merger will
not be a taxable transaction for federal income tax purposes. See 'Certain
Federal Income Tax Consequences of the Merger' for more detailed information
regarding the federal income tax consequences of the Merger. The transaction
being effected by the Merger is referred to herein as the 'Reorganization.'
7
<PAGE>
[ALTERNATE PAGE FOR MERGER PROSPECTUS]
RISK FACTORS
Before making any decision with respect to the Merger, the Company's
shareholders should carefully consider all of the information contained in this
Prospectus. In particular, prospective purchasers should carefully consider the
factors set forth herein under 'Risk Factors.' These risks include the effect of
the Company's substantial indebtedness on operations and liquidity; risks
associated with currency fluctuations; risks associated with international
operations; risks associated with competition and improvements in technology by
competitors; risks due to significant sales to the pharmaceutical and chemicals
industries; risks relating to future acquisitions; reliance on key management;
risk of liability under environmental laws; potentially adverse effect on stock
price due to shares eligible for future sale; restrictions on payment of
dividends; certain anti-takeover provisions in the Company's certificate of
incorporation; and the absence of a prior public market for the Common Stock.
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The summary historical financial information set forth below for the years
ended December 31, 1993, 1994 and 1995, for the period from January 1, 1996 to
October 14, 1996, and for the period from October 15, 1996 to December 31, 1996
is derived from the Company's financial statements, which were audited by KPMG
Fides Peat, independent auditors. The financial information for all periods
prior to October 15, 1996, the date of the Acquisition, is combined financial
information of the Mettler-Toledo Group (the 'Predecessor Business'). The
summary historical financial information at September 30, 1997 and for the nine
months ended September 30, 1996 and 1997 is derived from the unaudited interim
consolidated financial statements of the Predecessor Business and of the
Company, which, in the opinion of management, include all adjustments necessary
for a fair presentation of the results for the unaudited periods. Operating
results for the nine months ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1997. The summary pro forma financial information gives effect to the
Acquisition, the Safeline Acquisition, the Offerings and the Refinancing
(assuming all of the Notes are repurchased) and does not purport to represent
what the Company's results of operations actually would have been if such
transactions had occurred as of such dates. The combined historical data of the
Predecessor Business and the consolidated historical data of the Company are not
comparable in many respects due to the Acquisition and the Safeline Acquisition.
See 'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and 'Unaudited Pro Forma Financial Information' and the Consolidated
Financial Statements and accompanying notes included herein. The financial
information presented below was prepared in accordance with U.S. generally
accepted accounting principles ('U.S. GAAP').
8
<PAGE>
[ALTERNATE PAGE FOR MERGER PROSPECTUS]
RISK FACTORS
Before making any decision with respect to the Merger, the Company's
shareholders should consider carefully the following risk factors. This
Prospectus contains forward-looking statements. These statements are subject to
a number of risks and uncertainties, certain of which are beyond the Company's
control. See '--Forward-Looking Statements and Associated Risks' and
'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'
EFFECT OF SUBSTANTIAL INDEBTEDNESS ON OPERATIONS AND LIQUIDITY
In connection with the Acquisition and the Safeline Acquisition, the
Company incurred a significant amount of indebtedness. At September 30, 1997,
the Company's consolidated indebtedness (excluding unused commitments) on a pro
forma basis giving effect to the Offerings and the Refinancing would have been
approximately $421.9 million. The Company will have additional borrowing
capacity on a revolving credit basis under the New Credit Agreement and under
local working capital facilities for acquisitions and other purposes. The
Company is required to make scheduled principal payments on the term loans under
the New Credit Agreement. See 'Capitalization' and 'Description of Certain
Indebtedness.' The Company's ability to comply with the terms of the New Credit
Agreement and its other debt obligations to make cash payments with respect to
such obligations and to satisfy its other debt or to refinance any of such
obligations will depend on the future performance of the Company, which, in
turn, is subject to prevailing economic and competitive conditions and certain
financial, business and other factors beyond its control. See 'Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources' and 'Description of Certain
Indebtedness.'
The Company's high degree of leverage could have important consequences
including but not limited to the following: (i) the Company's ability to obtain
additional financing for acquisitions, capital expenditures, working capital or
general corporate purposes may be impaired in the future; (ii) a substantial
portion of the Company's cash flow from operations must be dedicated to the
payment of principal and interest on borrowings under the New Credit Agreement
and the Company's other indebtedness, thereby reducing the funds available to
the Company for its operations and other purposes, including investments in
research and development and capital spending; (iii) certain of the Company's
borrowings are and will continue to be at variable rates of interest, which
exposes the Company to the risk of increased interest rates; and (iv) the
Company may be substantially more leveraged than certain of its competitors,
which may place the Company at a relative competitive disadvantage and may make
the Company more vulnerable to a downturn in general economic conditions or its
business or changing market conditions and regulations. See 'Description of
Certain Indebtedness.'
The New Credit Agreement will contain and the Company's other debt
obligations contain a number of covenants that, among other things, will
restrict the ability of the Company to incur additional indebtedness, dispose of
certain assets, make capital expenditures and otherwise restrict corporate
activities. See 'Description of Certain Indebtedness.' The Company's ability to
comply with such covenants may be affected by events beyond its control,
including prevailing economic, financial and industry conditions. A failure to
comply with the covenants and restrictions contained in the New Credit
Agreement, the Company's other debt obligations or any agreements with respect
to any additional financing could result in an event of default under its debt
agreements.
RISKS ASSOCIATED WITH CURRENCY FLUCTUATIONS
Swiss franc-denominated expenses represent a much greater percentage of the
Company's operating expenses than Swiss franc-denominated sales represent of
total net sales. Some of the Company's manufacturing costs in Switzerland relate
to products that are sold outside of Switzerland, including many technologically
sophisticated products requiring highly skilled personnel. Moreover, a
substantial percentage of the Company's research and development expenses and
general and administrative expenses are incurred in Switzerland. Appreciation of
the Swiss franc against the Company's major trading currencies (i.e., the U.S.
dollar, certain major European currencies and the Japanese yen) has a negative
impact on the Company's income from operations, whereas depreciation of the
Swiss franc has a positive impact.
The Company's operations are conducted by subsidiaries in many countries,
and the results of operations and the financial position of each of those
subsidiaries is reported in the relevant foreign currency and then translated
into U.S. dollars at the applicable foreign currency exchange rate for inclusion
in the Company's
11
<PAGE>
[ALTERNATE PAGE FOR MERGER PROSPECTUS]
RESTRICTIONS ON PAYMENT OF DIVIDENDS; ABSENCE OF DIVIDENDS
The New Credit Agreement will restrict, among other things, the ability of
the Company to pay dividends. The Company does not anticipate paying any cash
dividends on the Common Stock in the foreseeable future. See 'Dividend Policy'
and 'Description of Certain Indebtedness.'
CERTAIN ANTI-TAKEOVER PROVISIONS
The Company's amended and restated certificate of incorporation (the
'Amended and Restated Certificate of Incorporation') and amended by-laws (the
'Amended By-laws') will contain certain provisions that could make more
difficult the acquisition of the Company by means of a tender offer, proxy
contest or otherwise. The Amended and Restated Certificate of Incorporation will
authorize the issuance of preferred stock without shareholder approval and upon
such terms as the Board of Directors may determine. The rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights of
holders of preferred stock that may be issued in the future. In addition, the
Amended By-laws will contain advance notice procedures for shareholders to
nominate candidates for election as directors and for shareholders to submit
proposals for consideration at shareholder meetings. The Company has no present
plans to issue shares of preferred stock. Under certain circumstances, Section
203 of the Delaware General Corporation Law (the 'DGCL') makes it more difficult
for an 'interested stockholder' (generally a 15% stockholder) to effect various
business combinations with a corporation for a three-year period. See
'Description of Capital Stock.'
ABSENCE OF PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the Offerings, there has been no public market for the Common
Stock. Although the Common Stock has been accepted for listing on the NYSE
subject to official notice of issuance, there can be no assurance that an active
trading market for the Common Stock will develop or be sustained following the
Offerings or that the market price of the Common Stock will not decline below
the initial public offering price. The initial public offering price will be
determined by negotiation among the Company and the Underwriters based upon
several factors and may not be indicative of future market prices. The price at
which the Common Stock will trade will depend upon a number of factors,
including, but not limited to, the Company's historical and anticipated
operating results and general market and economic conditions, some of which
factors are beyond the Company's control. Factors such as quarterly fluctuations
in the Company's financial and operating results, announcements by the Company
or others and developments affecting the Company, its products, its customers,
the markets in which it competes or the industry generally, also could cause the
market price of the Common Stock to fluctuate substantially. In addition, the
stock market has from time to time experienced extreme price and volume
fluctuations. These broad market fluctuations may adversely affect the market
price of the Common Stock.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Prospectus includes forward-looking statements that reflect the
Company's current views with respect to future events and financial performance,
including capital expenditures, planned product introductions, research and
development expenditures, potential future growth, including potential
penetration of developed markets and potential growth opportunities in emerging
markets, potential future acquisitions, potential cost savings from planned
employee reductions and restructuring programs, estimated proceeds from and
timing of asset sales, planned operational changes and research and development
efforts, strategic plans and future cash sources and requirements. These
forward-looking statements are subject to certain risks and uncertainties,
including those identified in 'Risk Factors,' which could cause actual results
to differ materially from historical results or those anticipated. The words
'believe,' 'expect,' 'anticipate' and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of their dates. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
14
<PAGE>
[ALTERNATE PAGE FOR MERGER PROSPECTUS]
THE COMPANY
GENERAL
Mettler-Toledo is a leading global supplier of precision instruments. The
Company is the world's largest manufacturer and marketer of weighing instruments
for use in laboratory, industrial and food retailing applications. In addition,
the Company holds one of the top three market positions in several related
analytical instruments such as titrators, thermal analysis systems, pH meters,
automatic lab reactors and electrodes. Through the recent acquisition of
Safeline, the Company is also the world's largest manufacturer and marketer of
metal detection systems for companies that produce and package goods in the food
processing, pharmaceutical, cosmetics, chemicals and other industries. The
Company focuses on high value-added segments of its markets by providing
innovative instruments, by integrating these instruments into
application-specific solutions for customers, and by facilitating the processing
of data gathered by its instruments and the transfer of this data to customers'
management information systems. Mettler-Toledo services a worldwide customer
base through its own sales and service organization and has a global
manufacturing presence in Europe, the United States and Asia. The Company
generated pro forma 1996 net sales of $889.6 million (giving effect to the
Safeline Acquisition) which were derived 49% in Europe, 40% in North and South
America and 11% in Asia and other markets.
The mailing address of the Company's principal executive offices is Im
Langacher, P.O. Box MT-100, CH-8606, Greifensee, Switzerland. Its telephone
number is 41-1-944-22-11.
ACQUISITION AND SAFELINE ACQUISITION
Acquisition. The Company was incorporated in December 1991. It was
recapitalized in connection with the October 15, 1996 acquisition of the
Mettler-Toledo Group from Ciba in a transaction sponsored by management and AEA
Investors. The Company paid cash consideration of approximately SFr 505.0
million (approximately $402.0 million at October 15, 1996), including dividends
of approximately SFr 109.4 million (approximately $87.1 million at October 15,
1996), paid approximately $185.0 million to settle amounts due to Ciba and its
affiliates and incurred expenses in connection with the Acquisition and related
financing of approximately $29.0 million. The Company primarily financed the
Acquisition with (i) borrowings under a credit agreement in the amount of $307.0
million, (ii) the issuance of $135.0 million of the Notes and (iii) an equity
contribution of $190.0 million primarily from AEA Investors, its
shareholder-investors and executive officers and other employees of the Company.
In connection with the Acquisition, the Company agreed that it would not, in the
18-month period following the closing of the Acquisition, without the prior
written consent of Ciba, engage in certain extraordinary dispositions, including
certain sales of assets or equity of any company in the Mettler-Toledo Group,
mergers or similar business combinations (except certain transactions the
aggregate net proceeds of which do not exceed SFr 80.0 million (approximately
$64.0 million at October 15, 1996) in a 12-month period). Consummation of the
Offerings does not require the consent of Ciba.
Safeline Acquisition. On May 30, 1997, the Company acquired Safeline for
pounds 61.0 million (approximately $100.0 million at May 30, 1997), plus up to
an additional pounds 6.0 million (approximately $10.0 million at May 30, 1997)
for a contingent earn-out payment. In October 1997, the Company made an
additional payment, representing a post-closing adjustment, of pounds 1.9
million (approximately $3.1 million at October 3, 1997). Such amount will be
accounted for as additional purchase price. Safeline, based in Manchester, U.K.,
is the world's largest manufacturer and marketer of metal detection systems for
companies that produce and package goods in the food processing, pharmaceutical,
cosmetics, chemicals and other industries. Safeline's metal detectors can also
be used in conjunction with the Company's checkweighing products for important
quality and safety checks in these industries. From 1992 to 1996, Safeline's
sales net increased at a compounded annual growth rate of approximately 30%, in
part due to the introduction of new products such as the first digital
electronic and Zero Metal-Free Zone metal detectors. Safeline had net sales and
Adjusted Operating Income of $40.4 million and $9.9 million, respectively, for
the year ended December 31, 1996.
15
<PAGE>
[ALTERNATE PAGE FOR MERGER PROSPECTUS]
CONCURRENT TRANSACTIONS
Credit Agreement Refinancing. In connection with the Offerings, the
Company intends to refinance its Credit Agreement by entering into the New
Credit Agreement. The Company expects that it will have pro forma borrowings
under the New Credit Agreement of $383.9 million (representing an increase of
$71.3 million) as of September 30, 1997 and borrowings of $38.0 million under
various other credit arrangements. Of the borrowings under the New Credit
Agreement, $200.0 million will be in the form of a term loan and the remainder
will be outstanding under a revolving credit facility. The Company's revolving
credit facility commitment will increase from $170.0 million to $420.0 million
under the New Credit Agreement, and this commitment will include a $100.0
million acquisition facility. Additional borrowings under the New Credit
Agreement will be used, together with the net proceeds from the Offerings, to
repurchase the Notes and to pay related premiums and fees and expenses. As a
result of the Refinancing, the Company expects to realize significantly lower
interest expense. See 'Capitalization.'
Note Repurchase. As part of the Refinancing, the Company has commenced a
tender offer for all of the Notes, and all of the Notes have been irrevocably
tendered. The Company will use net proceeds from the Offerings and additional
borrowings under the New Credit Agreement to finance the Note Repurchase. See
'Capitalization.' In connection with the Note Repurchase, the Company has
obtained the requisite consents to remove substantially all of the restrictive
covenants and certain other provisions from the Indenture governing the Notes.
In connection with the refinancing of the Credit Agreement and the Note
Repurchase, the Company anticipates that it will record an extraordinary loss of
approximately $30.0 million representing the premium expected to be paid in
connection with the purchase of the Notes and the write-off of related
capitalized debt issuance fees resulting from the Refinancing.
HOLDING
Holding does not carry on any business activities other than to act as a
holding company for, and ultimate corporate parent of MTI. The Company owns all
of the common stock of Holding and such common stock represents substantially
all of the assets of the Company. Accordingly, the information contained in this
Prospectus as it relates to the Company is substantially the same as such
information as it relates to Holding. For information regarding the business,
property and legal matters of Holding, see 'Business.' For information regarding
certain relationships and related transactions of Holding, see 'Certain
Transactions.'
Holding has not declared or paid any cash dividends on its equity
securities and does not intend to do so in the foreseeable future. Since Holding
is a holding company, it relies on the dividends and other distributions of MTI
to obtain funds for distribution to the shareholders of Holding. MTI, however,
has certain restrictions on its ability to declare and pay dividends to Holding
or the Company. See 'Dividend Policy.'
The members of the Board of Directors of Holding are Robert F. Spoerry,
Thomas P. Salice and Alan W. Wilkinson, all of whom are executive officers of
the Company and all executive officers of Holding are also executive officers of
the Company. Accordingly, for information regarding directors, executive
officers and executive compensation of or relating to Holding, see 'Management.'
Since the Company acts as a holding company and has no assets other than
cash and the capital stock of Holding, the information that would be provided by
selected financial data, pro forma financial statements, management's discussion
and analysis of financial condition and results of operations and financial
statements with respect to Holding is substantially the same as the information
provided herein with respect to the Company and has not been separately provided
in this Prospectus. See 'Summary--Summary Historical and Pro Forma Financial
Information,' 'Unaudited Pro Forma Financial Information,' 'Selected Historical
Financial Information,' 'Management's Discussion and Analysis of Financial
Condition and Results of Operations' and the Company's financial statements
included herein.
The mailing address of Holding's principal executive offices is Im
Langacher, P.O. Box MT-100, CH 8606, Greifensee, Switzerland. Its telephone
number is 41-1-944-22-11.
16
<PAGE>
[ALTERNATE PAGE FOR MERGER PROSPECTUS]
DIVIDEND POLICY
The Company has never paid any dividends on its common stock and does not
anticipate paying any cash dividends on the Common Stock in the foreseeable
future. The current policy of the Company's Board of Directors is to retain
earnings to finance the operations and expansion of the Company's business. In
addition, the Company's New Credit Agreement will restrict the Company's ability
to pay dividends to its shareholders. Any future determination to pay dividends
will depend on the Company's results of operations, financial condition, capital
requirements, contractual restrictions and other factors deemed relevant by the
Board of Directors. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources' and
'Description of Certain Indebtedness.'
17
<PAGE>
[ALTERNATE PAGE FOR MERGER PROSPECTUS]
THE MERGER
It is anticipated that Holding will be merged with and into the Company
pursuant to a merger under Section 251 of the DGCL. The Company would be the
surviving corporation of such Merger. Upon receipt of the written consent of
their respective shareholders, Holding will be merged with and into the Company.
The Merger would be effected pursuant to the Merger Agreement.
The Merger Agreement. The Merger Agreement provides that, upon approval of
the shareholders of Holding and the Company entitled to vote thereon, Holding
will be merged with and into the Company, which will be the corporation
surviving the Merger. Pursuant to the Merger Agreement, all the capital stock of
Holding will be canceled and each share of the three classes of common stock of
the Company will be converted into and represent the right to receive shares of
Common Stock of the Company. Existing shareholders of the Company will receive a
cash payment at a market price in lieu of any fractional shares that would be
required to be issued as a result of the Merger. The Merger Agreement is
attached hereto as Appendix A and is hereby incorporated by reference in this
Prospectus.
Reasons for the Merger. The Boards of Directors of Holding and the Company
have deemed it advisable and in the best interest of Holding and the Company to
collapse Holding and the Company into one company in order to simplify the
Mettler-Toledo organizational structure in connection with the initial public
offering of the Company's Common Stock and to simplify the capital structure by
converting the three outstanding classes of the Company's capital stock into one
class. The Boards believe that the simplified structure will cause the Company's
Common Stock to be more amenable to sale and trading in the public equity
markets. See 'Comparison of Shareholder Rights.'
Amendment of Certificate of Incorporation and By-laws. The Merger
Agreement sets forth several proposed amendments to the Company's certificate of
incorporation. Specifically, the amendments will (i) permit the Board of
Directors, without further shareholder authorization, to issue shares of
Preferred Stock in one or more series and to determine and fix the rights,
preferences and privileges of each series, (ii) reclassify the Company's
existing Class A, Class B and Class C common stock into one class of Common
Stock, (iii) impose advance notice requirements for shareholder action and a
prohibition on the taking of shareholder action by written consent and (iv) add
director and officer indemnification provisions. See 'Description of Capital
Stock.' The name of the Company will be changed to Mettler-Toledo International
Inc.
Common Stock. For information regarding the Common Stock of the Company to
be received by the shareholders of the Company, see 'Description of Capital
Stock.'
Rights of Shareholders. For an explanation of the difference between the
rights of the holders of Class A, Class B and Class C common stock of the
Company and the rights of holders of the Company's Common Stock, see 'Comparison
of Shareholder Rights,' 'Description of Existing Capital Stock' and 'Description
of Capital Stock.'
Restrictions on Resale. All shares of the Company's Common Stock received
by the Company's shareholders in the Merger will be freely transferable, except
as set forth below and except that shares of Common Stock received by persons
who are deemed to be 'affiliates' (as such term is defined under Securities Act)
of the Company prior to the Merger may be resold by them only in transactions
permitted by the resale provisions of Rule 145 promulgated under the Securities
Act (or Rule 144 in the case of such persons who become affiliates of the
Company) or as otherwise permitted under the Securities Act. In connection with
the Offerings, shareholders holding substantially all of the Company's Common
Stock, subject to certain limited exceptions, have agreed not to, among other
things, sell or otherwise dispose of any shares of the Company's Common Stock
for a period of 180 days after the date of this Prospectus without the prior
written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Accounting Treatment. The Merger will be treated as a reorganization of
companies under common control and will be accounted for similar to a pooling of
interests for accounting and financial reporting purposes.
Tax Consequences. For a description of the federal income tax consequences
of the Merger, see 'Certain Federal Income Tax Consequences of the Merger.'
18
<PAGE>
[ALTERNATE PAGE FOR MERGER PROSPECTUS]
SOLICITATION OF CONSENTS
Under the DGCL the affirmative vote of a majority of the outstanding shares
of Class B common stock of the Company is required to approve the Merger. In
lieu of a meeting and vote, holders of a majority of the outstanding shares of
Class B common stock of the Company can consent in writing and deliver such
consent or consents to the Company's registered office in the State of Delaware,
its principal place of business or an officer or agent of the corporation having
custody of the book in which proceedings of meetings of shareholders are
recorded. All holders of Class B common stock will be entitled to give their
written consent to approve and adopt the Merger. The record date for determining
the shareholders of record for the written consents is November , 1997. Prompt
notice of any actions taken by written consent as required by the DGCL will be
given to those shareholders of the Company who do not consent in writing.
The solicitation of written consents is made by the Company. The Company
will bear the cost of the solicitation.
The Class B shareholders' consents solicited pursuant to this Prospectus
must be submitted to the Company promptly. The Company plans to consummate the
Merger as soon as sufficient consents have been obtained.
The written consents shall be revocable by the Company's shareholders
submitting such consents until such consents are submitted to the Company as set
forth above. Upon delivery of a consent to the Company pursuant to the DGCL,
such consent will not be revocable. However, the Merger Agreement may be
terminated or amended (subject to certain limitations) by the Board of Directors
of either Holding or the Company at any time prior to the filing of such
agreement with the State of Delaware, notwithstanding the approval of such
agreement by the written consent of the Company's shareholders.
Under Delaware law, appraisal rights are available to all holders of common
stock of the Company who do not provide their affirmative vote or written
consent for the adoption and approval of the Merger. In connection with the
Merger and in accordance with Delaware law, the shareholders of the Company were
given notice of their rights to appraisal. Additional notice of such rights to
the extent required by Delaware law is provided herewith. Attached hereto as
Appendix B is a copy of Section 262 of the DGCL regarding appraisal rights.
COMPARISON OF SHAREHOLDER RIGHTS
As a result of the Merger, all outstanding shares of common stock of
Holding will be canceled and the existing shares of Class A, Class B and Class C
common stock of the Company will be converted into and represent the right to
receive 12.58392 shares of Common Stock. Following the Merger, the rights of the
shareholders of the Company will thereafter be governed by the Company's Amended
and Restated Certificate of Incorporation and Amended By-laws.
Voting. Holders of the Company's Common Stock are entitled to one vote per
share on all matters to be voted upon by the shareholders. The entire voting
power of the shareholders of the Company is vested exclusively in the Class B
shareholders. Upon consummation of the Merger all classes of stock of the
Company will be converted pro rata into shares of Common Stock of the Company.
The Merger will thus effectively dilute the Class B shareholders' voting power
from 100% of the outstanding voting stock of the Company to less than 1% of the
outstanding voting stock of the Company. See 'Description of Capital Stock' and
'Description of Existing Capital Stock.'
Preference. Holders of the Company's common stock are entitled to share
ratably in dividends and, in the event of the liquidation, dissolution or
winding up of the Company, in all the assets remaining after payment of
liabilities. See 'Description of Capital Stock.' Holders of Class A common stock
of the Company have a dividend and liquidation preference over the holders of
Class B and Class C common stock of the Company. See 'Description of Existing
Capital Stock.' Upon consummation of the Merger shareholders who held shares of
Class A common stock will no longer have this distribution and liquidation
preference.
Notice Provisions. The Company's amended by-laws will contain provisions
that could make more difficult the acquisition of the Company by means of a
tender offer, a proxy contest or otherwise, including provisions regarding
advance notice for shareholders' nominations of directors and other shareholder
proposals. See 'Description of Capital Stock.' These provisions are not present
in the Company's existing by-laws.
68
<PAGE>
[ALTERNATE PAGE FOR MERGER PROSPECTUS]
NYSE Listing. Upon consummation of the Merger and Offerings, the Common
Stock of the Company will be listed on the NYSE. The shares of common stock of
the Company currently outstanding are not publicly traded.
DESCRIPTION OF EXISTING CAPITAL STOCK
The following brief description of the Company's capital stock does not
purport to be complete and is subject in all respects to applicable Delaware law
and to the provisions of the Company's Restated Certificate of Incorporation
(the 'Restated Certificate of Incorporation') and By-laws (the 'By-laws').
Pursuant to the Merger, all of the capital stock of Holding will be canceled and
each outstanding share of the three classes of common stock of the Company will
be converted into and represent the right to receive shares of Common Stock of
the Company. The description of the capital stock and the Restated Certificate
of Incorporation and By-law provisions set forth below are relevant only to the
Company as in existence prior to the Merger.
The authorized capital stock of the Company consists of 2,775,976 shares of
Common Stock, $.01 par value of which 2,233,117 shares are designated as Class A
common stock, 1,000 shares are designated Class B common stock and 541,859
shares are designated Class C common stock. As of the date hereof, the Company
had outstanding 1,898,795 shares of Class A common stock (excluding 3,984 shares
held in treasury), 1,000 shares of Class B common stock and 537,453 (excluding
1,139 shares held in treasury) shares of Class C common stock, and an additional
338,378 shares of Class A common stock were issuable upon exercise of
outstanding employee stock options. As of the date hereof, there were
approximately 823 holders of record of Class A common stock, 8 holders of record
of Class B common stock and 841 holders of record of Class C common stock.
Currently there is no public market for any of the shares of capital stock
of the Company.
COMMON STOCK
Holders of common stock of the Company have no preemptive, subscription or
redemption rights. Except for the Class A dividend and distribution preference
and the Class B voting rights (each as described below) the three classes of
common stock of the Company have identical rights under the Company's Restated
Certificate of Incorporation and By-laws.
Preference. Dividends or distributions in connection with the liquidation,
dissolution or winding up of the affairs of the Company or not paid out of the
current and accumulated earnings and profits shall be paid in the following
manner: First, exclusively to the holders of the shares of Class A common stock,
ratably to each such holder, until the sum of all dividends and distributions to
each holder of Class A common stock equals $100 for each share of Class A common
stock held by such holder. After each holder of shares of Class A common stock
shall have received dividends and distributions totaling $100, then exclusively
to the holders of the shares of Class B common stock and Class C common stock
ratably to each such holder until the sum of all dividends and distributions to
each holder of Class B common stock and/or Class C common stock equals $100 for
each share of Class B common stock and/or Class C common stock held by such
shareholder. After each holder of Class B common stock and Class C common stock
shall have received such dividends and distributions, then to all holders of
Class A common stock, Class B common stock and/or Class C common stock, ratably
to each holder of such shares.
Voting. The entire voting power of the Company's common stock is vested
exclusively in Class B common stock. Each holder of shares of Class B common
stock shall be entitled to one vote for each share of Class B common stock.
CERTAIN CHARTER AND BY-LAW PROVISIONS
Director's Liability. The Amended and Restated Certificate of
Incorporation provides that to the fullest extent permitted by the DGCL as it
currently exists, a director of the Company shall not be liable to the Company
or its stockholders for monetary damages for breach of fiduciary duty as a
director. See 'Description of Capital Stock--Certain Provisions of the Company's
Amended and Restated Certificate of Incorporation, Amended By-laws and Delaware
Law.'
Section 203 of Delaware Law. The Company is subject to Section 203 of the
DGCL. See 'Description of Capital Stock--Certain Provisions of the Company's
Amended and Restated Certificate of Incorporation, Amended By-laws and Delaware
Law.' Such provision could make more difficult the acquisition of the Company by
means of a tender offer, a proxy contest or otherwise.
69
<PAGE>
[ALTERNATE PAGE FOR MERGER PROSPECTUS]
REGISTRATION RIGHTS
Current holders of the Company's Common Stock (other than certain members
of senior management) have rights to require the Company to register such shares
of Common Stock for resale pursuant to subscription agreements pursuant to which
they acquired their shares. After securities of the Company have been sold
pursuant to a registration statement under the Securities Act, upon the request
of persons owning at least 25% of the sum of all outstanding shares of Common
Stock which are then 'restricted securities' (as defined by Rule 144 under the
Securities Act) and which have a value of at least $5,000,000, the Company would
be required to register the sale of such securities, subject to certain
limitations and requirements. The Company is not required to file any
registration statement within six months of the effective date of any earlier
registration statement and is not required to file more than three registration
statements pursuant to such requests. In addition, under certain circumstances,
should the Company file a registration statement with the Securities and
Exchange Commission registering shares of the Common Stock of the Company, the
owners of restricted securities would be entitled to include their restricted
securities in such registration.
PRINCIPAL SHAREHOLDERS
The following table sets forth information with respect to the beneficial
ownership of the voting and non-voting classes of capital stock of the Company
prior to the Merger and the beneficial ownership of the Company's Common Stock
after the Merger by (i) each director of the Company, (ii) the Named Executive
Officers of the Company, (iii) all directors and executive officers of the
Company as a group and (iv) each person who is the beneficial owner of more than
five percent of any class of the Company's common stock:
<TABLE>
<CAPTION>
SHARES OF
SHARES OF THE COMPANY'S
SHARES OF THE THE COMPANY'S COMMON STOCK
COMPANY'S VOTING NON-VOTING CAPITAL AFTER THE
CAPITAL STOCK(1) STOCK(1)(2) MERGER(1)
------------------ --------------------- ------------------
NUMBER OF % OF NUMBER OF % OF NUMBER OF % OF
NAME SHARES CLASS SHARES CLASS(2) SHARES CLASS
- ------------------------------------------------------- --------- ----- --------- -------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
DIRECTORS:
Philip Caldwell(3)................................... 0 -- 8,136 * 102,383 *
Robert F. Spoerry(4)................................. 0 -- 34,551 1.42% 644,384 1.72%
Reginald H. Jones.................................... 70 7.0% 3,633 * 46,598 *
John D. Macomber..................................... 75 7.5 3,411 * 43,742 *
Laurence Z.Y. Moh.................................... 0 -- 28,352 1.16 356,779 0.96
Thomas P. Salice(3).................................. 0 -- 39,708 1.63 556,058 1.49
Alan W. Wilkinson(3)................................. 0 -- 39,708 1.63 556,058 1.49
NAMED EXECUTIVE OFFICERS:
Fred Ort(5).......................................... 0 -- 6,076 * 92,177 *
Karl M. Lang(6)...................................... 0 -- 6,076 * 118,377 *
Lukas Braunschweiler(7).............................. 0 -- 6,076 * 118,377 *
John D. Robechek(3)(8)............................... 0 -- 5,214 * 107,530 *
All directors and executive officers as a group (15
persons)(9).......................................... 145 14.5 234,922 9.53 2,958,063 7.84
OTHER 5% SHAREHOLDERS:
AEA Investors Inc.................................... 490 49.0 41,162 1.69 524,135 1.40
Finlayson Fund Investments PTE LTD................... 0 -- 230,526 9.46 2,900,921 7.77
National Union Fire Insurance Company of Pittsburgh,
PA................................................ 0 -- 177,974 7.31 2,239,611 6.00
Clifton C. Garvin, Jr................................ 75 7.5 1,738 * 22,814 *
Edmund T. Pratt, Jr.................................. 75 7.5 5,215 * 66,569 *
Francis C. Rooney, Jr................................ 75 7.5 1,506 * 19,895 *
Geoffrey T. Boisi.................................... 65 6.5 2,579 * 33,272 *
John R. Opel, Trustee for John R. Opel Revocable
Trust U/A dated April 7, 1997..................... 75 7.5 2,666 * 34,493 *
Forma Investments Limited............................ 0 -- 135,521 5.6 1,705,385 4.57
Nassau Capital Funds L.P............................. 0 -- 126,050 5.2 1,586,203 4.25
Ciby-Geigy AG........................................ 0 -- 122,143 5.0 1,537,038 4.12
</TABLE>
(Footnotes on next page)
70
<PAGE>
[ALTERNATE PAGE FOR MERGER PROSPECTUS]
(Footnotes from previous page)
- ------------------
* Less than 1%
(1) Based on 1,000 shares of the Company's voting capital stock and 2,436,248
shares of the Company's non-voting capital stock outstanding prior to the
Merger and 37,336,801 shares of the Company's Common Stock outstanding after
the Merger. The number of shares held by such persons after the Merger
assumes no purchases by any such persons in the Offerings. Calculations of
percentage of beneficial ownership as of a certain date assume the exercise
by only the respective named shareholder of all options for the purchase of
common stock held by such shareholder which are exercisable within 60 days
from such date.
(2) The shares of the Company's non-voting capital stock include the shares of
its Class A common stock and Class C common stock. The percentage of class
is determined by combining the Class A common stock and Class C common stock
into one class of non-voting capital stock.
(3) Include shares held by, or in trust for, members of such individual's family
for which Messrs. Caldwell, Salice, Wilkinson and Robechek disclaim
beneficial ownership. Does not include shares held by AEA Investors, of
which Messrs. Salice and Wilkinson are officers.
(4) Mr. Spoerry is also a Named Executive Officer. Includes 16,656 shares of
common stock issuable upon exercise of options that are exercisable within
60 days from the date hereof.
(5) Includes 1,249 shares of common stock issuable upon exercise of options that
are exercisable within 60 days from the date hereof.
(6) Includes 3,331 shares of common stock issuable upon exercise of options that
are exercisable within 60 days from the date hereof.
(7) Includes 3,331 shares of common stock issuable upon exercise of options that
are exercisable within 60 days from the date hereof.
(8) Includes 3,331 shares of common stock issuable upon exercise of options that
are exercisable within 60 days from the date hereof.
(9) Includes William Donnelly, who became Vice President, Chief Financial
Officer, Treasurer and Assistant Secretary on April 1, 1997, and Fred Ort
who ceased to be an executive officer on April 1, 1997 but who remains a
non-executive officer.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following summary describes the material federal income tax
consequences of the Merger to Holding, the Company and the stockholders of the
Company. It does not discuss all the tax consequences that may be relevant to
the Company's shareholders in special tax situations (such as insurance
companies, financial institutions, securities dealers, tax-exempt organizations
or shareholders who exercise dissenter's rights) or to the Company's
shareholders who acquired their shares of Company common stock pursuant to the
exercise of employee stock options or warrants, or otherwise as compensation.
The summary also does not discuss tax consequences to holders of the Company's
outstanding warrants or stock options. Neither Holding nor the Company has
requested a ruling from the Internal Revenue Service (the 'IRS') or an opinion
of counsel with regard to any of the tax consequences of the Merger.
Under present federal income tax law, based upon the assumption that the
Merger will take place as described in the Merger Agreement, no gain or loss
will be recognized upon the receipt of shares of Common Stock in exchange for
shares of the Company's common stock (except to the extent cash is received in
lieu of fractional shares). The tax basis of the shares of Common Stock received
in the Merger (including any fractional shares of Common Stock deemed received)
will be the same as the tax basis of the common stock exchanged therefor, and
the holding period for shares of Common Stock received will include the period
that the exchanged shares were held by the holder, provided such shares were
held as a capital asset. In addition, the Company and Holding will not recognize
gain or loss in connection with the Merger.
A shareholder of the Company who receives cash in lieu of a fractional
share of Common Stock will be treated as if the cash were received in payment
for such fractional share, and, except as discussed below, such shareholder will
therefore recognize gain or loss equal to the difference between the cash
received and such shareholder's tax basis in the fractional share. Such gain or
loss will be capital gain or loss if the common stock was held as a capital
asset and will be long-term capital gain or loss if the common stock was held
for more than one year as of the consummation of the Merger. In the case of a
non-corporate shareholder of the Company, such long-term capital gain generally
will be subject to a maximum tax rate of 28% if the common stock was held for
more than 1 year but not more than 18 months and to a maximum tax rate of 20% if
the common stock was held for more than 18 months. Shareholders of the Company
who are Non-U.S. Holders will generally not recognize gain or loss for federal
income tax purposes with respect to the receipt of cash in lieu of fractional
shares, unless such stockholders would be subject to federal income tax on a
sale of common stock under the rules discussed in 'Certain United States Federal
Tax Considerations for Non-United States Holders--Disposition of Common Stock.'
See 'Certain United States Federal Tax Considerations for Non-United States
Holders.'
The foregoing discussion is for general information only and is based on
currently existing federal income tax law which is subject to change. Any change
in applicable law would affect the continuing validity of the discussion. ALL
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH REGARD TO THE TAX
CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF
STATE, LOCAL AND FOREIGN INCOME TAX LAWS.
71
<PAGE>
[ALTERNATE PAGE FOR MERGER PROSPECTUS]
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS. IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREROF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 11
The Company.................................... 15
Holding........................................ 16
Dividend Policy................................ 17
The Merger..................................... 18
Capitalization................................. 18
Unaudited Pro Forma Financial
Information.................................. 19
Selected Historical Financial Information...... 27
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 29
Industry....................................... 38
Business....................................... 40
Management..................................... 53
Certain Relationships and Related
Transactions................................. 57
Security Ownership of Certain Beneficial Owners
and Management............................... 58
Description of Certain Indebtedness............ 59
Description of Capital Stock................... 61
Shares Eligible for Future Sale................ 63
Certain United States Federal Tax
Considerations For Non-United States
Holders...................................... 65
Solicitation of Consents....................... 68
Comparison of Shareholder Rights............... 68
Description of Existing Capital Stock.......... 69
Principal Shareholders......................... 70
Certain Federal Income Tax Consequences of the
Merger....................................... 71
Legal Matters.................................. 71
Independent Auditors........................... 71
Available Information.......................... 71
Index to Financial Statements.................. F-1
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
[LOGO]
METTLER-TOLEDO
INTERNATIONAL INC.
COMMON STOCK
------------------------
PROSPECTUS
------------------------
, 1997
------------------------------------------------------
------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
The following table shows the expenses, other than underwriting discounts
and commissions, to be incurred in connection with the sale and distribution of
securities being registered by the Company.
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 185,876
NASD Filing Fee............................................. 30,500
Listing Fee................................................. 200,100
Blue Sky Fees and Expenses.................................. 5,000
Legal Fees and Expenses..................................... 650,000
Accounting Fees and Expenses................................ 650,000
Printing Expenses........................................... 750,000
Miscellaneous Expenses...................................... 28,524
----------
Total..................................................... $2,500,000
----------
----------
</TABLE>
- ------------------
* Except for the SEC registration fee and the NASD Filing Fee, all of the
foregoing expenses have been estimated.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company, as a Delaware corporation, is empowered by Section 145 of the
DGCL, subject to the procedures and limitations stated therein, to indemnify any
person against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with any threatened, pending or completed action, suit or proceeding in which
such person is made or threatened to be made a party by reason of his being or
having been a director, officer, employee or agent of the Company or his serving
at the request of the Company as a director, officer, employee or agent of
another company or other entity. The statute provides that indemnification
pursuant to its provisions is not exclusive of other rights of indemnification
to which a person may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors, or otherwise. The Amended By-laws
provide for indemnification by the Company of its directors and officers to the
full extent authorized by the DGCL. Pursuant to Section 145 of the DGCL, the
Company has purchased insurance on behalf of its present and former directors
and officers against liabilities asserted against and incurred by them in such
capacity or arising out of their status as such.
Pursuant to specific authority granted by Section 102 of the DGCL, the
Amended and Restated Certificate of Incorporation contains the following
provision regarding indemnification of directors:
'To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or may hereafter be amended, a Director of the
Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a Director.'
The Amended By-laws contain the following provision regarding
indemnification of directors and officers:
'The Corporation shall indemnify to the full extent authorized by law
any person made or threatened to be made a party to an action, suit or
proceeding, whether criminal, civil administrative or investigative, by
reason of the fact that he, his testator or intestate is or was a director,
officer, employee or agent of the Corporation or is or was serving, at the
request of the Corporation, as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise.'
The Company has entered into agreements to provide indemnification for
their directors and certain officers in addition to the indemnification provided
for in the Amended and Restated Certificate of Incorporation and Amended
By-laws. These agreements, among other things, indemnify the directors, to the
fullest extent provided by Delaware law, for certain expenses (including
attorneys' fees), losses, claims, liabilities, judgments, fines and
II-1
<PAGE>
settlement amounts incurred by such indemnitee in any action or proceeding,
including any action by or in the right of the Company, on account of services
as a director or officer of any affiliate of the Company, or as a director or
officer of any other company or enterprise that the indemnitee provides services
to at the request of the Company.
The Management Agreement between Mettler-Toledo, Inc. and AEA Investors
provides for indemnification of employees of AEA Investors who serve as
directors of the Company.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
From the date of its incorporation until the issuances of common stock
which occurred beginning in October 1996, the Company issued common stock to
certain members of senior management, the investor-participants of AEA Investors
and AEA Investors for approximately $.03 per share. In connection with the
Acquisition, the Company effected a recapitalization pursuant to which such
common stock was converted into Class B common stock or Class C common stock, as
the case may be.
1. In October 1996, the Company issued 1,803,489 shares of Class A common
stock for an aggregate consideration of $180,348,900, 50 shares of Class B
common stock for an aggregate consideration of approximately $2, and 172,376
shares of Class C common stock for an aggregate consideration of approximately
$5,171. The shares were offered and sold to executive officers of the Company,
the management and investor-participants of AEA Investors and AEA Investors in
reliance on Rule 506 of Regulation D and Section 4(2) under the Securities Act.
2. In October 1996, the Company issued 8,843 shares of Class A common stock
for an aggregate consideration of $884,300, and 2,526 shares of Class C common
stock for an aggregate consideration of approximately $76. The shares were
offered and sold in reliance on Rule 701 under the Securities Act and were sold
pursuant to a written compensatory benefit plan to employees of the Company and
its subsidiaries.
3. In October 1996, the Company issued 16,578 shares of Class A Common
Stock for an aggregate consideration of $1,657,800, and 4,738 shares of Class C
common stock for an aggregate consideration of approximately $142. The shares
were offered and sold in reliance on Rule 903 under the Securities Act outside
the United States to employees of the Company who represented that they were non
U.S. persons.
4. In December 1996, the Company issued 25,750 shares of Class A common
stock for an aggregate consideration of $2,575,000, and 11,885 shares of Class C
common stock for an aggregate consideration of approximately $357. The shares
were offered and sold to executive officers of the Company, the management and
investor-participants of AEA Investors and other accredited investors in
reliance on Rule 506 of Regulation D under the Securities Act.
5. In December 1996, the Company issued 8,620 shares of Class A common
stock for an aggregate consideration of $862,000, and 2,472 shares of Class C
common stock for an aggregate consideration of approximately $74. The shares
were offered and sold in reliance on Rule 701 under the Securities Act and were
sold pursuant to a written compensatory benefit plan to employees of the Company
and its subsidiaries.
6. In December 1996, the Company issued 36,499 shares of Class A common
stock for an aggregate consideration of $3,649,900, and 10,401 shares of Class C
common stock for an aggregate consideration of approximately $312. The shares
were offered and sold in reliance on Rule 903 under the Securities Act outside
the United States to employees of the Company who represented that they were non
U.S. persons.
7. In April 1997, the Company issued 3,000 shares of Class A common stock
for an aggregate consideration of $300,000, and 857 shares of Class C common
stock for an aggregate consideration of approximately $26. The shares were
offered and sold to an executive officer of the Company in reliance on Rule 506
of Regulation D under the Securities Act.
The sales described in items 1, 4 and 7 were made to (i) individuals who
represented that they were accredited investors, (ii) executive officers of the
Company, or (iii) employees of AEA Investors (who numbered fewer than 35 and)
who the Company believes have knowledge and experience in financial and business
matters sufficient to be capable of evaluating the merits and risks of
purchasing the securities issued.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
1.1 -- Form of U.S. Purchase Agreement.
1.2 -- Form of International Purchase Agreement.
2.1 -- Stock Purchase Agreement between AEA-MT Inc, AG fur Prazisionsinstrumente and Ciba-Geigy AG, as
amended (Filed as Exhibit 2.1 to the Registration Statement, as amended, on Form S-1, of the Company
(Reg. No. 33-09621) and incorporated herein by reference).
2.2 -- Share Sale and Purchase Agreement relating to the acquisition of the entire issued share capital of
Safeline Limited (Filed as Exhibit 2 to the Current Report on Form 8-K of Mettler-Toledo Holding
Inc. dated June 3, 1997 and incorporated herein by reference).
3.1 -- Form of Amended and Restated Certificate of Incorporation of the Company.
3.2 -- Form of Amended By-laws of the Company.
4.1 -- Indenture dated as of October 15, 1996, among MT Acquisition Corp., as Issuer, Mettler-Toledo
Holding Inc., as Note Guarantor, and United States Trust Company of New York, as Trustee (Filed as
Exhibit 4.1 to the Current Report on Form 8-K of Mettler-Toledo Holding Inc. dated October 15, 1996
and incorporated herein by reference).
4.2 -- First Supplemental Indenture dated as of October 15, 1996, among Mettler-Toledo, Inc.,
Mettler-Toledo Holding Inc., as Note Guarantor, and United States Trust Company of New York, as
Trustee (Filed as Exhibit 4.2 to the Current Report on Form 8-K of Mettler-Toledo Holding Inc. dated
October 15, 1996 and incorporated herein by reference).
4.3 -- Specimen Form of the Company's Common Stock Certificate.
4.4 -- Second Supplemental Indenture dated as of October 16, 1997 among Mettler-Toledo, Inc., as Issuer,
Mettler-Toledo Holding Inc., as Note Guarantor, and United States Trust Company of New York, as
Trustee.
5.1 -- Opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel to the Company, as to the legality of
the securities being registered.
10.1 -- Management Consulting Agreement dated as of October 15, 1996 between Mettler-Toledo, Inc. and AEA
Investors Inc. (Filed as Exhibit 10.3 to the Annual Report on Form 10-K of Mettler-Toledo Holding
Inc. dated March 31, 1997 and incorporated herein by reference).
10.2 -- Employment Agreement between Robert F. Spoerry and Mettler-Toledo, AG, dated as of October 30, 1996
(Filed as Exhibit 10.4 to the Annual Report on Form 10-K of Mettler-Toledo Holding Inc. dated March
31, 1997 and incorporated herein by reference).
10.3 -- Loan Agreement between Robert F. Spoerry and Mettler-Toledo AG, dated as of October 7, 1996 (Filed
as Exhibit 10.5 to the Annual Report on Form 10-K of Mettler-Toledo Holding Inc. dated March 31,
1997 and incorporated herein by reference).
10.4 -- MT Investors Inc. Stock Option Plan (Filed as Exhibit 10.6 to the Annual Report on Form 10-K of
Mettler-Toledo Holding Inc. dated March 31, 1997 and incorporated herein by reference).
10.5 -- Mettler Toledo Performance-Oriented Bonus System (POBS), effective as of 1993 (Filed as Exhibit 10.7
to the Annual Report on Form 10-K of Mettler-Toledo Holding Inc. dated March 31, 1997 and
incorporated herein by reference).
10.6 -- Mettler Toledo POBS Plus--Incentive Scheme for Senior Management of Mettler Toledo, dated as of
November 4, 1996 (Filed as Exhibit 10.8 to the Annual Report on Form 10-K of Mettler-Toledo Holding
Inc. dated March 31, 1997 and incorporated herein by reference).
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C> <C>
10.7 -- Credit Agreement, dated as of May 29, 1997, between Mettler-Toledo, Inc., Mettler-Toledo Holding AG,
as Borrowers, Safeline Holding Company as UK Borrower, Mettler-Toledo, Inc. as Canadian Borrower and
Merrill Lynch & Co. as Arranger and Documentation Agent, and the Lenders thereto (Filed as Exhibit
10.9 to Amendment No. 1 to the Form 10 of the Company, dated as of June 30, 1997, and incorporated
herein by reference).
10.8 -- Form of Credit Agreement, dated as of November , 1997, between Mettler-Toledo International Inc.,
as Guarantor, Mettler-Toledo, Inc., Mettler-Toledo AG, as Borrowers, Safeline Holding Company as UK
Borrower, Mettler-Toledo, Inc., as Canadian Borrower and Merrill Lynch & Co. as Arranger and
Documentation Agent, and the Lenders thereto.
10.9 -- Form of Agreement of Merger dated November , 1997 by and between MT Investors Inc. and
Mettler-Toledo Holding Inc.
10.10 -- 1997 Amended and Restated Stock Option Plan.
10.11 -- Form of Participants' Subscription Agreement.
10.12 -- Form of GMC Subscription Agreement.
11** -- Statement regarding computation of per share earnings.
21 -- Subsidiaries of the Company.
23.1 -- Consent of Fried, Frank, Harris, Shriver & Jacobson (included in Exhibit 5.1).
23.2 -- Consent of KPMG Fides Peat, independent auditors.
24.1 ** -- Powers of Attorney.
</TABLE>
- ------------------
* To be filed by amendment
** Previously filed
(b) Schedules
<TABLE>
<CAPTION>
SCHEDULE
NUMBER DESCRIPTION
- -------- -----------
<S> <C>
I** Condensed Financial Information of Registrant
II** Valuation and Qualifying Accounts
</TABLE>
- ------------------
** Previously filed
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of Prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of Prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
II-4
<PAGE>
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
Prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(4) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (3) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not
be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(5) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the
prospectus within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent to
the effective date of the registration statement through the date of
responding to the request.
(6) The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject of
and included in the registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK,
STATE OF NEW YORK, ON THE 10TH DAY OF NOVEMBER, 1997.
MT INVESTORS INC.
By: /s/ WILLIAM P. DONNELLY
----------------------------------
William P. Donnelly
Vice President, Finance, Chief
Financial
Officer and Treasurer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* President and Chief Executive Officer November 10, 1997
- ------------------------------------------ (Principal Executive Officer), Director
Robert F. Spoerry
/s/ WILLIAM P. DONNELLY Vice President, Finance, Chief Financial November 10, 1997
- ------------------------------------------ Officer and Treasurer (Principal Financial
William P. Donnelly and Accounting Officer)
* Chairman of the Board November 10, 1997
- ------------------------------------------
Philip Caldwell
* Director November 10, 1997
- ------------------------------------------
Reginald H. Jones
* Director November 10, 1997
- ------------------------------------------
John D. Macomber
* Director November 10, 1997
- ------------------------------------------
John M. Manser
* Director November 10, 1997
- ------------------------------------------
Laurence Z.Y. Moh
* Director November 10, 1997
- ------------------------------------------
Thomas P. Salice
* Director November 10, 1997
- ------------------------------------------
Alan W. Wilkinson
*By: /s/ WILLIAM P. DONNELLY
-------------------------------------
William P. Donnelly
Attorney-in-Fact
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<S> <C> <C>
1.1 -- Form of U.S. Purchase Agreement.
1.2 -- Form of International Purchase Agreement.
2.1 -- Stock Purchase Agreement between AEA-MT Inc, AG fur Prazisionsinstrumente and Ciba-Geigy AG, as
amended (Filed as Exhibit 2.1 to the Registration Statement, as amended, on Form S-1, of the Company
(Reg. No. 33-09621) and incorporated herein by reference).
2.2 -- Share Sale and Purchase Agreement relating to the acquisition of the entire issued share capital of
Safeline Limited (filed as Exhibit 22 to the Current Report on Form 8-K of Mettler-Toledo Holding Inc.
dated June 3, 1997 and incorporated herein by reference).
3.1 -- Form of Amended and Restated Certificate of Incorporation of the Company.
3.2 -- Form of Amended By-laws of the Company.
4.1 -- Indenture dated as of October 15, 1996, among MT Acquisition Corp., as Issuer, Mettler-Toledo Holding
Inc., as Note Guarantor, and United States Trust Company of New York, as Trustee (Filed as Exhibit 4.1
to the Current Report on Form 8-K of Mettler-Toledo Holding Inc. dated October 15, 1996 and
incorporated herein by reference).
4.2 -- First Supplemental Indenture dated as of October 15, 1996, among Mettler-Toledo, Inc., Mettler-Toledo
Holding Inc., as Note Guarantor, and United States Trust Company of New York, as Trustee (Filed as
Exhibit 4.2 to the Current Report on Form 8-K of Mettler-Toledo Holding Inc. dated October 15, 1996
and incorporated herein by reference).
4.3 -- Specimen Form of the Company's Common Stock Certificate.
4.4 -- Second Supplemental Indenture dated as of October 16, 1997 among Mettler-Toledo, Inc., Mettler-Toledo
Holding Inc., as Note Guarantor, and United States Trust Company of New York, as Trustee.
5.1 -- Opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel to the Company, as to the legality of the
securities being registered.
10.1 -- Management Consulting Agreement dated as of October 15, 1996 between Mettler-Toledo, Inc. and AEA
Investors Inc. (Filed as Exhibit 10.3 to the Annual Report on Form 10-K of Mettler-Toledo Holding Inc.
dated March 31, 1997 and incorporated herein by reference).
10.2 -- Employment Agreement between Robert F. Spoerry and Mettler-Toledo, AG, dated as of October 30, 1996
(Filed as Exhibit 10.4 to the Annual Report on Form 10-K of Mettler-Toledo Holding Inc. dated March
31, 1997 and incorporated herein by reference).
10.3 -- Loan Agreement between Robert F. Spoerry and Mettler-Toledo AG, dated as of October 7, 1996 (Filed as
Exhibit 10.5 to the Annual Report on Form 10-K of Mettler-Toledo Holding Inc. dated March 31, 1997 and
incorporated herein by reference).
10.4 -- MT Investors Inc. Stock Option Plan (Filed as Exhibit 10.6 to the Annual Report on Form 10-K of
Mettler-Toledo Holding Inc. dated March 31, 1997 and incorporated herein by reference).
10.5 -- Mettler Toledo Performance-Oriented Bonus System (POBS), effective as of 1993 (Filed as Exhibit 10.7
to the Annual Report on Form 10-K of Mettler-Toledo Holding Inc. dated March 31, 1997 and incorporated
herein by reference).
10.6 -- Mettler Toledo POBS Plus--Incentive Scheme for Senior Management of Mettler Toledo, dated as of
November 4, 1996 (Filed as Exhibit 10.8 to the Annual Report on Form 10-K of Mettler-Toledo Holding
Inc. dated March 31, 1997 and incorporated herein by reference).
10.7 -- Credit Agreement, dated as of May 29, 1997, between Mettler-Toledo, Inc., Mettler-Toledo Holding AG,
as Borrowers, Safeline Holding Company as UK Borrower, Mettler-Toledo, Inc. as Canadian Borrower and
Merrill Lynch & Co. as Arranger and Documentation Agent, and the Lenders thereto (Filed as Exhibit
10.9 to Amendment No. 1 to the Form 10 of the Company, dated as of June 30, 1997, and incorporated
herein by reference).
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
10.8 -- Form of Credit Agreement, dated as of November , 1997, between Mettler-Toledo International Inc., as
Guarantor, Mettler-Toledo, Inc., Mettler-Toledo AG, as Borrowers, Safeline Holding Company as UK
Borrower, Mettler-Toledo, Inc., as Canadian Borrower and Merrill Lynch & Co. as Arranger and
Documentation Agent, and the Lenders thereto.
10.9 -- Form of Agreement of Merger dated as of November , 1997 by and between MT Investors Inc. and
Mettler-Toledo Holding Inc.
10.10 -- 1997 Amended and Restated Stock Option Plan.
10.11 -- Form of Participants' Subscription Agreement.
10.12 -- Form of GMC Subscription Agreement.
11** -- Statement regarding computation of per share earnings.
21 -- Subsidiaries of the Company.
23.1 -- Consent of Fried, Frank, Harris, Shriver & Jacobson (included in Exhibit 5.1).
23.2 -- Consent of KPMG Fides Peat, independent auditors.
24.1** -- Powers of Attorney.
</TABLE>
- ------------------
* To be filed by amendment
** Previously filed
<PAGE>
MT INVESTORS INC.
(a Delaware corporation)
(to be renamed Mettler-Toledo International Inc.)
Shares of Common Stock
FORM OF U.S. PURCHASE AGREEMENT
Dated: , 1997
<PAGE>
Table of Contents
U.S. PURCHASE AGREEMENT.......................................................1
SECTION 1. Representations and Warranties.............................5
(a) Representations and Warranties by the Company and Mettler..5
(i) Compliance with Registration Requirements.............5
(ii) Independent Accountants..............................6
(iii) Financial Statements................................6
(iv) No Material Adverse Change in Business...............7
(v) Good Standing.........................................8
(vi) Good Standing of Subsidiaries........................8
(vii) Capitalization......................................9
(viii) Authorization of Agreement.........................9
(ix) Authorization and Description of Securities..........9
(x) Absence of Defaults and Conflicts....................10
(xi) Absence of Labor Dispute............................11
(xii) Absence of Proceedings.............................11
(xiii) Accuracy of Exhibits..............................11
(xiv) Possession of Intellectual Property................11
(xv) Absence of Further Requirements.....................12
(xvi) Possession of Licenses and Permits.................12
(xvii) Title to Property.................................13
(xviii) Investment Company Act...........................13
(xix) Environmental Laws.................................13
(xx) Registration Rights.................................14
(xxi) Taxes..............................................14
(xxii) Accounting Controls...............................15
(xxiii) Insurance........................................15
(xxiv) Stabilization or Manipulation.....................15
(xxv) Certain Relationships..............................15
(xxvi) No Offering Material..............................16
(xxvii) Suppliers........................................16
(xxviii) Authority to Consummate Merger and Related
Transactions....................................16
(xxix) Appraisal Rights..................................17
(b) Officer's Certificates....................................17
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing...........17
(a) Initial Securities........................................17
(b) Option Securities.........................................17
(c) Payment...................................................18
(d) Denominations; Registration...............................19
SECTION 3. Covenants of the Company..................................19
i
<PAGE>
(a) Compliance with Securities Regulations and Commission
Requests..................................................19
(b) Filing of Amendments......................................20
(c) Delivery of Registration Statements.......... ............20
(d) Delivery of Prospectuses..................................20
(e) Continued Compliance with Securities Laws.................20
(f) Blue Sky Qualifications...................................21
(g) Rule 158..................................................21
(h) Use of Proceeds...........................................22
(i) Restriction on Sale of Securities.........................22
(j) Reporting Requirements....................................22
(k) Compliance with NASD Rules................................23
SECTION 4. Payment of Expenses.......................................23
(a) Expenses..................................................23
(b) Termination of Agreement..................................24
SECTION 5. Conditions of U.S. Underwriters' Obligations..............24
(a) Effectiveness of Registration Statement...................24
(b) Opinion of Counsel for Company............................24
(c) Opinion of German Counsel for the Company.................25
(d) Opinion of Swiss Counsel for the Company..................25
(e) Opinion of Christine J. Smith, Esq........................25
(f) Opinion of Counsel for U.S. Underwriters..................25
(g) Officers' Certificate.....................................26
(h) Litigation Certificate....................................26
(i) Accountant's Comfort Letter...............................26
(j) Bring-down Comfort Letter.................................27
(k) Approval of Listing.......................................27
(l) No Objection..............................................27
(m) Lock-up Agreements; Registration Rights...................27
(n) Purchase of Initial International Securities..............27
(o) Reorganization. .........................................27
(p) Reliance Letters..........................................27
(q) Conditions to Purchase of U.S. Option Securities..........28
(r) Additional Documents......................................29
(s) Termination of Agreement..................................29
SECTION 6. Indemnification...........................................30
(a) Indemnification of U.S. Underwriters......................30
(b) Indemnification of Company, Directors and Officers........31
(c) Actions against Parties; Notification.....................32
(d) Settlement without Consent if Failure to Reimburse........32
(e) Indemnification for Reserved Securities...................33
SECTION 7. Contribution..............................................33
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery..................................................35
ii
<PAGE>
SECTION 9. Termination of Agreement..................................35
(a) Termination; General......................................35
(b) Liabilities...............................................35
SECTION 10. Default by One or More of the U.S. Underwriters...........36
SECTION 11. Notices...................................................36
SECTION 12. Parties...................................................37
SECTION 13. GOVERNING LAW AND TIME....................................37
SECTION 14. Effect of Headings........................................37
SCHEDULES
Schedule A - List of Underwriters............................ Sch A-1
Schedule B - Pricing Information............................. Sch B-1
Schedule C - List of persons and entities subject to lock-up. Sch C-1
EXHIBITS ............................................................ A-1
Exhibit A - Form of Opinion of Company's Counsel................. A-1
Exhibit B - Form of Local Counsel Opinion........................ B-1
Exhibit C - Form of Opinion of Christine J. Smith, Esq........... C-1
Exhibit D - Form of Litigation Certificate of the
Chief Financial Officer of the Company.............. D-1
Exhibit E - Form of Lock-up Letter............................... E-1
iii
<PAGE>
MT INVESTORS INC.
(a Delaware corporation)
(to be renamed Mettler-Toledo International Inc.)
Shares of Common Stock
(Par Value $.01 Per Share)
FORM OF U.S. PURCHASE AGREEMENT
, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
B.T. ALEX. BROWN INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
as U.S. Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
MT Investors Inc., a Delaware corporation (the "Company"), and
Mettler-Toledo, Inc. ("Mettler"), confirm their agreement with Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and
each of the other U.S. Underwriters named in Schedule A hereto (collectively,
the "U.S. Underwriters", which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom Merrill
Lynch, B.T. Alex. Brown Incorporated, Credit Suisse First Boston Corporation and
Goldman, Sachs & Co. are acting as representatives (in such capacity, the "U.S.
Representatives"), with respect to the issue and sale by the Company and the
purchase by the U.S. Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $.01 per share, of the
Company ("Common Stock") set forth in said Schedule A, and with respect to the
grant by the Company to the U.S. Underwriters, acting severally and not jointly,
of the option described in Section 2(b) hereof to purchase all or any part of o
additional shares of
<PAGE>
Common Stock to cover over-allotments, if any. The aforesaid shares of Common
Stock (the "Initial U.S. Securities") to be purchased by the U.S. Underwriters
and all or any part of the shares of Common Stock subject to the option
described in Section 2(b) hereof (the "U.S. Option Securities") are hereinafter
called, collectively, the "U.S. Securities".
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "International Purchase Agreement")
providing for the offering by the Company of an aggregate of shares of Common
Stock (the "Initial International Securities") through arrangements with certain
underwriters outside the United States and Canada (the "International Managers")
for which Merrill Lynch International, BT Alex. Brown International, a Division
of Bankers Trust International PLC, Credit Suisse First Boston (Europe) Limited
and Goldman Sachs International are acting as lead managers (the "Lead
Managers"), and the grant by the Company to the International Managers, acting
severally and not jointly, of an option to purchase all or any part of the
International Managers' pro rata portion of up to additional shares of Common
Stock solely to cover overallotments, if any (the "International Option
Securities" and, together with the U.S. Option Securities, the "Option
Securities"). The Initial International Securities and the International Option
Securities are hereinafter called the "International Securities". It is
understood that the Company is not obligated to sell and the U.S. Underwriters
are not obligated to purchase any Initial U.S. Securities unless all of the
Initial International Securities are contemporaneously purchased by the
International Managers.
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters", the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities", and the U.S. Securities and the International Securities
are hereinafter collectively called the "Securities".
The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (in such capacity, the "Global Coordinator").
The Company understands that the U.S. Underwriters propose to make a
public offering of the U.S. Securities as soon as the U.S. Representatives deem
advisable after this Agreement has been executed and delivered.
2
<PAGE>
The Company and the U.S. Underwriters agree that up to shares of the
Initial U.S. Securities to be purchased by the U.S. Underwriters and that up to
shares of the Initial International Securities to be purchased by the
International Managers (collectively, the "Reserved Securities") shall be
reserved for sale by the Underwriters to certain employees of the Company and
its subsidiaries and certain other persons, as part of the distribution of the
Securities by the Underwriters, subject to the terms of this Agreement, the
applicable rules, regulations and interpretations of the National Association of
Securities Dealers, Inc. and all other applicable laws, rules and regulations.
To the extent that such Reserved Securities are not orally confirmed for
purchase by such employees and persons by the end of the first business day
after the date of this Agreement, such Reserved Securities may be offered to the
public as part of the public offering contemplated hereby.
Mettler is a wholly owned subsidiary of Mettler-Toledo Holding Inc.
("Holding"), which in turn is a wholly owned subsidiary of the Company. At or
prior to the Closing Time (as defined below), (i) Holding will be merged with
and into the Company, with the Company being the surviving corporation (the
"Merger"), pursuant to a merger agreement (the "Merger Agreement"), (ii) the
Company will change its name to Mettler-Toledo International Inc. and (iii) in
the Merger, each share of the Class A, Class B and Class C common stock of the
Company will be converted into 12.58392 shares of Common Stock of the Company
and each outstanding stock option to receive Class A, Class B and Class C common
stock of the Company which is outstanding at the time of effectiveness of the
Merger will be converted into and represent an option to receive shares of
Common Stock. The foregoing transactions are referred to as the
"Reorganization." Existing stockholders of the Company will receive a cash
payment (at the initial public offering price) in lieu of any fractional shares
that would be required to be issued as a result of the Reorganization. All
references herein to the Company shall be to (i) MT Investors Inc. prior to the
Reorganization and (ii) Mettler-Toledo International Inc., the surviving
corporation resulting from the Merger.
In addition, prior to or simultaneously with the issuance and sale of
the U.S. Securities and the International Securities, (i) the Company and
certain of its subsidiaries will enter into a Bank Credit Agreement with Merrill
Lynch, as arranger and documentation agent, and the various lending institutions
named therein (the "New Bank Credit Agreement"), and (ii) Mettler-Toledo, Inc.
("MTI"), a wholly owned subsidiary of Holding, will effect the Note Repurchase
(as defined in the Registration Statement), which will consist of a tender offer
for MTI's 9 3/4% Senior Subordinated Notes due 2006 (the "Notes") and a related
consent solicitation for amendments to the Indenture governing the Notes, and
will execute and deliver a supplemental indenture to such Indenture (the
"Supplemental Indenture") to effect such amendments thereto. The
3
<PAGE>
foregoing transactions are hereinafter referred to collectively as the
"Related Transactions".
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-35597) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two
forms of prospectus are to be used in connection with the offering and sale of
the Securities: one relating to the U.S. Securities (the "Form of U.S.
Prospectus") and one relating to the International Securities (the "Form of
International Prospectus"). The Form of International Prospectus is identical to
the Form of U.S. Prospectus, except for the front cover and back cover pages and
the information under the caption "Underwriting." The Registration Statement
also contains a form of prospectus to be used in connection with the issuance by
the Company of shares of its Common Stock pursuant to the Merger. The
information included in any such prospectus or in any such Term Sheet, as the
case may be, that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective (a) pursuant to paragraph (b) of Rule 430A is
referred to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule
434 is referred to as "Rule 434 Information". Each Form of U.S. Prospectus and
Form of International Prospectus used before such registration statement became
effective, and any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus". Such registration statement, including the exhibits
thereto and schedules thereto at the time it became effective and including the
Rule 430A Information and the Rule 434 Information, as applicable, is herein
called the "Registration Statement". Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final Form
of U.S. Prospectus and the final Form of International Prospectus in the forms
first furnished to the Underwriters for use in connection with the offering of
the Securities are herein called the "U.S. Prospectus" and the "International
Prospectus", respectively, and collectively, the "Prospectuses". If Rule 434 is
relied on, the terms "U.S. Prospectus" and "International Prospectus" shall
refer to the preliminary U.S. Prospectus dated , 1997 and preliminary
International Prospectus
4
<PAGE>
dated , 1997, respectively, each together with the applicable Term Sheet
and all references in this Agreement to the date of such Prospectuses shall mean
the date of the applicable Term Sheet. For purposes of this Agreement, all
references to the Registration Statement, any preliminary prospectus, the U.S.
Prospectus, the International Prospectus or any Term Sheet or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("EDGAR").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company and Mettler. The
Company and Mettler, jointly and severally, represent and warrant to each U.S.
Underwriter as of the date hereof, as of the Closing Time referred to in Section
2(c) hereof and as of each Date of Delivery (if any) referred to in Section 2(b)
hereof, and agree with each U.S. Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information
has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any U.S. Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments
and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and
the Prospectuses, any preliminary prospectuses and any supplement
thereto or any prospectus wrapper prepared in connection therewith, at
their respective times of issuance and at the Closing Time, complied
and will comply in all material respects with any applicable laws or
regulations of foreign jurisdictions in which the Prospectuses and such
preliminary prospectuses, as amended or supplemented, if applicable,
are distributed in connection with the offer and sale of Reserved
Securities. Neither of the Prospectuses nor any amendments or
supplements thereto (including any
5
<PAGE>
prospectus wrapper), at the time the Prospectuses or any amendments or
supplements thereto were issued and at the Closing Time (and, if any
U.S. Option Securities are purchased, at the Date of Delivery),
included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. If Rule 434 is used, the Company
will comply with the requirements of Rule 434 and the Prospectuses
shall not be "materially different", as such term is used in Rule 434,
from the prospectuses included in the Registration Statement at the
time it became effective. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or the U.S. Prospectus made in reliance upon and
in conformity with information furnished to the Company in writing by
any Underwriter through Merrill Lynch expressly for use in the
Registration Statement or the U.S. Prospectus.
Each preliminary prospectus and the prospectuses filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectuses
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted
by Regulation S-T of the 1933 Act Regulations.
(ii) Independent Accountants. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements included
in the Registration Statement and the Prospectuses, together with the
related schedules and notes, present fairly the consolidated financial
position of the Company and its subsidiaries and, in respect of the
Predecessor Business (as defined in the Registration Statement under
"Selected Historical Financial Information"), of the Company and its
combined affiliated entities, as the case may be, at the dates
indicated and the statement of operations, changes in net assets,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries and, in respect of the Predecessor Business, of the
Company and its combined affiliated entities, as the case may be, for
the periods specified; said financial statements have been prepared in
conformity with U.S. generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods
6
<PAGE>
involved. The supporting schedules included in the Registration
Statement present fairly in accordance with GAAP the information
required to be stated therein. The selected financial data and the
summary financial information included in the Prospectuses present
fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in
the Registration Statement. The pro forma financial statements and the
related notes thereto included in the Registration Statement and the
Prospectuses present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and circumstances
referred to therein.
(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business,
and no material adverse effect on the ability of the Company, Holding,
Mettler or any other subsidiary of the Company, as the case may be, to
enter into this Agreement, the International Purchase Agreement, the
Merger Agreement, the New Bank Credit Agreement, the Supplemental
Indenture or the dealer manager agreement with respect to the Note
Repurchase ("the Dealer Manager Agreement") or to consummate the
transactions contemplated in this Agreement or the International
Purchase Agreement or the Related Transactions (any such material
adverse change or effect, a "Material Adverse Effect"), (B) there have
been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and its subsidiaries
considered as one enterprise, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(v) Good Standing. The Company and Mettler have been duly
organized and are validly existing as corporations in good standing
under the laws of the State of Delaware and have corporate power and
authority to own, lease and operate their properties and to conduct
their business as described in the Prospectuses and to enter into and
perform their obligations under this Agreement; and the Company and
Mettler are duly qualified as foreign corporations to transact business
and are in good standing in each other
7
<PAGE>
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would
not result in a Material Adverse Effect.
(vi) Good Standing of Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect; except for directors' qualifying shares or as
otherwise disclosed in the Registration Statement, all of the issued
and outstanding capital stock of each such Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned by the Company, directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity, except for any security interest, mortgage, pledge, lien,
encumbrance, claim or equity created pursuant to the Credit Agreement
(as defined in the Registration Statement) or the New Bank Credit
Agreement or under any local working capital facilities or interest
protection agreements secured under the New Bank Credit Agreement (the
"Other Secured Agreements"); and none of the outstanding shares of
capital stock of any Subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such Subsidiary.
The only subsidiaries of the Company are (a) the subsidiaries listed on
Exhibit 21 to the Registration Statement and (b) certain other
subsidiaries which, considered in the aggregate as a single Subsidiary,
do not constitute a "significant subsidiary" as defined in Rule 1-02 of
Regulation S-X.
(vii) Capitalization. After giving effect to the
Reorganization, the authorized, issued and outstanding capital stock of
the Company shall be as set forth in the Prospectuses in the column
entitled "As Adjusted" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectuses or pursuant to the exercise of convertible securities or
options referred to in the Prospectuses). The shares of issued and
outstanding capital stock of the Company to be issued by the Company in
connection with the
8
<PAGE>
Reorganization have been or will be, upon completion of the
Reorganization, duly authorized and validly issued and are, or upon
issuance thereof in connection with and pursuant to the Reorganization,
will be, fully paid and non-assessable; none of such outstanding shares
of capital stock of the Company has been or will be, upon completion of
the Reorganization, issued in violation of the preemptive or other
similar rights of any securityholder of the Company.
(viii) Authorization of Agreement. This Agreement and the
International Purchase Agreement have been duly authorized, executed
and delivered by the Company and Mettler, and all actions and
proceedings required under applicable law to be taken by the Company
and its subsidiaries in connection with the Merger will have been duly
and validly taken on or prior to the effective date of the Merger; and
on or prior to the Closing Time, the Merger will have been duly and
validly effected.
(ix) Authorization and Description of Securities. The
Securities to be purchased by the U.S. Underwriters and the
International Managers from the Company have been duly authorized for
issuance and sale to the U.S. Underwriters pursuant to this Agreement
and the International Managers pursuant to the International Purchase
Agreement, respectively, and, when issued and delivered by the Company
pursuant to this Agreement and the International Purchase Agreement,
respectively, against payment of the consideration set forth herein and
in the International Purchase Agreement, respectively, will be validly
issued, fully paid and non-assessable; the Common Stock conforms in all
material respects to all statements relating thereto contained in the
Prospectuses and such description conforms to the rights set forth in
the instruments defining the same; no holder of the Securities will be
subject to personal liability by reason of being such a holder; and the
issuance of the Securities is not subject to the preemptive or other
similar rights of any securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the Company nor
any of its subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which it or any of them may be bound, or to which any of
the property or assets of the Company or any subsidiary is subject
(collectively, "Agreements and Instruments"), except for (a) with
respect to the Company's subsidiaries other than the Subsidiaries, such
violations that would not result in a Material Adverse Effect, and (b)
such defaults that would not result in a Material Adverse Effect; and
the execution, delivery and performance of this
9
<PAGE>
Agreement and the International Purchase Agreement by the Company or
Mettler, the consummation by the Company or its subsidiaries of the
transactions contemplated in this Agreement and the International
Purchase Agreement, the Related Transactions and the transactions
contemplated in the Registration Statement (including the issuance and
sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectuses under the caption "Use of
Proceeds"), and compliance by the Company and its subsidiaries with
their obligations under this Agreement, the International Purchase
Agreement, the Merger Agreement, the New Bank Credit Agreement, the
Supplemental Indenture and the Dealer Manager Agreement, have been duly
authorized by all necessary corporate action by the Company or its
subsidiaries, as the case may be, except for any required approval of
the Merger by the stockholders of the Company, which approval will be
obtained prior to the Closing Date, and do not and will not, whether
with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event
(as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company or any subsidiary pursuant to, the Agreements and Instruments
(except for (A) such conflicts, breaches or defaults or liens, charges
or encumbrances that would not result in a Material Adverse Effect or
(B) such liens, charges, or encumbrances as are created in connection
with the execution, delivery and performance of the New Bank Credit
Facility or the Other Secured Agreements, nor will such action result
in any violation of the provisions of the charter or by-laws of the
Company or any subsidiary or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any subsidiary or any of their assets,
properties or operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any subsidiary.
(xi) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge
of the Company or Mettler, is imminent, and neither the Company nor
Mettler is aware of any existing or imminent labor disturbance by the
employees of any of its or any subsidiary's principal suppliers,
manufacturers, customers or contractors, which, in either case, might
reasonably be expected to result in a Material Adverse Effect.
10
<PAGE>
(xii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company or Mettler, threatened, against or
affecting the Company or any subsidiary, which is required to be
disclosed in the Registration Statement (other than as disclosed
therein), or which might reasonably be expected to result in a Material
Adverse Effect or which might reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation
of the transactions contemplated in this Agreement or the International
Purchase Agreement or the Related Transactions or the performance by
the Company and its subsidiaries of their obligations hereunder or
under the International Purchase Agreement, the Merger Agreement, the
New Bank Credit Agreement, the Supplemental Indenture or the Dealer
Manager Agreement, and the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary is a
party or of which any of their respective property or assets is the
subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, could
not reasonably be expected to result in a Material Adverse Effect.
(xiii) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectuses or to be filed as exhibits thereto which
have not been so described and filed as required.
(xiv) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them except where the failure
to so own, possess or acquire, singly and in the aggregate, would not
result in a Material Adverse Effect, and neither the Company nor any of
its subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect
to any Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or inadequate to protect
the interest of the Company or any of its subsidiaries therein, and
which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, singly or in
the aggregate, would result in a Material Adverse Effect.
11
<PAGE>
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company or
Mettler of their obligations hereunder, in connection with the
offering, issuance or sale of the Securities under this Agreement and
the International Purchase Agreement or the consummation of the
transactions contemplated by this Agreement or the International
Purchase Agreement or the Related Transactions, except (i) such as have
been already obtained or as may be required under the 1933 Act or the
1933 Act Regulations and foreign or state securities or blue sky laws,
(ii) such as have been obtained under the laws and regulations of
jurisdictions outside the United States in which the Reserved
Securities are offered and (iii) such as will be obtained at or prior
to the Closing Date under Delaware law in connection with the filing of
the certificate of amendment, certificate of merger and certificate of
ownership and merger with the Delaware Secretary of State in connection
with the Merger and the Company's name change.
(xvi) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them except
for such Governmental Licenses the failure of which to possess would
not have a Material Adverse Effect; the Company and its subsidiaries
are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of
such Governmental Licenses to be in full force and effect would not
have a Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any written notice of any judicial or
administrative proceedings relating to the revocation or modification
of any such Governmental Licenses which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would result
in a Material Adverse Effect.
(xvii) Title to Property. The Company and its subsidiaries
have good and marketable title to all real property owned by the
Company and its subsidiaries and good title to all other properties
owned by them, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any
kind except such as (a) are described in the Prospectuses or as set
forth in the New Bank Credit Agreement or the Other Secured Agreements,
12
<PAGE>
(b) do not, singly or in the aggregate, materially affect the value of
such property and do not interfere with the use made and proposed to be
made of such property by the Company or any of its subsidiaries or (c)
would not have a Material Adverse Effect; all of the leases and
subleases material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company or any of its
subsidiaries holds properties described in the Prospectuses, are in
full force and effect; and neither the Company nor any subsidiary has
any notice of any claim of any sort that has been asserted by anyone
adverse to the rights of the Company or any subsidiary under any of the
leases or subleases mentioned above, or affecting or questioning the
rights of the Company or such subsidiary to the continued possession of
the leased or subleased premises under any such lease or sublease
except for such claims as would not singly or in the aggregate result
in a Material Adverse Effect.
(xviii) Investment Company Act. Neither the Company nor
Mettler is or upon (a) the issuance and sale of the Securities as
herein contemplated and the application of the net proceeds therefrom
as described in the Prospectuses or (b) the consummation of the
transactions contemplated by this Agreement or the International
Purchase Agreement and the Related Transactions will be, an "investment
company" as such term is defined in the Investment Company Act of 1940,
as amended (the "1940 Act").
(xix) Environmental Laws. Except as described in the
Registration Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries is in violation of any federal, state,
local or foreign statute, law, regulation, ordinance, code, common law
or any judicial or administrative interpretation thereof enforceable at
law or in equity, including any applicable judicial or administrative
order, consent, decree or judgment, relating to pollution or protection
of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum
or petroleum products subject to regulation under any environmental law
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials subject to regulation under any
environmental law (collectively, "Environmental Laws"), (B) the Company
and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in
compliance with their requirements, (C) there are no pending or, to the
knowledge of the Company or Mettler, threatened administrative,
regulatory
13
<PAGE>
or judicial actions, suits, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to
any Environmental Law against the Company or any of its subsidiaries
and (D) to the knowledge of the Company or Mettler, there are no events
or circumstances that could reasonably be expected to form the basis of
an order for clean-up or remediation, or an action, suit or proceeding
by any private party or governmental body or agency, against the
Company or any of its subsidiaries relating to Hazardous Materials or
any Environmental Laws.
(xx) Registration Rights. Except as described in the
Registration Statement and the Prospectuses, no person has registration
rights or other similar rights to have any securities of the Company
registered by the Company under the 1933 Act. No persons who have
registration rights or other similar rights relating to the Common
Stock of the Company have any such rights to have Common Stock
registered pursuant to the Registration Statement which have not been
waived. There are no persons with registration rights or other similar
rights to have any securities registered by the Company's subsidiaries
under the 1933 Act.
(xxi) Taxes. The Company and its subsidiaries have filed all
tax returns that are required to have been filed by them pursuant to
applicable law except insofar as the failure to file such returns would
not result in a Material Adverse Effect, and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the
Company and its subsidiaries, except for such taxes, if any, as are
being contested in good faith by appropriate proceedings and as to
which adequate reserves have been provided in accordance with GAAP, and
except for the failure to pay such taxes which, individually and in the
aggregate, would not have a Material Adverse Effect. The charges,
accruals and reserves on the books of the Company and its subsidiaries
in respect of any tax liability for any years not finally determined
are adequate in accordance with GAAP to meet any assessments or
reassessments for additional tax for any years not finally determined,
except to the extent of any inadequacy that would not result in a
Material Adverse Effect. No material taxes have been or will be imposed
on the Company, Holding or Mettler in connection with the consummation
of the Reorganization.
(xxii) Accounting Controls. The Company and its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization, (B) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with generally accepted accounting principles and to
maintain accountability for assets, (C) access to
14
<PAGE>
assets is permitted only in accordance with management's general or
specific authorization and (D) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxiii) Insurance. The Company and its subsidiaries carry or
are entitled to the benefits of insurance, with financially sound and
reputable insurers, in such amounts and covering such risks as is
generally maintained by companies of established repute engaged in the
same or similar business, and all policies with respect to such
insurance are in full force and effect.
(xxiv) Stabilization or Manipulation. Neither the Company nor
any of its subsidiaries has taken, directly or indirectly, any action
designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of any such entity to
facilitate the sale or resale of the Securities.
(xxv) Certain Relationships. No relationship, direct or
indirect, exists between or among any of the Company and any of its
subsidiaries or any affiliate of any such entity, on the one hand, and
any director, officer, stockholder, customer or supplier of any of
them, on the other hand, which is required by the 1933 Act or by the
1933 Act Regulations to be described in the Registration Statement or
the Prospectuses which is not so described or is not described as
required.
(xxvi) No Offering Material. The Company and its subsidiaries
have not distributed and, prior to the later to occur of (i) the
Closing Time and (ii) completion of the distribution of the Securities,
will not distribute any offering material in connection with the
offering and sale of the Securities other than the Registration
Statement, any preliminary prospectus, the Prospectus or other
materials, if any, permitted by the 1933 Act and approved by the U.S.
Representatives.
(xxvii) Suppliers. No supplier of merchandise to the Company
or any of its subsidiaries has ceased shipments of merchandise thereto,
which cessation would result in a Material Adverse Effect.
(xxviii) Authority to Consummate Merger and Related
Transactions. The Company and its subsidiaries have, to the extent
applicable, all necessary corporate power and authority to enter into
and perform their respective obligations under the Merger Agreement,
the New Bank Credit Agreement, the
15
<PAGE>
Supplemental Indenture and the Dealer Manager Agreement; the execution,
delivery and performance of the Merger Agreement, the New Bank Credit
Agreement, the Supplemental Indenture and the Dealer Manager Agreement,
as applicable, by the Company and such subsidiaries have been duly
authorized, except that the Merger remains subject to the approval of
the shareholders of the Company; the Merger Agreement, the New Bank
Credit Agreement, the Supplemental Indenture and the Dealer Manager
Agreement have been duly authorized and have or prior to the Closing
Time will be executed and delivered by the Company and such
subsidiaries as applicable; and (assuming due authorization, execution
and delivery by each other party thereto other than the Company or any
of its subsidiaries) the Merger Agreement (subject to obtaining the
requisite shareholder approval), the New Bank Credit Agreement, the
Supplemental Indenture and the Dealer Manager Agreement will constitute
valid and binding obligations, as applicable, of the Company and such
subsidiaries, enforceable against the Company and such subsidiaries, as
applicable, in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law), except (i) as to the enforcement
of the indemnification provisions of the Dealer Manager Agreement and
(ii) with respect to the New Bank Credit Agreement, except as
enforceability may be limited by other laws and regulations of non-U.S.
jurisdictions.
(xxix) Appraisal Rights. To the knowledge of the Company and
Mettler, no stockholders of the Company have demanded an appraisal of
their shares as a result of the Merger, and on or prior to the Closing
Time, each outstanding share of the Company's three classes of common
stock which are issued and outstanding on the date hereof will be
converted into and represent the right to receive 12.58392 shares of
Common Stock, except that fractional shares will represent the right to
receive cash at $ per share.
(b) Officer's Certificates. Any certificate signed by any officer
of the Company, Mettler or any of the Company's subsidiaries delivered to the
Global Coordinator, the U.S. Representatives or to counsel for the U.S.
Underwriters shall be deemed a joint and several representation and warranty by
the Company and Mettler to each U.S. Underwriter as to the matters covered
thereby.
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.
16
<PAGE>
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each U.S. Underwriter, severally and not
jointly, and each U.S. Underwriter, severally and not jointly, agrees to
purchase from the Company, at the price per share set forth in Schedule B, the
number of Initial U.S. Securities set forth in Schedule A opposite the name of
such U.S. Underwriter, plus any additional number of Initial U.S. Securities
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the U.S. Underwriters,
severally and not jointly, to purchase up to an additional shares of Common
Stock at the price per share set forth in Schedule B, less an amount per share
equal to any dividends or distributions declared by the Company and payable on
the Initial U.S. Securities but not payable on the U.S. Option Securities. The
option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial U.S. Securities upon notice by the Global
Coordinator to the Company setting forth the number of U.S. Option Securities as
to which the several U.S. Underwriters are then exercising the option and the
time and date of payment and delivery for such U.S. Option Securities. Any such
time and date of delivery for the U.S. Option Securities (a "Date of Delivery")
shall be determined by the Global Coordinator, but shall not be later than seven
full business days after the exercise of said option, nor in any event prior to
the Closing Time, as hereinafter defined. If the option is exercised as to all
or any portion of the U.S. Option Securities, each of the U.S. Underwriters,
acting severally and not jointly, will purchase that proportion of the total
number of U.S. Option Securities then being purchased which the number of
Initial U.S. Securities set forth in Schedule A opposite the name of such U.S.
Underwriter bears to the total number of Initial U.S. Securities, subject in
each case to such adjustments as the Global Coordinator in its discretion shall
make to eliminate any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Fried,
Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New York 10004,
or at such other place as shall be agreed upon by the Global Coordinator and the
Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs
after 4:30 P.M. (Eastern time) on any given day) business day after the date
hereof (unless postponed in accordance with the provisions of Section 10), or
such other time not later than ten business days after such date as shall be
agreed upon by the Global Coordinator and the Company (such time and date of
payment and delivery being herein called "Closing Time").
17
<PAGE>
In addition, in the event that any or all of the U.S. Option Securities
are purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on each Date of Delivery as specified in the
notice from the Global Coordinator to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the U.S. Representatives for the respective accounts of the U.S. Underwriters of
certificates for the U.S. Securities to be purchased by them. It is understood
that each U.S. Underwriter has authorized the U.S. Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial U.S. Securities and the U.S. Option Securities, if any,
which it has agreed to purchase. Merrill Lynch, individually and not as
representative of the U.S. Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial U.S. Securities or the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, will be made available
for examination and packaging by the U.S. Representatives in the City of New
York not later than 10:00 A.M. (Eastern time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with
each U.S. Underwriter as follows:
(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify
the Global Coordinator immediately, and confirm the notice in writing,
(i) when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to the Prospectuses or any
amended Prospectuses shall have been filed, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission
for any amendment to the Registration Statement or any amendment or
supplement to the Prospectuses or for additional information, and (iv)
of the issuance by the Commission of any stop order suspending the
18
<PAGE>
effectiveness of the Registration Statement or of any order preventing
or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale
in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect
the filings necessary pursuant to Rule 424(b) and will take such steps
as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will
promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order
is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) Filing of Amendments. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to
the the Registration Statement (including any filing under Rule
462(b)), any Term Sheet or any amendment, supplement or revision to
either the prospectus included in the Registration Statement at the
time it became effective or to the Prospectuses, will furnish the
Global Coordinator with copies of any such documents a reasonable
amount of time prior to such proposed filing or use, as the case may
be, and will not file or use any such document to which the Global
Coordinator or counsel for the U.S. Underwriters shall object.
(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the U.S. Representatives and counsel for
the U.S. Underwriters, without charge, signed copies of the
Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates
of experts, and will also deliver to the U.S. Representatives, without
charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the
U.S. Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the U.S. Underwriters will be identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to
each U.S. Underwriter, without charge, as many copies of each
preliminary prospectus as such U.S. Underwriter reasonably requested,
and the Company hereby consents to the use of such copies for purposes
permitted by the 1933 Act. The Company will furnish to each U.S.
Underwriter, without charge, during the period when the U.S. Prospectus
is required to be delivered under the 1933 Act or the Securities
19
<PAGE>
Exchange Act of 1934 (the "1934 Act"), such number of copies of the
U.S. Prospectus (as amended or supplemented) as such U.S. Underwriter
may reasonably request. The U.S. Prospectus and any amendments or
supplements thereto furnished to the U.S. Underwriters will be
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company
will comply with the 1933 Act and the 1933 Act Regulations so as to
permit the completion of the distribution of the Securities as
contemplated in this Agreement, the International Purchase Agreement
and the Prospectuses. If at any time when a prospectus is required by
the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result
of which it is necessary, in the opinion of counsel for the U.S.
Underwriters or for the Company, to amend the Registration Statement or
amend or supplement any Prospectus in order that the Prospectuses will
not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion
of such counsel, at any such time to amend the Registration Statement
or amend or supplement any Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company
will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the
Prospectuses comply with such requirements, and the Company will
furnish to the U.S. Underwriters such number of copies of such
amendment or supplement as the U.S. Underwriters may reasonably
request; provided, however, that if the date of any such amendment or
supplement is more than 270 days after the date hereof, the
preparation, filing and furnishing of such amendment or supplement
shall be at the expense of the Underwriters.
(f) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the U.S. Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions (domestic or foreign) as the
Global Coordinator may designate and to maintain such qualifications in
effect for a period of not less than one year from the later of the
effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not
be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it
is not
20
<PAGE>
otherwise so subject. In each jurisdiction in which the Securities have
been so qualified, the Company will file such statements and reports as
may be required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
effective date of the Registration Statement and any Rule 462(b)
Registration Statement.
(g) Rule 158. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified
in the Prospectuses under "Use of Proceeds".
(i) Restriction on Sale of Securities. During a period of 180
days from the date of the Prospectuses, the Company will not, without
the prior written consent of the Global Coordinator, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or
warrant for the sale of or otherwise dispose or transfer any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under
the 1933 Act with respect to any of the foregoing or (ii) enter into
any swap or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of
ownership of the Common Stock, whether any such swap or transaction
described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold hereunder or
under the International Purchase Agreement, (B) any shares of Common
Stock issued by the Company upon the exercise of an option or warrant
or the conversion of a security outstanding on the date hereof and
referred to in the Prospectuses, (C) any shares of Common Stock issued
or options to purchase Common Stock granted pursuant to existing
employee benefit plans of the Company referred to in the Prospectuses,
(D) any shares of Common Stock issued pursuant to any non-employee
director stock plan or dividend reinvestment plan, (E) any shares of
Common Stock issued in connection with the Reorganization, (F) the
issuance of options under the Company's stock option plan and the
exercise by the Company's employees of their rights relating thereto or
(G) the filing of a registration statement on Form S-8 under the 1933
Act relating to Common Stock pursuant to the Company's stock option
plan.
21
<PAGE>
(j) Reporting Requirements. The Company, during the period
when the Prospectuses are required to be delivered under the 1933 Act
or the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the rules and regulations of the Commission
thereunder.
(k) Compliance with NASD Rules. The Company hereby agrees that
it will ensure that the Reserved Securities will be restricted as
required by the National Association of Securities Dealers, Inc. (the
"NASD") or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of this
Agreement. The Underwriters will notify the Company as to which persons
will need to be so restricted. At the request of the Underwriters, the
Company will direct the transfer agent to place a stop transfer
restriction upon such securities for such period of time. Should the
Company release, or seek to release, from such restrictions any of the
Reserved Securities, the Company agrees to reimburse the Underwriters
for any reasonable expenses (including, without limitation, legal
expenses) they incur in connection with such release.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company and Mettler, jointly and severally will pay
all expenses incident to the performance of their obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, including any stock or other transfer taxes and any stamp or other
duties payable upon the sale, issuance or delivery of the Securities to the
Underwriters and the transfer of the Securities between the U.S. Underwriters
and the International Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto (such fees and expenses of
counsel not to exceed $5,000.00), (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectuses and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue Sky
Survey and any supplement thereto, (viii) the fees
22
<PAGE>
and expenses of any transfer agent or registrar for the Securities, (ix) the
filing fees incident to, and the reasonable fees and disbursements of counsel to
the Underwriters in connection with, the review by the National Association of
Securities Dealers, Inc. (the "NASD") of the terms of the sale of the
Securities, (x) the fees and expenses incurred in connection with the listing of
the Securities on the NYSE and (xi) all costs and expenses of the Underwriters,
including the fees and disbursements of Fried, Frank, Harris, Shriver &
Jacobson, in connection with matters related to the Reserved Securities.
(b) Termination of Agreement. If this Agreement is terminated by the
U.S. Representatives in accordance with the provisions of Section 5(r) or
Section 9(a)(i) hereof, the Company and Mettler shall reimburse the U.S.
Underwriters for all of their reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the U.S. Underwriters.
SECTION 5. Conditions of U.S. Underwriters' Obligations. The
obligations of the several U.S. Underwriters hereunder are subject to the
accuracy in all material respects of the representations and warranties of the
Company and Mettler contained in Section 1 hereof or in certificates of any
officer of the Company, Mettler or any subsidiary of the Company delivered
pursuant to the provisions hereof, to the performance by the Company and Mettler
of their respective covenants and other obligations hereunder, and to the
following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act or proceedings therefor initiated or threatened by
the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the U.S. Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Fried, Frank, Harris, Shriver & Jacobson, special
counsel for the Company, in form and substance satisfactory to counsel
for the U.S. Underwriters, together with signed or reproduced copies of
such letter for each of the other U.S.
23
<PAGE>
Underwriters to the effect set forth in Exhibit A hereto and to such
further effect as counsel to the U.S. Underwriters may reasonably
request.
(c) Opinion of German Counsel for the Company. At Closing
Time, the U.S. Representatives shall have received the favorable
opinion, dated as of Closing Time, of , special German counsel for
the Company, in form and substance satisfactory to counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter
for each of the other U.S. Underwriters to the effect set forth in
Exhibit B hereto and to such further effect as counsel to the U.S.
Underwriters may reasonably request, with respect to each direct or
indirect subsidiary of the Company or Mettler organized under the laws
of Germany.
(d) Opinion of Swiss Counsel for the Company. At Closing Time,
the U.S. Representatives shall have received the favorable opinion,
dated as of Closing Time, of , special Swiss counsel for the
Company, in form and substance satisfactory to counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter
for each of the other U.S. Underwriters to the effect set forth in
Exhibit B hereto and to such further effect as counsel to the U.S.
Underwriters may reasonably request, with respect to each direct or
indirect subsidiary of the Company or Mettler organized under the laws
of Switzerland.
(e) Opinion of Christine J. Smith, Esq. At the Closing Time,
the U.S. Representatives shall have received the favorable opinion,
dated as of the Closing Time, of Christine J. Smith, Esq., in form and
substance satisfactory to counsel for the U.S. Underwriters, together
with signed or reproduced copies of such letter for each of the other
U.S. Underwriters to the effect set forth in Exhibit C hereto and to
such effect as counsel to the U.S. Underwriters may reasonably request.
(f) Opinion of Counsel for U.S. Underwriters. At Closing Time,
the U.S. Representatives shall have received the favorable opinion,
dated as of Closing Time, of Debevoise & Plimpton, counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter
for each of the other U.S. Underwriters with respect to the matters set
forth in clauses (1), (2), (5) (but with respect to preemptive or other
similar rights, solely as to preemptive or other similar rights arising
by operation of law or under the charter or by-laws of the Company),
(7) through (10), inclusive, (11) (solely as to the information in the
Prospectus under "Description of Capital Stock--Common Stock") and the
first full paragraph of text following clause 16 of Exhibit A hereto.
In giving such opinion such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the State
of New York, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the
24
<PAGE>
opinions of counsel satisfactory to the U.S. Representatives. Such
counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(g) Officers' Certificate. At Closing Time, there shall not
have been, since the date hereof or since the respective dates as of
which information is given in the Prospectuses, any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, and the U.S. Representatives shall
have received a certificate of the President or a Vice President of the
Company and of the chief financial or chief accounting officer of each
of the Company and Mettler, in each case dated as of Closing Time, to
the effect that (i) there has been no such Material Adverse Effect,
(ii) the representations and warranties in Section 1(a) hereof are true
and correct in all material respects with the same force and effect as
though expressly made at and as of Closing Time, (iii) each of the
Company and Mettler has complied with all agreements and satisfied all
conditions contained in this Agreement and the International Purchase
Agreement on its part to be performed or satisfied at or prior to
Closing Time, and (iv) no stop order suspending the effectiveness of
the Registration Statement has been issued and, to the knowledge of
such officer no proceedings for that purpose have been instituted or
are pending or are contemplated by the Commission.
(h) Litigation Certificate. At Closing Time, the U.S.
Representatives shall have received a certificate of the chief
financial officer of the Company, dated as of Closing Time, in form and
substance satisfactory to counsel for the U.S. Underwriters to the
effect set forth in Exhibit D.
(i) Accountant's Comfort Letter. At the time of the execution
of this Agreement, the U.S. Representatives shall have received from
KPMG Fides Peat a letter dated such date, in form and substance
satisfactory to the U.S. Representatives, together with signed or
reproduced copies of such letter for each of the other U.S.
Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the
Prospectuses.
(j) Bring-down Comfort Letter. At Closing Time, the U.S.
Representatives shall have received from KPMG Fides Peat a letter,
dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter
25
<PAGE>
furnished pursuant to subsection (i) of this Section, except that the
specified date referred to shall be a date not more than three business
days prior to Closing Time.
(k) Approval of Listing. At Closing Time, the Securities shall
have been approved for listing on the NYSE, subject only to official
notice of issuance.
(l) No Objection. The NASD has confirmed that it has not
raised any objection with respect to the fairness and reasonableness of
the underwriting terms and arrangements.
(m) Lock-up Agreements; Registration Rights. At the date of
this Agreement, the U.S. Representatives shall have received an
agreement substantially in the form of Exhibit E hereto signed by the
persons listed on Schedule C hereto. The Company shall have taken all
required action so that no person who has registration rights or other
similar rights relating to Common Stock of the Company to have Common
Stock registered pursuant to the Registration Statement shall be
permitted to exercise such rights; and no person who has registration
rights or other similar rights relating to the Common Stock of the
Company to have Common Stock registered pursuant to the Registration
Statement shall have exercised such rights.
(n) Purchase of Initial International Securities.
Contemporaneously with the purchase by the U.S. Underwriters of the
Initial U.S. Securities under this Agreement, the International
Managers shall have purchased the Initial International Securities
under the International Purchase Agreement.
(o) Reorganization. At or prior to the Closing Time, the
Reorganization, as described in all material respects in the
Registration Statement and Prospectuses, as amended or supplemented,
shall have been duly and validly effected and all corporate proceedings
and legal matters incident thereto shall be satisfactory in all
material respects to counsel for the U.S. Underwriters in their
reasonable judgment.
(p) Reliance Letters. At or prior to the Closing Time, the
U.S. Representatives shall have received letters addressed to the U.S.
Representatives, in form and substance reasonably satisfactory to the
U.S. Representatives, permitting the Underwriter to rely on each
opinion of counsel of the Company that is or has been delivered to any
party in connection with any of the New Bank Credit Agreement, the
Supplemental Indenture and the Dealer Manager Agreement or the
consummation of the transactions contemplated thereby.
26
<PAGE>
(q) Conditions to Purchase of U.S. Option Securities. In the
event that the U.S. Underwriters exercise their option provided in
Section 2(b) hereof to purchase all or any portion of the U.S. Option
Securities, the representations and warranties of the Company contained
herein and the statements in any certificates furnished by the Company
or any subsidiary of the Company hereunder shall be true and correct as
of each Date of Delivery and, at the relevant Date of Delivery, the
U.S. Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of each of the
Company, Mettler and of the chief financial or chief
accounting officer of each of the Company and Mettler
confirming that the certificate delivered at the Closing Time
pursuant to Section 5(g) hereof remains true and correct as of
such Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion of
Fried, Frank, Harris, Shriver & Jacobson, special counsel for
the Company, in form and substance reasonably satisfactory to
counsel for the U.S. Underwriters, dated such Date of
Delivery, relating to the U.S. Option Securities to be
purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(b) hereof.
(iii) Opinion of Christine J. Smith, Esq. The favorable
opinion of Christine J. Smith, Esq., dated such Date of
Delivery, in form and substance reasonably satisfactory to
counsel for the U.S. Underwriters and otherwise to the same
effect as the opinion required by Section 5(e) hereof.
(iv) Opinion of Counsel for U.S. Underwriters. The favorable
opinion of Debevoise & Plimpton, counsel for the U.S.
Underwriters, dated such Date of Delivery, relating to the
U.S. Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion
required by Section 5(f) hereof.
(v) Opinion of German Counsel for Company. The favorable
opinion of , special German counsel for the Company, in
form and substance reasonably satisfactory to counsel for the
U.S. Underwriters, dated such Date of Delivery, relating to
the U.S. Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion
required by Section 5(c) hereof.
27
<PAGE>
(vi) Opinion of Swiss Counsel for Company. The favorable
opinion of , special Swiss counsel for the Company, in
form and substance reasonably satisfactory to counsel for
the U.S. Underwriters, dated such Date of Delivery, relating
to the U.S. Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion
required by Section 5(d) hereof.
(vii) Bring-down Comfort Letter. A letter from KPMG Fides
Peat, in form and substance satisfactory to the U.S.
Representatives and dated such Date of Delivery, and
substantially in the same form and substance as the letter
furnished to the U.S. Representatives pursuant to Section 5(j)
hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more
than five days prior to such Date of Delivery.
(r) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the U.S. Underwriters shall have been furnished
with such documents and opinions as they may reasonably request for the
purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated, or in order to evidence the accuracy
of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of the Securities as
herein contemplated shall be satisfactory in form and substance to the
U.S. Representatives and counsel for the U.S. Underwriters.
(s) Termination of Agreement. If any condition specified in
this Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of U.S. Option Securities on a Date of Delivery which is after
the Closing Time, the obligations of the several U.S. Underwriters to
purchase the relevant Option Securities, may be terminated by the U.S.
Representatives by notice to the Company at any time at or prior to
Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party
except as provided in Section 4 and except that Sections 1,6,7 and 8
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of U.S. Underwriters. Each of the Company and
Mettler, jointly and severally, agrees to indemnify and hold harmless each U.S.
Underwriter and
28
<PAGE>
each person, if any, who controls any U.S. Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or
the Prospectuses (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of (A) the violation of
any applicable laws or regulations of foreign jurisdictions where
Reserved Securities have been offered and (B) any untrue statement or
alleged untrue statement of a material fact included in the supplement
or prospectus wrapper material distributed in connection with the
reservation and sale of the Reserved Securities or the omission or
alleged omission therefrom of a material fact necessary to make the
statements therein, when considered in conjunction with the
Prospectuses or preliminary prospectuses, not misleading;
(iii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission or in
connection with any violation of the nature referred to in Section
6(a)(ii)(A) and (B) hereof; provided that (subject to Section 6(d)
below) any such settlement is effected with the written consent of the
Company; and
(iv) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission or in connection with any
violation of
29
<PAGE>
the nature referred to in Section 6(a)(ii)(A) and (B) hereof, to the
extent that any such expense is not paid under (i), (ii) or (iii)
above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense (a) to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
U.S. Prospectus (or any amendment or supplement thereto) and (b) with respect to
any preliminary prospectus to the extent that any such loss, liability, claim,
damage or expense of such U.S. Underwriter results solely from the fact that
such U.S. Underwriter sold Securities to a person as to whom the Company shall
establish that there was not sent by commercially reasonable means, at or prior
to the written confirmation of such sale, a copy of the U.S. Prospectus in any
case where such delivery is required by the 1933 Act, if the Company has
previously furnished copies thereof in sufficient quantity to such U.S.
Underwriter and the loss, liability, claim, damage or expense of such U.S.
Underwriter results from an untrue statement or omission of a material fact
contained in the preliminary prospectus that was corrected in the U.S.
Prospectus.
(b) Indemnification of Company, Directors and Officers. Each U.S.
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary U.S. prospectus or
the U.S. Prospectus (or any amendment or supplement thereto) in reliance upon
and in conformity with written information furnished to the Company by such U.S.
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the U.S.
Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on
30
<PAGE>
account of this indemnity agreement. In the case of parties indemnified pursuant
to Section 6(a) above, counsel to the indemnified parties shall be selected by
Merrill Lynch, and, in the case of parties indemnified pursuant to Section 6(b)
above, counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(iii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) Indemnification for Reserved Securities. In connection with the
offer and sale of the Reserved Securities, each of the Company and Mettler,
jointly and severally, agrees, promptly upon a written request, in writing to
indemnify and hold harmless the U.S. Underwriters from and against any and all
losses, liabilities, claims, damages and expenses incurred by them as a result
of the failure of certain employees of the Company and its subsidiaries and
certain other persons having a business relationship with the Company to pay for
and accept delivery of Reserved Securities which, by the end of the first
business day following the date of this Agreement, were subject to a properly
confirmed agreement to purchase.
31
<PAGE>
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and Mettler
on the one hand and the U.S. Underwriters on the other hand from the offering of
the Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and Mettler on the one hand and
of the U.S. Underwriters on the other hand in connection with the statements or
omissions, or in connection with any violation of the nature referred to in
Section 6(a) hereof, which resulted in such losses, liabilities, claims, damages
or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and Mettler on the one
hand and the U.S. Underwriters on the other hand in connection with the offering
of the U.S. Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
U.S. Securities pursuant to this Agreement (before deducting expenses) received
by the Company and the total underwriting discount received by the U.S.
Underwriters, in each case as set forth on the cover of the U.S. Prospectus, or,
if Rule 434 is used, the corresponding location on the Term Sheet, bear to the
aggregate initial public offering price of the U.S. Securities as set forth on
such cover.
The relative fault of the Company and Mettler on the one hand and the
U.S. Underwriters on the other hand shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or Mettler on the one hand or by the U.S.
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission or any failure or violation of the nature referred to in Section
6(a)(ii)(A) hereof.
The Company, Mettler and the U.S. Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 7 were determined
by pro rata allocation (even if the U.S. Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to
32
<PAGE>
above in this Section 7 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.
Notwithstanding the provisions of this Section 7, no U.S. Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the U.S. Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such U.S. Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a
U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The U.S.
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial U.S. Securities set forth
opposite their respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company, Mettler or any
subsidiaries of the Company submitted pursuant hereto, shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of any U.S. Underwriter or controlling person, or by or on behalf of the
Company, and shall survive delivery of the Securities to the U.S. Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The U.S. Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the U.S. Prospectus, any
material adverse change in the
33
<PAGE>
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of Merrill Lynch, impracticable to market
the Securities or to enforce contracts for the sale of the Securities, or (iii)
if trading in any securities of the Company has been suspended or materially
limited by the Commission or the NYSE, or if trading generally on the American
Stock Exchange, the NYSE or in the Nasdaq National Market has been suspended or
materially limited, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the National Association of
Securities Dealers, Inc. or any other governmental authority, or (iv) if a
banking moratorium has been declared by either Federal, New York or Swiss
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6 and 7 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the U.S. Underwriters. If one or
more of the U.S. Underwriters shall fail at Closing Time or a Date of Delivery
to purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), Merrill Lynch shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting U.S. Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, Merrill Lynch
shall not have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of U.S. Securities to be purchased on such date, each of
the non-defaulting U.S. Underwriters shall be obligated, severally and
not jointly, to purchase the full amount thereof in the proportions
that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting U.S. Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of U.S. Securities to be purchased on such date, this Agreement
or, with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the
34
<PAGE>
U.S. Underwriters to purchase and of the Company to sell the Option
Securities to be purchased and sold on such Date of Delivery shall
terminate without liability on the part of any non-defaulting U.S.
Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
U.S. Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
U.S. Underwriters to purchase and the Company to sell the relevant U.S. Option
Securities, as the case may be, either the U.S. Representatives or the Company
shall have the right to postpone Closing Time or the relevant Date of Delivery,
as the case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "U.S. Underwriter" includes
any person substituted for a U.S. Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to the U.S. Representatives c/o Merrill Lynch at
North Tower, World Financial Center, New York, New York 10281-1201, attention of
, with a copy to Debevoise & Plimpton, 875 Third Avenue, New York, New York
10022, Attention: James C. Scoville; and notices to the Company and Mettler
shall be directed to the Company at Mettler-Toledo International Inc., Im
Langacher, P.O. Box MT-100, CH 8606 Greifensee, Switzerland, Attention: William
P. Donnelly, with a copy to Fried, Frank, Harris, Shriver & Jacobson, 4 Chiswell
Street, London, EC1Y 4UP, Attention: Timothy E. Peterson.
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the U.S. Underwriters, the Company and Mettler and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the U.S. Underwriters, the Company and Mettler and their respective
successors and the controlling persons and officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the U.S.
Underwriters, the Company and Mettler and their respective successors, and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities
35
<PAGE>
from any U.S. Underwriter shall be deemed to be a successor by reason merely of
such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
36
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the U.S. Underwriters, the Company and Mettler in accordance with its
terms.
Very truly yours,
MT INVESTORS INC.
By:
--------------------------
Name:
Title:
METTLER-TOLEDO, INC.
By:
--------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
B.T. ALEX. BROWN INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
--------------------------------------
Authorized Signatory
For themselves and as U.S. Representatives of the
other U.S. Underwriters named in Schedule A hereto.
37
<PAGE>
SCHEDULE A
Number of
Initial U.S.
Name of U.S. Underwriters Securities
- ------------------------- ------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..................................................
B.T. Alex. Brown Incorporated...................................
Credit Suisse First Boston Corporation..........................
Goldman, Sachs & Co.............................................
------------
Total........................................................... 5,333,334
============
Sch A-1
<PAGE>
SCHEDULE B
MT INVESTORS, INC.
Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, shall be $ .
2. The purchase price per share for the U.S. Securities to be
paid by the several U.S. Underwriters shall be $ , being an amount
equal to the initial public offering price set forth above less $
per share; provided that the purchase price per share for any U.S.
Option Securities purchased upon the exercise of the over-allotment
option described in Section 2(b) shall be reduced by an amount per
share equal to any dividends or distributions declared by the Company
and payable on the Initial U.S. Securities but not payable on the
U.S. Option Securities.
Sch B-1
<PAGE>
SCHEDULE C
List of persons and entities
subject to lock-up
Robert F. Spoerry
William P. Donnelly
Karl M. Lang
Lucas Braunschweiler
John D. Robechek
Peter Burker
Thomas Rubbe
Philip Caldwell
Reginald H. Jones
John D. Macomber
John M. Manser
Laurence Z.Y. Moh
Thomas P. Salice
Alan W. Wilkinson
All AEA Investors Inc. shareholder-investors and substantially all other
Existing Stockholders of the Company
Sch C-1
<PAGE>
Exhibit A
FORM OF OPINION OF FRIED, FRANK,
HARRIS, SHRIVER & JACOBSON TO BE
DELIVERED PURSUANT TO SECTION 5(b)
November , 1997
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
BT Alex. Brown Incorporated
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, NY 10281-1209
Merrill Lynch International
BT Alex. Brown International,
a Division of Bankers Trust International PLC
Credit Suisse First Boston (Europe) Limited
Goldman Sachs International
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London, England, EC2Y 9LY
Ladies and Gentlemen:
We are acting as special counsel to Mettler-Toledo International Inc.,
a Delaware corporation (the "Company"), in connection with the underwritten
public offerings of shares of the Company's Common Stock (the "Securities"),
pursuant to (i) a Purchase Agreement (the "U.S. Purchase Agreement"), dated as
of November , 1997, among the Company, Mettler-Toledo, Inc., a Delaware
corporation ("Mettler"), and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated, BT Alex.
A-1
<PAGE>
Brown Incorporated, Credit Suisse First Boston Corporation and Goldman,
Sachs & Co., as representatives of the U.S. Underwriters, and (ii) an
International Purchase Agreement (the "International Purchase Agreement," and
together with the U.S. Purchase Agreement, the "Purchase Agreements"), dated as
of November , 1997, among the Company, Mettler and Merrill Lynch
International, BT Alex. Brown International, a Division of Bankers Trust
International PLC, Credit Suisse First Boston (Europe) Limited and Goldman Sachs
International, as representatives of the International Managers. This opinion is
being delivered pursuant to Section 5(b) of each of the Purchase Agreements and
simultaneously with the payment by the Underwriters to the Company for the
Securities. Except as provided herein, all capitalized terms used herein which
are defined in the Purchase Agreements have the respective meanings specified
therein. With your permission, all assumptions and statements of reliance herein
have been made without any independent investigation or verification on our part
except to the extent otherwise expressly stated, and we express no opinion with
respect to the subject matter or accuracy of such assumptions or items relied
upon.
In connection with this opinion, we have (i) investigated such
questions of law, (ii) examined originals or certified, conformed or
reproduction copies of such agreements, instruments, documents and records of
the Company and its subsidiaries, such certificates of public officials and such
other documents, and (iii) reviewed such information from officers and
representatives of the Company and its subsidiaries and others, in each case, as
we have deemed necessary or appropriate for the purposes of this opinion. In all
such examinations, we have assumed the legal capacity of all natural persons
executing documents, the genuineness of all signatures on original or certified
copies, the authenticity of all original or certified copies and the conformity
to original or certified documents of all copies submitted to us as conformed or
reproduction copies. As to various questions of fact relevant to the opinions
expressed herein, we have relied upon, and assume the accuracy of, the
statements made in the certificates of officers of the Company and its
subsidiaries delivered to us, the representations and warranties contained in
the Purchase Agreements and certificates and oral or written statements and
other information of or from public officials and officers and representatives
of the Company, its subsidiaries and others, and assume compliance on the part
of all parties to the Purchase Agreements with their covenants and agreements
contained therein. With respect to the opinions expressed in paragraph 3 below,
we have relied solely upon a certificate or certificates of public officials of
such jurisdictions, copies of which have been provided to you. With respect to
the opinion expressed in paragraph 8 below regarding the effectiveness of the
Registration Statement and the absence of any stop orders or proceedings for
that purpose, we are relying upon the oral advice of the staff of the Securities
and Exchange Commission (the "Commission"). Based upon the foregoing, and
subject to the limitations, qualifications and assumptions set forth herein,
A-2
<PAGE>
and in reliance, to the extent hereinafter stated, upon the opinion of other
counsel, we are of the opinion that:
1. The Company has been duly incorporated and the Company and
Mettler are validly existing as corporations in good standing under the
laws of the State of Delaware.
2. Each of the Company and Mettler has the corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectuses and to enter into and perform
its obligations under the Purchase Agreements.
3. Each of the Company and Mettler is duly qualified as a
foreign corporation to transact business and is in good standing in the
states listed on Schedule I to this opinion.
4. The authorized capital stock of the Company is as set forth
in the Prospectuses under the caption "Capitalization."
5. The issuance of the Securities pursuant to the Purchase
Agreements has been duly authorized and, when such Securities are
issued and delivered in accordance with the terms of the Purchase
Agreements, such Securities will be validly issued, fully paid and
non-assessable, and the issuance of such Securities will not be subject
to any preemptive rights of stockholders arising under the Delaware
General Corporation Law, the Amended and Restated Certificate of
Incorporation or amended By-laws of the Company or any of the
agreements, contracts or instruments filed as an exhibit to the
Registration Statement.
6. The issuance of the shares of Common Stock in connection
with the Merger (the "Merger Shares") has been duly authorized and
assuming that the shares of common stock of MT Investors were validly
issued, fully paid and non-assessable, when such shares of Common Stock
are issued and delivered in accordance with the terms of the Merger
Agreement, the Merger Shares will be validly issued, fully paid and
non-assessable, and the issuance of the Merger Shares will not be
subject to any preemptive rights of stockholders arising under the
Delaware General Corporation Law, the Amended and Restated Certificate
of Incorporation or amended By-laws of the Company or any of the
agreements, contracts or instruments filed as an exhibit to the
Registration Statement.
A-3
<PAGE>
7. Each of the Purchase Agreements has been duly authorized,
executed and delivered by the Company and Mettler.
8. The Registration Statement, [including any Rule 462(b)
Registration Statement,] has been declared effective under the 1933
Act; any required filing of the Prospectuses pursuant to Rule 424(b)
has been made in the manner and within the time period required by Rule
424(b); and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or
threatened by the Commission.
9. The Registration Statement, [including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable,], the Prospectuses [and each amendment or
supplement to the Registration Statement and the Prospectuses] as of
their respective effective or issue dates (other than the financial
statements, notes and schedules thereto and other financial data
included therein or omitted therefrom, as to which we need express no
opinion) complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
10. The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable requirements of
the Delaware General Corporation Law, with any applicable requirements
of the Amended and Restated Certificate of Incorporation and amended
By-laws of the Company and the requirements of the NYSE.
11. The information in the Prospectuses under "Description of
Capital Stock," "Description of Certain Indebtedness" and "Certain
United States Federal Tax Considerations for Non-United States Holders"
and in the Registration Statement under Item 14, in each case to the
extent that such information constitutes matters of law, summaries of
legal matters or documents, has been reviewed by us and is correct in
all material respects.
12. To our knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the
Company or Mettler is a party, or to which the property of the Company
or Mettler is subject, before or brought by any New York, Delaware or
federal court or New York, Delaware or federal governmental agency or
body, which might reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the consummation of the transactions
A-4
<PAGE>
contemplated in the U.S. Purchase Agreement and the International
Purchase Agreement or the performance by the Company or Mettler of its
obligations thereunder or the Related Transactions.
13. No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any New York,
Delaware or federal court or governmental authority or New York,
Delaware or federal agency, is necessary or required in connection with
the due authorization, execution and delivery of the Purchase
Agreements or for the offering, issuance, sale or delivery of the
Securities except (i) such as have been obtained or as may be required
under the 1933 Act or the 1933 Act Regulations and foreign or state
securities or blue sky laws, (ii) such as have been obtained under the
laws and regulations of jurisdictions outside the United States in
which the Reserved Securities are offered, and (iii) the filing of the
certificate of amendment and the certificate of merger with the
Delaware Secretary of State in connection with the Company's name
change and the Merger.
14. The consummation of the Merger and the execution and
delivery by the Company and Mettler of, and the performance by the
Company and Mettler of their obligations under, the Purchase Agreements
did not and will not (i) contravene any provision of the certificates
of incorporation and bylaws, in each case as amended, as the case may
be, of the Company or Mettler, (ii) contravene any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
listed as an exhibit to the Registration Statement or (iii) violate (x)
any present statute, rule or regulation of any governmental agency or
authority of the United States of America or the State of New York or
Delaware (as it relates to the General Corporation Law of the State of
Delaware) applicable to the Company or any subsidiary, or (y) any
judgment or decree or order of any court or governmental agency or body
of the United States of America or the States of New York or Delaware
(as it relates to the General Corporation Law of the State of Delaware)
known to us; provided, however, that we express no opinion with respect
to any violation, breach or default arising under or based upon any
cross-default provision insofar as such violation relates to a default
under an agreement that is not an exhibit to the Registration
Statement.
15. The Merger Agreement has been duly executed and delivered
by the duly authorized officers of the Company and Holding, as the case
may be, and all corporate actions required to be taken by the Company
and Holding, as the case may be, at or prior to the effective date of
the Merger in connection with the Merger Agreement and the Merger
pursuant to United States Federal and Delaware General Corporation Law
have been duly and validly taken.
A-5
<PAGE>
16. Neither the Company nor Mettler is an "investment company"
as such term is defined in the 1940 Act.
In addition, in the course of the preparation by the Company
of the Registration Statement and the Prospectuses, we participated in
conferences with certain of the officers and representatives of, and the
independent public accountants for the Company, at which the Registration
Statement and the Prospectuses were discussed. Between the date of effectiveness
of the Registration Statement and the time of delivery of this letter, we
attended additional conferences with certain of the officers and representatives
of the Company, at which the contents of the Registration Statement and
Prospectuses were discussed to a limited extent. Given the limitations inherent
in the independent verification of factual matters and the character of
determinations involved in the registration process, we are not passing upon or
assuming any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectuses, except
as specified in paragraph 10. Subject to the foregoing and on the basis of the
information gained in the performance of the services referred to above,
including information obtained from officers and other representatives of, and
the independent public accountants for the Company, no facts have come to our
attention that cause us to believe that the Registration Statement, as of its
effective date, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, or that the Prospectuses as of their
date contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Also, subject to the foregoing, no facts have come to our
attention in the course of proceedings described in the second sentence of this
paragraph that cause us to believe that the Prospectuses, as of the date and
time of delivery of this letter, contain any untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances in which
they were made, not misleading. We express no view or belief, however, with
respect to financial statements, notes or schedules thereto or other financial
data included in or omitted from the Registration Statement or Prospectuses. The
opinions set forth above are subject to the following additional qualifications
and assumptions:
(a) Our opinion is subject to (i) applicable bankruptcy,
insolvency, fraudulent transfer, fraudulent conveyance, reorganization,
moratorium and other laws now or hereafter in effect affecting
creditors' rights generally and (ii) general principles of equity
(including, without limitation, standards of materiality, good faith,
fair dealing and reasonableness), whether such principles are
considered in a proceeding at law or equity.
A-6
<PAGE>
(b) Our opinion is subject to the effect of, and we express no
opinion with respect to the application of or compliance with, state
securities or Blue Sky laws.
(c) For purposes of paragraphs 13 and 14 above, we have
reviewed only those statutes, rules and regulations that in our
experience are applicable to transactions of the type contemplated by
the Purchase Agreements or for the offering, issuance, sale or delivery
of the Securities or the Merger.
(d) For purposes of the opinion set forth in paragraph 12
above, we have endeavored, to the extent we have believed necessary, to
determine from lawyers currently in our firm who have performed
substantive legal services for the Company and Mettler whether such
services involved substantive attention in the form of legal
representation concerning pending legal proceedings of the nature
referred to in such paragraph 12, and we have not made any review,
search or investigation of public files or records or files or records
of the Company or Mettler, or of their transactions, or any other
investigation or inquiry with respect to such opinion.
The opinions expressed herein are limited to the federal laws
of the United States of America, the General Corporation Law of the State of
Delaware and the laws of the State of New York, as currently in effect. To the
extent such opinion contains assumptions, conditions and limitations, we are
incorporating such assumptions, conditions and limitations herein. We assume no
obligations to supplement this letter if any applicable laws change after the
date hereof or if we become aware of any facts that might change the opinions
expressed herein after the date hereof.
The opinions expressed herein are solely for your benefit and
may not be relied upon in any manner or for any purpose by any other person and
may not be quoted in whole or in part without our prior written consent.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER &
JACOBSON
By:
Timothy E. Peterson
A-7
<PAGE>
Exhibit A
[Officer's Certificate to come]
A-8
<PAGE>
Schedule I
[list of jurisdictions to come]
A-9
<PAGE>
Exhibit B
FORM OF LOCAL COUNSEL OPINION
TO BE DELIVERED PURSUANT TO
SECTIONS 5(c) AND (d)
(i) Each of [names of local subsidiaries] (collectively, the
"Subsidiaries") has been duly incorporated and is validly existing as a
corporation [in good standing]* under laws of , and has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectuses; all of the issued and outstanding capital
stock of each Subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and, to our knowledge, is owned by ; to our
knowledge, none of the outstanding shares of capital stock of any Subsidiary was
issued in violation of the preemptive or similar rights of any securityholder of
such Subsidiary arising under the laws of for the charter or by-laws
of such Subsidiary.
(ii) To our knowledge, there is not pending or threatened any action,
suit, proceeding, inquiry or investigation, to which the Company or any of the
Subsidiaries is a party, or to which the property of the Company or any of the
Subsidiaries is subject, before or brought by any court, governmental agency or
body in , which might reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the consummation of the transactions contemplated in the U.S.
Purchase Agreement and the International Purchase Agreement or the performance
by the Company or Mettler of its obligations thereunder.
(iii) The execution, delivery and performance of the U.S. Purchase
Agreement and the International Purchase Agreement and the consummation of the
transactions contemplated in the U.S. Purchase Agreement, the International
Purchase Agreement and in the Registration Statement (including the issuance and
sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectuses under the caption "Use Of
Proceeds"), and the compliance by the Company, Holdings, and Mettler with their
respective obligations under the U.S. Purchase Agreement and the International
Purchase Agreement, do not and will not, whether with or without the giving of
notice or lapse of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined in Section 1(a)(x) of the Purchase
Agreements) under, or result in the creation or imposition of any Liens upon any
property or assets of any Subsidiary pursuant to any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument, known to us, to which a
- ----------
* If concept is recognized in local jurisdiction.
B-1
<PAGE>
Subsidiary is a party or by which any of them may be bound, or to which any of
the property or assets of the Subsidiaries is subject (except for Liens under
the Credit Agreement and the Working Capital Facilities and such conflicts,
breaches or defaults or liens, charges or encumbrances that would not have a
Material Adverse Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Subsidiaries, or any applicable law,
statute, rule, regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court of having jurisdiction
over the Subsidiaries or any of their respective properties, assets or
operations.
B-2
<PAGE>
Exhibit C
FORM OF OPINION OF CHRISTINE J. SMITH, ESQ. TO BE
DELIVERED PURSUANT TO SECTION 5(E)
(i) All shares of Class A, Class B and Class C Common Stock of the
Company outstanding immediately prior to the Merger were validly issued, fully
paid and non-assessable.
(ii) To my knowledge, the Company is not in violation of its Amended
and Restated Certificate of Incorporation or amended By-laws.
(iii) To my knowledge, there are no persons with registration rights or
other similar rights arising under the Amended and Restated Certificate of
Incorporation or amended By-laws of the Company or New York, Delaware or federal
law to have any securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the 1933 Act.
C-1
<PAGE>
Exhibit D
[Letterhead of MT Investors Inc.]
Form of Litigation Certificate
The undersigned, William P. Donnelly, hereby certifies that he
is the Chief Financial Officer of Mettler-Toledo International Inc., a Delaware
corporation (the "Company"), and that, as such, he is authorized to execute and
deliver this Certificate on behalf of the Company and, with reference to the
Section 5(h) of the U.S. Purchase Agreement (the "U.S. Purchase Agreement"),
dated , among the Company, Mettler-Toledo, Inc. ("Mettler-Toledo"),
a Delaware corporation, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, BT Alex. Brown Corporation, Credit Suisse First Boston
Corporation and Goldman, Sachs & Co., as representatives of the underwriters
listed in Schedule A to the U.S. Purchase Agreement, and Section 5(h) of the
International Purchase Agreement (the "International Purchase Agreement" and
together with the U.S. Purchase Agreement, the "Purchase Agreements"), dated
, 1997, among the Company, Mettler-Toledo, Merrill Lynch
International, BT Alex. Brown International, A Division of Bankers Trust
International PLC, Credit Suisse First Boston (Europe) Limited and Goldman Sachs
International, as lead managers to the underwriters listed in Schedule A to the
International Purchase Agreement, further certifies, represents and warrants on
behalf of the Company as follows (each capitalized term used herein without
definition having the same meaning specified in the Purchase Agreements):
(a) to the best of his knowledge, based upon certifications made by
officers of the Company and its subsidiaries in the form attached
hereto as Exhibit A, the undersigned has set forth in Exhibit B
attached hereto all actions, suits, proceedings, inquiries or
investigations before or brought by any court or governmental agency or
body, domestic or foreign, pending or threatened against or affecting
the Company or any of its subsidiaries, at the Closing Time, where the
maximum level of liability is equal to or greater than $250,000; and
(b) further certifies, represents and warrants on behalf of the Company
that none of such actions, suits, proceedings, inquiries or
investigations set forth in Exhibit B would reasonably be expected to
have a Material Adverse Effect or would reasonably be expected to
materially or adversely affect the property or assets of the Company
or its subsidiaries or the consummation of the transactions
contemplated in the Purchase Agreements or the performance by the
Company or
D-1
<PAGE>
Mettler-Toledo of its obligations hereunder or thereunder.
D-2
<PAGE>
WITNESS the signature of the undersigned this day of November, 1997.
------------------------------
By: William P. Donnelly
Title: Chief Financial Officer
D-3
<PAGE>
Exhibit E
[FORM OF LOCK-UP PURSUANT TO SECTION 5(M)]
, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
B.T. ALEX. BROWN INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
as Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL A DIVISION OF BANKERS TRUST,
INTERNATIONAL
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
GOLDMAN SACHS INTERNATIONAL
as Representatives of the several International Underwriters
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London, England, EC2Y 9LY
MT INVESTORS INC.
Im Langacher
P.O. Box MT-100
CH 8606, Greifensee, Switzerland
Re: Proposed Public Offering by MT Investors Inc.
(to be renamed Mettler-Toledo International Inc.)
Dear Sirs:
The undersigned, a stockholder of MT Investors Inc., a Delaware
corporation (the "Company"), understands that Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), B.T. Alex. Brown
Incorporated, Credit Suisse First Boston Corporation and Goldman, Sachs & Co.
propose to enter into a U.S. Purchase Agreement (the "U.S. Purchase Agreement")
with the Company, and Merrill Lynch International, BT Alex. Brown International
A Division of Bankers Trust International PLC, Credit Suisse First
E-1
<PAGE>
Boston (Europe) Limited and Goldman Sachs International propose to enter into an
International Purchase Agreement (the "International Purchase Agreement") with
the Company, each providing for the public offering (the "Offerings") of shares
(the "Securities") of the Company's common stock, par value $.01 per share (the
"Common Stock"). In recognition of the benefit that such an offering will confer
upon the undersigned as a stockholder of the Company, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with each underwriter to be named in the
U.S. Purchase Agreement or the International Purchase Agreement that, during a
period of 180 days from the date of the U.S. Purchase Agreement, the undersigned
will not, without the prior written consent of Merrill Lynch, directly or
indirectly, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of, or otherwise dispose of or transfer any shares
of the Company's Common Stock or any securities convertible into or exchangeable
or exercisable for Common Stock (except through gifts to persons, trusts or
other entities who agree in writing to be bound by the restrictions of this
letter), or file any registration statement under the Securities Act of 1933, as
amended, with respect to any of the foregoing, or (ii) enter into any swap or
any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Common
Stock, whether any such swap or transaction is to be settled by delivery of
Common Stock or other securities, in cash or otherwise; provided, however, that
(i) the Company may file a registration statement on Form S-8 under the
Securities Act of 1933 relating to Common Stock of the Company issued pursuant
to the Company's stock option plan (the "Stock Plan"),
E-2
<PAGE>
and (ii) employees of the Company may exercise rights to acquire Common
Stock pursuant to the Stock Plan.
Sincerely,
If Individual:
Print Name
---------------------------
Signature
----------------------------
If Corporation, Partnership or Trust:
--------------------------------------
[print or type name of entity]
By:
-----------------------------------
Name:
--------------------------------
Title:
--------------------------------
E-3
<PAGE>
MT INVESTORS INC.
(a Delaware corporation)
(to be renamed Mettler-Toledo International Inc.)
Shares of Common Stock
FORM OF INTERNATIONAL PURCHASE AGREEMENT
Dated: , 1997
<PAGE>
Table of Contents
<TABLE>
<S> <C>
INTERNATIONAL PURCHASE AGREEMENT.........................................................................1
SECTION 1. Representations and Warranties...............................................5
(a) Representations and Warranties by the Company and Mettler....................5
(i) Compliance with Registration Requirements..........................5
(ii) Independent Accountants............................................6
(iii) Financial Statements...............................................6
(iv) No Material Adverse Change in Business.............................7
(v) Good Standing......................................................7
(vi) Good Standing of Subsidiaries......................................8
(vii) Capitalization.....................................................8
(viii) Authorization of Agreement.........................................9
(ix) Authorization and Description of Securities........................9
(x) Absence of Defaults and Conflicts..................................9
(xi) Absence of Labor Dispute..........................................11
(xii) Absence of Proceedings............................................11
(xiii) Accuracy of Exhibits..............................................11
(xiv) Possession of Intellectual Property...............................11
(xv) Absence of Further Requirements...................................12
(xvi) Possession of Licenses and Permits................................12
(xvii) Title to Property.................................................13
(xviii) Investment Company Act............................................13
(xix) Environmental Laws................................................13
(xx) Registration Rights...............................................14
(xxi) Taxes.............................................................14
(xxii) Accounting Controls...............................................15
(xxiii) Insurance.........................................................15
(xxiv) Stabilization or Manipulation.....................................15
(xxv) Certain Relationships.............................................15
(xxvi) No Offering Material..............................................15
(xxvii) Suppliers.........................................................16
(xxviii) Authority to Consummate Merger and Related
Transactions......................................................16
(xxix) Appraisal Rights..................................................17
(b) Officer's Certificates......................................................17
SECTION 2. Sale and Delivery to International Managers; Closing........................17
(a) Initial Securities..........................................................17
(b) Option Securities...........................................................17
(c) Payment.....................................................................18
(d) Denominations; Registration.................................................19
SECTION 3. Covenants of the Company....................................................19
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
(a) Compliance with Securities Regulations and Commission
Requests....................................................................19
(b) Filing of Amendments........................................................20
(c) Delivery of Registration Statements.........................................20
(d) Delivery of Prospectuses....................................................20
(e) Continued Compliance with Securities Laws...................................20
(f) Blue Sky Qualifications.....................................................21
(g) Rule 158....................................................................21
(h) Use of Proceeds.............................................................22
(i) Restriction on Sale of Securities...........................................22
(j) Reporting Requirements......................................................22
(k) Compliance with NASD Rules..................................................23
SECTION 4. Payment of Expenses.........................................................23
(a) Expenses....................................................................23
(b) Termination of Agreement....................................................24
SECTION 5. Conditions of International Managers' Obligations...........................24
(a) Effectiveness of Registration Statement.....................................24
(b) Opinion of Counsel for Company..............................................24
(c) Opinion of German Counsel for the Company...................................25
(d) Opinion of Swiss Counsel for the Company....................................25
(e) Opinion of Christine J. Smith, Esq..........................................25
(f) Opinion of Counsel for International Managers...............................25
(g) Officers' Certificate.......................................................26
(h) Litigation Certificate......................................................26
(i) Accountant's Comfort Letter.................................................26
(j) Bring-down Comfort Letter...................................................27
(k) Approval of Listing.........................................................27
(l) No Objection................................................................27
(m) Lock-up Agreements; Registration Rights.....................................27
(n) Purchase of Initial U.S. Securities.........................................27
(o) Reorganization..............................................................27
(p) Reliance Letters............................................................27
(q) Conditions to Purchase of International Option Securities...................28
(r) Additional Documents........................................................29
(s) Termination of Agreement....................................................29
SECTION 6. Indemnification.............................................................30
(a) Indemnification of International Managers...................................30
(b) Indemnification of Company, Directors and Officers..........................31
(c) Actions against Parties; Notification.......................................32
(d) Settlement without Consent if Failure to Reimburse..........................32
(e) Indemnification for Reserved Securities.....................................33
SECTION 7. Contribution................................................................33
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery....................................................................35
SECTION 9. Termination of Agreement....................................................35
(a) Termination; General........................................................35
(b) Liabilities.................................................................36
SECTION 10. Default by One or More of the International Managers........................36
SECTION 11. Notices.....................................................................37
SECTION 12. Parties.....................................................................37
SECTION 13. GOVERNING LAW AND TIME......................................................37
SECTION 14. Effect of Headings..........................................................37
SCHEDULES
Schedule A - List of Underwriters................................................Sch A-1
Schedule B - Pricing Information.................................................Sch B-1
Schedule C - List of persons and entities subject to lock-up.....................Sch C-1
EXHIBITS
Exhibit A - Form of Opinion of Company's Counsel.....................................A-1
Exhibit B - Form of Local Counsel Opinion............................................B-1
Exhibit C - Form of Opinion of Christine J. Smith, Esq...............................C-1
Exhibit D - Form of Litigation Certificate of the
Chief Financial Officer of the Company................................D-1
Exhibit E - Form of Lock-up Letter................................................. E-1
</TABLE>
iii
<PAGE>
MT INVESTORS INC.
(a Delaware corporation)
(to be renamed Mettler-Toledo International Inc.)
Shares of Common Stock
(Par Value $.01 Per Share)
FORM OF INTERNATIONAL PURCHASE AGREEMENT
, 1997
MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL,
A DIVISION OF BANKERS TRUST INTERNATIONAL PLC
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
GOLDMAN SACHS INTERNATIONAL
as Lead Managers of the several International Managers
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England
Ladies and Gentlemen:
MT Investors Inc., a Delaware corporation (the "Company"), and
Mettler-Toledo, Inc. ("Mettler"), confirm their agreement with Merrill Lynch
International ("Merrill Lynch") and each of the other International Managers
named in Schedule A hereto (collectively, the "International Managers", which
term shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof), for whom Merrill Lynch, BT Alex. Brown International, a
Division of Bankers Trust International PLC, Credit Suisse First Boston (Europe)
Limited and Goldman Sachs International are acting as representatives (in such
capacity, the "Lead Managers"), with respect to the issue and sale by the
Company and the purchase by the International Managers, acting severally and not
jointly, of the respective numbers of shares of Common Stock, par value $.01 per
share, of the Company ("Common Stock") set forth in said Schedule A, and with
respect to the grant by the Company to the International Managers, acting
severally and not jointly, of the option described in Section 2(b) hereof to
purchase all or any part of additional shares of Common Stock to cover
over-allotments, if any. The aforesaid shares of Common Stock (the
"Initial International Securities") to be purchased by the International
<PAGE>
Managers and all or any part of the shares of Common Stock subject to the
option described in Section 2(b) hereof (the "International Option Securities")
are hereinafter called, collectively, the "International Securities".
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "U.S. Purchase Agreement") providing for
the offering by the Company of an aggregate of shares of Common Stock (the
"Initial U.S. Securities") through arrangements with certain underwriters in the
United States and Canada (the "U.S. Underwriters") for which Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, BT Alex. Brown
Incorporated, Credit Suisse First Boston Corporation and Goldman, Sachs & Co.
are acting as representatives (the "U.S. Representatives"), and the grant by the
Company to the U.S. Underwriters, acting severally and not jointly, of an option
to purchase all or any part of the U.S. Underwriters' pro rata portion of up to
additional shares of Common Stock solely to cover overallotments, if any
(the "U.S. Option Securities" and, together with the International Option
Securities, the "Option Securities"). The Initial U.S. Securities and the U.S.
Option Securities are hereinafter called the "U.S. Securities". It is understood
that the Company is not obligated to sell and the International Managers are not
obligated to purchase any Initial International Securities unless all of the
Initial U.S. Securities are contemporaneously purchased by the U.S.
Underwriters.
The International Managers and the U.S. Underwriters are hereinafter
collectively called the "Underwriters", the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities", and the U.S. Securities and the International Securities
are hereinafter collectively called the "Securities".
The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (in such capacity, the "Global Coordinator").
The Company understands that the International Managers propose to make
a public offering of the International Securities as soon as the Lead Managers
deem advisable after this Agreement has been executed and delivered.
The Company and the International Managers agree that up to shares
of the Initial International Securities to be purchased by the International
Managers and that up to shares of the U.S. Securities to be purchased by the
U.S. Underwriters (collectively, the "Reserved Securities") shall be reserved
for sale by the Underwriters to certain
2
<PAGE>
employees of the Company and its subsidiaries and certain other persons, as
part of the distribution of the Securities by the Underwriters, subject to the
terms of this Agreement, the applicable rules, regulations and interpretations
of the National Association of Securities Dealers, Inc. and all other
applicable laws, rules and regulations. To the extent that such Reserved
Securities are not orally confirmed for purchase by such employees and persons
by the end of the first business day after the date of this Agreement, such
Reserved Securities may be offered to the public as part of the public
offering contemplated hereby.
Mettler is a wholly owned subsidiary of Mettler-Toledo Holding Inc.
("Holding"), which in turn is a wholly owned subsidiary of the Company. At or
prior to the Closing Time (as defined below), (i) Holding will be merged with
and into the Company, with the Company being the surviving corporation (the
"Merger"), pursuant to a merger agreement (the "Merger Agreement"), (ii) the
Company will change its name to Mettler-Toledo International Inc. and (iii) in
the Merger, each share of the Class A, Class B and Class C common stock of the
Company will be converted into 12.58392 shares of Common Stock of the Company
and each outstanding stock option to receive Class A, Class B and Class C common
stock of the Company which is outstanding at the time of effectiveness of the
Merger will be converted into and represent an option to receive shares of
Common Stock. The foregoing transactions are referred to as the
"Reorganization." Existing stockholders of the Company will receive a cash
payment (at the initial public offering price) in lieu of any fractional shares
that would be required to be issued as a result of the Reorganization. All
references herein to the Company shall be to (i) MT Investors Inc. prior to the
Reorganization and (ii) Mettler-Toledo International Inc., the surviving
corporation resulting from the Merger.
In addition, prior to or simultaneously with the issuance and sale of
the International Securities and the U.S. Securities, (i) the Company and
certain of its subsidiaries will enter into a Bank Credit Agreement with Merrill
Lynch, as arranger and documentation agent, and the various lending institutions
named therein (the "New Bank Credit Agreement"), and (ii) Mettler-Toledo, Inc.
("MTI"), a wholly owned subsidiary of Holding, will effect the Note Repurchase
(as defined in the Registration Statement), which will consist of a tender offer
for MTI's 9 3/4% Senior Subordinated Notes due 2006 (the "Notes") and a related
consent solicitation for amendments to the Indenture governing the Notes, and
will execute and deliver a supplemental indenture to such Indenture (the
"Supplemental Indenture") to effect such amendments thereto. The foregoing
transactions are hereinafter referred to collectively as the "Related
Transactions".
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-35597) covering the
3
<PAGE>
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two
forms of prospectus are to be used in connection with the offering and sale of
the Securities: one relating to the International Securities (the "Form of
International Prospectus") and one relating to the U.S. Securities (the "Form of
U.S. Prospectus"). The Form of International Prospectus is identical to the Form
of U.S. Prospectus, except for the front cover and back cover pages and the
information under the caption "Underwriting." The Registration Statement also
contains a form of prospectus to be used in connection with the issuance by the
Company of shares of its Common Stock pursuant to the Merger. The information
included in any such prospectus or in any such Term Sheet, as the case may be,
that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information". Each Form of International Prospectus and
Form of U.S. Prospectus used before such registration statement became
effective, and any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus". Such registration statement, including the exhibits
thereto and schedules thereto at the time it became effective and including the
Rule 430A Information and the Rule 434 Information, as applicable, is herein
called the "Registration Statement". Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final Form
of International Prospectus and the final Form of U.S. Prospectus in the forms
first furnished to the Underwriters for use in connection with the offering of
the Securities are herein called the "International Prospectus" and the "U.S.
Prospectus", respectively, and collectively, the "Prospectuses". If Rule 434 is
relied on, the terms "International Prospectus" and "U.S. Prospectus" shall
refer to the preliminary International Prospectus dated , 1997 and
preliminary U.S. Prospectus dated , 1997, respectively, each together
with the applicable Term Sheet and all references in this Agreement to the date
of such Prospectuses shall mean the date of the applicable Term Sheet. For
purposes of this Agreement, all references to the Registration Statement, any
preliminary prospectus, the International Prospectus, the U.S. Prospectus or
any Term Sheet or any amendment or supplement to any of the foregoing shall be
5
<PAGE>
deemed to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("EDGAR").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company and Mettler. The
Company and Mettler, jointly and severally, represent and warrant to each
International Manager as of the date hereof, as of the Closing Time referred to
in Section 2(c) hereof and as of each Date of Delivery (if any) referred to in
Section 2(b) hereof, and agree with each International Manager, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information
has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any International
Option Securities are purchased, at the Date of Delivery), the
Registration Statement, the Rule 462(b) Registration Statement and any
amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations and did not and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and
the Prospectuses, any preliminary prospectuses and any supplement
thereto or any prospectus wrapper prepared in connection therewith, at
their respective times of issuance and at the Closing Time, complied
and will comply in all material respects with any applicable laws or
regulations of foreign jurisdictions in which the Prospectuses and such
preliminary prospectuses, as amended or supplemented, if applicable,
are distributed in connection with the offer and sale of Reserved
Securities. Neither of the Prospectuses nor any amendments or
supplements thereto (including any prospectus wrapper), at the time
the Prospectuses or any amendments or supplements thereto were issued
and at the Closing Time (and, if any International Option Securities
are purchased, at the Date of Delivery), included or will include an
untrue statement of a material fact or omitted or will omit to state a
material fact necessary in order to make the statements therein, in the
light of the
6
<PAGE>
circumstances under which they were made, not misleading. If Rule 434
is used, the Company will comply with the requirements of Rule 434
and the Prospectuses shall not be "materially different", as such
term is used in Rule 434, from the prospectuses included in the
Registration Statement at the time it became effective. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the
International Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any International
Manager through Merrill Lynch expressly for use in the Registration
Statement or the International Prospectus.
Each preliminary prospectus and the prospectuses filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectuses
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted
by Regulation S-T of the 1933 Act Regulations.
(ii) Independent Accountants. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements included
in the Registration Statement and the Prospectuses, together with the
related schedules and notes, present fairly the consolidated financial
position of the Company and its subsidiaries and, in respect of the
Predecessor Business (as defined in the Registration Statement under
"Selected Historical Financial Information"), of the Company and its
combined affiliated entities, as the case may be, at the dates
indicated and the statement of operations, changes in net assets,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries and, in respect of the Predecessor Business, of the
Company and its combined affiliated entities, as the case may be, for
the periods specified; said financial statements have been prepared
in conformity with U.S. generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved.
The supporting schedules included in the Registration Statement
present fairly in accordance with GAAP the information required to be
stated therein. The selected financial data and the summary financial
information included in the Prospectuses present fairly the
information shown therein and have been compiled on a basis
consistent with that of the audited financial statements
6
<PAGE>
included in the Registration Statement. The pro forma financial
statements and the related notes thereto included in the Registration
Statement and the Prospectuses present fairly the information shown
therein, have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements and
have been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.
(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business,
and no material adverse effect on the ability of the Company, Holding,
Mettler or any other subsidiary of the Company, as the case may be, to
enter into this Agreement, the U.S. Purchase Agreement, the Merger
Agreement, the New Bank Credit Agreement, the Supplemental Indenture or
the dealer manager agreement with respect to the Note Repurchase ("the
Dealer Manager Agreement") or to consummate the transactions
contemplated in this Agreement or the U.S. Purchase Agreement or the
Related Transactions (any such material adverse change or effect, a
"Material Adverse Effect"), (B) there have been no transactions entered
into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise, and (C)
there has been no dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock.
(v) Good Standing. The Company and Mettler have been duly
organized and are validly existing as corporations in good standing
under the laws of the State of Delaware and have corporate power and
authority to own, lease and operate their properties and to conduct
their business as described in the Prospectuses and to enter into and
perform their obligations under this Agreement; and the Company and
Mettler are duly qualified as foreign corporations to transact
business and are in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect.
7
<PAGE>
(vi) Good Standing of Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect; except for directors' qualifying shares or as
otherwise disclosed in the Registration Statement, all of the issued
and outstanding capital stock of each such Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned by the Company, directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity, except for any security interest, mortgage, pledge, lien,
encumbrance, claim or equity created pursuant to the Credit Agreement
(as defined in the Registration Statement) or the New Bank Credit
Agreement or under any local working capital facilities or interest
protection agreements secured under the New Bank Credit Agreement (the
"Other Secured Agreements"); and none of the outstanding shares of
capital stock of any Subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such Subsidiary.
The only subsidiaries of the Company are (a) the subsidiaries listed on
Exhibit 21 to the Registration Statement and (b) certain other
subsidiaries which, considered in the aggregate as a single Subsidiary,
do not constitute a "significant subsidiary" as defined in Rule 1-02 of
Regulation S-X.
(vii) Capitalization. After giving effect to the
Reorganization, the authorized, issued and outstanding capital stock
of the Company shall be as set forth in the Prospectuses in the
column entitled "As Adjusted" under the caption "Capitalization"
(except for subsequent issuances, if any, pursuant to this Agreement,
pursuant to reservations, agreements or employee benefit plans
referred to in the Prospectuses or pursuant to the exercise of
convertible securities or options referred to in the Prospectuses).
The shares of issued and outstanding capital stock of the Company to
be issued by the Company in connection with the Reorganization have
been or will be, upon completion of the Reorganization, duly
authorized and validly issued and are, or upon issuance thereof in
connection with and pursuant to the Reorganization, will be, fully
paid and non-assessable; none of such outstanding shares of capital
stock of the Company has been or will be, upon
8
<PAGE>
completion of the Reorganization, issued in violation of the
preemptive or other similar rights of any securityholder of the
Company.
(viii) Authorization of Agreement. This Agreement and the U.S.
Purchase Agreement have been duly authorized, executed and delivered by
the Company and Mettler, and all actions and proceedings required under
applicable law to be taken by the Company and its subsidiaries in
connection with the Merger will have been duly and validly taken on or
prior to the effective date of the Merger; and on or prior to the
Closing Time, the Merger will have been duly and validly effected.
(ix) Authorization and Description of Securities. The
Securities to be purchased by the International Managers and the U.S.
Underwriters from the Company have been duly authorized for issuance
and sale to the International Managers pursuant to this Agreement and
the U.S. Underwriters pursuant to the U.S. Purchase Agreement,
respectively, and, when issued and delivered by the Company pursuant to
this Agreement and the U.S. Purchase Agreement, respectively, against
payment of the consideration set forth herein and in the U.S. Purchase
Agreement, respectively, will be validly issued, fully paid and
non-assessable; the Common Stock conforms in all material respects to
all statements relating thereto contained in the Prospectuses and such
description conforms to the rights set forth in the instruments
defining the same; no holder of the Securities will be subject to
personal liability by reason of being such a holder; and the issuance
of the Securities is not subject to the preemptive or other similar
rights of any securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the Company
nor any of its subsidiaries is in violation of its charter or by-laws
or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments"),
except for (a) with respect to the Company's subsidiaries other than
the Subsidiaries, such violations that would not result in a Material
Adverse Effect, and (b) such defaults that would not result in a
Material Adverse Effect; and the execution, delivery and performance
of this Agreement and the U.S. Purchase Agreement by the Company or
Mettler, the consummation by the Company or its subsidiaries of the
transactions contemplated in this Agreement and the U.S. Purchase
Agreement, the Related Transactions and the transactions contemplated
in the Registration Statement
9
<PAGE>
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the
Prospectuses under the caption "Use of Proceeds"), and compliance by
the Company and its subsidiaries with their obligations under this
Agreement, the U.S. Purchase Agreement, the Merger Agreement, the New
Bank Credit Agreement, the Supplemental Indenture and the Dealer
Manager Agreement, have been duly authorized by all necessary
corporate action by the Company or its subsidiaries, as the case may
be, except for any required approval of the Merger by the stockholders
of the Company, which approval will be obtained prior to the Closing
Date, and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined below) under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any
subsidiary pursuant to, the Agreements and Instruments (except for (A)
such conflicts, breaches or defaults or liens, charges or encumbrances
that would not result in a Material Adverse Effect or (B) such liens,
charges, or encumbrances as are created in connection with the
execution, delivery and performance of the New Bank Credit Facility
or the Other Secured Agreements, nor will such action result in any
violation of the provisions of the charter or by-laws of the Company
or any subsidiary or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any subsidiary or any of their assets, properties
or operations. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment
of all or a portion of such indebtedness by the Company or any
subsidiary.
(xi) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge
of the Company or Mettler, is imminent, and neither the Company nor
Mettler is aware of any existing or imminent labor disturbance by the
employees of any of its or any subsidiary's principal suppliers,
manufacturers, customers or contractors, which, in either case, might
reasonably be expected to result in a Material Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company or Mettler, threatened against or
affecting the Company or any subsidiary, which is required to be
disclosed in the Registration Statement (other than as disclosed
therein), or which might reasonably be expected to result in a Material
Adverse
10
<PAGE>
Effect or which might reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation
of the transactions contemplated in this Agreement or the U.S. Purchase
Agreement or the Related Transactions or the performance by the Company
and its subsidiaries of their obligations hereunder or under the U.S.
Purchase Agreement, the Merger Agreement, the New Bank Credit
Agreement, the Supplemental Indenture or the Dealer Manager Agreement,
and the aggregate of all pending legal or governmental proceedings to
which the Company or any subsidiary is a party or of which any of their
respective property or assets is the subject which are not described in
the Registration Statement, including ordinary routine litigation
incidental to the business, could not reasonably be expected to result
in a Material Adverse Effect.
(xiii) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectuses or to be filed as exhibits thereto which
have not been so described and filed as required.
(xiv) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them except where the failure
to so own, possess or acquire, singly and in the aggregate, would not
result in a Material Adverse Effect, and neither the Company nor any of
its subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect
to any Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or inadequate to protect
the interest of the Company or any of its subsidiaries therein, and
which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, singly or in
the aggregate, would result in a Material Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company or
Mettler of their obligations hereunder, in connection with the
offering, issuance or sale of the Securities under this Agreement and
the U.S. Purchase Agreement or the consummation of the transactions
contemplated by
11
<PAGE>
this Agreement or the U.S. Purchase Agreement or the Related
Transactions, except (i) such as have been already obtained or as may
be required under the 1933 Act or the 1933 Act Regulations and
foreign or state securities or blue sky laws, (ii) such as have been
obtained under the laws and regulations of jurisdictions outside the
United States in which the Reserved Securities are offered and (iii)
such as will be obtained at or prior to the Closing Date under Delaware
law in connection with the filing of the certificate of amendment,
certificate of merger and certificate of ownership and merger with the
Delaware Secretary of State in connection with the Merger and the
Company's name change.
(xvi) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them except
for such Governmental Licenses the failure of which to possess would
not have a Material Adverse Effect; the Company and its subsidiaries
are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of
such Governmental Licenses to be in full force and effect would not
have a Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any written notice of any judicial or
administrative proceedings relating to the revocation or modification
of any such Governmental Licenses which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Effect.
(xvii) Title to Property. The Company and its subsidiaries
have good and marketable title to all real property owned by the
Company and its subsidiaries and good title to all other properties
owned by them, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any
kind except such as (a) are described in the Prospectuses or as set
forth in the New Bank Credit Agreement or the Other Secured Agreements,
(b) do not, singly or in the aggregate, materially affect the value of
such property and do not interfere with the use made and proposed to be
made of such property by the Company or any of its subsidiaries or (c)
would not have a Material Adverse Effect; all of the leases and
subleases material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company or any of its
subsidiaries holds properties described in the Prospectuses, are in
full force and effect; and neither the Company nor any subsidiary has
any
12
<PAGE>
notice of any claim of any sort that has been asserted by anyone
adverse to the rights of the Company or any subsidiary under any of the
leases or subleases mentioned above, or affecting or questioning the
rights of the Company or such subsidiary to the continued possession of
the leased or subleased premises under any such lease or sublease
except for such claims as would not singly or in the aggregate result
in a Material Adverse Effect.
(xviii) Investment Company Act. Neither the Company nor
Mettler is or upon (a) the issuance and sale of the Securities as
herein contemplated and the application of the net proceeds therefrom
as described in the Prospectuses or (b) the consummation of the
transactions contemplated by this Agreement or the U.S. Purchase
Agreement and the Related Transactions will be, an "investment company"
as such term is defined in the Investment Company Act of 1940, as
amended (the "1940 Act").
(xix) Environmental Laws. Except as described in the
Registration Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries is in violation of any federal, state,
local or foreign statute, law, regulation, ordinance, code, common law
or any judicial or administrative interpretation thereof enforceable at
law or in equity, including any applicable judicial or administrative
order, consent, decree or judgment, relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata), including, without limitation, laws and regulations
relating to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum
or petroleum products subject to regulation under any environmental law
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials subject to regulation under any
environmental law (collectively, "Environmental Laws"), (B) the Company
and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in
compliance with their requirements, (C) there are no pending or, to the
knowledge of the Company or Mettler, threatened administrative,
regulatory or judicial actions, suits, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries and (D) to the knowledge of the Company or Mettler, there
are no events or circumstances that could reasonably be expected to
form the basis of an order for clean-up or remediation, or an action,
suit or proceeding by any private party or governmental body or agency,
against
13
<PAGE>
the Company or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.
(xx) Registration Rights. Except as described in the
Registration Statement and the Prospectuses, no person has registration
rights or other similar rights to have any securities of the Company
registered by the Company under the 1933 Act. No persons who have
registration rights or other similar rights relating to the Common
Stock of the Company have any such rights to have Common Stock
registered pursuant to the Registration Statement which have not been
waived. There are no persons with registration rights or other similar
rights to have any securities registered by the Company's subsidiaries
under the 1933 Act.
(xxi) Taxes. The Company and its subsidiaries have filed all
tax returns that are required to have been filed by them pursuant to
applicable law except insofar as the failure to file such returns would
not result in a Material Adverse Effect, and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the
Company and its subsidiaries, except for such taxes, if any, as are
being contested in good faith by appropriate proceedings and as to
which adequate reserves have been provided in accordance with GAAP, and
except for the failure to pay such taxes which, individually and in the
aggregate, would not have a Material Adverse Effect. The charges,
accruals and reserves on the books of the Company and its
subsidiaries in respect of any tax liability for any years not
finally determined are adequate in accordance with GAAP to meet any
assessments or reassessments for additional tax for any years not
finally determined, except to the extent of any inadequacy that would
not result in a Material Adverse Effect. No material taxes have been
or will be imposed on the Company, Holding or Mettler in connection
with the consummation of the Reorganization.
(xxii) Accounting Controls. The Company and its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization, (B) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with generally accepted accounting principles and to
maintain accountability for assets, (C) access to assets is permitted
only in accordance with management's general or specific authorization
and (D) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
14
<PAGE>
(xxiii) Insurance. The Company and its subsidiaries carry or
are entitled to the benefits of insurance, with financially sound and
reputable insurers, in such amounts and covering such risks as are
generally maintained by companies of established repute engaged in the
same or similar business, and all policies with respect to such
insurance are in full force and effect.
(xxiv) Stabilization or Manipulation. Neither the Company nor
any of its subsidiaries has taken, directly or indirectly, any action
designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of any such entity to
facilitate the sale or resale of the Securities.
(xxv) Certain Relationships. No relationship, direct or
indirect, exists between or among any of the Company and any of its
subsidiaries or any affiliate of any such entity, on the one hand, and
any director, officer, stockholder, customer or supplier of any of
them, on the other hand, which is required by the 1933 Act or by the
1933 Act Regulations to be described in the Registration Statement or
the Prospectuses which is not so described or is not described as
required.
(xxvi) No Offering Material. The Company and its subsidiaries
have not distributed and, prior to the later to occur (1) the Closing
Time and (ii) completion of the distribution of the Securities, will
not distribute any offering material in connection with the offering
and sale of the Securities other than the Registration Statement, any
preliminary prospectus, the Prospectus or other materials, if any,
permitted by the 1933 Act and approved by the U.S. Representatives.
(xvii) Suppliers. No supplier of merchandise to the Company or
any of its subsidiaries has ceased shipments of merchandise thereto,
which cessation would result in a Material Adverse Effect.
(xxvii) Authority to Consummate Merger and Related
Transactions. The Company and its subsidiaries have, to the extent
applicable, all necessary corporate power and authority to enter into
and perform their respective obligations under the Merger Agreement,
the New Bank Credit Agreement, the Supplemental Indenture and the
Dealer Manager Agreement; the execution, delivery and performance of
the Merger Agreement, the New Bank Credit Agreement, the Supplemental
Indenture and the Dealer Manager Agreement, as applicable, by the
Company and such subsidiaries have been duly authorized, except that
the Merger remains subject to the approval of the shareholders of the
15
<PAGE>
Company; the Merger Agreement, the New Bank Credit Agreement, the
Supplemental Indenture and the Dealer Manager Agreement have been duly
authorized, and have or prior to the Closing Time will be executed and
delivered by the Company and such subsidiaries as applicable; and
(assuming due authorization, execution and delivery by each other party
thereto other than the Company or any of its subsidiaries) the Merger
Agreement (subject to obtaining the requisite shareholder approval),
the New Bank Credit Agreement, the Supplemental Indenture and the
Dealer Manager Agreement will constitute valid and binding obligations,
as applicable, of the Company and such subsidiaries, enforceable
against the Company and such subsidiaries, as applicable, in accordance
with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law), except (i) as to the enforcement of the
indemnification provisions of the Dealer Manager Agreement and (ii)
with respect to the New Bank Credit Agreement, except as
enforceability may be limited by other laws and regulations of non-U.S.
jurisdictions.
(xxix) Appraisal Rights. To the knowledge of the Company and
Mettler, no stockholders of the Company have demanded an appraisal of
their shares as a result of the Merger, and on or prior to the Closing
Time, each outstanding share of the Company's three classes of common
stock which are issued and outstanding on the date hereof will be
converted into and represent the right to receive 12.58392 shares of
Common Stock, except that fractional shares will represent the right to
receive cash at $ per share.
(b) Officer's Certificates. Any certificate signed by any officer of
the Company, Mettler or any of the Company's subsidiaries delivered to the
Global Coordinator, the Lead Managers or to counsel for the International
Managers shall be deemed a joint and several representation and warranty by the
Company and Mettler to each International Manager as to the matters covered
thereby.
SECTION 2. Sale and Delivery to International Managers; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each International Manager, severally and
not jointly, and each International Manager, severally and not jointly, agrees
to purchase from the Company, at the price per share set forth in Schedule B,
the number of Initial International Securities set forth in
16
<PAGE>
Schedule A opposite the name of such International Manager, plus any additional
number of Initial International Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the International Managers,
severally and not jointly, to purchase up to an additional shares of Common
Stock at the price per share set forth in Schedule B, less an amount per share
equal to any dividends or distributions declared by the Company and payable on
the Initial International Securities but not payable on the International Option
Securities. The option hereby granted will expire 30 days after the date hereof
and may be exercised in whole or in part from time to time only for the purpose
of covering over-allotments which may be made in connection with the offering
and distribution of the Initial International Securities upon notice by the
Global Coordinator to the Company setting forth the number of International
Option Securities as to which the several International Managers are then
exercising the option and the time and date of payment and delivery for such
International Option Securities. Any such time and date of delivery for the
International Option Securities (a "Date of Delivery") shall be determined by
the Global Coordinator, but shall not be later than seven full business days
after the exercise of said option, nor in any event prior to the Closing Time,
as hereinafter defined. If the option is exercised as to all or any portion of
the International Option Securities, each of the International Managers, acting
severally and not jointly, will purchase that proportion of the total number of
International Option Securities then being purchased which the number of Initial
International Securities set forth in Schedule A opposite the name of such
International Manager bears to the total number of Initial International
Securities, subject in each case to such adjustments as the Global Coordinator
in its discretion shall make to eliminate any sales or purchases of fractional
shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Fried,
Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New York 10004,
or at such other place as shall be agreed upon by the Global Coordinator and the
Company, at 10:00 A.M. (Eastern time) on the third (fourth, if the pricing
occurs after 4:30 P.M. (Eastern time) on any given day) business day after the
date hereof (unless postponed in accordance with the provisions of Section 10),
or such other time not later than ten business days after such date as shall be
agreed upon by the Global Coordinator and the Company (such time and date of
payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the International Option
Securities are purchased by the International Managers, payment of the purchase
price for, and delivery
17
<PAGE>
of certificates for, such International Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on each Date of Delivery as specified in
the notice from the Global Coordinator to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Lead Managers for the respective accounts of the International Managers of
certificates for the International Securities to be purchased by them. It is
understood that each International Manager has authorized the Lead Managers, for
its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Initial International Securities and the International
Option Securities, if any, which it has agreed to purchase. Merrill Lynch,
individually and not as representative of the International Managers, may (but
shall not be obligated to) make payment of the purchase price for the Initial
International Securities or the International Option Securities, if any, to be
purchased by any International Manager whose funds have not been received by
the Closing Time or the relevant Date of Delivery, as the case may be, but
such payment shall not relieve such International Manager from its obligations
hereunder.
(d) Denominations; Registration. Certificates for the Initial
International Securities and the International Option Securities, if any, shall
be in such denominations and registered in such names as the Lead Managers may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
International Securities and the International Option Securities, if any, will
be made available for examination and packaging by the Lead Managers in the City
of New York not later than 10:00 A.M. (Eastern time) on the business day prior
to the Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
International Manager as follows:
(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify
the Global Coordinator immediately, and confirm the notice in writing,
(i) when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to the Prospectuses or any
amended Prospectuses shall have been filed, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission
for any amendment to the Registration Statement or any amendment or
supplement to the Prospectuses or for additional information,
18
<PAGE>
and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any preliminary prospectus,
or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Company
will promptly effect the filings necessary pursuant to Rule 424(b)
and will take such steps as it deems necessary to ascertain promptly
whether the form of prospectus transmitted for filing under Rule
424(b) was received for filing by the Commission and, in the event
that it was not, it will promptly file such prospectus. The Company
will make every reasonable effort to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the lifting thereof
at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to
the Registration Statement (including any filing under Rule 462(b)),
any Term Sheet or any amendment, supplement or revision to either the
prospectus included in the Registration Statement at the time it became
effective or to the Prospectuses, will furnish the Global Coordinator
with copies of any such documents a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file or
use any such document to which the Global Coordinator or counsel for
the International Managers shall object.
(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the Lead Managers and counsel for the
International Managers, without charge, signed copies of the
Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates
of experts, and will also deliver to the Lead Managers, without charge,
a conformed copy of the Registration Statement as originally filed and
of each amendment thereto (without exhibits) for each of the
International Managers. The copies of the Registration Statement and
each amendment thereto furnished to the International Managers will be
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to
each International Manager, without charge, as many copies of each
preliminary prospectus as such International Manager reasonably
requested, and the Company hereby consents to the use of such copies
for purposes permitted by the 1933 Act. The Company will furnish to
each International Manager, without charge, during
19
<PAGE>
the period when the International Prospectus is required to be
delivered under the 1933 Act or the Securities Exchange Act of 1934
(the "1934 Act"), such number of copies of the International
Prospectus (as amended or supplemented) as such International Manager
may reasonably request. The International Prospectus and any amendments
or supplements thereto furnished to the International Managers will
be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted
by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company
will comply with the 1933 Act and the 1933 Act Regulations so as to
permit the completion of the distribution of the Securities as
contemplated in this Agreement, the U.S. Purchase Agreement and the
Prospectuses. If at any time when a prospectus is required by the 1933
Act to be delivered in connection with sales of the Securities, any
event shall occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel for the International Managers or
for the Company, to amend the Registration Statement or amend or
supplement any Prospectus in order that the Prospectuses will not
include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it
is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration
Statement or amend or supplement any Prospectus in order to comply
with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to
Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration
Statement or the Prospectuses comply with such requirements, and the
Company will furnish to the International Managers such number of
copies of such amendment or supplement as the International Managers
may reasonably request; provided, however, that if the date of any
such amendment or supplement is more than 270 days after the date
hereof, the preparation, filing and furnishing of such amendment or
supplement shall be at the expense of the Underwriters.
(f) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the International Managers, to qualify the
Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions (domestic or foreign) as the
Global Coordinator may designate and to maintain such qualifications in
effect for a period of not less than one year from the later of the
effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not
be obligated to file any
20
<PAGE>
general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which
it is not so qualified or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so
subject. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may
be required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from
the effective date of the Registration Statement and any Rule 462(b)
Registration Statement.
(g) Rule 158. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits
contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Securities in the manner
specified in the Prospectuses under "Use of Proceeds".
(i) Restriction on Sale of Securities. During a period of 180
days from the date of the Prospectuses, the Company will not, without
the prior written consent of the Global Coordinator, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or
warrant for the sale of or otherwise dispose or transfer any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under
the 1933 Act with respect to any of the foregoing or (ii) enter into
any swap or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of
ownership of the Common Stock, whether any such swap or transaction
described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold hereunder or
under the International Purchase Agreement, (B) any shares of Common
Stock issued by the Company upon the exercise of an option or warrant
or the conversion of a security outstanding on the date hereof and
referred to in the Prospectuses, (C) any shares of Common Stock issued
or options to purchase Common Stock granted pursuant to existing
employee benefit plans of the Company referred to in the Prospectuses,
(D) any shares of Common Stock issued pursuant to any non-employee
director stock plan or dividend reinvestment plan, (E) any shares of
Common Stock issued in connection with the Reorganization, (F) the
issuance of options under the Company's stock option plan and the
21
<PAGE>
exercise by the Company's employees of their rights relating thereto or
(G) the filing of a registration statement on Form S-8 under the 1933
Act relating to Common Stock pursuant to the Company's stock option
plan.
(j) Reporting Requirements. The Company, during the period
when the Prospectuses are required to be delivered under the 1933 Act
or the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the rules and regulations of the Commission
thereunder.
(k) Compliance with NASD Rules. The Company hereby agrees that
it will ensure that the Reserved Securities will be restricted as
required by the National Association of Securities Dealers, Inc. (the
"NASD") or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of this
Agreement. The Underwriters will notify the Company as to which persons
will need to be so restricted. At the request of the Underwriters, the
Company will direct the transfer agent to place a stop transfer
restriction upon such securities for such period of time. Should the
Company release, or seek to release, from such restrictions any of the
Reserved Securities, the Company agrees to reimburse the Underwriters
for any reasonable expenses (including, without limitation, legal
expenses) they incur in connection with such release.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company and Mettler, jointly and severally will pay
all expenses incident to the performance of their obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, including any stock or other transfer taxes and any stamp or other
duties payable upon the sale, issuance or delivery of the Securities to the
Underwriters and the transfer of the Securities between the International
Managers and the U.S. Underwriters, (iv) the fees and disbursements of the
Company's counsel, accountants and other advisors, (v) the qualification of the
Securities under securities laws in accordance with the provisions of Section
3(f) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey and any supplement thereto (such fees and
expenses
22
<PAGE>
of counsel not to exceed $5,000.00), (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectuses and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue Sky
Survey and any supplement thereto, (viii) the fees and expenses of any transfer
agent or registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of the sale of the Securities, (x) the fees and expenses
incurred in connection with the listing of the Securities on the NYSE and (xi)
all costs and expenses of the Underwriters, including the fees and
disbursements of Fried, Frank, Harris, Shriver & Jacobson, in connection with
matters related to the Reserved Securities.
(b) Termination of Agreement. If this Agreement is terminated by the
U.S. Representatives in accordance with the provisions of Section 5(r) or
Section 9(a)(i) hereof, the Company and Mettler shall reimburse the
International Managers for all of their reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the International
Managers.
SECTION 5. Conditions of International Managers' Obligations. The
obligations of the several International Managers hereunder are subject to the
accuracy in all material respects of the representations and warranties of the
Company and Mettler contained in Section 1 hereof or in certificates of any
officer of the Company, Mettler or any subsidiary of the Company delivered
pursuant to the provisions hereof, to the performance by the Company and Mettler
of their respective covenants and other obligations hereunder, and to the
following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act or proceedings therefor initiated or threatened by
the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the International Managers. A prospectus
containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).
23
<PAGE>
(b) Opinion of Counsel for Company. At Closing Time, the Lead
Managers shall have received the favorable opinion, dated as of Closing
Time, of Fried, Frank, Harris, Shriver & Jacobson, special counsel for
the Company, in form and substance satisfactory to counsel for the
International Managers, together with signed or reproduced copies of
such letter for each of the other International Managers to the effect
set forth in Exhibit A hereto and to such further effect as counsel to
the International Managers may reasonably request.
(c) Opinion of German Counsel for the Company. At Closing
Time, the Lead Managers shall have received the favorable opinion,
dated as of Closing Time, of , special German counsel for the
Company, in form and substance satisfactory to counsel for the
International Managers, together with signed or reproduced copies of
such letter for each of the other International Managers to the effect
set forth in Exhibit B hereto and to such further effect as counsel to
the International Managers may reasonably request, with respect to each
direct or indirect subsidiary of the Company or Mettler organized under
the laws of Germany.
(d) Opinion of Swiss Counsel for the Company. At Closing Time,
the Lead Managers shall have received the favorable opinion, dated as
of Closing Time, of , special Swiss counsel for the Company, in
form and substance satisfactory to counsel for the International
Managers, together with signed or reproduced copies of such letter
for each of the other International Managers to the effect set forth
in Exhibit B hereto and to such further effect as counsel to the
International Managers may reasonably request, with respect to each
direct or indirect subsidiary of the Company or Mettler organized
under the laws of Switzerland.
(e) Opinion of Christine J. Smith, Esq. At the Closing Time,
the Lead Managers shall have received the favorable opinion, dated as
of the Closing Time, of Christine J. Smith, Esq., in form and substance
reasonably satisfactory to counsel for the International Managers,
together with signed or reproduced copies of such letter for each of
the other International Managers to the effect set forth in Exhibit C
hereto and to such effect as counsel to the International Managers may
reasonably request.
(f) Opinion of Counsel for International Managers. At Closing
Time, the Lead Managers shall have received the favorable opinion,
dated as of Closing Time, of Debevoise & Plimpton, counsel for the
International Managers, together with signed or reproduced copies of
such letter for each of the other International Managers with respect
to the matters set forth in clauses (1), (2), (5) (but with
24
<PAGE>
respect to preemptive or other similar rights, solely as to preemptive
or other similar rights arising by operation of law or under the
charter or by-laws of the Company), (7) through (10), inclusive, (11)
(solely as to the information in the Prospectus under "Description of
Capital Stock--Common Stock") and the first full paragraph of text
following clause 16 of Exhibit A hereto. In giving such opinion such
counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York, the federal
law of the United States and the General Corporation Law of the State
of Delaware, upon the opinions of counsel satisfactory to the Lead
Managers. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and its
subsidiaries and certificates of public officials.
(g) Officers' Certificate. At Closing Time, there shall not
have been, since the date hereof or since the respective dates as of
which information is given in the Prospectuses, any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, and the Lead Managers shall have
received a certificate of the President or a Vice President of the
Company and of the chief financial or chief accounting officer of each
of the Company and Mettler, in each case dated as of Closing Time, to
the effect that (i) there has been no such Material Adverse Effect,
(ii) the representations and warranties in Section 1(a) hereof are true
and correct in all material respects with the same force and effect as
though expressly made at and as of Closing Time, (iii) each of the
Company and Mettler has complied with all agreements and satisfied all
conditions contained in this Agreement and the U.S. Purchase Agreement
on its part to be performed or satisfied at or prior to Closing Time,
and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and, to the knowledge of such officer no
proceedings for that purpose have been instituted or are pending or are
contemplated by the Commission.
(h) Litigation Certificate. At Closing Time, the Lead Managers
shall have received a certificate of the chief financial officer of the
Company, dated as of Closing Time, in form and substance satisfactory
to counsel for the International Managers to the effect set forth in
Exhibit D.
(i) Accountant's Comfort Letter. At the time of the execution
of this Agreement, the Lead Managers shall have received from KPMG
Fides Peat a letter dated such date, in form and substance satisfactory
to the Lead Managers together with signed or reproduced copies of such
letter for each of the other
25
<PAGE>
International Managers containing statements and information of the
type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectuses.
(j) Bring-down Comfort Letter. At Closing Time, the Lead
Managers shall have received from KPMG Fides Peat a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in
the letter furnished pursuant to subsection (e) of this Section, except
that the specified date referred to shall be a date not more than three
business days prior to Closing Time.
(k) Approval of Listing. At Closing Time, the Securities shall
have been approved for listing on the NYSE, subject only to official
notice of issuance.
(l) No Objection. The NASD has confirmed that it has not
raised any objection with respect to the fairness and reasonableness
of the underwriting terms and arrangements.
(m) Lock-up Agreements; Registration Rights. At the date of
this Agreement, the Lead Managers shall have received an agreement
substantially in the form of Exhibit E hereto signed by the persons
listed on Schedule C hereto. The Company shall have taken all required
action so that no person who has registration rights or other similar
rights relating to Common Stock of the Company to have Common Stock
registered pursuant to the Registration Statement shall be permitted to
exercise such rights; and no person who has registration rights or
other similar rights relating to the Common Stock of the Company to
have Common Stock registered pursuant to the Registration Statement
shall have exercised such rights.
(n) Purchase of Initial U.S. Securities. Contemporaneously
with the purchase by the International Managers of the Initial
International Securities under this Agreement, the U.S. Underwriters
shall have purchased the Initial U.S. Securities under the U.S.
Purchase Agreement.
(o) Reorganization. At or prior to the Closing Time, the
Reorganization, as described in all material respects in the
Registration Statement and Prospectuses, as amended or supplemented,
shall have been duly and validly effected and all corporate proceedings
and legal matters incident thereto shall be satisfactory in all
material respects to counsel for the International Managers in their
reasonable judgment.
26
<PAGE>
(p) Reliance Letters. At or prior to the Closing Time, the
Lead Managers shall have received letters addressed to the Lead
Managers, in form and substance reasonably satisfactory to the Lead
Managers, permitting the Underwriter to rely on each opinion of
counsel of the Company that is or has been delivered to any party in
connection with any of the New Bank Credit Agreement, the Supplemental
Indenture and the Dealer Manager Agreement or the consummation of the
transactions contemplated thereby.
(q) Conditions to Purchase of International Option Securities.
In the event that the International Managers exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the
International Option Securities, the representations and warranties of
the Company contained herein and the statements in any certificates
furnished by the Company or any subsidiary of the Company hereunder
shall be true and correct as of each Date of Delivery and, at the
relevant Date of Delivery, the Lead Managers shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of each of the
Company, Mettler and of the chief financial or chief
accounting officer of each of the Company and Mettler
confirming that the certificate delivered at the Closing Time
pursuant to Section 5(g) hereof remains true and correct as of
such Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion of
Fried, Frank, Harris, Shriver & Jacobson, special counsel for
the Company, in form and substance reasonably satisfactory to
counsel for the International Managers, dated such Date of
Delivery, relating to the International Option Securities to
be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 5(b) hereof.
(iii) Opinion of Christine J. Smith, Esq. The favorable
opinion of Christine J. Smith, Esq., dated such Date of
Delivery, in form and substance reasonably satisfactory to
counsel for the International Managers and otherwise to the
same effect as the opinion required by Section 5(e) hereof.
(iv) Opinion of Counsel for International Managers. The
favorable opinion of Debevoise & Plimpton, counsel for the
International Managers, dated such Date of Delivery, relating
to the International Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as
the opinion required by Section 5(f) hereof.
27
<PAGE>
(v) Opinion of German Counsel for Company. The favorable
opinion of , special German counsel for the Company, in
form and substance reasonably satisfactory to counsel for the
International Managers, dated such Date of Delivery, relating
to the International Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the
opinion required by Section 5(c) hereof.
(vi) Opinion of Swiss Counsel for Company. The favorable
opinion of , special Swiss counsel for the Company,
in form and substance reasonably satisfactory to counsel for
the International Managers, dated such Date of Delivery,
relating to the International Option Securities to be
purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(d) hereof.
(vii) Bring-down Comfort Letter. A letter from KPMG Fides
Peat, in form and substance satisfactory to the Lead Managers
and dated such Date of Delivery, and substantially in the same
form and substance as the letter furnished to the Lead
Managers pursuant to Section 5(j) hereof, except that the
"specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days prior to
such Date of Delivery.
(r) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the International Managers shall have been
furnished with such documents and opinions as they may reasonably
request for the purpose of enabling them to pass upon the issuance and
sale of the Securities as herein contemplated, or in order to evidence
the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and
sale of the Securities as herein contemplated shall be satisfactory in
form and substance to the Lead Managers and counsel for the
International Managers.
(s) Termination of Agreement. If any condition specified in
this Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of International Option Securities on a Date of Delivery which
is after the Closing Time, the obligations of the several International
Managers to purchase the relevant Option Securities, may be terminated
by the Lead Managers by notice to the Company at any time at or prior
to Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party
except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
28
<PAGE>
SECTION 6. Indemnification.
(a) Indemnification of International Managers. Each of the Company and
Mettler, jointly and severally, agrees to indemnify and hold harmless each
International Manager and each person, if any, who controls any International
Manager within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or
the Prospectuses (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of (A) the violation of
any applicable laws or regulations of foreign jurisdictions where
Reserved Securities have been offered and (B) any untrue statement or
alleged untrue statement of a material fact included in the supplement
or prospectus wrapper material distributed in connection with the
reservation and sale of the Reserved Securities or the omission or
alleged omission therefrom of a material fact necessary to make the
statements therein, when considered in conjunction with the
Prospectuses or preliminary prospectuses, not misleading;
(iii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission or in
connection with any violation of the nature referred to in Section
6(a)(ii)(A) and (B) hereof; provided that (subject to Section 6(d)
below) any such settlement is effected with the written consent of
the Company; and
(iv) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred
29
<PAGE>
in investigating, preparing or defending against any litigation, or
any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission or in connection with any violation of the nature referred
to in Section 6(a)(ii)(A) and (B) hereof, to the extent that any such
expense is not paid under (i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense (a) to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
U.S. Prospectus (or any amendment or supplement thereto) and (b) with respect to
any preliminary prospectus to the extent that any such loss, liability, claim,
damage or expense of such International Manager results solely from the fact
that such International Manager sold Securities to a person as to whom the
Company shall establish that there was not sent by commercially reasonable
means, at or prior to the written confirmation of such sale, a copy of the
International Prospectus in any case where such delivery is required by the 1933
Act, if the Company has previously furnished copies thereof in sufficient
quantity to such International Manager and the loss, liability, claim, damage or
expense of such International Manager results from an untrue statement or
omission of a material fact contained in the preliminary prospectus that was
corrected in the International Prospectus.
(b) Indemnification of Company, Directors and Officers. Each
International Manager severally agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in
the Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
international prospectus or the International Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by such International Manager through Merrill Lynch
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the International Prospectus (or any amendment
or supplement thereto).
30
<PAGE>
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(iii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) Indemnification for Reserved Securities. In connection with the
offer and sale of the Reserved Securities, each of the Company and Mettler,
jointly and severally, agrees, promptly upon a written request, in writing to
indemnify and hold harmless the
31
<PAGE>
International Managers from and against any and all losses, liabilities,
claims, damages and expenses incurred by them as a result of the failure of
certain employees of the Company and its subsidiaries and certain other
persons having a business relationship with the Company to pay for and accept
delivery of Reserved Securities which, by the end of the first business day
following the date of this Agreement, were subject to a properly confirmed
agreement to purchase.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and Mettler
on the one hand and the International Managers on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company and Mettler on the one hand
and of the International Managers on the other hand in connection with the
statements or omissions, or in connection with any violation of the nature
referred to in Section 6(a) hereof, which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
The relative benefits received by the Company and Mettler on the one
hand and the International Managers on the other hand in connection with the
offering of the International Securities pursuant to this Agreement shall be
deemed to be in the same respective proportions as the total net proceeds from
the offering of the International Securities pursuant to this Agreement (before
deducting expenses) received by the Company and the total underwriting discount
received by the International Managers, in each case as set forth on the cover
of the International Prospectus, or, if Rule 434 is used, the corresponding
location on the Term Sheet, bear to the aggregate initial public offering
price of the International Securities as set forth on such cover.
The relative fault of the Company and Mettler on the one hand and the
International Managers on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or Mettler on the one hand or by the
International Managers on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission or any failure or violation of the nature referred to in
Section 6(a)(ii)(A) hereof.
32
<PAGE>
The Company, Mettler and the International Managers agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the International Managers were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 7. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
7 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no International
Manager shall be required to contribute any amount in excess of the amount by
which the total price at which the International Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such International Manager has otherwise been required to pay
by reason of any such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a
International Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Company. The International Managers' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the number of Initial
International Securities set forth opposite their respective names in Schedule
A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company, Mettler or any
subsidiaries of the Company submitted pursuant hereto, shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of any International Manager or controlling person, or by or on behalf of
the Company, and shall survive delivery of the Securities to the International
Managers.
33
<PAGE>
SECTION 9. Termination of Agreement.
(a) Termination; General. The Lead Managers may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the International
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of Merrill Lynch, impracticable to market the Securities or to enforce
contracts for the sale of the Securities, or (iii) if trading in any securities
of the Company has been suspended or materially limited by the Commission or the
NYSE, or if trading generally on the American Stock Exchange, the NYSE or in the
Nasdaq National Market has been suspended or materially limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either Federal, New York or Swiss authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6 and 7 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the International Managers. If
one or more of the International Managers shall fail at Closing Time or a Date
of Delivery to purchase the Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), Merrill Lynch shall
have the right, within 24 hours thereafter, to make arrangements for one or more
of the non-defaulting International Managers, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, Merrill
Lynch shall not have completed such arrangements within such 24-hour period,
then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of International Securities to be purchased on such date,
each of the non-defaulting International Managers shall be obligated,
severally and not
34
<PAGE>
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting International Managers,
or
(b) if the number of Defaulted Securities exceeds 10% of the
number of International Securities to be purchased on such date, this
Agreement or, with respect to any Date of Delivery which occurs after
the Closing Time, the obligation of the International Managers to
purchase and of the Company to sell the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without
liability on the part of any non-defaulting International Manager.
No action taken pursuant to this Section shall relieve any defaulting
International Manager from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
International Managers to purchase and the Company to sell the relevant
International Option Securities, as the case may be, either the Lead Managers or
the Company shall have the right to postpone Closing Time or the relevant Date
of Delivery, as the case may be, for a period not exceeding seven days in order
to effect any required changes in the Registration Statement or Prospectus or
in any other documents or arrangements. As used herein, the term
"International Manager" includes any person substituted for a International
Manager under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to the Lead Managers at North Tower,
World Financial Center, New York, New York 10281-1201, attention of , with a
copy to Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022,
Attention: James C. Scoville; and notices to the Company and Mettler shall be
directed to the Company at Mettler-Toledo International Inc., Im Langacher, P.O.
Box MT-100, CH 8606 Greifensee, Switzerland, Attention: William P. Donnelly,
with a copy to Fried, Frank, Harris, Shriver & Jacobson, 4 Chiswell Street,
London, EC1Y 4UP, Attention: Timothy E. Peterson.
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the International Managers, the Company and Mettler and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the International Managers,
36
<PAGE>
the Company and Mettler and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the International Managers, the Company and
Mettler and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any International Manager shall be deemed to be a successor by reason
merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
36
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the International Managers, the Company and Mettler in accordance with its
terms.
Very truly yours,
MT INVESTORS INC.
By:___________________________
Name:
Title:
METTLER-TOLEDO, INC.
By:___________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL,
A DIVISION OF BANKERS TRUST INTERNATIONAL PLC
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
GOLDMAN SACHS INTERNATIONAL
By: MERRILL LYNCH INTERNATIONAL
By_______________________________________________
Authorized Signatory
For themselves and as Lead Managers of the other International Managers named in
Schedule A hereto.
37
<PAGE>
SCHEDULE A
Number of
Initial
International
Name of International Manager Securities
----------------------------- -------------
Merrill Lynch International..................................
BT Alex. Brown International,................................
a Division of Bankers Trust International PLC
Credit Suisse First Boston (Europe) Limited..................
Goldman Sachs International..................................
Total........................................................ 1,333,333
=========
Sch A-1
<PAGE>
SCHEDULE B
MT INVESTORS, INC.
Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, shall be $ .
2. The purchase price per share for the International
Securities to be paid by the several International Managers shall be
$ , being an amount equal to the initial public offering price set
forth above less $ per share; provided that the purchase price per
share for any International Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall
be reduced by an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial
International Securities but not payable on the International Option
Securities.
Sch B-1
<PAGE>
SCHEDULE C
List of persons and entities
subject to lock-up
Robert F. Spoerry
William P. Donnelly
Karl M. Lang
Lucas Braunschweiler
John D. Robechek
Peter Burker
Thomas Rubbe
Philip Caldwell
Reginald H. Jones
John D. Macomber
John M. Manser
Laurence Z.Y. Moh
Thomas P. Salice
Alan W. Wilkinson
All AEA Investors Inc. shareholder-investors and substantially all other
Existing
Stockholders of the Company
Sch C-1
<PAGE>
Exhibit A
FORM OF OPINION OF FRIED, FRANK,
HARRIS, SHRIVER & JACOBSON TO BE
DELIVERED PURSUANT TO SECTION 5(b)
November , 1997
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
BT Alex. Brown Incorporated
Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, NY 10281-1209
Merrill Lynch International
BT Alex. Brown International,
a Division of Bankers Trust International PLC
Credit Suisse First Boston (Europe) Limited
Goldman Sachs International
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London, England, EC2Y 9LY
Ladies and Gentlemen:
We are acting as special counsel to Mettler-Toledo
International Inc., a Delaware corporation (the "Company"), in connection with
the underwritten public offerings of shares of the Company's Common Stock
(the "Securities"), pursuant to (i) a Purchase Agreement (the "U.S. Purchase
Agreement"), dated as of November , 1997, among the Company,
Mettler-Toledo, Inc., a Delaware corporation ("Mettler"), and
A-1
<PAGE>
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, BT
Alex. Brown Incorporated, Credit Suisse First Boston Corporation and Goldman,
Sachs & Co., as representatives of the U.S. Underwriters, and (ii) an
International Purchase Agreement (the "International Purchase Agreement," and
together with the U.S. Purchase Agreement, the "Purchase Agreements"), dated
as of November , 1997, among the Company, Mettler and Merrill Lynch
International, BT Alex. Brown International, a Division of Bankers Trust
International PLC, Credit Suisse First Boston (Europe) Limited and Goldman
Sachs International, as representatives of the International Managers. This
opinion is being delivered pursuant to Section 5(b) of each of the Purchase
Agreements and simultaneously with the payment by the Underwriters to the
Company for the Securities. Except as provided herein, all capitalized terms
used herein which are defined in the Purchase Agreements have the respective
meanings specified therein. With your permission, all assumptions and
statements of reliance herein have been made without any independent
investigation or verification on our part except to the extent otherwise
expressly stated, and we express no opinion with respect to the subject matter
or accuracy of such assumptions or items relied upon.
In connection with this opinion, we have (i) investigated such
questions of law, (ii) examined originals or certified, conformed or
reproduction copies of such agreements, instruments, documents and records of
the Company and its subsidiaries, such certificates of public officials and such
other documents, and (iii) reviewed such information from officers and
representatives of the Company and its subsidiaries and others, in each case, as
we have deemed necessary or appropriate for the purposes of this opinion. In all
such examinations, we have assumed the legal capacity of all natural persons
executing documents, the genuineness of all signatures on original or certified
copies, the authenticity of all original or certified copies and the conformity
to original or certified documents of all copies submitted to us as conformed or
reproduction copies. As to various questions of fact relevant to the opinions
expressed herein, we have relied upon, and assume the accuracy of, the
statements made in the certificates of officers of the Company and its
subsidiaries delivered to us, the representations and warranties contained in
the Purchase Agreements and certificates and oral or written statements and
other information of or from public officials and officers and representatives
of the Company, its subsidiaries and others, and assume compliance on the part
of all parties to the Purchase Agreements with their covenants and agreements
contained therein. With respect to the opinions expressed in paragraph 3 below,
we have relied solely upon a certificate or certificates of public officials of
such jurisdictions, copies of which have been provided to you. With respect to
the opinion expressed in paragraph 8 below regarding the effectiveness of the
Registration Statement and the absence of any stop orders or proceedings for
that purpose, we are relying upon the oral advice of the staff of the Securities
and Exchange Commission (the "Commission"). Based upon the foregoing, and
subject to the limitations, qualifications and assumptions set forth herein,
A-2
<PAGE>
and in reliance, to the extent hereinafter stated, upon the opinion of other
counsel, we are of the opinion that:
1. The Company has been duly incorporated and the Company and
Mettler are validly existing as corporations in good standing under the
laws of the State of Delaware.
2. Each of the Company and Mettler has the corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectuses and to enter into and perform
its obligations under the Purchase Agreements.
3. Each of the Company and Mettler is duly qualified as a
foreign corporation to transact business and is in good standing in the
states listed on Schedule I to this opinion.
4. The authorized capital stock of the Company is as set
forth in the Prospectuses under the caption "Capitalization."
5. The issuance of the Securities pursuant to the Purchase
Agreements has been duly authorized and, when such Securities are
issued and delivered in accordance with the terms of the Purchase
Agreements, such Securities will be validly issued, fully paid and
non-assessable, and the issuance of such Securities will not be subject
to any preemptive rights of stockholders arising under the Delaware
General Corporation Law, the Amended and Restated Certificate of
Incorporation or amended By-laws of the Company or any of the
agreements, contracts or instruments filed as an exhibit to the
Registration Statement.
6. The issuance of the shares of Common Stock in connection
with the Merger (the "Merger Shares") has been duly authorized and
assuming that the shares of common stock of MT Investors were validly
issued, fully paid and non-assessable; when such shares of Common Stock
are issued and delivered in accordance with the terms of the Merger
Agreement, the Merger Shares will be validly issued, fully paid and
non-assessable, and the issuance of the Merger Shares will not be
subject to any preemptive rights of stockholders arising under the
Delaware General Corporation Law, the Amended and Restated Certificate
of Incorporation or amended By-laws of the Company or any of the
agreements, contracts or instruments filed as an exhibit to the
Registration Statement.
A-3
<PAGE>
7. Each of the Purchase Agreements has been duly authorized,
executed and delivered by the Company and Mettler.
8. The Registration Statement, [including any Rule 462(b)
Registration Statement,] has been declared effective under the 1933
Act; any required filing of the Prospectuses pursuant to Rule 424(b)
has been made in the manner and within the time period required by Rule
424(b); and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or
threatened by the Commission.
9. The Registration Statement, [including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable,], the Prospectuses [and each amendment or
supplement to the Registration Statement and the Prospectuses] as of
their respective effective or issue dates (other than the financial
statements, notes and schedules thereto and other financial data
included therein or omitted therefrom, as to which we need express no
opinion) complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
10. The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable requirements of
the Delaware General Corporation Law, with any applicable requirements
of the Amended and Restated Certificate of Incorporation and amended
By-laws of the Company and the requirements of the NYSE.
11. The information in the Prospectuses under "Description of
Capital Stock," "Description of Certain Indebtedness" and "Certain
United States Federal Tax Considerations for Non-United States Holders"
and in the Registration Statement under Item 14, in each case to the
extent that such information constitutes matters of law, summaries of
legal matters or documents, has been reviewed by us and is correct in
all material respects.
12. To our knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the
Company or Mettler is a party, or to which the property of the
Company or Mettler is subject, before or brought by any New York,
Delaware or federal court or New York, Delaware or federal
governmental agency or body, which might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be
expected to materially and adversely affect (i) the consummation of
the transactions
A-4
<PAGE>
contemplated in the U.S. Purchase Agreement and the International
Purchase Agreement or the performance by the Company or Mettler of
its obligations thereunder or (ii) the Related Transactions.
13. No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any New York,
Delaware or federal court or governmental authority or New York,
Delaware or federal agency, is necessary or required in connection with
the due authorization, execution and delivery of the Purchase
Agreements or for the offering, issuance, sale or delivery of the
Securities except (i) such as have been obtained or as may be required
under the 1933 Act or the 1933 Act Regulations and foreign or state
securities or blue sky laws, (ii) such as have been obtained under the
laws and regulations of jurisdictions outside the United States in
which the Reserved Securities are offered, and (iii) the filing of the
certificate of amendment and the certificate of merger with the
Delaware Secretary of State in connection with the Company's name
change and the Merger.
14. The consummation of the Merger and the execution and
delivery by the Company and Mettler of, and the performance by the
Company and Mettler of their obligations under, the Purchase Agreements
did not and will not (i) contravene any provision of the certificates
of incorporation and bylaws, in each case as amended, as the case may
be, of the Company or Mettler, (ii) contravene any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
listed as an exhibit to the Registration Statement or (iii) violate (x)
any present statute, rule or regulation of any governmental agency or
authority of the United States of America or the State of New York or
Delaware (as it relates to the General Corporation Law of the State of
Delaware) applicable to the Company or any subsidiary, or (y) any
judgment or decree or order of any court or governmental agency or body
of the United States of America or the States of New York or Delaware
(as it relates to the General Corporation Law of the State of Delaware)
known to us; provided, however, that we express no opinion with respect
to any violation, breach or default arising under or based upon any
cross-default provision insofar as such violation relates to a default
under an agreement that is not an exhibit to the Registration
Statement.
15. The Merger Agreement has been duly executed and delivered
by the duly authorized officers of the Company and Holding, as the case
may be, and all corporate actions required to be taken by the Company
and Holding, as the case may be, at or prior to the effective date of
the Merger in connection with the Merger Agreement and the Merger
pursuant to United States Federal and Delaware General Corporation Law
have been duly and validly taken.
A-5
<PAGE>
16. Neither the Company nor Mettler is an "investment
company" as such term is defined in the 1940 Act.
In addition, in the course of the preparation by the Company
of the Registration Statement and the Prospectuses, we participated in
conferences with certain of the officers and representatives of, and the
independent public accountants for the Company, at which the Registration
Statement and the Prospectuses were discussed. Between the date of effectiveness
of the Registration Statement and the time of delivery of this letter, we
attended additional conferences with certain of the officers and representatives
of the Company, at which the contents of the Registration Statement and
Prospectuses were discussed to a limited extent. Given the limitations inherent
in the independent verification of factual matters and the character of
determinations involved in the registration process, we are not passing upon or
assuming any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectuses, except
as specified in paragraph 10. Subject to the foregoing and on the basis of the
information gained in the performance of the services referred to above,
including information obtained from officers and other representatives of, and
the independent public accountants for the Company, no facts have come to our
attention that cause us to believe that the Registration Statement, as of its
effective date, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, or that the Prospectuses as of their
date contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Also, subject to the foregoing, no facts have come to our
attention in the course of proceedings described in the second sentence of this
paragraph that cause us to believe that the Prospectuses, as of the date and
time of delivery of this letter, contain any untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances in which
they were made, not misleading. We express no view or belief, however, with
respect to financial statements, notes or schedules thereto or other financial
data included in or omitted from the Registration Statement or Prospectuses.
The opinions set forth above are subject to the following additional
qualifications and assumptions:
(a) Our opinion is subject to (i) applicable bankruptcy,
insolvency, fraudulent transfer, fraudulent conveyance, reorganization,
moratorium and other laws now or hereafter in effect affecting
creditors' rights generally and (ii) general principles of equity
(including, without limitation, standards of materiality, good faith,
fair dealing and reasonableness), whether such principles are
considered in a proceeding at law or equity.
A-6
<PAGE>
(b) Our opinion is subject to the effect of, and we express no
opinion with respect to the application of or compliance with, state
securities or Blue Sky laws.
(c) For purposes of paragraphs 13 and 14 above, we have
reviewed only those statutes, rules and regulations that in our
experience are applicable to transactions of the type contemplated by
the Purchase Agreements or for the offering, issuance, sale or delivery
of the Securities or the Merger.
(d) For purposes of the opinion set forth in paragraph 12
above, we have endeavored, to the extent we have believed necessary, to
determine from lawyers currently in our firm who have performed
substantive legal services for the Company and Mettler whether such
services involved substantive attention in the form of legal
representation concerning pending legal proceedings of the nature
referred to in such paragraph 12, and we have not made any review,
search or investigation of public files or records or files or records
of the Company or Mettler, or of their transactions, or any other
investigation or inquiry with respect to such opinion.
The opinions expressed herein are limited to the federal laws
of the United States of America, the General Corporation Law of the State of
Delaware and the laws of the State of New York, as currently in effect. To the
extent such opinion contains assumptions, conditions and limitations, we are
incorporating such assumptions, conditions and limitations herein. We assume no
obligations to supplement this letter if any applicable laws change after the
date hereof or if we become aware of any facts that might change the opinions
expressed herein after the date hereof.
The opinions expressed herein are solely for your benefit and
may not be relied upon in any manner or for any purpose by any other person and
may not be quoted in whole or in part without our prior written consent.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER &
JACOBSON
By:___________________________________
Timothy E. Peterson
A-7
<PAGE>
Exhibit A
[Officer's Certificate to come]
A-8
<PAGE>
Schedule I
[list of jurisdictions to come]
A-9
<PAGE>
Exhibit B
FORM OF LOCAL COUNSEL OPINION
TO BE DELIVERED PURSUANT TO
SECTIONS 5(c) AND (d)
(i) Each of [names of local subsidiaries] (collectively, the
"Subsidiaries") has been duly incorporated and is validly existing as a
corporation [in good standing]* under laws of , and has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectuses; all of the issued and outstanding capital
stock of each Subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and, to our knowledge, is owned by ; to our
knowledge, none of the outstanding shares of capital stock of any Subsidiary was
issued in violation of the preemptive or similar rights of any securityholder of
such Subsidiary arising under the laws of for the charter or by-laws of such
Subsidiary.
(ii) To our knowledge, there is not pending or threatened any action,
suit, proceeding, inquiry or investigation, to which the Company or any of the
Subsidiaries is a party, or to which the property of the Company or any of the
Subsidiaries is subject, before or brought by any court, governmental agency or
body in , which might reasonably be expected to result in a Material Adverse
Effect, or which might reasonably be expected to materially and adversely affect
the consummation of the transactions contemplated in the U.S. Purchase Agreement
and the International Purchase Agreement or the performance by the Company or
Mettler of its obligations thereunder.
(iii) The execution, delivery and performance of the U.S. Purchase
Agreement and the International Purchase Agreement and the consummation of the
transactions contemplated in the U.S. Purchase Agreement, the International
Purchase Agreement and in the Registration Statement (including the issuance and
sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectuses under the caption "Use Of
Proceeds"), and the compliance by the Company, Holdings, and Mettler with their
respective obligations under the U.S. Purchase Agreement and the International
Purchase Agreement, do not and will not, whether with or without the giving of
notice or lapse of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined in Section 1(a)(x) of the Purchase
Agreements) under, or result in the creation or imposition of any Liens
upon any property or assets of any Subsidiary pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or any
other agreement or instrument, known to us, to which a
- --------
* If concept is recognized in local jurisdiction.
B-2
<PAGE>
Subsidiary is a party or by which any of them may be bound, or to which any of
the property or assets of the Subsidiaries is subject (except for Liens under
the Credit Agreement and the Working Capital Facilities and such conflicts,
breaches or defaults or liens, charges or encumbrances that would not have a
Material Adverse Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Subsidiaries, or any applicable
law, statute, rule, regulation, judgment, order, writ or decree, known to us,
of any government, government instrumentality or court of having
jurisdiction over the Subsidiaries or any of their respective properties,
assets or operations.
B-2
<PAGE>
Exhibit C
FORM OF OPINION OF CHRISTINE J. SMITH, ESQ.
TO BE DELIVERED PURSUANT TO SECTION 5(e)
(i) All shares of Class A, Class B and Class C Common Stock of the
Company outstanding immediately prior to the Merger were validly issued, fully
paid and non-assessable.
(ii) To my knowledge, the Company is not in violation of its
Amended and Restated Certificate of Incorporation or amended By-laws.
(iii) To my knowledge, there are no persons with registration rights or
other similar rights arising under the Amended and Restated Certificate of
Incorporation or amended By-laws of the Company or New York, Delaware or federal
law to have any securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the 1933 Act.
C-1
<PAGE>
Exhibit D
[Letterhead of MT Investors Inc.]
Form of Litigation Certificate
The undersigned, William P. Donnelly, hereby certifies that he
is the Chief Financial Officer of Mettler-Toledo International Inc., a Delaware
corporation (the "Company"), and that, as such, he is authorized to execute and
deliver this Certificate on behalf of the Company and, with reference to the
Section 5(h) of the U.S. Purchase Agreement (the "U.S. Purchase Agreement"),
dated , among the Company, Mettler-Toledo, Inc. ("Mettler-Toledo"),
a Delaware corporation, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, BT Alex. Brown Corporation, Credit Suisse First Boston
Corporation and Goldman, Sachs & Co., as representatives of the underwriters
listed in Schedule A to the U.S. Purchase Agreement, and Section 5(h) of the
International Purchase Agreement (the "International Purchase Agreement" and
together with the U.S. Purchase Agreement, the "Purchase Agreements"), dated
, 1997, among the Company, Mettler-Toledo, Merrill Lynch
International, BT Alex. Brown International, A Division of Bankers Trust
International PLC, Credit Suisse First Boston (Europe) Limited and Goldman Sachs
International, as lead managers to the underwriters listed in Schedule A to the
International Purchase Agreement, further certifies, represents and warrants on
behalf of the Company as follows (each capitalized term used herein without
definition having the same meaning specified in the Purchase Agreements):
(a) to the best of his knowledge, based upon certifications made by
officers of the Company and its subsidiaries in the form attached
hereto as Exhibit A, the undersigned has set forth in Exhibit B
attached hereto all actions, suits, proceedings, inquiries or
investigations before or brought by any court or governmental agency or
body, domestic or foreign, pending or threatened against or affecting
the Company or any of its subsidiaries, at the Closing Time, where the
maximum level of liability is equal to or greater than $250,000; and
(b) further certifies, represents and warrants on behalf of the Company
that none of such actions, suits, proceedings, inquiries or
investigations set forth in Exhibit B would reasonably be expected to
have a Material Adverse Effect or would reasonably be expected to
materially or adversely affect the property or assets of the Company
or its subsidiaries or the consummation of the transactions
contemplated in the Purchase Agreements or the performance by the
Company or Mettler-Toledo of its obligations hereunder or thereunder.
2
<PAGE>
WITNESS the signature of the undersigned this day of November, 1997.
______________________________________
By: William P. Donnelly
Title: Chief Financial Officer
3
<PAGE>
[EXHIBIT A]
4
<PAGE>
Exhibit E
[FORM OF LOCK-UP PURSUANT TO SECTION 5(i)]
, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
B.T. ALEX. BROWN INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
as U.S. Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL,
A DIVISION OF BANKERS TRUST INTERNATIONAL
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
GOLDMAN SACHS INTERNATIONAL
as Representatives of the several International Underwriters
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London, England, EC2Y 9LY
MT INVESTORS INC.
Im Langacher
P.O. Box MT-100
CH 8606, Greifensee, Switzerland
Re: Proposed Public Offering by MT Investors Inc.
(to be renamed Mettler-Toledo International Inc.)
Dear Sirs:
The undersigned, a stockholder of MT Investors Inc., a Delaware
corporation (the "Company"), understands that Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), B.T. Alex. Brown
Incorporated, Credit Suisse First Boston Corporation and Goldman, Sachs & Co.
propose to enter into a U.S. Purchase Agreement (the "U.S. Purchase Agreement")
with the Company, and Merrill Lynch International, BT Alex. Brown
International, a Division of Bankers Trust International
E-1
<PAGE>
PLC, Credit Suisse First Boston (Europe) Limited and Goldman Sachs
International propose to enter into an International Purchase Agreement (the
"International Purchase Agreement") with the Company, each providing for the
public offering (the "Offerings") of shares (the "Securities") of the Company's
common stock, par value $.01 per share (the "Common Stock"). In recognition of
the benefit that such an offering will confer upon the undersigned as a
stockholder of the Company, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned
agrees with each underwriter to be named in the U.S. Purchase Agreement or the
International Purchase Agreement that, during a period of 180 days from the
date of the U.S. Purchase Agreement, the undersigned will not, without the
prior written consent of Merrill Lynch, directly or indirectly, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant for
the sale of, or otherwise dispose of or transfer any shares of the Company's
Common Stock or any securities convertible into or exchangeable or exercisable
for Common Stock (except through gifts to persons, trusts or other entities who
agree in writing to be bound by the restrictions of this letter), or file any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing, or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap or transaction is to be settled by delivery of Common Stock or
other securities, in cash or otherwise; provided, however, that (i) the Company
may file a registration statement on Form S-8 under the Securities Act of 1933
relating to Common Stock of the Company issued pursuant to the Company's
E-2
<PAGE>
stock option plan(the "Stock Plan"), and (ii) employees of the Company may
exercise rights to acquire Common Stock pursuant to the Stock Plan.
Sincerely,
If Individual:
Print Name____________________________
Signature_____________________________
If Corporation, Partnership or Trust:
______________________________________
[print or type name of entity]
By:___________________________________
Name:_________________________________
Title:________________________________
E-3
<PAGE>
FORM OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
METTLER-TOLEDO INTERNATIONAL INC.
(Pursuant to Sections 242 and 245 of the General Corporation
Law of the State of Delaware)
FIRST: The name of the Corporation is Mettler-Toledo
International Inc.
SECOND: The address of the Corporation's registered office in
the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of its registered agent as
such address is the Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under
the General Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of capital
stock which the Corporation shall have the authority to issue is 135,000,000
shares, all with a par value of One Cent ($.01) per share, of which 10,000,000
shares shall be designated as Preferred Stock, and 125,000,000 shares shall be
designated as Common Stock.
A. Preferred Stock. The Board of Directors is
authorized, subject to limitations prescribed by law, to provide for
the issuance of shares of Preferred Stock in one or more series, to
establish the number of shares to be included in each such series,
and to fix the designations, powers, preferences, and rights of
the share of each such series, and any qualifications, limitations,
or restrictions thereof.
B. Common Stock. A statement of the powers,
preferences, and rights, and the qualifications, limitations or
restrictions thereof, in respect of each class of Common Stock is as
follows:
1. Dividends and Distributions:
1.01. The holders of Common Stock shall be entitled to
receive dividends and distributions, including distributions in connection with
the liquidation, dissolution or winding up of the affairs of the Corporation,
when and as declared or made by the Board of Directors of the Corporation, out
of funds of the Corporation legally available therefor, payable on such dividend
or distribution payment dates to stockholders of record on such record dates,
not exceeding 60 days preceding the dividend or distribution payment dates, as
shall be fixed for the purpose by the Board of Directors of the Corporation,
upon the following terms:
1.01(a). Dividends or distributions shall be paid ratably to
all of the holders of Common Stock in the proportion that the number of shares
of Common Stock held by such holder bears to the total number of outstanding
shares of Common Stock of the Corporation.
1.01(b). Dividends or distributions of any property of
the Corporation shall be made as follows:
1.01(b)(i). The value of such property shall be determined in
the manner set forth in Section 1.01(b)(ii) on the last business day prior to
the date of declaration of such distribution; and such property shall be deemed
to have been sold with the resulting net proceeds being equal to such value and
shall be distributed to the holders of shares of stock of the Corporation in
accordance with Section 1.01(a).
1.01(b)(ii). For the purpose of determining the value of any
property of the Corporation, freely marketable securities which are listed on a
national securities exchange shall be valued at the average of their last sales
prices on each of the last 20 trading days ending on and including the date of
determination. If no sales occurred on any such trading day, such sales price
shall be deemed to be the mean between the "bid" and "ask" prices on such day.
Freely marketable securities which are not so listed shall be valued at the
average of their last closing "bid" and "ask" prices on each of the last 20
trading days ending on and including the date of determination on the basis of
quotations furnished by the National Association of Securities Dealers
Incorporated, if available. Any security which is held under the representation
that it has been acquired for investment and not with a view to public sale or
distribution or which is held subject to any other restriction affecting
marketability shall be valued at such discount from the value determined under
the applicable provisions above as the Board of Directors of the Corporation
deems necessary to reflect properly the restricted marketability of such
securities. Notwithstanding the foregoing, securities which are not freely
marketable securities and all other property may be assigned such value as the
Board of Directors of the Corporation determines to be the fair value. All
matters concerning the valuation of the properly of the Corporation, the
determination of earnings and profits and accounting procedures not specifically
and expressly provided for by the terms of this Certificate of Incorporation
shall be determined by the Board of Directors of the Corporation, whose
determination shall, when made in good faith and with due care to the
performance of its duties, be final and conclusive as to all of the holders of
outstanding shares of the Corporation.
2. Voting Rights.
2.01. Except as expressly required by statute, each share of
Common Stock shall be entitled to one vote per share on all matters voted on by
the stockholders.
2
<PAGE>
2.02. As permitted by Section 242(b)(2) of the Delaware
General Corporation Law, the number of authorized shares of any class of the
Corporation's Common Stock may be increased at any time and from time to time by
the affirmative vote of the holders of a majority of the shares of Common Stock
then outstanding.
FIFTH:
1. Stockholder Actions. Any action required or permitted to
be taken by the Corporation's stockholders must be effected at a duly called
annual or special meeting of stockholders.
2. Special Meetings. A special meeting of the stockholders of
the Corporation may be called at any time by the Board of Directors, the
Chairman of the Board or the President and Chief Executive Officer and shall be
called by the Chairman of the Board, the President and the Chief Executive
Officer or the Secretary at the request in writing of stockholders holding
together at least fifty percent (50%) of the number of shares of stock
outstanding and entitled to vote at such meeting. Any special meeting of the
stockholders shall be held on such date, at such time and at such place within
or without the State of Delaware as the Board of Directors or the officer
calling the meeting may designate. At a special meeting of stockholders, no
business shall be transacted and no corporate action shall be taken other than
that stated in the notice of the meeting unless all of the stockholders are
present in person or by proxy, in which case any and all business may be
transacted at the meeting even though the meeting is held without notice.
3. Consents in writing. Any action required or
permitted to be taken by the Corporation's stockholders may not be
effected by consent in writing."
SIXTH: Elections of directors need not be by ballot unless
the By-Laws of the Corporation so provide.
SEVENTH: The Board of Directors of the Corporation may make
By-laws and from time to time may alter, amend or repeal By-laws.
EIGHTH: To the fullest extent permitted by the Delaware
General Corporation Law as the same exists or may hereafter be amended, a
Director of the Corporation shall not be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a Director.
NINTH:
1. Nature of Indemnity. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he (or a person of whom
he is the legal representative), is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership,
3
<PAGE>
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee, fiduciary or agent or
in any other capacity while serving as a director, officer, employee, fiduciary
or agent, shall be indemnified and held harmless by the Corporation to the
fullest extent which it is empowered to do so by the General Corporation Law of
the State of Delaware, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment) against all
expense, liability and loss (including attorneys' fees actually and reasonably
incurred by such person in connection with such proceeding) and such
indemnification shall inure to the benefit of his heirs, executors and
administrators; provided, however, that, except as provided in Section 2 of this
Article Ninth, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding initiated by such person only if
such proceeding was authorized by the Board of Directors of the Corporation. The
right to indemnification conferred in this Article Ninth shall be contract right
and, subject to Sections 2 and 5, shall include the right to payment by the
Corporation of the expenses incurred in defending any such proceeding in advance
of its final disposition. The Corporation may, by action of the Board of
Directors, provide indemnification to employees and agents of the Corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
2. Procedure for Indemnification of Directors and Officers.
Any indemnification of a director or officer of the Corporation under Section 1
of this Article Ninth or advance of expenses under Section 5 of this Article
Ninth shall be made promptly, and in any event within 30 days, upon the written
request of the director or officer. If a determination by the Corporation that
the director or officer is entitled to indemnification pursuant to this Article
Ninth is required, and the Corporation fails to respond within sixty days to a
written request for indemnity, the Corporation shall be deemed to have approved
the request. If the Corporation denies a written request for indemnification or
advancing of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within 30 days, the right to indemnification or
advances as granted by this Article Ninth shall be enforceable by the director
or officer in any court of competent jurisdiction. Such person's costs and
expenses incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the Corporation. It shall be a defense to any such action (other
than an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any, has been tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the General Corporation Law
of the State of Delaware for the Corporation to indemnify the claimant for the
amount claimed, but the burden of such defense shall be on the Corporation .
Neither the failure of the Corporation (including the Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she has
4
<PAGE>
met the applicable standard of conduct set forth in the General Corporation Law
of the State of Delaware, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or it
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the application standard of conduct.
3. Nonexclusivity of Article Ninth. The rights conferred in
this Article Ninth to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition shall not be
exclusive of any other right which any person may have or hereafter acquire
under any stature, provision of the certificate of incorporation, by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
4. Insurance. The Corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the Corporation or was
serving at the request of the Corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, whether or not the Corporation would have the power to indemnify
such person against such liability under this Article Ninth.
5. Expenses. Expenses incurred by any person described in
Section 1 of this Article Ninth in defending a proceeding shall be paid by the
Corporation in advance of such proceeding's final disposition, unless otherwise
reasonably determined by the Board of Directors for good reason; in each case
upon receipt of an undertaking by or on behalf of the director or office to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Corporation. Such expenses incurred by other employees
and agents may be so paid upon such terms and conditions, if any, as the Board
of Directors deems appropriate.
6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article Ninth and who are or were employees or
agents of the Corporation, or who are or were serving at the request of the
Corporation as employee or agents of another corporation, partnership, joint
venture, trust or other enterprise, may be indemnified to the extent authorized
at any time or from time to time by the Board of Directors.
7. Contract Rights. The provision of this Article Ninth shall
be deemed to be a contract right between the Corporation and each director or
officer who serves in any such capacity at any time while this Article Ninth and
the relevant provisions of the General Corporation Law of the State of Delaware
or other applicable law are in effect, and any repeal or modification of this
Article Ninth or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
5
<PAGE>
8. Merger or Consolidation. For purposes of this Article
Ninth, reference to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee, or agent of such constituent corporation or is or
was serving at the request of such constituent corporation as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article
Ninth with respect to the resulting or surviving corporation as he or she would
have with respect to such constituent corporation if its separate existence had
continued."
TENTH: The Corporation reserves the right to amend or repeal
any provisions contained in this Amended and Restated Certificate of
Incorporation from time to time and at any time in the manner now or hereafter
prescribed by the laws of the State of Delaware, and all rights conferred upon
stockholders and directors are granted subject to such reservation, except that
the contract rights described in Article Ninth may no be abrogated by reason of
any such amendment.
6
<PAGE>
FROM OF AMENDED BY-LAWS
OF
METTLER-TOLEDO INTERNATIONAL INC.
ARTICLE I
Stockholders
SECTION 1. Annual Meeting. The annual meeting of the stockholders of the
Corporation shall be held on such date, at such time and at such place within or
without the State of Delaware as may be designated by the Board of Directors,
for the purpose of electing Directors and for the transaction of such other
business as may be properly brought before the meeting.
SECTION 2. Special Meetings. Except as otherwise provided in the
Certificate of Incorporation, a special meeting of the stockholders of the
Corporation may be called at any time by the Board of Directors, the Chairman of
the Board or the President and shall be called by the Chairman of the Board, the
President or the Secretary at the request in writing of stockholders holding
together at least twenty-five percent of the number of shares of stock
outstanding and entitled to vote at such meeting. Any special meeting of the
stockholders shall be held on such date, at such time and at such place within
or without the State of Delaware as the Board of Directors or the officer
calling the meeting may designate. At a special meeting of the stockholders, no
business shall be transacted and no corporate action shall be taken other than
that stated in the notice of the meeting unless all of the stockholders are
present in person or by proxy, in which case any and all business may be
transacted at the meeting even though the meeting is held without notice.
SECTION 3. Notice of Meetings. Except as otherwise provided in these
BY-LAWS or by law, a written notice of each meeting of the stockholders shall be
given not less than ten (10) nor more than sixty (60) days before the date of
the meeting to each stockholder of the Corporation entitled to vote at such
meeting at his address as it appears on the records of the Corporation. The
notice shall state the place, date and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called.
SECTION 4. Quorum. At any meeting of the stockholders, the holders of a
majority in number of the total outstanding shares of stock of the Corporation
entitled to vote at such meeting, present in person or represented by proxy,
shall constitute a quorum of the stockholders for all purposes, unless the
representation of a larger number of shares shall be required by law, by the
Certificate of Incorporation or by these By-Laws, in which case the
representation of the number of shares so required shall constitute a quorum;
provided that at any meeting of the stockholders at which the holders of any
class of stock of the Corporation shall be entitled to vote separately as a
class, the holders of a majority
<PAGE>
larger number of shares will be required by law, by the Certificate of
Incorporation or by these By-Laws, in which case the representation of the
number of shares so required shall constitute a quorum; provided that at any
meeting of the stockholders at which the holders of any class of stock of the
Corporation shall be entitled to vote separately as a class, the holders of a
majority in number of the total outstanding shares of such class, present in
person or represented by proxy, shall constitute a quorum for purposes of such
class vote unless the representation of a larger number of shares of such class
shall be required by law, by the Certificate of Incorporation or by these
By-Laws.
SECTION 5. Adjourned Meetings. Whether or not a quorum shall be present in
person or represented at any meeting of the stockholders, the holders of a
majority in number of the shares of stock of the Corporation present in person
or represented by Proxy and entitled to vote at such meeting may adjourn from
time to time; provided, however, that if the holders of any class of stock of
the Corporation are entitled to vote separately as a class upon any matter at
such meeting, any adjournment of the meeting in respect of action by such class
upon such matter shall be determined by the holders of a majority of the shares
of such class present in person or represented by proxy and entitled to vote at
such meeting. When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting the stockholders, or the holders of any class of stock entitled to vote
separately as a class, as the case may be, may transact any business which might
have been transacted by them at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the adjourned meeting.
SECTION 6. Organization. The Chairman of the Board or, in his absence, the
President shall call all meetings of the stockholders to order, and shall act as
Chairman of such meetings. In the absence of the Chairman of the Board and the
President, the holders of a majority in number of the shares of stock of the
Corporation present in person or represented by proxy and entitled to vote at
such meeting shall elect a Chairman.
The Secretary of the Corporation shall act as Secretary of all meetings of
the stockholders; but in the absence of the Secretary, the Chairman may appoint
any person to act as Secretary of the meeting. It shall be the duty of the
Secretary to prepare and make, at least ten days before every meeting of
stockholders, a complete list of stockholders entitled to vote at such meeting,
arranged in alphabetical order and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. Such list shall
be open, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting or, if not so
specified, at the place where the meeting is to be held, for the ten days next
preceding the meeting, to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, and shall be produced
and kept at the time and place of
-2-
<PAGE>
the meeting during the whole time thereof and subject to the inspection of any
stockholder who may be present.
SECTION 7. Voting. Except as otherwise provided in the Certificate of
Incorporation or by law, each stockholder shall be entitled to one vote for each
share of the capital stock of the Corporation registered in the name of such
stockholder upon the books of the Corporation. Each stockholder entitled to vote
at meeting of stockholders or to express consent or dissent to corporate action
in writing without a meeting may authorize another person or persons to act for
him by proxy, but no such proxy shall be voted or acted upon after three years
from its date, unless the proxy provides for a longer period. When directed by
the presiding officer or upon the demand of any stockholder, the vote upon any
matter before a meeting of stockholders shall be by ballot. Except as otherwise
provided by law or by the Certificate of Incorporation, Directors shall be
elected by a plurality of the votes cast at a meeting of stockholders by the
stockholders entitled to vote in the election and, whenever any corporate
action, other than the election of Directors is to be taken, it shall be
authorized by a majority of the votes cast at a meeting of stockholders by the
stockholders entitled to vote thereon.
Shares of the capital stock of the Corporation belonging to the
Corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be counted
for quorum purposes.
SECTION 8. Inspectors. When required by law or directed by the presiding
officer or upon the demand of any stockholder entitled to vote, but not
otherwise, the polls shall be opened and closed, the proxies and ballots shall
be received and taken in charge, and all questions touching the qualification of
voters, the validity of proxies and the acceptance or rejection of votes shall
be decided at any meeting of the stockholders by two or more Inspectors who may
be appointed by the Board of Directors before the meeting, or if not so
appointed, shall be appointed by the presiding officer at the meeting. If any
person so appointed fails to appear or act, the vacancy may be filled by
appointment in like manner.
SECTION 9. Consent of Stockholder in Lieu of Meeting. Unless otherwise
provided in the Certificate of Incorporation, any action required to be taken or
which may be taken at any annual or special meeting of the stockholders of the
Corporation, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of any such corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
-3-
<PAGE>
SECTION 10. Advance Notice Provisions for Election of Directors. Only
persons who are nominated in accordance with the following procedures shall be
eligible for election as directors of the Corporation. Nominations of persons
for election to the Board of Directors may be made at any annual meeting of
stockholders, or at any special meeting of stockholders called for the purpose
of electing directors, (a) by or at the direction of the Board of Directors (or
any duly authorized committee thereof) or (b) by any stockholder of the
Corporation (i) who is a stockholder of record on the date of the giving of the
notice provided for in this Section 10 and on the record date for the
determination of stockholders entitled to vote at such meeting and (ii) who
complies with the notice procedures set forth in this Section 10.
In addition to any other applicable requirements, for a nomination to be
made by a stockholder such stockholder must have given timely notice thereof in
proper written form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered to
or mailed and received at the principal executive offices of the Corporation (a)
in the case of an annual meeting, not less than sixty (60) days nor more than
ninety (90) days prior to the date of the annual meeting; provided, however,
that in the event that less than seventy (70) days notice or prior public
disclosure of the date of the annual meeting is given or made to stockholders,
notice by the stockholder in order to be timely must be so received not later
than the close of business on the tenth (10th) day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure of the date of the annual meeting was made, whichever first occurs;
and (b) in the case of a special meeting of stockholders called for the purpose
of electing directors, not later than the close of business on the tenth (10th)
day following the day on which notice of the date of the special meeting was
mailed or public disclosure of the date of the special meeting was made,
whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary must
set forth (a) as to each person whom the stockholder proposes to nominate for
election as a director (i) the name, age, business address and residence address
of the person, (ii) the principal occupation or employment of the person, (iii)
the class or series and number of shares of capital stock of the Corporation
which are owned beneficially or of record by the person and (iv) any other
information relating to the person that would be required to be disclosed in a
proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder; and (b) as to the stockholder giving the
notice (i) the name and record address of such stockholder, (ii) the class or
series and number of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy, at
the meeting to nominate the
-4-
<PAGE>
persons named in its notice and (v) any other information relating to such
stockholder that would be required to be disclosed in a proxy statement
or other filings required to be made in connection with solicitations of proxies
for election of directors pursuant to Section 14 of the Exchange Act and the
rules and regulations promulgated thereunder. Such notice must be accompanied by
a written consent of each proposed nominee to being named as a nominee and to
serve as a director if elected.
No person shall be eligible for election as a director of the Corporation
unless nominated in accordance with the procedures set forth in this Section 10.
If the Chairman of the meeting determines that a nomination was not made in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the nomination was defective and such defective nomination shall be
disregarded.
SECTION 11. Advance Notice Provisions for Business to be Transacted at
Annual Meeting. No business may be transacted at an annual meeting of
stockholders, other than business that is either (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors (or any duly authorized committee thereof), (b) otherwise properly
brought before the annual meeting by or at the direction of the Board of
Directors (or any duly authorized committee thereof) or (c) otherwise properly
brought before the annual meeting by any stockholder of the Corporation (i) who
is a stockholder of record on the date of the giving of the notice provided for
in this Section 11 and on the record date for the determination of stockholders
entitled to vote at such annual meeting and (ii) who complies with the notice
procedures set forth in this Section 11.
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a stockholder, such stockholder
must have given timely notice thereof in proper written form to the Secretary of
the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered to
or mailed and received at the principal executive offices of the Corporation not
less than sixty (60) days nor more than ninety (90) days prior to the date of
the annual meeting; provided, however, that in the event that less than seventy
(70) days notice or prior public disclosure of the date of the annual meeting is
given or made to stockholders, notice by the stockholder in order to be timely
must be so received not later than the close of business on the tenth (10th) day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure of the date of the annual meeting was made,
whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary must
set forth as to each matter such stockholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and record address of such stockholder, (iii) the class
or series and number of shares of capital stock of the Corporation which are
owned beneficially or of record by such stockholder, (iv) a description of all
arrangements or understandings between such stockholder and any other person or
persons (including their names) in connection with the proposal of such
-5-
<PAGE>
business by such stockholder and any material interest of such stockholder in
such business and (v) a representation that such stockholder intends to appear
in person or by proxy at the annual meeting to bring such business before the
meeting.
No business shall be conducted at the annual meeting of stockholders
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 11, provided, however that, once business
has been properly brought before the annual meeting in accordance with such
procedures, nothing in this Section 11 shall be deemed to preclude discussion by
any stockholder of any such business. If the Chairman of an annual meeting
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted.
SECTION 12. Order of Business. The order of business at all meetings of
the stockholders shall be determined by the Chairman of the meeting.
ARTICLE II
Board of Directors
SECTION 1. Number and Term of Office. The business and affairs of the
Corporation shall be managed by or under the direction of eight (8) Directors,
who need not be stockholders of the Corporation. The Directors shall, except as
hereinafter otherwise provided for filling vacancies, be elected at the annual
meeting of stockholders, and shall hold office until their respective successors
are elected and qualified or until their earlier resignation or removal. The
number of Directors may be altered from time to time by amendment of these
By-Laws.
SECTION 2. Removal, Vacancies and Additional Directors. The stockholders
may, at any special meeting the notice of which shall state that it is called
for that purpose, remove, with or without cause, any Director and fill the
vacancy; provided that whenever any Director shall have been elected by the
holders of any class of stock of the Corporation voting separately as a class
under the provisions of the Certificate of Incorporation, such Director may be
removed and the vacancy filled only by the holders of that class of stock voting
separately as a class. Vacancies caused by any such removal and not filled by
the stockholders at the meeting at which such removal shall have been made, or
any vacancy caused by the death or resignation of any Director or for any other
reason, and any newly created directorship resulting from any increase in the
authorized number of Directors, may be filled by the affirmative vote of a
majority of the Directors then in office, although less than a quorum, and any
Director so elected to fill any such vacancy or newly created directorship shall
hold office until his successor is elected and qualified or until his earlier
resignation or removal.
-6-
<PAGE>
When one or more Directors shall resign effective at a future date, a
majority of Directors then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or resignations shall become effective, and each
Director so chosen shall hold office as herein provided in connection with the
filling of other vacancies.
SECTION 3. Place of Meeting. The Board of Directors may hold its meetings
in such place or places in the State of Delaware or outside the State of
Delaware as the Board from time to time shall determine.
SECTION 4. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as the Board from time to time by
resolution shall determine. No notice shall be required for any regular meeting
of the Board of Directors; but a copy of every resolution fixing or changing the
time or place of regular meetings shall be mailed to every Director at least
five days before the first meeting held in pursuance thereof.
SECTION 5. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by direction of the Chairman of the Board, the
President or by any two of the Directors then in office.
Notice of the day, hour and place of holding of each special meeting shall
be given by mailing the same at least two days before the meeting or by causing
the same to be delivered personally or transmitted by telegraph, facsimile,
telex or sent by certified, registered or overnight mail at least one day before
the meeting to each Director. Unless otherwise indicated in the notice thereof,
any and all business other than an amendment of these By-Laws may be transacted
at any special meeting, and an amendment of these By-Laws may be acted upon if
the notice of the meeting shall have stated that the amendment of these By-Laws
is one of the purposes of the meeting. At any meeting at which every Director
shall be present, even though without any notice, any business may be
transacted, including the amendment of these By-Laws.
SECTION 6. Quorum. Subject to the provisions of Section 2 of this Article
II, a majority of the members of the Board of Directors in office (but in no
case less than one-third of the total number of Directors nor less than two
Directors) shall constitute a quorum for the transaction of business and the
vote of the majority of the Directors present at any meeting of the Board of
Directors at which a quorum is present shall be the act of the Board of
Directors, If at any meeting of the Board there is less than a quorum present, a
majority of those present may adjourn the meeting from time to time.
SECTION 7. Organization. The Chairman of the Board or, in his absence, the
President shall preside at all meetings of the Board of Directors. In the
absence of the Chairman of the Board and the President, a Chairman shall be
elected from the Directors present. The Secretary of the Corporation shall act
as Secretary of all meetings of the Directors; but in the absence of the
Secretary, the Chairman may appoint any person to act as Secretary of the
meeting.
-7-
<PAGE>
SECTION 8. Committees. The Board of Directors may, by resolution passed by
a majority of the whole Board, designate one or more committees, each committee
to consist of one or more of the Directors of the Corporation. The Board may
designate one or more Directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided by resolution
passed by a majority of the whole Board, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and the affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporations property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending these By-Laws; and unless such resolution, these By-Laws, or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.
SECTION 9. Conference Telephone Meetings. Unless otherwise restricted by
the Certificate of Incorporation or by these By-Laws, the members of the Board
of Directors or any committee designated by the Board, may participate in a
meeting of the Board or such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
SECTION 10. Consent of Directors or Committee in Lieu of Meeting. Unless
otherwise restricted by the Certificate of Incorporation or by these By-Laws,
any action required or permitted to be taken at any meeting of the Board of
Directors, or of any committee thereof, may be taken without a meeting if all
members of the Board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the Board or committee, as the case may be.
ARTICLE III
Officers
SECTION 1. Officers. The officers of the Corporation shall be a Chairman
of the Board, a President, one or more Vice Presidents, a Chief Financial
Officer, a Secretary and a Treasurer, and such additional officers, if any, as
shall be
-8-
<PAGE>
elected by the Board of Directors pursuant to the provisions of Section
7 of this Article III. The Chairman of the Board, the President, one or more
Vice Presidents, a Chief Financial Officer, the Secretary and the Treasurer
shall be elected by the Board of Directors at its first meeting after each
annual meeting of the stockholders. The failure to hold such election shall not
of itself terminate the term of office of any officer. All officers shall hold
office at the pleasure of the Board of Directors. Any officer may resign at
any time upon written notice to the Corporation. Officers may, but need not,
be Directors. Any number of offices may be held by the same person.
All officers, agents and employees shall be subject to removal, with or
without cause, at any time by the Board of Directors. The removal of an officer
without cause shall be without prejudice to his contract rights, if any. The
election or appointment of an officer shall not of itself create contract
rights. All agents and employees other than officers elected by the Board of
Directors shall also be subject to removal, with or without cause, at any time
by the officers appointing them.
Any vacancy caused by the death of any officer, his resignation, his
removal, or otherwise, may be filled by the Board of Directors, and any officer
so elected shall hold office at the pleasure of the Board of Directors.
In addition to the powers and duties of the officers of the Corporation as
set forth in these By-Laws, the officers shall have such authority and shall
perform such duties as from time to time may be determined by the Board of
Directors.
SECTION 2. Powers and Duties of the Chairman of the Board, The Chairman of
the Board shall preside at all meetings of the stockholders and at all meetings
of the Board of Directors and shall have such other powers and perform such
other duties as may from time to time be assigned to him by these By-Laws or by
the Board of Directors.
SECTION 3. Powers and Duties of the President. The President shall be the
chief executive officer of the Corporation and, subject to the control of the
Board of Directors and the Chairman of the Board, shall have general charge and
control of all its operations and shall perform all duties incident to the
office of President. In the absence of the Chairman of the Board, he shall
preside at all meetings of the stockholders and at all meetings of the Board of
Directors and shall have such other powers and perform such other duties as may
from time to time be assigned to him by these By-Laws or by the Board of
Directors or the Chairman of the Board.
SECTION 4. Powers and Duties of the Vice Presidents. Each Vice President
shall perform all duties incident to the office of Vice President and shall have
such other powers and perform such other duties as may from time to time be
assigned to him by these By-Laws or by the Board of Directors, the Chairman of
the Board or the President.
-9-
<PAGE>
SECTION 5. Powers and Duties of the Chief Financial Officer. The Chief
Financial Officer shall be the principal financial officer of the Corporation,
and shall be in charge of, and have control over, all financial accounting and
tax matters regarding the Corporation. The Chief Financial Officer shall have
such other powers and perform such other duties as may from time to time be
assigned to him by these By-Laws or by the Board of Directors, the Chairman of
the Board or the President.
SECTION 6. Powers and Duties of the Secretary. The Secretary shall keep
the minutes of all meetings of the Board of Directors and the minutes of all
meetings of the stockholders in books provided for that purpose; he shall attend
to the giving or serving of all notices of the Corporation; he shall have
custody of the corporate seal of the Corporation and shall affix the same to
such documents and other papers as the Board of Directors, the Chairman of the
Board or the President shall authorize and direct; he shall have charge of the
stock certificate books, transfer books and stock ledgers and such other books
and papers as the Board of Directors, the Chairman of the Board or the President
shall direct, all of which shall at reasonable times be open to the examination
of any Director, upon application, at the office of the Corporation during
business hours; and he shall perform duties incident to the office of Secretary
and shall also have such other powers and shall perform such other duties as may
from time to time be assigned to him by these By-Laws or the Board of Directors,
the Chairman of the Board or the President.
SECTION 7. Powers and Duties of the Treasurer. The Treasurer shall act at
the direction of the Chief Financial Officer. At the direction of the Chief
Financial Officer, the Treasurer shall have custody of, and when proper shall
pay out, disburse or otherwise dispose of, all funds and securities of the
Corporation which may have come into his hands; he may endorse on behalf of the
Corporation for collection checks, notes and other obligations and shall deposit
the same to the credit of the Corporation in such bank or banks or depository or
depositories as the Board of Directors may designate; he shall enter or cause to
be entered regularly in the books of the Corporation kept for the purpose full
and accurate accounts of all moneys received or paid or otherwise disposed of by
him and whenever required by the Board of Directors, or the President or Chief
Financial Officer shall render statements of such accounts; he shall, at all
reasonable times, exhibit his books and accounts to any Director of the
Corporation upon application at the office of the Corporation during business
hours; and he shall perform all duties incident to the office of Treasurer and
shall also have such other powers and shall perform such other duties as may
from time to time be assigned to him by these By-Laws or by the Board of
Directors, the Chairman of the Board, or the President or the Chief Financial
Officer.
SECTION 8. Additional Officers. The Board of Directors may from time to
time elect such other officers (who may but need not be Directors), including a
Controller, Assistant Treasurers, Assistant Secretaries and Assistant
Controllers, as the Board may deem advisable and such officers shall have such
authority and shall perform
-10-
<PAGE>
such duties as may from time to time be assigned to them by the Board of
Directors, the Chairman of the Board or the President.
The Board of Directors may from time to time by resolution delegate to
any Assistant Treasurer or Assistant Treasurers any of the powers or duties
herein assigned to the Treasurer; and may similarly delegate to any Assistant
Secretary or Assistant Secretaries any of the powers or duties herein assigned
to the Secretary.
SECTION 9. Giving of Bond by Officers. All officers of the Corporation, if
required to do so by the Board of Directors, shall furnish bonds to the
Corporation for the faithful performance of their duties, in such penalties and
with such conditions and security as the Board shall require.
SECTION 10. Voting Upon Stocks. Unless otherwise ordered by the Board of
Directors, the Chairman of the Board, the President or any Vice President shall
have full power and authority on behalf of the Corporation to attend and to act
and to vote, or in the name of the Corporation to execute proxies to vote, at
any meetings of stockholders of any corporation in which the Corporation may
hold stock, and at any such meetings shall possess and may exercise, in person
or by proxy, any and all rights, powers and privileges incident to the ownership
of such stock. The Board of Directors may from time to time, by resolution,
confer like powers upon any other person or persons.
SECTION 11. Compensation of Officers. The officers of the Corporation
shall be entitled to receive such compensation for their services as shall from
time to time be determined by the Board of Directors.
ARTICLE IV
Stock-Seal-Fiscal Year
SECTION 1. Certificates For Shares of Stock. The certificates for shares
of stock of the Corporation shall be in such form, not inconsistent with the
Certificate of Incorporation, as shall be approved by the Board of Directors.
All certificates shall be signed by the Chairman of the Board, the President or
a Vice President and by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer, and shall not be valid unless so signed.
In case any officer or officers who shall have signed any such certificate
or certificates shall cease to be such officer or officers of the Corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be issued and delivered as though the person or
persons who signed such certificate or certificates had not ceased to be such
officer or officers of the Corporation.
-11-
<PAGE>
All certificates for shares of stock shall be consecutively numbered as
the same are issued. The name of the person owning the shares represented
thereby with the number of such shares and the date of issue thereof shall be
entered on the books of the Corporation.
Except as hereinafter provided, all certificates surrendered to the
Corporation for transfer shall be canceled, and no new certificates shall be
issued until former certificates for the same number of shares have been
surrendered and canceled.
SECTION 2. Lost, Stolen or Destroyed Certificates. Whenever person owning
a certificate for shares of stock of the Corporation alleges that it has been
lost stolen or destroyed, he shall in the office of the Corporation an affidavit
setting forth, to the best of his knowledge and belief, the time, place and
circumstances of the loss, theft or destruction, and, if required by the Board
of Directors, a bond of indemnity or other indemnification sufficient in the
opinion of the Board of Directors to indemnify the Corporation and its agents
against any claim that may be made against it or them on account of the alleged
loss, theft or destruction of any such certificate or the issuance of a new
certificate in replacement therefor. Thereupon the Corporation may cause to be
issued to such person a new certificate in replacement for the certificate
alleged to have been lost, stolen or destroyed. Upon the stub of every new
certificate so issued shall be noted the fact of such issue and the number, date
and the name of the registered owner of the lost, stolen or destroyed
certificate in lieu of which the new certificate is issued.
SECTION 3. Transfer of Shares. Shares of stock of the Corporation shall be
transferred on the books of the Corporation by the holder thereof, in person or
by his attorney duly authorized in writing, upon surrender and cancellation of
certificates for the number of shares of stock to be transferred, except as
provided in the preceding section.
SECTION 4. Regulations. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient concerning
the issue, transfer and registration of certificates for shares of stock of the
Corporation.
SECTION 5. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock Or for the purpose of any
other lawful action, as the case may be, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action.
If no record date is fixed, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is
-12-
<PAGE>
waived, at the close of business on the day next preceding the day on which
the meeting is held; the record date for determining stockholders entitled
to express consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is necessary, shall be the day on which
the first written consent is expressed; and the record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
SECTION 6. Dividends. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors shall have power to declare and pay
dividends upon shares of stock of the Corporation, but only out of funds
available f6r the payment of dividends as provided by law.
Subject to the provisions of the Certificate of Incorporation, any
dividends declared upon the stock of the Corporation shall be payable on such
date or dates as the Board of Directors shall determine. If the date fixed for
the payment of any dividend shall in any year fall upon a legal holiday, then
the dividend payable on such date shall be paid on the next day not a legal
holiday.
SECTION 7. Corporate Seal. The Board of Directors shall provide a suitable
seal, containing the name of the Corporation, which seal shall be kept in the
custody of the Secretary. A duplicate of the seal may be kept and be used by any
officer of the Corporation designated by the Board of Directors, the Chairman of
the Board or the President.
SECTION 8. Fiscal Year. The fiscal year of the Corporation shall be such
fiscal year as the Board of Directors from time to time by resolution shall
determine.
ARTICLE V
Miscellaneous Provisions
SECTION 1. Checks, Notes, Etc. All checks, drafts, bills of exchange,
acceptances, notes or other obligations or orders for the payment of money shall
be signed and, if so required by the Board of Directors, countersigned by such
officers of the Corporation and/or other persons as the Board of Directors from
time to time shall designate.
Checks, drafts, bills of exchange, acceptances, notes, obligations and
orders for the payment of money made payable to the Corporation may be endorsed
for deposit to the credit of the Corporation with a duly authorized depository
by the
-13-
<PAGE>
Treasurer, or otherwise as the Board of Directors may from time to time,
by resolution, determine.
SECTION 2. Loans. No loans and no renewals of any loans shall be
contracted on behalf of the Corporation except as authorized by the Board of
Directors. When authorized so to do, any officer or agent of the Corporation may
effect loans and advances for the Corporation from any bank, trust company or
other institution or from any firm, corporation or individual, and for such
loans and advances may make, execute and deliver promissory notes, bonds or
other evidences of indebtedness of the Corporation. When authorized so to do,
any officer or agent of the Corporation may pledge, hypothecate or transfer, as
security for the payment of any and all loans, advances, indebtedness and
liabilities of the Corporation, any and all stocks, securities and other
personal property at any time held by the Corporation, and to that end may
endorse, assign and deliver the same. Such authority may be general or confined
to specific instances.
SECTION 3. Waivers of Notice. Whenever any notice whatever is required to
be given by law, by the Certificate of Incorporation or by these By-Laws to any
person or persons, a waiver thereof in writing, signed by the person or persons
entitled to the notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
SECTION 4. Offices Outside of Delaware. Except as otherwise required by
the laws of the State of Delaware, the Corporation may have an office or offices
and keep its books, documents and papers outside of the State of Delaware at
such place or places as from time to time may be determined by the Board of
Directors, the Chairman of the Board or the President.
SECTION 5. Indemnification of Directors Officers and Employees. The
Corporation shall indemnify to the full extent authorized by law any person made
or threatened to be made a party to an action, suit or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that he,
his testator or intestate is or was a director, officer, employee or agent of
the Corporation or is or was serving, at the request of the Corporation, as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
ARTICLE VI
Amendments
These By-Laws and any amendment thereof may be altered, amended or
repealed, or new By-Laws may be adopted, by the Board of Directors at any
regular or special meeting by the affirmative vote of a majority of all of the
members of the Board, provided in the case of any special meeting at which all
of the members of the Board are not
-14-
<PAGE>
Present, that the notice of such meeting shall have stated that the
amendment of these By-Laws was one of the purposes of the meeting; but these
By-Laws and any amendment thereof, including the By-Laws adopted by the Board of
Directors, may be altered, amended or repealed and other By-Laws may be adopted
by the holders of a majority of the total outstanding stock of the Corporation
entitled to vote at any annual meeting or at any special meeting, provided, in
the case of any special meeting, that notice of such proposed alteration,
amendment, repeal or adoption is included in the notice of the meeting.
<PAGE>
TEMPORARY CERTIFICATE--EXCHANGEABLE FOR DEFINITIVE ENGRAVED CERTIFICATE WHEN
READY FOR DELIVERY
METTLER TOLEDO
NUMBER SHARES
TM
METTLER-TOLEDO INTERNATIONAL INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFICATE IS TRANSFERABLE IN RIDGEFIELD PARK, NJ AND NEW YORK, NY
COMMON STOCK COMMON STOCK
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP 592688 10 5
This certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
METTLER-TOLEDO INTERNATIONAL INC. transferable on the books of the Corporation
in person or by duly authorized attorney upon surrender of this Certificate
properly endorsed. This Certificate is not valid unless countersigned by the
Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
COUNTERSIGNED AND REGISTERED
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT PRESIDENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE TREASURER
METTLER-TOLEDO INTERNATIONAL INC.
CORPORATE
SEAL
1993
DELAWARE
- -------------------------------------------------------------------------------
AMERICAN BANKNOTE COMPANY PRODUCTION COORDINATOR SUE McNAMEE 215 830 2156
680 BLAIR MILL ROAD PROOF OF NOVEMBER 4, 1997
HORSHAM, PA 19044 METTLER-TOLEDO
215-657-3480 H 52793fc
- -------------------------------------------------------------------------------
SALES PERSON W. TALBERT- 212-557-9100 Opr. hj/eg/lr rev 2
- -------------------------------------------------------------------------------
/home/jim/inprogress/home13/METTLER52793 /net/banknote/home13/m
- -------------------------------------------------------------------------------
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- _____Custodian_____
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act _______________________
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received, ____________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
INDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE,
OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------- shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
- ----------------------------------------------------------------------- Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated ________________
--------------------------------------------------------------------
NOTICE: The signature to this assigment must correspond with the name
as written upon the face of the certificate in every particular without
alteration or enlargement or any change whatever. The signature of the
person executing this power must be guaranteed by an Eligible Guarantor
Institution such as a Commercial Bank, Trust Company, Securities
Broker/Dealer, Credit Union, or a Saving Association participating in a
Medallion program approved by the Securities Transfer Association, Inc.
SIGNATURE(S) GUARANTEED: ____________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP
IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
- -------------------------------------------------------------------------------
AMERICAN BANKNOTE COMPANY PRODUCTION COORDINATOR SUE McNAMEE 251 830 2156
680 BLAIR MILL ROAD PROOF OF SEPTEMBER 22, 1997
HORSHAM, PA 19044 METTLER-TOLEDO
215-657-3480 H 52793bk
- -------------------------------------------------------------------------------
SALES PERSON W. TALBERT- 212-557-9100 Opr. hj NEW
- -------------------------------------------------------------------------------
/home/jim/inprogress/home13/METTLER52793 /net/banknote/home13/M
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
METTLER-TOLEDO, INC.
(successor by merger to MT Acquisition Corp.), as Issuer
and
METTLER-TOLEDO HOLDING INC.,
as Note Guarantor
9 3/4% Senior Subordinated Notes due 2006
------------------------------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of October 16, 1997
------------------------------------------------
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
- -------------------------------------------------------------------------------
Supplementing the Indenture dated as of October 15, 1996,
as supplemented and amended by the
First Supplemental Indenture dated as of October 15, 1996
<PAGE>
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE (this "Second Supplemental
Indenture"), dated as of October 16, 1997, by and among METTLER-TOLEDO, INC.
(successor by merger to MT Acquisition Corp.), as Issuer, METTLER-TOLEDO HOLDING
INC., as Note Guarantor, and UNITED STATES TRUST COMPANY OF NEW YORK, a New York
banking corporation (the "Trustee").
WITNESSETH:
WHEREAS, the Issuer, the Note Guarantor and the Trustee have
entered into an Indenture dated as of October 15, 1996, as supplemented and
amended by a First Supplemental Indenture dated as of October 15, 1996 (as so
supplemented and amended, the "Indenture"), pursuant to which Indenture the
Issuer has issued and the Note Guarantor has guaranteed certain 9 3/4% Senior
Subordinated Notes due 2006 (the "Securities"); and
WHEREAS, the Issuer and the Note Guarantor desire to execute
and deliver this Second Supplemental Indenture in accordance with the provisions
of the Indenture for purposes of eliminating certain covenants of the Issuer,
modifying the provision restricting mergers and asset transfers by the Issuers,
modifying the events of default provision and making certain conforming and
other changes; and
WHEREAS, the execution and delivery of this Second
Supplemental Indenture by the Issuer and the Note Guarantor have been duly
authorized by the Issuer and the Note Guarantor; and
WHEREAS, the execution and delivery of this Second
Supplemental Indenture by the Issuer, the Note Guarantor and the Trustee have
been consented to by the Holders of a majority in principal amount of the
Securities in accordance with Section 9.02 of the Indenture; and
WHEREAS, all the conditions and requirements necessary to make
this Second Supplemental Indenture, when duly executed and delivered, a valid
and binding agreement of the Issuer and the Note Guarantor in accordance with
its terms and for the purposes herein expressed, have been performed and
fulfilled.
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants contained herein and in the Indenture and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Issuer, the Note Guarantor and the Trustee hereby agree as
follows:
<PAGE>
ARTICLE ONE
DEFINITIONS AND EFFECT
Section 1.01 Incorporation of Previous Documents. Unless
otherwise expressly provided, the provisions of the Indenture are incorporated
herein by reference.
Section 1.02 Definitions. Capitalized terms which are used but
not defined herein shall have the meanings ascribed to such terms in the
Indenture.
Section 1.03 Effect of Second Supplemental Indenture. From and
after the execution and delivery of this Second Supplemental Indenture, the
Indenture shall be deemed to be modified as herein provided, but except as
modified hereby, the Indenture shall continue in full force and effect. The
Indenture as modified hereby shall be read, taken and construed as one and the
same instrument.
ARTICLE TWO
AMENDMENTS TO THE INDENTURE
Section 2.01 Effectiveness. This Second Supplemental Indenture
shall take effect immediately upon its execution and delivery by the Trustee and
the Issuers in accordance with the provisions of Article 9 of the Indenture;
provided, however, that the provisions of Sections 2.02, 2.03, and 2.04 of this
Second Supplemental Indenture shall not become effective unless and until the
Issuer delivers an Officer's Certificate to the Trustee substantially in the
form attached hereto as Exhibit A (the "Condition"). Simultaneously with
satisfaction of the Condition, without any further action whatsoever, the
provisions of Section 2.02, 2.03 and 2.04 of this Second Supplemental Indenture
shall become effective for all purposes.
Section 2.02 Amendments to Article 4 of the Indenture. Article
4 of the Indenture is amended by deleting Sections 4.03, 4.04, 4.05, 4.08, 4.09,
4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19 and 4.20 in their entirety
and replacing such Sections respectively, with the following:
"Section 4.03 Corporate Existence
[intentionally omitted]";
"Section 4.04 Payment of Taxes and Other Claims.
[intentionally omitted]";
-3-
<PAGE>
"Section 4.05 Maintenance of Properties.
[intentionally omitted]";
"Section 4.08 Limitation on Indebtedness.
[intentionally omitted]";
"Section 4.09 Limitation on Restricted Payments
[intentionally omitted]";
"Section 4.10 Limitation on Transactions with
Affiliates
[intentionally omitted]";
"Section 4.11 Limitation on Certain Liens
[intentionally omitted]";
"Section 4.12 Limitation on Certain Guarantees.
[intentionally omitted]";
"Section 4.13 Certain Future Note Guarantors.
[intentionally omitted]";
"Section 4.15 Limitation on the Sale or Issuance
of Preferred Stock of Restricted Subsidiaries.
[intentionally omitted]";
"Section 4.16 Limitation on Dividend and Other
Payment Restrictions Affecting Restricted Subsidiaries.
[intentionally omitted]";
"Section 4.17 Restriction on Transfer of Assets
to Subsidiaries.
[intentionally omitted]";
"Section 4.18 Limitation on Disposition of
Proceeds of Asset Sales.
[intentionally omitted]";
-4-
<PAGE>
"Section 4.19 Change of Control.
[intentionally omitted]"; and
"Section 4.20 Reporting Requirements.
[intentionally omitted]".
Section 2.03 Amendments to Article 5 of the Indenture. Section
5.01 of the Indenture is amended by deleting clause (a)(ii)(y) in its entirety
and replacing such clause with the following:
"(y) [intentionally omitted]".
Section 2.04 Amendments to Article 6 of the Indenture. Section
6.01 of the Indenture is amended by deleting clauses (iii), (v), (vi) and (vii)
in their entirety and replacing such clauses with the following.
"(iii) [intentionally omitted]";
"(v) [intentionally omitted]";
"(vi) [intentionally omitted]"; and
"(vii) [intentionally omitted]".
ARTICLE THREE
THE TRUSTEE
Section 3.01 Acceptance by Trustee. The Trustee hereby accepts
the amendments to the Indenture effected by this Second Supplemental Indenture
and agrees to execute the trusts created by the Indenture as hereby amended, but
only upon the terms and conditions in the Indenture and in this Second
Supplemental Indenture. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Second
Supplemental Indenture, for the due execution hereof by the Issuer and the Note
Guarantor or for or in respect of the recitals contained herein, all of which
recitals are made by the Issuer and the Note Guarantor solely.
-5-
<PAGE>
ARTICLE FOUR
MISCELLANEOUS PROVISIONS
Section 4.01 Further Assurances. The parties hereto will
execute and deliver such further instruments and do such further acts and things
as may be reasonably required to carry out the intent and purpose of this Second
Supplemental Indenture and the Indenture.
Section 4.02 Governing Law. This Second Supplemental Indenture
shall be governed by and construed in accordance with the laws of the State of
New York (regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws) as to all matters, including, without
limitation, matters of validity, construction, effect, performance and remedies.
Section 4.03 Counterparts. This Second Supplemental Indenture
may be executed in any number of counterparts, each of which, when so executed
and delivered, shall be an original, but such counterparts shall together
constitute but one and the same instrument.
Section 4.04 Effect of Headings. The Article and Section
headings herein are for convenience only and shall not affect the construction
hereof.
Section 4.05 Successors and Assigns. All covenants and
agreements of the Issuer and the Note Guarantor in this Second Supplemental
Indenture shall bind each of the Issuer's and the Note Guarantor's respective
successors and assigns, whether so expressed or not. All covenants and
agreements of the Trustee in this Second Supplemental Indenture shall bind its
successor and assigns, whether so expressed or not.
Section 4.06 Severability Clause. In case any provision of
this Second Supplemental Indenture should be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
Section 4.07 Conflict with Trust Indenture Act. If any
provision of this Second Supplemental Indenture limits, qualifies or conflicts
with a provision of the Trust Indenture Act of 1939, as amended (the "TIA") that
is required under the TIA to be a part of and govern this Second Supplemental
Indenture, the latter provision shall control. If any provision of this Second
Supplemental Indenture modifies or excludes any provisions of the TIA that may
be so modified or excluded, the latter provision shall be deemed to apply to
this Second Supplemental Indenture as so modified or to be excluded, as the case
may be.
-6-
<PAGE>
IN WITNESS WHEREOF, each of the Issuer, the Note Guarantor and
the Trustee has caused this Second Supplemental Indenture to be executed on its
behalf by its duly authorized officer, all as of the day and year first above
written.
METTLER-TOLEDO, INC.
(successor by merger to
MT Acquisition Corp.)
By: /s/ William P. Donnelly
____________________________
Name: William P. Donnelly
Title:Chief Financial Officer
METTLER-TOLEDO HOLDING INC.
By: /s/ William P. Donnelly
____________________________
Name: William P. Donnelly
Title:Chief Financial Officer
UNITED STATES TRUST COMPANY
Of New York, as Trustee
By: /s/ Patricia Stermer
____________________________
Name: Patricia Stermer
Title:Assistant Vice President
-7-
<PAGE>
November 10, 1997
MT Investors Inc.
Im Langacher
P.O. Box MT-100
CH 8606 Greifensee, Switzerland
Ladies and Gentlemen:
We are acting as special counsel to MT Investors Inc., a
Delaware corporation to be renamed Mettler-Toledo International Inc. (the
"Company"), in connection with the registration under the Securities Act of
1933, as amended (the "Act"), of an aggregate of up to 38,336,801 shares (the
"Shares") of the Company's common stock, par value $.01 per share (the "Common
Stock"), including (i) up to 7,666,667 shares of Common Stock which will be
offered to the public by the Company (the "Offered Shares") and (ii) up to
30,670,134 shares of Common Stock which will be issued to the shareholders of
the Company pursuant to the merger agreement (the "Merger Agreement") between
the Company and Mettler-Toledo Holding Inc. (the "Merger Shares"). With your
permission, all assumptions and statements of reliance herein have been made
without any independent investigation or verification on our part except to the
extent otherwise expressly stated, and we express no opinion with respect to the
subject matter or accuracy of such assumptions or items relied upon.
For purposes of this opinion, we have examined the originals,
or certified, conformed or reproduction copies, of all records, agreements,
instruments and documents as we have deemed relevant or necessary as the basis
for the opinions hereinafter expressed. In all such examinations, we have
assumed the genuineness of all signatures on original or certified copies and
the conformity to original or certified copies of all copies submitted to us as
conformed or reproduction copies. As to various questions of fact relevant to
such opinions, we have relied upon certificates and statements of public
officials and officers or representatives of the Company and of others.
Based upon the foregoing and subject to the limitations set
forth herein, it is our opinion, assuming that (i) in the case of the Offered
Shares, the Offered Shares have been issued, delivered and paid for in
accordance with the terms of the Company's Registration Statement on Form S-1,
as amended
<PAGE>
MT Investors, Inc. - 2 - November 10, 1997
(Registration No. 333-35597) (the "Registration Statement"), and the terms of
the proposed form of Purchase Agreements previously reviewed by us between the
Company, Mettler-Toledo, Inc. and Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, BT Alex. Brown Incorporated, Credit Suisse First
Boston Corporation and Goldman, Sachs & Co., as representatives of the U.S.
Underwriters, and Merrill Lynch International, BT Alex. Brown International, a
Division of Bankers Trust International PLC, Credit Suisse First Boston (Europe)
Limited and Goldman Sachs International, as representatives of the International
Managers, and (ii) in the case of the Merger Shares, the shares of capital stock
of MT Investors Inc. issued prior to the Merger were validly issued, fully paid
and nonassessable, the merger of Mettler-Toledo Holding Inc. into the Company
pursuant to the Merger Agreement has been effected in accordance with Delaware
law and the Merger Shares have been issued pursuant to the Merger Agreement in
exchange for the shares of the existing capital stock of the Company, that the
Shares will be duly authorized and the Shares will be validly issued, fully
paid and nonassessable.
This opinion is limited to the General Corporation Law of the
State of Delaware.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to this firm under the
caption "Legal Matters" in the Prospectuses forming part of the Registration
Statement to the extent that a "Legal Matters" section is included in such
Prospectuses. In giving such consent, we do not hereby admit that we are in the
category of such persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended.
The opinion expressed herein is solely for your benefit and
may not be relied upon in any manner or for any purpose except as specifically
provided for herein.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ Timothy E. Peterson
____________________________________________
Timothy E. Peterson
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM OF SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of October 15, 1996
among
METTLER-TOLEDO INTERNATIONAL INC.
(survivor of the merger of
MT Investors Inc.
and Mettler-Toledo Holding Inc.),
as Guarantor,
METTLER-TOLEDO, INC.
(survivor of the merger of MT Acquisition Corp.
and Mettler-Toledo, Inc.)
and
METTLER-TOLEDO HOLDING AG,
as Borrowers,
SAFELINE HOLDING COMPANY,
as UK Borrower,
METTLER-TOLEDO INC.,
as Canadian Borrower,
THE SUBSIDIARY SWING LINE BORROWERS NAMED HEREIN,
MERRILL LYNCH & CO.,
as Arranger and Documentation Agent,
THE BANK OF NOVA SCOTIA,
as Administrative Agent,
THE BANK OF NOVA SCOTIA,
as Canadian Agent,
CREDIT SUISSE FIRST BOSTON
and LEHMAN COMMERCIAL PAPER INC.,
as Co-Agents,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
AMENDED AND RESTATED AS OF NOVEMBER [ ], 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS, ETC.
1.1 Certain Defined Terms.............................................. 2
1.2 Other Interpretive Provisions......................................45
1.3 Accounting Principles..............................................46
1.4 Currency Equivalents Generally.....................................46
1.5 Principle of Deemed Reinvestment...................................46
1.6 Effect on Original Credit Agreement and Other Loan Documents.......46
1.7 Payments on Second Amendment and Restatement Date; Assignments
on Second Amendment and Restatement Date, etc......................47
1.8 Certain Transactions Exempted......................................48
1.9 Repayment of Safeline Funds........................................48
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments and Loans.........................49
2.3 Procedure for Borrowings (Other Than Canadian Borrowings)..........52
2.3A Procedure for Canadian Borrowings..................................52
(Other Than Canadian Borrowings)...................................54
2.4A Conversion and Continuation Elections for Canadian Borrowings......55
2.5 Utilization of Commitments in Offshore Currencies..................56
2.6 Reduction or Termination of Commitments............................59
2.7 Prepayments........................................................60
2.8 Currency Exchange Fluctuations.....................................63
2.9 Repayment..........................................................64
2.10 Interest...........................................................66
2.11 Fees...............................................................66
(a) Arrangement, Agency Fees.....................................67
(b) Facility Fees................................................67
(c) Canadian Facility Fees.......................................67
2.12 Computation of Fees, Interest and Dollar Equivalent Amount.........67
2.13 Payments by Each Applicable Borrower...............................67
2.14 Payments by the Lenders to the Applicable Agent....................68
2.15 Adjustments........................................................69
2.16 Swing Line Commitment..............................................69
2.17 Borrowing Procedures for Swing Line Loans..........................70
2.18 Refunding of Swing Line Loans......................................71
2.19 Participations in Swing Line Loans.................................72
2.20 Swing Line Participation Obligations Unconditional.................72
2.21 Conditions to Swing Line Loans.....................................73
2.22 Substitution of Lenders in Certain Circumstances...................73
2.23 Qualified Foreign Lender Notes.....................................74
-i-
<PAGE>
Section Page
ARTICLE III
THE LETTERS OF CREDIT
3.1 The Letter of Credit Subfacility...................................74
3.2 Issuance, Amendment and Renewal of Letters of Credit...............76
3.3 Risk Participations, Drawings and Reimbursements...................78
3.4 Repayment of Participations........................................80
3.5 Role of the L/C Lender.............................................80
3.6 Obligations Absolute...............................................81
3.7 Cash Collateral Pledge.............................................81
3.8 Letter of Credit Fees..............................................81
3.9 Uniform Customs and Practice.......................................82
3.10 Letters of Credit for the Account of Subsidiaries..................82
ARTICLE IV
NET PAYMENTS, YIELD PROTECTION AND ILLEGALITY
4.1 Net Payments.......................................................82
4.2 Illegality.........................................................87
4.3 Increased Costs and Reduction of Return............................88
4.4 Funding Losses.....................................................89
4.5 Inability To Determine Rates.......................................90
4.6 Reserves on LIBOR Rate Loans; MLA Costs............................91
4.7 Certificates of Lenders............................................91
4.8 Substitution of Lenders............................................91
4.9 Right of Lenders To Fund Through Branches and Affiliates...........91
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions of Initial Loans.......................................92
5.1A Conditions of Loans To Effect the Safeline Acquisition............92
5.2 Conditions to All Credit Extensions...............................92
(a) Notice, Application.....................................92
(b) Continuation of Representations and Warranties..........92
(c) No Existing Default; No Legal Bar ......................92
5.3 Conditions to Effectiveness of Second Amended and Restated
Credit Agreement..............................................93
(a) Second Amended and Restated Credit Agreement;
Ratification of Security Documents by Loan Parties;
Notes; Holding Guarantee and U.S. Borrower Guarantee....93
(b) Opinions of Counsel.....................................93
(c) Corporate Documents.....................................93
(d) Accuracy of Representations and Warranties..............94
(e) Adverse Change, etc.....................................94
(f) Litigation..............................................94
(g) Approvals...............................................94
(h) Payment Adjustments; Second Amendment and
Restatement Assignments..............................94
(i) Certificate.............................................94
-ii-
<PAGE>
Section Page
(j) Initial Public Offering.................................95
(k) Tender Offer or Redemption of Senior Subordinated
Notes................................................95
5.4 Delivery of Documents.............................................95
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 Corporate Status..................................................95
6.2 Authority.........................................................95
6.3 No Conflicts; Consents............................................96
6.4 Binding Effect....................................................96
6.5 Litigation........................................................96
6.6 No Default........................................................96
6.7 Benefit Plans.....................................................97
6.8 Use of Proceeds; Margin Regulations...............................97
6.9 Financial Condition; Financial Statements; Solvency; etc..........97
6.10 Properties........................................................98
6.11 Taxes.............................................................99
6.12 Environmental Matters.............................................99
6.13 Regulated Entities...............................................101
6.14 Employee and Labor Matters.......................................101
6.15 Intellectual Property............................................101
6.16 Subsidiaries.....................................................101
6.17 Existing Indebtedness............................................102
6.18 True and Complete Disclosure.....................................102
6.19 Security Interests...............................................102
6.20 Representations and Warranties in Basic Documents................103
6.21 M-T Acquisition and Safeline Acquisition.........................103
6.22 Broker's Fees....................................................103
6.23 Senior Subordinated Notes........................................103
6.24 Assignment of Rights Under M-T Acquisition Documents.............103
6.25 IPO and Repurchase of Senior Subordinated Notes..................104
ARTICLE VII
AFFIRMATIVE COVENANTS
7.1 Financial Statements, etc........................................104
7.2 Certificates; Other Information..................................105
7.3 Notices..........................................................105
7.4 Preservation of Corporate Existence, etc.........................106
7.5 Maintenance of Property; Insurance...............................107
7.6 Payment of Obligations...........................................107
7.7 Compliance with Environmental Laws...............................107
7.8 Compliance with ERISA............................................108
7.9 Inspection of Property and Books and Records.....................108
7.10 End of Fiscal Years; Fiscal Quarters.............................108
7.11 Use of Proceeds..................................................108
7.12 Further Assurances...............................................109
-iii-
<PAGE>
Section Page
7.13 Equal Security for Loans and Notes; No Further Negative Pledges.109
7.14 Pledge of Additional Collateral.................................110
7.15 Security Interests..............................................110
7.16 Interest Rate Protection........................................111
7.17 Currency and Commodity Hedging Transactions.....................111
7.18 Foreign Subsidiaries Security...................................111
7.19 Register........................................................112
7.20 New Subsidiaries................................................113
7.21 Assumption by Mettler-Toledo, Inc...............................113
7.22 Post-Closing Obligations........................................113
ARTICLE VIII
NEGATIVE COVENANTS
8.1 Limitation on Liens.............................................114
8.2 Consolidations, Mergers and Disposition of Assets...............117
8.3 Leases. . ......................................................119
8.4 Loans and Investments...........................................119
8.5 Limitation on Indebtedness......................................123
8.6 Transactions with Affiliates....................................124
8.7 Use of Proceeds.................................................125
8.8 Contingent Obligations..........................................125
8.9 Restrictions on Subsidiaries....................................127
8.10 Fixed Charge Coverage Ratio.....................................127
8.11 Minimum Net Worth...............................................127
8.12 Debt to EBITDA Ratio............................................128
8.13 Restricted Payments.............................................128
8.14 ERISA. . . . . . . . ...........................................129
8.15 Change in Business..............................................129
8.16 Accounting Changes .............................................130
8.17 Prepayments of Senior Subordinated Notes, etc...................130
8.18 Amendments to Other Documents...................................130
8.19 Capital Expenditures............................................130
8.20 Sale and Lease-Backs............................................131
8.21 Sale or Discount of Receivables.................................131
8.22 Creation of Subsidiaries........................................131
8.23 Designated Senior Debt..........................................132
8.24 Issuance or Disposal of Subsidiary Stock........................132
8.25 Limitation on Other Restrictions on Amendment of Basic
Documents.....................................................132
8.26 Limitation on Swing Line Lenders................................132
ARTICLE IX
EVENTS OF DEFAULT
9.1 Event of Default................................................133
(a) Non-Payment............................................133
(b) Representation or Warranty.............................133
(c) Specific Defaults......................................133
-iv-
<PAGE>
Section Page
(d) Other Defaults.........................................133
(e) Cross-Default..........................................133
(f) Insolvency; Voluntary Proceedings......................134
(g) Involuntary Proceedings................................134
(h) ERISA..................................................134
(i) Monetary Judgments.....................................134
(j) Non-Monetary Judgments.................................134
(k) Guarantees.............................................134
(l) Security Documents.....................................134
(m) Change of Control......................................135
(n) Environmental Events...................................135
9.2 Remedies.....................................................135
9.3 Rights Not Exclusive.........................................136
ARTICLE X
THE AGENTS
10.1 Appointment and Authorization................................136
10.2 Delegation of Duties.........................................137
10.3 Exculpatory Provisions.......................................137
10.4 Reliance by Agents...........................................137
10.5 Notice of Default............................................138
10.6 Credit Decision..............................................138
10.7 Indemnification .............................................139
10.8 Agents in Individual Capacity................................139
10.9 Successor Agents.............................................139
10.10 Holders......................................................140
10.11 Failure To Act...............................................140
ARTICLE XI
MISCELLANEOUS
11.1 Amendments and Waivers.......................................140
11.2 Notices......................................................142
11.3 No Waiver; Cumulative Remedies...............................143
11.4 Expenses, Indemnity, etc.....................................143
11.5 Payments Pro Rata............................................145
11.6 Payments Set Aside...........................................145
11.7 Successors and Assigns.......................................145
11.8 Assignments and Participations, etc..........................146
11.9 Confidentiality..............................................148
11.10 Set-off......................................................149
11.11 Notification of Addresses, Lending Offices, etc..............149
11.12 Counterparts.................................................149
11.13 Severability; Modification To Conform to Law.................149
11.14 No Third Parties Benefitted..................................149
11.15 Governing Law; Submission to Jurisdiction; Venue.............150
11.16 Waiver of Jury Trial.........................................150
-v-
<PAGE>
Section Page
11.17 Judgment.....................................................150
11.18 Prior Understandings.........................................151
11.19 Survival.....................................................151
11.20 CH Foreign Subsidiary Mortgages..............................151
11.21 Release of Collateral........................................151
11.22 Amendment of Security Documents..............................151
Signatures...................................................S-1
-vi-
<PAGE>
ANNEXES
Annex A Agent's Payment Offices for
Offshore Currency Loans
SCHEDULES
Schedule 1.1(a) Ciba Loan Documents
Schedule 1.1(b) Calculation of the MLA Cost
Schedule 1.1(c) Mortgaged Properties
Schedule 1.1(d) M-T Acquisition Documents
Schedule 1.1(e) Non-Guarantor Subsidiaries
Schedule 1.1(f) Safeline Acquisition Documents
Schedule 1.7(a) Payment Adjustments for Paid Lenders Relating to Second
Amendment and Restatement
Schedule 1.7(b) Payment Adjustments for Paid Existing Lenders
Relating to Second Amendment and Restatement
Schedule 1.7(c) Payment Adjustments for Paying Existing Lenders
Relating to Second Amendment and Restatement
Schedule 1.7(d) Payment Adjustments for New Lenders Relating to
Second Amendment and Restatement
Schedule 1.7(f) Amendment and Restatement Assignments
Schedule 1.8 Certain Exempted Transactions
Schedule 2.1 Commitments and Pro Rata Shares
Schedule 2.1(c) Canadian Lenders and Percentages
Schedule 5.1(p) Debt To Be Repaid
Schedule 5.1A(o) Debt To Be Repaid of Safeline Limited and Its
Subsidiaries
Schedule 5.3(a) Subsidiaries To Execute and Deliver Ratification
Agreement After Amendment and Restatement Date
Schedule 6.5 Litigation
Schedule 6.12 Environmental Matters
Schedule 6.15 Intellectual Property
Schedule 6.16 Subsidiaries and Minority Interests
Schedule 6.17 Existing Indebtedness
Schedule 6.17A Existing Indebtedness of Safeline Limited and Its
Subsidiaries
Schedule 6.21 Certain Consents
Schedule 6.22 Broker's Fees
Schedule 7.22 Subsidiaries To Enter into Loan Documents Post-Closing
Schedule 8.1(a) Certain Existing Liens as of the Original Closing Date
Schedule 8.1(w) Certain Liens on Safeline Limited and Its
Subsidiaries as of the Safeline Closing Date
Schedule 8.2(i) Certain Asset Sales
Schedule 8.2(i)(A) Certain Additional Assets Sale of Properties
Schedule 8.4(j) Investments Made in Connection with the M-T Acquisition
Schedule 8.4(o) Existing Investments and Investments To Be Made
Under Binding Agreements
Schedule 8.8 Contingent Obligations
Schedule 8.8A Contingent Obligations of Safeline Limited and
Its Subsidiaries
Schedule 11.2 Addresses for Notices
-vii-
<PAGE>
EXHIBITS
Exhibit A-1 Form of Notice of Canadian Borrowing
Exhibit A-2 Form of Notice of Borrowing
Exhibit B-1 Form of Notice of Conversion/Continuation
Exhibit B-2 Form of Canadian Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Security Agreement
Exhibit E-1 Form of CH Borrower Guarantee
Exhibit E-2 Form of Amended and Restated Domestic Subsidiary
Guarantee
Exhibit E-3 [Reserved]
Exhibit E-4 Form of Amended and Restated Holding Guarantee
Exhibit E-5 Form of Amended and Restated US Borrower Guarantee
Exhibit F-1 Form of Opinion of Fried, Frank, Harris, Shriver &
Jacobson
Exhibit F-2 Form of Local Counsel Opinion to the Domestic Loan
Parties
Exhibit F-3 Form of Opinion of Fried, Frank, Harris, Shriver &
Jacobson To Be Delivered on the Amendment and
Restatement Date
Exhibit F-4 Form of Opinion of Fried, Frank, Harris, Shriver &
Jacobson To Be Delivered on the Safeline Closing Date
Exhibit F-5 Form of Opinion of Counsel to Canadian Borrower
Exhibit F-6 Form of Opinion of Counsel to UK Borrower
Exhibit F-7 Form of Opinion of Fried, Frank, Harris, Shriver &
Jacobson To Be Delivered on the Second Amendment
and Restatement Date
Exhibit G Form of Assignment and Acceptance
Exhibit H-1 Form of Tranche A-CHF Term Note
Exhibit H-2 [Reserved]
Exhibit H-3 Form of Tranche A-UK Term Note
Exhibit H-4 Form of Tranche A-US Term Note
Exhibit H-5 Form of Revolving Note
Exhibit H-5A Form of Canadian Revolving Note
Exhibit H-6 Form of Swing Line Note
Exhibit H-7 Form of QFL A-US Note
Exhibit H-8 Form of QFL A-CHF Note
Exhibit H-9 Form of QFL A-UK Note
Exhibit I Form of Mortgage
Exhibit J-1 Form of Domestic Subsidiary Securities Pledge Agreement
Exhibit J-2 [Reserved]
Exhibit J-3 Form of Holding Securities Pledge Agreement
Exhibit J-4 Form of US Borrower Securities Pledge Agreement
Exhibit K Form of Interest Rate Certificate
Exhibit L-1 Form of Section 4.1(f)(i) Certificate
Exhibit L-2 Form of Section 4.1(f)(v) Certificate
Exhibit M Form of Assumption Agreement
Exhibit N Form of Intercreditor Agreement
Exhibit O Form of Ratification Agreement
-viii-
<PAGE>
FORM OF SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered
into as of October 15, 1996, among METTLER-TOLEDO INTERNATIONAL INC. (the
survivor of the merger of MT Investors Inc. and Mettler-Toledo Holding Inc.), a
Delaware corporation (together with its successors, "Holding"); METTLER-TOLEDO,
INC. (the survivor of the merger of MT Acquisition Corp. (a Delaware
corporation) and Mettler-Toledo, Inc.), a Delaware corporation (together with
its successors, "US Borrower"); METTLER-TOLEDO HOLDING AG, a corporation
organized under the laws of Switzerland and, after giving effect to the M-T
Acquisition, a Wholly-Owned Subsidiary of US Borrower (together with its
successors, "CH Borrower" and, together with US Borrower; the "Borrowers");
SAFELINE HOLDING COMPANY, an unlimited liability company organized under the
laws of the United Kingdom, as UK Borrower; METTLER-TOLEDO INC., a Canadian
corporation, as Canadian Borrower; the several SUBSIDIARY SWING LINE BORROWERS
named herein; the several financial institutions from time to time party to this
Agreement (collectively the "Lenders"; individually each a "Lender"); MERRILL
LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as arranger and
documentation agent (together with its successors, the "Arranger" or
"Documentation Agent"); THE BANK OF NOVA SCOTIA ("Scotiabank"), as
Administrative Agent (together with its successors, the "Administrative Agent"),
a Swing Line Lender and L/C Lender; THE BANK OF NOVA SCOTIA, as Canadian Agent
(together with its successors, the "Canadian Agent"); CREDIT SUISSE FIRST
BOSTON, as a Swing Line Lender and as a co-agent; and LEHMAN COMMERCIAL PAPER
INC., as a co-agent (together with Credit Suisse First Boston in its capacity as
a co-agent and each of their respective successors, the "Co-Agents"), as
provided herein, and is amended and restated as of November [ ], 1997.
WHEREAS, subject to the terms and conditions of this
Agreement, to finance in part the M-T Acquisition, to repay certain existing
Indebtedness of the Borrowers and their Subsidiaries, to pay fees and expenses
in connection with the M-T Acquisition Transactions and, after the Original
Closing Date, to provide working capital to, and for general corporate purposes
of, US Borrower and the Subsidiaries and to provide for the making of the Ciba
Loan,
(i) the Lenders made the Term Loans (as defined in the
Original Credit Agreement) to the Borrowers on the Original Closing
Date; and
(ii) the Lenders agreed to make available, during the period
from the Original Closing Date until 30 Business Days prior to the
Revolving Loan Maturity Date, (a) to the Borrowers, a revolving
multicurrency credit facility with letter of credit and swing line
subfacilities, and (b) to the Subsidiary Swing Line Borrowers, the
swing line subfacility and the letter of credit subfacility,
WHEREAS, immediately following or in connection with the
consummation of the M-T Acquisition the rights and obligations of MT Acquisition
Corp. as "US Borrower" under and pursuant to the Loan Documents were assumed
(the "Assumption") by Mettler-Toledo, Inc. pursuant to the Assumption Agreement,
WHEREAS, the Lenders, the Agents (as defined in the Original
Credit Agreement), the Co-Agents, MT Acquisition Corp. (which merged into
Mettler-Toledo, Inc.), CH Borrower and the Subsidiary Swing Line Borrowers
originally entered into that certain Credit Agreement dated as of October 15,
1996 (the "Original Credit Agreement") prior to the consummation of the M-T
Acquisition, which has been consummated, and, together with the UK Borrower,
Canadian Borrower and Canadian Agent, entered into the Amended and Restated
Credit Agreement in order to amend and restate the Original Credit Agreement to
provide for Letters of Credit to be issued by the Swing Line Lenders for the
account of the Subsidiary Swing Line Borrowers on the terms and conditions set
forth in the Amended and Restated Credit Agreement, to provide for the
extensions of credit to be made hereunder in connection with the Safeline
Acquisition on the terms and conditions set forth in the Amended and
<PAGE>
-2-
Restated Credit Agreement, to provide for the conversion of the term extensions
of credit existing as of the Amendment and Restatement Date into term extensions
of credit under the Amended and Restated Credit Agreement, to provide for the
increased Revolving Facility Commitments set forth herein, to provide for the
Revolving Facility Commitments to be available for UK Borrower (subject to the
limitation herein) on the terms and conditions herein set forth, to provide for
a Canadian Dollar revolving credit facility to be made available to Canadian
Borrower on the terms and conditions herein set forth, and to make such other
amendments thereto as were evidenced by the Amended and Restated Credit
Agreement,
WHEREAS, the Lenders, the Agents, the Co-Agents, the
Borrowers, Canadian Borrower, UK Borrower and the Subsidiary Swing Line
Borrowers are entering into this Second Amended and Restated Credit Agreement in
order to amend and restate the Original Credit Agreement as amended and restated
by the Amended and Restated Credit Agreement to provide for the conversion of
extensions of credit existing as of the Second Amendment and Restatement Date
into term extensions of credit under this Agreement as amended and restated as
of the Second Amendment and Restatement Date, to provide for an increase in the
Revolving Facility Commitments and to make such other amendments as are
evidenced hereby,
WHEREAS, in connection with the effectiveness of this
Second Amended and Restated Credit Agreement (i) MT Investors Inc. and
Mettler-Toledo Holding Inc. will merge and the survivor will be named
Mettler-Toledo International Inc., (ii) Mettler-Toledo International Inc. will
effect an initial public offering of its common stock, and (iii) U.S. Borrower
will effect a tender offer for its outstanding U.S.$135.0 million 9 3/4% senior
subordinated notes due 2006, and
WHEREAS, the Borrowers, Canadian Borrower, UK Borrower, the
Subsidiary Swing Line Borrowers, the Lenders, the Agents and the Co-Agents
intend that (a) all obligations of the parties under the Original Credit
Agreement as amended to the Second Amendment and Restatement Date shall continue
to exist under and be evidenced by this Agreement and the other Loan Documents,
and (b) except as expressly stated herein or amended hereby, the Original Credit
Agreement and the other Loan Documents as amended to the Second Amendment and
Restatement Date are ratified and confirmed as remaining unmodified and in full
force and effect with respect to all Obligations.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree that the Original
Credit Agreement as amended to the Second Amendment and Restatement Date is
hereby amended and restated in its entirety as follows:
ARTICLE I.
DEFINITIONS, ETC.
1.1. Certain Defined Terms. The following terms have the
following meanings:
ABR Loan means a Loan or an L/C Advance that bears interest
based on the Alternate Base Rate. ABR Loans may only be made in U.S. Dollars.
Acquisition means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of any
business or division of a Person, (b) the acquisition of in excess of 50% of the
capital stock, partnership interests,
<PAGE>
-3-
membership interests or equity of any Person, or otherwise causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any other combination
with another Person.
Additional Collateral -- see Section 7.14.
Adjusted Working Capital means the remainder of: (a) (i) the
consolidated current assets of US Borrower and the Subsidiaries, less (ii) the
amount of cash and Cash Equivalents included in such consolidated current
assets; less (b) (i) consolidated current liabilities of US Borrower and the
Subsidiaries, less (ii) the amount of short-term Indebtedness (including
Revolving Facility Loans and current maturities of long-term Indebtedness) of US
Borrower and the Subsidiaries included in such consolidated current liabilities.
Adjustment Date -- see the definition of Assumed Swing Line
Loan Amount.
Administrative Agent -- see the introduction to this
Agreement.
Administrative Agent's Fee Letter -- see subsection 2.11(a).
AEA means AEA Investors Inc., a Delaware corporation, and its
successors.
Affiliate means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such Person. A Person shall be deemed to control another Person if
the controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such other Person, whether
through the ownership of voting securities or membership interests, by contract,
or otherwise.
Agents means the Documentation Agent, the Canadian Agent and
the Administrative Agent; and Agent means the Documentation Agent, the Canadian
Agent or the Administrative Agent.
Agent's Payment Office means (i) in respect of payments by the
Borrowers or UK Borrower in U.S. Dollars, The Bank of Nova Scotia, One Liberty
Plaza, 26th Floor, New York, New York 10006 or such other address as the
Administrative Agent may from time to time specify in accordance with Section
11.2, (ii) in the case of payments by the Borrowers, UK Borrower, or the UK
Swing Line Borrowers in any Offshore Currency, as set forth in Annex A or such
other address as the Administrative Agent may from time to time specify in
accordance with Section 11.2, and (iii) in the case of payments by Canadian
Borrower, the address for payments set forth on Schedule 11.2 for the Canadian
Agent or such other address as the Canadian Agent may from time to time specify
in accordance with Section 11.2.
Agreed Alternative Currency -- see subsection 2.5(e).
Agreement means this Second Amended and Restated Credit
Agreement, as amended and in effect from time to time.
Aggregate Outstanding Revolving Credit means as to any
Revolving Facility Lender at any time an amount equal to the sum of (a) the
aggregate unpaid principal Dollar Equivalent amount at such time of all
Revolving Loans made by such Revolving Facility Lender, (b) such Revolving
Facility Lender's Pro Rata Share of the Effective Amount of all outstanding L/C
Obligations (other than Subsidiary L/C Obligations, except those of the UK Swing
Line Borrowers) at such time, and (c) such Revolving Facility Lender's Pro Rata
Share of the aggregate Dollar Equivalent amount of all outstanding Swing Line
Loans (which for all purposes, other than any
<PAGE>
-4-
Revolving Loan made pursuant to Section 2.18, any Swing Line Loan made pursuant
to Section 2.16 and any Revolving Loan to be made pursuant to Section 3.3 and
except as otherwise expressly provided herein, shall include such Lender's Pro
Rata Share of the Assumed Swing Line Loan Amount).
Alternate Base Rate means, for any day, with respect to all
ABR Loans, a fluctuating rate of interest per annum (rounded, if necessary, to
the nearest 1/100 of 1%) equal to the higher of: (a) 0.50% per annum above the
latest U.S. Federal Funds Rate; and (b) the per annum rate of interest in effect
for such day as published in The Wall Street Journal (or a comparable
publication if The Wall Street Journal is not then published) as the "Prime
Rate" for major money center banks in the United States.
Amended and Restated Credit Agreement means the Original
Credit Agreement as amended and restated as of May 29, 1997 upon satisfaction or
waiver of the conditions precedent set forth in Section 5.3 (as such Section was
in effect on the Amendment and Restatement Date) prior to the Second Amendment
and Restatement Date.
Amendment and Restatement Date means the date on which all
conditions precedent set forth in Section 5.3 (as such Section was in effect on
the Amendment and Restatement Date) were satisfied or waived by the Required
Lenders, the Agents, the Swing Line Lenders, each L/C Lender and the Co-Agents
(May 29, 1997).
Amortization Payments means, as to any Term Loan Facility, the
scheduled repayments of the Term Loans of such Term Loan Facility as set forth
in subsections 2.9(a), (b) and (c) and Amortization Payment means any such
scheduled repayment.
Annualized Interest Expense means, for any period of less than
four fiscal quarters, the product of (x) Interest Expense for such period and
(y) a fraction, the numerator of which is 365 and the denominator of which is
the number of days in such period.
Applicable Agent means (a) with respect to all matters other
than matters relating to Canadian Loans, the Administrative Agent, and (b) with
respect to matters relating to Canadian Loans, the Canadian Agent.
Applicable Borrower means, with respect to any Loan, US
Borrower, CH Borrower, Canadian Borrower, UK Borrower or a Subsidiary Swing Line
Borrower, as applicable, which is the Loan Party to whom such Loan was, or is to
be, made.
Applicable Currency means, as to any particular payment or
Loan, U.S. Dollars, Canadian Dollars or the Offshore Currency in which it is
denominated or is payable.
Applicable Facility Fee Percentage means (i) upon the Second
Amendment and Restatement Date, the percentage per annum in the table below
corresponding to the pro forma Debt to EBITDA Ratio as of the end of most recent
fiscal quarter ended immediately prior to the Second Amendment and Restatement
Date for which financial statements have been delivered to the Lenders under the
Amended and Restated Credit Agreement after giving effect to all transactions to
occur as of the Second Amendment and Restatement Date and (ii) thereafter when
the Debt to EBITDA Ratio at the end of the most recent fiscal quarter is as set
forth below, the percentage per annum set forth opposite such Debt to EBITDA
Ratio below in the grid below (the "Facility Fee Leverage Grid"):
<PAGE>
-5-
- -------------------------------------------------------------------------------
Applicable
Debt to EBITDA Ratio Facility Fee Percentage
- -------------------------------------------------------------------------------
> 4.25 to 1.0 0.375%
- ------------------------------------------------------------------------------
> 4.00 to 1.0 and 0.375%
<= 4.25 to 1.0
- ------------------------------------------------------------------------------
> 3.75 to 1.0 and 0.300%
<= 4.00 to 1.0
- ------------------------------------------------------------------------------
> 3.50 to 1.0 and 0.300%
<= 3.75 to 1.0
- ------------------------------------------------------------------------------
> 3.25 to 1.0 and 0.250%
<= 3.50 to 1.0
- ------------------------------------------------------------------------------
> 2.75 to 1.0 and 0.250%
<= 3.25 to 1.0
- ------------------------------------------------------------------------------
<= 2.75 to 1.0 0.200%
- ------------------------------------------------------------------------------
Any change in the Debt to EBITDA Ratio shall result in the adjustment of the
Applicable Facility Fee Percentage as of the date of receipt by the
Administrative Agent and the Canadian Agent of the Interest Rate Certificate
most recently delivered pursuant to subsection 7.2(b) to the level applicable to
such new Debt to EBITDA Ratio. From and after such date on which Moody's and S&P
have given a rating for the Index Debt in any of the categories set forth in the
table below (the "Investment Grade Date"), Applicable Facility Fee Percentage
shall mean at any date on or after the Investment Grade Date (subject to the
proviso to this sentence) the applicable percentage set forth below based upon
the ratings by Moody's and S&P, respectively, applicable on such date to the
Index Debt; provided, however, that notwithstanding the foregoing if and for so
long as S&P has rated the Index Debt at BB+ or below or Moody's has rated the
Index Debt at Ba1 or below, the Applicable Facility Fee Percentage shall be
determined solely by the Facility Fee Leverage Grid.
Applicable Facility
Fee Percentage
Category 1
S&P: BBB+ or better 0.125%
Moody's: Baa1 or better
Category 2
S&P: BBB to BBB+ 0.125%
Moody's: Baa2 to Baa1
Category 3
S&P: BBB- 0.150%
Moody's: Baa3
<PAGE>
-6-
For purposes of the foregoing, (i) if either Moody's or S&P shall not have in
effect a rating for the Index Debt (other than by reason of the circumstances
referred to in the last sentence of this definition) and (x) the other rating
agency shall have in effect a rating for the Index Debt in Category 1, then such
rating agency not so having a rating in effect shall be deemed to have
established a rating for the Index Debt in Category 2 or (y) the other rating
agency shall have in effect a rating for the Index Debt in Category 2 or
Category 3, then such rating agency not so having a rating in effect shall be
deemed to have established a rating for the Index Debt in Category 3, (ii) if
the rating established or deemed to have been established by Moody's and S&P for
the Index Debt shall fall within different Categories, the Applicable Facility
Fee Percentage shall be based on the Category corresponding to the lower of the
two ratings; (iii) if neither Moody's nor S&P shall have in effect a rating for
the Index Debt (other than by reason of the circumstances described in the last
sentence of this definition) then for so long as such condition exists, the
Applicable Facility Fee Percentage will be determined solely by the Facility Fee
Leverage Grid; and (iv) if the ratings established or deemed to have been
established by Moody's and S&P for the Index Debt shall be changed (other than
as a result of a change in the rating system of Moody's or S&P), such change
shall be effective as of the date on which it is first announced by the
applicable rating agency. Each change in the Applicable Facility Fee Percentage
shall apply during the period commencing on the effective date of such change
and ending on the date immediately preceding the effective date of the next such
change. If the rating system of Moody's or S&P shall change, or if either such
rating agency shall cease to be in the business of rating corporate debt
obligations, or if the Index Debt shall be unrated by Moody's or S&P as a result
of a reasonable business decision of US Borrower, US Borrower and the Lenders
shall negotiate in good faith to amend this definition to reflect such changed
rating system or the non-availability of ratings from such rating agency and,
pending the effectiveness of any such amendment, the Applicable Facility Fee
Percentage most recently in effect shall continue in effect.
Applicable Margin means for each category of Loan set forth in
the table below (i) upon the Second Amendment and Restatement Date, with respect
to such Loan category specified below, the percentage per annum in the table
below corresponding to the pro forma Debt to EBITDA Ratio as of the end of the
most recent fiscal quarter ended immediately prior to the Second Amendment and
Restatement Date for which financial statements have been delivered to Lenders
under the Amended and Restated Credit Agreement after giving effect to the
transactions to occur as of the Amendment and Restatement Date and (ii)
thereafter, with respect to such Loan category specified below, when the Debt to
EBITDA Ratio at the end of the most recent fiscal quarter is as set forth below,
the percentage per annum set forth opposite such Debt to EBITDA Ratio for such
category of Loan in the grid below (the "Applicable Margin Leverage Grid"):
<PAGE>
-7-
<TABLE>
<CAPTION>
==============================================================================================
LIBOR Rate Loans ABR Loans Canadian Loans
-----------------------------------------------------------------------------
Revolving
Facility Loans
Debt to and Non-U.S. $ Revolving BA
EBITDA Ratio Swing Line Tranche A Facility Tranche A Equivalent Prime Rate
Loans Term Loans Loans Term Loans Rate Loans Loans
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
> 4.25 to 1.0 1.125% 1.500% 0.125% 0.500% 1.125% 1.125%
- -----------------------------------------------------------------------------------------------
> 4.00 to 1.0 and
<= 4.25 to 1.0 1.000% 1.375% 0.000% 0.375% 1.000% 1.000%
- -----------------------------------------------------------------------------------------------
> 3.75 to 1.0 and
<= 4.00 to 1.0 0.825% 1.125% 0.000% 0.125% 0.825% 0.825%
- -----------------------------------------------------------------------------------------------
> 3.50 to 1.0 and
<= 3.75 to 1.0 0.700% 1.000% -0.30% 0.000% 0.700% 0.700%
- -----------------------------------------------------------------------------------------------
> 3.25 to 1.0 and
<= 3.50 to 1.0 0.625% 0.875% -0.25% 0.000% 0.625% 0.625%
- -----------------------------------------------------------------------------------------------
> 2.75 to 1.0 and
<= 3.25 to 1.0 0.500% 0.750% -0.25% 0.000% 0.500% 0.500%
- -----------------------------------------------------------------------------------------------
<= 2.75 to 1.0 0.425% 0.625% -0.20% 0.000% 0.425% 0.425%
===============================================================================================
</TABLE>
Any change in the Debt to EBITDA Ratio shall result in the adjustment of the
Applicable Margin as of the date of receipt by the Administrative Agent and the
Canadian Agent of the Interest Rate Certificate most recently delivered pursuant
to subsection 7.2(b) to the level applicable to such new Debt to EBITDA Ratio.
From and after the Investment Grade Date, Applicable Margin shall mean at any
date on or after the Investment Grade Date (subject to the proviso to this
sentence) the applicable percentage set forth below applicable to the category
of Loan in question based upon the ratings by Moody's and S&P, respectively,
applicable on such date to the Index Debt; provided, however, that
notwithstanding the foregoing if and for so long as S&P has rated the Index Debt
at BB+ or below or Moody's has rated the Index Debt at Ba1 or below, the
Applicable Margin shall be determined solely by the Applicable Margin Leverage
Grid.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
LIBOR Rate Loan ABR Loans Canadian Loans
- --------------------------------------------------------------------------------------------------------------------
Revolving Facility
Loans and Non- Tranche A Revolving Tranche A BA Prime
U.S. $ Swing Term Facility Term Equivalent Rate
Line Loans Loans Loans Loans Rate Loans Loans
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Category 1 0.175% 0.300% 0.000% 0.000% 0.175% 0.175%
- ----------
S&P: BBB+ or better
Moody's: Baa1 or better
- --------------------------------------------------------------------------------------------------------------------
Category 2 0.250% 0.375% 0.000% 0.000% 0.250% 0.250%
- ----------
S&P: BBB to BBB+
Moody's: Baa2 to Baa1
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-8-
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Category 3 0.300% 0.450% 0.000% 0.000% 0.300% 0.300%
- ----------
S&P: BBB-
Moody's: Baa3
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
For purposes of the foregoing, (i) if either Moody's or S&P shall not have in
effect a rating for the Index Debt (other than by reason of the circumstances
referred to in the last sentence of this definition) and (x) the other rating
agency shall have in effect a rating for the Index Debt in Category 1, then such
rating agency not so having a rating in effect shall be deemed to have
established a rating for the Index Debt in Category 2 or (y) the other rating
agency shall have in effect a rating for the Index Debt in Category 2 or
Category 3, then such rating agency not so having a rating in effect shall be
deemed to have established a rating for the Index Debt in Category 3; (ii) if
the ratings established or deemed to have been established by Moody's and S&P
for the Index Debt shall fall within different Categories, the Applicable Margin
shall be based on the Category corresponding to the lower of the two ratings;
(iii) if neither Moody's and S&P shall have in effect a rating for the Index
Debt (other than by reason of the circumstances described in the last sentence
of this definition) then for so long as such condition exists, the Applicable
Margin will be determined solely by the Applicable Margin Leverage Grid; and
(iv) if the ratings established or deemed to have been established by Moody's
and S&P for the Index Debt shall be changed (other than as a result of a change
in the rating system of Moody's or S&P), such change shall be effective as of
the date on which it is first announced by the applicable rating agency. Each
change in the Applicable Margin shall apply during the period commencing on the
effective date of such change and ending on the date immediately preceding the
effective date of the next such change. If the rating system of Moody's or S&P
shall change, or if either such rating agency shall cease to be in the business
of rating corporate debt obligations, or if the Index Debt shall be unrated by
Moody's or S&P as a result of a reasonable business decision of US Borrower, US
Borrower and the Lenders shall negotiate in good faith to amend this definition
to reflect such changed rating system or the non-availability of ratings from
such rating agency and, pending the effectiveness of any such amendment, the
Applicable Margin most recently in effect shall continue in effect.
Applicable Margin Leverage Grid -- see the definition of
Applicable Margin.
Applicable Swing Line Lender means, with respect to any Swing
Line Loan, the Swing Line Lender to whom a request for such Loan has been made
hereunder or who has made such Loan.
Arranger -- see the introduction to this Agreement.
Asset Sale shall mean any sale, issuance, conveyance,
transfer, lease or other disposition (including by sale-leaseback, merger,
consolidation or otherwise) by US Borrower or any Subsidiary, in one or a series
of related transactions, of: (a) any capital stock of any Subsidiary; (b) all or
substantially all of the properties and assets of any division or line of
business of US Borrower or any Subsidiary; (c) any payment, liquidation or
realization on any Investment permitted by subsection 8.4(d); or (d) other than
inventory in the ordinary course of business, any properties or assets of US
Borrower or any Subsidiary. For the purposes of this definition, the term "Asset
Sale" shall not include (i) any sale, issuance, conveyance, transfer, lease or
other disposition of properties or assets to either Borrower or any Wholly-Owned
Subsidiary of US Borrower which is a Qualified Subsidiary Guarantor, (ii) any
Asset Sale not resulting in total consideration individually of more than the
Dollar Equivalent amount of U.S. $250,000 (calculated only at the time of
consummation thereof), (iii) any sale, issuance, conveyance, transfer, lease or
other disposition of properties or assets of US Borrower or any Subsidiary
permitted by Section 8.2 (other than subsections (d), (i), (j) and (k) thereof),
<PAGE>
-9-
(iv) Takings or Destructions or loss of title to any Mortgaged Real Property,
(v) any Lien permitted by Section 8.1, (vi) any Investment permitted by Section
8.4, and (vii) any Restricted Payment permitted by Section 8.13.
Assignee -- see subsection 11.8(a).
Assigning Lender -- see subsection 1.7(f).
Assignment and Acceptance -- see subsection 11.8(b).
Assumed Swing Line Loan Amount means the Dollar Equivalent
amount of the aggregate total of the Subsidiary Swing Line Borrower Sublimits of
the Subsidiary Swing Line Borrowers other than the UK Swing Line Borrowers,
which amount shall be adjusted (up or down) after the Original Closing Date not
less frequently than on the last Business Day of each fiscal quarter of US
Borrower occurring after the Original Closing Date (each such date, an
"Adjustment Date") by the amount by which the Dollar Equivalent amount as of
such date of the Subsidiary Swing Line Borrower Sublimits of the Subsidiary
Swing Line Borrowers other than the UK Swing Line Borrowers is greater than or
less than the Assumed Swing Line Loan Amount as of the immediately preceding
Adjustment Date (or the Original Closing Date with respect to the first
Adjustment Date occurring after the Original Closing Date) (and from the most
recent Adjustment Date until the next immediately succeeding Adjustment Date the
Administrative Agent shall assume that the Dollar Equivalent amount of Swing
Line Loans in an amount of such adjusted amount is then outstanding for all
purposes other than any Revolving Loan to be made under Section 2.18, any Swing
Line Loan to be made under Section 2.16 and any Revolving Loan to be made
pursuant to Section 3.3).
Assumption -- see the recitals hereto.
Assumption Agreement means the Assumption Agreement executed
and delivered by a duly authorized officer of Mettler-Toledo, Inc. in connection
with or following the consummation of the M-T Acquisition, substantially in the
form of Exhibit M with such changes thereto as shall be approved by the
Arranger, providing for the Assumption.
Attorney Costs means and includes all reasonable fees and
charges of any law firm or other external counsel.
Available Revolving Facility Commitment means, as to any
Revolving Facility Lender at any time, an amount equal to the excess, if any, of
(a) the amount of such Revolving Facility Lender's Revolving Facility Commitment
at such time, over (b) the sum of (i) the aggregate unpaid principal Dollar
Equivalent amount at such time of all Revolving Loans made by such Revolving
Facility Lender, (ii) such Revolving Facility Lender's Pro Rata Share of the
Effective Amount of all outstanding L/C Obligations (other than Subsidiary L/C
Obligations, except those of the UK Swing Line Borrowers) at such time, and
(iii) such Revolving Facility Lender's Pro Rata Share of the aggregate Dollar
Equivalent amount of all outstanding Swing Line Loans (which for all purposes,
other than any Revolving Loan made pursuant to Section 2.18, any Swing Line Loan
made pursuant to Section 2.16 and any Revolving Loan made pursuant to Section
3.3 and except as otherwise expressly provided herein, shall include such
Lender's Pro Rata Share of the Assumed Swing Line Loan Amount).
Average Life means, when applied to any Indebtedness at any
date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial
<PAGE>
-10-
maturity or other required payment of principal, including payment at final
maturity, in respect thereof, by (ii) the number of years (calculated to the
nearest one-twelfth) which will elapse between such date and the making of such
payment.
BA Equivalent Rate means, for any Interest Period with respect
to BA Equivalent Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward, if necessary, to the next 1/100th of 1%)
equal to the market bid rate determined by the Canadian Agent for banker's
acceptances (with a tenor comparable to such Interest Period and in an amount
comparable to the BA Equivalent Rate Loan of Scotiabank for such Interest
Period) accepted by Scotiabank on the first day of such Interest Period.
BA Equivalent Rate Loan means a Loan that bears interest based
on the BA Equivalent Rate.
Bankruptcy Code means the U.S. Federal Bankruptcy Reform Act
of 1978 (11 U.S.C. ss. 101, et seq.), as amended.
Basic Documents means the Loan Documents, the Transaction
Documents and the Other Documents, collectively, and Basic Document means any
such agreement.
Beneficial Owner shall have the meaning assigned thereto in
Rule 13d-3 of the SEC under the Exchange Act as in effect on the date hereof.
Benefitted Lender -- see Section 2.15.
Board of Directors means the Board of Directors of any of US
Borrower or Holding, as the case may be, or a designated committee thereof.
Borrowers -- see the introduction to this Agreement.
Borrowing means a borrowing hereunder consisting of (a) Loans
of the same Facility and Type and in the same Applicable Currency made to a
Borrower, UK Borrower or a Subsidiary Swing Line Borrower on the same day by one
or more Lenders under Article II and, other than in the case of ABR Loans or
Swing Line Loans made to any Swing Line Borrower, having the same Interest
Period, or (b) Canadian Loans made to Canadian Borrower on the same day by the
Canadian Lenders pursuant to Article II and, other than in the case of Prime
Rate Loans, having the same Interest Period.
Borrowing Date means any date on which a Borrowing occurs
under Section 2.3, 2.3A, or
2.17.
Business Day means any day other than a Saturday, Sunday or
other day on which commercial banks in Luxembourg, London, England, New York,
New York or Zurich, Switzerland (and in the case of disbursements and payments
in Canadian Dollars, in Toronto, Canada) or, with respect to any Subsidiary
Swing Line Borrower, the applicable country of its incorporation or organization
are authorized or required by law to close and (i) with respect to disbursements
and payments in U.S. Dollars or Canadian Dollars relating to LIBOR Rate Loans, a
day on which dealings are carried on in the applicable offshore U.S. Dollar or
Canadian Dollar interbank market, and (ii) with respect to disbursements and
payments in and calculations pertaining to any Offshore Currency, a day on which
commercial banks are open for foreign exchange business in London, England, and
on which dealings in the relevant Offshore Currency are carried on in the
applicable offshore
<PAGE>
-11-
foreign exchange interbank market in which disbursement of or payment in such
Offshore Currency will be made or received hereunder.
Canadian Agent -- see the introduction to this Agreement.
Canadian Borrower means Mettler-Toledo Inc., a Canadian
corporation, and its successors.
Canadian Borrowing means a Borrowing hereunder consisting of
Canadian Loans made by the Canadian Lenders ratably according to their
Percentages.
Canadian Certificate -- see subsection 4.1(f)(vii).
Canadian Commitment -- see subsection 2.1(c).
Canadian Dollars and Cdn. $ each mean lawful money of Canada.
Canadian Facility means the revolving facility in an aggregate
principal amount of Cdn. $26.3 million provided hereunder as set forth in
subsection 2.1(c).
Canadian Facility Fee -- see subsection 2.11(c).
Canadian Federal Funds Rate means the overnight rate
established by the Canadian Agent based on its customary practice.
Canadian Lender means any Lender listed on Schedule 2.1(c)
under the heading "Canadian Lender" and any other Lender that may from time to
time hold Canadian Loans.
Canadian Loan -- see subsection 2.1(c).
Canadian Maturity Date means December 31, 2004.
Canadian Revolving Note and Canadian Revolving Notes -- see
Section 2.2.
Canadian Termination Date means the earlier to occur of (i)
the date 30 Business Days prior to the Canadian Maturity Date and (ii) the date
on which the Canadian Commitments are terminated or reduced to zero pursuant to
Section 2.6.
Capital Adequacy Regulation means, in respect of any Lender,
any guideline, request or directive of any central bank or other Governmental
Authority, or any other law, rule or regulation, whether or not having the force
of law, in each case, regarding capital adequacy of such Lender or of any
corporation controlling such Lender which is generally applicable to banks or
corporations controlling banks in any applicable jurisdiction (and not
applicable to such Lender or the corporation controlling such Lender solely due
to the financial or regulatory condition of such Lender or such corporation).
Capital Expenditures means all expenditures which, in
accordance with GAAP, would be required to be capitalized and shown on the
consolidated balance sheet of US Borrower, but excluding (i) expenditures made
in connection with the replacement, substitution or restoration of assets to the
extent financed (x) from insurance proceeds (or other similar recoveries) paid
on account of the loss of or damage to the assets
<PAGE>
-12-
being replaced or restored or (y) with awards of compensation arising from the
taking by eminent domain, expropriation or condemnation of the assets being
replaced, (ii) the M-T Acquisition, (iii) any Acquisition effected in accordance
with subsection 8.4(f), (iv) any Investment (other than pursuant to subsection
8.4(t)) permitted by Section 8.4, and (v) the Safeline Acquisition.
Capital Lease, as applied to any Person, shall mean any lease
of any property (whether real, personal or mixed) by that Person as lessee
which, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of that Person.
Cash means money, currency or a credit balance in a deposit
account.
Cash Collateralize means to pledge and deposit with or deliver
to the Administrative Agent, for the benefit of the Administrative Agent and the
Revolving Facility Lenders, as collateral for the L/C Obligations, Cash pursuant
to documentation in form and substance reasonably satisfactory to the
Administrative Agent and the L/C Lender (which documents are hereby consented to
by the Lenders). Derivatives of such term shall have corresponding meanings. The
Revolving Borrowers hereby grant to the Administrative Agent, for the benefit of
the Administrative Agent, the L/C Lender and the Revolving Facility Lenders, a
security interest in all such Cash. Cash collateral shall be maintained in
blocked deposit accounts at Scotiabank.
Cash Equivalents means (i) any security, maturing not more
than one year after the date of acquisition, issued by the United States of
America or an instrumentality or agency thereof and guaranteed fully as to
principal, premium, if any, and interest by the United States of America; (ii)
any certificate of deposit, time deposit or bankers' acceptance (or, with
respect to non-U.S. banking institutions, similar instruments), maturing not
more than one year after the day of acquisition, issued by any commercial
banking institution that is a member of the U.S. Federal Reserve System or a
commercial banking institution organized and located in a country recognized by
the United States of America, in each case, having combined capital and surplus
and undivided profits of not less than U.S. $500 million (or the foreign
currency equivalent thereof), whose short-term debt has a rating, at the time as
of which any investment therein is made, of "P-1" (or higher) according to
Moody's or "A-1" (or higher) according to S&P; (iii) commercial paper maturing
not more than one year after the date of acquisition issued by a corporation
(other than an Affiliate or Subsidiary of either Borrower) with a rating, at the
time as of which any investment therein is made, of "P-1" (or higher) according
to Moody's or "A-1" (or higher) according to S&P; (iv) any money market deposit
accounts issued or offered by a commercial banking institution that is a member
of the U.S. Federal Reserve System or a commercial banking institution organized
and located in a country recognized by the United States of America, in each
case, having combined capital and surplus in excess of U.S. $500 million (or the
foreign currency equivalent thereof); and (v) other short-term investments
utilized by Foreign Subsidiaries in accordance with normal investment practices
for cash management not exceeding a Dollar Equivalent amount of U.S. $5.0
million in aggregate principal amount outstanding at any time.
Change in Law means the introduction of any Requirement of
Law, or any change in any Requirement of Law or in the interpretation or
administration of any Requirement of Law.
Change of Control means any of the following events: (a)
Holding shall cease to own directly or indirectly 100% on a fully diluted basis
of the economic and voting interest in US Borrower's capital stock or shall not
have the power to appoint all of the members of the Board of Directors of US
Borrower; or (b) US Borrower shall cease to own directly or indirectly 100% on a
fully diluted basis of the economic and voting interest in any of CH Borrower's,
Canadian Borrower's or UK Borrower's capital stock or shall not have the power
to appoint all of the members of the Board of Directors of CH Borrower, Canadian
Borrower or UK
<PAGE>
-13-
Borrower; or (c) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), other than the Investors, is or becomes
(as a result of the acquisition or issuance of securities, by merger or
otherwise) the Beneficial Owner, directly or indirectly, on a fully diluted
basis of more than 30% of the economic or voting interest in Holding's capital
stock (or of the capital stock of any other Person of which US Borrower is a
Subsidiary); or (d) during any consecutive two-year period, individuals who at
the beginning of such period constituted the Board of Directors of Holding (or
any other parent of US Borrower), as the case may be (together with any new
directors whose election by the shareholders of Holding (or any other Person of
which US Borrower is a Subsidiary), as the case may be, was approved by a vote
of 66-2/3% of the directors then still in office who were either directors at
the beginning of such period or whose election as directors or nomination for
election was previously so approved), cease for any reason to constitute a
majority of the Board of Directors of Holding (or any other Person of which US
Borrower is a Subsidiary), as the case may be, then in office; provided,
however, that the merger of US Borrower and Holding shall not, in and of itself,
be deemed a Change of Control so long as the Lenders retain a pledge of 100% of
the capital stock of US Borrower or its successor in interest in such merger.
CH Borrower -- see the introduction to this Agreement.
CH Borrower Guarantee means a guarantee substantially in the
form of Exhibit E-1 entered into and delivered by CH Borrower.
CHF and Swiss Francs mean lawful money of Switzerland.
CHF Equivalent means, at any time, (a) as to any amount
denominated in CHF, the amount thereof at such time, and (b) as to any amount
denominated in any Offshore Currency, the equivalent amount in CHF as determined
by Credit Suisse First Boston at such time on the basis of the Spot Rate for the
purchase of CHF with such Offshore Currency on the date as is specified herein.
CH Foreign Subsidiary means each Foreign Subsidiary which is
also a Subsidiary of CH Borrower.
Chinese Subsidiaries means each of the following Subsidiaries:
Changzhou Toledo Electronic Scale Ltd., Changzhou; Panzhihua Toledo Electronic
Scale Ltd., Panzhihua; Mettler-Toledo Instruments (Shanghai) Ltd., Shanghai;
Mettler-Toledo International Trading (Shanghai) Corp., and Xinjian Toledo
Electronic Scale Ltd., Urumgi, each incorporated in the People's Republic of
China, and their respective successors.
Ciba Loan means the loan made by CH Borrower to AG fur
Prazisioninstrumente, Greifensee, Switzerland, pursuant to the Ciba Loan
Documents in the amount of approximately CHF 37.875 million.
Ciba Loan Documents means the documents set forth on Schedule
1.1(a), as amended and in effect from time to time in accordance with Section
8.18.
Ciba Reimbursement Agreement means the agreement dated as of
October 15, 1996 between Ciba-Geigy AG, US Borrower, Holding and Mettler-Toledo,
Inc., as amended and in effect from time to time in accordance with Section
8.18.
Co-Agents -- see the introduction to this Agreement.
<PAGE>
-14-
Code means the United States Internal Revenue Code of 1986, as
amended.
Collateral means all of the Security Agreement Collateral,
Pledged Securities and Mortgaged Real Property.
Commitment, as to each Lender, means its Tranche A-CHF
Facility Commitment, Tranche A-UK Facility Commitment, Tranche A-US Facility
Commitment, Revolving Facility Commitment, Canadian Commitment or Swing Line
Commitment.
Company means Holding or any of its Subsidiaries.
Compliance Certificate means a certificate substantially in
the form of Exhibit C and delivered by the Borrowers pursuant to subsection
7.2(a).
Computation Amount -- see subsection 3.8(a).
Computation Date means any date on which the Administrative
Agent determines the Dollar Equivalent amount of any Offshore Currency Loans or
Swing Line Loans pursuant to subsection 2.5(a) or 2.8(b).
Computation Period means each period of four full consecutive
fiscal quarters most recently ended and for which financial statements are or
are required to be available. Prior to such time as four full consecutive fiscal
quarters of financial information for US Borrower are available, Computation
Period shall include financial information of the Mettler-Toledo Group to the
extent necessary such that four full fiscal quarters of financial information
form the basis of the Computation Period.
Confidential Memorandum shall mean the Confidential Memorandum
dated September 1996, and all written supplemental material thereto prepared by,
or on behalf of, the Borrowers and transmitted to the Lenders prior to the
Original Closing Date, the Confidential Memorandum dated April 1997, and all
written supplemental material thereto prepared by, or on behalf of, the
Borrowers and transmitted to the Lenders prior to the Amendment and Restatement
Date, and the Confidential Memorandum dated October 1997, and all written
supplemental material thereto prepared by, or on behalf of, US Borrower and
transmitted to the Lenders prior to the Second Amendment and Restatement Date.
Consolidated Net Income means, for any period, the
consolidated net income of US Borrower and the Subsidiaries for such period;
provided, however, that there shall be excluded therefrom (i) the income of any
Subsidiary to the extent that the transfer of such income by such Subsidiary to
either Borrower or its direct parent at the time is restricted in any material
way by operation of the terms of its charter or any judgment, decree, order,
statute, rule or governmental regulation applicable to such Subsidiary or any
agreement or instrument which is binding on such Subsidiary, (ii) the income of
any Person which is not a Subsidiary (but any dividends or other distributions
received in cash by either Borrower or any Subsidiary from such Person shall be
included in Consolidated Net Income), (iii) unrealized gains or losses in
respect of Swap Contracts, and (iv) unrealized foreign currency transaction
gains or losses in respect of Indebtedness of any Person denominated in a
currency other than the functional currency of such Person and permitted by
Section 8.5.
Consolidated Net Worth means at the date of determination
thereof, the sum of (a) all items which in conformity with GAAP would be
classified as stockholders' equity on a consolidated balance sheet of
<PAGE>
-15-
US Borrower at such date and (b) preferred stock (whether or not so classified
as stockholders' equity) provided that such preferred stock (i) has no mandatory
redemptions prior to the Tranche A Term Loan Maturity Date and (ii) was issued
and is outstanding on terms and conditions reasonably satisfactory to the
Administrative Agent; provided, however, that Consolidated Net Worth shall be
calculated without giving effect to (1) any item excluded from the definition of
Consolidated Net Income (other than clauses (i) and (ii) thereof), (2) any
write-off of deferred financing costs, or premiums paid, in connection with the
early extinguishment of Indebtedness hereunder or under the Senior Subordinated
Notes, (3) cumulative currency translation adjustments and net unrealized
investment gains and losses, (4) charges relating to the closure of the
Westerville, Ohio facility, (5) (v) any nonrecurring restructuring charges
related to the M-T Acquisition and the Safeline Acquisition, (w) any
nonrecurring charges recorded prior to the Second Amendment and Restatement Date
(including (whether or not recorded) an announced charge for the fourth quarter
of fiscal 1997 of U.S. $3.0 million disclosed in the registration statement
relating to the IPO), (x) any other non-recurring charges recorded in an
aggregate amount not to exceed U.S. $30 million, (y) any non-recurring non-cash
charges related to any Acquisition (other than the M-T Acquisition and the
Safeline Acquisition) by US Borrower or any Subsidiary, and (z) any
non-recurring cash charges in connection with any Acquisition (other than the
M-T Acquisition or the Safeline Acquisition) occurring after the Second
Amendment and Restatement Date in an amount not to exceed U.S. $10.0 million per
Acquisition and U.S. $25.0 million in the aggregate, (6) any write-off of note
tender premiums relating to the repurchase of the Senior Subordinated Notes in
connection with this Second Amended and Restated Credit Agreement, and (7) any
expense relating to bonuses paid by Ciba-Geigy AG or its Affiliates (other than
an Affiliate that will be an Affiliate of US Borrower after the consummation of
the M-T Acquisition) to employees of US Borrower or any Subsidiary pursuant to
any agreements entered into in connection with the disposition of the
Mettler-Toledo Group by Ciba-Geigy AG or assumed by US Borrower or any
Subsidiary in consideration of a reduction in the purchase price for the M-T
Acquisition.
Contingent Obligation means, as to any Person, any direct or
indirect liability of such Person, whether or not contingent, with or without
recourse, (a) with respect to any Indebtedness, lease, dividend, letter of
credit or other obligation (the "primary obligations") of another Person (the
"primary obligor"), including any obligation of such Person (i) to purchase,
repurchase or otherwise acquire such primary obligations or any security
therefor, (ii) to advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the holder of any such primary obligation
against loss in respect thereof (each of (i) - (iv), a "Guaranty Obligation");
(b) with respect to any Surety Instrument (other than any Letter of Credit)
issued for the account of such Person or as to which such Person is otherwise
liable for reimbursement of drawings or payments; (c) to purchase any materials,
supplies or other property from, or to obtain the services of, another Person if
the relevant contract or other related document or obligation requires that
payment for such materials, supplies or other property, or for such services,
shall be made regardless of whether delivery of such materials, supplies or
other property is ever made or tendered, or such services are ever performed or
tendered; or (d) in respect of any Swap Contract. The amount of any Contingent
Obligation shall (x) in the case of a Guaranty Obligation, be deemed equal to
the stated or determinable amount of the primary obligation in respect of which
such Guaranty Obligation is made or, if not stated or if indeterminable, the
maximum reasonably anticipated liability in respect thereof, and (y) in the case
of other Contingent Obligations, be equal to the maximum reasonably anticipated
liability in respect thereof.
Contractual Obligation means, as to any Person, any term,
covenant, provision of condition of any security issued by such Person or of any
agreement, undertaking, contract, indenture, mortgage, deed of
<PAGE>
-16-
trust or other instrument, document or agreement to which such Person is a party
or by which it or any of its property is bound.
Conversion/Continuation Date means any Business Day on which
(a) either Borrower or UK Borrower, as the case may be, (i) converts Loans of a
Facility from one Type to the other Type or (ii) continues as Loans of the same
Type, but with a new Interest Period, Loans of a Facility having Interest
Periods expiring on such date or (b) Canadian Borrower (i) converts Canadian
Loans from one Type to another Type or (ii) continues as Canadian Loans of the
same Type, but with a new Interest Period, Canadian Loans having Interest
Periods expiring on such date.
Covered Taxes means any and all Taxes, other than, in the case
of each Lender or Agent, Taxes of any jurisdiction (or any political subdivision
thereof) imposed on or measured by such Lender's or such Agent's net income or
net profits (including any franchise Taxes imposed thereon and any branch
profits Taxes) that arise by reason of a former, present or future connection
between such Lender or Agent and such jurisdiction (including, without
limitation, a connection arising from such Lender or Agent being or having been
a citizen or resident of such jurisdiction, or having been organized, present or
engaged in a trade or business in such jurisdiction, or having or having had a
permanent establishment or fixed place of business in such jurisdiction, but
excluding a connection arising solely from such Lender or Agent having executed,
delivered, performed its obligations or received a payment under this
Agreement). For the avoidance of doubt, Covered Taxes shall include any
deductions or withholdings by a Borrower on account of any Taxes from payments
made under this Agreement or any other Loan Document.
Credit Agreement Loan Parties means the Revolving Borrowers,
Canadian Borrower and the Subsidiary Swing Line Borrowers, collectively.
Credit Extension means and includes (a) the making of any Loan
hereunder and (b) the Issuance of any Letter of Credit hereunder.
Credit Facilities means the Revolving Facility, the
Canadian Facility and the Term Loan Facilities.
Current Liabilities means, at any time, all amounts which, in
accordance with GAAP, would be included as current liabilities on a consolidated
balance sheet of US Borrower and the Subsidiaries at such time, excluding
current maturities of Indebtedness.
Debt To Be Repaid means all Indebtedness listed on Schedule
5.1(p) and on Schedule 5.1A(o).
Debt to EBITDA Ratio means, as of the last day of any fiscal
quarter, the ratio of: (a) the total consolidated Indebtedness of US Borrower
and the Subsidiaries as of such day to (b) EBITDA for the Computation Period
ending on such day.
Defaulting Lender means any Lender with respect to which a
Lender Default is in effect.
Destruction has the meaning assigned to that term in the
Mortgages.
Deutschemarks and DM each mean lawful money of Germany.
<PAGE>
-17-
Disinterested Director means a member of a Board of Directors
who does not have any material direct or indirect financial interest in or with
respect to the transaction being considered.
Documentation Agent -- see the introduction to this Agreement.
Dollar Equivalent means, at any time, (a) as to any amount
denominated in U.S. Dollars, the amount thereof at such time, and (b) as to any
amount denominated in Canadian Dollars or any Offshore Currency, the equivalent
amount in U.S. Dollars as determined by the Administrative Agent at such time on
the basis of the Spot Rate for the purchase of U.S. Dollars with such Canadian
Dollars or Offshore Currency on the most recent Computation Date provided for in
subsection 2.5(a) or such other date as is specified herein. With respect to
Swing Line Loans, Dollar Equivalent shall be based upon the Dollar Equivalent of
the Subsidiary Currency Equivalent thereof as of the date of the calculation of
such Dollar Equivalent.
Domestic Guarantors means Holding, US Borrower and the
Domestic Subsidiary Guarantors.
Domestic Loan Parties means the Domestic Guarantors.
Domestic Subsidiary means a Subsidiary that is incorporated
under the laws of any State of the United States or Puerto Rico or the District
of Columbia and that is a direct Subsidiary of (i) US Borrower, (ii) another
Domestic Subsidiary, or (iii) UK Borrower, so long as UK Borrower is treated as
a "branch" of US Borrower for U.S. tax purposes. For the avoidance of doubt, UK
Borrower itself shall not be considered a Domestic Subsidiary.
Domestic Subsidiary Guarantee means a guarantee substantially
in the form of Exhibit E-2 entered into and delivered by a Domestic Subsidiary,
as amended and restated on the Amendment and Restatement Date.
Domestic Subsidiary Guarantor means each Domestic Subsidiary
which executes and delivers a Domestic Subsidiary Guarantee.
Domestic Subsidiary Securities Pledge Agreement means a
securities pledge agreement substantially in the form of Exhibit J-1 entered
into and delivered by a Domestic Subsidiary.
EBITDA means, for any period, the sum of: (a) Consolidated Net
Income of US Borrower and the Subsidiaries for such period excluding, to the
extent reflected in determining such Consolidated Net Income, (i) extraordinary
gains and losses for such period, (ii) any gain or loss associated with the sale
or write-down of assets not in the ordinary course of business, (iii) any
deferred financing costs for such period written off, or premiums paid, in
connection with the early extinguishment of Indebtedness hereunder or under the
Senior Subordinated Notes, (iv) any charge for such period relating to the
closure of the Westerville, Ohio facility, (v) (1) any non-recurring
restructuring charges related to the M-T Acquisition or the Safeline
Acquisition, (2) any non-recurring charges recorded prior to the Second
Amendment and Restatement Date (including (whether or not recorded) an announced
charge for fiscal 1997 of U.S. $3.0 million disclosed in the registration
statement relating to the IPO), (3) any other non-recurring charges in an
aggregate amount not to exceed U.S. $30.0 million, (4) any non-recurring
non-cash charges related to any Acquisition (other than the M-T Acquisition and
the Safeline Acquisition) by US Borrower or any Subsidiary and (5) any
non-recurring cash charges incurred in connection with any Acquisition by US
Borrower or any Subsidiary (other than the M-T Acquisition or the Safeline
Acquisition) occurring after the Second Amendment and Restatement Date in an
amount not to exceed U.S. $10.0 per Acquisition and U.S. $25.0 million in the
aggregate, (vi) any expense
<PAGE>
-18-
relating to bonuses paid by Ciba-Geigy AG or its Affiliates (other than an
Affiliate that became an Affiliate of US Borrower after the consummation of the
M-T Acquisition) to employees of US Borrower or any Subsidiary pursuant to any
agreements entered into in connection with the disposition of the Mettler-Toledo
Group by Ciba-Geigy AG or assumed by US Borrower or any Subsidiary in
consideration of a reduction in the purchase price for the M-T Acquisition,
(vii) other income (expense) items as reported on US Borrower's financial
statements not to exceed U.S. $3.0 million in the aggregate for any fiscal year
and (viii) any other non-cash or non-recurring items of income or expense (other
than any non-cash item of expense requiring an accrual or reserve for future
cash expense), plus (b) to the extent deducted in determining Consolidated Net
Income for such period, Interest Expense, income tax and capital tax expense,
depreciation, depletion and amortization expense for such period. Prior to such
time as four full fiscal quarters of financial information of US Borrower after
(i) the Original Closing Date are available pursuant to this Agreement, EBITDA
shall be calculated by taking into account the results of the Mettler-Toledo
Group (in accordance with this definition) for such number of fiscal quarters
(or part thereof) so that, when added to the financial information of US
Borrower, four full fiscal quarters of financial information form the basis for
the calculation under this definition, and (ii) the Safeline Closing Date are
available pursuant to this Agreement, EBITDA shall be calculated, other than for
purposes of Section 8.10, on a pro forma basis consistent with GAAP as if the
Safeline Acquisition had been consummated at the beginning of the relevant
period. EBITDA shall be calculated to give pro forma effect to any Acquisition
occurring during any period for which it is being measured by giving pro forma
effect to such Acquisition as if it had occurred at the beginning of such
period, which pro forma calculation shall be made in accordance with GAAP and
with respect to any Acquisition which involves U.S. $10.0 million or more in the
aggregate for all consideration paid in connection therewith, such calculation
must be based on financial statements prepared in accordance with GAAP, which
financial statements may be prepared reasonably and in good faith by management
of US Borrower, and which financial statements shall, in any case, be delivered
to the Administrative Agent.
Effective Amount means with respect to any outstanding L/C
Obligations on any date, the aggregate Dollar Equivalent amount of such L/C
Obligations on such date after giving effect to any Issuances of Letters of
Credit occurring on such date and any other changes in the aggregate Dollar
Equivalent amount of the L/C Obligations as of such date, including as a result
of any reimbursement of outstanding unpaid drawings under any Letter of Credit
or any reduction in the maximum amount available for drawing under any Letter of
Credit taking effect on such date.
Eligible Assignee means (i) a commercial bank organized under
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least U.S. $100.0 million; (ii) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital and
surplus in a Dollar Equivalent amount of at least U.S. $100.0 million; provided,
however, that such bank is acting through a branch or agency located in the
country in which it is organized or another country which is also a member of
the OECD; (iii) a Person that is primarily engaged in the business of commercial
banking and that is (A) a Subsidiary of a Lender, (B) a Subsidiary of a Person
of which a Lender is a Subsidiary, or (C) a Person of which a Lender is a
Subsidiary; (iv) an "accredited investor" as such term is defined in Rule 501(a)
of Regulation D under the U.S. Securities Act of 1933, as amended; (v) an
insurance company, mutual fund or other financial institution organized under
the laws of the United States, any state thereof, any other country which is a
member of the OECD or a political subdivision of any such country with assets
under management in a Dollar Equivalent amount of at least U.S. $100.0 million;
and (vi) any Affiliate of a Lender; provided, however, that no Person shall be
an Eligible Assignee in respect of any Tranche A-CHF Facility Commitment,
Tranche A-UK Facility Commitment, Revolving Facility Commitment or Canadian
Commitment unless, at the time of the proposed assignment to such Person, such
Person is able to make (w)
<PAGE>
-19-
with respect to the Tranche A-CHF Facility Commitment, Tranche A-CHF Term Loans,
(x) with respect to the Tranche A-UK Facility Commitment, Tranche A-UK Term
Loans, (y) with respect to the Revolving Facility Commitments, Revolving Loans
in U.S. Dollars and each Offshore Currency, and (z) with respect to the Canadian
Commitments, Canadian Loans. With respect to any Lender that is a fund that
invests in loans, any other fund that invests in loans and is managed or advised
by the same investment advisor of such Lender or by an Affiliate of such
investment advisor shall be treated as a single Eligible Assignee.
Environmental Approvals means any material approval,
determination, order, consent, authorization, certificate, license, permit,
franchise, concession or validation of, or exemption or other action by, or
filing, recording or registration with, or notice to, any Governmental Authority
pursuant to or required under any Environmental Law.
Environmental Claims means all claims, however asserted, by
any Governmental Authority or other Person alleging potential liability under,
or responsibility for violation of, any Environmental Law, or for any release or
threatened release of a Hazardous Material or injury to the environment.
Environmental Laws means all applicable federal, state, local
and foreign laws, common law or regulations, treaties, orders, decrees, permits,
licenses, authorizations, judgments or injunctions issued, promulgated, approved
or entered thereunder, now or hereafter in effect in each case relating to
pollution or protection of employee health or safety or the environment
(including, without limitation, ambient and indoor air, surface water,
groundwater, soil, land surface or subsurface) including, without limitation,
laws relating to (a) emissions, discharges, releases or threatened releases of
Hazardous Materials into the environment and (b) the manufacture, processing,
distribution, use, generation, treatment, storage, disposal, transport or
handling of Hazardous Materials.
Equipment has the meaning assigned to that term in the
Security Agreements.
Equity Issuance means the issuance of common equity securities
by Holding directly or indirectly to the Investors for gross proceeds of the
Dollar Equivalent amount of not less than U.S. $190.0 million on or prior to the
Original Closing Date; provided, however, that up to the Dollar Equivalent
amount of U.S. $7.50 million to be contributed by employees of the
Mettler-Toledo Group may be contributed after the Original Closing Date, but
will be contributed by AEA or its designee if not so contributed by employees
prior to December 31, 1996 (and the term Equity Issuance shall include such
later contributions to the extent made by December 31, 1996).
ERISA means the Employee Retirement Income Security Act of
1974.
ERISA Affiliate means any trade or business (whether or not
incorporated) under common control with a Loan Party within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
ERISA Event means (a) a Reportable Event with respect to a
Pension Plan; (b) the failure to make a required contribution to a Pension Plan
if such failure could give rise to a Lien under Section 302(f) of ERISA; (c) a
withdrawal by a Loan Party or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which
is treated as such a withdrawal under Section 4062(e) of ERISA; (d) a complete
or partial withdrawal by a Loan Party or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (e) the filing of a notice of intent to terminate, the
<PAGE>
-20-
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (f) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA or the commencement
of proceedings by the PBGC for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; (g) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon a Loan Party or any
ERISA Affiliate; (h) the making of any amendment to a Pension Plan which could
result in the imposition of a Lien or the posting of a bond or other security;
(i) the engagement in any transaction by a Loan Party or any ERISA Affiliate in
connection with which any such entity could be subject to either a tax imposed
by Section 4975(a) of the Code or the corresponding civil penalty assessed
pursuant to Section 502(i) of ERISA; or (j) the application for a waiver of the
minimum funding standard under Section 412 of the Code with respect to a Pension
Plan.
Event of Default means any of the events or circumstances
specified in Section 9.1.
Excess Cash Flow means, for any period, the remainder of (a)
the sum, without duplication, of (i) Consolidated Net Income for such period
(calculated by (x) excluding any gains or losses on the sale or other
disposition of assets (other than sales of inventory in the ordinary course of
business), (y) adding back the non-cash component of all extraordinary or
non-recurring items of expense and (z) deducting the non-cash component of all
extraordinary or non-recurring items of income, in each case to the extent taken
into account in the calculation of such Consolidated Net Income), plus (ii) all
depreciation and amortization of assets (including goodwill and other intangible
assets), non-cash interest expense and all other non-cash charges of US Borrower
and the Subsidiaries deducted in determining Consolidated Net Income for such
period, plus (iii) any net decrease in Adjusted Working Capital (as reflected on
the audited consolidated statement of cash flows in accordance with FAS 52)
during such period (exclusive of decreases in working capital associated with
asset sales), plus (iv) all federal, state, local and foreign income or capital
taxes (whether paid or deferred) of US Borrower and the Subsidiaries deducted in
determining Consolidated Net Income for such period, minus (b) the sum, without
duplication, of (i) regularly scheduled installment payments of principal of
Term Loans pursuant to Section 2.9, voluntary prepayments of the Term Loans
pursuant to subsection 2.7(g), prepayments of principal of Revolving Facility
Loans pursuant to Section 2.8, the aggregate principal amount of permanent
principal payments with respect to any other Indebtedness of US Borrower and the
Subsidiaries, prepayments of the Revolving Loans and Canadian Loans to the
extent of any concurrent permanent reduction in the Revolving Facility
Commitments and Canadian Commitments, as the case may be, and the portion of any
regularly scheduled payments with respect to Capital Leases allocable to
principal, in each case made during such period (in any such case other than to
the extent any such payment is made from the proceeds of any capital
contribution to US Borrower or any Subsidiary or from any proceeds from the
issuance or sale of capital stock of US Borrower or any Subsidiary, any
incurrence of Indebtedness by US Borrower or any Subsidiary or from the proceeds
of any sale or other disposition of assets by US Borrower or any Subsidiary
(other than sales of inventory in the ordinary course of business)), plus (ii)
Capital Expenditures for such period and cash paid in connection with any
Acquisition during such period (other than to the extent made from any capital
contribution to US Borrower or any Subsidiary or from any proceeds from the
issuance or sale of capital stock of US Borrower or any Subsidiary, any
incurrence of Indebtedness by US Borrower or any Subsidiary or from the proceeds
of any sale or other disposition of assets by US Borrower or any Subsidiary or
insurance proceeds (other than sales of inventory in the ordinary course of
business)), plus (iii) all federal, state, local and foreign income or capital
taxes paid by US Borrower and the Subsidiaries during such period, plus (iv)
non-cash charges added back in any previous period pursuant to item (a)(ii)
above to the extent such charge has become a cash item in the current period,
plus (v) any net increase in Adjusted Working Capital (as reflected on the
audited consolidated statement of cash flows in accordance with FAS 52) during
such period (exclusive of increases in working capital associated with asset
sales). No conversion or repayment of term extensions of
<PAGE>
-21-
credit made under the Original Credit Agreement as of the Amendment and
Restatement Date as contemplated by Section 1.7 or Section 2.1 shall be taken
into account in the calculation of Excess Cash Flow for any period and no
repayment or conversion of term extensions of credit made under the Amended and
Restated Credit Agreement as of the Second Amendment and Restatement Date as
contemplated by Section 1.10 or Section 2.1 shall be taken into account in the
calculation of Excess Cash Flow for any period.
Exchange Act means the United States Securities Exchange Act
of 1934.
Exchange Notes -- see subsection 2.23(a).
Facility means any of the Canadian Facility, the Tranche A-CHF
Term Loan Facility, the Tranche A-UK Term Loan Facility, the Tranche A-US Term
Loan Facility, or the Revolving Facility.
Facility Fee -- see subsection 2.11(b).
Facility Fee Leverage Grid -- see the definition of Applicable
Facility Fee Percentage.
Fee Letters -- see subsection 2.11(a).
FIRREA means the Financial Institutions Reform, Recovery &
Enforcement Act of 1989, as amended from time to time, and any successor
statute.
Foreign Guarantor means each Foreign Subsidiary which executes
and delivers a Foreign Subsidiary Guarantee.
Foreign Loan Parties means Canadian Borrower, CH Borrower, UK
Borrower, the Subsidiary Swing Line Borrowers and the Foreign Guarantors.
Foreign Subsidiary means a direct or indirect Subsidiary of US
Borrower which is not a Domestic Subsidiary.
Foreign Subsidiary Guarantee means a guarantee substantially
in the form of the Domestic Subsidiary Guarantee entered into and delivered by a
Foreign Subsidiary, but with such modifications, additions and deletions as may
be required to comply with applicable law.
Foreign Subsidiary Securities Pledge Agreement means a
securities pledge agreement substantially in the form of the Domestic Subsidiary
Securities Pledge Agreement entered into and delivered by a Foreign Subsidiary,
but with such modifications, additions and deletions as may be required to
comply with applicable law.
FRB means the Board of Governors of the U.S. Federal Reserve
System, and any Governmental Authority succeeding to any of its principal
functions.
French Francs and FF each mean lawful money of France.
GAAP means generally accepted accounting principles set forth
as of the relevant date in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with
<PAGE>
-22-
similar functions of comparable stature and authority within the U.S.
accounting profession), which are applicable to the circumstances as of
the date of determination.
German Subsidiary means Mettler-Toledo Management Holding
Deutschland GmbH, a German corporation, and its successors.
Governmental Authority means any nation or government, any
state, provincial, canton or other political subdivision thereof, any central
bank (or similar monetary or regulatory authority) thereof (or any central bank
or similar monetary or regulatory authority created under the Treaty of Rome
(being the treaty establishing the European Economic Community signed in Rome,
Italy on 25 March 1957, as amended) or created by any group of nations,
governments or states), the NAIC, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
Guarantees means the Holding Guarantee, the Domestic
Subsidiary Guarantees, the Foreign Subsidiary Guarantees, the CH Borrower
Guarantee and the US Borrower Guarantee.
Guarantors means each of the Domestic Guarantors and the
Foreign Guarantors.
Guaranty Obligation -- see the definition of Contingent
Obligation.
Hazardous Materials means any pollutant, contaminant, toxic,
hazardous or extremely hazardous substance, constituent or waste, or any other
constituent, waste, material, compound or substance including, without
limitation, petroleum (including crude oil or any fraction thereof) or any
petroleum product, subject to regulation under any Environmental Law.
Holding -- see the introduction to this Agreement.
Holding Guarantee means a guarantee substantially in the form
of Exhibit E-4 entered into and delivered by Holding, as amended and restated on
the Second Amendment and Restatement Date.
Holding Securities Pledge Agreement means a securities pledge
agreement substantially in the form of Exhibit J-3 entered into and delivered by
Holding.
Honor Date -- see subsection 3.3(b).
Indebtedness of any Person means, without duplication, (a) all
indebtedness for borrowed money of such Person; (b) all obligations issued,
undertaken or assumed by such Person as the deferred purchase price of property
or services (other than trade payables and accrued expenses entered into in the
ordinary course of business on ordinary terms); (c) all non-contingent
reimbursement or payment obligations of such Person with respect to Surety
Instruments (such as, for example, unpaid reimbursement obligations in respect
of a drawing under a letter of credit); (d) all obligations of such Person
evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses; (e) all indebtedness of such Person created or
arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property); (f) all obligations of such Person with respect to Capital Leases;
(g) all net obligations of such Person with respect to Swap Contracts (such
obligations to be
<PAGE>
-23-
equal at any time to the aggregate net amount that would have been payable by
such Person at the most recent fiscal quarter end in connection with the
termination of such Swap Contracts at such fiscal quarter end); (h) all
indebtedness of other Persons referred to in clauses (a) through (g) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness;
and (j) all Guaranty Obligations of such Person in respect of indebtedness or
obligations of others of the kinds referred to in clauses (a) through (h) above.
Indebtedness shall not include (x) accounts extended by suppliers in the
ordinary course on normal trade terms in connection with the purchase of goods
and services, or (y) any Indebtedness created by the sale or discount of
receivables permitted by Section 8.21.
Indemnified Person -- see Section 11.4.
Independent Auditor -- see subsection 7.1(a).
Index Debt means the senior, unsecured, non-externally credit
enhanced, long-term indebtedness for borrowed money of US Borrower.
Initial Funding Date means the first date on which any Lender
makes a Loan hereunder.
Initial Public Offering shall mean an underwritten public
offering of the common stock of M-T Investors or Holding, other than any public
offering or sale pursuant to a registration statement on Form S-8 or a
comparable form.
Initial Loans means the Loans made on the Initial Funding
Date.
Insolvency Proceeding means, with respect to any Person, (a)
any case, action or proceeding with respect to such Person before any court or
by or before any other Governmental Authority relating to bankruptcy,
insolvency, reorganization, liquidation, receivership, dissolution,
sequestration, conservatorship, winding-up or relief of debtors (or the
convening of a meeting or the passing of a resolution for or with a view to any
of the foregoing), or (b) any assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other similar arrangement
in respect of such Person's creditors generally or any substantial portion of
its creditors.
Intellectual Property -- see Section 6.15.
Intercompany Indebtedness -- see subsection 8.4(c).
Intercreditor Agreement means an Intercreditor Agreement,
substantially in the form of Exhibit N with such changes thereto as shall be
approved by the Administrative Agent.
Interest Expense means for any period the consolidated
interest expense of US Borrower and the Subsidiaries for such period (including
all imputed interest on Capital Leases, but excluding (i) amortization of fees
and expenses in connection with the M-T Acquisition and the Safeline
Acquisition, this Agreement and the transactions contemplated by the foregoing,
(ii) amortization in connection with Swap Contracts, (iii) expenses relating to
the sale or discount of receivables permitted by Section 8.21, and (iv) interest
expense on deferred compensation or customer deposits); provided, however, that
interest expense shall give effect to any currency exchange agreements which
have the effect of changing the currency in which such interest is payable.
<PAGE>
-24-
Interest Payment Date means (a) as to any ABR Loan, the last
Business Day of each calendar quarter, (b) as to any Prime Rate Loan and any
Non-U.S. $ Swing Line Loan, the last Business Day of each calendar month, (c) as
to any LIBOR Rate Loan, the last day of each Interest Period applicable to such
Loan; provided, however, that if any Interest Period for a LIBOR Rate Loan
exceeds three months, the date that falls three months (or, in the case of a
12-month Interest Period, three months, six months and nine months) after the
beginning of such Interest Period also shall be an Interest Payment Date, and
(d) as to any BA Equivalent Rate Loan, the last day of each Interest Period
applicable to such Loan; provided, however, that if any Interest Period for a BA
Equivalent Rate Loan exceeds 90 days, the date that falls 90 days after the
beginning of such Interest Period also shall be an Interest Payment Date.
Interest Period means, (a) as to any LIBOR Rate Loan, the
period commencing on the Borrowing Date of such Loan or, on the
Conversion/Continuation Date on which such Loan is converted into or continued
as a LIBOR Rate Loan, as applicable, and ending on the date one, two, three,
six, or, if available from all of the Lenders, twelve months thereafter as
selected by the Applicable Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be; and (b) as to any BA Equivalent
Rate Loan, the period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which such Loan is converted into or continued
as a BA Equivalent Rate Loan, and ending on the date 30, 60, 90 or 180 days
thereafter, as selected by Canadian Borrower in its Notice of Canadian Borrowing
or Notice of Continuation/Conversion; provided, however, that:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be extended to
the following Business Day unless, in the case of a LIBOR Rate Loan,
the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period shall
end on the preceding Business Day;
(ii) any Interest Period for a LIBOR Rate Loan that begins
on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period;
(iii) no Interest Period for any Revolving Facility Loan
shall extend beyond the scheduled Termination Date and no Interest
Period for any Canadian Loan shall extend beyond the Canadian
Termination Date;
(iv) no Interest Period for any Tranche A-CHF Term Loan or
Tranche A-UK Term Loan shall extend beyond any scheduled installment
date for Term Loans under such Facility unless the aggregate principal
amount of Term Loans under such Facility having Interest Periods that
will expire on or before such scheduled installment date equals or
exceeds the amount of the installment of Term Loans due under such
Facility on such date; and
(v) no Interest Period for any Term Loan under the Tranche
A-US Term Loan Facility shall extend beyond any scheduled installment
date unless the aggregate principal amount of all Term Loans under such
Facility that are ABR Loans, plus the aggregate principal amount of all
Term Loans under such Facility having Interest Periods that will expire
on or before such scheduled installment date, equals or exceeds the
amount of the installment of the Term Loans under such Facility due on
such date.
<PAGE>
-25-
Interest Rate Certificate means an officers' certificate
substantially in the form of Exhibit K, delivered pursuant to subsection 7.2(b),
demonstrating in reasonable detail the calculation of the Debt to EBITDA Ratio
as of the last day of the subject period.
Inventory means all of the inventory of US Borrower and the
Subsidiaries, whether now existing or existing in the future, including, without
limitation: (i) all raw materials, work in process, parts, components,
assemblies, supplies and materials used or consumed in their business, (ii) all
goods, wares and merchandise, finished or unfinished, held for sale or lease or
leased or furnished or to be furnished under contracts of service, and (iii) all
goods returned or repossessed by US Borrower or the Subsidiaries.
Investment -- see Section 8.4.
Investment Grade Date -- see the definition of Applicable
Facility Fee Percentage.
Investors means AEA and its current, former and future
employees, stockholders, directors and officers and the officers of Holding, US
Borrower, CH Borrower, UK Borrower and their respective subsidiaries, and (i)
trusts for the benefit of such Persons or the spouses, issue, parents or other
relatives of such Persons, (ii) entities controlling or controlled by such
Persons and (iii) in the event of the death of any such individual Person, heirs
or testamentary legatees of such Person. Investors shall also include Novartis
and its direct and indirect subsidiaries, the specialty chemicals entity that
was spun off from Novartis in connection with the merger of Ciba-Geigy and
Sandoz and the direct and indirect subsidiaries of such specialty chemicals
entity; provided, however, that no such entity referred to in this sentence
owns, directly or indirectly, more than seven and one-half percent (7.50%) on a
fully diluted basis of the economic or voting interest in the capital stock of
Holding.
IPO means the public offering of newly issued shares of common
stock of Holding pursuant to a registration statement filed with the SEC under
the Securities Act of 1933 consummated concurrently with the transactions to
occur on the Second Amendment and Restatement Date.
IRS means the United States Internal Revenue Service, and any
Governmental Authority succeeding to any of its principal functions under the
Code.
Issuance Date -- see subsection 3.1(a).
Issue means, with respect to any Letter of Credit, to issue or
to extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms Issued, Issuing and Issuance have corresponding meanings.
Japanese Yen means lawful money of Japan.
Joint Venture means a corporation, partnership, limited
liability company, joint venture or other similar legal arrangement (whether
created by contract or conducted through a separate legal entity) now or
hereafter formed by US Borrower or any Subsidiary with another Person or Persons
in order to conduct a common venture or enterprise with such Person or Persons
and that is not a Subsidiary (whether owned, directly or indirectly, 50% or less
by US Borrower or any Subsidiary).
L/C Advance means each L/C Lender's participation in any L/C
Borrowing in accordance with its Pro Rata Share.
<PAGE>
-26-
L/C Amendment Application means an application form for
amendment of outstanding standby or commercial documentary letters of credit as
shall at any time be in use by the applicable L/C Lender, as the L/C Lender
shall request.
L/C Application means an application form for issuances of
standby or commercial documentary letters of credit as shall at any time be in
use by the applicable L/C Lender, as the L/C Lender shall request.
L/C Borrowing means an extension of credit resulting from a
drawing under any Letter of Credit (including any Letter of Credit issued for
the account of any Subsidiary Swing Line Borrower) which shall not have been
reimbursed on the date when made nor converted into a Borrowing of Revolving
Facility Loans under subsection 3.3(b).
L/C Commitment means the commitment of the L/C Lender (other
than the Subsidiary Swing Line Lenders) to Issue Letters of Credit from time to
time Issued or outstanding under Article III, in an aggregate Dollar Equivalent
amount not to exceed on any date an amount equal to the lesser of U.S. $60.0
million and the amount of the combined Commitments of all L/C Lenders; it being
understood that the L/C Commitment is a part of the combined Revolving Facility
Commitments of all L/C Lenders, rather than a separate, independent commitment.
L/C Lender means (x) with respect to the Borrowers and UK
Borrower, the New York agency of Scotiabank or such other Lender or Lenders
selected by the Administrative Agent satisfactory to the Borrowers who agrees to
act in such capacity to issue Letters of Credit and (y) with respect to each
Subsidiary Swing Line Borrower, the Swing Line Lender who is to make Swing Line
Loans hereunder to such Subsidiary Swing Line Borrower. All references in this
Agreement to the L/C Lender shall be deemed a reference to the applicable L/C
Lender issuing the applicable Letter of Credit.
L/C Obligations means at any time the sum of (a) the aggregate
undrawn Dollar Equivalent amount of all Letters of Credit then outstanding, plus
(b) the Dollar Equivalent amount of all unreimbursed drawings under all Letters
of Credit, including all outstanding L/C Borrowings.
L/C-Related Documents means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document relating to
any Letter of Credit, including any of the applicable L/C Lender's standard form
documents for letter of credit issuances.
Lease means any lease, sublease, franchise agreement, license,
occupancy or concession agreement.
Lender -- see the introduction to this Agreement; Lender shall
include (x) any L/C Lender or Swing Line Lender, (y) at any time prior to the
consummation of the transactions to occur on the Amendment and Restatement Date,
any Person that is or was a Lender under the Original Credit Agreement as of the
time immediately prior to the consummation of the transactions on the Amendment
and Restatement Date, and (z) at any time prior to the consummation of the
transactions to occur on the Second Amendment and Restatement Date, any Person
that is or was a Lender under the Amended and Restated Credit Agreement as of
the time immediately prior to the consummation of the transactions on the Second
Amendment and Restatement Date.
Lender Default means (i) the refusal (which has not been
retracted) of a Lender to make available its portion of any Borrowing (including
pursuant to Section 2.18) or to fund its portion of any
<PAGE>
-27-
unreimbursed payment under Section 3.3, or (ii) a Lender having notified the
Applicable Agent and/or any Applicable Borrower that it does not intend to
comply with the obligations under Section 2.1, 2.18 or 3.3.
Lending Office means, as to any Lender, the office or offices
of such Lender (or, in the case of any Offshore Currency Loan or Canadian Loan,
of an Affiliate of such Lender) specified to the Administrative Agent and the
Borrowers (and Canadian Borrower and the Canadian Agent with respect to Canadian
Loans) as its "Lending Office" or "Domestic Lending Office" or "Offshore Lending
Office" or "Canadian Lending Office", as the case may be.
Letter of Credit means any letter of credit (whether a standby
letter of credit or a commercial documentary letter of credit) Issued by an L/C
Lender pursuant to Article III.
LIBOR Rate means, with respect to each day during each
Interest Period pertaining to LIBOR Rate Loans comprising part of the same
Borrowing, the rate per annum determined by the Administrative Agent to be the
arithmetic mean (rounded to the nearest 1/100th of 1%) of the offered rates for
deposits in Dollars or in the Applicable Currency with a term comparable to such
Interest Period that appears on the Telerate British Bankers Assoc. Interest
Settlement Rates Page (as defined below) at approximately 11:30 a.m., London,
England time, on the second full Business Day preceding the first day of such
Interest Period (or, in the case of Pounds Sterling, on the first day of such
Interest Period); provided, however, that if there shall at any time no longer
exist a Telerate British Bankers Assoc. Interest Settlement Rates Page, "LIBOR
Rate" shall mean, with respect to each day during each Interest Period
pertaining to LIBOR Rate Loans comprising part of the same Borrowing, the rate
per annum equal to the rate at which Scotiabank is offered deposits in Dollars
or in the Applicable Currency at approximately 11:30 a.m., London, England time,
two Business Days prior to the first day of such Interest Period (or, in the
case of Pounds Sterling, on the first day of such Interest Period) in the
interbank eurocurrency market where the eurocurrency and foreign currency and
exchange operations in respect of Dollars or such Applicable Currency, as the
case may be, are then being conducted for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the amount of its LIBOR Rate Loan to be outstanding during such
Interest Period. "Telerate British Bankers Assoc. Interest Settlement Rates
Page" shall mean the display designated as Page 3750 (or such other page on
which any Applicable Currency then appears) on the Telerate System Incorporated
Service (or such other page as may replace such page on such service for the
purpose of displaying the rates at which Dollar deposits in any Applicable
Currency are offered by leading banks in the London interbank deposit market).
LIBOR Rate Loan means any Loan that bears interest based on
the LIBOR Rate.
Lien means any security interest, mortgage, deed of trust,
pledge, claim, hypothecation, assignment for security, charge or deposit
arrangement, preferential arrangement in the nature of security or lien
(statutory or other), or other encumbrance of any kind in respect of any
property (including those created by, arising under or evidenced by any
conditional sale or other title retention agreement).
Loan means (a) an extension of credit by a Lender to either
Borrower, UK Borrower or a Subsidiary Swing Line Borrower under Article II or
Article III, which may be a Term Loan, a Revolving Loan, a Swing Line Loan or an
L/C Advance, or (b) an extension of credit by a Canadian Lender to Canadian
Borrower under Article II.
Loan Documents means this Agreement, any Note, the Fee
Letters, the L/C-Related Documents, the Guarantees, each Security Document, each
Swap Contract entered into with any Lender or any
<PAGE>
-28-
Affiliate of a Lender by any Company and all other documents delivered to any
Agent or any Lender in connection herewith.
Loan Parties means the Domestic Loan Parties and the Foreign
Loan Parties.
Losses means as to any Person, the losses, liabilities, claims
(including those based upon negligence, strict or absolute liability and
liability in tort), damages, expenses, obligations, penalties, actions,
judgments, Liens, penalties, fines, suits, costs or disbursements of any kind or
nature whatsoever (including Attorney Costs in connection with any Proceeding
commenced or threatened, whether or not such Person shall be designated a party
thereto) at any time (including following the payment of the Obligations and/or
the termination of the Commitments hereunder) incurred by, imposed on or
asserted against such Person.
Majority Lenders of the Affected Tranche means (i) at any time
prior to the Original Closing Date, Non-Defaulting Lenders holding at least a
majority of the aggregate amount of the Commitments of the Non-Defaulting
Lenders of the applicable Term Loan Facility which would be adversely affected
by any amendment, waiver or consent contemplated by clause (6) of the second
proviso to subsection 11.1(a) and (ii) at any time after the Original Closing
Date, Non-Defaulting Lenders holding at least a majority of the aggregate amount
of the outstanding Loans of the Non-Defaulting Lenders of the applicable Term
Loan Facility which would be adversely affected by any amendment, waiver or
consent contemplated by clause (6) of the second proviso to subsection 11.1(a).
Management Services Agreement means the Management Services
Agreement dated as of October 15, 1996, between AEA and US Borrower, as in
effect on the Original Closing Date and as the same may be amended and in effect
from time to time in accordance with Section 8.18.
Margin Stock means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
Material Adverse Effect means (a) a material adverse effect
upon the operations, business, assets, nature of assets, properties, condition
(financial or otherwise), solvency or prospects of US Borrower and the
Subsidiaries taken as a whole (which term "Subsidiary" shall include, on or
prior to the Original Closing Date or the Safeline Closing Date, as the case may
be, any entity which will become or be merged into or acquired by either
Borrower or any of its Subsidiaries on the Original Closing Date or the Safeline
Closing Date, as the case may be, in connection with the Transactions); or (b) a
material adverse effect on the rights and remedies of the Agents or the Lenders
under the Loan Documents.
Mettler-Toledo Group means the entities (other than those
affiliated solely with Holding immediately prior to the consummation of the M-T
Acquisition) set forth in the M-T Acquisition Documents and any additional
entities formed by such parties or their Affiliates in connection with
consummating the M-T Acquisition.
Mettler-Toledo, Inc. means Mettler-Toledo, Inc., a Delaware
corporation, the survivor of the merger of itself and MT Acquisition Corp.
(a Delaware corporation) and its successors.
Minimum Tranche means, in respect of Loans comprising part
of the same Borrowing, or to be converted or continued under Section 2.4 or
2.4A, (a) in the case of ABR Loans, U.S. $1.0 million or a higher integral
multiple of U.S. $1.0 million, (b) in the case of Canadian Loans, Cdn.
$250,000 or a higher integral multiple of Cdn. $250,000, (c) in the case of
LIBOR Rate Loans which are Tranche A-US Term Loans,
<PAGE>
-29-
a minimum Dollar Equivalent amount of U.S. $5.0 million and an integral multiple
of U.S. $100,000, (d) in the case of Revolving Loans which are LIBOR Rate Loans
(other than Revolving Loans made in Pounds Sterling and CHF), a minimum Dollar
Equivalent amount of U.S. $1.0 million and an integral multiple of U.S. $1.0
million, (e) in the case of Revolving Loans made in Pounds Sterling, a minimum
of 500,000 Pounds Sterling and an integral multiple of 100,000 Pounds Sterling,
(f) in the case of Revolving Loans made in CHF, a minimum of 1,000,000 CHF and
an integral multiple of 100,000 CHF, and (g) in the case of Tranche A-CHF Term
Loans, a minimum amount of CHF 5.0 million and an integral multiple of CHF
100,000, and (h) in the case of Tranche A-UK Term Loans, a minimum amount of 2.5
million Pounds Sterling and an integral multiple of 100,000 Pounds Sterling.
MLA Cost means the cost imputed to a Lender making a Loan in
Pounds Sterling of compliance with the Mandatory Liquid Assets requirements of
the Bank of England during the Interest Period of that Loan determined in
accordance with Schedule 1.1(b).
Moody's means Moody's Investors Service, Inc. or its
successors.
Mortgage means a term loan and revolving credit mortgage,
assignment of leases, security agreement and fixture filing, or a term loan and
revolving credit deed of trust, assignment of leases, security agreement and
fixture filing creating and evidencing a Lien on a Mortgaged Real Property,
which shall be substantially in the form of Exhibit I, containing such schedules
and including such additional provisions and other deviations from such Exhibits
as shall be necessary to conform such document to applicable or local law or as
shall be required under local law and which shall be dated as of the date of
delivery thereof and made by the owner of the Mortgaged Real Property described
therein for the benefit of the Administrative Agent, as mortgagee (grantee or
beneficiary), assignee and secured party, as the same may at any time be
amended, modified or supplemented in accordance with the terms thereof and
hereof.
Mortgaged Real Property means each Real Property designated on
Schedule 1.1(c) which shall be subject to a Mortgage and each additional Real
Property which shall be subject to a Mortgage delivered pursuant to Section
7.14.
M-T Acquisition means the acquisition by US Borrower or one or
more of the Subsidiaries of the Mettler-Toledo Group pursuant to the M-T
Acquisition Documents.
M-T Acquisition Documents means the documents listed in
Schedule 1.1(d) hereto, in each case as in effect on the Original Closing Date
and as amended and in effect from time to time in accordance with Section 8.18.
M-T Acquisition Transactions means the M-T Acquisition, the
offering and sale of the Senior Subordinated Notes and the other transactions
contemplated hereby and thereby to be effected in connection therewith on or
about the Original Closing Date.
M-T GmbH means Mettler-Toledo GmbH Greifensee, a Swiss
corporation and a Subsidiary.
M-T Investors means MT Investors Inc., a Delaware corporation,
and its successors.
M-T Leicester means Mettler-Toledo Ltd., Leicester, an English
corporation and a Subsidiary, and its successors.
<PAGE>
-30-
Multiemployer Plan means a "multiemployer plan," within the
meaning of Section 4001(a)(3) of ERISA, to which a Loan Party or any ERISA
Affiliate makes, is making or is obligated to make contributions or with respect
to which it otherwise may have any liability.
NAIC means the National Association of Insurance
Commissioners.
New Lender -- see subsection 1.7(d).
Net Award has the meaning assigned to that term in each
Mortgage.
Net Cash Proceeds means
(a) with respect to any Asset Sale, the aggregate cash
proceeds (including cash proceeds received by way of deferred payment
of principal pursuant to a note, installment receivable, liquidation or
payment of any Investment permitted by subsection 8.4(d), reserve for
adjustment or otherwise, but only as and when received) received by US
Borrower or any Subsidiary pursuant to such Asset Sale, net of (i) the
direct and indirect costs relating to such Asset Sale (including sales
commissions and legal, accounting and investment banking fees), (ii)
taxes, fees, impositions and recording charges paid or payable as a
result thereof (after taking into account any tax credits or deductions
taken in connection with such Asset Sale and any tax sharing
arrangements), (iii) amounts applied to the repayment of any
Indebtedness secured by a Lien on the asset subject to such Asset Sale
(other than the Obligations), (iv) liabilities of the entity, or
relating to the business or assets, sold, transferred or otherwise
disposed of which are retained by US Borrower or the applicable
Subsidiary, (v) amounts required to be paid to any Person (other than
US Borrower or any Subsidiary) owning a beneficial interest in the
assets subject to the Asset Sale and (vi) appropriate amounts to be
provided by US Borrower or any Subsidiary, as the case may be, as a
reserve required in accordance with GAAP against any liabilities
associated with such Asset Sale and retained by the US Borrower or any
Subsidiary, as the case may be, after such Asset Sale (but upon
reversal of such reserve, any amount so reserved shall thereupon be Net
Cash Proceeds);
(b) with respect to any issuance of equity securities or
Indebtedness, the aggregate cash proceeds (including cash proceeds
received by way of deferred payment of principal pursuant to a note,
installment receivable, reserve for adjustment or otherwise, but only
as and when received) received by Holding or any of its Subsidiaries
pursuant to such issuance, net of the direct costs relating to such
issuance (including sales and underwriter's commissions and legal,
accounting and investment banking fees); and
(c) with respect to any Taking, Destruction, or loss of title
to all or a portion of any Mortgaged Real Property, the Net Award, Net
Proceeds or title insurance proceeds (net of any reasonable costs
incurred to recover such title insurance proceeds), as applicable,
resulting therefrom, to be applied as Net Cash Proceeds under this
Agreement pursuant to the provisions of the Mortgages; provided,
however, such amounts have not been applied to restore or rebuild the
Mortgaged Real Property so Taken or Destroyed as permitted or required
by the applicable Mortgage and this Agreement.
If Holding or any of its Subsidiaries receives Net Cash
Proceeds in a currency other than U.S. Dollars, the Dollar Equivalent amount
thereof shall be determined as of the earlier of (i) the date on which such
<PAGE>
-31-
Net Cash Proceeds are required to be applied to prepayments under Section 2.7
and (ii) the date on which such Net Cash Proceeds are converted into the
currency in which any such prepayment will be required.
Net Proceeds has the meaning assigned to that term in each
Mortgage.
Net Tangible Assets means, at any time, the aggregate amount
which, in accordance with GAAP, would be included as total assets (less
intangible assets) on the consolidated balance sheet of US Borrower and the
Subsidiaries at such time, minus the aggregate amount which, in accordance with
GAAP, would be included as Current Liabilities on the consolidated balance sheet
of US Borrower and the Subsidiaries at such time.
Non-Defaulting Lender means each Lender other than a
Defaulting Lender.
Non-Guarantor Subsidiary means any Subsidiary set forth on
Schedule 1.1(e).
Non-U.S. $ Swing Line Loans means any Swing Line Loan that
is not made in U.S. Dollars.
Notes means the Tranche A-CHF Term Notes, the Tranche A-UK
Term Notes, the Tranche A-US Term Notes, the Revolving Notes, the Canadian
Revolving Notes and the Swing Line Notes and, if issued, the QFL Notes and Note
means any of them.
Notice of Borrowing means a notice in substantially the form
of Exhibit A-2.
Notice of Canadian Borrowing means a notice in substantially
the form of Exhibit A-1.
Notice of Conversion/Continuation means a notice in
substantially the form of Exhibit B-1 (in the case of a notice pursuant to
Section 2.4) or Exhibit B-2 (in the case of a notice pursuant to Section 2.4A).
Obligations means all advances, debts, liabilities,
obligations, guarantees, covenants and duties arising under any Loan Document,
owing by any Loan Party to any Lender, any Agent or any Indemnified Person,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising.
Officers' Certificate shall mean, as applied to any
corporation, a certificate executed on behalf of such corporation by its
Chairman of the Board (if an officer) or its President or one of its Vice
Presidents and by its Chief Financial Officer or its Treasurer or, in the case
of Foreign Subsidiaries, officers or persons performing comparable functions.
Each Officers' Certificate with respect to the compliance with a condition
precedent or agreement hereunder shall include (i) a statement that the signers
have read such condition or agreement and any definitions or other provisions
contained in this Agreement relating thereto, (ii) a statement that, in the
opinion of the signers, they have made or have caused to be made such
examination or investigation as is reasonably necessary to enable them to
express an opinion as to whether or not such condition or agreement has been
complied with, and (iii) a statement as to whether, in the opinion of the
signers, based upon such examination or investigation, such condition or
agreement has been complied with.
Offshore Currency means at any time Deutschemarks, French
Francs, Japanese Yen, Pounds Sterling, Swiss Francs or any Agreed Alternative
Currency.
Offshore Currency Loan means any LIBOR Rate Loan denominated
in an Offshore Currency.
<PAGE>
-32-
Offshore U.S. Dollar Loan means any LIBOR Rate Loan
denominated in U.S. Dollars.
Operating Lease Expense means all operating lease expenses of
US Borrower and the Subsidiaries.
Organization Documents means, for any corporation, the
certificate or articles of incorporation or association, the bylaws, any
unanimous shareholder agreement or declaration, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement or voting trust agreement, and all
applicable resolutions of the board of directors (or any committee thereof) of
such corporation and all other documents of a comparable nature and, for each
partnership, its partnership agreement, its certificate of partnership and all
other documents of the nature previously described as to a corporation.
Original Closing Date means the date on which all conditions
precedent set forth in Section 5.1 (as such Section was in effect on the
Original Closing Date) were satisfied or waived by all Lenders (October 15,
1996).
Original Credit Agreement -- see the recitals hereto.
Other Documents means the Ciba Loan Documents, the Ciba
Reimbursement Agreement, the Tax Sharing Agreement, the Management Services
Agreement, the Safeline Seller Notes, and all other documents, instruments and
agreements entered into in connection with such documents including all
appendices, annexes, schedules, attachments and exhibits to any such document,
in each case as amended and in effect from time to time in accordance with
Section 8.18.
Overnight Rate means, for any Loan (other than a Swing Line
Loan that is made in any Applicable Currency other than U.S. Dollars or Pounds
Sterling) for any day, the rate of interest per annum at which overnight
deposits in the Applicable Currency, in an amount approximately equal to the
amount with respect to which such rate is being determined, would be offered for
such day by the Administrative Agent's London Branch to major banks in the
London or other applicable offshore interbank market. The Overnight Rate for any
day which is not a Business Day shall be the Overnight Rate for the preceding
Business Day. The Overnight Rate for any Swing Line Loan made in any Applicable
Currency other than U.S. Dollars or Pounds Sterling means, for any day, the rate
of interest per annum determined by the Applicable Swing Line Lender.
Participant -- see subsection 11.8(d).
Paid Lender -- see subsection 1.7(a).
Paid Lender's Payment -- see subsection 1.7(a).
Paid Existing Lender -- see subsection 1.7(b).
Paid Existing Lender Payment Amount -- see subsection 1.7(b).
Paying Existing Lender -- see subsection 1.7(c).
Payment Adjustment -- see Section 1.7.
<PAGE>
-33-
PBGC means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under ERISA.
Pension Plan means a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code which a Loan Party or any ERISA
Affiliate sponsors or maintains, or to which it makes, is making or is obligated
to make contributions, or with respect to which it otherwise may have any
liability.
Percentage means, as to any Canadian Lender at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth decimal
place) at such time of such Canadian Lender's portion of the Canadian Commitment
divided by the amount of the Canadian Commitment. The initial Percentage of each
Canadian Lender is set forth on Schedule 2.1(c), and each Canadian Lender's
Percentage shall change simultaneously with any assignment by or to such
Canadian Lender pursuant to Section 11.8.
Permitted Liens -- see Section 8.1.
Person means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.
Plan means an employee benefit plan (as defined in Section
3(3) of ERISA) which a Loan Party or any ERISA Affiliate sponsors or maintains
or to which a Loan Party or any ERISA Affiliate makes, is making or is obligated
to make contributions or with respect to which it otherwise may have any
liability, and includes any Pension Plan.
Pledged Securities means all the Security Agreement Collateral
as defined in each of the Securities Pledge Agreements.
Pounds Sterling means the lawful money of the United Kingdom.
Prime Rate means, for any day, the per annum rate of interest
in effect for such day as publicly announced from time to time by Scotiabank in
Toronto, Ontario as its "prime rate." (The "prime rate" is a rate set by
Scotiabank based upon various factors including Scotiabank's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.) Any change in the prime rate announced by Scotiabank shall
take effect at the opening of business on the day specified in the public
announcement of such change.
Prime Rate Loan means a Canadian Loan that bears interest
based on the Prime Rate.
Prior Liens means Liens which pursuant to the provisions of
any Security Document are or may be superior to the Liens of such Security
Document.
Proceeding means any claim, action, judgment, suit, hearing,
governmental investigation, arbitration (to the extent binding on US Borrower or
any Subsidiary) or proceeding, including by or before any Governmental
Authority.
Pro Rata Share means as to any Lender in respect of any
Facility at any time, the percentage equivalent (expressed as a decimal, rounded
to the ninth decimal place) at such time of (a) prior to termination of the
Commitments in such Facility, (i) such Lender's Commitment in such Facility
divided by (ii) the
<PAGE>
-34-
combined Commitments of all Lenders in such Facility, or (b) after termination
of the Commitments in such Facility, (i) the aggregate principal Dollar
Equivalent amount of such Lender's Loans under such Facility, plus (in the case
of the Revolving Facility) (without duplication) the participation of such
Lender in the aggregate Effective Amount of all L/C Obligations and the Dollar
Equivalent amount of all Swing Line Loans, divided by (ii) the aggregate Dollar
Equivalent principal amount of all Loans under such Facility, plus (in the case
of the Revolving Facility) (without duplication) the Effective Amount of all L/C
Obligations.
QFL A-CHF Note -- see subsection 2.23(a).
QFL A-UK Note -- see subsection 2.23(a).
QFL A-US Note -- see subsection 2.23(a).
QFL Notes -- see subsection 2.23(a).
Qualified Public Offering shall mean an Initial Public
Offering resulting in gross cash proceeds to Holding of at least U.S. $75.0
million the proceeds of which have been contributed to US Borrower.
Qualified Subsidiary Guarantor means any Subsidiary Guarantor
the Guarantee of which does not on its face exclude any Obligations of (i) with
respect to any Domestic Subsidiary (other than UK Borrower Guarantor), any Loan
Party other than UK Borrower, (ii) with respect to UK Borrower Guarantor, UK
Borrower and (iii) with respect to any Foreign Subsidiary, CH Borrower, not
taking into account any restrictions resulting from the amount of capital of
such Subsidiary Guarantor available for distribution.
Quarterly Date means each March 31, June 30, September 30 and
December 31 of each year, commencing with and including September 30, 1997
through and including December 31, 2004.
Ratification Agreement means a Ratification Agreement
substantially in the form of Exhibit O entered into on the Amendment and
Restatement Date and on the Second Amendment and Restatement Date.
Real Property means all right, title and interest of the
Borrowers or any of their respective Subsidiaries (including, without
limitation, any leasehold estate) in and to a parcel of real property owned or
operated by either Borrower or any of its respective Subsidiaries together with,
in each case, all improvements and appurtenant fixtures, equipment, personal
property, easements and other property and rights incidental to the ownership,
lease or operation thereof.
Reimbursement Obligations shall mean, at any time, the
obligations of the Revolving Borrowers and the Subsidiary Swing Line Borrowers
then outstanding, or that may thereafter arise in respect of all Letters of
Credit then outstanding, to reimburse amounts paid by the applicable L/C Lender
in respect of any drawings under a Letter of Credit issued for the account of
such Revolving Borrower or Subsidiary Swing Line Borrower, as the case may be.
Related Business means the businesses of US Borrower and the
Subsidiaries as conducted on the Safeline Closing Date, and any businesses
related, ancillary or complementary to such businesses.
Replacement Lender -- see Section 4.8.
<PAGE>
-35-
Reportable Event means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder with respect to which a Loan
Party or any ERISA Affiliate would be subject to the notice requirements of
Section 4043(b), other than any such event for which the 30-day notice
requirement under ERISA has been waived in regulations issued by the PBGC.
Required Canadian Lenders means (a) at any time prior to the
Canadian Termination Date, Canadian Lenders which are Non-Defaulting Lenders
then holding at least a majority of the aggregate Canadian Commitments of all
Canadian Lenders which are Non-Defaulting Lenders, and (b) otherwise, Canadian
Lenders which are Non-Defaulting Lenders then holding at least a majority of the
then outstanding aggregate principal amount of Canadian Loans of all Canadian
Lenders which are Non-Defaulting Lenders.
Required Lenders means (a) at any time prior to the
Termination Date, Non-Defaulting Lenders then holding at least a majority of the
sum of (i) the then aggregate unused amount of the Commitments of the
Non-Defaulting Lenders, plus (ii) the then aggregate unpaid Dollar Equivalent
principal amount of the Loans of the Non-Defaulting Lenders, plus (iii) (without
duplication) the then aggregate Effective Amount of the L/C Obligations of the
Non-Defaulting Lenders, and (b) otherwise, Non-Defaulting Lenders then holding
at least a majority of the sum of (i) the then aggregate unpaid Dollar
Equivalent principal amount of the Loans of the Non-Defaulting Lenders, plus
(ii) (without duplication) the then aggregate Effective Amount of the L/C
Obligations of the Non-Defaulting Lenders (it being understood that, for
purposes of clauses (a) and (b), the principal amount of each Revolving Facility
Lender's Loans shall be deemed to be (i) in the case of any Revolving Facility
Lender other than any Applicable Swing Line Lender, increased by such Revolving
Facility Lender's participations in the Swing Line Loans of such Applicable
Swing Line Lender pursuant to Section 2.19 (whether funded or unfunded), except
to the extent such Revolving Facility Lender shall not have funded such
participations as required pursuant to Section 2.19, and (ii) in the case of any
Applicable Swing Line Lender, decreased by the amount of the participations of
all other Revolving Facility Lenders in its Swing Line Loans (whether funded or
unfunded), except to the extent any such other Revolving Facility Lender shall
not have funded such participations as required pursuant to Section 2.19. For
purposes of determining whether the Required Lenders have approved any
amendment, waiver or consent or taken any other action hereunder, the Dollar
Equivalent amount of all Offshore Currency Loans shall be calculated on the date
immediately preceding the date such amendment, waiver or consent is to become
effective or such action is to be taken.
Required Revolving Facility Lenders means (a) at any time
prior to the Termination Date, Revolving Facility Lenders which are
Non-Defaulting Lenders then holding at least a majority of the sum of (i) the
then aggregate Available Revolving Facility Commitments of all Revolving
Facility Lenders which are Non-Defaulting Lenders, plus (ii) the then Aggregate
Outstanding Revolving Credit of all Revolving Facility Lenders which are
Non-Defaulting Lenders, and (b) otherwise, Revolving Facility Lenders which are
Non-Defaulting Lenders then holding at least a majority of the then Aggregate
Outstanding Revolving Credit of all Revolving Facility Lenders which are
Non-Defaulting Lenders (it being understood that, for purposes of clauses (a)
and (b), the principal amount of each Revolving Facility Lender's Revolving
Facility Loans shall be deemed to be (i) in the case of any Revolving Facility
Lender other than any Applicable Swing Line Lender, increased by such Revolving
Facility Lender's participations in the Swing Line Loans pursuant to Section
2.19 (whether funded or unfunded), except to the extent such Revolving Facility
Lender shall not have funded such participations as required pursuant to Section
2.19, and (ii) in the case of any Applicable Swing Line Lender, decreased by the
amount of the participations of all other Revolving Facility Lenders in its
Swing Line Loans (whether funded or unfunded), except to the extent any such
other Revolving Facility Lender shall not have funded such participations as
required pursuant to Section 2.19. For purposes of determining whether the
Required Revolving Facility Lenders have approved any amendment, waiver or
consent or taken any other action hereunder, the Dollar Equivalent amount of all
Offshore Currency Loans shall be calculated on the date
<PAGE>
-36-
immediately preceding the date such amendment, waiver or consent is to become
effective or such action is to be taken.
Requirement of Law means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
Reset Date -- see the definition of Applicable Margin.
Responsible Officer means the chief executive officer, the
chief financial officer, the president or any vice-president of the Applicable
Borrower, or any other officer having substantially the same authority and
responsibility; or, with respect to compliance with financial covenants, the
chief financial officer, the treasurer or controller of the Applicable Borrower,
or any other officer having substantially the same authority and responsibility.
Restoration has the meaning assigned to that term in each
Mortgage.
Restricted Payment -- see Section 8.13.
Revolving Borrowers means the Borrowers and UK Borrower.
Revolving Facility means the revolving multicurrency credit
facility in an aggregate principal amount equal to the Dollar Equivalent of U.S.
$400.0 million with a letter of credit subfacility and a swing line subfacility
provided hereunder as set forth in subsection 2.1(d) and Sections 2.16 and 3.1.
Revolving Facility Commitment -- see subsection 2.1(d).
Revolving Facility Lender means a lender having a Revolving
Facility Commitment or a Swing Line Commitment or holding a Revolving Facility
Loan or a participation in an L/C Advance.
Revolving Facility Loan means an extension of credit by a
Revolving Facility Lender to a Revolving Borrower or a Subsidiary Swing Line
Borrower under the Revolving Facility pursuant to Article II or Article III,
which may be a Revolving Loan, a Swing Line Loan or an L/C Advance.
Revolving Loan -- see subsection 2.1(d).
Revolving Loan Maturity Date means [ ], 2004.
Revolving Note and Revolving Notes -- see Section 2.2.
Safeline Acquisition means the acquisition by US Borrower
through UK Borrower and Canadian Borrower of 100% of the issued and outstanding
share capital of Safeline Limited pursuant to the Safeline Acquisition
Documents.
Safeline Acquisition Documents means the documents listed in
Schedule 1.1(f), in each case as in effect on the Safeline Closing Date as
amended and in effect from time to time in accordance with Section 8.18.
<PAGE>
-37-
Safeline Acquisition Transactions means the Safeline
Acquisition, the issuance of the Safeline Seller Notes and each other
transaction contemplated hereby and thereby to be effected in connection
therewith on, about or after the Safeline Closing Date.
Safeline Closing Date means the date on which all conditions
precedent set forth in Section 5.1A are satisfied or waived by all Lenders.
Safeline Contingent Payment means the contingent payments set
forth in Section 1.2(c) of the acquisition agreement relating to the Safeline
Acquisition.
Safeline Limited means Safeline Limited, an English
corporation, and its successors.
Safeline Loan Parties means Canadian Borrower, UK Borrower,
the UK Borrower Guarantor and each other Subsidiary of UK Borrower which becomes
a party to a Loan Document in connection with the Safeline Acquisition.
Safeline Seller Notes means the notes of UK Borrower in an
aggregate principal amount of 13.7 million Pounds Sterling issued to the sellers
in the Safeline Acquisition, as amended and in effect from time to time in
accordance with Section 8.18.
Same Day Funds means (i) with respect to disbursements and
payments in U.S. Dollars, immediately available funds, and (ii) with respect to
disbursements and payments in Canadian Dollars or an Offshore Currency, same day
or other funds as may be determined by the Applicable Agent, as the case may be
(or, with respect to payments made by any Subsidiary Swing Line Borrower, the
Swing Line Lender who makes Swing Line Loans to such Subsidiary Swing Line
Borrower) to be customary in the place of disbursement or payment for the
settlement of international banking transactions in Canadian Dollars or the
relevant Offshore Currency.
Scotiabank -- see the introduction to this Agreement.
SEC means the United States Securities and Exchange
Commission, or any Governmental Authority succeeding to any of its principal
functions.
Second Amendment and Restatement Assignments -- see Section
1.7.
Second Amendment and Restatement Date means the date on which
all of the conditions precedent set forth in Section 5.3 are satisfied or waived
by the Required Lenders, the Agents, the Swing Line Lenders, each L/C Lender and
the Co-Agents.
Section 4.1(f)(i) Certificate -- see subsection 4.1(f)(i).
Section 4.1(f)(v) Certificate -- see subsection 4.1(f)(v).
Secured Parties has the meaning specified in the Security
Documents.
Securities Pledge Agreements means the US Borrower Securities
Pledge Agreement, the Holding Securities Pledge Agreement, the Domestic
Subsidiary Securities Pledge Agreement, the Foreign
<PAGE>
-38-
Subsidiary Securities Pledge Agreement, and any other securities pledge
agreements delivered pursuant to Section 5.1A(i) of the Amended and Restated
Credit Agreement, Section 7.14, Section 7.15, or Section 7.23.
Security Agreement means a security agreement substantially in
the form of Exhibit D entered into and delivered by each of the Borrowers and
certain of the Subsidiary Guarantors, and any other security agreement delivered
pursuant to Section 7.14, Section 7.15, or Section 7.23.
Security Agreement Collateral means all "Collateral" as
defined in the Security Agreement.
Security Documents means each of the Securities Pledge
Agreements, Security Agreements, the Mortgages and any other documents utilized
to pledge as Collateral for the Obligations any other property or assets of
whatever kind or nature.
Senior Subordinated Note Documents shall mean and include each
of the documents and other agreements entered into (including, without
limitation, the Senior Subordinated Note Indenture) relating to the issuance by
US Borrower of the Senior Subordinated Notes, as in effect on the Original
Closing Date and as the same may be entered into, modified, supplemented or
amended from time to time pursuant to the terms hereof and thereof.
Senior Subordinated Note Indenture shall mean the Indenture
and the First Supplemental Indenture, each dated as of October 15, 1996, entered
into by and among US Borrower, Holding and United States Trust Company of New
York, as trustee thereunder, as in effect on the Original Closing Date and the
Second Supplemental Indenture dated as of October 16, 1997, entered into by and
among US Borrower, Holding and United States Trust Company of New York, as
Trustee and as amended and in effect from time to time in accordance with
Section 8.18.
Senior Subordinated Notes means the U.S. $135.0 million 9-3/4%
senior subordinated notes due 2006 of US Borrower issued under the Senior
Subordinated Note Indenture.
S&P means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc.
Specified Subsidiary means any Non-Guarantor Subsidiary or any
Subsidiary set forth on Schedule 7.22.
Spot Rate means with respect to any Applicable Currency, at
any date of determination thereof, the spot rate of exchange with respect to
U.S. Dollars for such date in London that appears on the display page applicable
to such Applicable Currency on the Telerate System Incorporated Service (or such
other page as may replace such page on such service for the purpose of
displaying the spot rate of exchange in London); provided, however, that if
there shall at any time no longer exist such a page or a relevant spot rate is
not shown on such service, the spot rate of exchange shall be determined by
reference to another similar rate publishing service selected by the
Administrative Agent and if no such similar rate publishing service is available
by reference to the published rate of the Administrative Agent in effect at such
date for similar commercial transactions.
State, Local and Foreign Real Property Disclosure Requirements
means any federal, state or local laws requiring notification of the buyer of
real property, or notification, registration, or filing to or with any state or
local agency, prior to the sale of any real property or transfer of control of
an establishment, of the actual or threatened presence or release into the
environment, or the use, disposal, or handling of Hazardous
<PAGE>
-39-
Materials on, at, under, or near the real property to be sold or the
establishment for which control is to be transferred.
Subsidiary of a Person means any corporation, association,
partnership, limited liability company, joint venture, business trust or other
business entity of which more than 50% of the voting stock, membership interests
or other equity interests is owned or controlled directly or indirectly by such
Person, or one or more of the Subsidiaries of such Person, or a combination
thereof. Notwithstanding the foregoing, any Joint Venture which is not majority
owned by, but is controlled by, US Borrower or a Subsidiary and the financial
results of which are included in the consolidated financial statements of US
Borrower shall be deemed to be a Subsidiary of US Borrower. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of US Borrower. The term Subsidiary shall also include any Person to
become a Subsidiary pursuant to the M-T Acquisition or the Safeline Acquisition.
Subsidiary Currency means, as to any Subsidiary Swing Line
Borrower, the currency (or currencies with respect to M-T GmbH) in which such
Subsidiary Swing Line Borrower may borrow Swing Line Loans pursuant to Section
2.16.
Subsidiary Currency Equivalent means at any time with respect
to any Subsidiary Swing Line Borrower, (a) with respect to all Subsidiary Swing
Line Borrowers other than M-T GmbH, as to any amount denominated in the
Subsidiary Currency, the amount thereof at such time, and (b) with respect only
to M-T GmbH, as to any amount denominated in any Subsidiary Currency, the CHF
Equivalent thereof.
Subsidiary Guarantees means each Domestic Subsidiary Guarantee
and each Foreign Subsidiary Guarantee.
Subsidiary Guarantors means the Domestic Subsidiary
Guarantors and the Foreign Guarantors.
Subsidiary L/C Borrowing means, as to any Subsidiary Swing
Line Borrower, an extension of credit resulting from a drawing under any Letter
of Credit issued for the account of such Subsidiary Swing Line Borrower which
shall not have been reimbursed on the date when made nor converted into a
Borrowing of Revolving Facility Loans under subsection 3.3(b).
Subsidiary L/C Commitment means the commitment of each L/C
Lender which is a Swing Line Lender to Issue Letters of Credit from time to time
under Article III to the Subsidiary Swing Line Borrower to whom it is to make
Subsidiary Swing Line Loans, in an aggregate amount not to exceed the Subsidiary
Swing Line Borrower Sublimit of such Subsidiary Swing Line Borrower; it being
understood that the Subsidiary L/C Commitment is part of the Swing Line
Commitment of such Subsidiary Swing Line Lender rather than a separate,
independent commitment.
Subsidiary L/C Effective Amount means with respect to any
outstanding Subsidiary L/C Obligations of any Subsidiary Swing Line Borrower on
any date, the aggregate Subsidiary Currency Equivalent of such Subsidiary L/C
Obligations on such date after giving effect to any Issuances of Letters of
Credit occurring on such date for the account of such Subsidiary Swing Line
Borrower and any other changes in the aggregate Subsidiary Currency Equivalent
amount of the Subsidiary L/C Obligations of such Subsidiary Swing Line Borrower
as of such date, including as a result of any reimbursement of outstanding
unpaid drawings under any Letter of Credit of such Subsidiary Swing Line
Borrower or any reduction in the maximum amount available for drawing under any
Letter of Credit of such Subsidiary Swing Line Borrower taking effect on such
date.
<PAGE>
-40-
Subsidiary L/C Obligations means at any time, for any
Subsidiary Swing Line Borrower, the sum of (a) the aggregate undrawn Subsidiary
Currency Equivalent amount of all Letters of Credit Issued for the account of
such Subsidiary Swing Line Borrower then outstanding, plus (b) the Subsidiary
Currency Equivalent amount of all unreimbursed drawings under all Letters of
Credit Issued for the account of such Subsidiary Swing Line Borrower, including
all outstanding Subsidiary L/C Borrowings of such Subsidiary Swing Line
Borrower.
Subsidiary Swing Line Borrowers means, subject to the first
sentence of subsection 11.1(a), each of the following Subsidiaries: the German
Subsidiary; Mettler-Toledo S.A., Veroflay, a French corporation; Mettler-Toledo
K.K., Takarazuka, a Japanese corporation; M-T GmbH; each of the UK Swing Line
Borrowers; and each of their respective successors.
Subsidiary Swing Line Borrower Sublimit means, subject to the
first sentence of subsection 11.1(a), the amounts set forth opposite such
Subsidiary's (or, in the case of the UK Swing Line Borrowers, their collective)
name in the table below (it being understood that for the UK Swing Line
Borrowers the amount is an aggregate sublimit for all of them together), as
adjusted pursuant to subsection 2.6(a):
===============================================================================
Name of Subsidiary(ies) Units of Applicable Currency
- -------------------------------------------------------------------------------
German Subsidiary DM 18.0 million
- -------------------------------------------------------------------------------
Mettler-Toledo S.A., Veroflay FF 11.0 million
- -------------------------------------------------------------------------------
Mettler-Toledo K.K., Takarazuka 175.0 million Japanese Yen
- -------------------------------------------------------------------------------
M-T GmbH CHF 13.0 million
- -------------------------------------------------------------------------------
UK Swing Line Borrowers 5.0 million Pounds Sterling
===============================================================================
Substitute Lender -- see Section 2.22.
Supermajority Lenders means Non-Defaulting Lenders then
holding at least 66-2/3% of the sum of (i) the then aggregate unused amount of
the Commitments of the Non-Defaulting Lenders, plus (ii) the then aggregate
unpaid Dollar Equivalent principal amount of the Loans of the Non-Defaulting
Lenders, plus (iii) (without duplication) the then aggregate Effective Amount of
the L/C Obligations of the Non-Defaulting Lenders. For purposes of determining
whether the Supermajority Lenders have approved any amendment, waiver or consent
or taken any other action hereunder, the Dollar Equivalent amount of all
Canadian Loans and all Offshore Currency Loans shall be calculated on the date
immediately preceding the date such amendment, waiver or consent is to become
effective or such action is to be taken.
Surety Instruments means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, surety bonds and
similar instruments.
Survey means a survey of any Mortgaged Real Property (and all
improvements thereon): (i) prepared by a surveyor or engineer licensed to
perform surveys in the state, province or country where such Mortgaged Real
Property is located, (ii) dated (or redated) not earlier than six months prior
to the date of delivery thereof unless there shall have occurred within the six
months prior to such date of delivery any exterior construction on the site of
such Mortgaged Real Property, in which event such survey shall be dated (or
redated) after the completion of such construction or if such construction shall
not have been completed as of
<PAGE>
-41-
such date of delivery, not earlier than 20 days prior to such date of delivery,
(iii) certified by the surveyor (in a manner reasonably acceptable to the
Administrative Agent) to the Administrative Agent and the Title Company, and
(iv) complying in all material respects with the minimum detail requirements of
the American Land Title Association as such requirements are in effect on the
date of preparation of such survey; provided, however, that such survey is in a
form reasonably acceptable to the Title Company.
Swap Contract means any agreement (including any master
agreement and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward rate
agreement, commodity swap, commodity option, equity or equity index swap or
option, bond option, interest rate option, foreign exchange agreement, rate cap,
collar or floor agreement, currency swap agreement, cross-currency rate swap
agreement, swaption, currency option or any other, similar agreement (including
any option to enter into any of the foregoing).
Swing Line Borrowers means US Borrower and the Subsidiary
Swing Line Borrowers.
Swing Line Commitment means the commitment of each Swing Line
Lender to make Swing Line Loans hereunder in an aggregate Dollar Equivalent
amount not to exceed on any date on a combined basis for all the Swing Line
Lenders an amount equal to the lesser of U.S. $50.0 million and the amount of
the combined Commitments of all Swing Line Lenders, it being understood that the
Swing Line Commitment is a part of the combined Revolving Facility Commitments
of all Swing Line Lenders, rather than a separate independent commitment.
Swing Line Lender means each of Credit Suisse First Boston
(with respect solely to Swing Line Loans to be made to M-T GmbH), Scotiabank
(with respect solely to Swing Line Loans to be made in U.S. Dollars to US
Borrower and Pounds Sterling to the UK Swing Line Borrowers), Commerzbank AG
(with respect solely to Swing Line Loans to be made to the German Subsidiary),
and such other Lender having a Revolving Facility Commitment as selected by each
Subsidiary Swing Line Borrower (or, with respect to the UK Swing Line Borrowers,
by them collectively) and agreed to by such Lender (in each case solely with
respect to the Offshore Currency in which such Lender agrees to make Swing Line
Loans available to such Subsidiary Swing Line Borrower), in each case in its
capacity as a swing line lender hereunder, and Swing Line Lenders means all of
them.
Swing Line Loan -- see Section 2.16.
Swing Line Loan Calculation Date -- see subsection 2.7 (j).
Swing Line Note and Swing Line Notes -- see Section 2.2.
Swiss Francs and CHF each mean lawful money of Switzerland.
Taking has the meaning assigned to that term in each Mortgage.
Tax Sharing Agreement means the Tax Sharing Agreement dated as
of October 15, 1996 between M-T Investors and US Borrower, as amended and in
effect from time to time in accordance with Section 8.18. [Will there be a new
one?]
Taxes means any and all present or future income, stamp,
documentary, excise, property or other taxes, levies, imposts, duties,
deductions, charges, fees or withholdings, now or hereafter imposed,
<PAGE>
-42-
levied, collected, withheld or assessed by any Governmental Authority, and all
liabilities with respect thereto, including any present or future Taxes or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document.
Termination Date means the earlier to occur of (i) the date 30
Business Days prior to the Revolving Loan Maturity Date and (ii) the date on
which the Revolving Facility Commitments are terminated or reduced to zero
pursuant to Section 2.6.
Term Loan Commitments means the Tranche A-CHF Facility
Commitments, Tranche A-UK Facility Commitments, and the Tranche A-US Facility
Commitments of all the Lenders having such commitments.
Term Loan Facilities means the Tranche A-CHF Term Loan
Facility, the Tranche A-UK Term Loan Facility, and Tranche A-US Term Loan
Facility.
Term Loans means the loans made under the Term Loan
Facilities.
Title Company shall mean First American Title Insurance
Company or such other title insurance or abstract company as shall be designated
by the Required Lenders.
Tranche A-CHF Facility Commitment means a Lender's commitment
to make a Tranche A-CHF Term Loan hereunder.
Tranche A-CHF Lender means a Lender having a Tranche A-CHF
Term Loan.
Tranche A-CHF Term Loan -- see subsection 2.1(a).
Tranche A-CHF Term Loan Facility means the term loan facility
in an aggregate principal amount of CHF [ ] million.
Tranche A-CHF Term Loan Maturity Date means [ ], 2004.
Tranche A-CHF Term Note and Tranche A-CHF Term Notes -- see
Section 2.2.
Tranche A Term Loans means the Tranche A-CHF Term Loans, the
Tranche A-UK Term Loans and the Tranche A-US Term Loans, collectively.
Tranche A-UK Facility Commitment means a Lender's commitment
to make a Tranche A-UK Term Loan hereunder.
Tranche A-UK Lender means a Lender having a Tranche A-UK
Facility Commitment.
Tranche A-UK Term Loan - see subsection 2.1(a).
Tranche A-UK Term Loan Facility means the term loan facility
in an aggregate principal amount of 26.7 million Pounds Sterling.
<PAGE>
-43-
Tranche A-UK Term Loan Maturity Date means [ ], 2004.
Tranche A-UK Term Note and Tranche A-UK Term Notes - see
Section 2.2.
Tranche A-US Facility Commitment means a Lender's commitment
to make a Tranche A-US Term Loan hereunder.
Tranche A-US Lender means a Lender having a Tranche A-US
Facility Commitment.
Tranche A-US Term Loan -- see subsection 2.1(a).
Tranche A-US Term Loan Facility means the term loan facility
in an aggregate principal amount of U.S. $[ ] million.
Tranche A-US Term Loan Maturity Date means [ ], 2004.
Tranche A-US Term Note and Tranche A-US Term Notes -- see
Section 2.2.
Transaction Documents means the M-T Acquisition Documents, the
Safeline Acquisition Documents, the Senior Subordinated Note Documents, the
Safeline Seller Notes, the documents and instruments entered into in connection
with the Equity Issuance and each other document (other than the Loan Documents)
relating to the Transactions including all appendices, annexes, schedules,
attachments and exhibits to any such document.
Transactions means the M-T Acquisition Transactions and the
Safeline Acquisition Transactions.
Treaty Lender -- see the definition of UK Qualifying Lender.
Type of Loan means (a) in the case of Loans (other than
Canadian Loans), an ABR Loan or a LIBOR Rate Loan, and (b) in the case of
Canadian Loans, a Prime Rate Loan or a BA Equivalent Rate Loan.
UCC means the Uniform Commercial Code as in effect in the
applicable jurisdiction.
UK Borrower means Safeline Holding Company, an unlimited
liability company organized under the laws of the United Kingdom, and its
successors.
UK Borrower Guarantor means Safeline Inc., a Florida
corporation, and each of its successors which is also a Domestic Subsidiary. The
term UK Borrower Guarantor also includes any Domestic Subsidiary of UK Borrower
which becomes a Guarantor pursuant to Section 7.20, and each of any such
Subsidiary's successors which is also a Domestic Subsidiary.
UK Borrower Sublimit -- see subsection 2.1(d)
UK Borrower Swing Line L/C means any Letter of Credit Issued
for the account of UK Borrower that UK Borrower has notified the Administrative
Agent in writing is to be counted against the Subsidiary Swing Line Borrower
Sublimit of the UK Swing Line Borrowers.
<PAGE>
-44-
UK Certificate -- see subsection 4.1(f)(viii).
UK Lender -- see subsection 4.1(d)(ii).
UK Qualifying Lender means a UK Lender which either:
(a) (i) is a bank within the meaning of Section 840A of the
Income and Corporation Taxes Act 1988; (ii) will be
beneficially entitled to any interest to be paid to it on
any advance to UK Borrower under this Agreement; and
(iii) is within the charge to United Kingdom corporation
tax as respects such interest; provided, however, that,
if Section 349 or Section 840A of the Income and
Corporation Taxes Act 1988 is repealed, modified,
extended or re-enacted, the Administrative Agent may at
any time and from time to time (after consultation with
UK Borrower) amend this paragraph (a) in such manner as
it may reasonably determine to put, so far as
practicable, UK Borrower and UK Lenders in the same
position as they would otherwise have been in; and
provided, further, that an Assignee will not be a UK
Qualifying Lender by reason of this paragraph (a) unless
the assignor Lender was also a UK Qualifying Lender by
reason of this paragraph (a); or
(b) is "resident" (as such term is defined in the
appropriate double taxation treaty) in a country with
which the United Kingdom has a double taxation treaty
generally giving residents of that country complete
exemption from United Kingdom Tax on interest (and which
does not carry on business in the United Kingdom through
a permanent establishment with which the indebtedness
under this Agreement in respect of which the interest is
paid is effectively connected) (a "Treaty Lender") and
for this purpose "double taxation treaty" means any
convention or agreement between the government of the
United Kingdom and any other government for the avoidance
of double taxation and the prevention of fiscal evasion
with respect to taxes on income and capital gains.
UK Swing Line Borrowers means M-T Leicester, Safeline Limited,
and UK Borrower.
Unfunded Pension Liability means the excess of a Pension
Plan's benefit liabilities under Section 4001(a)(16) of ERISA over the fair
market value of such Plan's assets (including all accrued contributions required
to be made to the Plan in respect of the applicable plan year), determined in
accordance with the actuarial assumptions used for funding such Plan pursuant to
Section 412 of the Code for the applicable plan year.
Unmatured Event of Default means any event or circumstance
which, with the giving of notice, the lapse of time, or both, would (if not
cured or otherwise remedied during such time) constitute an Event of Default.
US Borrower -- see the introduction to this Agreement.
US Borrower Guarantee means the guarantee agreement
substantially in the form of Exhibit E-5 entered into and delivered by US
Borrower, as amended and restated on the Second Amendment and Restatement Date.
US Borrower Securities Pledge Agreement means a securities
pledge agreement substantially in the form of Exhibit J-4 entered into and
delivered by US Borrower.
<PAGE>
-45-
US Borrower Sublimit means U.S. $8.0 million, as adjusted
pursuant to subsection 2.6(a).
U.S. Dollars and U.S. $ each mean lawful money of the United
States.
U.S. Federal Funds Rate means, for any day, the rate set forth
in the weekly statistical release designated as H.15(519), or any successor
publication, published by the U.S. Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite the
caption "U.S. Federal Funds (Effective)"; or, if for any relevant day such rate
is not so published on any such preceding Business Day, the rate for such day
will be the arithmetic mean as determined by the Administrative Agent of the
rates for the last transaction in overnight U.S. Federal funds arranged prior to
9:00 a.m. (New York City time) on that day by each of three leading brokers of
U.S. Federal funds transactions in New York City selected by the Administrative
Agent.
Wholly-Owned Subsidiary means, for any Person, any corporation
in which (other than directors' qualifying shares or other shareholdings
required by law) 100% of the capital stock of each class having ordinary voting
power, and 100% of the capital stock of each other class, at the time as of
which any determination is being made, is owned, beneficially and of record, by
such Person, or by one or more of the other Wholly-Owned Subsidiaries, or a
combination thereof.
1.2. Other Interpretive Provisions. (a) The meanings of
defined terms are equally applicable to the singular and plural forms of the
defined terms.
(b) The words "hereof," "herein," "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and subsection, Section, Article, Schedule and Exhibit
references are to this Agreement unless otherwise specified.
(c)(i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including"; the
words "to" and "until" each mean "to but excluding," and the word "through"
means "to and including."
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
<PAGE>
-46-
(g) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agents, the
Borrowers and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or any Agent merely
because of an Agent's or Lenders' involvement in their preparation.
1.3. Accounting Principles. (a) Unless the context otherwise
clearly requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Agreement shall be
made, in accordance with GAAP, consistently applied; provided, however, that if
the Borrowers notify the Arranger that the Borrowers wish to amend any covenant
in Article VIII to eliminate the effect of any change in GAAP on the operation
of such covenant (or if the Arranger notifies the Borrowers that the Required
Lenders wish to amend Article VIII for such purpose), then the Borrowers'
compliance with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either
such notice is withdrawn or such covenant is amended in a manner satisfactory to
the Borrowers and the Required Lenders.
(b) References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of US Borrower.
1.4. Currency Equivalents Generally. For all purposes of any
Loan or other Credit Extension pursuant to this Agreement (but not for purposes
of the preparation of any financial statements delivered pursuant hereto), the
equivalent in any Offshore Currency or other currency (including Canadian
Dollars) of an amount in U.S. Dollars, and the equivalent in U.S. Dollars of an
amount in any Offshore Currency or other currency (including Canadian Dollars),
shall be determined at the Spot Rate. For purposes of determining compliance
with any restriction limited to a Dollar Equivalent amount in this Agreement
(other than to the extent relating to any Loan or other Credit Extension under
this Agreement), the Dollar Equivalent amount of transactions occurring prior to
the date of determination shall be calculated based on the Spot Rate on the date
of determination; provided, however, that if such Dollar Equivalent amount shall
be exceeded, such restriction shall nonetheless be deemed not violated if such
Dollar Equivalent amount of such transactions was calculated based on the
relevant currency exchange rate in effect on the date of each such transaction.
1.5. Principle of Deemed Reinvestment. Except to the extent
permitted under applicable law, all calculations of interest and fees hereunder
are to be made on the basis of the nominal interest rate set forth herein and
not using the effective rate method of calculation or on any basis which gives
effect to the principle of deemed reinvestment. For the purposes of disclosure
under the Interest Act (Canada), if and to the extent applicable, whenever
interest is to be paid hereunder and such interest is to be calculated on the
basis of a period of less than a calendar year, the yearly rate of interest to
which the rate determined pursuant to such calculation is equivalent is the rate
so determined multiplied by the actual number of days in the calendar year in
which the same is to be ascertained and divided by the number of days in such
period.
1.6. Effect on Original Credit Agreement and Other Loan
Documents. Upon the execution and delivery by the parties hereto of this
Agreement and the satisfaction (or waiver) of the conditions set forth in
Section 5.3, (i) this Agreement shall be deemed to amend, restate and supersede
the Original Credit Agreement, except that the grants of security interests,
mortgages and Liens under and pursuant to the Loan Documents shall continue
unaltered and each other Loan Document shall continue in full force and effect
in accordance with its terms and the parties hereto hereby ratify and confirm
the terms thereof as being in full force and effect and unaltered by this
Agreement, (ii) all Obligations under the Original Credit Agreement and the
other Loan Documents shall continue to be outstanding except as expressly
modified by this Agreement and shall be governed in all respects by this
Agreement and the other Loan Documents, it being agreed and
<PAGE>
-47-
understood that this Agreement does not constitute a novation, satisfaction,
payment or reborrowing of any Obligation under the Original Credit Agreement or
any other Loan Document except as expressly modified by the Agreement, nor does
it operate as a waiver of any right, power or remedy of any Lender under any
Loan Document (other than the Original Credit Agreement), and (iii) all
references to the Original Credit Agreement in any Loan Document or other
document or instrument delivered in connection therewith shall be deemed to
refer to this Agreement and the provisions hereof.
1.7. Payments on Second Amendment and Restatement Date;
Assignments on Second Amendment and Restatement Date; etc. Each of the Lenders
and each of the Agents consents and agrees to each of the following
transactions, all of which shall occur simultaneously with the effectiveness of
the transactions to occur on the Second Amendment and Restatement Date:
(a) Each of the Lenders listed in Schedule 1.7(a) (each, a
"Paid Lender") shall have all Obligations owing to it under the Loan
Documents (whether or not due) paid by the Credit Agreement Loan Party
responsible therefor (the "Paid Lender's Payment"). The Paid Lender's
Payment shall be paid in each Applicable Currency as set forth opposite
such Paid Lender's name in Schedule 1.7(a). All Obligations of the Paid
Lenders shall become due and payable on the Amendment and Restatement
Date contingent upon the effectiveness of all transactions to occur on
such date.
The Paid Lender's Payment shall satisfy all obligations to
such Paid Lenders under the Loan Documents (other than any amounts
which may arise after the Second Amendment and Restatement Date under
Article IV or Section 11.4).
(b) Each Lender listed in Schedule 1.7(b) (each, a "Paid
Existing Lender") having loans and commitments immediately prior to the
Second Amendment and Restatement Date shall be paid by the Credit
Agreement Loan Party responsible therefor in partial satisfaction of
such loans and commitments outstanding as of the Second Amendment and
Restatement Date that amount in Japanese Yen, Swiss Francs, or U.S.
Dollars set forth opposite each such Paid Existing Lender's name in
Schedule 1.7(b) (the "Paid Existing Lender Payment Amount"). The Paid
Existing Lender Payment Amount shall become due and payable on the
Second Amendment and Restatement Date contingent upon the effectiveness
of all transactions to occur on such date.
(c) Each of the Lenders (each, a "Paying Existing Lender")
listed in Schedule 1.7(c) shall pay to the Administrative Agent on
behalf of the Credit Agreement Loan Parties the total amounts in
Japanese Yen, Swiss Francs, and U.S. Dollars set forth opposite such
Paying Existing Lender's name in Schedule 1.7(c).
(d) Each Person which is to become a Lender on the Second
Amendment and Restatement Date (each, a "New Lender") and listed in
Schedule 1.7(d) shall pay to the Administrative Agent on behalf of the
Credit Agreement Loan Parties that amount in Japanese Yen, Swiss
Francs, and U.S. Dollars set forth opposite such New Lender's name in
Schedule 1.7(d).
(e) The Borrowers will pay all accrued interest, fees, and all
other amounts due under Article IV on the Second Amendment and
Restatement Date to the Administrative Agent for the benefit of each of
the Lenders (including all Paid Lenders, all Paid Existing Lenders and
the Paying Existing Lenders) in accordance with the amount thereof
owing to each such Lender as of the Amendment and Restatement Date.
<PAGE>
-48-
The payments contemplated by subsections 1.7(a), 1.7(b),
1.7(c), 1.7(d), and 1.7(e) are herein referred to as the "Payment Adjustments"
and will be made in connection with any amendments and modifications including
the reallocation of commitments, conversions, or extensions of credit under this
Agreement as of the Second Amendment and Restatement Date. Each Payment
Adjustment shall be deemed to have taken place simultaneously with the
consummation of all transactions contemplated under this Agreement on the Second
Amendment and Restatement Date and is contingent upon the consummation of all
such transactions contemplated under this Agreement as of the Second Amendment
and Restatement Date.
If for any reason the amendments contemplated by this
Agreement to become effective on the Second Amendment and Restatement Date do
not become effective, then all amounts received by the Administrative Agent or
Lenders in connection with the Payment Adjustments shall be returned by the
Administrative Agent or Lenders within two Business Days to Credit Agreement
Loan Parties, but without interest.
(f) Each Lender on Schedule 1.7(f) (each, an "Assigning
Lender") will enter into an Assignment and Acceptance agreement (each,
a "Second Amendment and Restatement Assignment") whereby each assignor
will assign all rights and obligations under the Loan Documents to the
parties set forth across from such Assigning Lender's name on Schedule
1.7(f). Each Second Amendment and Restatement Assignment shall be
deemed to have taken place immediately prior to the effectiveness of
the transactions contemplated under this Agreement to take place on the
Second Amendment and Restatement Date. Such Second Amendment and
Restatement Assignment will no longer be effective if the transactions
contemplated by this Agreement to occur on the Amendment and
Restatement Date are not consummated.
(g) Each Person which is a Lender as of the Second Amendment
and Restatement Date consents to the termination of all Interest
Periods relating to Loans which are LIBOR Rate Loans immediately prior
to the Amendment and Restatement Date in connection with the
transactions to occur on such date.
(h) Schedules 1.7(a)-(f) are amended and restated as of the
Second Amendment and Restatement Date as set forth in such Schedules on
such date.
1.8. Certain Transactions Exempted. Notwithstanding any other
provision of this Agreement or any other Loan Document, each of the transactions
set forth on Schedule 1.8 effected in connection with UK Borrower Guarantor
becoming a direct Subsidiary of UK Borrower shall not be prohibited by, nor
shall the consummation thereof be a violation of, any term or provision of this
Agreement or any other Loan Document if and so long as such transactions are
effected substantially on the terms set forth on Schedule 1.8.
1.9. Repayment of Safeline Funds. Each of the Agents and the
Lenders agree that all initial extensions of credit made in connection with the
Safeline Acquisition are being made prior to the satisfaction of all conditions
precedent set forth in Section 5.1A based upon the Credit Agreement Loan
Parties' reasonable expectation of the satisfaction of such conditions and that,
pending such satisfaction, such proceeds shall be held in escrow pursuant to
arrangements satisfactory to US Borrower and the Administrative Agent, which
arrangements shall provide for such funds being held for the benefit of the
Credit Agreement Loan Parties pursuant to the terms hereof and the Lenders
having made such extensions of credit and for the investment of such funds
pending application to the Safeline Acquisition in such high quality investments
as are reasonably acceptable to the Administrative Agent and not inconsistent
with the terms of this Agreement. The Administrative Agent will hold such funds
in escrow until the satisfaction of the conditions precedent set forth in
<PAGE>
-49-
Section 5.1A or until the repayment set forth in the next sentence.
Notwithstanding any other provision in this Agreement, the Credit Agreement Loan
Parties may, at any time prior to the date on which the conditions set forth in
Section 5.1A are not capable of being satisfied, repay the Tranche A-UK Term
Loans and any portion of the Tranche B Term Loans made to effect the Safeline
Acquisition (not to exceed U.S. $22.2 million in the case of the Tranche B Term
Loans) and in such case, the Administrative Agent will release such funds from
escrow as appropriate. During such time as the proceeds of any Loans are held in
escrow, interest on such Loans shall accrue thereon at the rates set forth
herein applicable to the Types of Loans constituting such Loans and shall be
payable at the times and as set forth herein applicable to all Loans of such
Type. No Credit Agreement Loan Party shall use any funds held pursuant to such
escrow arrangements referred to in this Section 1.9 other than to effect the
Safeline Acquisition or the repayments set forth in this Section 1.9.
ARTICLE II.
THE CREDITS
2.1. Amounts and Terms of Commitments and Loans. (a) (i) Each
Tranche A-CHF Lender severally agrees, on the terms and conditions set forth
herein, that in consideration of the Payment Adjustments (if applicable to such
Lender) and (if applicable to such Lender) the amendment of the extensions of
credit under the Amended and Restated Credit Agreement it shall convert its term
extensions of credit under the Amended and Restated Credit Agreement into, in
part, loans in CHF owing by US Borrower (each such loan, a "Tranche A-CHF Term
Loan") and, in connection therewith it shall surrender all notes issued in
respect of extensions of credit under the Amended and Restated Credit Agreement,
all such extensions of credit shall be deemed converted in full by the Payment
Adjustments (if applicable to such Lender) and the amended agreements evidenced
hereby and by new notes issued at the Second Amendment and Restatement Date,
including Tranche A-CHF Term Loans as of the Second Amendment and Restatement
Date in an amount as is set forth on Schedule 2.1 opposite such Lender's name
under the heading "Tranche A-CHF Term Loans as of the Second Amendment and
Restatement Date." Each Tranche A-CHF Lender shall have, as of the Second
Amendment and Restatement Date, Tranche A-CHF Term Loans in the amount set forth
on Schedule 2.1 opposite such Lender's name under the heading "Tranche A-CHF
Term Loans as of the Second Amendment and Restatement Date." The parties hereto
acknowledge and agree that no Lender having a Tranche A-CHF Term Loan as of the
Second Amendment and Restatement Date shall have any commitment to make any
extension of credit on the Second Amendment and Restatement Date or at any other
time in connection with its allocation of Tranche A-CHF Term Loans as of such
date, other than the Payment Adjustments.
(ii) Each Tranche A-UK Lender severally agrees, on the terms
and conditions set forth herein, to make a single loan, in Pounds Sterling, to
UK Borrower (each such loan, a "Tranche A-UK Term Loan") on the Safeline Closing
Date in an amount of such Lender's Pro Rata Share of 26.7 million Pounds
Sterling. The Tranche A-UK Commitment of each Tranche A-UK Lender is set forth
on Schedule 2.1 opposite such Lender's name under the heading "Tranche A-UK
Commitments."
(iii) Each Tranche A-US Lender severally agrees, on the terms
and conditions set forth herein, that, in consideration of the Payment
Adjustments (if applicable to such Lender) and (if applicable to such Lender)
the amendment of the extensions of credit under the Amended and Restated Credit
Agreement, it shall convert its extensions of credit under the Amended and
Restated Credit Agreement into, in part, loans in U.S. Dollars owing by US
Borrower (each such loan, a "Tranche A-US Term Loan") and, in connection
therewith, it shall surrender all notes issued in respect of term extensions of
credit under the Amended and Restated Credit Agreement, all such extensions of
credit shall be deemed converted in full by the Payment
<PAGE>
-50-
Adjustments (if applicable to such Lender) and the amended agreements evidenced
hereby and by new notes issued at the Second Amendment and Restatement Date,
including loans owing by US Borrower (each such loan, a "Tranche A-US Term
Loan") as of the Second Amendment and Restatement Date in an amount as is set
forth on Schedule 2.1 opposite such Lender's name under the heading "Tranche
A-US Term Loans as of the Second Amendment and Restatement Date." Each Tranche
A-US Lender shall have, as of the Second Amendment and Restatement Date, Tranche
A-US Term Loans in the amount set forth on Schedule 2.1 opposite such Lender's
name under the heading "Tranche A-US Term Loans as of the Second Amendment and
Restatement Date." The parties hereto acknowledge and agree that no Lender
having a Tranche A-US Term Loan as of the Second Amendment and Restatement Date
shall have any commitment to make any extension of credit on the Second
Amendment and Restatement Date or at any other time in connection with the
allocation of Tranche A-US Term Loans as of such date, other than the Payment
Adjustments.
(b) [Reserved]
(c) Each Canadian Lender agrees, on the terms and conditions
set forth herein, to make loans in Canadian Dollars to Canadian Borrower (each
such loan, a "Canadian Loan") from time to time on any Business Day during the
period from the Safeline Closing Date to the Canadian Termination Date, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Lender's name under the heading "Canadian Commitments"
on Schedule 2.1(c) (such amount, as reduced pursuant to Section 2.6 or changed
as a result of one or more assignments under Section 4.8 or 11.8, such Lender's
"Canadian Commitment"); provided, however, that at no time shall the aggregate
principal amount of all Canadian Loans exceed the combined Canadian Commitments
of all Canadian Lenders. Subject to the other terms and conditions hereof,
Canadian Borrower may borrow under this subsection 2.1(c), prepay pursuant to
subsection 2.7(g)(ii) and reborrow pursuant to this subsection 2.1(c) from time
to time.
(d) Each Revolving Facility Lender severally agrees, on the
terms and conditions set forth herein, to make loans to each of the Revolving
Borrowers (each such loan, a "Revolving Loan") from time to time on any Business
Day during the period from the Original Closing Date to the Termination Date, in
an aggregate principal amount at any one time outstanding not to exceed the
amount set forth opposite such Lender's name under the heading "Revolving
Facility Commitments" on Schedule 2.1 (such amount, as reduced pursuant to
Section 2.6 or changed as a result of one or more assignments under Section 4.8
or 11.8, such Lender's "Revolving Facility Commitment") and in such currencies
as a Revolving Borrower may request pursuant to subsection 2.3(a)(E); provided,
however, that (1) Borrowings of Revolving Loans on the Original Closing Date
shall in no event exceed the Dollar Equivalent amount of U.S. $75.0 million; (2)
after giving effect to any Borrowing of Revolving Loans, the aggregate principal
Dollar Equivalent amount of all outstanding Revolving Loans, plus the aggregate
principal Dollar Equivalent amount of all outstanding Swing Line Loans, plus
(without duplication) the Effective Amount of all L/C Obligations (other than
Subsidiary L/C Obligations, except those of the UK Swing Line Borrowers) shall
not exceed the combined Revolving Facility Commitments of all Revolving Facility
Lenders; (3) the Aggregate Outstanding Revolving Credit of any Revolving
Facility Lender shall not at any time exceed such Lender's Revolving Facility
Commitment; (4) UK Borrower may borrow under the Revolving Facility only on and
after the Safeline Closing Date; and (5) after giving effect to any Borrowing of
Revolving Loans by UK Borrower, the aggregate principal Dollar Equivalent amount
of outstanding Revolving Loans owing by UK Borrower, plus (without duplication)
the Effective Amount of all L/C Obligations of Letters of Credit Issued for the
account of UK Borrower (other than any UK Borrower Swing Line L/C) shall not
exceed 20.0 million Pounds Sterling (the "UK Borrower Sublimit"). For purposes
of making any Revolving Loan or other extension of credit under the Revolving
Facility, other than a Revolving Loan pursuant to Section 2.18, any Swing Line
Loan pursuant to Section 2.16 and any Revolving Loan pursuant to Section 3.3,
there shall be deemed to be outstanding at all times Swing Line Loans in a
<PAGE>
-51-
minimum aggregate amount equal to the Assumed Swing Line Loan Amount. Any
Revolving Loan made under Section 2.18 or Section 3.3 shall be made by each
Revolving Facility Lender in an amount equal to its Pro Rata Share of the
Revolving Loan made thereunder, provided that no Revolving Facility Lender need
make such a Revolving Loan to the extent that the sum of the aggregate amount of
Swing Line Loans made to any Subsidiary Swing Line Borrower, plus the Subsidiary
L/C Effective Amount of all Letters of Credit issued for the account of such
Subsidiary Swing Line Borrower exceeds such Subsidiary Swing Line Borrower's
Subsidiary Swing Line Borrower Sublimit. Within the limits of each Revolving
Facility Lender's Revolving Facility Commitment (and, with respect to UK
Borrower, the sublimit set forth in clause (4) of the proviso to the first
sentence of this Section 2.1(d)), and subject to the other terms and conditions
hereof, each Revolving Borrower may borrow under this subsection 2.1(d), prepay
under subsection 2.7(g)(i), and reborrow under this subsection 2.1(d). The
Revolving Borrowers shall not request extensions of credit under the Revolving
Facility (including pursuant to Article III) that would result in UK Borrower
not having availability under its UK Borrower Sublimit of the Revolving Facility
to fund its obligations under the Safeline Seller Notes and the Safeline
Contingent Obligation.
(e) Amounts which are borrowed as Term Loans which are
repaid or prepaid may not be reborrowed.
2.2. Evidence of Debt; Notes.
(a) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Applicable
Borrower to such Lender resulting from each Loan made by such Lender, including
the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.
(b) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the class and type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(c) The entries made in the accounts maintained pursuant to
paragraph (a) or (b) of this Section 2.2 shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided, however,
that the failure of any Lender or the Administrative Agent to maintain such
accounts or any error therein shall not in any manner affect the obligation of
the Applicable Borrower to repay the Loans in accordance with the terms of this
Agreement.
(d) Subject to Section 2.23, each Applicable Borrower's
obligation to pay the principal of, and interest on, all the Loans made to it by
each Lender shall, if requested by any Lender, be evidenced (i) if Tranche A-CHF
Term Loans, by a promissory note substantially in the form of Exhibit H-1, with
blanks appropriately completed (each, a "Tranche A-CHF Term Note" and,
collectively, the "Tranche A-CHF Term Notes"), (ii) [Reserved], (iii) if Tranche
A-UK Term Loans, by a promissory note substantially in the form of Exhibit H-3,
with blanks appropriately completed (each, a "Tranche A-UK Term Note" and,
collectively, the "Tranche A-UK Term Notes"), (iv) if Tranche A-US Term Loans,
by a promissory note substantially in the form of Exhibit H-4, with blanks
appropriately completed (each, a "Tranche A-US Term Note" and, collectively, the
"Tranche A-US Term Notes"), (v) if Revolving Loans, by a promissory note
substantially in the form of Exhibit H-5, with blanks appropriately completed
(each, a "Revolving Note" and, collectively, the "Revolving Notes"), (vi) if a
Canadian Loan, by a promissory note substantially in the form of Exhibit H-5A,
with blanks appropriately completed (each, a "Canadian Revolving Note" and,
collectively, the "Canadian
<PAGE>
-52-
Revolving Notes"), and (vii) if Swing Line Loans, by a promissory note
substantially in the form of Exhibit H-6, with blanks appropriately completed
(each, a "Swing Line Note" and, collectively, the Swing Line Notes"). Each such
Lender shall make appropriate notations on the schedules annexed to the
applicable Note of the date, amount and maturity of each applicable Loan made by
it and the amount of each payment of principal made by the Applicable Borrower
with respect thereto. Each such Lender is irrevocably authorized by the
Applicable Borrower to make such notations on the applicable Note and each such
Lender's record shall be conclusive absent manifest error; provided, however,
that the failure of a Lender to make, or an error in making, a notation on any
Note with respect to any Loan shall not limit or otherwise affect the
obligations of the Applicable Borrower hereunder or under such Note to such
Lender. In connection with the increase in the Revolving Facility Commitments on
the Second Amendment and Restatement Date as part of the amendments to the
Amended and Restated Credit Agreement, each Revolving Facility Lender shall
surrender its notes issued in connection with its revolving facility commitments
under the Amended and Restated Credit Agreement and be issued new Revolving
Notes pursuant to this Section 2.2. In connection with the amendment and
conversion of the term extensions of credit under the Amended and Restated
Credit Agreement, each Lender having Term Loans or Term Loan Commitments as of
the Second Amendment and Restatement Date (other than Tranche A-UK Facility
Commitments or Tranche A-UK Term Loans) shall surrender its old notes issued in
connection with its term extensions of credit under the Amended and Restated
Credit Agreement and be issued the appropriate Term Notes pursuant to this
Section 2.2.
2.3. Procedure for Borrowings (Other Than Canadian
Borrowings). (a) The provisions of this Section 2.3 shall not apply to any
Borrowing of a Canadian Loan, which shall be governed solely by Section 2.3A.
Each Borrowing (other than of a Swing Line Loan) shall be made upon the
Applicable Borrower's irrevocable written notice (or telephonic notice promptly
confirmed in writing) delivered to the Administrative Agent in the form of a
Notice of Borrowing (which notice must be received by the Administrative Agent
prior to (i) 10:00 a.m. (London, England time), three Business Days prior to the
requested Borrowing Date, in the case of Offshore Currency Loans; (ii) 10:00
a.m. (New York City time), three Business Days prior to the requested Borrowing
Date, in the case of Offshore U.S. Dollar Loans; and (iii) 10:00 a.m. (New York
City time), one Business Day prior to the requested Borrowing Date, in the case
of ABR Loans, and in each case not more than five Business Days prior to the
requested Borrowing Date) specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate amount not less than the Minimum Tranche;
(B) the requested Borrowing Date, which shall be a
Business Day;
(C) the Type of Loans comprising the Borrowing;
(D) in the case of a Borrowing of LIBOR Rate Loans, the
duration of the Interest Period therefor; and
(E) in the case of a Borrowing of Offshore Currency Loans, the
Applicable Currency.
(b) The Dollar Equivalent amount of any Borrowing of Revolving
Facility Loans in an Offshore Currency will be determined by the Administrative
Agent for such Borrowing on the Computation Date therefor in accordance with
subsection 2.5(a). Upon receipt of a Notice of Borrowing, the Administrative
Agent will promptly notify each Lender thereof and of the amount of such
Lender's Pro Rata Share of the Borrowing. In the case of a Borrowing of
Revolving Facility Loans comprised of Offshore Currency Loans,
<PAGE>
-53-
such notice will provide the approximate amount of each Lender's Pro Rata Share
of the Borrowing, and the Administrative Agent will, upon the determination of
the Dollar Equivalent amount of the Borrowing as specified in the Notice of
Borrowing, promptly notify each Lender of the exact amount of such Lender's Pro
Rata Share of the Borrowing.
(c) Each Lender will make the amount of its Pro Rata Share of each
Borrowing available to the Administrative Agent for the account of the
Applicable Borrower at the Agent's Payment Office on the Borrowing Date
requested by such Applicable Borrower in Same Day Funds and in the requested
currency (i) in the case of a Borrowing comprised of Loans in U.S. Dollars, by
11:00 a.m. (New York City time), and (ii) in the case of a Borrowing comprised
of Offshore Currency Loans, by such time (London, England time) as the
Administrative Agent may specify. The proceeds of all such Loans will promptly
be made available to the Applicable Borrower by the Administrative Agent at such
office by crediting the account of such Borrower or UK Borrower, as the case may
be, where requested by such Applicable Borrower with the aggregate of the
amounts made available to the Administrative Agent by the Lenders and in like
funds as received by the Administrative Agent.
(d) After giving effect to any Borrowing, there may not be more than
four different Interest Periods in effect for all Tranche A-CHF Term Loans, four
different Interest Periods in effect for all Tranche B Term Loans, four
different Interest Periods in effect for all Tranche A-UK Term Loans, four
different Interest Periods in effect for all Tranche A-US Term Loans, and six
different Interest Periods in effect for all Revolving Loans. No more than four
different Applicable Currencies shall be utilized for all outstanding Revolving
Loans.
(e) ABR Loans shall only be made in U.S. Dollars.
2.3A Procedure for Canadian Borrowings. (a) Each Canadian Borrowing
shall be made upon Canadian Borrower's irrevocable written notice delivered to
the Canadian Agent in the form of a Notice of Canadian Borrowing (which notice
must be received by the Canadian Agent prior to (i) 10:00 a.m. (New York City
time) two Business Days prior to the requested Borrowing Date, in the case of BA
Equivalent Rate Loans; and (ii) 9:00 a.m. (New York City time) on the requested
Borrowing Date, in the case of Prime Rate Loans, and in each case not more than
five Business Days prior to the requested Borrowing Date) specifying:
(A) the amount of the Canadian Borrowing, which shall be in an
aggregate amount not less than the Minimum Tranche;
(B) the requested Borrowing Date, which shall be a Business Day;
(C) the Type of Loans comprising the Canadian Borrowing; and
D) in the case of a Borrowing of BA Equivalent Rate Loans,
the duration of the Interest Period therefor.
(b) Upon receipt of a Notice of Canadian Borrowing, the Canadian Agent
will promptly notify each Canadian Lender thereof and of the amount of such
Canadian Lender's Percentage of the Canadian Borrowing.
(c) Each Canadian Lender will make the amount of its Percentage of each
Canadian Borrowing available to the Canadian Agent for the account of Canadian
Borrower at the applicable Agent's
<PAGE>
-54-
Payment Office by 11:00 a.m. (New York City time) on the Borrowing Date
requested by Canadian Borrower in Same Day Funds. The proceeds of all such
Canadian Loans will then be made available to Canadian Borrower by the Canadian
Agent at such office by crediting the account of Canadian Borrower on the books
of the Canadian Agent with the aggregate of the amounts made available to the
Canadian Agent by the Canadian Lenders and in like funds as received by the
Canadian Agent.
(d) After giving effect to any Canadian Borrowing, there may not be
more than four different Interest Periods in effect in respect of all Canadian
Loans then outstanding.
2.4. Conversion and Continuation Elections for Borrowings (Other Than
Canadian Borrowings). (a) The provisions of this Section 2.4 shall not apply to
any conversion or continuation election with respect to Canadian Loans, which
shall be governed solely by Section 2.4A. Any Applicable Borrower may, upon
irrevocable written notice to the Administrative Agent in accordance with
subsection 2.4(b) with respect to Loans made to it:
(i) elect, as of any Business Day in the case of ABR Loans, or as of
the last day of the applicable Interest Period (other than extensions of
credit under the Original Credit Agreement as of the Amendment and
Restatement Date, which election may be as of any Business Day), in the case
of Offshore U.S. Dollar Loans, to convert any such Loans (or any part
thereof in an amount not less than the Minimum Tranche) into Loans in U.S.
Dollars of the other Type; or
(ii) elect, as of the last day of the applicable Interest Period
(other than extensions of credit under the Original Credit Agreement as
of the Amendment and Restatement Date, which election may be as of any
Business Day), to continue any Loans having Interest Periods expiring on
such day (or any part thereof in an amount not less than the Minimum Tranche);
provided, however, that if at any time the aggregate amount of Offshore U.S.
Dollar Loans in respect of any Borrowing is reduced, by payment, prepayment or
conversion of part thereof, to be less than the Minimum Tranche, such Offshore
U.S. Dollar Loans shall automatically convert into ABR Loans, and on and after
such date the right of the Applicable Borrower to continue such Loans as, and
convert such Loans into, Offshore U.S. Dollar Loans shall terminate unless and
until such Loans are increased, by additional Borrowings or Conversions, to be
at least the Minimum Tranche.
(b) The Applicable Borrower shall deliver a Notice of
Conversion/Continuation to be received by the Administrative Agent not later
than (i) 10:00 a.m. (London, England time), three Business Days prior to the
Conversion/Continuation Date, if the Loans are to be continued as Offshore
Currency Loans; (ii) 10:00 a.m. (New York City time), three Business Days prior
to the Conversion/Continuation Date, if the Loans are to be converted into or
continued as Offshore U.S. Dollar Loans; and (iii) 10:00 a.m. (New York City
time), one Business Day prior to the Conversion/Continuation Date, if the Loans
are to be converted into ABR Loans, and in each case not more than five Business
Days prior to the Conversion/Continuation Date, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount and Type of Loans to be converted or
continued;
(C) the Type of Loans resulting from the proposed conversion or
continuation; and
<PAGE>
-55-
(D) other than in the case of conversions into ABR Loans, the
duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore U.S. Dollar Loans, the Applicable Borrower has failed to select timely
a new Interest Period to be applicable to such Offshore U.S. Dollar Loans, the
Applicable Borrower shall be deemed to have elected to convert such Offshore
U.S. Dollar Loans into ABR Loans effective as of the expiration date of such
Interest Period. If the Applicable Borrower has failed to select a new Interest
Period to be applicable to Offshore Currency Loans by the applicable time on the
third Business Day in advance of the expiration date of the current Interest
Period applicable thereto as provided in subsection 2.4(b), the Applicable
Borrower shall be deemed to have elected to continue such Offshore Currency
Loans on the basis of a one month Interest Period.
(d) The Administrative Agent will promptly notify each Lender of its
receipt of a Notice of Conversion/Continuation pursuant to this Section 2.4, or,
if no timely notice is provided by the Applicable Borrower, the Administrative
Agent will promptly notify each Lender of the details of any automatic
conversion. All conversions and continuations shall be made ratably according to
the respective outstanding principal amounts of the Loans held by each Lender
with respect to which the notice was given.
(e) Unless the Required Lenders otherwise agree or otherwise as
permitted hereby, during the existence of an Event of Default or Unmatured Event
of Default, no Applicable Borrower may elect to have a Loan converted into an
Offshore U.S. Dollar Loan or continued as a LIBOR Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than four different Interest Periods in effect for all
Tranche A-CHF Term Loans, four different Interest Periods in effect for all
Tranche A-UK Term Loans, four different Interest Periods in effect for all
Tranche A-US Term Loans, and six different Interest Periods in effect for all
Revolving Loans.
2.4A Conversion and Continuation Elections for Canadian Borrowings.
(a) Canadian Borrower may, upon irrevocable written notice to the Canadian Agent
in accordance with subsection 2.4A(b):
(i) elect, as of any Business Day, in the case of Prime Rate Loans,
or as of the last day of the applicable Interest Period, in the case of BA
Equivalent Rate Loans, to convert any such Canadian Loans (or any part thereof
in an amount not less than the Minimum Tranche) into Canadian Loans of another
Type; or
(ii) elect, as of the last day of the applicable Interest Period,
to continue any Canadian Loans having Interest Periods expiring on such day
(or any part thereof in an amount not less than the Minimum Tranche);
provided, however, that if at any time the aggregate amount of BA Equivalent
Rate Loans in respect of any Canadian Borrowing is reduced, by payment,
prepayment or conversion of part thereof, to be less than the Minimum Tranche,
such BA Equivalent Rate Loans shall automatically convert into Prime Rate Loans,
and on and after such date the right of Canadian Borrower to continue such
Canadian Loans as, or convert such Canadian Loans into, BA Equivalent Rate Loans
shall terminate.
(b) Canadian Borrower shall deliver a Notice of Conversion/Continuation
to be received by the Agents not later than (i) 10:00 a.m. (New York City time)
two Business Days prior to the Conversion/Continuation Date, if the Canadian
Loans are to be converted into or continued as BA Equivalent
<PAGE>
-56-
Rate Loans; and (ii) 9:00 a.m. (New York City time) on the
Conversion/Continuation Date, if the Canadian Loans are to be converted into
Prime Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Canadian Loans to be converted or renewed;
(C) the Type of Canadian Loans resulting from the proposed conversion
or continuation; and
(D) other than in the case of conversions into Prime Rate Loans, the
duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to BA
Equivalent Rate Loans, Canadian Borrower has failed to select timely a new
Interest Period to be applicable to such BA Equivalent Rate Loans, Canadian
Borrower shall be deemed to have elected to convert such BA Equivalent Rate
Loans into Prime Rate Loans effective as of the expiration date of such Interest
Period.
(d) The Canadian Agent will promptly notify each Canadian Lender of its
receipt of a Notice of Conversion/Continuation pursuant to this Section 2.4A,
or, if no timely notice is provided by Canadian Borrower, the Canadian Agent
will promptly notify each Lender of the details of any automatic conversion. All
conversions and continuations shall be made ratably according to the respective
outstanding principal amounts of the Canadian Loans held by each Canadian Lender
with respect to which the notice was given.
(e) Unless the Required Lenders otherwise agree, during the existence
of an Event of Default or Unmatured Event of Default, Canadian Borrower may not
elect to have a Canadian Loan converted into or continued as a BA Equivalent
Rate Loan and all Canadian Loans which are BA Equivalent Rate Loans shall be
automatically converted into a Prime Rate Loan at the end of the relevant
Interest Period so long as an Event of Default or Unmatured Event of Default is
in existence.
(f) After giving effect to any conversion or continuation of Canadian
Loans, there may not be more than four different Interest Periods in effect in
respect of all Canadian Loans together then outstanding.
2.5. Utilization of Commitments in Offshore Currencies. (a) The
Administrative Agent will determine the Dollar Equivalent amount with respect
to:
(i) any Borrowing (other than of Swing Line Loans) comprised of
Offshore Currency Loans three Business Days prior to the requested Borrowing
Date,
(ii) any Swing Line Loans made in U.S. Dollars or Pounds Sterling,
as of the proposed Borrowing Date thereof,
(iii) any Issuance of a Letter of Credit for the account of any
Revolving Borrower or any UK Swing Line Borrower in an Offshore Currency as of
the requested Issuance Date,
(iv) any drawing under a Letter of Credit Issued for the account of any
Revolving Borrower or any UK Swing Line Borrower in an Offshore Currency as of
the related Honor Date,
<PAGE>
-57-
(v) all outstanding Offshore Currency Loans (other than Swing Line
Loans not made in U.S. Dollars or Pounds Sterling), plus all Swing Line Loans
made in U.S. Dollars or Pounds Sterling, plus the Effective Amount of all L/C
Obligations under Letters of Credit Issued for the account of any Revolving
Borrower or any UK Swing Line Borrower as of the last Business Day of each month
and as of any other date selected by the Administrative Agent,
(vi) the aggregate Dollar Equivalent amount of the Subsidiary Swing
Line Borrower Sublimits of all Subsidiary Swing Line Borrowers other than the UK
Swing Line Borrowers as of each Adjustment Date,
(vii) any ABR Loan to be made in lieu of an Offshore Currency Loan
pursuant to subsection 2.5(b) as of the Business Day prior to the proposed
Borrowing Date,
(viii) the aggregate sum (without duplication) of the amount of all
Offshore Currency Loans (other than Swing Line Loans), plus all L/C Obligations
of the Revolving Borrowers, plus all Swing Line Loans, plus the Subsidiary L/C
Effective Amount of all Subsidiary L/C Obligations immediately prior to and
after giving effect to any Revolving Loan made under Section 2.18 as of the
proposed date of the making of any such Revolving Loan,
(ix) the aggregate sum of the amount of all Offshore Currency Loans
(other than Swing Line Loans), plus all L/C Obligations of the Revolving
Borrowers, plus all Swing Line Loans of the Subsidiary Swing Line Borrowers
other than the UK Swing Line Borrowers, plus the Subsidiary L/C Effective Amount
of all Subsidiary L/C Obligations immediately prior to and after giving effect
to any Revolving Loan made under Section 3.3 as of the proposed date of the
making of any such Revolving Loan,
(x) any outstanding Offshore Currency Loan as of any redenomination
date pursuant to this Section 2.5 or Section 4.5, and
(xi) all Offshore Currency Loans, plus the Effective Amount of all L/C
Obligations on any date on which the Revolving Facility Commitments, the US
Borrower Sublimit or the Subsidiary Swing Line Borrower Sublimits are reduced
pursuant to Section 2.6.
(b) In the case of a proposed Borrowing (other than of Swing Line
Loans) under the Revolving Facility comprised of Offshore Currency Loans, in the
event that any Revolving Facility Lender gives notice to the Administrative
Agent not later than 10:00 a.m. (London, England time) one Business Day prior to
the proposed Borrowing Date that it is unable to fund Revolving Facility Loans
in an Offshore Currency at a reasonable cost to it, such Lender shall make its
Pro Rata Share of the proposed Borrowing as an ABR Loan in the Dollar Equivalent
amount of the amount it otherwise would have made in such Offshore Currency;
provided, however, that the Lenders shall be under no obligation to make
Offshore Currency Loans in the requested Offshore Currency as part of such
Borrowing if the Administrative Agent has received notice from the Required
Revolving Facility Lenders by 10:00 a.m. (London, England time), two Business
Days prior to the day of such Borrowing, that such Lenders cannot provide Loans
in the requested Offshore Currency, in which event the Administrative Agent will
promptly give notice to the applicable Revolving Borrower that the Borrowing in
the requested Offshore Currency is not then available, and notice thereof also
will be given promptly by the Administrative Agent to the Lenders. If the
Administrative Agent shall have so notified the applicable Revolving Borrower
that, pursuant to any such notice from the Required Revolving Facility Lenders,
any such Borrowing in a requested Offshore Currency is not then available, such
Revolving Borrower may, by notice to the Administrative Agent not later than
10:00 a.m. (London, England time), on the requested date of
<PAGE>
-58-
such Borrowing, withdraw the Notice of Borrowing relating to such requested
Borrowing. If such Revolving Borrower does so withdraw such Notice of Borrowing,
the Borrowing requested therein shall not occur and the Administrative Agent
will promptly so notify each Lender. If such Revolving Borrower does not so
withdraw such Notice of Borrowing, the Administrative Agent will promptly so
notify each Lender and such Notice of Borrowing shall be deemed to be a Notice
of Borrowing that requests a Borrowing comprised of ABR Loans in an aggregate
amount equal to the Dollar Equivalent of the amount of the originally requested
Borrowing in the Notice of Borrowing (however, not in excess of the aggregate
Available Revolving Facility Commitment of all Revolving Facility Lenders at
such time); and in such notice by the Administrative Agent to each Lender the
Administrative Agent will state such aggregate amount of such Borrowing in U.S.
Dollars and such Lender's Pro Rata Share thereof.
(c) In the case of a proposed continuation of Offshore Currency Loans
under the Revolving Facility for an additional Interest Period pursuant to
Section 2.4, in the event that any Revolving Facility Lender gives notice to the
Administrative Agent that it is unable to continue Revolving Facility Loans in
an Offshore Currency at a reasonable cost to it, such Lender's Loans in such
Offshore Currency shall be repaid on the last day of the current Interest
Period; provided, however, that the Lenders shall be under no obligation to
continue such Offshore Currency Loans if the Administrative Agent has received
notice from the Required Revolving Facility Lenders by 10:00 a.m. (London,
England time), three Business Days prior to the day of such continuation, that
such Lenders cannot continue to provide Loans in the relevant Offshore Currency,
in which event the Administrative Agent will promptly give notice to the
applicable Revolving Borrower that the continuation of such Offshore Currency
Loans in the relevant Offshore Currency is not then available, and notice
thereof also will be given promptly by the Administrative Agent to the Lenders.
If the Administrative Agent shall have so notified such Revolving Borrower that,
pursuant to such notice from the Required Revolving Facility Lenders, any such
continuation of Offshore Currency Loans is not then available, any Notice of
Continuation/Conversion with respect thereto shall be deemed withdrawn and such
Offshore Currency Loans shall be repaid on the last day of the Interest Period
with respect to such Offshore Currency Loans.
(d) Notwithstanding anything herein to the contrary, during the
existence of an Event of Default, upon the request of the Required Revolving
Facility Lenders (in the case of clause (i) of this subsection), the Lenders
holding at least a majority of the Tranche A-CHF (in the case of clause (ii) of
this subsection) or the Lenders holding at least a majority of the Tranche A-UK
Term Loans (in the case of clause (iii) of this subsection), (i) all or any part
of any outstanding LIBOR Rate Loans under the Revolving Facility shall be
redenominated (if not Offshore U.S. Dollar Loans) and converted into ABR Loans
with effect from the last day of the Interest Period with respect to such LIBOR
Rate Loans, (ii) at the end of the current Interest Period therefor, each
Tranche A-CHF Term Loan shall not be continued for any Interest Period but
instead shall bear interest at a rate per annum equal to the Applicable Margin
for Tranche A-CHF Term Loans, plus the Overnight Rate for the Applicable
Currency from time to time in effect or such other rate as may be agreed to by
CH Borrower and the Lenders holding at least a majority of the Tranche A-CHF
Term Loans and specified to the Administrative Agent, and (iii) at the end of
the current Interest Period therefor, each Tranche A-UK Term Loan shall not be
continued for any Interest Period but instead shall bear interest at a rate per
annum equal to the Applicable Margin for Tranche A-UK Term Loans, plus the
Overnight Rate for the Applicable Currency from time to time in effect or such
other rate as may be agreed to by UK Borrower and the Lenders holding at least a
majority of the Tranche A-UK Term Loans and specified to the Administrative
Agent. The Administrative Agent will promptly notify the applicable Borrower of
any request pursuant to the foregoing sentence.
(e) The Revolving Borrowers shall be entitled to request that Revolving
Facility Loans hereunder also be permitted to be made in any other lawful
currency constituting a eurocurrency, in addition to
<PAGE>
-59-
the eurocurrencies specified in the definition of "Offshore Currency" herein,
that in the opinion of the Required Revolving Facility Lenders is at such time
freely traded in the offshore interbank foreign exchange markets and is freely
transferable and freely convertible into U.S. Dollars (an "Agreed Alternative
Currency"). The applicable Revolving Borrower shall deliver to the
Administrative Agent any request for designation of an Agreed Alternative
Currency not later than 10:00 a.m. (London, England time), at least ten Business
Days in advance of the date of any Borrowing hereunder proposed to be made in
such Agreed Alternative Currency. Upon receipt of any such request the
Administrative Agent will promptly notify the Revolving Facility Lenders
thereof, and each Lender will use its best efforts to respond to such request
within two Business Days of receipt thereof. If the Administrative Agent has not
received any response from a Revolving Facility Lender by the end of the day
four Business Days prior to the date of Borrowing to be made in such Agreed
Alternative Currency, the Administrative Agent shall conclusively presume the
assent of such Lender. Each Revolving Facility Lender may grant or accept such
request in its sole discretion. The Administrative Agent will promptly notify
the applicable Revolving Borrower of the acceptance or rejection of any such
request.
2.6. Reduction or Termination of Commitments. (a) The Borrowers may,
upon not less than five Business Days' prior notice to the Administrative Agent,
terminate the Commitments in any Facility (other than the Canadian Facility), or
permanently reduce the Commitments in any Facility (other than the Canadian
Facility) by an aggregate amount equal to the Dollar Equivalent of U.S. $1.0
million or a higher integral multiple of U.S. $1.0 million; unless, in the case
of the Revolving Facility, after giving effect thereto and to any prepayments of
the Revolving Facility Loans made on the effective date of such termination or
reduction, the then outstanding principal Dollar Equivalent amount of all
Revolving Facility Loans (including the Assumed Swing Line Loan Amount), plus
(without duplication) the Effective Amount of all L/C Obligations (other than
Subsidiary L/C Obligation, except those of the UK Swing Line Borrowers) together
would exceed the amount of the combined Revolving Facility Commitments of all
Revolving Facility Lenders then in effect. The Borrowers may, upon not less than
five Business Days' prior notice to the Administrative Agent and the Applicable
Swing Line Lender, terminate or permanently reduce the Subsidiary Swing Line
Borrower Sublimit of any Subsidiary Swing Line Borrower or the US Borrower
Sublimit; unless, after giving effect thereto and to any prepayment of the Swing
Line Loans made on the effective date of such termination or reduction the then
outstanding Dollar Equivalent amount of all Swing Line Loans, plus the
Subsidiary L/C Effective Amount of all Subsidiary L/C Obligations would exceed
the Dollar Equivalent amount of the aggregate of the Subsidiary Swing Line
Borrower Sublimits then in effect, plus the US Borrower Sublimit then in effect.
(b) There are no commitments to make any Tranche A-CHF Term Loans or
Tranche A-US Term Loans as of the Second Amendment and Restatement Date other
than by conversion of existing term extensions of credit under the Amended and
Restated Credit Agreement and the Payment Adjustments; the aggregate amount
thereof as of the Second Amendment and Restatement Date reflects an adjustment
and conversion of term loan extensions of credit previously made by the Lenders
on the Amendment and Restatement Date.
(c) The aggregate amount of the Revolving Commitments shall be
automatically and permanently terminated on the Termination Date. The aggregate
amount of the Canadian Commitments shall be automatically and permanently
reduced to zero on the Canadian Termination Date.
(d) Canadian Borrower shall have the right at any time or from time to
time (i) so long as no Canadian Loans will be outstanding as of the date
specified for termination, to terminate the Canadian Commitments and (ii) to
permanently reduce the aggregate amount of the unutilized Canadian Commitments
of all the Canadian Lenders; provided, however, that (x) Canadian Borrower shall
give five Business Days notice of each such termination or reduction to the
Canadian Agent and the Canadian Lenders, and (y) each partial
<PAGE>
-60-
reduction shall be in an aggregate amount at least equal to Cdn.$1.0 million (or
a larger multiple of Cdn.$1.0 million).
(e) Once reduced in accordance with this Section, the Commitments may
not be increased or reinstated. Any reduction of the Commitments in any Facility
shall be applied to each Lender's Commitment in such Facility according to its
Pro Rata Share or Percentage, as applicable. All accrued Facility Fees or
Canadian Facility Fees, as the case may be, in respect of any Facility to, but
not including, the effective date of any reduction or termination of Commitments
in such Facility shall be paid on the effective date of such reduction or
termination.
2.7. Prepayments. (a) So long as any Term Loans are outstanding, within
20 days following each date on which US Borrower or any Subsidiary receives any
Net Cash Proceeds from any Taking or Destruction or loss of title to any
Mortgaged Real Property, a Dollar Equivalent amount equal to 100% of such Net
Cash Proceeds shall be applied as a mandatory prepayment of principal of the
Term Loans; provided, however, that so long as no Event of Default or Unmatured
Event of Default then exists and such proceeds do not exceed the Dollar
Equivalent amount of U.S. $10.0 million, such proceeds shall not be required to
be so applied on such date to the extent that the Borrowers have delivered an
Officers' Certificate to the Administrative Agent on or prior to such date
stating that such proceeds shall be used to replace or restore (in accordance
with the procedures set forth in the Mortgage) any properties or assets in
respect of which such proceeds were paid within 360 days following the date of
the receipt of such proceeds (which certificate shall set forth the estimates of
the proceeds to be so expended); provided, further, however, that (i) if the
amount of such proceeds exceeds the Dollar Equivalent amount of U.S. $10.0
million, then the entire amount and not just the portion in excess of the Dollar
Equivalent amount of U.S. $10.0 million shall be applied as a mandatory
prepayment of Term Loans as provided above in this subsection 2.7(a) and (ii) if
all or any portion of such proceeds not required to be applied to the prepayment
of Term Loans pursuant to the preceding proviso are not so used within 360 days
after the date of the receipt of such proceeds, such remaining portion shall be
applied on the last day of such period (or the next preceding Business Day if
such last day is not a Business Day) as a mandatory prepayment of principal of
the Term Loans as provided above in this subsection 2.7(a). Each such prepayment
shall be applied as set forth in subsection 2.7(f).
(b) So long as any Term Loans are outstanding, within 90 days after the
end of each fiscal year of US Borrower ending after December 31, 1996, the Term
Loans shall be prepaid in a Dollar Equivalent amount equal to 75% of Excess Cash
Flow for such fiscal year; provided, however, that if the Debt to EBITDA Ratio
as of the end of the fiscal year immediately preceding the date of any such
prepayment is less than 3.50 to 1.0, such percentage shall be 50%. Each such
prepayment shall be applied as set forth in subsection 2.7(f).
(c) So long as any Term Loans are outstanding, within 30 days after the
receipt by US Borrower or any Subsidiary of Net Cash Proceeds from any Asset
Sale, the Term Loans shall be prepaid in a Dollar Equivalent amount equal to
100% of the Net Cash Proceeds of such Asset Sale; provided, however, that the
Net Cash Proceeds from any Asset Sale permitted by each of subsection 8.2(d) and
subsection 8.2(i) shall in each case not be required to be so applied to the
prepayment of the Term Loans on such date if (i) no Event of Default or
Unmatured Event of Default then exists and (ii) the Borrowers deliver an
Officers' Certificate to the Administrative Agent on or prior to such date
stating that such Net Cash Proceeds shall be reinvested in the business of the
Borrowers or any Subsidiary within 180 days following the date of such Asset
Sale (which certificate shall set forth the estimates of the proceeds to be so
expended); provided, further, however, that if all or any portion of such Net
Cash Proceeds not so applied to the prepayment of Term Loans is not so used
within such 180 day period, such remaining portion shall be applied on the last
day of such period (or the next
<PAGE>
-61-
preceding Business Day if such last day is not a Business Day) as a mandatory
prepayment of principal of outstanding Term Loans as provided above in this
subsection 2.7(c). Each such prepayment shall be applied as set forth in
subsection 2.7(f).
(d) So long as any Term Loans are outstanding, the Term Loans shall be
prepaid concurrently with the receipt of any Net Cash Proceeds from the issuance
of any Indebtedness by US Borrower or any Subsidiary (other than any
Indebtedness permitted by Section 8.5) in a Dollar Equivalent amount equal to
100% of such Net Cash Proceeds. Each such prepayment shall be applied as set
forth in subsection 2.7(f).
(e) So long as any Term Loans are outstanding, the Term Loans shall be
prepaid concurrently with the receipt of any Net Cash Proceeds from any capital
contribution to US Borrower or any Subsidiary or from the issuance or sale of
any equity securities of M-T Investors, Holding or any of its Subsidiaries or
any other direct or indirect parent of US Borrower (other than (w) the Equity
Issuance, (x) the exercise of employee stock options and the repayment of loans
to employees, (y) the issuance of equity to William Donnelly or to the sellers
in the Safeline Acquisition (not to exceed U.S. $6.0 million in total proceeds),
and (z) in each case, contributions from or issuances to another Company) in a
Dollar Equivalent amount equal to 50% of such Net Cash Proceeds; provided,
however, that no such prepayment shall be required in connection with the
issuance or sale by Holding of any equity securities of Holding to the Investors
or from the proceeds of any capital contribution therefrom to US Borrower or any
Subsidiary in an aggregate amount of Net Cash Proceeds up to the Dollar
Equivalent amount of U.S. $35.0 million since the Original Closing Date (over
and above the Equity Issuance) if (i) no Event of Default or Unmatured Event of
Default then exists, (ii) such Net Cash Proceeds are contemporaneously utilized
by US Borrower and the Subsidiaries in their business, and (iii) such Net Cash
Proceeds are not utilized by US Borrower or any Subsidiary, directly or
indirectly, to redeem, retire or acquire any other Indebtedness of US Borrower
or any Subsidiary. Notwithstanding the foregoing, if the net cash proceeds of
the IPO are applied to repurchase the Senior Subordinated Notes and pay related
expenses and premiums pursuant to the tender offer therefor being consummated
concurrently with the transactions to occur on the Second Amendment and
Restatement Date any excess proceeds of such IPO need not be applied to prepay
the Term Loans. Each such prepayment shall be applied as set forth in subsection
2.7(f).
(f) Each prepayment of the Term Loans required by subsections (a)-(e)
of this Section 2.7 shall be applied pro rata among the Term Loan Facilities
(based on the then remaining amounts of the Amortization Payments of the Term
Loan Facilities) and, as to each Term Loan Facility, first, to the next
immediately succeeding scheduled quarterly Amortization Payment of such Term
Loan Facility as set forth in the relevant subsection of Section 2.9 and,
second, pro rata to the remaining Amortization Payments under such Term Loan
Facility as set forth in the relevant subsection of Section 2.9. Subject to
subsection 2.10(b), all prepayments of Term Loans shall be made together with
all accrued interest thereon and any amounts required by Section 4.4, and all
such payments shall be applied to the payment of interest and such Section 4.4
amounts before application to principal. Without prejudice to the obligations to
prepay as set out in this Section 2.7, any Applicable Borrower proposing to make
any prepayment under this Section 2.7 will, prior to making any such prepayment,
take all steps required of it to obtain any consents, authorizations or other
approvals or take any other action which may at any relevant time be required of
it in respect of any such prepayment to be made by it (including taking all
requisite steps under Chapter VI of the Companies Act 1985 of Great Britain).
(g) (i) Subject to Section 4.4, any Applicable Borrower may, at any
time or from time to time, ratably prepay, without premium or penalty, Loans
under the Revolving Facility or under the Term Loan Facilities in whole or in
part, in an aggregate Dollar Equivalent principal amount of at least U.S. $1.0
million and a higher integral multiple of 1.0 million units of the Applicable
Currency. The Applicable Borrower shall
<PAGE>
-62-
deliver a notice of prepayment in accordance with Section 11.2 to be received by
the Administrative Agent not later than (i) 10:00 a.m. (London, England time),
three Business Days in advance of the prepayment date, if the Loans to be
prepaid are LIBOR Rate Loans, and (ii) 10:00 a.m. (New York City time), one
Business Day prior to the prepayment date, if the Loans to be prepaid are ABR
Loans (and in each case on not more than five Business Days' prior notice). Such
notice of prepayment shall specify the date and amount of such prepayment and
whether such prepayment is of ABR Loans, LIBOR Rate Loans, or any combination
thereof, whether Revolving Loans or Term Loans are being prepaid and the
Applicable Currency. Such notice shall not thereafter be revocable by the
Applicable Borrower. The Administrative Agent will promptly notify each Lender
thereof and of such Lender's Pro Rata Share of such prepayment. If such notice
is given by any Applicable Borrower, such Applicable Borrower shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to each
such date on the amount prepaid and any amounts required pursuant to Section
4.4. Each such prepayment (if a prepayment of Term Loans) shall be applied pro
rata among the Term Loan Facilities (based on the then remaining amounts of the
Amortization Payments of the Term Loan Facilities) and, as to each Term Loan
Facility, first, to the next immediately succeeding scheduled quarterly
Amortization Payment of such Term Loan Facility and, second, pro rata to the
then remaining amounts of the Amortization Payments under such Term Loan
Facility, subject, however, to clause (iii) of subsection 2.7(h).
(ii) Subject to Section 4.4, Canadian Borrower may, at any time or from
time to time, ratably prepay Canadian Loans in whole or in part, in an aggregate
principal amount of at least Cdn. $250,000 and an integral multiple of Cdn.
$250,000. Canadian Borrower shall deliver a notice of prepayment in accordance
with Section 11.2 to be received by the Canadian Agent not later than (i) 10:00
a.m. (New York City time) at least two Business Days in advance of the
prepayment date if the Loans to be prepaid are BA Equivalent Rate Loans and (ii)
9:00 a.m. (New York City time) on the prepayment date if the Loans to be prepaid
are Prime Rate Loans. Such notice of prepayment shall specify the date and
amount of such prepayment and whether such prepayment is of Prime Rate Loans, BA
Equivalent Rate Loans, or any combination thereof. Such notice shall not
thereafter be revocable by Canadian Borrower. The Canadian Agent will promptly
notify each Canadian Lender thereof and of such Canadian Lender's Percentage of
such prepayment. If such notice is given by Canadian Borrower, Canadian Borrower
shall make such prepayment and the payment amount specified in such notice shall
be due and payable on the date specified therein, together with, in the case of
BA Equivalent Rate Loans, accrued interest to each such date on the amount
prepaid and any amounts required pursuant to Section 4.4.
(h) With respect to each prepayment of Loans pursuant to Section 2.7,
the Applicable Borrower may designate the Types of Loans which are to be repaid
and the specific Borrowing(s) under the affected Facility pursuant to which
made; provided, however, that (i) LIBOR Rate Loans made pursuant to a specific
Facility may be designated for prepayment only on the last day of an Interest
Period applicable thereto unless all LIBOR Rate Loans made pursuant to such
Facility with Interest Periods ending on such date of prepayment and all ABR
Loans made pursuant to such Facility have been paid in full; (ii) if any
prepayment of LIBOR Rate Loans made pursuant to a single Borrowing shall reduce
the outstanding Loans made pursuant to such Borrowing to an amount less than the
Minimum Tranche, such Borrowing shall be immediately converted into, if such
Borrowing is Offshore U.S. Dollar Loans, ABR Loans, and, if such Borrowing is
Offshore Currency Loans, Offshore Currency Loans having an Interest Period of
one month; and (iii) each repayment of any Loans made pursuant to a Borrowing
shall be applied pro rata among such Loans, unless an Applicable Borrower shall
have become obligated to make any payment pursuant to Section 4.1, in which case
such Applicable Borrower may prepay the Loans held solely by the Lender or
Lenders to which it is obligated to make such payment. In the absence of a
designation by the Applicable Borrower as described in the preceding
<PAGE>
-63-
sentence, the Administrative Agent shall, subject to the above, make such
designation in its sole discretion with a view, but no obligation, to minimize
funding losses owing under Section 4.4.
(i) Notwithstanding subsections 2.7(a) and (c), to the extent that the
Net Cash Proceeds required to be applied to a prepayment of the Loans pursuant
to such subsections (1) are prohibited or delayed by applicable law from being
repatriated to the jurisdiction of the Borrower or UK Borrower, as the case may
be, required to make any such prepayment or (2) may not be so repatriated
without causing an adverse tax consequence, such Net Cash Proceeds required to
be applied to a prepayment of the Loans pursuant to such subsections shall, so
long as no Event of Default or Unmatured Event of Default has occurred and is
continuing, not be required to be applied as a prepayment of the Loans at the
time provided in such subsections to the extent that the aggregate Dollar
Equivalent amount of Net Cash Proceeds proposed to be not so applied for such
event when added to the aggregate Dollar Equivalent amount of Net Cash Proceeds
from all prior or concurrent events which have not been applied by virtue of
this subsection 2.7(i) is less than 5.0% of Net Tangible Assets at such time. If
and when such repatriation is permitted under the applicable local law or may be
made without an adverse tax consequence, as the case may be, such repatriation
shall be immediately effected and such Net Cash Proceeds shall be applied in the
manner set forth in subsections 2.7(a) and (c), with any time limit therein
being deemed to have started upon receipt of such Net Cash Proceeds by any
Subsidiary of US Borrower notwithstanding this subsection 2.7(i); provided,
however, if the time limit shall have expired, then such Net Cash Proceeds so
repatriated shall be applied to the prepayment of the Term Loans as set forth in
subsection 2.7(f) within three Business Days.
(j) On the last Business Day of each month occurring after October 31,
1996, the Borrowers and the Subsidiary Swing Line Borrowers shall determine the
aggregate Dollar Equivalent amount of the total amount of Swing Line Loans
actually outstanding, plus the Subsidiary L/C Effective Amount of all Subsidiary
L/C Obligations (the date of each such determination, the "Swing Line Loan
Calculation Date"). The Swing Line Borrowers shall repay the Swing Line Loans
and/or Cash Collateralize Letters of Credit issued for the account of the
Subsidiary Swing Line Borrowers within 10 Business Days of any Swing Line Loan
Calculation Date if the aggregate Dollar Equivalent amount of Swing Line Loans
then outstanding, plus the Subsidiary L/C Effective Amount of all Subsidiary L/C
Obligations exceeds U.S. $40.0 million in an amount equal to the amount such
that after giving effect thereto the Dollar Equivalent amount of all Swing Line
Loans then outstanding, plus the Subsidiary L/C Effective Amount of all
Subsidiary L/C Obligations would not exceed U.S. $40.0 million.
2.8. Currency Exchange Fluctuations. (a) The Credit Agreement Loan
Parties will implement and maintain internal controls to monitor the borrowings
and repayments of Loans by the Credit Agreement Loan Parties and the issuance of
and drawings under Letters of Credit, with the object of preventing any request
for a Credit Extension that would result in (i) the Aggregate Outstanding
Revolving Credit with respect to all of the Revolving Facility Lenders
(including the Swing Line Lenders) being in excess of the aggregate Revolving
Facility Commitments then in effect or (ii) the Subsidiary Swing Line Borrowers
exceeding their respective Subsidiary Swing Line Borrower Sublimits and of
promptly identifying and remedying any circumstance where, by reason of changes
in exchange rates, the Aggregate Outstanding Revolving Credit with respect to
all of the Revolving Facility Lenders (including the Swing Line Lenders) exceeds
the aggregate Revolving Facility Commitments then in effect or the aggregate
Swing Line Loans made to any Subsidiary Swing Line Borrower, plus the Subsidiary
L/C Effective Amount of all Subsidiary L/C Obligations of such Subsidiary Swing
Line Borrower exceeds its Subsidiary Swing Line Borrower Sublimit.
(b) Subject to Section 4.4, if on any Computation Date the
Administrative Agent shall have determined that the Aggregate Outstanding
Revolving Credit of all of the Revolving Facility Lenders
<PAGE>
-64-
exceeds the combined Revolving Facility Commitments of all Revolving Facility
Lenders by more than the Dollar Equivalent amount of U.S. $5.0 million due to a
change in applicable rates of exchange between U.S. Dollars, on the one hand,
and Offshore Currencies, on the other hand, then the Administrative Agent shall
give notice to the Revolving Borrowers that a prepayment of Loans (or, if no
Revolving Credit Loans are outstanding, payment of unreimbursed drawings under
Letters of Credit, or if none thereof, Cash Collateralization of outstanding
Letters of Credit) is required under this subsection, and the Revolving
Borrowers and the Subsidiary Swing Line Borrowers agree if such excess shall not
have been prepaid within 30 days of such notice or during such 30 days such
excess has not been eliminated by changes in currency exchange rates thereupon
to make prepayments (by such repayment of Loans, payment of unreimbursed
drawings or Cash Collateralization) of their respective pro rata portion of such
excess (determined by reference to the aggregate Dollar Equivalent amount of
each Revolving Borrower's outstanding Revolving Facility Loans, plus (without
duplication) the Effective Amount of all L/C Obligations relative to the total
of such amounts for each Revolving Borrower) such that, after giving effect to
such prepayment (or payment or Cash Collateralization and changes in currency
exchange rates), the Aggregate Outstanding Revolving Credit of all of the
Revolving Lenders does not exceed the combined Revolving Facility Commitments of
all Revolving Facility Lenders.
2.9. Repayment. (a) US Borrower shall repay the Tranche A-US Term
Loans and the Tranche A-CHF Term Loans on the Business Day immediately prior to
the Quarterly Dates set forth below in the installments as set forth below:
==============================================================================
Tranche A-US Tranche A-CHF
Each Quarterly Date in Term Loans Term Loans
Calendar Year (U.S. $) (CHF)
- ------------------------------------------------------------------------------
1997
- ------------------------------------------------------------------------------
1998
- ------------------------------------------------------------------------------
1999
- ------------------------------------------------------------------------------
2000
- ------------------------------------------------------------------------------
2001
- ------------------------------------------------------------------------------
2002
- ------------------------------------------------------------------------------
2003
- ------------------------------------------------------------------------------
2004
==============================================================================
(b) [Reserved]
(c) UK Borrower shall repay the Tranche A-UK Term Loans on the Business
Day immediately prior to the Quarterly Dates set forth below in the installments
set forth below [MODIFY, IF APPLICABLE]:
<PAGE>
-65-
================================================================
Tranche A-UK
Term Loans
Each Quarterly Date in (Pounds Sterling)
Calendar Year
- ----------------------------------------------------------------
1997
- ----------------------------------------------------------------
1998
- ----------------------------------------------------------------
1999
- ----------------------------------------------------------------
2000
- ----------------------------------------------------------------
2001
- ----------------------------------------------------------------
2002
- ----------------------------------------------------------------
2003
- ----------------------------------------------------------------
2004
================================================================
(d) Each Amortization Payment as set forth above in subsections 2.9(a),
(b) and (c) shall be automatically adjusted upon application of any prepayment
pursuant to Section 2.7.
(e) Until the Revolving Loan Maturity Date, the Credit Agreement Loan
Parties (other than Canadian Borrower) shall from time to time immediately
prepay the Revolving Facility Loans (and/or provide cover for L/C Obligations as
specified in subsection 2.9(f)) in such amounts as shall be necessary so that at
all times the Aggregate Outstanding Revolving Credit of all of the Revolving
Facility Lenders shall not (other than as a result of a change in currency
exchange rates) exceed the Revolving Facility Commitments of all of the
Revolving Facility Lenders, such amount to be applied, first, to Revolving
Facility Loans outstanding and, second, as cover for L/C Obligations outstanding
as specified in subsection 2.9(f).
(f) In the event that the Credit Agreement Loan Parties shall be
required pursuant to subsection 2.9(e) to provide cover for L/C Obligations, the
Credit Agreement Loan Parties shall effect the same by paying to the
Administrative Agent immediately available funds in an amount equal to the
required amount, which funds shall be retained by the Administrative Agent
pursuant to arrangements and documentation reasonably satisfactory to the
Administrative Agent as collateral security in the first instance for the L/C
Obligations until such time as all Letters of Credit shall have been terminated
and all of the L/C Obligations paid in full.
(g) All outstanding Revolving Loans (including Swing Line Loans) shall
be repaid in full on the Revolving Loan Maturity Date.
(h) Until the Canadian Loan Maturity Date, Canadian Borrower shall from
time to time prepay the Canadian Loans in such amounts as shall be necessary so
that at all times the aggregate outstanding amount of Canadian Loans shall not
exceed the Canadian Commitments of all of the Canadian Lenders.
(i) All outstanding Canadian Loans shall be repaid in full on the
Canadian Maturity Date.
<PAGE>
-66-
2.10. Interest. (a) Each Loan (other than a Canadian Loan or any
Non-U.S. $ Swing Line Loan) shall, except as otherwise provided herein, bear
interest on the outstanding principal amount thereof from the applicable
Borrowing Date at a rate per annum equal to the LIBOR Rate or the Alternate Base
Rate, as the case may be (and subject to the Applicable Borrower's right to
convert to the other Type of Loans under Section 2.4), plus the Applicable
Margin, plus, in the case of Loans made in Pounds Sterling, the MLA Cost. Each
Non-U.S. $ Swing Line Loan shall bear interest at the rate per annum equal to
(x) if such Loan is in Pounds Sterling, the Overnight Rate from time to time in
effect for Pounds Sterling, plus the Applicable Margin, plus the MLA Cost and
(y) if such Loan is in any other Offshore Currency, such rate as is agreed to by
the Applicable Swing Line Lender and the applicable Swing Line Borrower, plus
the Applicable Margin. Each Prime Rate Loan shall bear interest on the
outstanding principal amount thereof from the applicable Borrowing Date at a
rate per annum equal to the Prime Rate (subject to Canadian Borrower's right to
convert to other Types of Canadian Loans under Section 2.4A), plus the
Applicable Margin. Each BA Equivalent Rate Loan shall bear interest on the
outstanding principal amount thereof from the applicable Borrowing Date at a
rate per annum equal to the BA Equivalent Rate (subject to Canadian Borrower's
right to convert to other Types of Canadian Loans under Section 2.4A), plus the
Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of Loans
pursuant to Section 2.7 for the portion of the Loans so prepaid; provided,
however, that in the event that any Term Loans that are ABR Loans are prepaid
pursuant to Section 2.7, interest accrued on such Loans shall be payable on the
next succeeding Interest Payment Date thereafter (or at final maturity, if
earlier).
(c) Notwithstanding subsections (a) and (b) of this Section, if any
amount of principal of or interest on any Loan, or any other amount payable
hereunder or under any other Loan Document, is not paid in full when due
(whether at stated maturity, by acceleration, demand or otherwise), the
Applicable Borrower agrees, to the extent permitted by applicable law, to
compensate the Lenders for additional administrative and other costs they will
thereafter incur and to pay interest on such unpaid principal or other amount
from the date such amount becomes due until the date such amount is paid in
full, after as well as before any entry of judgment thereon, payable on demand,
at a rate per annum equal to (i) in the case of principal due in respect of any
Loan prior to the end of an Interest Period applicable thereto, the rate
otherwise applicable to such Loan, plus 2%, and (ii) in the case of any other
amount, (x) if such amount is payable in U.S. Dollars, the Alternate Base Rate
from time to time in effect, plus the Applicable Margin (but not less than 0)
for ABR Loans, plus 2%, (y) if such amount is payable in Canadian Dollars, the
Prime Rate from time to time in effect, plus 2%, and (z) if such amount is
payable in a currency other than U.S. Dollars and Canadian Dollars, the
Overnight Rate from time to time in effect, plus the Applicable Margin for LIBOR
Rate Loans for Loans under the applicable Facility from time to time in effect,
plus 2%, plus, in the case of Loans in Pounds Sterling, the MLA Cost.
(d) Anything herein to the contrary notwithstanding, the obligations of
each Applicable Borrower to any Lender hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Lender would be contrary
to the provisions of any law applicable to such Lender limiting the highest rate
of interest that may be lawfully contracted for, charged or received by such
Lender, and in such event the Applicable Borrower shall pay such Lender interest
at the highest rate permitted by applicable law.
2.11. Fees. In addition to certain fees described in Section 3.8:
<PAGE>
-67-
(a) Arrangement, Agency Fees. The Borrowers shall pay fees to the
Arranger for the Arranger's own account as required by the letter agreement
("Arranger Fee Letter") between the Arranger and U.S. Borrower dated November
[ ], 1997 and shall pay agency fees to the Administrative Agent for the
Administrative Agent's own account as required by the letter agreement between
the Administrative Agent and AEA dated October 7, 1996 (the "Administrative
Agent's Fee Letter" and, together with the Arranger Fee Letter, the "Fee
Letters"). All fees paid under the Fee Letters shall be paid solely in U.S.
Dollars.
(b) Facility Fees. The Borrowers shall pay to the Administrative Agent
for the account of each Revolving Facility Lender a facility fee computed at a
rate per annum equal to the Applicable Facility Fee Percentage (the "Facility
Fee") on the average daily effective amount of such Lender's Revolving Facility
Commitment, computed on a quarterly basis in arrears on the last Business Day of
each calendar quarter. Such Facility Fee shall accrue from the Original Closing
Date to the earlier of the Termination Date and the date on which the Revolving
Facility Commitments have been terminated in full and shall be due and payable
quarterly in arrears on the last Business Day of each calendar quarter
(commencing December 31, 1996) through the Termination Date or such earlier date
as the Revolving Facility Commitments have been terminated in full. The Facility
Fee shall be paid solely in U.S. Dollars.
(c) Canadian Facility Fees. Canadian Borrower shall pay to the
Canadian Agent for the account of each Canadian Lender a facility fee computed
at a rate per annum equal to the Applicable Facility Fee Percentage (the
"Canadian Facility Fee") on the average daily effective amount of such Canadian
Lender's Canadian Commitment computed on a quarterly basis in arrears on the
last Business Day of each calendar quarter. Such Canadian Facility Fee shall
accrue from the Safeline Closing Date to the earlier of the Canadian Termination
Date and the date on which the Canadian Commitments have been terminated in full
and shall be due and payable quarterly in arrears on the last Business Day of
each calendar quarter (commencing June 30, 1997) through the Canadian
Termination Date or such earlier date as the Canadian Commitments have been
terminated in full. The Canadian Facility Fee shall be paid solely in Canadian
Dollars.
2.12. Computation of Fees, Interest and Dollar Equivalent Amount. (a)
All computations of the Facility Fee and the Canadian Facility Fee shall be made
on the basis of a year of 360 days and actual days elapsed. All other
computations of interest and fees shall be made on the basis of a 360-day year
and actual days elapsed. Interest and fees shall accrue during each period
during which interest or such fees are computed from the first day thereof to
the last day thereof. If a Loan is repaid on the day on which it is made, one
day's interest shall accrue at the rate per annum applicable thereto as
determined in accordance with Section 2.10 shall be paid.
(b) Each determination of an interest rate or a Dollar Equivalent
amount by the Applicable Agent or an Applicable Swing Line Lender, as the case
may be, shall be conclusive and binding on each Applicable Borrower and the
Lenders in the absence of manifest error. The Applicable Agent or an Applicable
Swing Line Lender, as the case may be, will, at the request of the Applicable
Borrower or any Lender, deliver to the Borrowers or such Lender, as the case may
be, a statement showing the calculations used by the Applicable Agent or such
Applicable Swing Line Lender in determining any interest rate or Dollar
Equivalent amount.
2.13. Payments by Each Applicable Borrower. (a) All payments to be
made by each Applicable Borrower shall be made without set-off, recoupment or
counterclaim. Except as otherwise expressly
<PAGE>
-68-
provided herein, all payments by each Applicable Borrower (other than any
Subsidiary Swing Line Borrower) shall be made to the Applicable Agent for the
account of the Lenders or Scotiabank (with respect to Swing Line Loans made in
U.S. Dollars or Pounds Sterling) at the Agent's Payment Office, and all payments
to be made by all other Subsidiary Swing Line Borrowers shall be made to the
Applicable Swing Line Lender as directed by it for the account of such
Applicable Swing Line Lender. Except as otherwise provided herein, all payments
by each Applicable Borrower (i) with respect to principal of, interest on, and
any other amount relating to any Offshore Currency Loan, shall be made in the
Offshore Currency in which such Loan is denominated or payable, (ii) with
respect to the Canadian Facility Fee and principal of, interest on and any other
amount relating to any Canadian Loan, shall be made in Canadian Dollars, and
(iii) with respect to all other amounts payable hereunder, shall be made in U.S.
Dollars. Such payments shall be made in Same Day Funds and (x) in the case of
Offshore Currency payments, no later than such time on the dates specified
herein as may be determined by the Applicable Agent (or the Applicable Swing
Line Lender for Swing Line Loans not made in U.S. Dollars or Pounds Sterling)
(and advised in writing to each Applicable Borrower) to be necessary for such
payment to be credited on such date in accordance with normal banking procedures
in the place of payment, and (y) in the case of any U.S. Dollar or Canadian
Dollar payments, no later than 11:00 a.m. (New York City time) on the date
specified herein. The Applicable Agent will promptly distribute to each Lender
its Pro Rata Share of such payment received by it for the account of the Lenders
in like funds as received. Any payment received by the Applicable Agent or the
Applicable Swing Line Lender, as the case may be, later than the time specified
in clause (x) or (y) above, as applicable, shall be deemed to have been received
on the following Business Day, and any applicable interest or fee shall continue
to accrue.
(b) Whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall be included in the computation of interest or fees, as the case may
be.
(c) Unless the Applicable Agent receives notice from an Applicable
Borrower that borrows in Canadian Dollars, U.S. Dollars or Pounds Sterling prior
to the date on which any payment is due to the Lenders that such Applicable
Borrower will not make such payment in full as and when required, the Applicable
Agent may assume that such Applicable Borrower has made such payment in full to
the Applicable Agent on such date in Same Day Funds and the Applicable Agent may
(but shall not be required to), in reliance upon such assumption, distribute to
each Lender on such due date an amount equal to the amount then due such Lender.
If and to the extent an Applicable Borrower that borrows in Canadian Dollars,
U.S. Dollars or Pounds Sterling, as the case be, has not made such payment in
full to the Applicable Agent, each Lender shall repay to the Applicable Agent on
demand such amount distributed to such Lender, together with interest thereon at
(i) in the case of a payment in an Offshore Currency, the Overnight Rate, (ii)
in the case of payment in Canadian Dollars, the Canadian Federal Funds Rate, or
(iii) in the case of a payment in U.S. Dollars, the U.S. Federal Funds Rate, in
each case for each day from the date such amount is distributed to such Lender
until the date repaid.
2.14. Payments by the Lenders to the Applicable Agent. (a) Unless the
Applicable Agent receives notice from a Lender on or prior to the Closing Date
or, with respect to any Borrowing or Canadian Borrowing after the Original
Closing Date, at least one Business Day prior to the date of such Borrowing,
that such Lender will not make available as and when required hereunder to the
Applicable Agent for the account of the Applicable Borrower the amount of that
Lender's Pro Rata Share of the Borrowing or Percentage of the Canadian
Borrowing, as applicable, the Applicable Agent may assume that such Lender has
made such amount available to the Applicable Agent in Same Day Funds on the
Borrowing Date and the Applicable Agent may (but shall not be required to), in
reliance upon such assumption, make available to the Applicable Borrower on such
date a corresponding amount. If and to the extent any Lender shall not have made
its full amount available
<PAGE>
-69-
to the Applicable Agent in Same Day Funds and the Applicable Agent in such
circumstances has made available to the Applicable Borrower such amount, such
Lender shall on the Business Day following such Borrowing Date make such amount
available to the Applicable Agent, together with interest at (i) in the case of
a payment in an Offshore Currency, the Overnight Rate, (ii) in the case of
payment in Canadian Dollars, the Canadian Federal Funds Rate, and (iii) in the
case of a payment in U.S. Dollars, at the U.S. Federal Funds Rate, in each case
for each day during such period. A notice of the Applicable Agent submitted to
any Lender with respect to amounts owing under this subsection (a) shall be
conclusive, absent manifest error. If such amount is so made available, such
payment to the Applicable Agent shall constitute such Lender's Loan on the date
of Borrowing for all purposes of this Agreement. If such amount is not made
available to the Applicable Agent on the Business Day following the Borrowing
Date, the Applicable Agent will notify the Applicable Borrower of such failure
to fund and, upon demand by the Applicable Agent, the Applicable Borrower shall
pay such amount to the Applicable Agent for the Applicable Agent's account,
together with interest thereon for each day elapsed since the date of such
Borrowing or Canadian Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans or Canadian Loans, as the case may be,
comprising such Borrowing.
(b) The failure of any Lender to make any Loan on any Borrowing Date
shall not relieve any other Lender of its obligation hereunder (if any) to make
a Loan on such Borrowing Date, but no Lender shall be responsible for the
failure of any other Lender to make the Loan to be made by such other Lender on
any Borrowing Date.
2.15. Adjustments. If any Lender (a "Benefitted Lender") shall at any
time receive any payment of all or part of the Obligations then due and owing to
it, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in subsection 9.1(f) or (g), or otherwise (except pursuant to
Section 2.6, 2.7, 2.8 or 2.9, Article IV or Section 11.8)), in a greater
proportion than any such payment to or collateral received by any other Lender,
if any, in respect of the Obligations then due and owing to such other Lender,
such Benefitted Lender shall purchase for cash from the other Lenders an
interest (by participation or assignment (each in accordance with Section 11.8))
in such portion of each such other Lender's Revolving Facility Loans, Term
Loans, Canadian Loans or the L/C Obligations, as the case may be, owing to it,
or shall provide such other Lenders with the benefits of any such collateral, or
the proceeds thereof, as shall be necessary to cause such Benefitted Lender to
share the excess payment or benefits of such collateral or proceeds ratably
(based upon Dollar Equivalent amounts) with each of the Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Credit Agreement Loan Party expressly
consents to the foregoing arrangement and agrees that any holder of a
participation in any such Loan or L/C Obligation, as the case may be, so
purchased and any other subsequent holder of a participation in any Loan or L/C
Obligation otherwise acquired may exercise any and all rights of banker's lien,
set off or counterclaim with respect to any and all monies owing by such Credit
Agreement Loan Party to that holder as fully as if that holder were a holder of
such a Loan or L/C Obligation in the amount of the participation held by that
holder.
2.16. Swing Line Commitment. (a) Subject to the terms and conditions
of this Agreement, each Swing Line Lender agrees to make loans to the Swing Line
Borrowers on a revolving basis (each such loan, a "Swing Line Loan") from time
to time on any Business Day during the period from the Original Closing Date to
the Termination Date in an aggregate principal amount at any one time
outstanding for the Swing Line Borrowers collectively not to exceed the Dollar
Equivalent amount of U.S. $50.0 million; provided, however, that (i) the
aggregate amount (or CHF Equivalent with respect to M-T GmbH) of the sum of
Swing Line Loans made and outstanding at any one time to any Subsidiary Swing
Line Borrower, plus the Subsidiary L/C Effective Amount of all Subsidiary L/C
Obligations of such Subsidiary Swing Line Borrower shall not exceed
<PAGE>
-70-
the Subsidiary Swing Line Borrower Sublimit for such Subsidiary Swing Line
Borrower (or with respect to the UK Swing Line Borrowers, the collective
sublimit of the UK Swing Line Borrowers) and the aggregate Dollar Equivalent
amount of Swing Line Loans made to US Borrower shall not exceed the US Borrower
Sublimit, (ii) the sum of the Dollar Equivalent amount of the aggregate
principal amount of all outstanding Swing Line Loans, plus the aggregate
principal Dollar Equivalent amount of all other outstanding Revolving Facility
Loans, plus (without duplication) the Effective Amount of all L/C Obligations
(including Subsidiary L/C Obligations) shall not at any time exceed the
Revolving Facility Commitments of all Revolving Facility Lenders (which
calculation shall not give effect to the Assumed Swing Line Loan Amount) and
(iii) Scotiabank need only make Swing Line Loans in U.S. Dollars to US Borrower
and in Pounds Sterling to the UK Swing Line Borrowers; Credit Suisse First
Boston need only make Swing Line Loans to M-T GmbH in such currencies as it
shall agree with such Subsidiary Swing Line Borrower; Commerzbank AG need only
make Swing Line Loans in Deutschemarks to the German Subsidiary; and each other
Swing Line Lender need only make Swing Line Loans to the Subsidiary Swing Line
Borrower as it shall agree with and in the Applicable Currency as it and the
applicable Subsidiary Swing Line Borrower shall agree. All Swing Line Loans made
in U.S. Dollars shall be made and maintained as ABR Loans.
(b) Notwithstanding any other provision of this Agreement, (i) the
German Subsidiary shall only borrow Swing Line Loans in, and no Swing Line
Lender shall make any Swing Line Loan to any such Subsidiary Swing Line Borrower
other than in, Deutschemarks; (ii) Mettler-Toledo S.A., Veroflay shall only
borrow Swing Line Loans in, and no Swing Line Lender shall make any Swing Line
Loan to such Subsidiary Swing Line Borrower other than in, French Francs; (iii)
Mettler-Toledo K.K., Takarazuka shall only borrow Swing Line Loans in, and no
Swing Line Lender shall make any Swing Line Loan to such Subsidiary Swing Line
Borrower other than in, Japanese Yen; (iv) the UK Swing Line Borrowers shall
only borrow Swing Line Loans in, and no Swing Line Lender shall make any Swing
Line Loan to such Subsidiary Swing Line Borrower other than in, Pounds Sterling;
and (v) US Borrower shall only borrow Swing Line Loans in, and no Swing Line
Lender shall make any Swing Line Loan to US Borrower other than in, U.S.
Dollars.
(c) Credit Suisse First Boston shall not permit the CHF Equivalent
amount of all Swing Line Loans outstanding for M-T GmbH, plus the Subsidiary L/C
Effective Amount of all Subsidiary L/C Obligations of M-T GmbH to exceed M-T
GmbH's Subsidiary Swing Line Borrower Sublimit.
2.17. Borrowing Procedures for Swing Line Loans. (a) A Swing Line
Borrower requesting a Swing Line Loan shall give written or telephonic notice to
the Applicable Swing Line Lender of each proposed Borrowing pursuant to this
Section 2.17 not later than 11:00 a.m. (local time) on the proposed Borrowing
Date (promptly followed within one Business Day by delivery of a written
notice). Each such notice shall be effective upon receipt by the Applicable
Swing Line Lender and shall specify the Borrowing Date and amount of Borrowing.
Unless the Applicable Swing Line Lender has received written notice prior to
1:00 p.m. (local time) on the proposed Borrowing Date from the Administrative
Agent or any Lender (or otherwise has knowledge) that one or more of the
conditions precedent set forth in Article V with respect to such Borrowing is
not then satisfied, the Applicable Swing Line Lender shall pay over the
requested amount to the applicable Swing Line Borrower on the requested
Borrowing Date. Each Swing Line Loan shall be made on a Business Day and shall
be in the amount of (x) if made in U.S. Dollars or Pounds Sterling, at least the
Dollar Equivalent amount of U.S. $250,000 and an integral multiple of U.S.
$250,000 and (y) if made in any Offshore Currency other than Pounds Sterling, at
least such number of units of the Applicable Currency and such integral multiple
units of such Applicable Currency as is agreed to by the Applicable Swing Line
Lender and the applicable Swing Line Borrower.
<PAGE>
-71-
(b) The Applicable Swing Line Lender will determine the Subsidiary
Currency Equivalent amount with respect to
(i) the sum of Swing Line Loans made by such Swing Line Lender to the
Subsidiary Swing Line Borrower to whom it makes Swing Line Loans, plus the
Subsidiary L/C Effective Amount of all Subsidiary L/C Obligations of such
Subsidiary Swing Line Borrower as of the requested Borrowing Date of any Swing
Line Loan,
(ii) the sum of all outstanding Swing Line Loans made by such Swing
Line Lender to the Subsidiary Swing Line Borrower to whom it makes Swing Line
Loans, plus the Subsidiary L/C Effective Amount of all Subsidiary L/C
Obligations of such Subsidiary Swing Line Borrower as of the last Business Day
of each month, and
(iii) the sum of all outstanding Swing Line Loans made by such Swing
Line Lender to the Subsidiary Swing Line Borrower to whom it makes Swing Line
Loans, plus the Subsidiary L/C Effective Amount of all Subsidiary L/C
Obligations of such Subsidiary Swing Line Borrower as of any date on which the
Revolving Facility Commitments, the US Borrower Sublimit or the Subsidiary
Swing Line Borrower Sublimits are reduced pursuant to Section 2.6.
2.18. Refunding of Swing Line Loans. The Applicable Swing Line Lender
may, at any time in its sole and absolute discretion, on behalf of (i) US
Borrower, with respect to any Swing Line Loan made to US Borrower, (ii) UK
Borrower with respect to any Swing Line Loan made to UK Borrower or Safeline
Limited (or if UK Borrower is not able to borrow under the Revolving Facility,
US Borrower), or (iii) CH Borrower, with respect to any Swing Line Borrower
other than US Borrower, UK Borrower and Safeline Limited (and each such
Applicable Borrower hereby irrevocably directs the Applicable Swing Line Lender
to act on its behalf), request each Revolving Facility Lender to make a
Revolving Loan to the Applicable Borrower (x) with respect to Credit Suisse
First Boston, in CHF in an amount equal to such Revolving Facility Lender's Pro
Rata Share of the CHF Equivalent amount of the principal amount of the Swing
Line Loans made by such Swing Line Lender outstanding on the date such notice is
given, and (y) with respect to each other Swing Line Lender other than Credit
Suisse First Boston, in the Applicable Currency of the Swing Line Loans made by
such Swing Line Lender (or, with respect to Scotiabank, as identified and made
by it) in an amount equal to such Revolving Facility Lender's Pro Rata Share of
the Subsidiary Currency Equivalent amount of the principal amount of the Swing
Line Loans made by such Swing Line Lender outstanding on the date such notice is
given. Unless any of the events described in subsection 9.1(f) or (g) shall have
occurred (in which event the procedures of Section 2.19 shall apply), and
regardless of whether the conditions precedent set forth in this Agreement to
the making of a Revolving Loan are then satisfied or the aggregate amount of
such Revolving Loans is not in the minimum or integral amount otherwise required
hereunder, each Revolving Facility Lender shall make the proceeds of its
Revolving Loan available to (x) with respect to US Borrower and UK Borrower, the
Administrative Agent for the account of Scotiabank at the office of the
Administrative Agent in New York prior to 11:00 a.m. (New York City time with
respect to any refunding of a Swing Line Loan made in U.S. Dollars or London,
England time with respect to any other Swing Line Loan) in Same Day Funds on the
Business Day next succeeding the date such notice is given, and (y) with respect
to CH Borrower, the Applicable Swing Line Lender for the account of such
Applicable Swing Line Lender at the office of such Applicable Swing Line Lender
prior to 11:00 a.m. (local time) in Same Day funds on the Business Day next
succeeding the date such notice is given. The proceeds of such Revolving Loans
shall be immediately applied to repay the outstanding Swing Line Loans of the
Applicable Swing Line Lender. All Revolving Loans made pursuant to this Section
2.18 shall be LIBOR Rate Loans with an Interest Period of one month (but,
subject to the other provisions of this Agreement, may be continued as LIBOR
Rate Loans with a different Interest Period). No Revolving
<PAGE>
-72-
Facility Lender need make any Loan under this Section 2.18 (x) with respect to
Credit Suisse First Boston, other than in CHF and (y) with respect to any other
Swing Line Lender, unless the Swing Line Loan has been made in accordance with
subsection 2.16(b). Notwithstanding any other provision of this Agreement, if
any Swing Line Lender shall have made Swing Line Loans to or Issued Letters of
Credit for the account of a Subsidiary Swing Line Borrower such that the sum of
the amount of Swing Line Loans made and outstanding to such Subsidiary Swing
Line Borrower, plus the Subsidiary L/C Effective Amount of Subsidiary L/C
Obligations of such Subsidiary Swing Line Borrower is in excess of the
applicable Subsidiary Swing Line Borrower Sublimit of such Subsidiary Swing Line
Borrower (or, with respect to M-T GmbH, in excess of the CHF Equivalent of the
Subsidiary Swing Line Borrower Sublimit of M-T GmbH), no Lender shall have any
obligation to make a Revolving Loan with respect to such excess.
2.19. Participations in Swing Line Loans. (a) If an event described in
subsection 9.1(f) or (g) occurs (or for any reason the Revolving Facility
Lenders may not make Revolving Loans pursuant to Section 2.18, other than as
specified in the last sentence thereof), each Revolving Facility Lender will,
upon notice from the Administrative Agent, purchase from the Applicable Swing
Line Lender (and the Applicable Swing Line Lender will sell to each such
Revolving Facility Lender) an undivided participation interest in all
outstanding Swing Line Loans of such Swing Line Lender in an amount equal to its
Pro Rata Share of (x) with respect to Credit Suisse First Boston, the CHF
Equivalent amount, and (y) with respect to each other Swing Line Lender other
than Credit Suisse First Boston, the Subsidiary Currency Equivalent amount of
the outstanding principal amount of the Swing Line Loans of such Swing Line
Lender (and each Revolving Facility Lender will immediately transfer to the
Administrative Agent, for the account of the Applicable Swing Line Lender, in
immediately available funds, the amount of its participation and in the same
currencies as if it were refunding such Swing Line Loans pursuant to Section
2.18).
(b) Whenever, at any time after a Swing Line Lender has received
payment for any Revolving Facility Lender's participation interest in the Swing
Line Loans of such Swing Line Lender pursuant to subsection 2.19(a), such Swing
Line Lender receives any payment on account thereof, such Swing Line Lender will
distribute to the Administrative Agent for the account of such Revolving
Facility Lender its participation interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Revolving Facility Lender's participation interest was outstanding
and funded) in like funds as received; provided, however, that in the event that
such payment received by such Swing Line Lender is required to be returned, such
Revolving Facility Lender will return to the Administrative Agent for the
account of such Swing Line Lender any portion thereof previously distributed by
such Swing Line Lender to it in like funds as such payment is required to be
returned by such Swing Line Lender.
(c) Notwithstanding any other provision of this Agreement, if any
Swing Line Lender shall have made Swing Line Loans to or Issued Letters of
Credit for the account of a Subsidiary Swing Line Borrower such that the amount
of Swing Line Loans made and outstanding to such Subsidiary Swing Line Borrower,
plus the Subsidiary L/C Effective Amount of Subsidiary L/C Obligations of such
Subsidiary Swing Line Borrower is in excess of the applicable Subsidiary Swing
Line Borrower Sublimit for such Subsidiary Swing Line Borrower (or, with respect
to M-T GmbH, in excess of the CHF Equivalent of the Subsidiary Swing Line
Borrower Sublimit of M-T GmbH), no Lender shall have any obligation to purchase
any participation in the amount of such excess.
2.20. Swing Line Participation Obligations Unconditional. (a) Except
as provided in Section 2.18 and Section 2.19, each Revolving Facility Lender's
obligation to make Revolving Loans pursuant to Section 2.18 and/or to purchase
participation interests in Swing Line Loans pursuant to Section 2.19 shall be
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including (a) any set-off,
<PAGE>
-73-
counterclaim, recoupment, defense or other right which such Revolving Facility
Lender may have against the Applicable Swing Line Lender, any Loan Party or any
other Person for any reason whatsoever; (b) the occurrence or continuance of an
Event of Default; (c) any adverse change in the condition (financial or
otherwise) of any Loan Party or any other Person; (d) any breach of this
Agreement by any Loan Party or any other Revolving Facility Lender; (e) any
inability of the applicable Swing Line Borrower to satisfy the conditions
precedent to borrowing set forth in this Agreement on the date upon which any
Swing Line Loan is to be refunded or any participation interest therein is to be
purchased; or (f) any other circumstance, happening or event whatsoever, whether
or not similar to any of the foregoing.
(b) Notwithstanding the provisions of subsection 2.20(a), no Revolving
Facility Lender shall be required to make any Revolving Loan to any Applicable
Borrower to refund a Swing Line Loan pursuant to Section 2.18 or to purchase a
participation interest in a Swing Line Loan pursuant to Section 2.19 if, prior
to the making by the Applicable Swing Line Lender of such Swing Line Loan, such
Swing Line Lender received written notice from such Revolving Facility Lender
specifying that such Revolving Facility Lender believes in good faith that one
or more of the conditions precedent to the making of such Swing Line Loan were
not satisfied and, in fact, such conditions precedent were not satisfied at the
time of the making of such Swing Line Loan; provided, however, that the
obligation of such Revolving Facility Lender to make such Revolving Loans and to
purchase such participation interests shall be reinstated upon the earlier to
occur of (i) the date on which such Revolving Facility Lender notifies the
Applicable Swing Line Lender that its prior notice has been withdrawn and (ii)
the date on which all conditions precedent to the making of such Swing Line Loan
have been satisfied (or waived by the Required Revolving Facility Lenders, the
Required Lenders or all Lenders, as applicable).
2.21. Conditions to Swing Line Loans. Notwithstanding any other
provision of this Agreement, no Swing Line Lender shall be obligated to make any
Swing Line Loan if an Event of Default or Unmatured Event of Default exists or
would result therefrom.
2.22. Substitution of Lenders in Certain Circumstances. In the event
that (x) S&P or Moody's shall, after the date that any Person becomes a Lender,
downgrade the long-term certificate of deposit ratings of such Lender, and the
resulting ratings shall be below BBB- or Baa3, respectively, or the equivalent
or (y) any Revolving Facility Lender gives notice to the Administrative Agent
that it is unable to make, convert or continue any Offshore Currency Loan
pursuant to subsection 2.5(b) or (c), then each Applicable Borrower or each
Applicable Agent shall each have the right, but not the obligation, upon notice
to such Lender and the Applicable Agent, to replace such Lender with a financial
institution (a "Substitute Lender") acceptable to each Applicable Borrower and
each Applicable Agent (such consents not to be unreasonably withheld or delayed;
provided, however, that no such consent shall be required if the Substitute
Lender is an existing Lender), and upon any such downgrading of any Lender's
long-term certificate of deposit rating or the giving of such notice, each such
Lender hereby agrees to transfer and assign (in accordance with and subject to
the restrictions contained in Section 11.8) its Commitments, Loans, Notes and
other rights and obligations under this Agreement and all other Loan Documents
to such Substitute Lender; provided, however, that (i) such assignment shall be
without recourse, representation or warranty (other than that such Lender owns
the Commitments, Loans, and Notes being assigned, free and clear of any Liens)
and (ii) the purchase price paid by the Substitute Lender shall be in the amount
of such Lender's Loans and its Pro Rata Share of outstanding L/C Obligations,
together with all accrued and unpaid interest and fees in respect thereof, plus
all other amounts (other than the amounts (if any) demanded and unreimbursed
under Sections 4.1, 4.3 and 4.4, which shall be paid by each Applicable
Borrower), owing to such Lender hereunder. Upon any such termination or
assignment, such Lender shall cease to be a party hereto but shall continue to
be entitled to the benefits of any provisions of this Agreement which by their
terms survive the termination of this Agreement.
<PAGE>
-74-
2.23. Qualified Foreign Lender Notes. (a) Any Lender that is not a
"bank" within the meaning of Section 881(c)(3)(A) of the Code and that is in
compliance with the requirements of subsection 4.1(f)(i) (a "Qualified Foreign
Lender") shall upon receipt of the written request of US Borrower or the
Administrative Agent, and may upon its own written request to the Administrative
Agent, (i) exchange any Tranche A-US Term Note held by or assigned to it for a
note in the form attached hereto as Exhibit H-7 (a "QFL A-US Note"), (ii)
exchange any Tranche A-CHF Term Note held by or assigned to it for a note in the
form attached hereto as Exhibit H-8 (a "QFL A-CHF Note"), and (iii) exchange any
Tranche A-UK Term Note held by or assigned to it for a note in the form attached
hereto as Exhibit H-9 (a "QFL A-UK Note" and together with the QFL A-US Note and
the QFL B Note, the "QFL Notes"); provided, however that, prior to any exchange
of Notes, such Lender shall have delivered to US Borrower the certificates,
documents and forms described in subsection 4.1(f)(i). Any QFL Notes issued in
exchange for any existing Notes pursuant to this subsection 2.23(a) shall be (i)
dated the Original Closing Date, (ii) issued in the names of the entities in
whose names such existing Notes were issued and (iii) issued in the same
principal amounts as such existing Notes. Any Tranche A-CHF Term Note, Tranche
A-UK Term Note or Tranche A-US Term Note exchanged pursuant to this subsection
is sometimes referred to herein as an "Exchange Note".
(b) US Borrower agrees that, upon the request of or delivery of a
request to a Qualified Foreign Lender pursuant to subsection (a) of this Section
2.23, it shall execute and deliver QFL Notes to the Administrative Agent in
exchange for the Exchange Note surrendered in connection with such request
conforming to the requirements of such subsection (a). Each Qualified Foreign
Lender shall surrender its Exchange Notes to the Administrative Agent in
connection with any exchange pursuant to this subsection (b). Upon receipt by
the Administrative Agent of the Exchange Notes to be exchanged for such QFL
Notes in accordance with this subsection (b), the Administrative Agent shall
forward the appropriate QFL Notes to the Qualified Foreign Lender which
surrendered its Exchange Notes for exchange and shall forward the Exchange Notes
to US Borrower marked "cancelled." Once issued, QFL Notes (i) shall be deemed to
and shall be "Notes" and Tranche A-CHF Term Notes, Tranche A-UK Term Notes and
Tranche A-US Term Notes, as the case may be, for all purposes under this
Agreement, the Security Documents and the other Loan Documents, (ii) may not be
exchanged for Tranche A-CHF Term Notes, Tranche A-UK Term Notes or Tranche A-US
Term Notes, as the case may be, notwithstanding anything to the contrary in this
Agreement and (iii) shall at all times thereafter be QFL Notes, including,
without limitation, following any transfer or assignment thereof.
ARTICLE III.
THE LETTERS OF CREDIT
---------------------
3.1. The Letter of Credit Subfacility. (a) On the terms and conditions
set forth herein, (i) the L/C Lender agrees, (A) from time to time on any
Business Day during the period from the Original Closing Date to the Termination
Date to issue Letters of Credit (including irrevocable standby letters of
credit) for the account of any Revolving Borrower (or, if a Letter of Credit is
for the account of a Subsidiary, jointly for the account of the applicable
Revolving Borrower and such Subsidiary), or, if such L/C Lender is a Swing Line
Lender, for the account of the Subsidiary Swing Line Borrower to whom it makes
Swing Line Loans, and to amend or renew Letters of Credit previously issued by
it, in accordance with subsections 3.2(c) and 3.2(d), and (B) to honor properly
drawn drafts under the Letters of Credit; and (ii) the Revolving Facility
Lenders severally agree to participate in Letters of Credit Issued for the
accounts of the Revolving Borrowers (including any Letter of Credit issued
jointly for the account of a Revolving Borrower and any Subsidiary) or the
Subsidiary Swing Line Borrowers; provided, however, that the L/C Lender shall
not be obligated to Issue, and no Lender shall be obligated to participate in,
any Letter of Credit if as of the date of Issuance of such Letter of Credit
<PAGE>
-75-
(the "Issuance Date") (I) with respect to any Issuance for the account of any
Revolving Borrower (or jointly for the account of a Revolving Borrower and a
Subsidiary), (1) the Effective Amount of all L/C Obligations (other than
Subsidiary L/C Obligations, except those of the UK Swing Line Borrowers), plus
(without duplication) the outstanding principal Dollar Equivalent amount of all
Revolving Loans and Swing Line Loans (including the Assumed Swing Line Loan
Amount) exceeds the combined Revolving Facility Commitments of all Revolving
Facility Lenders, (2) the participation of such Revolving Facility Lender in the
Effective Amount of all L/C Obligations (other than Subsidiary L/C Obligations,
except those of the UK Swing Line Borrowers), plus (without duplication) the
outstanding principal Dollar Equivalent amount of the Revolving Loans of such
Revolving Facility Lender, plus such Revolving Facility Lender's Pro Rata Share
of the Dollar Equivalent amount of all outstanding Swing Line Loans (including
the Assumed Swing Line Loan Amount) exceeds such Revolving Facility Lender's
Revolving Facility Commitment, or (3) the Effective Amount of all L/C
Obligations (other than Subsidiary L/C Obligations except those of the UK Swing
Line Borrower) exceeds the L/C Commitment, (II) with respect to any Letter of
Credit Issued for the account of UK Borrower (or jointly for the account of UK
Borrower and any of its Subsidiaries), the Effective Amount of all L/C
Obligations of Letters of Credit Issued for the account of UK Borrower (unless
Issued jointly for the account of UK Borrower and a Borrower), plus (without
duplication) the outstanding principal Dollar Equivalent amount of all Revolving
Loans of UK Borrower exceeds 20.0 million Pounds Sterling or (III) with respect
to any Issuance for the account of any Subsidiary Swing Line Borrower (unless
such Issuance is jointly for the account of such Subsidiary Swing Line Borrower
and a Borrower), the Subsidiary L/C Effective Amount of all Subsidiary L/C
Obligations of such Subsidiary Swing Line Borrower, plus the Subsidiary Currency
Amount of all Swing Line Loans then outstanding of such Subsidiary Swing Line
Borrower exceeds the Subsidiary Swing Line Borrower Sublimit of such Subsidiary
Swing Line Borrower. Within the foregoing limits, and subject to the other terms
and conditions hereof, the Borrowers' ability to obtain Letters of Credit shall
be fully revolving, and, accordingly, the Borrowers may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit which have expired
or which have been drawn upon and reimbursed.
(b) The L/C Lender is under no obligation to Issue any Letter of
Credit if: (i) any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the L/C Lender from
Issuing such Letter of Credit, or any Requirement of Law applicable to the L/C
Lender or any request or directive (whether or not having the force of law) from
any Governmental Authority with jurisdiction over the L/C Lender shall prohibit,
or request that the L/C Lender refrain from, the Issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon the L/C
Lender with respect to such Letter of Credit any restriction, reserve or capital
requirement (for which the L/C Lender is not otherwise compensated hereunder)
not in effect on the Original Closing Date, or shall impose upon the L/C Lender
any unreimbursed loss, cost or expense which was not applicable on the Original
Closing Date and which the L/C Lender in good faith deems material to it; (ii)
the L/C Lender has received written notice from any Lender, the Administrative
Agent or either Borrower or any Subsidiary Swing Line Borrower, on or prior to
the Business Day prior to the requested date of Issuance of such Letter of
Credit, that one or more of the applicable conditions contained in Article V is
not then satisfied; (iii) the expiry date of any requested Letter of Credit is
(A) more than twelve months after the date of such Issuance for standby Letters
of Credit or more than 180 days after the date of such issuance for commercial
documentation Letters of Credit, unless the Required Revolving Facility Lenders
have approved such expiry date in writing; provided, however, that any standby
Letter of Credit may be automatically extendible for periods of up to one year
so long as no Default or Unmatured Event of Default then exists and such Letter
of Credit provides that the L/C Lender retains an option reasonably satisfactory
to the L/C Lender, to terminate such Letter of Credit prior to each extension
date, or (B) after the fifth Business Day prior to the Termination Date, unless
all of the Revolving Facility Lenders have approved such expiry date in writing;
(iv) any requested Letter of Credit does not provide for drafts, or is not
otherwise in form and substance reasonably acceptable to the L/C Lender, or the
Issuance of a Letter of Credit
<PAGE>
-76-
shall violate any applicable policies of the L/C Lender; (v) such Letter of
Credit (other than any Letter of Credit issued solely for the account of M-T
GmbH) is denominated in a currency other than U.S. $ or an Offshore Currency; or
(vi) an Event of Default or Unmatured Event of Default has occurred and is
continuing. No L/C Lender need Issue a Letter of Credit for the account of any
Subsidiary Swing Line Borrower denominated in a currency other than a currency
in which such Subsidiary Swing Line Borrower may borrow Swing Line Loans in
accordance with subsection 2.16(b).
(c) Notwithstanding the foregoing, in the event a Lender Default
exists, the L/C Lender shall not be required to Issue any Letter of Credit
unless the L/C Lender has entered into arrangements satisfactory to it and the
Revolving Borrowers and the Subsidiary Swing Line Borrowers to eliminate the L/C
Lender's risk with respect to the participation in Letters of Credit of the
Defaulting Lender or Lenders, including by Cash Collateralizing such Defaulting
Lender's or Lenders' Pro Rata Share of the L/C Obligations.
(d) Each L/C Lender who is to Issue Letters of Credit for the account
of a Subsidiary Swing Line Borrower will determine the Subsidiary Currency
Equivalent amount with respect to the sum of Swing Line Loans made by such Swing
Line Lender to the Subsidiary Swing Line Borrower to whom it makes Swing Line
Loans, plus the Subsidiary L/C Effective Amount of all Subsidiary L/C
Obligations of such Subsidiary Swing Line Borrower as of the requested Issuance
Date of any Letter of Credit for such Subsidiary Swing Line Borrower.
3.2. Issuance, Amendment and Renewal of Letters of Credit. (a) Each
Letter of Credit shall be Issued upon the irrevocable written request of the
applicable Revolving Borrower or Subsidiary Swing Line Borrower received by the
L/C Lender (with a copy sent by the applicable Revolving Borrower or Subsidiary
Swing Line Borrower to the Administrative Agent) at least three Business Days
(or such shorter time as the L/C Lender may agree in a particular instance in
its sole discretion) prior to the proposed date of Issuance. Each such request
for Issuance of a Letter of Credit shall be by facsimile, confirmed in an
original writing, in the form of an L/C Application, and shall specify in form
and detail reasonably satisfactory to the L/C Lender: (i) the proposed date of
Issuance of the Letter of Credit (which shall be a Business Day); (ii) the face
amount of the Letter of Credit; (iii) the expiry date of the Letter of Credit;
(iv) the name and address of the beneficiary thereof; (v) the documents to be
presented by the beneficiary of the Letter of Credit in case of any drawing
thereunder; (vi) the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder; (vii) the type of Letter of
Credit; (viii) with respect to any Letter of Credit Issued for the account of UK
Borrower, whether such Letter of Credit is to be counted against the UK Borrower
Sublimit or the Subsidiary Swing Line Borrower Sublimit of the UK Swing Line
Borrowers; and (ix) such other matters as the L/C Lender may reasonably require.
(b) At least two Business Days prior to the Issuance of any Letter of
Credit, the L/C Lender will, other than with respect to the Subsidiary Swing
Line Borrowers, confirm with the Administrative Agent (by telephone or in
writing) that the Administrative Agent has received a copy of the L/C
Application or L/C Amendment Application from the applicable Revolving Borrower
and, if not, the L/C Lender will provide the Administrative Agent with a copy
thereof. Unless the L/C Lender has received, on or before the Business Day
immediately preceding the date the L/C Lender is to Issue a requested Letter of
Credit, (A) notice from the Administrative Agent directing the L/C Lender (other
than any L/C Lender making Swing Line Loans other than to the UK Swing Line
Borrowers or US Borrower) not to Issue such Letter of Credit because such
Issuance is not then permitted under subsection 3.1(a) as a result of the
limitations set forth in clauses (1) through (3) thereof, or (B) a notice
described in subsection 3.1(b)(ii), then, subject to the terms and conditions
hereof, the L/C Lender shall, on the requested date, Issue a Letter of Credit
for the account of the applicable Revolving Borrower (or jointly for the account
of the applicable Revolving Borrower and the applicable Subsidiary) or the
<PAGE>
-77-
applicable Subsidiary Swing Line Borrower in accordance with the L/C Lender's
usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Termination Date, the L/C Lender will, upon the written request of
the applicable Revolving Borrower or the applicable Subsidiary Swing Line
Borrower received by the L/C Lender (with a copy sent by the applicable
Revolving Borrower or the applicable Subsidiary Swing Line Borrower to the
Administrative Agent) at least three days (or such shorter time as the L/C
Lender may agree in a particular instance in its sole discretion) prior to the
proposed date of amendment, amend any Letter of Credit Issued by it. Each such
request for amendment of a Letter of Credit shall be made by facsimile,
confirmed immediately in an original writing, made in the form of an L/C
Amendment Application and shall specify in form and detail reasonably
satisfactory to the L/C Lender: (i) the Letter of Credit to be amended; (ii) the
proposed date of amendment of the Letter of Credit (which shall be a Business
Day); (iii) the nature of the proposed amendment; and (iv) such other matters as
the L/C Lender may reasonably require. The L/C Lender shall be under no
obligation to, and shall not, amend any Letter of Credit if: (A) the L/C Lender
would have no obligation at such time to Issue such Letter of Credit in its
amended form under the terms of this Agreement; or (B) the beneficiary of any
such Letter of Credit does not accept the proposed amendment to the Letter of
Credit. The Administrative Agent will promptly notify the Revolving Facility
Lenders of the receipt by it of any L/C Application or L/C Amendment
Application.
(d) The L/C Lender and the Revolving Facility Lenders agree that,
while a standby Letter of Credit is outstanding and prior to the Termination
Date, at the option of the applicable Revolving Borrower or the applicable
Subsidiary Swing Line Borrower and upon the written request of the applicable
Revolving Borrower or the applicable Subsidiary Swing Line Borrower received by
the L/C Lender (with a copy sent by the applicable Revolving Borrower or the
applicable Subsidiary Swing Line Borrower to the Administrative Agent) at least
three Business Days (or such shorter time as the L/C Lender may agree in a
particular instance in its sole discretion) prior to the proposed date of
notification of renewal, the L/C Lender shall be entitled to authorize the
automatic renewal of any Letter of Credit Issued by it. Each such request for
renewal of a Letter of Credit shall be made by facsimile, confirmed in an
original writing, in the form of an L/C Amendment Application, and shall specify
in form and detail reasonably satisfactory to the L/C Lender: (i) the standby
Letter of Credit to be renewed; (ii) the proposed date of notification of
renewal of the Letter of Credit (which shall be a Business Day not more than 60
days prior to the expiry date of the Letter of Credit being renewed); (iii) the
revised expiry date of the Letter of Credit; and (iv) such other matters as the
L/C Lender may reasonably require. The L/C Lender shall be under no obligation
so to renew any Letter of Credit and shall not do so if: (A) the L/C Lender
would have no obligation at such time to Issue or amend such Letter of Credit in
its renewed form under the terms of this Agreement; or (B) the beneficiary of
any such Letter of Credit does not accept the proposed renewal of the Letter of
Credit. If any outstanding Letter of Credit shall provide that it shall be
automatically renewed unless the beneficiary thereof receives notice from the
L/C Lender that such Letter of Credit shall not be renewed, and if at the time
of renewal the L/C Lender would be entitled to authorize the automatic renewal
of such Letter of Credit in accordance with this subsection 3.2(d) upon the
request of the applicable Revolving Borrower or the applicable Subsidiary Swing
Line Borrower but the L/C Lender shall not have received any L/C Amendment
Application from the applicable Revolving Borrower or the applicable Subsidiary
Swing Line Borrower with respect to such renewal or other written direction by
the applicable Revolving Borrower or the applicable Subsidiary Swing Line
Borrower with respect thereto, the L/C Lender shall nonetheless be permitted to
allow such Letter of Credit to renew, and the applicable Revolving Borrower and
the Revolving Facility Lenders hereby authorize such renewal, and, accordingly,
the L/C Lender shall be deemed to have received an L/C Amendment Application
from the applicable Revolving Borrower or the applicable Subsidiary Swing Line
Borrower requesting such renewal.
<PAGE>
-78-
(e) The L/C Lender may, at its election (or as required by the
Administrative Agent at the direction of the Required Revolving Facility
Lenders), deliver any notices of termination or other communications to any
Letter of Credit beneficiary or transferee, and take any other reasonable
action, at any time and from time to time, in order to cause the expiry date of
such Letter of Credit to be a date not later than the fifth Business Day prior
to the Termination Date.
(f) This Agreement shall control in the event of any conflict with any
L/C-Related Document (other than any Letter of Credit).
(g) The L/C Lender will also deliver to the Administrative Agent,
concurrently or promptly following its delivery of a Letter of Credit, or
amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or amendment
to or renewal of a Letter of Credit.
3.3. Risk Participations, Drawings and Reimbursements. (a) Immediately
upon the Issuance of each Letter of Credit, each Revolving Facility Lender shall
be deemed to, and hereby irrevocably and unconditionally agrees to, purchase
from the L/C Lender a participation in such Letter of Credit and each drawing
thereunder in an amount equal to the product of (i) the Pro Rata Share of such
Revolving Facility Lender times (ii) the maximum amount available to be drawn
under such Letter of Credit and the amount of such drawing, respectively.
(b) In the event of any request for a drawing under a Letter of Credit
by the beneficiary or transferee thereof, the applicable L/C Lender will
promptly notify the applicable Revolving Borrower or the applicable Subsidiary
Swing Line Borrower (but the failure to so notify any Revolving Borrower or any
Subsidiary Swing Line Borrower shall not impair any rights of the Lenders or
modify any obligation of the Revolving Borrowers or any Subsidiary Swing Line
Borrower). The applicable Revolving Borrower or the applicable Subsidiary Swing
Line Borrower shall reimburse the L/C Lender prior to 1:00 p.m. (New York City
time or local time with respect to any Letter of Credit Issued for a Subsidiary
Swing Line Borrower), on each date that any amount is paid by the L/C Lender
under any Letter of Credit issued for the account of such Revolving Borrower or
Subsidiary Swing Line Borrower (each such date, an "Honor Date"), in an amount
equal to the amount so paid by the L/C Lender. In the event the applicable
Revolving Borrower or the applicable Subsidiary Swing Line Borrower fails to
reimburse the L/C Lender for the full amount of any drawing under any Letter of
Credit by 1:00 p.m. (New York City time or local time with respect to any
Subsidiary Swing Line Borrower) on the Honor Date, the L/C Lender will promptly
notify the Administrative Agent and the Administrative Agent will promptly
notify each Lender thereof. Thereupon US Borrower with respect to all Letters of
Credit Issued for its account, UK Borrower with respect to all Letters of Credit
Issued for its account or for the account of Safeline Limited (or if UK Borrower
is not able to borrow under the Revolving Facility, US Borrower), and CH
Borrower with respect to all Letters of Credit Issued for the account of any
Subsidiary Swing Line Borrower (other than UK Borrower or Safeline Limited) and
itself (unless Issued jointly for the account of US Borrower) shall be deemed to
have requested that Revolving Loans be made by the Revolving Facility Lenders to
be disbursed on the Honor Date under such Letter of Credit, subject to the
amount of the unutilized portion of the Revolving Facility Commitment and
subject to the conditions set forth in subsections 5.2(b) and (c), which Loans
shall be ABR Loans accruing interest at a rate per annum equal to the Alternate
Base Rate, plus the Applicable Margin for ABR Loans which are Revolving Loans,
in the case of a drawing in U.S. Dollars, or Loans accruing interest at a rate
per annum equal to the Overnight Rate applicable to such Offshore Currency from
time to time in effect, plus the Applicable Margin for LIBOR Rate Loans which
are Revolving Loans, plus, in the case of Revolving Loans in Pounds Sterling,
the MLA Cost, in the case of a drawing in an Offshore Currency. Any notice given
by the L/C Lender or the Administrative Agent pursuant to
<PAGE>
-79-
this subsection 3.3(b) may be oral if immediately confirmed in writing
(including by facsimile); provided, however, that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.
(c) Each Revolving Facility Lender shall upon any notice pursuant to
subsection 3.3(b) make available to the Administrative Agent for the account of
the L/C Lender an amount in U.S. Dollars or the Offshore Currency in which such
Letter of Credit is denominated, as the case may be, and in Same Day Funds equal
to its Pro Rata Share of the amount of the drawing, whereupon the participating
Revolving Facility Lenders shall (subject to subsection 3.3(d)) each be deemed
to have made a Revolving Loan to the applicable Revolving Borrower in that
amount accruing interest at a rate per annum equal to the Alternate Base Rate,
plus the Applicable Margin for ABR Loans which are Revolving Loans (in the case
of a drawing in U.S. Dollars), or the Overnight Rate applicable to such Offshore
Currency from time to time in effect, plus the Applicable Margin for LIBOR Rate
Loans which are Revolving Loans (in the case of a drawing in an Offshore
Currency), plus, in the case of Revolving Loans in Pounds Sterling, the MLA
Cost. If any Revolving Facility Lender so notified fails to make available to
the Administrative Agent for the account of the L/C Lender the amount of such
Revolving Facility Lender's Pro Rata Share of the amount of the drawing by no
later than 1:00 p.m. (New York time) on the Honor Date, then interest shall
accrue on such Revolving Facility Lender's obligation to make such payment, from
the Honor Date to the date such Revolving Facility Lender makes such payment, at
a rate per annum equal to (i) in the case of a drawing in U.S. Dollars, the U.S.
Federal Funds Rate in effect from time to time during such period and (ii) in
the case of a drawing in an Offshore Currency, the Overnight Rate applicable to
such Offshore Currency from time to time in effect. The Administrative Agent
will promptly give notice of the occurrence of the Honor Date, but failure of
the Administrative Agent to give any such notice on the Honor Date or in
sufficient time to enable any Revolving Facility Lender to effect such payment
on such date shall not relieve such Revolving Facility Lender from its
obligations under this Section 3.3.
(d) With respect to any unreimbursed drawing that is not converted
into Revolving Loans to the applicable Revolving Borrower in whole or in part,
because of such Revolving Borrower's failure to satisfy the conditions set forth
in subsections 5.2(b) and (c) or for any other reason, such Revolving Borrower
shall be deemed to have incurred from the L/C Lender an L/C Borrowing in the
amount of such drawing, which L/C Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at a rate per annum equal to
(i) in the case of a drawing in U.S. Dollars, the Alternate Base Rate, plus 2%
per annum, and (ii) in the case of a drawing in an Offshore Currency, the
Overnight Rate applicable to such Offshore Currency from time to time in effect,
plus 2% per annum, plus, in the case of Revolving Loans in Pounds Sterling, the
MLA Cost, and each Revolving Facility Lender's payment to the L/C Lender
pursuant to subsection 3.3(c) shall be deemed payment in respect of its
participation in such L/C Borrowing and shall constitute an L/C Advance from
such Revolving Facility Lender in satisfaction of its participation obligation
under this Section 3.3.
(e) Each Revolving Facility Lender's obligation in accordance with
this Agreement to make the Revolving Loans or L/C Advances, as contemplated by
this Section 3.3, as a result of a drawing under a Letter of Credit, shall be
absolute and unconditional and without recourse to the L/C Lender and shall not
be affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Revolving Facility Lender may have
against the L/C Lender, the applicable Revolving Borrower or any other Person
for any reason whatsoever; (ii) the occurrence or continuance of an Event of
Default, an Unmatured Event of Default or a Material Adverse Effect; or (iii)
any other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing; provided, however, that each Revolving Facility Lender's
obligation to make Revolving Loans under this Section 3.3 is subject to the
conditions set forth in Section 5.2.
<PAGE>
-80-
3.4. Repayment of Participations. (a) Upon (and only upon) receipt by
the Administrative Agent for the account of the L/C Lender of Same Day Funds
from the applicable Revolving Borrower or the applicable Subsidiary Swing Line
Borrower (i) in reimbursement of any payment made by the L/C Lender under the
Letter of Credit with respect to which any Revolving Facility Lender has paid
the Administrative Agent for the account of the L/C Lender for such Revolving
Facility Lender's participation in the Letter of Credit pursuant to Section 3.3
or (ii) in payment of interest thereon, the Administrative Agent will pay to
each Revolving Facility Lender, in the same funds as those received by the
Administrative Agent for the account of the L/C Lender, the amount of such
Revolving Facility Lender's Pro Rata Share of such funds, and the L/C Lender
shall receive the amount of the Pro Rata Share of such funds of any Revolving
Facility Lender that did not so pay the Administrative Agent for the account of
the L/C Lender.
(b) If the Administrative Agent or the L/C Lender is required at any
time to return to the applicable Revolving Borrower or the applicable Subsidiary
Swing Line Borrower, or to a trustee, receiver, liquidator or custodian, or any
official in any Insolvency Proceeding, any portion of any payment made by such
Revolving Borrower to the Administrative Agent for the account of the L/C Lender
pursuant to subsection 3.4(a) in reimbursement of a payment made under any
Letter of Credit or interest or fee thereon, each Revolving Facility Lender
shall, on demand of the Administrative Agent, forthwith return to the
Administrative Agent or the L/C Lender the amount of its Pro Rata Share of any
amount so returned by the Administrative Agent or the L/C Lender, plus interest
thereon from the date such demand is made to the date such amount is returned by
such Revolving Facility Lender to the Administrative Agent or the L/C Lender, at
a rate per annum equal to the U.S. Federal Funds Rate in effect from time to
time.
3.5. Role of the L/C Lender. (a) Each Revolving Facility Lender, the
Revolving Borrowers and the Subsidiary Swing Line Borrowers agree that, in
paying any drawing under a Letter of Credit, the L/C Lender shall not have any
responsibility to obtain any document (other than any sight draft and
certificates or other documents expressly required by the Letter of Credit) or
to ascertain or inquire as to the validity or accuracy of any such document or
the authority of the Person executing or delivering any such document.
(b) None of the Agents, any of their respective Affiliates or any of
the respective correspondents, participants or assignees of the L/C Lender shall
be liable to any Revolving Facility Lender for: (i) any action taken or omitted
in connection herewith at the request or with the approval of the Revolving
Facility Lenders (including the Required Revolving Facility Lenders, as
applicable); (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) Each Revolving Borrower and each Subsidiary Swing Line Borrower
hereby assumes all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of any Letter of Credit issued for its
account; provided, however, that this assumption is not intended to, and shall
not, preclude a Revolving Borrower's or a Subsidiary Swing Line Borrower's
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. None of the Agents, any of their
respective Affiliates or any of the respective correspondents, participants or
assignees of the L/C Lender shall be liable or responsible for any of the
matters described in clauses (i) through (iv) of Section 3.6; provided, however,
that, anything in such clauses to the contrary notwithstanding, a Revolving
Borrower or a Subsidiary Swing Line Borrower may have a claim against the L/C
Lender, and the L/C Lender may be liable to such Revolving Borrower or such
Subsidiary Swing Line Borrower, to the extent, but only to the extent, of any
direct, as opposed to consequential or exemplary, damages suffered by such
Revolving Borrower or such Subsidiary Swing Line Borrower which such Revolving
Borrower or such Subsidiary Swing Line Borrower proves were caused directly by
the L/C Lender's willful misconduct or gross negligence or the L/C Lender's
<PAGE>
-81-
willful failure to pay under any Letter of Credit after the presentation to it
by the beneficiary of a sight draft and certificate(s) strictly complying with
the terms and conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing: (i) the L/C Lender may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary; and (ii) the L/C Lender
shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason.
3.6. Obligations Absolute. The obligations of the Revolving Borrowers
and the Subsidiary Swing Line Borrowers under this Agreement and any L/C-Related
Document to reimburse the L/C Lender for a drawing under a Letter of Credit, and
to repay any L/C Borrowing and any drawing under a Letter of Credit converted
into Loans, shall be unconditional and irrevocable, and shall be paid strictly
in accordance with the terms of this Agreement and each such other L/C-Related
Document under all circumstances, including the following: (i) any lack of
validity or enforceability of this Agreement or any L/C-Related Document; (ii)
the existence of any claim, set-off, defense or other right that a Borrower may
have at any time against any beneficiary or any transferee of any Letter of
Credit (or any Person for whom any such beneficiary or any such transferee may
be acting), the L/C Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or by the L/C-Related Documents
or any unrelated transaction; (iii) any draft, demand, certificate or other
document presented under any Letter or Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or otherwise
of any document required in order to make a drawing under any Letter of Credit;
or (iv) any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, a Revolving Borrower or a
Subsidiary Swing Line Borrower or a guarantor; provided, however, that the
Revolving Borrowers and the Subsidiary Swing Line Borrowers shall not be
obligated to reimburse the L/C Lender for any wrongful payment made by the L/C
Lender as a result of acts or omissions constituting willful misconduct or gross
negligence on the part of the L/C Lender.
3.7. Cash Collateral Pledge. If any Letter of Credit remains
outstanding and partially or wholly undrawn as of the Termination Date, then the
Revolving Borrowers or the applicable Subsidiary Swing Line Borrower shall
immediately Cash Collateralize the L/C Obligations Issued for their respective
accounts in an amount equal to the maximum amount then available to be drawn
under all Letters of Credit.
3.8. Letter of Credit Fees. (a) The applicable Revolving Borrower or
the applicable Subsidiary Swing Line Borrower shall pay to (i) with respect to
any Letter of Credit Issued for any Revolving Borrower (other than any UK
Borrower Swing Line L/C), the Administrative Agent for the account of each of
the Revolving Facility Lenders, and (ii) with respect to Letters of Credit
Issued for the account of any Subsidiary Swing Line Borrower (other than UK
Borrower if such Letter of Credit is not a UK Borrower Swing Line L/C), the
applicable L/C Lender for its account only, a letter of credit fee with respect
to the Letters of Credit Issued for their respective accounts at a rate per
annum equal to the then Applicable Margin for LIBOR Rate Loans which are
Revolving Facility Loans on an amount equal to the average daily maximum amount
available to be drawn of the outstanding Letters of Credit Issued for their
respective accounts (the "Computation Amount"), computed on a quarterly basis in
arrears on the last Business Day of each calendar quarter and on the Termination
Date (or such later date on which all outstanding Letters of Credit Issued for
their respective accounts have been terminated or have expired) based upon
Letters of Credit outstanding Issued for their respective accounts for the
applicable period as calculated by (x) the Administrative Agent with respect to
Letters of Credit Issued for the account of the Revolving Borrowers, or (y) the
applicable L/C Lender with respect to any Letter of Credit Issued solely for the
account of a Subsidiary Swing Line Borrower.
<PAGE>
-82-
(b) The applicable Revolving Borrower or the applicable Subsidiary
Swing Line Borrower shall pay to (i) with respect to Letters of Credit Issued
for the account of any Revolving Borrower, the Administrative Agent, or (ii)
with respect to Letters of Credit Issued for the account of any Subsidiary Swing
Line Borrower, the applicable L/C Lender, in each case for the account of the
L/C Lender a letter of credit fronting fee for each Letter of Credit Issued by
the L/C Lender for the account of such Revolving Borrower or Subsidiary Swing
Line Borrower, as the case may be, of at least U.S. $100 or, if greater, at the
rate per annum equal to 1/8% of the Computation Amount, computed on the last
Business Day of each calendar quarter and on the Termination Date (or such later
date on which all outstanding Letters of Credit Issued for their respective
accounts have been terminated or have expired) based upon the Letters of Credit
outstanding for the applicable period as calculated by (x) the Administrative
Agent with respect to Letters of Credit Issued for the account of the Revolving
Borrowers or (y) the applicable L/C Lender with respect to any Letter of Credit
Issued solely for the account of a Subsidiary Swing Line Borrower, which fee,
with respect to the L/C Lender's share of the fee set forth in this subsection
3.8(b), shall be credited against the fee payable under subsection 3.8(a).
(c) The letter of credit fees payable under subsection 3.8(a) and the
fronting fees payable under subsection 3.8(b) shall be due and payable quarterly
in arrears on the last Business Day of each calendar quarter during which
Letters of Credit are outstanding, commencing on the first such quarterly date
to occur after the Closing Date, through the Termination Date (or such later
date upon which all outstanding Letters of Credit Issued for the respective
account of a Revolving Borrower or a Subsidiary Swing Line Borrower have been
terminated or have expired), with the final payment to be made on the
Termination Date (or such later termination or expiration date). All fees
payable under this Section 3.8 shall be calculated as of their due date based
upon the Dollar Equivalent amount of the Computation Amount as of such date
based upon the Spot Rate. All such fees shall be payable solely in U.S. Dollars.
(d) The Revolving Borrowers and the Subsidiary Swing Line Borrowers
shall pay to the L/C Lender from time to time on demand the normal issuance,
presentation, amendment and other processing fees, and other standard costs and
charges, of the L/C Lender relating to letters of credit as from time to time in
effect.
3.9. Uniform Customs and Practice. The Uniform Customs and Practice
for Documentary Credits as published by the International Chamber of Commerce
most recently at the time of issuance of any Letter of Credit shall (unless
otherwise expressly provided in such Letter of Credit) apply to such Letter of
Credit.
3.10. Letters of Credit for the Account of Subsidiaries. Each
Revolving Borrower and its applicable Subsidiary shall be jointly and severally
liable for any Letter of Credit which is issued jointly for the account of that
Revolving Borrower and any of its Subsidiaries.
ARTICLE IV.
NET PAYMENTS, YIELD PROTECTION AND ILLEGALITY
---------------------------------------------
4.1. Net Payments. (a) Except as provided in subsection 4.1(b), all
payments by any Loan Party to any Lender or any Agent under this Agreement and
any other Loan Document shall be made free and clear of, and without deduction
or withholding for, any Covered Taxes levied or imposed by any Governmental
Authority with respect to such payments. The Borrowers covenant and agree on
behalf of the Subsidiaries that the provisions of this Section 4.1 shall apply
to all payments under any Loan Document. In the event that any
<PAGE>
-83-
Loan Party (other than any Applicable Borrower) is obligated to make any
payments described in this Section 4.1 under any Loan Document, the Lenders and
Agents covenant and agree to deliver to any such Loan Party any forms or
certificates that (i) they are able to deliver, and (ii) they would have been
required to deliver to such Loan Party if it were an Applicable Borrower
pursuant to this Section 4.1 and the appropriate requests therefor have been
made; provided, however, that no Lender or Agent shall have any liability to any
Loan Party or any other Person if such Lender or Agent is not in compliance with
this sentence.
(b) If any Loan Party shall be required by law to deduct or withhold
any Covered Taxes from or in respect of any sum payable hereunder to any Lender
or any Agent, then except as provided in subsection 4.1(g): (i) the sum payable
shall be increased as necessary so that after making all such required
deductions and withholdings (including deductions and withholdings applicable to
additional sums payable under this Section) such Lender or such Agent, as the
case may be, receives an amount equal to the sum it would have received had no
such deductions or withholdings been made; (ii) such Loan Party shall make such
deductions and withholdings; and (iii) such Loan Party shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law. If for any reason CH Borrower, Canadian Borrower
or any other Loan Party (other than UK Borrower) fails to make any payments
required under the preceding sentence, then US Borrower shall make such payments
on behalf of CH Borrower, Canadian Borrower or such Loan Party. Within 30 days
after the date of any payment by a Loan Party of Covered Taxes, such Loan Party
shall furnish the Administrative Agent or the Applicable Subsidiary Swing Line
Lender, in the case of any Subsidiary Swing Line Borrower, the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment reasonably satisfactory to the Administrative Agent or the Applicable
Subsidiary Swing Line Lender, in the case of any Subsidiary Swing Line Borrower.
(c) The Loan Parties agree to indemnify and hold harmless each Lender
and each Agent for (i) the full amount of Covered Taxes (including any Covered
Taxes imposed by any jurisdiction on amounts payable under this Section 4.1)
paid by such Lender or such Agent and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Covered Taxes were correctly or legally asserted,
and (ii) any Taxes levied or imposed by any Governmental Authority on any
additional amounts paid by any Loan Party under this Section 4.1 that are
measured by such Lender's or such Agent's net income by the jurisdiction (or any
political subdivision thereof) under the laws of which such Lender or such
Agent, as the case may be, is organized or maintains a Lending Office.
(d)(i) If a Lender or an Agent receives a refund or credit of Taxes
paid or indemnified by a Loan Party pursuant to subsection (b) or (c) of this
Section 4.1, then such Lender or such Agent shall promptly repay the applicable
Loan Party such refund or the net benefit obtained by such Lender as a
consequence of the receipt of such credit (whether paid pursuant to subsection
(b) or (c) of this Section 4.1 and whether of the type described in either
clause (i) or (ii) of such subsection (c)) net of all out-of-pocket expenses
related thereto and without interest (other than interest received as part of
such refund or credit); provided, however, that if, due to any adjustment of
such Taxes (or of any liability, including penalties, interest, additions to tax
and expenses, arising therefrom or with respect thereto), such Lender or such
Agent loses the benefit of all or any portion of such refund or credit, the Loan
Parties will indemnify and hold harmless such Lender or such Agent in accordance
with this subsection. A certificate as to the amount of any such required
indemnification payment prepared by the Lender or such Agent and setting forth a
reasonable basis for such claim shall be final, conclusive and binding for all
purposes (it being understood and agreed that a Lender shall in no circumstances
be required to disclose any information or details of or relating to its tax or
financial affairs under or pursuant to this Section 4.1(d)(i)). Payment under
this indemnification shall be made within 30 days after the date such Lender or
such Agent makes written demand therefor by the delivery of such certificate.
<PAGE>
-84-
(ii) In furtherance of the provisions of subsection (d)(i), if
a Lender having a Revolving Facility Commitment, Revolving Facility Loan,
Tranche A-UK Facility Commitment or Tranche A-UK Term Loan (each, a "UK Lender")
is entitled to receive any additional amounts pursuant to this Section 4.1 which
are attributable to any withholding imposed prior to or during the time that
such Lender's UK Certificate (as defined in subsection 4.1 (f)(viii)) is being
processed or considered by Inland Revenue (or by the taxing authority of such
Lender's jurisdiction of residence in support thereof), then such UK Lender
shall take all reasonable steps which are necessary to obtain (or obtain the
benefit of) any refund, credit, relief, remission or repayment of Taxes,
including filing such forms, certificates, documents, applications or returns as
may be required to obtain such tax benefit and shall take such steps at the
earliest reasonable time; provided, however, that the amount of any material
expenses or costs incurred by such UK Lender shall be reimbursed by UK Borrower
promptly on demand by such Lender.
(e) If any Loan Party is required to pay additional amounts to any
Lender or any Agent pursuant to this Section 4.1, then such Lender shall use
reasonable efforts (consistent with legal and regulatory restrictions) to change
the jurisdiction of its Lending Office or take other appropriate action so as to
eliminate any obligation to make such additional payment by such Loan Party
which may thereafter accrue, if such change or other action in the reasonable
judgment of such Lender is not otherwise disadvantageous or burdensome to such
Lender.
(f)(i) Each Lender (other than a Canadian Lender which is not also
making a Revolving Facility Loan or Term Loan to US Borrower or UK Borrower) or
Agent which is not a United States person (as such term is defined in Section
7701(a) of the Code) agrees that:
(A) it shall, no later than the Original Closing Date (or, in
the case of a Lender which becomes a party hereto after the Original
Closing Date, the date upon which such Lender becomes a party hereto)
deliver to the Administrative Agent and to the Borrowers through the
Administrative Agent (x) two accurate and complete signed originals of
IRS Form 4224 or any successor thereto ("Form 4224"), or two accurate
and complete signed originals of IRS Form 1001 or any successor thereto
("Form 1001"), as appropriate, or (y) if such Lender is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and cannot
deliver either Form 1001 or Form 4224 pursuant to clause (x) above, a
certificate substantially in the form of Exhibit L-1 (any such
certificate, a "Section 4.1(f)(i) Certificate") and, in the case of
either (x) or (y), two accurate and complete original signed copies of
IRS Form W-8 or any successor thereto ("Form W-8") or IRS Form W-9 or
any successor thereto ("Form W-9"), whichever is applicable;
(B) if at any time such Lender or Agent makes any changes
necessitating a new Form 4224, Form 1001, Form W-8, Form W-9 or Section
4.1(f)(i) Certificate, as the case may be, it shall with reasonable
promptness deliver to the Administrative Agent and to the Borrowers
through the Administrative Agent in replacement for, or in addition to,
the forms previously delivered by it hereunder, two accurate and
complete signed originals of Form 4224, Form 1001, Form W-8, Form W-9
or Section 4.1(f)(i) Certificate, as appropriate; and
(C) it shall, before or promptly after the occurrence of any
event (including the passing of time (and in any event (x) in the case
of a Form 4224 or Section 4.1(f)(i) Certificate, before the payment of
any interest in each succeeding taxable year of such Lender after the
Original Closing Date during which interest may be paid under this
Agreement, and (y) in the case of a Form 1001, before the payment of
any interest in each third succeeding calendar year after the Original
Closing Date during which interest may be paid under this Agreement)
but excluding any event mentioned in clause
<PAGE>
-85-
(B) above) requiring a change in or renewal of the most recent Form
4224, Form 1001, Form W-8, Form W-9 or Section 4.1(f)(i) Certificate,
previously delivered by such Lender or Agent, deliver to the
Administrative Agent and to the Borrowers through the Administrative
Agent two accurate and complete original signed copies of Form 4224,
Form 1001, or Form W-8 and a Section 4.1(f)(i) Certificate, in
replacement for the forms previously delivered by such Lender or Agent.
(ii)Each Lender or Agent that is incorporated or organized under the
laws of the United States of America or a state thereof shall provide two
properly completed and duly executed copies of Form W- 9, or successor
applicable form, at the times specified for delivery of forms under paragraph
(f)(i) of this subsection.
(iii) Each Form 1001 or 4224 delivered by a Lender or Agent pursuant
to this subsection (f) shall certify, unless unable to do so by virtue of a
Change in Law occurring after the date such Lender or Agent becomes a party
hereto, that the Lender or Agent is entitled to receive payments under this
Agreement without deduction or withholding of U.S. federal income taxes and each
Form W-9 shall certify, unless unable to do so by virtue of a Change in Law
occurring after the date such Lender or Agent becomes a party hereto, that such
Lender or Agent is entitled to an exemption from U.S. backup withholding. Each
Canadian Certificate (as defined in subsection 4.1(f)(vii)) shall certify,
unless unable to do so by virtue of a Change in Law occurring after the date
such Lender or Agent becomes a party hereto, that the Lender or Agent is
entitled to receive payments under this Agreement without deduction or
withholding of Canadian federal income taxes. Each UK Certificate (as defined in
subsection 4.1 (f)(viii)) shall certify or establish, unless unable to do so by
virtue of a Change in Law occurring after the date such Lender or Agent becomes
a party hereto, that the Lender or Agent is entitled to receive payments under
this Agreement without deduction or withholding of UK income taxes.
(iv) Notwithstanding the foregoing provisions of this subsection (f)
or any other provision of this Section 4.1, no Lender or Agent shall be required
to deliver any form pursuant to this Section 4.1 if such Lender or Agent is not
legally able to do so by virtue of a Change in Law occurring after the date such
Lender or Agent becomes a party hereto.
(v) Each Revolving Facility Lender shall, no later than the Original
Closing Date (or, in the case of any such Lender which becomes a party hereto
after the Original Closing Date, the date upon which such Lender becomes a party
hereto) deliver a certificate substantially in the form of Exhibit L-2 or other
form of certificate reasonably satisfactory to CH Borrower (any such
certificate, a "Section 4.1(f)(v) Certificate"); provided, however, that with
respect to any Revolving Facility Loan (a) no Revolving Facility Lender making
Loans or having Commitments as of the Original Closing Date need deliver any
Section 4.1(f)(v) Certificate if (i) it is unable to do so and (ii) the total
number of Lenders within the same Facility who have not delivered Section
4.1(f)(v) Certificates does not exceed three and (b) after the Original Closing
Date no Assignee (or branch or Affiliate designated pursuant to Section 4.9) of
a Revolving Facility Lender need deliver any Section 4.1(f)(v) Certificate if
(i) it is unable to do so and (ii) the assignment to such Assignee would not
increase beyond three the sum of (a) the total number of Lenders within the same
Facility who have not delivered Section 4.1(f)(v) Certificates and (b) the total
number of Lenders within the same Facility who have notified CH Borrower or the
Administrative Agent that any of the representations made in a previously
delivered Section 4.1.(f)(v) Certificate are no longer true and correct. Each
Lender delivering a Section 4.1(f)(v) Certificate further agrees to deliver a
new Section 4.1(f)(v) Certificate at the times specified for delivery of a
Section 4.1(f)(i) Certificate under subsections (f)(i)(B) and (C) of this
Section 4.1, unless it is unable to do so by virtue of a Change in Law occurring
after the date such Lender becomes a party hereto.
<PAGE>
-86-
(vi) Each Lender or Agent shall, promptly upon a Loan Party's or the
Administrative Agent's reasonable request to that effect, deliver to such Loan
Party or the Administrative Agent (as the case may be) such other forms or
similar documentation or other information as may be required from time to time
by any applicable law, treaty, rule or regulation of any Governmental Authority
in order to establish such Lender's or Agent's tax status for withholding
purposes.
(vii) Each Canadian Lender agrees that it shall, no later than the
Safeline Closing Date (or, in the case of a Canadian Lender which becomes a
party hereto after the Safeline Closing Date, the date upon which such Lender
becomes a party hereto), deliver to the Canadian Agent and to Canadian Borrower
through the Canadian Agent an instrument in writing (a "Canadian Certificate")
certifying one of the following:
(A) that such Canadian Lender is not a non-resident of Canada
for the purposes of Part XIII of the Income Tax Act (Canada) and that
it is the sole beneficial owner of payments of principal and interest
on its Canadian Loans under this Agreement;
(B) its jurisdiction of incorporation and residence for tax
purposes, that it is the sole beneficial owner of payments of principal
and interest on its Canadian Loans under this Agreement and the rate of
withholding tax applicable to any payment of interest to it as such
rate may be reduced by an applicable tax convention entered into by
Canada; or
(C) its jurisdiction of incorporation and residence for tax
purpose, the names of the beneficial owners of payments of principal
and interest on its Canadian Loans under this Agreement, the residence
for tax purposes of each of such beneficial owners and the rate of
withholding tax applicable to any payment of interest in respect of
each beneficial owner as such rate may be reduced by an applicable tax
convention entered into by Canada.
In addition, each Canadian Lender shall notify Canadian Borrower and the
Canadian Agent of any changes in respect of (A), (B) or (C), as the case may be,
and shall promptly deliver to the Administrative Agent and Borrowers a Canadian
Certificate in replacement thereof, which Canadian Certificate shall, in any
event, be delivered prior to the next date for the payment of any interest to
such Lender. If the Canadian Agent receives a request from Revenue Canada
Customs, Excise and Taxation or another taxing authority to provide additional
information concerning the withholding tax status of any Canadian Lender, such
Canadian Lender shall (upon notice of such request from the Canadian Agent) use
reasonable efforts to obtain and deliver such information to such taxing
authority, the Canadian Agent and Canadian Borrower.
(viii) Each UK Lender:
(A) represents and warrants that it is a UK Qualifying Lender and
that such warranty will be deemed to be repeated by each UK
Lender on the due date for payment of any amount to such
Lender under this Agreement; provided, however, that if a UK
Lender is not or ceases to be a UK Qualifying Lender as a
result of any Change in Law occurring after the Amendment and
Restatement Date (or the date upon which such Lender becomes a
party hereto, if later) such UK Lender shall not be liable to
any Credit Agreement Loan Party for a breach of such
representation and warranty;
(B) agrees to promptly notify the Administrative Agent and the
Borrowers of any change in its status as a UK Qualifying Lender
of which it is aware;
<PAGE>
-87-
(C) agrees that, if it is a Treaty Lender, it shall (i) no later
than the Safeline Closing Date (or in the case of a Lender
which becomes a party hereto after the Safeline Closing Date,
the date upon which such Lender becomes a party hereto) deliver
to the Administrative Agent an accurate and complete signed
original of the claim form for relief from the United Kingdom
withholding applicable to such Lender's jurisdiction of
residence (a "UK Certificate"), which the Administrative Agent
shall, if it receives such forms on or prior to the Safeline
Closing Date, deliver to US Borrower no later than the Safeline
Closing Date, (ii) promptly complete and submit any other
Inland Revenue form or forms applicable to such Lender's
jurisdiction of residence, together with all necessary
certifications as are required to claim exemption from Taxes
in the United Kingdom for payments made hereunder, and (iii) do
all things reasonably requested by the UK Borrower, the
Administrative Agent, the Inland Revenue or the taxing
authority of such Lender's jurisdiction of residence with a
view to expediting confirmation from the Inland Revenue of such
exemption and with a view to ensuring that such exemption is
maintained in full force and effect; provided, however, that
the amount (as certified by the Lender) of any material
expenses or costs incurred by any Lender in compliance with this
clause (iii) shall be reimbursed by UK Borrower promptly on
demand by such Lender. Each Treaty Lender further agrees to
deliver a new UK Certificate in the event of the occurrence of
any event requiring a change in or renewal of any UK
Certificate. Nothing in this subsection 4.1(f)(viii)(C) shall
eliminate any form delivery requirement specified in
subsections 4.1(f)(i), (ii), or (v) for any UK Lender.
(g) No Loan Party will be required to pay any additional amount in
respect of Taxes pursuant to this Section 4.1 to any Lender or to any Agent with
respect to any Lender if the obligation to pay such additional amount would not
have arisen but for a failure by such Lender or Agent to comply with its
obligations under subsection 4.1(f) or Section 11.8 or because such Lender is
not or ceases to be a UK Qualifying Lender (other than by reason of a Change in
Law occurring after the Amendment and Restatement Date or the date upon which
such Lender became a party hereto, if later).
(h) Each Lender agrees to indemnify and hold harmless the Loan Parties
and each Agent from and against any Taxes, penalties, interest and other costs
or losses (including Attorney Costs) incurred or payable by the Loan Parties or
an Agent as a result of the failure of the Loan Parties or an Agent to comply
with its obligations to deduct or withhold any Taxes from any payments made
pursuant to this Agreement which failure resulted from such Loan Party's or an
Agent's reasonable reliance on any form, statement, certificate or other
information provided to it by such Lender pursuant to this Section 4.1.
(i) If, at any time, any Applicable Borrower requests any Lender to
deliver any forms or other documentation pursuant to subsection 4.1(f)(vi), then
such Applicable Borrower shall, on demand of such Lender through the
Administrative Agent, reimburse such Lender for any material costs and expenses
(including Attorney Costs) reasonably incurred by such Lender in the preparation
or delivery of such forms or other documentation.
4.2. Illegality. (a) If any Lender determines that any Change in Law
has made it unlawful, or that any central bank or other Governmental Authority
has asserted that it is unlawful, for such Lender or its applicable Lending
Office to make or maintain LIBOR Rate Loans in any Applicable Currency or, in
the case of any Canadian Lender, BA Equivalent Rate Loans, then, on notice
thereof by the Lender to the Applicable Borrower through the Applicable Agent
any obligation of such Lender to make, convert or continue LIBOR Rate Loans in
such Applicable Currency or BA Equivalent Rate Loans, as the case may be, shall
be suspended until such Lender notifies the Applicable Agent and the Applicable
Borrower that the circumstances giving rise
<PAGE>
-88-
to such determination no longer exist and until such time such Lender's
commitment shall be only to make an ABR Loan, or Prime Rate Loan with respect to
the Canadian Facility, when a LIBOR Rate Loan is requested in such Applicable
Currency or, in the case of any Canadian Lender, when a BA Equivalent Rate Loan
is requested.
(b) If a Lender determines that it is unlawful to maintain any LIBOR
Rate Loan in any Applicable Currency or, in the case of any Canadian Lender, BA
Equivalent Rate Loans, (x) with respect to any such LIBOR Rate Loan that is an
Offshore U.S. Dollar Loan, such Loan shall be automatically converted to an ABR
Loan either on the last day of the Interest Period therefor, if such Lender may
lawfully continue to maintain such LIBOR Rate Loan to such day, or immediately
if not, and (y) with respect to any other LIBOR Rate Loan or BA Equivalent Rate
Loan, the Applicable Borrower shall, upon their receipt of notice of such fact
and demand from such Lender (with a copy to the Applicable Agent), prepay in
full such LIBOR Rate Loans or BA Equivalent Rate Loans, as applicable, of such
Lender then outstanding in such Applicable Currency, together with interest
accrued thereon and amounts required under Section 4.4, either on the last day
of the Interest Period therefor, if such Lender may lawfully continue to
maintain such LIBOR Rate Loan or such BA Equivalent Rate Loan to such day, or
immediately, if not. If Canadian Borrower is required to so prepay any BA
Equivalent Rate Loan, then concurrently with such prepayment, Canadian Borrower
shall borrow from the affected Lender a Prime Rate Loan.
(c) Before giving any notice to the Administrative Agent under this
Section, the affected Lender shall designate a different Lending Office with
respect to its LIBOR Rate Loans or BA Equivalent Rate Loans or take other
appropriate action if such designation or other action will avoid the need for
giving notice and will not, in the judgment of such Lender, be illegal or
otherwise disadvantageous to such Lender.
4.3. Increased Costs and Reduction of Return. (a) If any Lender
determines that, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) the compliance by such
Lender with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), in either case after the
Original Closing Date, there shall be any increase in the cost to such Lender of
agreeing to make or making, funding or maintaining any LIBOR Rate Loan or BA
Equivalent Rate Loan or participating in Letters of Credit, or, in the case of
the L/C Lender, any increase in the cost to the L/C Lender of agreeing to issue,
issuing or maintaining any Letter of Credit or of agreeing to make or making,
funding or maintaining any unpaid drawing under any Letter of Credit, then US
Borrower (subject to the limitations herein) and each Applicable Borrower shall
be liable for, and shall from time to time, upon demand (which demand shall
contain a reasonably detailed calculation of any relevant costs and shall be
conclusive and binding in the absence of manifest error, and a copy thereof
shall be sent to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender, additional amounts as are sufficient to compensate
such Lender for such increased costs; provided, however, that (i) CH Borrower
shall be liable only for those additional amounts relating to the Obligations of
CH Borrower and each CH Foreign Subsidiary, (ii) UK Borrower shall be liable
only for those additional amounts relating to the Obligations of UK Borrower,
(iii) Canadian Borrower shall be liable only for those additional amounts
relating to Obligations of Canadian Borrower, and (iv) US Borrower shall not be
responsible for any additional amounts relating to the Obligations of UK
Borrower.
(b) If any Lender shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
such Lender (or its Lending Office) or any corporation controlling such Lender
with any Capital Adequacy Regulation, in each case after the
<PAGE>
-89-
date of this Agreement, affects or would affect the amount of capital required
or expected to be maintained by such Lender or any corporation controlling such
Lender and (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) determines that the amount of such
capital is increased as a consequence of its Commitment, Loans, credits or
obligations under this Agreement, then, upon demand of such Lender to US
Borrower or the Applicable Borrower through the Applicable Agent, US Borrower
(subject to the limitations herein) and each Applicable Borrower shall pay to
such Lender, from time to time as specified by such Lender, additional amounts
reasonably sufficient to compensate such Lender for such increase; provided,
however, that (i) CH Borrower shall be liable only for those additional amounts
relating to the Obligations of CH Borrower and each CH Foreign Subsidiary, (ii)
UK Borrower shall be liable only for those additional amounts relating to the
Obligations of UK Borrower, (iii) Canadian Borrower shall be liable only for
those additional amounts relating to Obligations of Canadian Borrower, and (iv)
US Borrower shall not be responsible for any additional amounts relating to the
Obligations of UK Borrower. A statement of such Lender as to any such additional
amount or amounts (including calculations thereof in reasonable detail), in the
absence of manifest error, shall be conclusive and binding on each Applicable
Borrower. In determining such amount or amounts, such Lender may use any method
of averaging and attribution that it (in its sole and absolute discretion) shall
deem applicable.
(c) Nothing in this Section 4.3 shall obligate any Loan Party to make
any payments with respect to Taxes of any sort, indemnification for which is
governed by Section 4.1.
4.4. Funding Losses. US Borrower and each Applicable Borrower shall,
within five days of receipt of written notice thereof, reimburse each Lender and
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of: (a) the failure of such Applicable Borrower to
make on a timely basis any payment of principal of any LIBOR Rate Loan or BA
Equivalent Rate Loan; (b) the failure (including by reason of Section 4.5) of
such Applicable Borrower to borrow, continue or convert a LIBOR Rate Loan or BA
Equivalent Rate Loan after such Applicable Borrower has given (or is deemed to
have given) a Notice of Borrowing, Notice of Canadian Borrowing or a Notice of
Conversion/Continuation (other than any such failure arising as a result of a
default by such Lender or any Applicable Agent); (c) the failure of such
Applicable Borrower to make any prepayment of any Loan in accordance with any
notice delivered under Section 2.7 or Section 2.3A; (d) the prepayment by such
Applicable Borrower (including pursuant to Section 2.7 or 2.8) or other payment
(including after acceleration thereof) the principal of any LIBOR Rate Loan or
BA Equivalent Rate Loan on a day that is not the last day of the relevant
Interest Period; or (e) the conversion by such Applicable Borrower under Section
2.4 or Section 2.4A of any LIBOR Rate Loan to an ABR Loan or a BA Equivalent
Rate Loan to a Prime Rate Loan, respectively, on a day that is not the last day
of the relevant Interest Period; including any such loss or expense arising from
the liquidation or reemployment of deposits or other funds obtained by it to
make, continue or maintain the applicable Loans or from fees payable to
terminate the deposits from which such funds were obtained. Such written notice
(which shall include calculations in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on each Applicable Borrower. For
purposes of calculating amounts payable by each Applicable Borrower to any
Lender under this Section and under subsection 4.3(a), (i) each LIBOR Rate Loan
made by a Lender (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at the LIBOR Rate
used in determining the interest rate for such LIBOR Rate Loan by a matching
deposit or other borrowing in the interbank eurocurrency market for a comparable
amount and for a comparable period and in the same Applicable Currency, whether
or not such LIBOR Rate Loan is in fact so funded, and (ii) each BA Equivalent
Rate Loan made by a Canadian Lender (and each related reserve, special deposit
or similar requirement) shall be conclusively deemed to have been funded at the
BA Equivalent Rate applicable to such BA Equivalent Rate Loan by the purchase by
such Canadian Lender of a bankers'
<PAGE>
-90-
acceptance in a comparable amount and for a comparable period, whether or not
such BA Equivalent Rate Loan is in fact so funded.
4.5. Inability To Determine Rates. (a) If the Required Revolving
Facility Lenders or Lenders holding a majority of the Loans under the Tranche
A-US Term Loan Facility determine that for any reason adequate and reasonable
means do not exist for determining the LIBOR Rate for any requested Interest
Period with respect to a proposed LIBOR Rate Loan under the applicable Facility,
the Administrative Agent will promptly so notify the Applicable Borrower and
each Lender under such Facility. Thereafter, the obligation of the Lenders under
such Facility to make, convert or maintain LIBOR Rate Loans in the Applicable
Currency shall be suspended until the Administrative Agent upon the instruction
of the Required Revolving Facility Lenders or Lenders holding a majority of the
Loans under the Tranche A-US Term Loan Facility, as the case may be, revoke such
notice in writing. Upon receipt of such notice, the Applicable Borrower may
revoke any Notice of Borrowing or Notice of Conversion/Continuation then
submitted by it. If the Applicable Borrower does not revoke (x) any such Notice
of Borrowing for Revolving Loans or (y) any such Notice of
Conversion/Continuation with respect solely to Offshore U.S. Dollar Loans, the
Lenders shall make, convert or continue the applicable Loans, as proposed by
such Applicable Borrower in the amount specified in the applicable notice
submitted by such Applicable Borrower, but such Loans shall be made, converted
or continued as ABR Loans instead of LIBOR Rate Loans, and in the case of any
Offshore Currency Loans under the Revolving Facility, the Borrowing shall be
redenominated and thereby be made in an aggregate amount equal to the Dollar
Equivalent amount of the originally requested Borrowing in the Offshore
Currency. If the Applicable Borrower does not revoke any Notice of
Conversion/Continuation with respect to any outstanding Revolving Loans that are
Offshore Currency Loans which are the subject of any such continuation, such
Offshore Currency Loans shall from the end of the current Interest Period
therefor bear interest at a rate per annum equal to the Applicable Margin for
LIBOR Rate Loans which are Revolving Loans, plus the Overnight Rate for the
Applicable Currency as in effect from time to time or such other rate as may be
agreed to between the Borrowers or UK Borrower, as the case may be, and the
Required Revolving Facility Lenders, and specified to the Administrative Agent
from time to time.
(b) If Lenders holding a majority of the Tranche A-CHF Term Loans or
Tranche A-UK Term Loans, as the case may be, determine that for any reason
adequate and reasonable means do not exist for determining the LIBOR Rate for
any requested Interest Period with respect to Tranche A-CHF Term Loans or
Tranche A-UK Term Loans, as the case may be, the Administrative Agent will
promptly so notify the Applicable Borrower and each Lender under the Tranche
A-CHF Term Loan Facility or the Tranche A-UK Term Loan Facility, as the case may
be. Thereafter, until the Administrative Agent upon the instruction of Lenders
holding a majority of the Tranche A-CHF Term Loans or Tranche A-UK Term Loans,
as the case may be, revokes such notice in writing, the Tranche A-CHF Term Loans
or Tranche A-UK Term Loans, as the case may be, shall bear interest at a rate
per annum equal to the Applicable Margin for LIBOR Rate Loans which are Tranche
A-CHF Term Loans or Tranche A-UK Term Loans, as the case may be, plus the
Overnight Rate for the Applicable Currency as in effect from time to time or
such other rate as may be agreed to between the Applicable Borrower and Lenders
holding a majority of the Tranche A-CHF Term Loans or Tranche A-UK Term Loans,
as the case may be, and specified to the Administrative Agent from time to time.
(c) If the Canadian Agent shall have determined that for any reason
adequate and reasonable means do not exist for ascertaining the BA Equivalent
Rate for any requested Interest Period with respect to a proposed BA Equivalent
Rate Loan, or any Canadian Lender shall have determined (and notified the
Canadian Agent) that the BA Equivalent Rate to be applicable for any requested
Interest Period with respect to a proposed BA Equivalent Rate Loan does not
adequately and fairly reflect the cost to such Canadian Lender of funding such
Loan, the Canadian Agent will forthwith give notice of such determination to
Canadian Borrower,
<PAGE>
-91-
the Administrative Agent and each Canadian Lender. Thereafter, the obligation of
the Canadian Lenders to make or maintain BA Equivalent Rate Loans for the
account of Canadian Borrower hereunder shall be suspended until the Canadian
Agent (at the request of the applicable Lender, if applicable) revokes such
notice in writing. Upon receipt of such notice, Canadian Borrower may revoke any
Notice of Canadian Borrowing or Notice of Conversion/Continuation then submitted
by it. If Canadian Borrower does not revoke such notice, the Canadian Lenders
shall make, convert or continue the Loans, as proposed by Canadian Borrower, in
the amount specified in the applicable notice submitted by Canadian Borrower,
but such Loans shall be made, converted or continued as Prime Rate Loans.
4.6. Reserves on LIBOR Rate Loans; MLA Costs. Each Applicable Borrower
shall pay to each Lender, as long as such Lender shall be required under
regulations of the FRB to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency funds or deposits (currently
known as "Eurocurrency liabilities") and, in respect of any Offshore Currency
Loans, under any applicable regulations of the country in which the Offshore
Currency of such Offshore Currency Loans circulates, additional costs on the
unpaid principal amount of each LIBOR Rate Loan and Offshore Currency Loan equal
to the actual costs of such reserves allocated to such Loan by such Lender (as
calculated by such Lender in good faith, which calculation shall be set forth in
reasonable detail and shall be conclusive), payable on each date on which
interest is payable on such Loan, provided the Applicable Borrower shall have
received at least 15 days' prior written notice (with a copy to the
Administrative Agent) of the amount of such additional interest from such
Lender. If a Lender fails to give notice 15 days prior to the relevant Interest
Payment Date, such additional interest shall be payable 15 days from receipt of
such notice. Each Applicable Borrower shall also pay all MLA Cost to each Lender
which makes Loans in Pounds Sterling.
4.7. Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article IV shall deliver to each Applicable Borrower
(with a copy to the Administrative Agent) a certificate (a) setting forth in
reasonable detail the circumstances giving rise to such claim and a computation
of the amount payable to such Lender hereunder in respect thereof and (b)
certifying that such Lender is making similar claims based on such circumstances
to similarly-situated borrowers from such Lender. Any such certificate shall be
conclusive and binding on each Applicable Borrower in the absence of manifest
error.
4.8. Substitution of Lenders. Upon (x) the receipt by any Applicable
Borrower or either Applicable Agent from any Lender (an "Affected Lender") of a
claim for compensation under Section 4.1 or 4.3 (or a Change in Law which could
reasonably be determined to allow a Lender to make such a claim) or a notice of
the type described in subsection 2.5(b), 2.5(c), 4.2(a) or 4.2(b), (y) any
Lender providing notice to any Applicable Borrower that a representation
contained in a Section 4.1(f)(i) Certificate, Section 4.1(f)(v) Certificate,
Canadian Certificate or UK Certificate is no longer true and correct or (z) the
refusal of any Lender to consent to a proposed amendment, waiver or consent with
respect to the Loan Documents which has been approved by the Required Lenders as
provided in subsection 11.1(b), any Applicable Borrower may: (i) request the
Affected Lender to use its best efforts to obtain a replacement bank or
financial institution satisfactory to such Applicable Borrower to acquire and
assume all or a ratable part of all of such Affected Lender's Loans,
participation in L/C Obligations and Commitments (a "Replacement Lender"); (ii)
request one more of the other Lenders to acquire and assume all or part of such
Affected Lender's Loans and Commitments; or (iii) designate a Replacement
Lender. Any such designation of a Replacement Lender under clause (i) or (iii)
shall be subject to the prior written consent of the Agents (which consent shall
not be unreasonably withheld).
4.9. Right of Lenders To Fund Through Branches and Affiliates. Each
Lender may, if it so elects, fulfill its commitment as to any Loan hereunder by
designating (in the case of a Term Loan prior to the Original Closing Date,
Amendment and Restatement Date, the Safeline Closing Date or Second Amendment
and
<PAGE>
-92-
Restatement Date, as applicable) a branch or Affiliate of such Lender to make
such Loan; provided, however, that (a) such Lender shall remain solely
responsible for the performances of its obligations hereunder, (b) no such
designation shall result in any increased costs to any Applicable Borrower and
(c) such branch or Affiliate complies with all form delivery and other
requirements hereunder (including pursuant to Section 4.1) as if it were a
Lender.
ARTICLE V.
CONDITIONS PRECEDENT
--------------------
5.1. Conditions of Initial Loans. The conditions to the Loans made on
the Original Closing Date set forth in Section 5.1 of the Original Credit
Agreement have been certified by US Borrower to have been satisfied as of the
Original Closing Date (other than any condition which was to be satisfactory to
any Agent or Lender) and the text thereof is herein deleted for economy of
documentation; however, such certification continues in full force and effect.
Reference is made to the terms of the Original Credit Agreement for the text of
Section 5.1.
5.1.A. Conditions of Loans To Effect the Safeline Acquisition. The
conditions to the Loans made on the Safeline Closing Date set forth in Section
5.1A of the Amended and Restated Credit Agreement have been certified by US
Borrower to have been satisfied as of the Safeline Closing Date (other than any
condition which was to be satisfactory to any Agent or Lender) and the text
thereof is herein deleted for economy of documentation; however, such
certification continues in full force and effect. Reference is made to the
Amended and Restated Credit Agreement for the text of Section 5.1A.
5.2. Conditions to All Credit Extensions. The obligation of each
Lender to make any Credit Extension (including the initial Credit Extension) is
subject to the satisfaction of the following conditions precedent on the
relevant Borrowing Date or Issuance Date:
(a) Notice, Application. The Applicable Agent shall have
received a Notice of Canadian Borrowing, Notice of Borrowing or the
Applicable Swing Line Lender shall have received notice from the
applicable Swing Line Borrower of a Swing Line Loan or the L/C Lender
and the Administrative Agent shall have received an L/C Application or
L/C Amendment Application, as required under Section 3.2 (in the case
of any Issuance of a Letter of Credit).
(b) Continuation of Representations and Warranties. The
representations and warranties in Article VI shall be true and correct
in all material respects on and as of the date of such Credit Extension
with the same effect as if made on and as of such date (except to the
extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of such
earlier date).
(c) No Existing Default; No Legal Bar. No Event of Default or
Unmatured Event of Default shall exist or will result from such Credit
Extension. No order, judgment or decree of any court, arbitration or
Governmental Authority shall purport to restrain any Lender from making
any Loans to be made by it on the date of such Credit Extension; and no
injunction or other restraining order shall have been issued and no
hearing to cause an injunction or other restraining order to be issued
shall be pending or noticed with respect to any action, suit or
proceeding seeking to enjoin or
<PAGE>
-93-
otherwise prevent the consummation of, or to recover any damages or
obtain relief as a result of, the transactions contemplated by this
Agreement or the making of Loans hereunder.
Each Notice of Canadian Borrowing, Notice of Borrowing, L/C
Application, L/C Amendment Application and Swing Loan request submitted by any
Applicable Borrower hereunder shall constitute a representation and warranty by
each Applicable Borrower hereunder, as of the date of such notice or request and
as of the relevant Borrowing Date or Issuance Date, as applicable, that the
applicable conditions in Section 5.1, Section 5.1A, this Section 5.2 and/or
Section 5.3 are satisfied.
5.3. Conditions to Effectiveness of Second Amended and Restated
Credit Agreement. The effectiveness of this Second Amended and Restated Credit
Agreement is subject to the satisfaction of the following conditions:
(a) Second Amended and Restated Credit Agreement; Ratification
of Security Documents by Loan Parties; Notes; Holding Guarantee and US
Borrower Guarantee. On the Second Amendment and Restatement Date, this
Agreement, the Holding Guarantee, the US Borrower Guarantee and the
Notes shall have been duly authorized, executed and delivered to the
Lenders by each Credit Agreement Loan Party which is a party thereto in
form and substance acceptable to the Agents and the Lenders. On the
Amendment and Restatement Date there shall have been duly authorized,
executed and delivered to the Lenders in form and substance
satisfactory to the Agents and Lenders a Ratification Agreement by
Holding, each Domestic Subsidiary and each CH Foreign Subsidiary (other
than the Subsidiaries listed on Schedule 5.3(a), which shall take such
action as soon as practicable in accordance with Section 7.23, and
other than the Subsidiary Swing Line Borrowers) that shall have
executed a Loan Document prior to the Second Amendment and Restatement
Date.
(b) Opinions of Counsel. On the Second Amendment and
Restatement Date, the Lenders shall have received an opinion or
opinions, addressed to the Agents and each of the Lenders and dated the
Second Amendment and Restatement Date, from (i) Fried, Frank, Harris,
Shriver & Jacobson, counsel to the Loan Parties, which opinion shall
cover the matters contained in Exhibit F-7 and such other matters
incident to the transactions contemplated herein to occur on the Second
Amendment and Restatement Date as the Agents may reasonably request,
and (ii) such local, foreign and other counsel reasonably satisfactory
to the Agents, which opinions shall be in form and substance reasonable
satisfactory to the Agents. At the Second Amendment and Restatement
Date, the Agents shall have received the opinions, dated as of the
Second Amendment and Restatement Date, and addressed to them on behalf
of the Lenders and the Agents, of any counsel to US Borrower delivered
to the underwriters of the IPO or the dealer manager of the repurchase
of the Senior Subordinated Notes, or otherwise, or letters, dated the
Second Amendment and Restatement Date, from such counsel entitling the
Agents and the Lenders to rely on such opinions, in each case as the
Arranger may reasonably request.
(c) Corporate Documents. The Agents shall have received on or
prior to the Second Amendment and Restatement Date certified copies of
all necessary corporate authority for each Loan Party executing any
Loan Document on the Second Amendment and Restatement Date (including
any board of directors resolutions and evidence of the incumbency,
including specimen signatures, of officers or other customary evidence
of the applicable jurisdictions) with respect to the execution,
delivery and performance of this Agreement, the Ratification Agreement
to be delivered on the Second Amendment and Restatement Date and each
other Loan Document to be amended or modified in connection with this
Second Amended and Restated Credit Agreement to which such Loan Party
is intended to be a party.
<PAGE>
-94-
(d) Accuracy of Representations and Warranties. The
representations and warranties in Article VI shall be true and correct
in all material respects on and as of the Second Amendment and
Restatement Date with the same effect as if made on and as of such date
(except to the extent such representations and warranties expressly
refer to an earlier date, in which case they shall be true and correct
as of such earlier date).
(e) Adverse Change, etc. On or prior to the Second Amendment
and Restatement Date, there shall not have occurred or become known any
material adverse change or any condition or event that has had or could
reasonably be expected to result in (i) a material adverse change in
the business, assets, liabilities (contingent or otherwise),
operations, condition (financial or otherwise) or solvency of US
Borrower and the Subsidiaries, taken as a whole, or any material
adverse change in the prospects of US Borrower and the Subsidiaries,
taken as a whole, in each case since December 31, 1996 or (ii) a
material adverse effect on the rights or remedies of the Agents or any
Lender under the Loan Documents (except in each case to the extent that
the incurrence of the Indebtedness pursuant to this Agreement and the
Senior Subordinated Notes or the consummation of the M-T Acquisition
would be deemed such an event or condition).
(f) Litigation. There shall be no litigation or administrative
proceedings or other legal regulatory developments, actual or
threatened, that, singly or in the aggregate, would have a Material
Adverse Effect, or a material adverse effect on the validity or
enforceability of the Loan Documents or the rights, remedies and
benefits available to the Agents and the Lenders under the Loan
Documents.
(g) Approvals. All requisite third parties (including
Governmental Authorities) shall have approved or consented to the
transactions contemplated hereby to occur on the Second Amendment and
Restatement Date to the extent required in each case to the extent that
the failure to obtain such consent or approval would have a Material
Adverse Effect, and there shall be no governmental or judicial action,
actual or threatened, that has or would have, singly or in the
aggregate, a reasonable likelihood of restraining, preventing or
imposing burdensome conditions on the consummation of the transaction
contemplated hereby to occur on the Second Amendment and Restatement
Date.
(h) Payment Adjustments; Second Amendment and Restatement
Assignments. All funds to be received by the Lenders (including Paid
Lenders, Paid Existing Lenders and the Paying Existing Lenders) and the
Credit Agreement Loan Parties in connection with the Payment
Adjustments as set forth in Section 1.7 and Schedule 1.7 shall have
been received by the Administrative Agent. The Second Amendment and
Restatement Assignments shall have been executed and delivered by the
parties thereto and shall be in full force and effect.
(i) Certificate. A certificate signed by a Responsible Officer
of CH Borrower and US Borrower, dated as of the Second Amendment and
Restatement Date, stating that: (i) the representations and warranties
contained in Article VI are true and correct in all material respects
on and as of such date, as though made on and as of such date (except
to the extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of such
earlier date); (ii) no Event of Default or Unmatured Event of Default
exists or would result from the transactions contemplated to occur on
the Second Amendment and Restatement Date; and (iii) no event or
circumstance has occurred since December 31, 1996 with respect to US
Borrower or any of the Subsidiaries that has resulted in a Material
Adverse Effect (except to the extent that the incurrence of
Indebtedness pursuant to this Agreement and the Senior Subordinated
Notes or the consummation of the M-T Acquisition would be deemed such
an event or condition).
<PAGE>
-95-
(j) Initial Public Offering. The IPO shall have been consummated
and shall have resulted in gross proceeds of not less than U.S. $85.0
million to US Borrower, and the net proceeds thereof shall have been
applied to redeem or repurchase the Senior Subordinated Notes.
(k) Tender Offer or Redemption of Senior Subordinated Notes. Not
less than U.S. $110.0 million of the Senior Subordinated Notes shall
have been redeemed or repurchased, and US Borrower shall have a plan
with respect to such U.S. $25.0 million thereof remaining reasonably
satisfactory to the Agents.
5.4. Delivery of Documents. All of the certificates, legal opinions
and other documents and papers referred to in Sections 5.2 and 5.3, unless
otherwise specified, shall be delivered to each of the Agents at their
respective office (or such other location as may be specified by such Agent) for
the account of each of the Lenders and in sufficient counterparts for each
Lender and, except where specifically otherwise provided, shall be reasonably
satisfactory to the Agents and the Lenders; provided, however, that for any
Credit Extension other than the initial Credit Extension, US Borrower shall not
be required to deliver surveys, leases, insurance certificates, opinions, title
insurance, UCC, tax lien or judgment searches, or appraisals.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
------------------------------
Each Credit Agreement Loan Party makes the following representations
and warranties to each Agent and each Lender, all of which shall survive the
execution and delivery of this Agreement and the making of the Loans (with the
execution and delivery of this Agreement on the Original Closing Date, on the
Amendment and Restatement Date and on the Second Amendment and Restatement Date
and the making of each Loan thereafter being deemed to constitute a
representation and warranty that the matters specified in this Article VI are
true and correct in all material respects after giving effect to the M-T
Acquisition and the Safeline Acquisition and the related transactions and as of
the date of such Loan unless such representation and warranty expressly
indicates that it is being made as of any specific date).
6.1. Corporate Status. Each Company (a) is a corporation, partnership,
joint stock company, limited liability company; unlimited liability company or
other legal entity duly organized, validly existing and, if applicable, in good
standing under the laws of its jurisdiction of organization; (b) has full
corporate or other power and authority and possesses all governmental
franchises, licenses, permits, authorizations and approvals necessary to enable
it to own, lease or otherwise hold its properties and assets and to carry on its
business as presently conducted; (c) in the case of the Domestic Loan Parties is
duly qualified and in good standing to do business as a foreign corporation in
each U.S. state in which the conduct or nature of its business or the ownership,
leasing or holding of its properties makes such qualification necessary; and (d)
is in compliance with all Requirements of Law, except, in each case referred to
in clauses (b), (c) and (d), to the extent that the failure to do so would not,
individually or in the aggregate, have a Material Adverse Effect.
6.2. Authority. Each Loan Party has all requisite corporate power and
authority to enter into each Basic Document to which it is a party and to
perform its obligations thereunder and to consummate the transactions
contemplated thereby. All corporate acts and other proceedings required to be
taken by each Company to authorize the execution, delivery and performance of
each Basic Document to which such entity is a party and the consummation of the
transactions contemplated thereby have been duly and properly taken.
<PAGE>
-96-
6.3. No Conflicts; Consents. (a) The execution, delivery and
performance by each Company of each Basic Document to which such entity is a
party does not and will not conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, any provision of (i) the Organization
Documents of such Company; (ii) any note, bond, mortgage, indenture, deed of
trust, license, lease, contract, commitment, agreement or arrangement to which
such Company is a party or by which any of its properties or assets are bound,
except for Debt to Be Repaid; or (iii) any judgment, order or decree, or
statute, law, ordinance, rule or regulation applicable to such Company or its
properties or assets, other than, in the case of clauses (ii) and (iii) above,
any such items that would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) No material consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority is required to be obtained or made by or with respect to any Company
in connection with the execution, delivery and performance of any Basic Document
or the consummation of the Transactions or the other transactions contemplated
hereby or thereby, the failure of which to obtain would not, individually or in
the aggregate, have a Material Adverse Effect, other than filings required
pursuant to applicable antitrust laws, approvals required pursuant to the Lex
Friedrich Statute if applicable to the transactions contemplated hereby to occur
in connection with the M-T Acquisition, U.S. Federal, state and foreign
securities and Blue Sky laws in connection with the offering and sale of the
Senior Subordinated Notes and Equity Issuance and Chinese governmental consent
to the transfer of the Chinese Subsidiaries.
6.4. Binding Effect. Each Basic Document to which any Company is a
party constitutes the legal, valid and binding obligation of such Company,
enforceable against such Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability, or by other laws and regulations of
non-U.S. jurisdictions.
6.5. Litigation. Except as may exist with respect to matters
specifically disclosed in Schedule 6.5 (as amended and restated as of the
Amendment and Restatement Date for matters relating to UK Borrower and its
Subsidiaries), there are no actions, suits, proceedings, claims or disputes
pending or, to the best knowledge of any Loan Party, threatened or contemplated,
at law, in equity, in arbitration or before any Governmental Authority, against
any Company or any of its properties which (a) would have a Material Adverse
Effect; or (b) would give rise to any legal restraint on or prohibition against
the Transactions or any of the transactions contemplated by any Basic Document.
No Company is a party or subject to or in default under any material judgment,
order, injunction or decree of any Governmental Authority or arbitration
tribunal applicable to it or any of its respective properties, assets,
operations or businesses, except where such events would not, singly or in the
aggregate, have a Material Adverse Effect. There is no pending investigation of
any Company, nor has there been any such investigation threatened in writing in
either case by any Governmental Authority, except where such events could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.6. No Default. No Company is in default in the performance,
observance or fulfillment of any Contractual Obligation of such Company which
default would, singly or in the aggregate with any other default, have a
Material Adverse Effect, and no condition exists which, with the giving of
notice or the lapse of time or both, would, individually or in the aggregate
with any other condition, constitute such a default. No event has occurred and
no condition exists which, singly or in the aggregate with any other event or
condition, would constitute an Event of Default or an Unmatured Event of
Default. No Company is in violation of any
<PAGE>
-97-
term of its Organization Documents, except where such violation would not,
individually or in the aggregate, have a Material Adverse Effect.
6.7. Benefit Plans. (a) Each Company and each of its ERISA Affiliates
are in compliance with all applicable provisions and requirements of ERISA, the
Code and other applicable laws with respect to each Plan, and have performed all
their material obligations under each Plan, except where non-compliance or
non-performance would not, individually or in the aggregate, have a Material
Adverse Effect. No ERISA Events have occurred or are reasonably expected to
occur which individually or in the aggregate resulted in or are reasonably
likely to result in (i) a Material Adverse Effect or (ii) the imposition of a
lien on the assets of any Company or any of its ERISA Affiliates or a
requirement for any Company or any of its ERISA Affiliates to post a bond or
other security. As of the most recent valuation date for any Pension Plan, the
amount of Unfunded Pension Liabilities individually or in the aggregate for all
Pension Plans (excluding for purposes of such computation any Pension Plans
which have a negative amount of Unfunded Pension Liabilities) does not exceed
$6.5 million.
(b) Each Company and each of the Foreign Plans are in compliance with
all applicable laws and regulations with respect to the Foreign Plans and the
terms of the Foreign Plans, and all required contributions have been made to the
Foreign Plans as are consistent with past practice and in the ordinary course of
business, except where non-compliance or failure would not, individually or in
the aggregate, have a Material Adverse Effect. For purposes hereof, the term
"Foreign Plans" shall mean any employee benefit plan, program, policy,
arrangement or agreement maintained or contributed to by, or entered into with,
a Company with respect to employees employed outside the United States.
6.8. Use of Proceeds; Margin Regulations. The proceeds of the Loans
are to be used solely for the purposes set forth in and permitted by Section
7.11 and Section 8.7. No Loan Party is generally engaged in the business of
purchasing or selling Margin Stock or extending credit for the purpose of
purchasing or carrying Margin Stock.
6.9. Financial Condition; Financial Statements; Solvency; etc. (a) The
audited combined balance sheet of the Mettler-Toledo Group dated December 31,
1995 (the "Balance Sheet"), and the audited combined statements of operations
and cash flows of the Mettler-Toledo Group for the year ended December 31, 1995,
together with the notes to such financial statements, have been prepared in
conformity with United States generally accepted accounting principles
consistently applied (except in each case as described in the notes thereto) and
on that basis fairly present the combined financial condition and results of
operations of the Mettler-Toledo Group as of the respective dates thereof and
for the respective periods indicated. The audited consolidated balance sheets of
Safeline Limited and its Subsidiaries for each of the years ended March 31,
1993, March 31, 1994, March 31, 1995 and March 31, 1996 and the audited
consolidated profit and loss account and cash flow statements of Safeline
Limited and its Subsidiaries for each fiscal year then ended, together with the
notes to such financial statements, have been prepared in conformity with
generally accepted accounting practices in the United Kingdom consistently
applied (except in each case as described in the notes thereto) and on that
basis fairly present the consolidated financial condition and results of
operations of Safeline Limited and its Subsidiaries at the respective dates and
for the respective periods indicated above.
(b) Since December 31, 1995, there has not occurred an event or
condition that has had or would have, individually or in the aggregate, a
Material Adverse Effect, except to the extent that the incurrence of
Indebtedness pursuant to this Agreement and the Senior Subordinated Notes or the
consummation of the M-T Acquisition or the Safeline Acquisition or the
repurchase of the Senior Subordinated Notes would be deemed such an event or
condition.
<PAGE>
-98-
(c) On and as of the Original Closing Date, the Amendment and
Restatement Date, the Safeline Closing Date, the Second Amendment and
Restatement Date and on and as of each Borrowing Date, on a pro forma basis
after giving effect to the Transactions to occur on such date (solely as to the
Original Closing Date and the Safeline Closing Date) and to all Indebtedness
incurred, and to be incurred, and Liens created, and to be created, by each Loan
Party on such date, (x) the sum of the assets, at a fair valuation, of each Loan
Party and of US Borrower and the Subsidiaries, on a consolidated basis, will
exceed such Person's or Persons' debts, on a consolidated basis, (y) each Loan
Party has not and US Borrower and the Subsidiaries, on a consolidated basis,
have not incurred or intended to, or believe that they will, incur debts beyond
their ability to pay such debts as such debts mature and (z) each Loan Party
will have and US Borrower and the Subsidiaries, on a consolidated basis, will
have sufficient capital with which to conduct their business. For purposes of
this Section 6.9(c), "debt" means any liability on a claim, and "claim" means
(i) right to payment whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (ii) right to an equitable
remedy for breach of performance if such breach gives rise to a payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or unsecured.
(d) Except as fully reflected in the financial statements
delivered at any time pursuant to Section 7.1 or any financial statements
delivered in connection with the consummation of the Transactions and except for
the Indebtedness incurred under this Agreement and the Senior Subordinated
Notes, there were as of the Original Closing Date, the Amendment and Restatement
Date, the Safeline Closing Date, the Second Amendment and Restatement Date and
on and as of each Borrowing Date (and after giving effect to any Loans made on
such date), no liabilities or obligations (excluding current obligations
incurred in the ordinary course of business) with respect to US Borrower or any
Subsidiary of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due), and the Borrowers do not know of any such
liability or obligation which, individually or in the aggregate, has had or
would have a Material Adverse Effect.
(e) During the period from December 31, 1995 to and including
the Original Closing Date, except as provided in the Transaction Documents,
there has been no sale, transfer or other disposition by the Mettler-Toledo
Group of any material part of the business or property of the Mettler-Toledo
Group, taken as a whole, and no purchase or other acquisition by any of them of
any business or property (including any capital stock of any other Person)
material in relation to the consolidated financial condition of the
Mettler-Toledo Group, taken as a whole, in each case, which is not reflected in
the financial statements delivered to the Agents and the Lenders or in the notes
thereto or otherwise in writing to the Agents and the Lenders on or prior to the
Original Closing Date (including the prospectus filed with the SEC for the
offering and sale of the Senior Subordinated Notes).
6.10. Properties. US Borrower and each Subsidiary owns or
leases, as applicable, all properties and assets reflected in the most recent
financial statements delivered pursuant to Section 7.1, except as sold or
otherwise disposed of since the date of such financial statements in the
ordinary course of business and in accordance with this Agreement and the MT
Acquisition Documents and Safeline Acquisition Documents. US Borrower is sole
legal and beneficial owner of all shares in UK Borrower. Immediately following
the Safeline Acquisition, UK Borrower and Canadian Borrower will be sole legal
and beneficial owner of all shares in Safeline Limited and Safeline Limited will
be sole legal and beneficial owner of all shares in Safeline Inc., Safeline SA
and Safeline GmbH, except in each case as provided for in the Safeline
Acquisition Documents. Title to each such property or asset is held by US
Borrower or a Subsidiary free and clear of all Liens, except for Prior Liens and
Permitted Liens. US Borrower and the Subsidiaries hold all material licenses,
certificates of occupancy or operation and similar certificates and clearances
of municipal and other authorities necessary to own and operate their properties
in the manner and for the purposes currently operated by such parties the
<PAGE>
-99-
absence of which would, individually or in the aggregate, have a Material
Adverse Effect. Neither US Borrower nor any Subsidiary has received written
notice of defaults of a material nature with respect to any leases of real
property under which US Borrower or any Subsidiary, is lessor or lessee that
would, individually or in the aggregate, have a Material Adverse Effect.
6.11. Taxes. US Borrower and each Subsidiary (and their
predecessors, if any, for whose tax liabilities such Person is or may be liable)
has filed all tax returns reports and forms required to be filed by it and has
paid all taxes and assessments shown to be due thereon or for which a notice of
assessment or deficiency has been received, except for those contested in good
faith and for which adequate reserves have been established in accordance with
GAAP, and except where failure would not, individually or in the aggregate, have
a Material Adverse Effect. US Borrower and any Subsidiary has paid, or provided
adequate reserves (established in accordance with GAAP) for the payment of, all
U.S. Federal, state, local and foreign income taxes (including franchise taxes
based upon income) applicable for all prior fiscal years and for the current
fiscal year, except where failure would not, individually or in the aggregate,
have a Material Adverse Effect. Neither Borrower knows of any proposed tax
assessment against US Borrower or any Subsidiary that would, individually or in
the aggregate, have a Material Adverse Effect, other than any assessment which
is being actively contested in good faith by such Borrower or Subsidiary to the
extent affected thereby and for which reserves or other appropriate provisions,
if any, as shall be required in conformity with GAAP shall have been made or
provided therefor.
6.12. Environmental Matters. (A) Except as disclosed in
Schedule 6.12 (as amended and restated as of the Amendment and Restatement Date
for matters relating to UK Borrower and its Subsidiaries) and except as would
not, individually or in the aggregate, have a Material Adverse Effect:
(i) US Borrower and each Subsidiary has obtained all permits,
licenses and other authorizations which are required under any
Environmental Law with respect to the operation of the businesses and
facilities and properties owned, leased or operated by any of them
including, without limitation, any joint ventures.
(ii) US Borrower and each Subsidiary is in compliance with all
terms and conditions of the permits, licenses and authorizations
specified in subsection (i) above, and is also in compliance with, and
has no liability under, any Environmental Laws applicable to it and its
business and operations and facilities and properties owned, leased or
operated by any of them.
(iii) Neither US Borrower nor any Subsidiary has received
written notice that it has been identified as a potentially responsible
party under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), or any comparable foreign
or state law, nor has US Borrower or any Subsidiary received any
written notification that any Hazardous Materials that it, or any of
their respective predecessors in interest has used, generated, stored,
treated, handled, transported or disposed of, or arranged for disposal
or treatment of, or arranged with a transporter for transport for
disposal or treatment of, have been found at any site at which any
governmental agency or private party is conducting or plans to conduct
a remedial investigation or other action pursuant to any Environmental
Law.
(iv) There have been no releases (i.e., any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping) of
Hazardous Materials by US Borrower or any Subsidiary or, to the
knowledge of the Borrowers, their respective predecessors in interest
on, at, upon, into or from any facilities or
<PAGE>
-100-
properties owned, leased, or operated by any of them. To the knowledge
of the Borrowers, there have been no such releases of Hazardous
Materials on, at, under or from any property adjacent to any Mortgaged
Real Property that, through soil, air, surface water or groundwater
migration or contamination, may reasonably have been expected to have
migrated to or under any Mortgaged Real Property.
(v) No properties now or formerly owned, leased or operated
by US Borrower or any Subsidiary are (i) listed or proposed for listing
on the National Priorities List under CERCLA or (ii) listed in the
Comprehensive Environmental Response, Compensation, Liability
Information System List promulgated pursuant to CERCLA or (iii) to the
knowledge of the Borrowers, included on any comparable lists maintained
by any Governmental Authority.
(vi) To the knowledge of the Borrowers, there are no past or
present events, conditions, activities, practices, or actions which
would reasonably be expected to prevent US Borrower's or any
Subsidiary's compliance with any Environmental Law, or which would
reasonably be expected to give rise to any liability under any
Environmental Law, including, without limitation, liability under
CERCLA or similar state, local or foreign laws.
(vii) No Lien has been asserted or recorded, or to the
knowledge of the Borrowers threatened under any Environmental Law with
respect to any assets, facility, inventory or property owned, leased or
operated by US Borrower or any Subsidiary.
(viii) Neither US Borrower nor any Subsidiary has assumed by
contract any liabilities or obligations arising under any Environmental
Law in connection with (i) any properties or facilities currently or
formerly (a) owned, leased or operated or (b) used for the storage or
disposal of Hazardous Materials, in each case by US Borrower or any
Subsidiary (or any of their respective predecessors in interest) or
(ii) any divisions, subsidiaries, companies or other entities formerly
owned by US Borrower or any Subsidiary.
(ix) Neither US Borrower nor any Subsidiary has entered into
or agreed to any currently pending or effective judgment, decree or
order by any judicial or administrative tribunal and are not subject to
any judgment, decree or order relating to compliance with any
Environmental Law or to investigation, response or corrective action
with respect to any Hazardous Material under any Environmental Law.
(x) Neither US Borrower nor any Subsidiary has received any
written notice of an Environmental Claim with regard to any properties,
facilities or business operated or formerly operated by US Borrower or
any Subsidiary or any of their respective predecessors in interest.
(xi) To the knowledge of Borrowers, there are no underground
storage tanks or related piping at any property owned, operated or
leased by US Borrower or any Subsidiary, and any former underground
tanks or related piping on any such property have been removed or
closed in accordance with any applicable Environmental Law.
(B) Environmental Documents. To the knowledge of the
Borrowers, all environmental investigations, studies, audits or assessments in
the possession or control of US Borrower or any Subsidiary ("Reports")
concerning any violation or potential violation of, or liability or potential
liability under, any Environmental Law relating to any current or prior
business, facilities or properties of US Borrower or any
<PAGE>
-101-
Subsidiary (or any of their respective predecessors in interest) or any
property, asset or facility currently or formerly (i) owned, operated or leased
or (ii) used for the storage or disposal of Hazardous Materials, in each case by
US Borrower or any Subsidiary (or any of their respective predecessors in
interest) have been made available to the Arranger, except for Reports
concerning such violation or liability, individually or in the aggregate, which
would not have a Material Adverse Effect.
6.13. Regulated Entities. No Loan Party is an "Investment
Company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940. Neither of the Borrowers nor any other
Loan Party is subject to regulation under the Public Utility Holding Company Act
of 1935, the U.S. Federal Power Act, the Interstate Commerce Act, any state
public utilities code, or any other U.S. Federal or state statute or regulation
limiting its ability to incur Indebtedness.
6.14. Employee and Labor Matters. There is (i) no unfair labor
practice complaint pending against US Borrower or any Subsidiary or, to the best
knowledge of the Borrowers, threatened against any of them, before the National
Labor Relations Board or similar foreign entity, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against US Borrower or any Subsidiary or, to the best knowledge of the
Borrowers, threatened against any of them, (ii) no strike, labor dispute,
slowdown or stoppage pending against US Borrower or any Subsidiary or, to the
best knowledge of the Borrowers, threatened against US Borrower or any
Subsidiary, and (iii) to the best knowledge of the Borrowers, no union
representation question existing with respect to the employees of US Borrower or
any Subsidiary and, to the best knowledge of the Borrowers, no union organizing
activities are taking place, except (with respect to any matter specified in
clause (i), (ii) or (iii) above, either individually or in the aggregate) such
as would not have a Material Adverse Effect.
6.15. Intellectual Property. To the knowledge of the
Borrowers, US Borrower and each Subsidiary owns or possesses adequate licenses
or otherwise has the right to use all of the patents, patent applications,
trademarks, trademark applications, service marks, service mark applications,
trade names, copyrights, trade secrets and know-how (whether domestic or
foreign) (collectively, "Intellectual Property") that are necessary for the
operation of its business as presently conducted, except where the failure to so
own or possess licenses or rights would not, individually or in the aggregate,
have a Material Adverse Effect. To the knowledge of US Borrower and the
Subsidiaries, no claim is pending that US Borrower or any Subsidiary infringe
upon the asserted rights of any other Person under any Intellectual Property,
except for any such claim which would not, individually or in the aggregate,
have a Material Adverse Effect. To the knowledge of the Borrowers, no claim is
pending that any such Intellectual Property owned or licensed by US Borrower or
any Subsidiary or which US Borrower or any Subsidiary otherwise have the right
to use, is invalid or unenforceable, except for any such claim which would not,
individually or in the aggregate, have a Material Adverse Effect.
Except as set forth in Schedule 6.15 (as amended and restated
as of the Amendment and Restatement Date for matters relating to UK Borrower and
its Subsidiaries) and except as would not, individually or in the aggregate,
have a Material Adverse Effect, US Borrower or a Subsidiary owns or has the
right to use all Intellectual Property listed in Schedule 6.15 and the
consummation of the transactions contemplated hereby will not, alter or impair
any such rights. Subject to the rights of third parties set forth in Schedule
6.15, all Intellectual Property listed in Schedule 6.15 is free and clear of all
Liens except such as would not, individually or in the aggregate, have a
Material Adverse Effect.
6.16. Subsidiaries. As of the Original Closing Date, US
Borrower had no Subsidiaries other than those specifically disclosed in part (a)
of Schedule 6.16 hereto and has no equity investments in any other corporation
or entity other than those specifically disclosed in part (b) of Schedule 6.16.
<PAGE>
-102-
6.17. Existing Indebtedness. Schedule 6.17 sets forth a true
and complete list of all Indebtedness of US Borrower and the Subsidiaries as of
the Original Closing Date and which is to remain outstanding after giving effect
to the Transactions occurring on the Original Closing Date and the incurrence of
Loans on the Original Closing Date (excluding the Loans, the Letters of Credit
and the Senior Subordinated Notes, the "Original Existing Indebtedness"), in
each case showing the aggregate principal amount thereof and the name of the
respective borrower and any other entity which directly or indirectly guaranteed
such debt. Schedule 6.17A sets forth a true and complete list of all
Indebtedness of Safeline Limited and its Subsidiaries as of the Safeline Closing
Date and which is to remain outstanding after effect to the Safeline Acquisition
Transactions and the incurrence of loans on such date (excluding the Loans, the
"Safeline Existing Indebtedness" and together with the Original Existing
Indebtedness, the "Existing Indebtedness"), in each case showing the aggregate
principal amount thereof and the name of the respective borrower and any other
entity which directly or indirectly guaranteed such debt.
6.18. True and Complete Disclosure. All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on behalf of
the Borrowers and the other Loan Parties in writing to any Lender (including,
without limitation, all information contained in the M-T Acquisition Documents,
the Safeline Acquisition Documents, the Basic Documents and the Confidential
Memorandum) for purposes of or in connection with this Agreement or any
transaction contemplated herein is (or was, on the date of making the Initial
Loans), and all other such factual information (taken as a whole) furnished by
or on behalf of the Borrowers in writing to any Lender after the Original
Closing Date was and will be, true and accurate in all material respects on the
date as of which such information is dated or certified and not incomplete by
omitting to state any material fact necessary to make such information, taken as
a whole, not misleading at such time in light of the circumstances under which
such information was provided. The projections and pro forma financial
information contained in or to be contained in such materials (including the pro
forma balance sheet furnished pursuant to Section 5.1(l), the projections
included in the Confidential Memorandum, and the budgets to be furnished
pursuant to Section 7.1(c)) are based on good faith estimates and assumptions
believed by the Borrowers to be reasonable at the time made, it being recognized
by the Lenders that such projections as to future events are not to be viewed as
facts, that actual results during the period or periods covered by any such
projections may differ materially from the projected results and that the
Borrowers make no representation or warranty that such projections, pro forma
results or budgets will be realized. There is no fact known to either Borrower
which materially and adversely affects the business, operations, property,
assets, nature of assets, liabilities, condition (financial or otherwise) or
prospects of US Borrower and the Subsidiaries, taken as a whole, which has not
been disclosed herein or in such other documents, certificates and written
statements furnished to the Lenders for use in connection with the transactions
contemplated hereby.
6.19. Security Interests. The Security Documents, once
executed, delivered, filed and/or recorded will create, in favor of the
Administrative Agent for the benefit of the Lenders, as security for the
obligations purported to be secured thereby, a valid and enforceable perfected
first priority security interest in and Lien upon all of the Collateral,
superior to and prior to the rights of all third persons and subject to no Liens
except the Prior Liens applicable to such Collateral and Permitted Liens, in all
cases until the security interests created thereby are released in accordance
with this Agreement and the Security Documents. The mortgagor under each
Mortgage has good and marketable title to the Mortgaged Real Property free and
clear of all Liens other than Permitted Liens and Prior Liens applicable to such
Mortgaged Real Property. The respective pledgor or assignor, as the case may be,
has (or on and after the time it executes the respective Security Document, will
have) good and marketable title to all items of Collateral (other than real
property subject to a Mortgage) covered by such Security Document free and clear
of all Liens other than Liens permitted by the applicable Security Document. No
filings or recordings are required in order to perfect the security interests
created under any Security Document delivered on the Original Closing Date or
the Safeline
<PAGE>
-103-
Closing Date, except for filings or recordings required in connection with any
such Security Document as set forth in the opinions of counsel delivered on the
Original Closing Date or the Safeline Closing Date.
6.20. Representations and Warranties in Basic Documents. All
representations and warranties set forth in the other Basic Documents were (with
respect to representations and warranties of parties other than the Loan
Parties, to the knowledge of the Borrowers) true and correct in all material
respects as of the time such representations and warranties were made and shall
be true and correct in all material respects as of the Original Closing Date and
the Safeline Closing Date, as the case may be, as if such representations and
warranties were made on and as of such date, unless stated to relate to a
specific earlier date, in which case such representations and warranties shall
be true and correct in all material respects as of such earlier date.
6.21. M-T Acquisition and Safeline Acquisition. At the time of
consummation thereof, each of the M-T Acquisition and Safeline Acquisition shall
have been consummated substantially in accordance with the terms of the M-T
Acquisition Documents or the Safeline Acquisition Documents, as the case may be,
and all applicable Requirements of Law. At the time of consummation thereof, all
consents and approvals of, and filings and registrations with, and all other
actions in respect of, all governmental agencies, authorities or
instrumentalities required to make or consummate each of the M-T Acquisition and
Safeline Acquisition have been obtained, given, filed or taken or waived and are
or will be in full force and effect (or effective judicial relief with respect
thereto has been obtained), except as set forth on Schedule 6.21 and except
where the failure to obtain, give, file, or take would not have a Material
Adverse Effect. All applicable waiting periods with respect thereto have or,
prior to the time when required, will have, expired without, in all such cases,
any action being taken by any competent Governmental Authority which restrains,
prevents, or imposes material adverse conditions upon the M-T Acquisition or the
Safeline Acquisition. Additionally, there does not exist any judgment, order or
injunction prohibiting or imposing material adverse conditions upon the M-T
Acquisition or the Safeline Acquisition or the performance by US Borrower and
the Subsidiaries of their obligations under the M-T Acquisition Documents or the
Safeline Acquisition Documents, as the case may be, and all applicable
Requirements of Law.
6.22. Broker's Fees. Except as disclosed in Schedule 6.22, no
broker's or finder's fee or commission will be payable with respect to this
Agreement or any of the Transactions contemplated hereby, and the Borrowers
hereby jointly and severally indemnify the Agents and the Lenders against, and
agree that they will jointly and severally hold the Agents and the Lenders
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including fees, expenses and disbursements or counsel) arising in
connection with any such claim, demand or liability.
6.23. Senior Subordinated Notes. The subordination provisions
contained in the Senior Subordinated Note Documents are enforceable against US
Borrower and each Subsidiary party thereto, and all Obligations are within the
definition of "Senior Indebtedness" or "Guarantor Senior Indebtedness", as the
case may be, included in such subordination provisions. Senior Subordinated
Notes, when issued and sold, will either (a) have been registered or qualified
under applicable federal and state securities laws or (b) be exempt therefrom.
The offering documents for the issuance and sale of the Senior Subordinated
Notes, as of their date, did not contain an untrue statement of material fact or
omit to state a material fact required to be stated therein or necessary to make
the statement therein not misleading.
6.24. Assignment of Rights Under M-T Acquisition Documents.
All rights of M-T Investors Inc. (formerly named AEA MT Inc.) under the M-T
Acquisition Documents will be assigned to US Borrower
<PAGE>
-104-
effective upon the consummation of the merger of US Borrower and Mettler-Toledo,
Inc., to Mettler-Toledo, Inc. by operation of law.
6.25. IPO and Repurchase of Senior Subordinated Notes. No
document filed with the SEC or distributed to investors in connection with the
IPO or the repurchase of the Senior Subordinated Notes contained as of the
respective date of any such document any untrue statement of material fact or
omitted to state any material fact required to be stated therein necessary in
order to make the statements therein not misleading. At the time of consummation
thereof, the IPO and the repurchase of the Senior Subordinated Notes complied in
all material respects with applicable law.
ARTICLE VII.
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or
any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter
of Credit shall remain outstanding:
7.1. Financial Statements, etc. The Borrowers shall deliver
to the Administrative Agent and each Lender, in form and detail satisfactory to
the Administrative Agent and the Required Lenders:
(a) as soon as available, but not later than 95 days after the
end of each fiscal year, a copy of the audited consolidated (and
consolidating with respect to (x) CH Borrower and its Subsidiaries on a
consolidated basis and (y) UK Borrower and its Subsidiaries on a
consolidated basis) balance sheet of US Borrower and the Subsidiaries
as at the end of such year and the related consolidated (and
consolidating with respect to (x) CH Borrower and its Subsidiaries on a
consolidated basis and (y) UK Borrower and its Subsidiaries on a
consolidated basis) statements of operations, retained earnings,
shareholders' equity and cash flow for such year, setting forth in each
case in comparative form the corresponding consolidated figures for the
previous fiscal year and comparable budgeted figures for such fiscal
year, and, in the case of the consolidated statements, accompanied by
the opinion of KPMG Fides Peat or another nationally recognized
independent certified public accounting firm selected by the Borrowers
and reasonably acceptable to the Administrative Agent ("Independent
Auditor"), which opinion (i) shall state that such consolidated
financial statements present fairly the consolidated financial position
and results of operations of US Borrower and the Subsidiaries for the
periods indicated in conformity with GAAP and (ii) shall not be
qualified or limited because of a restricted or limited examination by
the Independent Auditor of any material portion of US Borrower's or any
Subsidiary's records and shall be delivered to the Administrative Agent
pursuant to a reliance agreement between the Administrative Agent and
Lenders and such Independent Auditor in form and substance satisfactory
to the Agents and a certificate of such accountants stating that in the
course of its regular audit of the business of US Borrower and the
Subsidiaries no Event of Default or Unmatured Event of Default which
has occurred and is continuing has come to their attention or, if such
an Event of Default or Unmatured Event of Default has come to their
attention, a statement as to the nature thereof;
(b) as soon as available, but not later than 50 days after the
end of each of the fiscal quarters (other than the fourth quarter which
will be delivered in 95 days) of each fiscal year, a copy of the
consolidated (and consolidating with respect to (x) CH Borrower and its
Subsidiaries on a
<PAGE>
-105-
consolidated basis and (y) UK Borrower and its Subsidiaries on a
consolidated basis) balance sheet of US Borrower and the Subsidiaries
as of the end of such quarter and the related consolidated (and
consolidating with respect to CH Borrower and its Subsidiaries on a
consolidated basis and (y) UK Borrower and its Subsidiaries on a
consolidated basis) statements of operations, retained earnings and
cash flow for the period commencing on the first day and ending on the
last day of such quarter, and the period from the beginning of the
respective fiscal year to the end of such quarter, setting forth in
each case in comparative form the corresponding consolidated figures
for the corresponding period in the previous fiscal year, accompanied
by a certificate of a Responsible Officer, which certificate shall
state that said consolidated financial statements fairly present, in
accordance with GAAP (subject to ordinary, good-faith year-end
adjustments), the consolidated financial position and the results of
operations of US Borrower and the Subsidiaries;
(c) within 95 days after the commencement of each fiscal year,
budgets of US Borrower and the Subsidiaries in reasonable detail for
each fiscal quarter of such fiscal year and for each fiscal quarter of
the immediately succeeding fiscal year, in each case, as customarily
prepared by management for its internal use, setting forth, with
appropriate discussion, the principal assumptions upon which such
budgets are based. Together with each delivery of statements of
operations pursuant to subsection 7.1(b), a comparison of the current
year-to-date financial results against the budgets required to be
submitted pursuant to this subsection (c) shall be presented; and
(d) promptly upon receipt thereof, a copy of each report or
"management letter" submitted to US Borrower or any Subsidiary by its
independent accountants in connection with any annual, interim or
special audit made by them of the books of US Borrower or any
Subsidiary.
7.2. Certificates; Other Information. The Borrowers shall
furnish to the Administrative Agent and each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and (b), a Compliance Certificate
executed by a Responsible Officer stating that the Loan Parties are in
compliance with the covenants set forth under this Article VII and
Article VIII and, with respect to any calculation utilizing EBITDA, a
schedule showing the pro forma effect of any Acquisition to the extent
pro forma effect is given thereto with appropriate supporting
information and data;
(b) on and after the Reset Date and until the Investment Grade
Date, together with the financial statements delivered pursuant to
subsections 7.1(a) and 7.1(b), an Interest Rate Certificate;
(c) copies of all financial statements and regular, periodical
or special reports that US Borrower or any Subsidiary may make to, or
file with, the SEC if not otherwise delivered under Section 7.1; and
(d) as soon as practicable, such additional information
regarding the business, financial or corporate affairs of US Borrower
or any Subsidiary as the Administrative Agent or any Lender (through
the Administrative Agent) may from time to time reasonably (as to type
and interval) request.
7.3. Notices. Promptly upon a Responsible Officer learning
thereof, the Borrowers shall notify the Administrative Agent and each Lender:
(a) of the occurrence of any Event of Default or
Unmatured Event of Default;
<PAGE>
-106-
(b) of any of the following matters that has resulted in a
Material Adverse Effect: (i) any breach or non-performance of, or any
default under, a Contractual Obligation of US Borrower or any
Subsidiary; (ii) any dispute, litigation, investigation, proceeding or
suspension by or before any Governmental Authority affecting US
Borrower or any Subsidiary; or (iii) to the knowledge of the Borrowers
the commencement of, or any material development in, any litigation or
proceeding affecting US Borrower or any Subsidiary, including pursuant
to any applicable Environmental Laws;
(c) of the occurrence of any of the following events if such
event has resulted or could reasonably be expected to result in any
Material Adverse Effect or in a Lien under ERISA or the Code (but in no
event more than ten days after such event), and deliver to the
Administrative Agent and each Lender a copy of any notice with respect
to such event that is filed with a Governmental Authority and any
notice delivered by a Governmental Authority to the Loan Party or any
ERISA Affiliate with respect to such event, and upon the request of the
Administrative Agent or any Lender shall furnish any Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed
by any Loan Party or ERISA Affiliate with the Internal Revenue Service
with respect to any Pension Plan: (i) an ERISA Event; (ii) the adoption
after the Original Closing Date of, or the commencement after the
Original Closing Date of contributions to, any Plan subject to Section
412 of the Code by US Borrower or any ERISA Affiliate; (iii) the
adoption after the Original Closing Date of any amendment to a Plan
subject to Section 412 of the Code; (iv) of any pending or threatened
Environmental Claim against US Borrower or any Subsidiary or any Real
Property owned or operated by US Borrower or any Subsidiary that would,
singly or in the aggregate, have a Material Adverse Effect; (v) of any
condition or occurrence on any Real Property owned or operated by US
Borrower or any Subsidiary that (x) results in noncompliance by US
Borrower or any Subsidiary with any applicable Environmental Law or (y)
would form the basis of an Environmental Claim against US Borrower or
any Subsidiary or any such Real Property in each case to the extent
that any such noncompliance or Environmental Claim would, singly or in
the aggregate, have a Material Adverse Effect; and (vi) of any
condition or occurrence on any Real Property owned or operated by US
Borrower or any Subsidiary that could reasonably be expected to cause
such Real Property to be subject to any restrictions on the ownership,
occupancy, use or transferability by US Borrower or any Subsidiary, as
the case may be, of its interest in such Real Property under any
Environmental Law which condition or occurrence would, singly or in the
aggregate, have a Material Adverse Effect; and
(d) of the occurrence of any default or event of default
under the Senior Subordinated Notes.
Each notice under this Section shall be accompanied by a
written statement by a Responsible Officer setting forth details of the
occurrence referred to therein, and stating what action the Borrowers or any
affected Subsidiary proposes to take with respect thereto.
7.4. Preservation of Corporate Existence, etc. The Borrowers
shall, and shall cause each of their respective Subsidiaries to: (a) preserve
and maintain in full force and effect its existence and good standing under the
laws of its state or jurisdiction of organization, except in a transaction
permitted by Section 8.3; (b) preserve and maintain in full force and effect all
material governmental rights, privileges, qualifications, permits, licenses and
franchises necessary in the normal conduct of its business, except in connection
with transactions permitted by Section 8.3 and sales of assets permitted by
Section 8.2; (c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; (d) preserve or renew all of
its Intellectual Property, the non-preservation of which would, singly or in the
aggregate, have a Material Adverse Effect; and (e) comply in all material
respects with all material Requirements of Law of any Governmental Authority
having jurisdiction over it or its business if failure to comply with such
requirements
<PAGE>
-107-
would, singly or in the aggregate, have a Material Adverse Effect, except, in
the case of clauses (a) (with respect to any Subsidiary which is of de minimis
significance to US Borrower and the Subsidiaries taken as a whole), (b), (c) and
(d), to the extent no longer economically desirable, in the commercially
reasonable opinion of management and except for the M-T Acquisition.
7.5. Maintenance of Property; Insurance. (a) Each Borrower
will, and will cause each of its Subsidiaries (i) to exercise commercially
reasonable efforts to maintain or cause to be maintained in good repair, working
order and condition (subject to normal wear and tear) all properties used in its
businesses and from time to time will make or cause to be made all repairs,
renewals and replacements thereof, which the applicable Borrower or the
applicable Subsidiary deems appropriate in its commercially reasonable opinion
so that the business carried on in connection therewith may be properly and
advantageously conducted and will maintain and renew as necessary all licenses,
permits and other clearances reasonably necessary in the applicable Borrower's
or the applicable Subsidiary's commercially reasonable opinion to use and occupy
such properties, except to the extent no longer economically desirable in the
commercially reasonable opinion of the applicable Borrower or the applicable
Subsidiary, and (ii) promptly to pay all calls, installments and other payments
which may be made or become due in respect of any shares held by US Borrower or
any Subsidiary.
(b) The Borrowers shall, and shall cause each of their
respective Subsidiaries to, maintain in full force and effect, with financially
sound and reputable independent insurers, insurance or reinsurance with respect
to their properties and business against loss or damage of the kinds customarily
insured against by corporations of established reputation engaged in the same or
similar business and similarly situated, of such types and in such amounts as
are customarily carried under similar circumstances by such other corporations.
The Borrowers and each of their respective Subsidiaries, as applicable, shall
furnish to the Administrative Agent on the Closing Date a summary of the
material insurance carried in respect of US Borrower and the Subsidiaries and
the assets of US Borrower and the Subsidiaries, together with certificates of
insurance and other evidence of such insurance, if any, naming the
Administrative Agent as an additional insured and/or loss payee.
(c) Without duplicating the requirements of subsection 7.5(b)
above, each Borrower will, and will cause each of its Subsidiaries to, maintain
in full force the insurance coverages specified in the Mortgages and the other
Security Documents so long as any Collateral is pledged thereunder pursuant to
the terms of this Agreement and the Security Documents.
7.6. Payment of Obligations. The Borrowers shall, and shall
cause each of their respective Subsidiaries to, pay and discharge as the same
shall become due and payable all of their obligations and liabilities,
including: (a) all material tax liabilities, assessments and governmental
charges or levies upon them or their properties or assets; and (b) all lawful
claims which, if unpaid, would by law become a Lien (other than a Permitted
Lien) upon their property; unless, in each case, the same are being contested in
good faith by appropriate proceedings and adequate reserves in accordance with
GAAP are being maintained by such Borrower or such Subsidiary with respect
thereto, or the failure to so pay or discharge would not, individually or in the
aggregate, have a Material Adverse Effect.
7.7. Compliance with Environmental Laws. (a) Each Borrower
shall comply and if any of its Subsidiaries fails to comply, shall cause such
Subsidiary to comply with all Environmental Laws; (b) each Borrower will pay,
and, if any of its Subsidiaries fails to pay, will cause each such Subsidiary to
pay, all costs and expenses incurred by it in complying in all material respects
with all Environmental Laws, and will keep or cause to be kept all Real Property
owned, operated or leased by any of them free and clear of any Liens
imposed pursuant to such Environmental Laws unless the failure to comply with
these requirements specified in clause (a) or (b) above would not, individually
or in the aggregate, have a Material Adverse Effect; (c) in the
<PAGE>
-108-
event of the presence of any Hazardous Material at, on, under or upon any
property owned, operated or leased by either Borrower or any Subsidiary which
would reasonably be expected to result in liability under or a violation of any
Environmental Law, in each case which would, individually or in the aggregate,
have a Material Adverse Effect, the Borrowers agree to undertake, and/or to
cause any of their respective Subsidiaries, tenants or occupants to undertake,
at their sole expense, any investigation, removal, remedial or other action
required pursuant to Environmental Laws to mitigate and eliminate any such
adverse effect; provided, however, that neither Borrower nor any of their
respective Subsidiaries shall be required to comply with any order or directive
which is being contested in good faith and by proper proceedings so long as it
has maintained adequate reserves with respect to such compliance to the extent
required in accordance with GAAP; and (d) each Borrower shall as promptly as
practicable notify the Administrative Agent of the occurrence of any event
specified in clause (c) of this Section 7.7 and shall thereafter keep the
Administrative Agent informed on a periodic basis of any actions taken in
response to such event and the results of such actions.
7.8. Compliance with ERISA. The Borrowers shall, and shall
cause each of their respective ERISA Affiliates to: (a) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other applicable law; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; and (c) make all
required contributions to any Plan subject to Section 412 of the Code, except
where failure would not, individually or in the aggregate, have a Material
Adverse Effect.
7.9. Inspection of Property and Books and Records. The
Borrowers shall, and shall cause each of their respective Subsidiaries to,
maintain proper books of record and account, in which full, true and correct
entries in order to permit the preparation of US Borrower's consolidated
financial statements in conformity with GAAP shall be made of all financial
transactions and matters involving the assets and business of US Borrower and
the Subsidiaries. The Borrowers shall, and shall cause each of their respective
Subsidiaries to, permit representatives and independent contractors of the
Administrative Agent or any Lender to visit and inspect any of their respective
properties or assets, to examine their respective corporate, financial and
operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants (provided that officers
of a Borrower or such Subsidiary are offered the reasonable opportunity to be
present at such discussion), all at the expense of the Borrowers (it being
understood that travel and out-of-pocket expenses of the Agents and the Lenders
in connection therewith shall not be for the account of the Borrowers) and at
such reasonable times and intervals during normal business hours and as often as
may be reasonably desired, upon reasonable advance notice to the Borrowers or to
the applicable Subsidiary and in connection with commercially reasonable
informational needs of the Administrative Agent or any Lender; provided,
however, when an Event of Default or emergency exists the Administrative Agent
or any Lender may do any of the foregoing at any time and without advance notice
in a commercially reasonable manner.
7.10. End of Fiscal Years; Fiscal Quarters. US Borrower will,
for financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries', fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries', fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
7.11. Use of Proceeds. On the Original Closing Date, the
Borrowers shall use the proceeds of all of the Term Loans and a borrowing of not
more than U.S. $75 million of the Revolving Facility Loans solely to (i) finance
a portion of the M-T Acquisition and (ii) pay fees and expenses in connection
with the M-T Acquisition. After the Original Closing Date, the Revolving
Facility will be used solely to provide working capital and for general
corporate purposes of the Credit Agreement Loan Parties and their Subsidiaries
(including the Safeline Contingent Payment and the repayment of the Safeline
Seller Notes) and to make the
<PAGE>
-109-
Ciba Loan and up to U.S. $100.0 million thereof may be used to effect any
Acquisition permitted by subsection 8.4(f). On the Safeline Closing Date US
Borrower and the other Loan Parties shall use the proceeds of all Loans made on
such date solely to (i) finance the Safeline Acquisition and (ii) pay fees and
expenses in connection with the Safeline Acquisition. After the Safeline Closing
Date, the Canadian Facility will be used solely to provide working capital and
for general corporate purposes of Canadian Borrower and its Subsidiaries
(including the Safeline Contingent Payment and the repayment of the Safeline
Seller Notes).
7.12. Further Assurances. The Borrowers shall take such
actions as are reasonably necessary, or as the Administrative Agent or any
Lender may reasonably request from time to time, to (A) ensure that (i) the
Obligations of the Credit Agreement Loan Parties (other than UK Borrower) are
unconditionally guaranteed by each of the Domestic Subsidiaries, and (ii) the
Obligations of CH Borrower are unconditionally guaranteed (subject to
limitations under applicable law) by each of the CH Foreign Subsidiaries (other
than, subject to Section 7.22, the Specified Subsidiaries), (B) cause any
Subsidiaries created or acquired by US Borrower or any Subsidiary in which the
aggregate amount invested therein by any Company is in excess of the Dollar
Equivalent of U.S. $1.0 million after the Original Closing Date to (i) execute
and deliver (x) a Domestic Subsidiary Guarantee, in the case of any Domestic
Subsidiary, or (y) a Foreign Subsidiary Guarantee (to the extent permitted by
and subject to limitations under applicable law (including limitations as to the
nature of the Obligations which may be guaranteed)), in the case of any CH
Foreign Subsidiaries (other than any CH Foreign Subsidiary that cannot, by
virtue of applicable law, enter into a Foreign Subsidiary Guarantee), and (ii)
(other than, subject to Section 7.22, any Specified Subsidiary or any Subsidiary
that cannot, by virtue of applicable law, enter into security documents in
respect of the Obligations) enter into any security documents that the
Administrative Agent may reasonably require (consistent with the principles of
this Agreement) to ensure that the Obligations are secured by perfected Liens in
favor of the Administrative Agent, for the benefit of the Administrative Agent
and the applicable Lenders, on all of the Collateral (subject to limitations
under applicable law); provided, however, that the provisions of this subsection
7.12(B)(ii) shall not apply from and after the Investment Grade Date, and (C)
ensure that UK Borrower, Safeline Limited and M-T Leicester comply at all times
with the provisions of Section 151 of the Companies Act 1985 of Great Britain
and take promptly any action required under Chapter VI of the Companies Act 1985
of Great Britain to relax the requirements of Section 151 of the Companies Act
1985 of Great Britain where necessary to enable such corporation to comply with
any provision of any of the Loan Documents, and each of UK Borrower, Safeline
Limited and M-T Leicester agrees to take any such action accordingly.
7.13. Equal Security for Loans and Notes; No Further Negative
Pledges. (a) If either Borrower or any of their respective Subsidiaries shall
create or assume any Lien upon any of their respective property or assets,
whether now owned or hereafter acquired and whether or not such property or
assets constitute Collateral, other than any Lien permitted by the Loan
Documents, it shall make or cause to be made effective provisions whereby the
Obligations will be secured by such Lien equally and ratably with any and all
other Indebtedness thereby secured as long as any such Indebtedness shall be
secured; provided, however, that this covenant shall not be construed as consent
by the Administrative Agent and the Required Lenders to any violation by either
Borrower or any of their respective Subsidiaries of the provisions of Section
8.1.
(b) Except with respect to prohibitions against other
encumbrances on specific property encumbered to secure payment of particular
Indebtedness permitted hereunder and except as provided in the Senior
Subordinated Note Indenture and the Senior Subordinated Notes, neither Borrower
nor any of their respective Subsidiaries shall enter into any agreement
prohibiting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired.
<PAGE>
-110-
7.14. Pledge of Additional Collateral. Subject to Section
7.13, as soon as reasonably practicable after the acquisition of any property or
assets by US Borrower or any Subsidiary with a Dollar Equivalent Value of in
excess of U.S. $100,000 individually and U.S. $5.0 million or more in the
aggregate of the type that would have constituted Collateral (if the Person
acquiring such assets had executed an appropriate Security Document on the
Original Closing Date (whether or not actually so executed)) at the Original
Closing Date (the "Additional Collateral"), the Borrowers will, and will cause
each of their respective Subsidiaries to, take all reasonably necessary or
desirable action, including the filing of appropriate financing statements under
the provisions of the UCC and applicable foreign, domestic or local laws, rules
or regulations in each of the offices where such filing is necessary or
appropriate, to grant to the Administrative Agent for the benefit of, (i) with
respect to any such Additional Collateral acquired by US Borrower or any
Domestic Subsidiary (other than UK Borrower Guarantor), all of the Lenders
(other than the UK Lenders), and, with respect to UK Borrower Guarantor, the
Lenders with Obligations owing by UK Borrower, (ii) with respect to any such
Additional Collateral acquired by CH Borrower and CH Foreign Subsidiaries, the
Lenders owed Obligations by CH Borrower and/or CH Foreign Subsidiaries, and
(iii) with respect to any such Additional Collateral acquired by UK Borrower,
the Lenders owed Obligations by UK Borrower, a perfected first priority Lien in
such Collateral (or comparable interest under foreign law in the case of foreign
Collateral) pursuant to and to the full extent required by the applicable
Security Documents and this Agreement; provided, however, that notwithstanding
the foregoing, (1) none of US Borrower, UK Borrower or any Domestic Subsidiary
shall be required, subject to Section 7.18, to pledge more than 65% of the
capital stock of any Foreign Subsidiary and no capital stock of any Foreign
Subsidiary which is not a "first tier" Subsidiary of US Borrower, UK Borrower or
any Domestic Subsidiary need be pledged by US Borrower, UK Borrower or any
Domestic Subsidiary, (2) none of US Borrower or any Subsidiary shall be
required, subject to Section 7.18, to pledge any property or assets which in
accordance with the terms of the Loan Documents was not pledged (or would not
have been so pledged if then in existence) on the Original Closing Date, other
than any property to be pledged on the Safeline Closing Date, (3) no Foreign
Subsidiary need pledge any property or assets to the extent prohibited by
applicable law, to the extent such pledge would secure the Obligations of US
Borrower or UK Borrower, or to the extent such pledge would cause adverse tax
consequences, and (4) the provisions of this sentence shall not apply from and
after the Investment Grade Date. In the event that (x) US Borrower or any
Domestic Subsidiary acquires an interest in any additional real property which
is a manufacturing or significant assembly facility or of a character and
importance similar at such time to the facilities that are subject to the
Mortgages on the Original Closing Date, US Borrower or such Subsidiary, as the
case may be, will take such reasonable actions and execute such documents as the
Administrative Agent shall reasonably require to confirm the Lien of a Mortgage,
if applicable, or to create a new Mortgage for the benefit of the Lenders (it
being agreed, however, that any real property owned by UK Borrower Guarantor as
of the Safeline Closing Date need not be subject to a Mortgage pursuant to this
Section 7.14), or (y) CH Borrower or any CH Foreign Subsidiary acquires an
interest in any additional real property which is a manufacturing or significant
assembly facility or of a character and importance similar at such time to the
facilities that are subject to the Mortgages on the Original Closing Date, CH
Borrower or such Subsidiary, as the case may be, will take such reasonable
actions and execute such documents as the Administrative Agent will reasonably
require to confirm the lien of a Mortgage, if applicable, or to create a new
Mortgage for the benefit of the Lenders which are owed Obligations by CH
Borrower or any CH Foreign Subsidiary; provided, however, that the foregoing
provisions shall not apply from and after the Investment Grade Date. All actions
taken by the parties in connection with the pledge of Additional Collateral,
including, without limitation, reasonable costs of counsel for the Lenders,
shall be for the account of the Borrowers, which shall pay all reasonable sums
due on demand.
7.15. Security Interests. (a) The Borrowers will, and will
cause each of their respective Subsidiaries to, perform any and all reasonable
acts and execute any and all documents (including, without limitation, the
execution, amendment or supplementation of any financing statement, continuation
statement or
<PAGE>
-111-
other statement) for filing in any appropriate jurisdiction under the provisions
of the UCC and applicable foreign, domestic or local law or any statute, rule or
regulation of any applicable jurisdiction, including any filings in local real
estate land record offices and the United States Patent and Trademark Office, or
the United States Copyright Office or similar foreign offices, which are
reasonably necessary or advisable, from time to time, in order to grant,
continue or maintain in favor of the Administrative Agent for the benefit of the
applicable Lenders a valid and perfected Lien on the Collateral and any
Additional Collateral, subject to no Liens except for Prior Liens, Permitted
Liens and Liens permitted by the applicable Security Documents; provided,
however, that the foregoing provisions shall not apply from and after the
Investment Grade Date.
(b) The Borrowers shall, and shall cause each of their
respective Subsidiaries to, deliver or cause to be delivered to the
Administrative Agent from time to time such other reasonable documentation,
consents, authorizations, approvals and orders in form and substance reasonably
satisfactory to the Administrative Agent as the Administrative Agent shall deem
reasonably necessary or advisable to perfect or maintain the Liens on the
Collateral; provided, however, that the foregoing provisions shall not apply
from and after the Investment Grade Date. Furthermore, with respect to any
Additional Collateral, the Borrowers shall cause to be delivered to the
Administrative Agent such opinions of counsel, title insurance and other related
documents as may reasonably be requested by the Administrative Agent to assure
itself that this Section 7.15 has been complied with.
(c) If the Administrative Agent or the Required Lenders
determine that they are required by law or regulation to have appraisals
prepared in respect of the Real Property of the Borrowers and their respective
Subsidiaries constituting Collateral, the Borrowers shall provide to the
Administrative Agent appraisals which satisfy the applicable requirements of the
Real Estate Appraisal Reform Amendments of FIRREA and which shall be in form and
substance satisfactory to the Administrative Agent.
7.16. Interest Rate Protection. The Borrowers shall obtain, on
or within 60 days after the Second Amendment and Restatement Date, interest rate
protection having terms and with counterparties reasonably satisfactory to the
Administrative Agent as shall result in effectively limiting the interest cost
to the Borrowers of 50% of the aggregate Dollar Equivalent principal amount of
then outstanding Term Loans for a period of at least three years from the date
the initial interest rate protection was obtained. The Lenders waive any failure
to comply with this covenant prior to the Amendment and Restatement Date.
7.17. Currency and Commodity Hedging Transactions. The
Borrowers and each of the Subsidiaries shall only enter into, purchase or
otherwise acquire agreements or arrangements relating to currency or commodity
hedging to the extent and only to the extent that such agreements or
arrangements are entered into, purchased or otherwise acquired in the ordinary
course of business of the Borrowers or any of the Subsidiaries with reputable
financial institutions and not for purposes of speculation.
7.18. Foreign Subsidiaries Security. If following a change in
the relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for the
Borrowers reasonably acceptable to the Arranger does not within 30 days after a
request from the Arranger or the Required Lenders deliver its opinion (in form
reasonably acceptable to the Arranger) with respect to any Foreign Subsidiary
which has not already had all of its stock owned by Holding or any of its
Subsidiaries pledged pursuant to a Securities Pledge Agreement, that (i) a
pledge to secure the Obligations of US Borrower or the Domestic Subsidiary
Guarantor which is the parent of such Foreign Subsidiary, as the case may be,
(x) of 66-2/3% or more of the total combined voting power of all classes of
capital stock of such Foreign Subsidiary entitled to vote and (y) of any
promissory note issued by such Foreign Subsidiary, if wholly-owned, to US
Borrower or any of its Domestic Subsidiaries, (ii) the entering into by such
<PAGE>
-112-
Foreign Subsidiary, if wholly-owned, of a security agreement in substantially
the form of the Security Agreement executed and delivered by the Domestic
Subsidiary Guarantors (with appropriate modifications to conform to applicable
law) and (iii) the entering into by such Foreign Subsidiary, if wholly-owned, of
a guaranty in substantially the form of the Domestic Subsidiary Guarantee
guaranteeing the Obligations of US Borrower and CH Borrower, in any such case
could reasonably be expected to cause (I) the undistributed earnings of such
Foreign Subsidiary as determined for U.S. Federal income tax purposes to be
treated as a deemed dividend to such Foreign Subsidiary's United States parent
for U.S. Federal income tax purposes or (II) any other material adverse U.S.
Federal income tax consequences to the Loan Parties, then in the case of a
failure to deliver the opinion with respect to the factors described in clause
(i) above, that portion of such Foreign Subsidiary's outstanding capital stock
or any promissory notes so issued by such Foreign Subsidiary, in each case not
theretofore pledged pursuant to a Securities Pledge Agreement, shall be pledged
to the Administrative Agent pursuant to a Securities Pledge Agreement (with
appropriate modifications to conform to and subject to limitations of law) (or
another pledge agreement in substantially similar form, if needed) and, in the
case of a failure to deliver the opinion with respect to the factors described
in clause (ii) above, such Foreign Subsidiary shall execute and deliver a
Security Agreement in substantially the form executed and delivered by the
Foreign Subsidiary Guarantors (with appropriate modifications to conform to and
subject to limitations of law) (or another security agreement in substantially
similar form, if needed) securing the Obligations of US Borrower and CH Borrower
and their obligations under any Swap Agreement with a Lender and, in the event a
Guarantee guaranteeing the Obligations of US Borrower and/or CH Borrower shall
have been executed by such Foreign Subsidiary, the obligations of such Foreign
Subsidiary thereunder and, in the case of a failure to deliver the opinion with
respect to the factors described in clause (iii) above, such Foreign Subsidiary
shall execute and deliver a Guarantee guaranteeing the Obligations of US
Borrower and CH Borrower (with appropriate modifications to conform to and
subject to limitations of law) (or another guaranty in substantially similar
form, if needed), and their obligations under any Swap Agreement with a Lender,
in each case to the extent that the entering into of such Security Agreement or
Guarantee is permitted by the laws of the respective foreign jurisdiction and
with all documents delivered pursuant to this Section 7.18 to be in form and
substance reasonably satisfactory to the Arranger; provided, however, that (1)
such Foreign Subsidiary shall not be required to pledge pursuant to a Foreign
Subsidiary Security Agreement any property or assets that it would not have been
required to pledge had it executed a Foreign Subsidiary Security Agreement at
the Original Closing Date and (2) the provisions of the foregoing shall not
apply from and after the Investment Grade Date.
7.19. Register. The Borrowers and UK Borrower hereby designate
the Administrative Agent to serve as the Borrowers' agent, solely for purposes
of this Section 7.19, to maintain a register (the "Register") on which it will
record the Commitment from time to time of each of the Lenders, the Loans made
by each of the Lenders (other than any Swing Line Loan made in other than U.S.
Dollars or Pounds Sterling) and each repayment in respect of the principal
amount of the Loans of each Lender (other than any Swing Line Loan made in other
than U.S. Dollars or Pounds Sterling). Failure to make any such recordation or
any error in such recordation shall not affect either Borrower's or UK
Borrower's obligations in respect of such Loans. The entries in the Register
shall be conclusive, in the absence of manifest error, and the applicable
Borrower, UK Borrower, the Administrative Agent and the Lenders shall treat each
Person whose name is recorded in the Register as the owner of such a Loan or
other obligation hereunder as the owner thereof for all purposes of this
Agreement and the other Loan Documents, notwithstanding any notice to the
contrary. With respect to any Lender, the transfer of any Commitment of such
Lender or the rights to the principal of, and interest on, any Loan (other than
any Swing Line Loan made in other than U.S. Dollars or Pounds Sterling) shall
not be effective until such transfer is recorded on the Register maintained by
the Administrative Agent with respect to ownership of such Commitment or Loans
and prior to such recordation all amounts owing to the transferor with respect
to such Commitment or Loans shall remain owing to the transferor. The
registration of assignment or
<PAGE>
-113-
transfer of all or part of any Commitment or Loans (other than any Swing Line
Loan made in other than U.S. Dollars or Pounds Sterling) shall be recorded by
the Administrative Agent on the Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment and
Acceptance pursuant to Section 11.8. Coincident with the delivery of such an
Assignment and Acceptance to the Administrative Agent for acceptance and
registration of assignment or transfer of all or part of a Loan, or as soon
thereafter as practicable, the assigning or transferor Lender shall surrender
the Note evidencing such Loan and thereupon one or more new Notes in the same
aggregate principal amount shall be issued to the assigning or transferor Lender
and/or the new Lender. The Borrowers and the UK Borrower agree to indemnify the
Administrative Agent from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Administrative Agent in performing its duties under this Section
7.19.
7.20. New Subsidiaries. In addition to their obligations with
respect to Sections 7.14, 7.15 and 7.18, if, after the Original Closing Date,
the Borrowers or any Subsidiary shall create or acquire any Subsidiary (other
than Safeline Inc.), the Borrowers shall, concurrently with the creation or
acquisition of such Subsidiary, (i) cause such Subsidiary (other than (subject
to Section 7.18) a Foreign Subsidiary that is not a CH Foreign Subsidiary) to
execute and deliver to the Administrative Agent a Subsidiary Guarantee, as
appropriate (with appropriate modifications to conform to and subject to the
limitations of foreign law), guaranteeing (1) with respect to any Domestic
Subsidiary (other than UK Borrower Guarantor), the Obligations of the Credit
Agreement Loan Parties (other than UK Borrower), (2) with respect to UK Borrower
Guarantor, UK Borrower and (3) with respect to any CH Foreign Subsidiary, the
Obligations of CH Borrower, and (ii) take all necessary actions and execute such
agreements, instruments and documents, including, without limitation, stock
powers executed in blank, and deliver such opinions of counsel with respect
thereto, as the Administrative Agent may reasonably require to cause, subject to
Section 7.18, (x) 100%, with respect to Domestic Subsidiaries, (y) at least 65%
with respect to Foreign Subsidiaries that are "first tier" Foreign Subsidiaries
of US Borrower or any Domestic Subsidiary, or (z) such amount as may be pledged
under applicable law without causing adverse tax consequences, with respect to
CH Foreign Subsidiaries, of the capital stock of such Subsidiary owned or
controlled by the Borrowers or any Subsidiary to be pledged to the
Administrative Agent to secure such Guarantees hereunder such that the
Administrative Agent has a valid and perfected first-priority security interest
in such pledged capital stock or the equivalent under applicable law; provided,
however, that the provisions of this subsection 7.20(ii) shall not apply from
and after the Investment Grade Date.
7.21. Assumption by Mettler-Toledo, Inc. Holding shall
cause MT Acquisition Corp. and Mettler-Toledo, Inc. to enter into the
Assumption Agreement by the Original Closing Date.
7.22. Post-Closing Obligations. (a) US Borrower shall,
and shall cause each of the Subsidiaries set forth on Schedule 7.22, to, as
expeditiously as possible after the Original Closing Date:
(i) execute and deliver each of the Loan Documents as set
forth on Schedule 7.22 identified thereon to be executed and delivered
by such Subsidiary, subject to limitations under applicable law and any
required third-party consents (which consents US Borrower shall use its
best efforts to procure but such efforts need not include the payment
of money);
(ii) use commercially reasonably efforts to obtain and deliver
to the Administrative Agent a Mortgage encumbering the Real Property
located in Ithaca, New York in favor of the Administrative Agent, for
the benefit of the Lenders, duly executed and acknowledged by the Loan
Party that is the owner of or holder of an interest in such real
property and otherwise in compliance with and in
<PAGE>
-114-
accordance with the provisions of subsection 5.1(j) of the Original
Credit Agreement, except that any opinion of counsel in connection
therewith need only be customary for Mortgages of a similar nature;
(iii) request, and if obtained deliver to the Administrative
Agent zoning letters with respect to each Mortgaged Property, for which
a zoning endorsement from the title insurance company has not been
obtained, confirming that each such Mortgaged Property is in compliance
with applicable zoning regulations; and
(iv) obtain and deliver to the Administrative Agent, to the
extent not previously delivered prior to the Original Closing Date,
UCC, judgment and the tax lien search reports each of a recent date
listing all effective financing statements or comparable documents that
name Mettler-Toledo, Inc., as debtor in each of the jurisdictions set
forth below:
(1) Maricopa County, Arizona;
(2) New Haven County, Connecticut;
(3) Howard County, Maryland;
(4) Oakland County, Michigan;
(5) Independent City of Richmond, Virginia;
(6) Independent City of Winchester, Virginia; and
(7) Hancock County, West Virginia.
(b) The certificate of merger with respect to the merger of
MT Acquisition Corp. and Mettler-Toledo, Inc. shall be filed with the Secretary
of State of the State of Delaware on or promptly after the Closing Date.
(c) Within a reasonable period of time after the Original
Closing Date, the Borrowers shall or shall cause to be delivered evidence of the
completion of all recordings and filings of, or with respect to, the Security
Documents and delivery of such other security and other documents as may be
necessary or, in the opinion of the Arranger, desirable to perfect the Liens
created, or purported or intended to be created, by the Security Documents.
ARTICLE VIII.
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or
any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter
of Credit shall remain outstanding:
8.1. Limitation on Liens. The Borrowers shall not, and will
not cause or permit any Subsidiary to, create, incur, assume or suffer to exist
any Lien upon or with respect to any property or assets of either Borrower or
any Subsidiary, whether now owned or hereafter acquired, or sell any such
property or assets subject to an understanding or agreement, contingent or
otherwise, to repurchase such property or assets or assign any right to receive
income, or file or permit the filing of any financing statement under the UCC or
any other similar effective notice of Lien under any similar recording or notice
statute, except Prior Liens and other Liens expressly permitted by the Security
Documents, and except the following, which are herein collectively referred to
as "Permitted Liens" (each of which shall be given independent effect):
<PAGE>
-115-
(a) any Lien existing on property of either Borrower or any
Subsidiary (including any member of the Mettler-Toledo Group) on the
Original Closing Date and set forth in Schedule 8.1(a) covering only
the property or assets set forth in such Schedule 8.1(a) and securing
Indebtedness outstanding on such date (other than any Debt to Be
Repaid);
(b) any Lien created under any Loan Document;
(c) to the extent complying with the provisions of the
Security Documents, Liens for taxes, fees, assessments or other
governmental charges which are not yet delinquent, or to the extent
that non-payment thereof is permitted by Section 7.6;
(d) to the extent complying with the provisions of the
Security Documents, Liens in respect of property or assets of US
Borrower or any Subsidiary imposed by law which were incurred in the
ordinary course of business and have not arisen to secure Indebtedness,
such as landlords', carriers', warehousemen's, mechanics',
materialmen's, workmen's and repairmen's Liens, equipment leases and
other similar Liens arising in the ordinary course of business, and (x)
which do not in the aggregate materially detract from the value of such
property or assets or materially impair the use thereof in the
operation of the business of US Borrower and the Subsidiaries or (y)
which are being contested in good faith by appropriate proceedings,
which proceedings have the effect of preventing the forfeiture or sale
of the property or asset subject to such Lien;
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
social security or similar legislation;
(f) Liens on the property of US Borrower or any Subsidiary
(other than Collateral) securing (i) the non-delinquent performance of
bids, trade contracts (other than for borrowed money), leases or
statutory obligations, (ii) contingent obligations on surety or appeal
bonds, and (iii) other non-delinquent obligations of a like nature, in
each case, incurred in the ordinary course of business; provided,
however, that all such Liens individually or in the aggregate would not
(even if enforced) cause a Material Adverse Effect;
(g) Liens consisting of judgment or judicial attachment liens
(including prejudgment attachment), provided that the enforcement of
such Liens is effectively stayed or payment of which is covered in full
(subject to a customary deductible) by insurance or which do not
otherwise result in an Event of Default under subsection 9.1(i);
(h) easements, rights-of-way, servitudes, covenants,
restrictive covenants, encumbrances, minor defects or irregularities in
title and other similar restrictions which, individually or in the
aggregate, do not materially interfere with the ordinary conduct of the
businesses of US Borrower and the Subsidiaries and which do not
materially impair for its intended purpose the Mortgaged Real Property
to which they relate;
(i) security interests (whether purchase money or otherwise)
on any property acquired, constructed or improved after the Original
Closing Date by US Borrower or any Subsidiary securing Indebtedness
incurred or assumed for the purpose of financing all or any part of the
cost of acquiring, constructing or improving such property; provided,
however, that (i) any such Lien attaches to such property concurrently
with or within 180 days after the acquisition thereof or the completion
of
<PAGE>
-116-
construction or improvement, (ii) such Lien attaches solely to the
property so acquired, constructed or improved in such transaction,
(iii) the principal amount of the Indebtedness secured thereby does not
exceed 100% of the fair market value of such property at the time of
incurrence of such Indebtedness, plus the cost of construction or
improvement, and (iv) the principal amount of the Indebtedness secured
by any and all such security interests, plus the aggregate amount of
all Indebtedness arising under Capital Leases permitted solely by
subsection (j) below of this Section 8.1, shall not at any time exceed
a Dollar Equivalent amount of U.S. $10.0 million;
(j) Liens securing obligations in respect of Capital Leases on
assets subject to such leases; provided, however, that the aggregate
amount of all Indebtedness arising under Capital Leases permitted
solely by this subsection (j) (other than in respect of Capital Leases
for automobiles leased in the ordinary course of business that are not
required to be capitalized under International Accounting Standards),
plus the aggregate amount of all Indebtedness secured by security
interests permitted solely by subsection (i) above of this Section 8.1,
shall not at any time exceed a Dollar Equivalent amount of U.S. $10.0
million;
(k) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; provided, however, that (i)
such deposit account is not a dedicated cash collateral account and is
not subject to restrictions against access by US Borrower or any
Subsidiary in excess of those set forth by regulations promulgated by
the FRB, and (ii) such deposit account is not intended by US Borrower
or any Subsidiary to provide collateral to the depository institution;
(l) Liens existing on any asset (other than of Safeline
Limited and its Subsidiaries as of the Safeline Closing Date) prior to
the date of acquisition thereof by US Borrower or any Subsidiary which
(i) were not created in contemplation of or in connection with such
acquisition and (ii) do not extend to or cover any other property or
assets of US Borrower or any Subsidiary;
(m) Liens existing on any asset of any Person (other than
Safeline Limited and its Subsidiaries as of the Safeline Closing Date)
at the time such Person becomes a Subsidiary or is merged, amalgamated
or consolidated with or into a Subsidiary which (i) were not created in
contemplation of or in connection with such event and (ii) do not
extend to or cover any other property or assets of US Borrower or any
Subsidiary;
(n) Liens (excluding Liens on Collateral) not otherwise
permitted hereunder securing obligations not at any time exceeding in
the aggregate a Dollar Equivalent amount of U.S. $5.0 million;
(o) subject to the provisions of Section 8.20, Leases with
respect to the assets or properties of US Borrower or any Subsidiary,
subordinate in all respects to the Liens granted and evidenced by the
Security Documents;
(p) Liens evidenced by UCC financing statements regarding
operating and equipment leases permitted by this Agreement or in
respect of consigned goods;
(q) any encumbrance or restriction (including, without
limitation, any put and call agreements) with respect to the capital
stock of any Joint Venture or Subsidiary pursuant to the agreement
governing such Joint Venture or Subsidiary; provided, however, that no
such encumbrance
<PAGE>
-117-
or restriction affects in any way the ability of US Borrower or any
Subsidiary to comply with Section 8.22;
(r) any Lien arising out of the refinancing, extension,
renewal or refunding of any Indebtedness secured by any Lien permitted
by any of subsection 8.1(a), (i), (j), (l), (m), (n) or (v); provided,
however, that such Indebtedness is not increased, except as permitted
under subsection 8.5(o) and is not secured by any additional assets as
to which a Lien is not otherwise permitted hereunder;
(s) Liens solely in favor of either Borrower or, if granted by
any Qualified Subsidiary Guarantor, any Subsidiary which is a Qualified
Subsidiary Guarantor or, if granted by any other Subsidiary, any
Subsidiary;
(t) Liens securing obligations under Swap Contracts with
Lenders or any Affiliate of aLender;
(u) Liens securing Guaranty Obligations of US Borrower or any
Subsidiary in respect of Indebtedness incurred pursuant to subsection
8.5(g); provided, however, that the creditor in respect of such
Indebtedness (or an agent on behalf of the creditors) shall have
executed and delivered an Intercreditor Agreement which is in full
force and effect;
(v) Liens on cash in a deposit account securing Indebtedness
incurred under subsection 8.5(n) to the extent that such deposit
account is established in connection therewith, not to exceed an amount
of cash equal to such Indebtedness; and
(w) Liens set forth on Schedule 8.1(w) and existing on the
assets of Safeline Limited and its Subsidiaries as in effect on the Safeline
Closing Date.
8.2. Consolidations, Mergers and Disposition of Assets. The
Borrowers shall not, and shall not cause or permit any Subsidiary to, directly
or indirectly, consummate any Asset Sale or wind up, liquidate or dissolve its
affairs or merge, amalgamate, consolidate with or into, or convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of their respective properties or assets
(whether now owned or hereafter acquired) to or in favor of any Person, except
(each of which shall be given independent effect):
(a) dispositions of inventory and of used, worn-out or surplus
equipment, all in the ordinary course of business; provided, however,
that the proceeds thereof are reinvested in the business of US Borrower
or the Subsidiaries;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied
to the purchase price of similar replacement equipment;
(c) the Liens permitted by Section 8.1, the Investments
permitted pursuant to Section 8.4 and the Restricted Payments
permitted by Section 8.13;
(d) US Borrower or any Subsidiary may sell assets; provided,
however, that (x) the aggregate sale proceeds from all such Assets
Sales shall not exceed the Dollar Equivalent amount of U.S. $2.0
million in any fiscal year of US Borrower and (y) the Net Cash Proceeds
therefrom are
<PAGE>
-118-
either applied to prepay Term Loans as provided in subsection 2.7(c)
or reinvested as provided in subsection 2.7(c);
(e) US Borrower or any Subsidiary may sell or discount, in
each case without recourse, accounts receivables arising in the
ordinary course of business, but only in connection with the compromise
or collection thereof or as permitted by Section 8.21; provided,
however, that any Foreign Subsidiary may effect such sale or discount
with recourse if such is consistent with ordinary business terms in
such Subsidiary's country of business;
(f) US Borrower or any Subsidiary may, in the ordinary course
of business, license patents, trademarks, copyrights and know-how to
third Persons, so long as each such license is permitted to be assigned
pursuant to the Security Agreement and does not otherwise prohibit the
granting of a Lien therein by US Borrower or any Subsidiary pursuant to
the Security Agreement;
(g) any Subsidiary may be merged or consolidated with or into
either Borrower or any Wholly-Owned Subsidiary of US Borrower which is
a Qualified Subsidiary Guarantor and may transfer assets to either
Borrower or any Wholly-Owned Subsidiary of US Borrower which is a
Qualified Subsidiary Guarantor; provided, however, that (w) in any
merger or consolidation involving either Borrower, such Borrower (or CH
Borrower if between the Borrowers) shall be the surviving corporation
(provided that upon CH Borrower being the survivor of any merger or
consolidation between the Borrowers, CH Borrower shall assume all
Obligations of US Borrower pursuant to documentation in form and
substance satisfactory to the Administrative Agent), (x) in any merger
or consolidation involving UK Borrower, the survivor (if not UK
Borrower) shall assume all Obligations of UK Borrower pursuant to
documentation in form and substance satisfactory to the Administrative
Agent, and (y) if the surviving corporation of such merger or
consolidation or the transferee of such assets is a Subsidiary, (i) all
of the capital stock of such Subsidiary is pledged pursuant to a
Securities Pledge Agreement, (ii) such surviving Subsidiary is a
Qualified Subsidiary Guarantor, and (iii) the assets of such surviving
Subsidiary are pledged pursuant to an appropriate Security Document,
except in each case to the extent prohibited by law or such as would
cause adverse tax consequences; and (z) UK Borrower Guarantor may not
merge or consolidate with or into any Person unless the surviving
entity would be a Guarantor of all Obligations of UK Borrower;
(h) the consummation of the M-T Acquisition in accordance
with the M-T Acquisition Documents and the Safeline Acquisition in
accordance with the Safeline Acquisition Documents;
(i) US Borrower or any Subsidiary may sell assets set forth on
Schedule 8.2(i) or set forth on Schedule 8.2(i)(A); provided, however,
that the Net Cash Proceeds therefrom are either applied to prepay Term
Loans as provided in subsection 2.7(c) or reinvested as provided in
subsection 2.7(c);
(j) US Borrower or any Subsidiary may sell surplus real
property and improvements thereon not utilized in the business of US
Borrower or any Subsidiary; provided, however, that the Net Cash
Proceeds therefrom are applied to prepay Term Loans as provided in
subsection 2.7(c);
(k) US Borrower or any Subsidiary may sell a line of business
if the portion of the consolidated EBITDA of US Borrower and the
Subsidiaries for the latest twelve months immediately prior to such
sale attributable to such business, plus the trailing twelve month
EBITDA of all other businesses sold pursuant to this subsection 8.2(k)
(measured at the time of sale) does not exceed 5.0%
<PAGE>
-119-
of the consolidated EBITDA of US Borrower and the Subsidiaries for the
latest twelve months (before giving effect to the current contemplated
sale);
(l) any Acquisition permitted by Section 8.4;
(m) any Foreign Subsidiary which is not a Qualified Subsidiary
Guarantor may merge or consolidate with or into or sell, assign or
transfer its assets to any other Foreign Subsidiary which is not a
Qualified Subsidiary Guarantor, except that no Subsidiary which is a CH
Foreign Subsidiary may enter into any such transaction with a
Subsidiary that is not a CH Foreign Subsidiary unless the CH Foreign
Subsidiary is the surviving or transferee corporation; and
(n) the abandonment or other disposition of patents,
trademarks or other intellectual property that is, in the reasonable
judgment of US Borrower, no longer economically practicable to maintain
or useful in the conduct of the business of US Borrower and the
Subsidiaries, taken as a whole.
To the extent the Required Lenders waive the provisions of this Section 8.2 with
respect to the sale or other disposition of any Collateral, or any Collateral is
sold or otherwise disposed of as permitted by this Section 8.2 (and such
Collateral is released (or permitted to be released) from the Liens created by
the respective Security Document), such Collateral in each case shall be sold or
otherwise disposed of free and clear of the Liens created by the Security
Documents and the Administrative Agent shall take such actions as are
appropriate in connection therewith.
8.3. Leases. The Borrowers shall not permit, and shall not
cause or permit any Subsidiary to permit, the aggregate lease payments
calculated in accordance with GAAP (including, without limitation, any property
taxes paid as additional rent or lease payments) by US Borrower and the
Subsidiaries on a consolidated basis under any agreement to rent or lease any
real or personal property (or any extension or renewal thereof) (excluding
Capital Leases) to exceed in any fiscal year (commencing with fiscal 1996) the
Dollar Equivalent amount of U.S. $21.0 million, increased each fiscal year after
fiscal 1998 by the Dollar Equivalent amount of U.S. $2.0 million.
8.4. Loans and Investments. The Borrowers shall not, and shall
not cause or permit any Subsidiary to, directly or indirectly, purchase or
acquire, or make any commitment to purchase or acquire, any capital stock,
equity interest, or obligations or other securities of, or any interest in, any
Person, or make or commit to make any Acquisition, or make or commit to make any
advance, loan, extension of credit or capital contribution to, or guarantee of
any obligation of, or any other investment in, or incur Guaranty Obligations on
behalf of, any Person (including any Affiliate of US Borrower) (any of the
foregoing, an "Investment"), except for (each of which shall be given
independent effect):
(a) Investments by US Borrower and the Subsidiaries in Cash
and Cash Equivalents;
(b) extensions of credit in the nature of accounts receivable
or notes receivable arising from the sale or lease of goods or
services in the ordinary course of business;
(c) Investments (including extensions of credit (such
extensions of credit, "Intercompany Indebtedness") and Guaranty
Obligations) by US Borrower or any Subsidiary in or to US Borrower, CH
Borrower or any Wholly-Owned Subsidiary of US Borrower which is a
Qualified Subsidiary Guarantor (or in any Person that thereby becomes a
Wholly-Owned Subsidiary of US Borrower which
<PAGE>
-120-
is a Qualified Subsidiary Guarantor or is merged or consolidated into
US Borrower, CH Borrower or any Wholly-Owned Subsidiary of US Borrower
which is a Qualified Subsidiary Guarantor); provided, however, that (x)
with respect to any Guaranty Obligation issued by any Subsidiary of
either Borrower's obligations, such Subsidiary has entered into a
Subsidiary Guarantee at least as favorable as such Guaranty Obligation,
(y) upon request of the Required Lenders, all such Intercompany
Indebtedness shall be evidenced by subordinated promissory notes in
form, and shall be pledged to the Administrative Agent pursuant to
documentation, reasonably satisfactory to the Required Lenders, and (z)
such Subsidiary shall have entered into the appropriate Security
Documents pursuant to Section 7.14 and taken all necessary action
pursuant to Section 7.15;
(d) Investments consisting of non-cash consideration received
in the form of securities, notes or similar obligations in connection
with disposition of assets permitted by subsection 8.2(d), (i), (j) or
(k); provided, however, that (i) the aggregate amount of such non-cash
consideration received in connection with any such disposition shall
not exceed 25% with respect to subsections 8.2(d), (i) and (j) and 15%
with respect to subsection 8.2(k) of the total consideration received
in connection with such disposition and (ii) such non-cash
consideration is pledged pursuant to the appropriate Security Document;
(e) Investments in Joint Ventures or non-Wholly-Owned
Subsidiaries (other than any Investment made to consummate any
Acquisition); provided, however, that the aggregate amount of any such
Investment, plus the aggregate value of all such Investments (excluding
Investments which constitute part of the M-T Acquisition and the
Safeline Acquisition) made by US Borrower or any Subsidiary after the
Original Closing Date and (without duplication) the aggregate amount of
all Guaranty Obligations permitted solely by subsection 8.8(f) paid
after the Original Closing Date or outstanding as of the date of such
Investment, shall not exceed a Dollar Equivalent amount of U.S. $25.0
million (exclusive of any Investment pursuant to subsection 8.4(f));
provided, however, that any such Investment shall comply with Section
8.6;
(f) Investments made in order to consummate Acquisitions
(other than the M-T Acquisition and the Safeline Acquisition);
provided, however, that (i) no Event of Default or Unmatured Event of
Default exists or will result therefrom (including any such event under
Section 8.15), (ii) on a pro forma basis, after giving effect to such
Acquisition(s), US Borrower would have been in compliance with Sections
8.10, 8.11 and 8.12 on the last day of the most recently completed
fiscal quarter (assuming, for purposes of Sections 8.10 and, if
applicable, 8.12, that such Acquisition had occurred on the first day
of the Computation Period ending on such last day) which compliance
shall, for any Acquisition involving consideration of the Dollar
Equivalent amount of U.S. $10.0 million, be demonstrated in an
Officers' Certificate delivered to the Administrative Agent and each
Lender and (iii) the aggregate Dollar Equivalent amount of the
consideration (which for each Acquisition shall be measured at the date
of consummation thereof and which shall include debt assumed, earn
outs, working capital deficits and deferred payments) paid for all
Acquisitions (other than the M-T Acquisition and the Safeline
Acquisition) consummated since the Original Closing Date shall not
exceed the Dollar Equivalent amount of U.S. $100 million;
(g) pledges or deposits required in the ordinary course of
business in connection with workmen's compensation, unemployment
insurance and other social security or similar legislation;
(h) pledges or deposits in connection with (i) the
non-delinquent performance of bids, trade contracts (other than for
borrowed money), leases or statutory obligations, (ii) contingent
<PAGE>
-121-
obligations on surety or appeal bonds (including those permitted by
subsection 8.8(d)), and (iii) other non-delinquent obligations of a
like nature, in each case incurred in the ordinary course of business;
(i) advances, loans or extensions of credit to suppliers in
the ordinary course of business by US Borrower or any Subsidiary
consistent with past practice as of the Original Closing Date;
(j) advances, loans or extensions of credit by US Borrower or
any Subsidiary to employees of US Borrower or any Subsidiary; provided,
however, that the aggregate amount of all such loans, advances and
extensions of credit, other than those entered into in connection with
the consummation of the M-T Acquisition and the Safeline Acquisition
and set forth on Schedule 8.4(j) and other than advances for travel and
entertainment expenses in the ordinary course of business, shall not at
any time exceed in the aggregate a Dollar Equivalent amount of U.S.
$5.0 million;
(k) other advances, loans or extensions of credit (excluding
advances, loans or extensions of credit of the types described in
subsection 8.4(j)) in the ordinary course of business by US Borrower or
any Subsidiary not at any time exceeding in the aggregate a Dollar
Equivalent amount of U.S. $2.50 million;
(l) Investments to consummate the M-T Acquisition on the terms
set forth in the M-T Acquisition Documents and Investments to
consummate the Safeline Acquisition on the terms set forth in the
Safeline Acquisition Documents, including Investments in UK Borrower or
Canadian Borrower necessary to repay the Safeline Seller Notes or pay
the Safeline Contingent Obligation;
(m) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course
of business; provided, however, that any securities or other property
so received is pledged pursuant to the appropriate Security Document;
(n) Swap Contracts entered into in compliance with subsection
8.8(b);
(o) Investments in existence on the Original Closing Date and
listed in Schedule 8.4(o), without giving effect to any additions
thereto and Investments to be made pursuant to binding agreements in
existence on the Original Closing Date set forth on Schedule 8.4(o) to
the extent made in accordance with the terms of such agreements as in
effect on the Original Closing Date;
(p) Investments (including Intercompany Indebtedness and
Guaranty Obligations) by US Borrower or any Subsidiary in any
Subsidiary which is not a Qualified Subsidiary Guarantor or which is
not a Wholly-Owned Subsidiary of US Borrower and not otherwise
permitted by subsections (e), (q), (v) and (w) of this Section 8.4, not
to exceed an aggregate amount outstanding at any time (net of returns,
dividends in cash, net cash proceeds on sale or other cash realizations
thereof) of the Dollar Equivalent amount of U.S. $10.0 million;
provided, however, that upon request of the Required Lenders, all such
Intercompany Indebtedness shall be evidenced by subordinated promissory
notes in form, and shall be pledged to the Administrative Agent
pursuant to documentation, reasonably satisfactory to the Required
Lenders;
(q) US Borrower and the Subsidiaries may hold additional
Investments in any Subsidiary which is not a Qualified Subsidiary
Guarantor or a Wholly-Owned Subsidiary to the extent that such
<PAGE>
-122-
Investments reflect an increase in the value of such Subsidiary
resulting from retained earnings of such Subsidiary;
(r) any Subsidiary which is not a Qualified Subsidiary
Guarantor may make Investments in or to any other Subsidiary which is
not a Qualified Subsidiary Guarantor (other than by a CH Foreign
Subsidiary to a non-CH Foreign Subsidiary);
(s) Investment made in connection with the Ciba Loan;
provided, however, that (x) the Administrative Agent shall have
received evidence reasonably satisfactory to it from Swiss tax
authorities that the Swiss tax authorities will refund the Swiss
withholding tax payments for which substantially all of such loan is
the interim source pending such repayment and (y) the Ciba Loan
Documents are pledged pursuant to the Security Documents;
(t) without duplication, Capital Expenditures permitted by
Section 8.19 and the Contingent Obligations permitted by subsections
8.8(d), (g) and (i);
(u) US Borrower or any Subsidiary may make Investments
(including Intercompany Indebtedness and Guaranty Obligations) in any
Subsidiary Guarantor which is not a Qualified Subsidiary Guarantor in
an amount not to exceed the Dollar Equivalent amount of the Obligations
guaranteed by such Subsidiary Guarantor; provided, however, that upon
request of the Required Lenders, all such Intercompany Indebtedness
shall be evidenced by subordinated promissory notes in form, and shall
be pledged to the Administrative Agent pursuant to documentation,
reasonably satisfactory to the Required Lenders;
(v) Investments by US Borrower or any Subsidiary in any
Wholly-Owned Subsidiary which is not a Qualified Subsidiary Guarantor
to the extent that contemporaneously with such Investment such entity
in which the Investment is being made issues an unsubordinated note to
US Borrower or a Qualified Subsidiary Guarantor in a Dollar Equivalent
amount equal to the Dollar Equivalent amount of the value of such
Investment at such time; provided, however, that (i) such note is fully
secured by all assets of the entity in which the Investment is being
made to the extent permitted by applicable law; (ii) such note is
pledged to the Administrative Agent on behalf of the Lenders pursuant
to the Security Documents; and (iii) such security interests securing
such note, if any, are collaterally assigned to the Administrative
Agent on behalf of the Lenders;
(w) Investments (including Intercompany Indebtedness and
Guaranty Obligations) by either Borrower or any Subsidiary in any
Wholly-Owned Subsidiary to the extent made in the ordinary course to
fund or support the ordinary course operations of such Wholly-Owned
Subsidiary; provided, however, that upon the request of the Required
Lenders all such Intercompany Indebtedness shall be evidenced by
promissory notes in form, and shall be pledged to the Administrative
Agent pursuant to documentation, reasonably satisfactory to the
Required Lenders;
(x) Investments by UK Borrower in any Subsidiary of UK
Borrower which is a Wholly-Owned Subsidiary of US Borrower or Safeline
S.A., or by any Subsidiary of UK Borrower in UK Borrower or any other
Subsidiary of UK Borrower; and
(y) Investments in UK Borrower (i) to prepay or to repay Loans
owing by UK Borrower or Safeline Limited or other payment obligations
under this Agreement or (ii) in an amount at any time outstanding not
to exceed the Dollar Equivalent amount of U.S. $5 million.
<PAGE>
-123-
8.5. Limitation on Indebtedness. The Borrowers shall not, and
shall not cause or permit any Subsidiary to, directly or indirectly, create,
incur, assume, suffer to exist, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness, except (each of which shall
be given independent effect):
(a) the Obligations;
(b) Indebtedness consisting of Contingent Obligations
permitted pursuant to Section 8.8;
(c) Indebtedness existing on the Original Closing Date or the
Safeline Closing Date which is Debt to Be Repaid (which Indebtedness
may not be outstanding beyond the Original Closing Date or the Safeline
Closing Date, as the case may be) or is set forth in Schedule 6.17 or
Schedule 6.17A;
(d) Indebtedness incurred in connection with Capital Leases to
the extent permitted by subsection 8.1(j) and Indebtedness incurred in
connection with the acquisition, construction or improvement of
property to the extent permitted by subsection 8.1(i);
(e) Indebtedness of any Subsidiary to US Borrower or CH
Borrower and, to the extent the credit extension creating such
Indebtedness is permitted by subsection 8.4(c), (e), (l), (p), (r),
(u), (v) or (w) or (x), of any Subsidiary to any other Subsidiary;
(f) Indebtedness of US Borrower under the Senior Subordinated
Notes in an aggregate principal amount not to exceed U.S. $135.0
million, less any prepayments or repayments thereof (including in
connection with the transactions to occur on the Second Amendment and
Restatement Date), and any guarantee of the Senior Subordinated Notes
by any Domestic Subsidiary in accordance with the terms of the Senior
Subordinated Note Documents as in effect on the Original Closing Date;
(g) Indebtedness of Foreign Subsidiaries in an aggregate
principal amount not to exceed in the aggregate at any time outstanding
for all Foreign Subsidiaries (exclusive of any amount incurred pursuant
to subsection 8.5(n) below) the Dollar Equivalent amount of U.S. $30.0
million (which amount shall be increased to (x) U.S. $50.0 million
after the consummation of a Qualified Public Offering and (y) U.S.
$60.0 million after the consummation of a Qualified Public Offering so
long as the Debt to EBITDA Ratio as of the end of the most recently
completed fiscal quarter is less than 2.5 to 1.0); provided, however,
that not more than the Dollar Equivalent amount of U.S. $15.0 million
(which amount shall be increased to (x) U.S. $25.0 million after the
consummation of a Qualified Public Offering and (y) U.S. $30.0 million
after the consummation of a Qualified Public Offering so long as the
Debt to EBITDA Ratio as of the end of the most recently completed
fiscal quarter is less than 3.5 to 1.0) in the aggregate may be
incurred and outstanding at any time pursuant to any agreement that is
for permanent funded debt;
(h) unsecured Indebtedness not to exceed in the aggregate at
any time outstanding the Dollar Equivalent amount of U.S. $10.0
million;
(i) Indebtedness arising from honoring a check, draft or
similar instrument against insufficient funds; provided, however, that
such Indebtedness is extinguished within five Business Days of its
incurrence;
(j) obligations under operating leases permitted by
Section 8.3 or Section 8.20;
<PAGE>
-124-
(k) the Safeline Seller Notes as in effect on the Safeline
Closing Date;
(l) Indebtedness of a Person (other than Indebtedness of
Safeline Limited and its Subsidiaries as of the Safeline Closing Date)
existing at the time such Person became a Subsidiary or assets were
acquired from such Person, to the extent such Indebtedness was not
incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary or the acquisition of such assets, not to exceed
in the aggregate at any time outstanding the Dollar Equivalent amount
of U.S. $10.0 million;
(m) unsecured Indebtedness incurred by US Borrower to former
employees in connection with the purchase or redemption of stock of
US Borrower or Holding not to exceed in aggregate amount outstanding
the Dollar Equivalent amount of U.S. $2.50 million;
(n) Indebtedness of the Chinese Subsidiaries pursuant to local
working capital facilities and other Indebtedness not to exceed in the
aggregate at any time outstanding for all Chinese Subsidiaries the
Dollar Equivalent amount of U.S. $15.0 million; and
(o) any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this subsection (o), a
"refinancing") of any Indebtedness permitted by this Section 8.5,
including any successive refinancings, so long as any such refinancing
Indebtedness shall (w) not be on financial and other terms, in the
reasonable judgment of the Borrowers, that are more onerous than the
Indebtedness being refinanced, (x) not have a stated maturity or
Average Life that is shorter than the Indebtedness being refinanced,
(y) be at least as subordinate to the Obligations as the Indebtedness
being refinanced (and unsecured if the refinanced Indebtedness is
unsecured) and (z) be in principal amount that does not exceed the
principal amount so refinanced, plus the lesser of (I) the stated
amount of any premium or other payment required to be paid in
connection with such refinancing pursuant to the terms of the
Indebtedness being refinanced and (II) the amount of premium or other
payment actually paid at such time to refinance the Indebtedness, plus,
in either case, the amount of reasonable expenses of the Borrowers or
any Subsidiary incurred in connection with such refinancing.
If such Indebtedness is incurred to refinance Indebtedness
denominated in a currency other than U.S. Dollars and such refinancing would
cause a Dollar Equivalent restriction to be exceeded if calculated at the
relevant currency exchange rate in effect on the date of such refinancing, such
Dollar Equivalent restriction shall not be deemed to have been exceeded so long
as the principal amount of such refinancing Indebtedness does not exceed the
principal amount of such Indebtedness being refinanced, but the ability to make
subsequent incurrences of Indebtedness subject to the applicable Dollar
Equivalent restriction shall be determined as if the relevant currency exchange
rate applied to any such previous refinancing was the rate in effect on the date
of such refinancing.
8.6. Transactions with Affiliates. The Borrowers shall not,
and shall not cause or permit any Subsidiary to, directly or indirectly, enter
into any transaction with any Affiliate of US Borrower (other than a Borrower or
a Subsidiary if no portion of such Subsidiary is owned (other than through US
Borrower or the Subsidiaries) by Persons who control (directly or indirectly)
Holding), except upon fair and reasonable terms no less favorable to such
Borrower or such Subsidiary than would obtain in a comparable arm's-length
transaction with a Person not an Affiliate of US Borrower or such Subsidiary;
provided, however, that the following shall in any event be permitted: (a) the
payment on the Original Closing Date of one time fees to AEA in an aggregate
amount not to exceed U.S. $5.50 million (plus reasonable out-of-pocket expenses
incurred by AEA in providing services to US Borrower, including monies advanced
for the purchase of currency options and contracts entered into in connection
with consummation of the M-T Acquisition); (b) the payment, on a
<PAGE>
-125-
quarterly basis, of management fees to AEA pursuant to the Management Services
Agreement in an aggregate amount (for all such Persons taken together) not to
exceed U.S. $250,000 in any fiscal quarter of US Borrower; provided, however,
that no Event of Default or Unmatured Event of Default pursuant to Section
9.1(a) then exists or would result therefrom; (c) the reimbursement of AEA for
its reasonable out-of-pocket expenses incurred by it in connection with
performing management services to US Borrower and the Subsidiaries pursuant to
the Management Services Agreement; (d) Restricted Payments permitted by Section
8.13; (e) US Borrower and the Domestic Subsidiaries may enter into the Tax
Sharing Agreement and may make payments thereunder; (f) the payment of
reasonable and customary regular fees to directors of US Borrower or any
Subsidiary who are not employees of US Borrower or any Subsidiary; (g) any
transaction with an officer or member of the board of directors of US Borrower
or any Subsidiary in the ordinary course of business involving compensation,
indemnity or employee benefit arrangements; (h) loans or advances to employees
permitted by subsection 8.4(j); (i) the M-T Acquisition and all transactions
related thereto (including but not limited to the financing thereof) to the
extent consummated in accordance with the M-T Acquisition Documents and the
Safeline Acquisitions and all transactions related thereto (including but not
limited to the financing thereof) to the extent consummated in accordance with
the Safeline Acquisition Documents; (j) any transaction in the ordinary course
of business or approved by a majority of the Disinterested Directors, between US
Borrower or any Subsidiary and any Affiliate of US Borrower controlled by US
Borrower that is a Joint Venture or similar entity primarily engaged in a
Related Business; provided, however, that no person or entity which has an
economic interest in Holding has an interest in such Joint Venture other than
through US Borrower or any Subsidiary; (k) US Borrower and the Subsidiaries may
enter into and perform its obligations under the Ciba Reimbursement Agreement
and the Ciba Loan Documents; (l) the payment on the Safeline Closing Date of one
time fees to AEA in an aggregate amount not to exceed U.S. $1.5 million (plus
reasonable out-of-pocket expenses incurred by AEA in connection with the
Safeline Acquisition); and (m) the fee payable upon the termination of the
Management Services Agreement.
8.7. Use of Proceeds. (a) No Credit Agreement Loan Party
shall, and the Borrowers shall not cause or permit any Subsidiary to, directly
or indirectly, use any portion of the Loan proceeds or any Letter of Credit,
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance Indebtedness of any Loan Party or others incurred to
purchase or carry Margin Stock or (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock.
(b) No Credit Agreement Loan Party shall, directly or
indirectly, use any portion of the Loan proceeds or any Letter of Credit (i)
knowingly to purchase Ineligible Securities from the Arranger during any period
in which the Arranger makes a market in such Ineligible Securities, (ii)
knowingly to purchase during the underwriting or placement period Ineligible
Securities being underwritten or privately placed by the Arranger, or (iii) to
make payments of principal or interest on Ineligible Securities underwritten or
privately placed by the Arranger and issued by or for the benefit of a Borrower
or any Affiliate of a Borrower. The Arranger is a registered broker-dealer and
permitted to underwrite and deal in certain Ineligible Securities; and
"Ineligible Securities" means securities which may not be underwritten or dealt
in by member banks of the U.S. Federal Reserve System under Section 16 of the
Banking Act of 1933 (12 U.S.C. ss. 24, Seventh), as amended.
8.8. Contingent Obligations. The Borrowers shall not, and
shall not cause or permit any Subsidiary to, directly or indirectly, create,
incur, assume or suffer to exist any Contingent Obligations, except:
(a) endorsements for collection or deposit in the ordinary
course of business;
<PAGE>
-126-
(b) Swap Contracts entered into in the ordinary course of
business and designed to protect against fluctuations in interest
rates, currency exchange rates, commodity prices or similar risks
(including any Swap Contract entered into pursuant to Section 7.16 or
Section 7.17);
(c) Contingent Obligations of US Borrower and the Subsidiaries
existing as of the Original Closing Date and listed in Schedule 8.8 and
Contingent Obligations of Safeline Limited and its Subsidiaries
existing as of the Safeline Closing Date and listed in Schedule 8.8A;
(d) Contingent Obligations arising under (i) Surety
Instruments arising in the ordinary course of business of US Borrower
or any Subsidiary or (ii) any guaranty of the performance of
contractual obligations (other than obligations to pay money) of other
Persons that are not Subsidiaries so long as such guaranty arises in
connection with a project in which a Borrower or the applicable
Subsidiary is otherwise involved in the ordinary course of business,
not to exceed in the aggregate for all Contingent Obligations pursuant
to this subclause (d) the Dollar Equivalent amount of U.S. $25.0
million;
(e) Guaranty Obligations permitted by subsections 8.4(c),
(i), (j), (k), (p), (r), (u) and (w);
(f) Guaranty Obligations in respect of the Indebtedness or
other liabilities of Joint Ventures or Persons in which a Borrower or
any Subsidiary has a minority interest or in non-Wholly-Owned
Subsidiaries of US Borrower; provided, however, that the aggregate
amount of all such Guaranty Obligations at any time outstanding, plus
the aggregate amount of all Guaranty Obligations permitted solely by
this subsection (f) which are paid after the Original Closing Date and
(without duplication) the aggregate amount of all Investments
(excluding Investments which constitute part of the M-T Acquisition or
the Safeline Acquisition) made after the Original Closing Date which
are permitted solely by subsection 8.4(e), shall not exceed in the
aggregate a Dollar Equivalent amount of U.S. $25.0 million;
(g) other Contingent Obligations not at any time exceeding
in the aggregate outstanding a Dollar Equivalent amount of U.S.
$5.0 million;
(h) the Guarantees and reimbursement obligations arising
under the Loan Documents in respect of drawings under Letters of
Credit;
(i) Guaranty Obligations by Domestic Subsidiaries of US
Borrower in respect of US Borrower's obligations under the Senior
Subordinated Notes pursuant to the Senior Subordinated Note Documents
as in effect on the Original Closing Date;
(j) the Ciba Reimbursement Agreement;
(k) Guaranty Obligations of Foreign Subsidiaries under
letters of credit;
(l) Guaranty Obligations by US Borrower or any Subsidiary of
Indebtedness of Foreign Subsidiaries permitted by subsection 8.5(g)
or (n);
(m) Guaranty Obligations in connection with sales and other
dispositions of assets permitted under Section 8.2, arising in
connection with indemnification and other agreements in respect
<PAGE>
-127-
of any contract relating to such sale, not to exceed the consideration
received by US Borrower or any Subsidiary in connection with such sale
and excluding in all cases any Guaranty Obligation with respect to any
obligation of any third person incurred in connection with the
acquisition of such assets; and
(n) the Safeline Contingent Payment.
8.9. Restrictions on Subsidiaries. The Borrowers shall not
cause or permit any Subsidiary to, directly or indirectly, enter into any
agreement or instrument (other than (i) the Senior Subordinated Note Documents
as in effect on the Original Closing Date, (ii) the Loan Documents and (iii) any
agreement or instrument relating to Indebtedness permitted by subsection 8.5(c),
provided that such restriction relates solely to such Foreign Subsidiary) which
by its terms restricts the ability of such Subsidiary (a) to declare or pay
dividends or make similar distributions, (b) to repay principal of, or pay any
interest on, any indebtedness owed to a Borrower or any other Subsidiary, (c) to
make payments of royalties, licensing fees and similar amounts to a Borrower or
any other Subsidiary or (d) to make loans or advances to, or guarantee any
Indebtedness or other obligation of, a Borrower or any other Subsidiary, except
for such encumbrances or restrictions existing under or by reason of (i)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of US Borrower or a Subsidiary, (ii) customary provisions
restricting assignment of any agreement or license entered into by US Borrower
or any Subsidiary in the ordinary course of business, (iii) customary provisions
restricting the transfer of assets subject to Liens permitted under subsections
8.1(a), (i), (j), (l), (m), (n) and (q) and (iv) applicable law (including
minimum capital requirements).
8.10. Fixed Charge Coverage Ratio. The Borrowers shall not
permit, as of the last day of any fiscal quarter (beginning with the fiscal
quarter ending December 31, 1997) ending during any period set forth below, the
ratio of (a) EBITDA less Capital Expenditures for the Computation Period ending
on such day, to (b) (x) prior to the first such time as four fiscal quarters of
financial information of US Borrower after the Original Closing Date shall have
been provided pursuant to this Agreement, Annualized Interest Expense at the end
of such fiscal quarter and (y) thereafter, Interest Expense of US Borrower and
the Subsidiaries for such Computation Period, to be less than the ratio set
forth opposite such period in the table below:
==============================================================================
Period Ratio
- ------------------------------------------------------------------------------
December 31, 1997 through 6/30/1998 2.00:1.0
- ------------------------------------------------------------------------------
7/1/1998 through 6/30/1999 2.50:1.0
- ------------------------------------------------------------------------------
7/1/1999 through 6/30/2000 3.00:1.0
- ------------------------------------------------------------------------------
7/1/2000 and thereafter 3.25:1.0
==============================================================================
8.11. Minimum Net Worth. The Borrowers shall not permit
Consolidated Net Worth (to be calculated for the purposes of this Section 8.11
without giving effect to cumulative depreciation and amortization of intangibles
and excluding net gains (but not losses) resulting from asset sales) at the end
of any fiscal quarter (beginning with the fiscal quarter ended December 31,
1997) occurring during any period set forth below to be less than the amount set
forth opposite such period:
<PAGE>
-128-
===============================================================================
Consolidated
Period Net Worth
- -------------------------------------------------------------------------------
December 31, 1997 through 9/30/1998 U.S. $175.0 million
- -------------------------------------------------------------------------------
10/1/1998 through 9/30/1999 U.S. $200 million
- -------------------------------------------------------------------------------
10/1/1999 through 9/30/2000 U.S. $250 million
- -------------------------------------------------------------------------------
10/1/2000 through 9/30/2001 U.S. $275 million
- -------------------------------------------------------------------------------
10/1/2001 and thereafter U.S. $300 million
===============================================================================
8.12. Debt to EBITDA Ratio. The Borrowers shall not permit, as
of the last day of any fiscal quarter (beginning with the fiscal quarter ending
December 31, 1997) ending during any period set forth below, the Debt to EBITDA
Ratio to exceed the ratio set forth opposite such period in the table below:
===============================================================================
Period Ratio
- -------------------------------------------------------------------------------
December 31, 1997 through 3/31/1999 5.0:1.0
- -------------------------------------------------------------------------------
4/1/1999 through 9/30/1999 4.75:1.0
- -------------------------------------------------------------------------------
10/1/1999 through 3/31/2000 4.50:1.0
- -------------------------------------------------------------------------------
4/1/2000 through 9/30/2000 4.25:1.0
- -------------------------------------------------------------------------------
10/1/2000 and thereafter 4.00:1.0
===============================================================================
8.13. Restricted Payments. Neither Borrower shall (i) declare
or make any dividend payment or other distribution of assets, properties, cash,
rights, obligations or securities on account of any shares of any class of the
capital stock of US Borrower or any Subsidiary (other than to US Borrower or any
Subsidiary) or (ii) purchase, redeem or otherwise acquire for value, or permit
any Subsidiary to purchase or otherwise acquire for value, any shares of US
Borrower's or any Subsidiary's capital stock or any warrants, rights or options
to acquire such shares, now or hereafter outstanding owned by any Person other
than US Borrower or any Wholly-Owned Subsidiary of US Borrower (any such
prohibited transaction, a "Restricted Payment"), except that (each of which
shall be given independent effect):
(a) US Borrower or any Subsidiary may declare and make
dividend payments or other distributions payable solely in its common
stock;
(b) US Borrower or any Subsidiary may purchase, redeem,
defease or otherwise acquire or retire for value shares of its common
stock or warrants or options to acquire any such shares with shares of
its common stock;
(c) any Subsidiary may pay dividends and distributions or
purchase, redeem, defease or otherwise acquire or retire for value
shares of its common stock or warrants or options to acquire any such
shares so long as any such payments pursuant thereto by any
non-Wholly-Owned Subsidiary of US
<PAGE>
-129-
Borrower are made on a pro rata basis to such Subsidiary's shareholders
generally or are paid solely to a Loan Party;
(d) US Borrower may pay cash loans, advances, dividends or
distributions to Holding to permit Holding to purchase capital stock
(or options or other rights in respect thereof) of Holding held by
former employees of Holding or any of its Subsidiaries following
termination of their employment or pursuant to repurchase provisions
under employee stock option agreements or employee stock purchase
agreements; provided, however, that (i) no Event of Default or
Unmatured Event of Default shall then exist or would arise therefrom
and (ii) the aggregate amount of such dividends shall not exceed U.S.
$2.0 million in any fiscal year and U.S. $5.0 million in the aggregate
since the Original Closing Date;
(e) US Borrower may pay cash dividends to Holding to enable
Holding to pay operating expenses (including fees and indemnification
payments to directors and officers) in the ordinary course of business;
provided, however, that (i) no Event of Default or Unmatured Event of
Default under subsection 9.1(a) shall then exist or would arise
therefrom and (ii) the aggregate amount of such dividends shall not
exceed U.S. $1.0 million in any fiscal year;
(f) US Borrower may pay dividends to Holding in connection
with the payment of items specified in clauses (b) and (c) of the
proviso to Section 8.6; and
(g) US Borrower may make any payments to Holding or any parent
company of Holding to enable Holding or any parent company of Holding,
as applicable, to make payments, to holders of the common stock of US
Borrower, Holding or any parent company of Holding, as applicable, in
lieu of issuance of fractional shares of such common stock, in
connection with any recapitalization of US Borrower, Holding or any
parent company of Holding, as applicable, such payments not to exceed
U.S. $100,000 in the aggregate.
8.14. ERISA. The Loan Parties shall not, and shall not
permit any of their ERISA Affiliates to, engage in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA.
8.15. Change in Business. (a) The Borrowers shall not, and
shall not cause or permit any Subsidiary to, directly or indirectly, engage in
any material line of business substantially different from those lines of
business carried on by US Borrower and the Subsidiaries (including the
Mettler-Toledo Group) on the Original Closing Date, unless the Safeline
Acquisition is consummated, and, then, on the Safeline Closing Date.
(b) Holding will engage in no business other than its
ownership of the capital stock of US Borrower and having those liabilities which
it is responsible for under the Basic Documents to which it is a party.
Notwithstanding the foregoing, Holding may engage in those activities that are
incidental to (a) the maintenance of its corporate existence in compliance with
applicable law, (b) legal, tax and accounting matters in connection with any of
the foregoing activities and (c) the entering into, and performing its
obligations under, the Basic Documents to which it is a party.
8.16. Accounting Changes. The Borrowers shall not, and
shall not cause or permit any Subsidiary to, make any significant change in
accounting principles or reporting practices, except as required by GAAP, or
change their fiscal years.
<PAGE>
-130-
8.17. Prepayments of Senior Subordinated Notes, etc. Holding
and the Borrowers shall not, and shall not cause or permit any Subsidiary to:
(a) make (or give any notice in respect of) any voluntary or optional payment or
prepayment or redemption or acquisition for value of the Senior Subordinated
Notes (including, without limitation, by way of depositing with any trustee with
respect thereto money or securities before such Indebtedness is due for the
purpose of paying such Indebtedness when due) or exchange of any such
Indebtedness, except that (i) a refinancing thereof may be effected in
accordance with subsection 8.5(o), and (ii) the Senior Subordinated Notes may be
redeemed or repurchased with the net proceeds of the IPO and, after the IPO, may
be repurchased in open market purchases (and cancelled) on ordinary business
terms; (b) amend, modify or change its certificate of incorporation (including,
without limitation, by the filing of any certificate of designation) or its
by-laws or any other organizational document or the foreign equivalent thereof
with respect to Foreign Subsidiaries (other than such changes with respect to
Subsidiaries (other than CH Borrower) as are necessary to effect changes in
organizational structure (whether under applicable corporate law or for tax
purposes) from corporate to partnership form in connection with the M-T
Acquisition), or any agreement entered into by it with respect to its capital
stock, or enter into any new agreement with respect to its capital stock in any
manner which would be materially adverse to the Lenders; or (c) issue any
capital stock other than non-redeemable common stock.
8.18. Amendments to Other Documents. Holding and the Borrowers
shall not and shall not cause or permit any Subsidiary to, directly or
indirectly, make any amendment, supplement or other modification of, or enter
into any consent or waiver with respect to, the subordination provisions of the
Senior Subordinated Note Documents or make any material amendment, supplement or
other modification of, or enter into any consent or waiver with respect to, any
Transaction Document or Other Document.
8.19. Capital Expenditures. The Borrowers shall not permit
the aggregate amount of all Capital Expenditures made by US Borrower and the
Subsidiaries for any fiscal year to exceed a Dollar Equivalent amount set
forth in the table below:
===============================================================================
Fiscal Year U.S. Dollars
- -------------------------------------------------------------------------------
1997 40 million
- -------------------------------------------------------------------------------
1998 40 million
- -------------------------------------------------------------------------------
1999 45 million
- -------------------------------------------------------------------------------
2000 45 million
- -------------------------------------------------------------------------------
2001 50 million
- -------------------------------------------------------------------------------
2002 50 million
- -------------------------------------------------------------------------------
2003 and thereafter 50 million
===============================================================================
; provided, however, that (x) the unused permitted amount of such Capital
Expenditures in any fiscal year may be carried over and used in the following
fiscal year if and to the extent that such carryover amount would not result in
the amount expended in any fiscal year exceeding 125% of the amount set forth in
the above table for such year (it being understood that in any fiscal year the
base permitted amount shall be counted first towards total expenditures); and
(y) the limitation set forth above shall not include (1) Capital Expenditures
made with (i) the proceeds of additional capital contributions by Holding or the
proceeds of additional equity issuances and
<PAGE>
-131-
(ii) Net Cash Proceeds of Asset Sales to the extent reinvested in the business
as permitted hereby, (2) Capital Expenditures related to integration costs that
arise out of the M-T Acquisition in an amount not exceeding a Dollar Equivalent
amount of U.S. $5.0 million at any time prior to December 31, 1997, and (3)
Capital Leases with respect to automobiles leased in the ordinary course of
business that are not required to be capitalized under International Accounting
Standards.
8.20. Sale and Lease-Backs. The Borrowers shall not, and shall
not cause or permit any Subsidiary to, directly or indirectly, become or
thereafter remain liable as lessee or as guarantor or other surety with respect
to the lessee's obligations under any lease, whether an operating lease or a
Capital Lease, of any property (whether real or personal or mixed), whether now
owned or hereafter acquired, (i) which US Borrower or any Subsidiary has sold or
transferred or is to sell or transfer to any other Person (other than US
Borrower or any Wholly-Owned Subsidiary which is a Qualified Subsidiary
Guarantor) or (ii) which US Borrower or any Subsidiary intends to use for
substantially the same purpose as any other property which has been or is to be
sold or transferred by Borrower or any Subsidiary to any Person in connection
with such lease, if in the case of clause (i) or (ii) above, such sale and such
lease are part of the same transaction or a series of related transactions or
such sale and such lease occur within one year of each other or are with the
same other Person, except for any transaction permitted by subsection 8.2(d).
8.21. Sale or Discount of Receivables. Each Borrower shall
not, nor shall it cause or permit any Subsidiary to, directly or indirectly,
sell, with or without recourse, or discount (other than in connection with trade
discounts or arrangements necessitated by the creditworthiness of the other
party, in each case in the ordinary course of business consistent with past
practice) or otherwise sell for less than the face value thereof, notes or
accounts receivable, except (i) to US Borrower or any Wholly-Owned Subsidiary
which is a Qualified Subsidiary Guarantor, (ii) by Foreign Subsidiaries (x) in
the ordinary course and either (I) consistent with past practice as of the
Original Closing Date or (II) consistent with the customary practices of the
applicable country, and (iii) by Mettler-Toledo (Albstadt) GmbH, Albstadt and
Mettler-Toledo GmbH, Greifensee in connection with the transfer of distribution
rights relating to the business in Japan, not to exceed the Dollar Equivalent
amount of U.S. $4.0 million.
8.22. Creation of Subsidiaries. The Borrowers shall not, and
shall not cause or permit any Subsidiary to, establish, create or acquire after
the Original Closing Date any Subsidiary; provided, however, that, US Borrower
and its Wholly-Owned Subsidiaries shall be permitted to establish, create or
acquire Wholly-Owned Subsidiaries or any non-Wholly-Owned Subsidiary in
connection with any Investment permitted by subsections 8.4(e) or (f) so long
as, with respect to any such new Subsidiary in which US Borrower or any
Subsidiary has made Investments of the Dollar Equivalent of U.S. $1.0 million or
more, (i) at least 30 days' prior written notice thereof is given to the
Administrative Agent, (ii) all of the capital stock of such new Subsidiary held
by US Borrower or any Subsidiary is pledged pursuant to a Securities Pledge
Agreement and the certificates representing such stock, together with stock
powers duly executed in blank are delivered to the Administrative Agent;
provided, however, (x) that subject to Section 7.18, not more than 65% of the
capital stock of Foreign Subsidiaries which are not CH Foreign Subsidiaries need
be pledged and no capital stock of any such Foreign Subsidiary which is not a
"first tier" Subsidiary of US Borrower or any Domestic Subsidiary need be
pledged by US Borrower or any Domestic Subsidiary or Foreign Subsidiary that is
not a CH Foreign Subsidiary and (y) the provisions of this subsection 8.22(ii)
shall not apply from and after the Investment Grade Date, (iii) any such new
Subsidiary which is a Domestic Subsidiary shall have executed and delivered a
Domestic Subsidiary Guarantee and, subject to Section 7.14, each other Security
Document executed and delivered by the Domestic Subsidiaries on the Original
Closing Date and each such new CH Foreign Subsidiary shall have executed a
Foreign Subsidiary Guarantee and each other Security Document executed and
delivered by CH Foreign Subsidiaries on the Original Closing Date (subject to
applicable limitations under foreign law);
<PAGE>
-132-
provided, however, that (x) any Subsidiary which is prohibited by applicable
local law from entering into a Subsidiary Guarantee need not do so and (y) the
requirements of this subsection 8.22(iii) with respect to Security Documents
shall not apply from and after the Investment Grade Date, and (iv) to the extent
requested by the Administrative Agent or the Required Lenders, such Subsidiary
takes all actions required pursuant to Section 7.14 and Section 7.15. In
addition, each new Subsidiary which is a Domestic Subsidiary or a CH Foreign
Subsidiary, as the case may be, shall execute and deliver or cause to be
executed and delivered all other relevant documentation of the type described in
Section 5 as such new Subsidiary would have had to deliver if such new
Subsidiary were a Domestic Subsidiary or CH Foreign Subsidiary, as the case may
be, on the Original Closing Date.
8.23. Designated Senior Debt. Neither Holding nor US Borrower
will, and each of them will not permit any Subsidiary to, designate or permit
the designation of any Indebtedness (other than the Obligations) as "Designated
Senior Indebtedness" or "Designated Guarantor Senior Indebtedness" for purposes
of, and as defined in, the Senior Subordinated Note Documents.
8.24. Issuance or Disposal of Subsidiary Stock. The Borrowers
shall not, directly or indirectly: (a) issue, sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock, partnership interests, or
other equity securities of (or warrants, rights or options to acquire shares or
other equity securities of) any Subsidiary; or (b) cause or permit any
Subsidiary to, directly or indirectly, issue, sell, assign, pledge or otherwise
encumber or dispose of any of their respective or any of their respective
Subsidiaries' shares of capital stock, partnership interests, or other
securities (or warrants, rights or options to acquire any such shares or other
securities), except, in each case under clause (a) or (b), (i) to US Borrower or
any of its Wholly-Owned Subsidiaries, (ii) to qualify directors if required by
applicable law, (iii) the pledge thereof pursuant to the Security Documents and
(iv) as permitted by subsection 8.2(d) or (k) (provided, in each case, such sale
is for all of the capital stock of such Subsidiary) or by subsection 8.13(a) or
(b).
8.25. Limitation on Other Restrictions on Amendment of Basic
Documents. None of Holding, the Borrowers or the Subsidiaries shall enter into,
suffer to exist or become or remain subject to any agreement or instrument to
which any of them is a party or to which any of them or any property of any of
them (now owned or hereafter acquired) may be subject or bound (except for the
Loan Documents or the other Basic Documents (but with respect to the Basic
Documents that are not Loan Documents, only as to themselves)) that would
prohibit or restrict (including by way of any covenant, representation or
warranty or event of default), or require the consent of any Person to any
amendment to, or waiver or consent to departure from the terms of, any Basic
Document (which, in the case of the Basic Documents that are not Loan Documents,
would be materially adverse to the Lenders).
8.26. Limitation on Swing Line Lenders. No Subsidiary Swing
Line Borrower shall, and US Borrower shall not cause or permit any Subsidiary
Swing Line Borrower to, have or arrange for, or enter into any agreement or
understanding with respect to, more than one Lender acting at any one time as a
Swing Line Lender for any Subsidiary Swing Line Borrower (or, for the UK Swing
Line Borrowers, for them collectively), or for any Lender to replace any Swing
Line Lender for any Subsidiary Swing Line Borrower unless all extensions of
credit hereunder to the Subsidiary Swing Line Borrower to whom such replaced
Swing Line Lender made extensions of credit hereunder have been paid in full and
arrangements for potential L/C Obligations with respect to all Letters of Credit
Issued and outstanding by such replaced Swing Line Lender have been provided for
to the satisfaction of such replaced Swing Line Lender.
<PAGE>
-133-
ARTICLE IX.
EVENTS OF DEFAULT
9.1. Event of Default. Any of the following shall
constitute an "Event of Default":
(a) Non-Payment. Any Loan Party fails to pay, (i) when and as
required to be paid herein, any principal of any Loan or of any L/C
Obligation or (ii) within three days after the same becomes due, any
interest, fee or any other amount payable under any Loan Document.
(b) Representation or Warranty. Any representation or warranty
by any Loan Party made or deemed made in any Loan Document, or which is
contained in any certificate, document or financial or other statement
by any Loan Party or any Responsible Officer furnished at any time
under any Loan Document, is incorrect in any material respect on or as
of the date made or deemed made.
(c) Specific Defaults. Any Loan Party fails to perform or
observe any term, covenant or agreement contained in Section 7.3(a)
or in Article VIII.
(d) Other Defaults. Any Loan Party fails to perform or observe
any term, covenant or agreement (other than those referred to in
subsections 9.1(a), (b) or (c) above) contained in any Loan Document,
and such failure shall continue unremedied for a period of at least 30
days after the date upon which written notice thereof is given to the
Borrowers by any Agent or any Lender.
(e) Cross-Default. (i) Any Company fails to make any payment
in respect of any one or more issues of Indebtedness (other than the
Obligations) or Contingent Obligation having an aggregate principal of
more than the Dollar Equivalent amount of U.S. $5.0 million beyond the
period of grace, if any, provided in the instrument or agreement under
which such Indebtedness or Contingent Obligation was created or by
which it is governed; or (ii) any Company fails to perform or observe
any other term, condition or covenant, or any other event shall occur
or condition exist, under any agreement or instrument relating to any
Indebtedness or Contingent Obligation, if the effect of such failure,
event or condition is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such Indebtedness
or Contingent Obligation (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause (with or
without notice or passage of time or both), such Indebtedness to be
declared to be due and payable prior to its stated maturity or to
require any Company to redeem or purchase, or offer to redeem or
purchase, all or any portion of such Indebtedness, or any such
Indebtedness shall be required to be prepaid (other than by a regularly
scheduled required prepayment or redemption) prior to the stated
maturity thereof or such Contingent Obligation to become payable or
cash collateral in respect thereof to be demanded; provided, however,
that the aggregate amount of all such Indebtedness or Contingent
Obligations so affected and cash collateral so required shall be in a
Dollar Equivalent amount of U.S. $5.0 million or more.
(f) Insolvency; Voluntary Proceedings. Any Company (i) ceases
or fails to be solvent, or generally fails to pay, or admits in writing
its inability to pay, its debts as they become due; (ii) commences or
consents to any Insolvency Proceeding with respect to itself; or (iii)
takes any action to effectuate or authorize any of the foregoing.
<PAGE>
-134-
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against any Company, or any writ,
judgment, warrant of attachment, execution or similar process is issued
or levied against a Company, and such proceeding or petition shall not
be dismissed, or such writ, judgment, warrant of attachment, execution
or similar process shall not be released, vacated or fully bonded,
within 60 days after commencement, filing or levy; (ii) any Company
admits the material allegations of a petition against it in any
Insolvency Proceeding, or an order for relief (or similar order under
non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) any
Company acquiesces in the appointment of a receiver, receiver and
manager, trustee, custodian, conservator, liquidator, mortgagee in
possession (or agent therefor), or other similar person for itself or a
substantial portion of its property or business.
(h) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or a Multiemployer Plan which has resulted or is
reasonably likely to result in liability of a Loan Party under Title IV
of ERISA to such Pension Plan or Multiemployer Plan or to the PBGC in
an aggregate Dollar Equivalent amount in excess of U.S. $5.0 million;
or (ii) the aggregate Dollar Equivalent amount of Unfunded Pension
Liability among all Pension Plans at any time exceeds U.S. $5.0 million
and as a result thereof a lien shall be imposed, a security interest
shall be granted or a material liability is incurred, which lien,
security interest or liability, in the reasonable judgment of the
Required Lenders, is reasonably likely to result in a Material Adverse
Effect.
(i) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is
entered against any Company involving in the aggregate a liability (to
the extent not covered by independent third-party insurance as to which
the insurer does not dispute coverage) as to any single or related
series of transactions, incidents or conditions, of a Dollar Equivalent
amount of U.S. $5.0 million or more, and the same shall remain
unvacated and unstayed pending appeal for a period of 30 days after the
entry thereof.
(j) Non-Monetary Judgments. Any non-monetary judgment, order
or decree is entered against any Company which does or would reasonably
be expected to have a Material Adverse Effect, and there shall be any
period of 30 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect.
(k) Guarantees. Any Guarantee ceases to be in full force and
effect (other than due to any effect of applicable foreign law or
action by any foreign government) or any of the Guarantors repudiates,
or attempts to repudiate, any of its obligations under any of the
Guarantees.
(l) Security Documents. Any Security Document shall cease to
be in full force and effect (other than due to any effect of applicable
foreign law or action by any foreign government), or shall cease to
give the Administrative Agent the Liens, rights, powers and privileges
purported to be created thereby, in favor of the Administrative Agent,
superior to and prior to the rights of all third Persons and subject to
no Liens other than Prior Liens and Liens expressly permitted by the
applicable Security Document, or any judgment creditor having a Lien
against any item of Collateral shall commence legal action to foreclose
such Lien or otherwise exercise its remedies against any item of
Collateral or either Borrower or any Subsidiary fails to comply with or
to perform any material obligation or agreement under any Security
Document within ten days after being requested by the Administrative
Agent or any Lender, provided, however, that the foregoing shall not
apply from and after the Investment Grade Date.
<PAGE>
-135-
(m) Change of Control. Any Change of Control shall occur.
(n) Environmental Events. There shall have been asserted
against any Company, claims, whether accrued, absolute or contingent,
based on or arising from the generation, storage, transport, handling
or disposal of Hazardous Materials by any Company or any Affiliate, or
any predecessor in interest of any Company or any Affiliate, which
claims are reasonably likely to be determined adversely to any Company
and the amount of any such claim (insofar as it is payable by any
Company but after deducting any portion thereof which is reasonably
expected to be paid, discharged or forgiven by other creditworthy
Persons jointly and severally liable therefor), is, singly or in the
aggregate, reasonably likely to have a Material Adverse Effect.
9.2. Remedies. If any Event of Default occurs, the
Administrative Agent shall, at the request, or may, with the consent, of the
Required Lenders:
(a) declare the commitment of each Lender to make Loans and
the obligation of the L/C Lender to Issue Letters of Credit to be
terminated, whereupon such commitments and obligation shall be
terminated;
(b) declare an amount equal to the maximum aggregate amount
that is or at any time thereafter may become available for drawing
under any outstanding Letters of Credit (whether or not any beneficiary
shall have presented, or shall be entitled at such time to present, the
drafts or other documents required to draw under such Letters of
Credit) to be immediately due and payable, and declare the unpaid
principal amount of all outstanding Loans, all interest accrued and
unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Credit Agreement Loan
Parties;
(c) direct the Credit Agreement Loan Parties to pay (and the
Credit Agreement Loan Parties agree that upon receipt of such notice,
or upon the occurrence of an Event of Default specified in subsection
9.1(f) or (g) with respect to any Credit Agreement Loan Party, such
Credit Agreement Loan Party will pay) to the Applicable Agent at the
Agent's Payment Office such additional amount of cash, to be held as
security by the Administrative Agent, as is equal to the aggregate
undrawn face amount of all Letters of Credit issued for the account of
any Credit Agreement Loan Party and then outstanding; and
(d) exercise on behalf of the Administrative Agent and the
Lenders all rights and remedies available to the Administrative Agent
and the Lenders under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 9.1, the obligation of each Lender to make Loans and any
obligation of the L/C Lender to Issue Letters of Credit, shall automatically
terminate and the unpaid principal amount of all outstanding Loans and all
interest and other amounts as aforesaid shall automatically become due and
payable without further act of the Administrative Agent, the L/C Lender or any
other Lender.
9.3. Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.
<PAGE>
-136-
ARTICLE X.
THE AGENTS
10.1. Appointment and Authorization. (a) Each Lender hereby
irrevocably (subject to Section 10.9) appoints, designates and authorizes each
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
The Administrative Agent is expressly authorized to (A) execute and deliver, and
approve the form and substance of, all Security Documents on the Original
Closing Date and the Safeline Closing Date or any other time and take all
actions incidental or related thereto and to execute and deliver, and approve
the form and substance of, the Ratification Agreement (entered into on the
Amendment and Restatement Date or the Second Amendment and Restatement Date) and
each Intercreditor Agreement entered into in connection with any Lien granted
pursuant to subsection 8.1(u), (B) approve and agree with the Credit Agreement
Loan Parties each form of Exhibit to this Agreement modified or added in
connection with the amendments hereto effected on the Amendment and Restatement
Date and the Second Amendment and Restatement Date, (C) execute and deliver, and
approve the form and substance of, any release of all or part of security
comprised in any Security Document which is necessary to ensure no transaction
set forth on Schedule 1.8 (if and so long as such transactions are effected
substantially on the terms set forth on Schedule 1.8) results in a pledge of
more than 65% of the capital stock of Safeline Limited, and take all actions
incidental or related thereto, and (D) execute and deliver on behalf of the
Lenders and the Agents all documents necessary to release Collateral from the
Lien of the Loan Documents as and when permitted by Section 11.21.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, none of any Agent, the Arranger or any
Co-Agent shall have any duties or responsibilities except those expressly set
forth herein, nor shall any of any Agent, the Arranger or any Co-Agent have or
be deemed to have any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against any of any Agent, the Arranger or any Co-Agent or any of their
affiliates. The provisions of this Article X are solely for the benefit of the
Agents, the Arranger, the Co-Agents and the Lenders, and no Loan Party shall
have any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, each Agent shall act
solely as an Agent of the Lenders as provided for herein and no Agent assumes
and shall not be deemed to have assumed any obligation or relationship of agency
or trust with or for any Loan Party. None of the Documentation Agent, the
Arranger or any Co-Agent shall have any responsibilities under any Loan
Document, except as expressly set forth therein.
(b) The L/C Lender shall act on behalf of the Revolving
Facility Lenders with respect to any Letters of Credit Issued by it and the
documents associated therewith until such time and except for so long as the
Administrative Agent may agree at the request of the Required Lenders to act for
the L/C Lender with respect thereto; provided, however, that the L/C Lender
shall have all of the benefits and immunities (i) provided to the Administrative
Agent in this Article X with respect to any acts taken or omissions suffered by
the L/C Lender in connection with Letters of Credit Issued by it or proposed to
be Issued by it and the application and agreements for letters of credit
pertaining to the Letters of Credit as fully as if the term "Administrative
Agent," as used in this Article X, included the L/C Lender with respect to such
acts or omissions and (ii) as additionally provided in this Agreement with
respect to the L/C Lender.
(c) Each Swing Line Lender shall have all of the benefits and
immunities (i) provided to the Administrative Agent in this Article X with
respect to any acts taken or omissions suffered by such Swing
<PAGE>
-137-
Line Lender in connection with Swing Line Loans made or proposed to be made by
it as fully as if the term "Administrative Agent," as used in this Article X,
included the Swing Line Lenders with respect to such acts or omissions and (ii)
as additionally provided in this Agreement with respect to the Swing Line
Lenders.
10.2. Delegation of Duties. Each Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. No Agent shall be responsible
for the negligence or misconduct of any agent or attorney-in-fact that it
selects with reasonable care.
10.3. Exculpatory Provisions. None of any Agent, the Arranger,
any Co-Agent or any of their respective Affiliates shall (i) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Loan Document or under any other document or
instrument referred to or provided for herein or therein or the transactions
contemplated hereby or thereby (except for its own gross negligence or willful
misconduct), (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by any Loan Party or any
Subsidiary or Affiliate of any Loan Party, or any officer thereof, contained in
this Agreement or in any other Loan Document, under or in connection with, this
Agreement or any other Loan Document, or the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or any other document referred to or provided for herein or therein, or
for any failure of any Loan Party or any other party to any Loan Document to
perform its obligations hereunder or thereunder, (iii) except to the extent
that, with respect to any Agent, it is expressly instructed by the Lenders with
respect to collateral security under the Security Documents, be required to
initiate or conduct any litigation or collection proceedings hereunder or under
any other Loan Document or (iv) with respect to any Agent, be under any
obligation to take any action hereunder or under any other Loan Document if such
Agent believes in good faith that taking such action may conflict with any law
or any provision of any Loan Document, or may require such Agent to qualify to
do business in any jurisdiction where it is not then so qualified. None of any
Agent, the Arranger, any Co-Agent or any of their respective Affiliates shall be
under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party or any Subsidiary or Affiliate of any Loan
Party.
10.4. Reliance by Agents. (a) Each Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by or on behalf of
the proper Person or Persons, and upon advice and statements of legal counsel
(including counsel to any Loan Party or any Subsidiary), independent accountants
and other experts selected by any Agent. Each Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document, unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. Each Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other Loan
Document, in accordance with a request or consent of the Required Lenders, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 5.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with each
document or other matter either sent by any Agent to such Lender for consent,
approval,
<PAGE>
-138-
acceptance or satisfaction, or required thereunder to be consented to or
approved by or acceptable or satisfactory to the Lender.
10.5. Notice of Default. No Agent shall be deemed to have
knowledge or notice of the occurrence of any Event of Default or Unmatured Event
of Default, unless such Agent shall have received written notice from a Lender
or a Borrower referring to this Agreement, describing such Event of Default or
Unmatured Event of Default and stating that such notice is a "notice of
default." If an Agent receives such a notice, such Agent will notify the Lenders
of its receipt thereof. Each Agent shall take such action with respect to such
Event of Default or Unmatured Event of Default as may be requested by the
Required Lenders in accordance with Article IX; provided, however, that, unless
and until an Agent has received any such request, such Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Event of Default or Unmatured Event of Default as it shall deem
advisable or in the best interest of the Lenders except to the extent that this
Agreement expressly requires otherwise.
10.6. Credit Decision. Each Lender acknowledges that none of
any Agent, the Arranger, any Co-Agent or any of their respective Affiliates has
made any representation or warranty to it, and that no act by any Agent
hereafter taken, including any review of the affairs of any Loan Party, shall be
deemed to constitute any representation or warranty by any Agent, the Arranger,
any Co-Agent or any Lender. None of any Agent, the Arranger or any Co-Agent
shall be required to keep itself informed as to the performance or observance by
any Lender of this Agreement or any of the other Loan Documents or any other
document referred to or provided for herein or therein or to inspect the
properties or books of any Loan Party. Each Lender represents to each Agent, the
Arranger and the Co-Agents that it has, independently and without reliance upon
any Agent, the Arranger, any Co-Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, prospects, operations, property,
financial and other condition and creditworthiness of the Loan Parties, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit hereunder. Each Lender also represents that it will, independently and
without reliance upon any Agent, the Arranger, any Co-Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement or any other Loan Document, and
to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties. Except for notices, reports and other
documents and information expressly herein required to be furnished to the
Lenders by any Agent, none of any Agent, the Arranger or any Co-Agent shall have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of the Loan Parties which may come into
the possession of any Agent, the Arranger, any Co-Agent or any of their
respective Affiliates.
10.7. Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand
each Agent, the Arranger, the Co-Agents and each of their respective Affiliates
(to the extent not reimbursed by or on behalf of the Loan Parties in accordance
with the terms hereof and without limiting the obligation of the Borrowers to do
so), pro rata (determined on the same basis used in determining Required
Lenders), from and against any and all Losses which may at any time be imposed
on, incurred by or asserted against any Agent, the Arranger or any Co-Agent in
their respective capacity as such (including by any Lender) arising out of or by
reason of any investigation in any way relating to or arising out of this
Agreement or any other Loan Document, or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or the enforcement of any of the terms hereof or thereof or of any such other
documents; provided, however, that (A) no Lender shall be liable for the
<PAGE>
-139-
payment to, the Arranger or any Co-Agent or any of their respective Affiliates
of any portion of the Losses resulting from such Person's gross negligence or
willful misconduct and (B) no non-Canadian Lender shall have any obligation to
the Canadian Agent. Without limitation of the foregoing, each Lender shall
reimburse the Administrative Agent upon demand for its ratable share (determined
on the same basis used in determining Required Lenders) of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by such Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein or therein, to the extent that any Agent
is not reimbursed for such expenses by or on behalf of the Loan Parties. The
agreements set forth in this Section 10.7 shall survive the payment of all Loans
and other obligations hereunder and the resignation or replacement of any Agent
and shall be in addition to and not in lieu of any other indemnification
agreements contained in any other Loan Document.
10.8. Agents in Individual Capacity. Each Agent and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the Loan
Parties and Affiliates of the Loan Parties as though such Agent were not an
Agent hereunder, without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, an Agent and its Affiliates may
receive information regarding the Loan Parties or their Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Borrowers or such Affiliates) and acknowledge that no Agent or any of its
Affiliates shall be under any obligation to provide such information to them.
With respect to its Loans, an Agent (and any of its Affiliates which may become
a Lender) shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though it were not an Agent or the L/C
Lender. The terms "Lender" and "Lenders" shall, unless the context otherwise
indicates, include Agent in its individual capacity.
10.9. Successor Agents. Any Agent may, and at the request of
the Required Lenders shall, resign as an Agent upon 30 days' notice to the
Lenders and the Borrowers. If an Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor Agent, as
applicable, which successor agent shall, so long as no Event of Default exists,
be subject to the approval of the Borrowers (which approval shall not be
unreasonably withheld or delayed). If no successor agent is appointed prior to
the effective date of the resignation of an Agent, such Agent may appoint, after
consulting with the Lenders and the Borrowers, a successor agent, from among the
Lenders. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Agent, and the term "Administrative Agent," "Canadian Agent" or
"Documentation Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as such Agent shall be terminated. After the
retiring Agent's resignation hereunder as such Agent, the provisions of this
Article X and Section 11.4 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was such Agent under this Agreement. If no
successor agent has accepted appointment as the applicable Agent by the date
which is 30 days following the retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of such Agent hereunder until such
time, if any, as the Required Lenders appoint a successor agent as provided for
above. Each successor Agent shall comply with subsection 4.1(f).
10.10. Holders. Each Agent may deem and treat the payee of any
Note as the owner thereof for all purposes hereof unless and until a written
notice of the assignment, transfer or endorsement thereof, as the case may be,
shall have been filed with such Agent. Any request, authority or consent of any
Person or entity who, at the time of making such request or giving such consent,
is the holder of any Note shall be
<PAGE>
-140-
conclusive and binding on any subsequent holder, transferee, assignee or
indorsee, as the case may be, of such Note or of any Note or Notes issued in
exchange therefor.
10.11. Failure To Act. Except for action expressly required of
an Agent hereunder and under the other Loan Documents, each Agent shall in all
cases be fully justified in failing or refusing to act hereunder and thereunder
unless it shall receive further assurances to its satisfaction from the Lenders
of their indemnification obligations under Section 10.7 against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
ARTICLE XI.
MISCELLANEOUS
11.1. Amendments and Waivers. (a) Subject to Section 8.26, the
Administrative Agent, each Swing Line Lender affected thereby and the Credit
Agreement Loan Parties, without notice to or consent of any Lender or other
Agent, may (i) add additional Swing Line Lenders for the Subsidiary Swing Lone
Borrowers (with only the new Swing Line Lender being deemed affected thereby),
(ii) modify or amend the definition of Subsidiary Swing Line Borrowers,
including by naming additional Subsidiaries as Subsidiary Swing Line Borrowers,
or (iii) modify or amend the definition of the Subsidiary Swing Line Borrower
Sublimits or US Borrower Sublimit so long as the Dollar Equivalent amount
thereof on the date of such modification or amendment is not greater than the
Swing Line Commitment (with only the Swing Line Lender which lends to the
Subsidiary Swing Line Borrower whose sublimit is increased deemed affected
thereby); provided, however, that no additional currencies to be made available
to any Subsidiary Swing Line Borrower beyond that in effect on the Second
Amendment and Restatement Date or thereafter approved in accordance with this
Agreement may be effected pursuant to this sentence. No other amendment or
waiver of any provision of this Agreement or any other Loan Document, and no
consent with respect to any other departure by any Credit Agreement Loan Party
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by the Administrative Agent at the written request of
the Required Lenders) and the Credit Agreement Loan Parties and acknowledged by
the Administrative Agent, and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that (i) no such waiver, amendment or consent shall, unless
in writing and signed by all the affected Non-Defaulting Lenders (or by the
Administrative Agent at the written request of all the affected Non-Defaulting
Lenders) and the Credit Agreement Loan Parties and acknowledged by the
Administrative Agent, do any of the following: (A) extend the term of any of the
Commitments (it being understood that a waiver of any condition, covenant
violation, Event of Default or Unmatured Event of Default shall not constitute a
change in the terms of any Commitment of any Lender) or extend the time or waive
any requirement for the reduction or termination of any of the Commitments (or
reinstate any Commitment terminated pursuant to Section 9.2) or change the
currency in which any Loan or L/C Obligation is payable, except as expressly
permitted herein (provided that the consent of the Lenders whose Loans or
Commitments are being so changed (and none other) shall be required); (B) extend
the final scheduled maturity of any Loan or Note, or extend the expiration date
of any Letter of Credit beyond the Termination Date or postpone or delay any
date fixed for any payment of interest, fees or other amounts (other than
interim principal payments and any prepayment of the Term Loans as a result of
any of the events set forth in Section 2.7) due to the Lenders (or any of them)
under any Loan Document; (C) reduce the principal of, or the rate of interest
specified herein (other than as a result of waiving the applicability of any
post-default increase in interest rates) on, any Loan or (subject to clause (5)
below) any fees or other amounts payable under any Loan Document; (D) reduce the
percentage set forth in the definition of the term "Required Lenders", or
"Supermajority Lenders" (it being understood that additional extensions of
credit pursuant to this
<PAGE>
-141-
Agreement consented to by the Required Lenders may be included in the
determination of any such definition without notice or consent of any other
Lender or Agent on substantially the same basis as the Commitments (and related
extensions of credit) are included on the Second Amendment and Restatement
Date); (E) release any material portion of the Collateral (except as expressly
permitted by the Loan Documents), provided that from and after the Investment
Grade Date all of the Collateral may be released as provided in Section 11.21;
(F) amend this Section 11.1, Section 2.15, Article IV, or Section 11.4 or any
provision herein or under any Loan Document providing for consent or other
action by all Lenders; (G) release any Guarantor from its obligations under its
Guarantee (except upon a permitted sale of such Guarantor); or (H) consent to
the assignment or transfer by any Loan Party of its rights and obligations under
any Loan Document or the making of any assignment of Loans or other Obligations
or participation therein to any Loan Party or any Affiliate thereof; (ii) no
such waiver, amendment or consent shall increase the Commitments of any Lender
over the amount thereof then in effect without the consent of such Lender (it
being understood that amendments, modifications or waivers of conditions
precedent, covenants, Events of Default or Unmatured Events of Default shall not
constitute an increase of the Commitment of any Lender); (iii) no consent of any
Lender need be obtained, and the Administrative Agent is hereby authorized, to
release any Lien securing the Obligations on property which is the subject of
any disposition permitted by this Agreement and the other Loan Documents; (iv)
no reduction of the percentage specified in the definition of "Required
Revolving Facility Lenders" shall be made without the consent of each Revolving
Facility Lender (it being understood that additional extensions of credit
pursuant to this Agreement consented to by the Required Lenders may be included
in such definition without notice to or consent of any other Lender or Agent on
substantially the same terms as the Commitments (and related extensions of
credit) are included on the Closing Date); (v) no reduction of the percentage
specified in the definition of Required Canadian Lenders shall be made without
the consent of each Canadian Lender (it being understood that additional
extensions of credit pursuant to this Agreement consented to by the Required
Lenders may be included in such definition without notice to or consent of any
other Lender or Agent on substantially the same terms as the Commitments (and
related extensions of credit) all included on the Second Amendment and
Restatement Date); and (vi) no reduction of the percentage specified in the
definition of "Majority Lenders of the Affected Tranche" shall be made without
the consent of each Lender having a Term Loan Commitment or Term Loan (it being
understood that additional extensions of credit pursuant to this Agreement
consented to by the Required Lenders may be included in such definition without
notice to or consent of any other Lender or Agent on substantially the same
terms as the Commitments (and related extensions of credit) all included on the
Second Amendment and Restatement Date); provided, further, however, that (1) no
amendment, waiver or consent shall, unless in writing and signed by the L/C
Lender in addition to the Required Lenders or all Non-Defaulting Lenders, as the
case may be, affect the rights or duties of the L/C Lender under this Agreement
or any L/C-Related Document, (2) no amendment, waiver or consent shall, unless
in writing signed by each Swing Line Lender affected thereby in addition to the
Required Lenders or all Non-Defaulting Lenders, as the case may be, affect the
rights or duties of any Swing Line Lender under any Loan Document, (3) no
amendment, waiver or consent shall, unless in writing and signed by the
Applicable Agent in addition to the Required Lenders or all Non-Defaulting
Lenders, as the case may be, affect the rights or duties of the Applicable Agent
under any Loan Document, (4) no amendment, waiver or consent (including any of
the foregoing with respect to any representation, warranty, covenant, default or
other matter which is otherwise effective for purposes of this Agreement) shall,
unless in writing and signed by the (I) Required Revolving Facility Lenders, be
effective for determining whether the conditions precedent to any Credit
Extension under the Revolving Facility have been satisfied or (II) Required
Canadian Lenders, be effective for determining whether the conditions precedent
to any Credit Extension under the Canadian Facility have been satisfied, (5) the
Fee Letters may be amended, or rights or privileges thereunder waived, in
accordance with their respective terms, (6) no amendment, waiver or consent
shall, unless in writing signed by the Majority Lenders of the Affected Tranche,
in addition to the Required Lenders, (x) change the application of prepayments
under Section 2.7 as among the Term Loan Facilities or the order in which such
prepayments are applied to any such Facility
<PAGE>
-142-
(although any required prepayment under Section 2.7 may be waived or amended, in
whole or in part, by the Supermajority Lenders so long as the application of any
such prepayment which is still made is not altered) or (y) extend the time for
any scheduled Amortization Payments or reduce the principal amount of any
scheduled Amortization Payment, and (7) no amendment, waiver or consent shall,
unless in writing and signed by all Canadian Lenders in addition to the Required
Lenders or all Lenders, as the case may be, affect the rights or duties of the
Canadian Lenders under this Agreement or any other Loan Document; provided,
further, still, however, that no amendment, waiver or consent shall, unless in
writing signed by the Supermajority Lenders, amend, waive or consent to the
departure from any required prepayment under Section 2.7. In the case of any
waiver effected in accordance with this Section 11.1, the Loan Parties, the
Lenders and the Agents shall be restored to their former position and rights
under each Loan Document, and any Event of Default or Unmatured Event of Default
waived shall be deemed to be cured and not continuing; but no such waiver shall
extend to any subsequent or other Event of Default or Unmatured Event of
Default, or impair any right consequent thereon. Any amendment, waiver or
consent effected in accordance with this Section 11.1 shall be binding upon each
holder of the Notes at the time outstanding, each future holder of the Notes
and, if signed by the Credit Agreement Loan Parties, on the Credit Agreement
Loan Parties and the other Loan Parties.
(b) If, in connection with any proposed amendment, waiver or
consent to any of the provisions of this Agreement as contemplated by clauses
(i)(A)-(H), inclusive, of the first proviso to subsection 11.1(a), the consent
of the Required Lenders is obtained but the consent of one or more of such other
Lenders whose consent is required is not obtained, then the Credit Agreement
Loan Parties shall have the right to replace each such non-consenting Lender or
Lenders (so long as all non-consenting Lenders are so replaced) with one or more
Replacement Lenders pursuant to Section 4.8 so long as at the time of such
replacement each such Replacement Lender consents to the proposed amendment,
waiver or consent; provided, however, that the Credit Agreement Loan Parties
shall not have the right to replace a Lender solely as a result of the exercise
of such Lender's rights (and the withholding of any required consent by such
Lender) pursuant to clauses (ii), (iii) or (iv) of the first proviso of
subsection 11.1(a) or the second or third proviso to subsection 11.1(a).
11.2. Notices. (a) Except as otherwise expressly provided
herein, all notices, requests and other communications hereunder and under the
Security Documents (including any modifications of, or waivers, requests or
consents under, this Agreement) shall be in writing (including, unless the
context expressly otherwise provides, by facsimile transmission; provided,
however, that any matter transmitted by any Credit Agreement Loan Party (x) to
any Agent or any Applicable Swing Line Lender by facsimile shall be immediately
confirmed by a telephone call to the recipient at the number specified on
Schedule 11.2 and (y) to any Lender by facsimile shall be immediately confirmed
by a telephone call to the recipient at the number specified on Schedule 11.2 or
by overnight mail to the recipient at the address specified on Schedule 11.2)
and mailed, faxed or delivered to the applicable party at the address or
facsimile number specified for notices on Schedule 11.2 (which such facsimile
notices shall be confirmed by overnight mail); or, as directed to any Credit
Agreement Loan Party or any Agent or any Applicable Swing Line Lender, to such
other address as shall be designated by such party in a written notice to the
other parties, and as directed to any other party, at such other address as
shall be designated by such party in a written notice to the Credit Agreement
Loan Parties and the Agents and the Applicable Swing Line Lenders (it being
understood that these provisions with respect to any Applicable Swing Line
Lenders and any Subsidiary Swing Line Borrower to which it has agreed to make
Swing Line Loans shall apply only to such parties.)
(b) All such notices, requests and communications shall be
effective, (i) if transmitted by overnight delivery or faxed, when delivered or
transmitted in legible form by facsimile machine, respectively, (ii) if mailed,
upon receipt or (iii) if delivered, upon delivery; except that notices pursuant
to Article II, III or X
<PAGE>
-143-
to an Agent shall not be effective until actually received by such Agent, and
notices pursuant to Article III to the L/C Lender shall not be effective until
actually received by the L/C Lender.
(c) Any agreement of any Agent and the Lenders herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Credit Agreement Loan Parties. The Agents and the
Lenders shall be entitled to rely on the authority of any Person purporting to
be a Person authorized by a Credit Agreement Loan Party to give such notice, and
neither any Agent nor any Lenders shall have any liability to any Credit
Agreement Loan Party or any other Person on account of any action taken or not
taken by an Agent or any Lender in reliance upon such telephonic or facsimile
notice. The obligation of the Credit Agreement Loan Parties to repay the Loans
and L/C Obligations shall not be affected in any way or to any extent by any
failure by any Agent or any Lender to receive written confirmation of any
telephonic or facsimile notice or the receipt by the Administrative Agent or any
Lender of a confirmation which is at variance with the terms understood by such
Agent or such Lender to be contained in the telephonic or facsimile notice.
(d) All notices to the Canadian Agent shall also be sent
simultaneously to the Administrative Agent.
11.3. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of any Agent or any Lender, any right,
remedy, power or privilege hereunder or under any other Loan Document, and no
course of dealing between any Loan Party and any Agent or Lenders shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder or under any other Loan Document preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege hereunder or under such other Loan Document. The
rights and remedies expressly provided herein are cumulative and not exclusive
of any rights or remedies provided by law. No notice to or demand upon any Loan
Party in any case shall entitle any Loan Party to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
the Agents or the Lenders to any other or further action in any circumstance
without notice or demand.
11.4. Expenses, Indemnity, etc. Each Credit Agreement Loan
Party agrees: (a) to pay or reimburse the Agents for its proportionate share of
all of their reasonable out-of-pocket costs and expenses (including the
reasonable fees and expenses of Cahill Gordon & Reindel and of all local and
foreign counsel) in connection with (i) the negotiation, preparation, execution
and delivery of this Agreement and the other Loan Documents and the extensions
of credit hereunder, the administration of the transactions contemplated hereby
(including the monitoring of the Collateral) and the Arranger's syndication
efforts (including the Agents' due diligence investigation expenses) with
respect to this Agreement and (ii) the negotiation or preparation of any
modification, supplement or waiver of any of the terms of this Agreement or any
of the other Loan Documents (whether or not consummated or effective); (b) to
pay or reimburse each of the Lenders and each Agent for its proportionate share
of all reasonable out-of-pocket costs and expenses of the Lenders and each Agent
(including Attorney Costs of each Agent and the Lenders) in connection with (i)
protection of the Lenders' rights following any Event of Default and any
enforcement or collection proceedings resulting therefrom, including all manner
of participation in or other involvement with (x) bankruptcy, insolvency,
receivership, foreclosure, winding up, dissolution or liquidation proceedings,
(y) judicial or regulatory proceedings, and (z) workout, restructuring or other
negotiations or proceedings (whether or not the workout, restructuring or
transaction contemplated thereby is consummated), and (ii) the enforcement of
this Section 11.4; and (c) to pay or reimburse each of the Lenders and each
Agent for its proportionate share of all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or revenue
authority in respect of this Agreement or any of the other Loan Documents or any
other document referred to herein or therein and all costs, expenses, taxes,
assessments and other charges (including title insurance and Attorney Costs)
incurred in connection with any
<PAGE>
-144-
filing, registration, recording or perfection of any security interest
contemplated by any Loan Document or any other document referred to therein.
Subject to the limitations under Article IV, each Credit
Agreement Loan Party agrees, whether or not the transactions contemplated hereby
are consummated, to indemnify each Lender, each Agent, each Co-Agent and each of
their respective directors, officers, employees, attorneys, trustees and agents
(each, an "Indemnified Person") from, and hold each of them harmless against,
its proportionate share of any and all Losses incurred by any of them in
connection with any Proceeding (whether or not any Agent, any Co-Agent or any
Lender is a party thereto and whether or not brought by or on behalf of any Loan
Party or any other Person) arising out of or by reason of relating to any of the
Loan Documents, the extensions of credit hereunder or any actual or proposed use
by any Credit Agreement Loan Party or any Subsidiary of the proceeds of any of
the extensions of credit hereunder or the use of any collateral security for the
Loans (including the exercise by any Agent or any Lender of the rights and
remedies or any power of attorney with respect thereto and any action or
inaction in respect thereof), but excluding any such Losses to the extent
resulting from the gross negligence or bad faith of the Indemnified Person.
Without limiting the generality of the foregoing, each Credit Agreement Loan
Party agrees to (x) indemnify each Agent for any payments that any Agent is
required to make under any indemnity issued to any Lender referred to in any
Security Document, and (y) indemnify each Lender and each other Indemnified
Person from, and hold each Lender and each other Indemnified Person harmless
against, any Losses described in the preceding sentence (net of insurance
proceeds actually received but excluding, as provided in the preceding sentence,
any Loss to the extent resulting from the gross negligence or bad faith of such
Indemnified Person) arising under any Environmental Law based on or arising out
of (A) the past, present or future operations of either Borrower or any
Subsidiary (or any predecessor in interest to either Borrower or any
Subsidiary), (B) the past, present or future condition of any facility or
property owned, operated or leased at any time by either Borrower or any
Subsidiary (or any of their respective predecessors in interest), or (C) any
Release or threatened Release of any Hazardous Materials at, under or from any
such facility or property, including, without limitation, any such Release or
threatened Release that shall occur during any period when any Lender or other
Indemnified Person shall be in possession of any such facility or property
following the exercise by such Lender or other Indemnified Person of any of its
rights and remedies hereunder or under any of the Security Documents, and the
alleged disposal or alleged arranging for disposal or treatment of any Hazardous
Materials by either Borrower or any Subsidiary (or any of their respective
predecessors in interest) at any third-party site.
To the extent that the undertaking to indemnify and hold
harmless set forth in this Section 11.4 is unenforceable because it is violative
of any law or public policy or otherwise, each Credit Agreement Loan Party shall
contribute the maximum portion that each of them is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all indemnified
liabilities incurred by any of the Persons indemnified hereunder.
Each Credit Agreement Loan Party also agrees that no
Indemnified Person shall have any liability (whether direct or indirect, in
contract or tort or otherwise) for any Losses to any Loan Party or any Loan
Party's security holders or creditors resulting from, arising out of, in any way
related to or by reason of, any matter referred to in the second paragraph of
this Section 11.4, except to the extent that any Loss resulted from the gross
negligence or bad faith of such Indemnified Person.
In the event that any Indemnified Person is requested or
required to appear as a witness in any Proceeding brought by or on behalf of or
against any Loan Party or any affiliate of any Loan Party in which such
Indemnified Person is not named as a defendant, each Credit Agreement Loan Party
agrees to reimburse each Indemnified Person for all reasonable out-of-pocket
expenses and all reasonable allocable costs of in-house
<PAGE>
-145-
legal counsel incurred by each Indemnified Person in connection with such
Indemnified Person's appearing and preparing to appear as such a witness,
including the reasonable fees and disbursements of one common counsel for all
Indemnified Persons.
Each Credit Agreement Loan Party agrees that, without the
prior written consent of the Administrative Agent, the Arranger and the Required
Lenders, no Loan Party will settle, compromise or consent to the entry of any
judgment in any pending or threatened Proceeding in respect of which
indemnification could be sought under the indemnification provisions of this
Section 11.4 (whether or not any Indemnified Person is an actual or potential
party to such Proceeding), unless such settlement, compromise or consent
includes an unconditional written release reasonably satisfactory to the
Administrative Agent, the Arranger and the Required Lenders of each Indemnified
Person from all liability arising out of such Proceeding and does not include
any statement as to an admission of fault, culpability or failure to act by or
on behalf of any Indemnified Person and does not involve any payment of money or
other value by any Indemnified Person or any injunctive relief or factual
findings or stipulations binding on any Indemnified Person. No Indemnified
Person shall settle, compromise or consent to the entry of any judgment in any
pending or threatened Proceeding without the prior written consent of the
Borrowers, which consent shall not be unreasonably withheld or delayed.
11.5. Payments Pro Rata. Subject to Section 2.15, each
Applicable Agent agrees that promptly after its receipt of each payment from or
on behalf of any Loan Party in respect of any Obligations of such Loan Party, it
shall distribute such payment to the Lenders based upon their respective Pro
Rata Shares, if any, of the Obligations with respect to which such payment was
received.
11.6. Payments Set Aside. To the extent that a Credit
Agreement Loan Party makes a payment to an Applicable Agent or any Lender, or an
Applicable Agent or any Lender exercises its right of set-off, and such payment
or the proceeds of such set-off or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by an Applicable Agent or such Lender in
its discretion) to be repaid to a trustee, receiver, receiver manager or any
other party, in connection with any Insolvency Proceeding or otherwise, then (a)
to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred and (b)
each Lender severally agrees to pay to such Applicable Agent upon demand its pro
rata share of any amount so recovered from or repaid by such Applicable Agent.
11.7. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
11.8. Assignments and Participations, etc. (a) No Credit
Agreement Loan Party may assign its rights or obligations hereunder or under
the Notes without the prior written consent of all of the Lenders and the
Agents.
(b) Any Lender may, with the written consent of the Borrowers
and the Agents (and Scotiabank in its capacity as a Swing Line Lender and
Scotiabank in its capacity as an L/C Lender in the case of any assignment of
Revolving Facility Commitments) (which consent, in each case, shall not be
unreasonably withheld or delayed), at any time assign and delegate to one or
more Eligible Assignees (provided that, except with respect to any assignment of
a Revolving Note, which shall require the consent of the Borrowers as described
above, no written consent of the Borrowers, any Agent, any Swing Line Lender or
any L/C Lender shall be required in connection with any assignment and
delegation by a Lender to an Eligible Assignee that is
<PAGE>
-146-
an Affiliate of such Lender or to another Lender) (each an "Assignee") (in which
case, the Assignee and assignor Lenders shall give notice of the assignment to
the Agents) all or any part of the Loans, the Commitments, the L/C Obligations
and the other rights and obligations of such Lender hereunder, which assignment,
other than to a Lender or an Affiliate of a Lender, shall be in a minimum
(unless the Borrowers and the Agents agree to a lesser amount) Dollar Equivalent
amount of U.S. $5.0 million (or, in the case of any assignment of a portion of
the Canadian Commitment, a minimum amount of Cdn. $5.0 million) or, if less, the
entire amount of all Loans, the Commitments, L/C Obligations and other rights
and obligations of such Lender hereunder in any Facility; provided, however,
that (i) in no event may any such assignment be made to the Credit Agreement
Loan Parties or any of their Affiliates; (ii) the Credit Agreement Loan Parties
and the Agents may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until (x) written notice
of such assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to any Credit
Agreement Loan Party and the Agents by such Lender and the Assignee, (y) such
Lender and its Assignee shall have delivered to the Borrowers and the
Administrative Agent an Assignment and Acceptance in the form of Exhibit G
("Assignment and Acceptance") together with any Note or Notes subject to such
assignment, and (z) the assignor Lender shall have paid to the Administrative
Agent a processing fee in the amount of U.S. $3,000 (except that no such fee
shall apply to assignments by any Lender to any of its Affiliates); and (iii) no
Canadian Lender may assign any of its rights and obligations hereunder unless
arrangements satisfactory to Canadian Borrower and the Canadian Agent have been
made for one or more Lenders to act (or to cause their respective Affiliates to
act) as Canadian Lenders hereunder in the full amount of the Canadian Commitment
of such Lender. Notwithstanding any other term of this subsection 11.8(b), the
agreement of any Swing Line Lender to provide the Swing Line Commitment shall
not impair or otherwise restrict in any manner the ability of such Swing Line
Lender to make any assignment of its Loans or Commitments in accordance with the
provisions of this Section 11.8, it being understood and agreed that such Swing
Line Lender may terminate its Swing Line Commitment, either in whole or in part,
in connection with the making of any assignment; provided, however, that the
Assignee assumes the Swing Line Commitment of such Swing Line Lender. At the
time of each assignment pursuant to this subsection 11.8(b) to a Person which is
not already a Lender hereunder within the same Facility, the Assignee shall
provide to the Credit Agreement Loan Parties and the Agents the appropriate
forms and certificates described in subsection 4.1(f) (except to the extent
expressly provided otherwise). To the extent that an assignment of all or any
portion of a Lender's Commitments and related outstanding Obligations pursuant
to this subsection 11.8(b) would, at the time of such assignment, result in
increased costs payable to such assignee Lender under Section 4.1, 4.3 or 4.4
from those being charged by the respective assigning Lender prior to such
assignment, then no Credit Agreement Loan Party shall be obligated to pay such
increased costs (although the Credit Agreement Loan Parties shall be obligated
to pay any other increased costs of the type described above resulting from
changes after the date of the respective assignment). In connection with any
assignment it is agreed that, among other things, the imposition of any
withholding tax applicable at the time of assignment on payments to an Eligible
Assignee at the time of assignment or the inability of an Eligible Assignee to
provide Loans in any Offshore Currency in which Loans under the Facility being
assigned are made at the time of assignment (unless all Lenders are then so
unable) shall be reasonable grounds to withhold consent required from the
Borrowers; provided, however, that in connection with any assignment by a UK
Lender, the parties acknowledge that (i) in the case of an Eligible Assignee
that qualifies as a UK Qualifying Lender by reason of being a Treaty Lender, if
such Eligible Assignee shall have delivered a UK Certificate in compliance with
the provisions of Section 4.1(f)(viii)(C), the potential imposition of UK
withholding tax while such UK Certificate is being processed or considered by
the appropriate taxing authorities shall not be reasonable grounds for
withholding such consent, but (ii) the Borrowers shall have reasonable grounds
to withhold consent in the case of an assignment by a Treaty Lender to an
Eligible Assignee that is not a UK Qualifying Lender (including certain banks
which generally would qualify as UK Qualifying Lenders).
<PAGE>
-147-
(c) From and after the date that the Agents notify the
assignor Lender that they have received (and provided their consent and, to the
extent required, received the consents of the Credit Agreement Loan Parties and
the L/C Lender with respect to) an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights hereunder have been
assigned to it and obligations hereunder have been assumed by it pursuant to
such Assignment and Acceptance, shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assignor Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Loan Documents.
(d) Any Lender may at any time sell to one or more commercial
banks or other Persons that are not Affiliates of either Borrower (a
"Participant") participating interests in any Loan, the Commitment of such
Lender and the other interests of such Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Credit Agreement Loan Parties, the Swing Line
Lenders, the L/C Lender and the Agents shall continue to deal solely and
directly with the originating Lender in connection with the originating Lender's
rights and obligations under this Agreement and the other Loan Documents, and
(iv) no Lender shall transfer or grant any participating interest under which
the Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the extent
such amendment, consent or waiver would (1) extend the final scheduled maturity
of any Loan, Note or Letter of Credit (unless such Letter of Credit is not
extended beyond the Termination Date) in which such Participant is
participating, or reduce the rate or extend the time of payment of interest or
fees thereon (except in connection with a waiver of applicability of any
post-default increase in interest rates) or reduce the principal amount thereof,
or increase the amount of the Participant's participation over the amount
thereof then in effect (it being understood that a waiver of any condition,
covenant, violation, Event of Default or Unmatured Event of Default shall not
constitute a change in the terms of such participation, and that an increase in
any Revolving Facility Commitment or Revolving Facility Loan shall be permitted
without the consent of any Participant if the Participant's participation is not
increased as a result thereof), (2) consent to the assignment or transfer by any
Credit Agreement Loan Party of any of its rights and obligations under this
Agreement or (3) release all or substantially all of the Collateral under all of
the Security Documents (except as expressly provided in the Loan Documents)
supporting the Loans hereunder in which such Participant is participating. In
the case of any such participation, the Participant shall be entitled to the
benefit of Sections 2.15, 4.1, 4.3, 4.4, 4.6 and 11.4 as though it were also a
Lender hereunder (provided that the originating Lender and not any Credit
Agreement Loan Party shall be obligated to pay any amount under Section 4.1,
4.3, 4.4 or 4.6 to any Participant which is greater than a Credit Agreement Loan
Party would have been required to pay to the originating Lender if no such
participation had been sold), and if amounts outstanding under this Agreement
are due and unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, the Participant shall be
deemed to have the right of set-off in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. Each originating Lender shall indemnify and hold harmless each Credit
Agreement Loan Party and each Agent from and against any taxes, penalties,
interest and other costs and losses (including Attorney Costs) incurred or
payable by any Credit Agreement Loan Party or any Agent as a result of the
failure of any Credit Agreement Loan Party or any Agent to comply with its
obligations to deduct or withhold any Taxes from any payments made pursuant to
this Agreement to such Lender or any Agent, as the case may be, which Taxes
would not have been incurred or payable if such Participant had been a Lender
that had complied with the requirements of subsection 4.1(f) (including
subsection 4.1(f)(iii)).
<PAGE>
-148-
(e) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and any Note held by
it in favor of any U.S. Federal Reserve Bank in accordance with Regulation A and
any Operating Circular issued by such U.S. Federal Reserve Bank. No such
assignment shall release the assigning Lender from its obligations hereunder.
(f) Each Credit Agreement Loan Party shall and shall cause
each of its Subsidiaries to assist any Lender in effectuating any assignment or
participation pursuant to this subsection 11.8(f) (including during syndication)
in whatever manner such Lender reasonably deems necessary, including the
participation in meetings with prospective Assignees.
11.9. Confidentiality. (a) Each of the Lenders agrees that it
will use its reasonable efforts not to disclose without the prior consent of the
Borrowers (other than to its employees, auditors, counsel or other professional
advisors, to Affiliates or to another Lender if the Lender or such Lender's
holding or parent company in its sole discretion determines that any such party
should have access to such information) any information with respect to the
Borrowers or any of their Subsidiaries which is furnished pursuant to this
Agreement; provided, however, that any Lender may disclose any such information
(i) as has become generally available to the public, (ii) as may be required or
appropriate in any report, statement or testimony submitted to any municipal,
state, provincial or U.S. Federal or foreign regulatory body having or claiming
to have jurisdiction over such Lender or to the U.S. Federal Reserve Board or
the U.S. Federal Deposit Insurance Corporation or the NAIC or similar
organizations (whether in the United States or elsewhere) or their successors,
(iii) as may be required or appropriate in response to any summons or subpoena
or in connection with any litigation (provided that, where practicable, the
Borrowers shall be afforded prior notice thereof and a reasonable opportunity to
contest such summons or subpoena; it being understood, however, that the Agents
and Lenders shall be permitted in any event to comply with such summons or
subpoena), (iv) to comply with any law, order, regulation or ruling applicable
to such Lender, (v) to any prospective transferee in connection with any
contemplated transfer of any of the Notes or any interest therein by such
Lender; provided, however, that the transferring Lender shall use reasonable
efforts to procure that such prospective transferee (unless it is a Lender)
executes an agreement with such Lender containing provisions substantially
identical to those contained in this Section 11.9, and (vi) to any direct or
indirect contractual counterparties in swap agreements or such contractual
counterparties' professional advisors provided that such contractual
counterparty or professional advisor to such contractual counterparty agrees in
writing to keep such information confidential to the same extent required of the
Lenders hereunder.
(b) Each Credit Agreement Loan Party hereby acknowledges and
agrees that each Lender may share with any of its Affiliates any information
related to any Credit Agreement Loan Party or any of its Subsidiaries
(including, without limitation, any nonpublic customer information regarding the
creditworthiness of any Credit Agreement Loan Party and its Subsidiaries,
provided that such Persons shall be subject to the provisions of this Section
11.9 to the same extent as such Lender).
(c) Notwithstanding anything herein to the contrary, each
Credit Agreement Loan Party hereby acknowledges and agrees that each Lender may
share any information with respect to any Credit Agreement Loan Party or any of
its Subsidiaries furnished pursuant to this Agreement to any Person which shares
or bears, whether directly or indirectly, such Lender's economic benefits or
burdens hereunder; provided, however, that such Person shall be subject to the
provisions of this Section 11.9 to the same extent as such Lender.
<PAGE>
-149-
11.10. Set-off. In addition to any right or remedy of the
Lenders now or hereafter provided by law, and not by way of limitation of any
such right or remedy, during the continuance of an Event of Default such Lender
is authorized at any time and from time to time, without prior notice to any
Credit Agreement Loan Party, any such notice being waived by the Credit
Agreement Loan Parties to the fullest extent permitted by law, to set off and to
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing by, such Lender (including by branches and agencies of such Lender
wherever located) to or for the credit or the account of the applicable Credit
Agreement Loan Party against such amount, irrespective of whether or not any
Agent or such Lender shall have made demand under this Agreement or any Loan
Document, including all interests in Obligations of such Loan Party purchased by
such Lender pursuant to Section 2.19 and all other claims of any nature or
description arising out of or connected with any Loan Document, irrespective of
whether or not such Lender shall have made any demand hereunder and although
said Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured. Each Lender agrees promptly to notify the applicable Credit Agreement
Loan Party and the Agents after any such set-off and application made by such
Lender; provided, however, that the failure to give such notice shall not affect
the validity of such set-off and application.
11.11. Notification of Addresses, Lending Offices, etc. Each
Lender shall notify the Agents in writing of any change in the address to which
notices to such Lender should be directed, of addresses of any Lending Office,
of payment instructions in respect of all payments to be made to it hereunder
and of such other administrative information as the Agents shall reasonably
request.
11.12. Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which, when so executed, shall be
deemed an original, and all of which taken together shall be deemed to
constitute but one and the same instrument. Any of the parties hereto may
execute this Agreement by signing any such counterpart.
11.13. Severability; Modification To Conform to Law. It is the
intention of the parties that this Agreement be enforceable to the fullest
extent permissible under applicable law, but that the unenforceability (or
modification to conform to such law) of any provision or provisions hereof shall
not render unenforceable, or impair, the remainder hereof. If any provision of
this Agreement shall be held invalid or unenforceable in whole or in part in any
jurisdiction, this Agreement shall, as to such jurisdiction, be deemed amended
to modify or delete, as necessary, the offending provision or provisions and to
alter the bounds thereof in order to render it or them valid and enforceable to
the maximum extent permitted by applicable law, without in any manner affecting
the validity or enforceability of such provision or provisions in any other
jurisdiction or the remaining provisions hereof in any jurisdiction.
11.14. No Third Parties Benefitted. This Agreement is made and
entered into for the sole protection and legal benefit of the Credit Agreement
Loan Parties, the Lenders, the Agents and the Affiliates of the Agents, and
their permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any other Loan Document.
11.15. Governing Law; Submission to Jurisdiction; Venue. (a)
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE SET FORTH
THEREIN, BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW THEREOF. Any legal
action or proceeding with respect to this Agreement or any other Loan Document
may be brought in the courts of the
<PAGE>
-150-
State of New York or of the United States for the Southern District of New York
and, by execution and delivery of this Agreement, each Loan Party hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Loan Party
hereby further irrevocably waives any claim that any such courts lack
jurisdiction over such Loan Party, and agrees not to plead or claim, in any
legal action or proceeding with respect to this Agreement or any other Loan
Document brought in any of the aforesaid courts, that any such court lacks
jurisdiction over such Loan Party. Each Loan Party irrevocably consents to the
service of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such Loan Party, at
its address for notices pursuant to Section 11.2, such service to become
effective 30 days after such mailing. Each Loan Party hereby irrevocably waives
any objection to such service of process and further irrevocably agrees not to
plead or claim in any action or proceeding commenced hereunder or under any
other Loan Document that service of process was in any way invalid or in
effective. Nothing herein shall affect the right of any Agent, any Lender or the
holder of any Note to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any Loan Party in any
other jurisdiction.
(b) Each Credit Agreement Loan Party on its own behalf and
each Borrower on behalf of each other Loan Party hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid proceedings arising out of or in connection with this Agreement or
any other Loan Document brought in the courts referred to in clause (a) above
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such proceeding brought in any such court has been brought
in an inconvenient forum.
11.16. Waiver of Jury Trial. Each of the parties to this
Agreement hereby irrevocably waives all right to a trial by jury in any
proceeding or counterclaim arising out of or relating to this Agreement, any
other Loan Document or any of the transactions contemplated hereby or thereby.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
11.17. Judgment. If, for the purpose of obtaining judgment in
any court, it is necessary to convert a sum due hereunder or any other Loan
Document in one currency into another currency, the rate of exchange used shall
be that at which in accordance with normal banking procedures the Agent could
purchase the first currency with such other currency on the Business Day
preceding that on which final judgment is given. The obligation of each Credit
Agreement Loan Party in respect of any such sum due from it to the
Administrative Agent hereunder or under any other Loan Document shall,
notwithstanding any judgment in a currency (the "Judgment Currency") other than
that in which such sum is denominated in accordance with the applicable
provisions of this Agreement (the "Agreement Currency"), be discharged only to
the extent that on the Business Day following receipt by the Applicable Agent of
any sum adjudged to be so due in the Judgment Currency, such Agent may in
accordance with normal banking procedures purchase the Agreement Currency with
the Judgment Currency. If the amount of the Agreement Currency so purchased is
less than the sum originally due to the Applicable Agent in the Agreement
Currency, each Credit Agreement Loan Party agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Agent or the Person to whom
such obligation was owing against such loss. If the amount of the Agreement
Currency so purchased is greater than the sum originally due to the Applicable
Agent in such currency, such Agent agrees to return the amount of any excess to
the applicable Credit Agreement Loan Party (or to any other Person who may be
entitled thereto under applicable law).
11.18. Prior Understandings. This Agreement, together with
the other Loan Documents, embodies the entire agreement and understanding
among the Credit Agreement Loan Parties, the Lenders and the Agents, and
supersedes all prior or contemporaneous agreements and understandings of such
Persons, verbal
<PAGE>
-151-
or written, relating to the subject matter hereof and thereof, except that as
between the Loan Parties and the Arranger and the Agent the following shall
continue to remain in effect: (a) the Commitment Letter dated November [ ], 1997
between US Borrower and Merrill Lynch Capital Corporation (other than (A) the
Term Sheet (as defined in the Commitment Letter) and (B) the commitments of
Merrill Lynch Capital Corporation thereunder), and (b) the Fee Letters.
11.19. Survival. The obligations of the Credit Agreement Loan
Parties under Article IV and Sections 11.4, 11.15 and 11.16 shall survive the
repayment of the Loans and other Obligations and the termination of the
Commitments and, in the case of any Lender that may assign any interest in its
Commitments, Loans or Letter of Credit interest hereunder, shall survive the
making of such assignment, notwithstanding that such assigning Lender may cease
to be a "Lender" hereunder.
11.20. CH Foreign Subsidiary Mortgages. Notwithstanding
anything else herein to the contrary, after the Original Closing Date, in order
to reduce or eliminate the potential imposition of withholding taxes, at CH
Borrower's request, the Agent shall permit Mortgages with respect to Mortgaged
Properties securing any Foreign Subsidiary Guarantee to be released and to be
replaced by Mortgages in favor of CH Borrower securing intercompany indebtedness
owned from the applicable Foreign Subsidiary Guarantor to CH Borrower; provided,
however, that (i) such intercompany indebtedness is pledged by CH Borrower to
secure its Obligations hereunder pursuant to the Securities Pledge Agreement
entered into by CH Borrower and the documents evidencing such intercompany
indebtedness and such Mortgages are delivered to the Administrative Agent; (ii)
the Administrative Agent receives opinions of counsel satisfactory to the
Administrative Agent with respect to the validity, binding effect and
enforceability of such mortgages and the perfection of the security interest
created by such mortgages, which opinions of counsel shall be substantially
equivalent in form and substance to the opinions of counsel delivered with
respect to the Mortgages being replaced; and (iii) all other matters relating to
such transactions shall be in form and substance reasonably satisfactory to the
Administrative Agent and its counsel and the Loan Parties shall take all action
and execute all documents and instruments as are reasonably requested by the
Administrative Agent to provide for the security interest therein of the
Lenders. The Administrative Agent and the Lenders shall take all actions, at the
expense of the Borrowers, reasonably requested by the Borrowers to effect such
transactions.
11.21. Release of Collateral. From and after the Investment
Grade Date the Administrative Agent shall, at the request and sole expense of US
Borrower, take any action and execute all documents and instruments to effect
the release of the Lien of the Loan Documents on the Collateral.
11.22. Amendment of Security Documents. The parties hereby
agree that for any Security Document entered into on or after the Original
Closing Date securing Swap Obligations (as defined in any such Security
Document) pursuant to a Swap Contract, the term Swap Obligations shall include,
in addition to Swap Contracts entered into with any Lender, Swap Contracts
entered into with any Affiliate of any Lender. In any such Security Document,
the term Secured Parties shall include, in addition to Lenders, Affiliates of
any Lender who entered into Swap Contracts with US Borrower or any Subsidiary;
provided, however, that if such Security Document does not secure the
obligations, or a guarantee of the obligations, under this Agreement of US
Borrower, then in such case with respect to such Security Document no such
change shall be effected.
[Signature Pages Follow]
<PAGE>
S-1
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
METTLER-TOLEDO, INC. (the survivor of
the merger of MT Acquisition Corp.
and Mettler-Toledo, Inc.), as a Borrower
By: ____________________________________
Title:
METTLER-TOLEDO HOLDING AG,
as a Borrower
By: ____________________________________
Title:
M-T INTERNATIONAL INC.,
as Guarantor
By: ____________________________________
Title:
SAFELINE HOLDING COMPANY,
as UK Borrower and as a Subsidiary
Swing Line Borrower
By: ____________________________________
Title:
METTLER-TOLEDO INC.,
as Canadian Borrower
By: ____________________________________
Title:
<PAGE>
S-2
METTLER TOLEDO MANAGEMENT HOLDING
DEUTSCHLAND GMBH, as a Subsidiary Swing
Line Borrower
By:
----------------------------------------
Title:
METTLER-TOLEDO S.A., VEROFLAY,
as a Subsidiary Swing Line Borrower
By:
----------------------------------------
Title:
METTLER-TOLEDO K.K., TAKARAZUKA,
as a Subsidiary Swing Line Borrower
By:
----------------------------------------
Title:
METTLER-TOLEDO GMBH, GREIFENSEE,
as a Subsidiary Swing Line Borrower
By:
----------------------------------------
Title:
METTLER-TOLEDO LTD., LEICESTER,
as a Subsidiary Swing Line Borrower
By:
----------------------------------------
Title:
SAFELINE LIMITED,
as a Subsidiary Swing Line Borrower
By:
----------------------------------------
Title:
<PAGE>
S-3
MERRILL LYNCH & CO., MERRILL LYNCH,
PIERCE, FENNER & SMITH INCORPORATED,
as Arranger and Documentation Agent
By:
----------------------------------------
Title:
<PAGE>
S-4
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By:
----------------------------------------
Title:
THE BANK OF NOVA SCOTIA,
as Canadian Agent
By:
----------------------------------------
Title:
<PAGE>
S-5
CREDIT SUISSE FIRST BOSTON,
as Co-Agent
By:
----------------------------------------
Title:
<PAGE>
S-6
LEHMAN COMMERCIAL PAPER INC.,
as Co-Agent
By:
----------------------------------------
Title:
<PAGE>
METTLER-TOLEDO, INC. Annex A
The Bank of Nova Scotia Administrative Details:
For payment of principal, fees, or interest paid in the following currencies to
The Bank of Nova Scotia, please credit our accounts:
U.S. Dollar Denominated: at the U.S. Federal Reserve Bank of
New York, ABA# 026002532
For further credit to The Bank of Nova
Scotia, New York Agency, Account #
02086-12, Attention: Special Management
Account, Reference: Mettler Toledo
French Franc Denominated: Banque Francaise Du Commerce Exteriuer
For further credit to The Bank of Nova
Scotia London, Reference: Mettler
Toledo
Paris, France
Swift Code: BFCEFRPP
Pounds Sterling Denominated: The Bank of Nova Scotia London
For further credit to The Bank of Nova
Scotia London, Reference: Mettler
Toledo
33 Finsbury Square, London EC2A 1B8
Chaps 301661
Swift Code: LOYD GB 2L
Japanese Yen Denominated: Sanwa Bank Tokyo, Japan
For further credit to The Bank of Nova
Scotia London, Reference: Mettler
Toledo
Swift Code: SANWJPJT
Deutsche Mark Denominated: Deutsche Bank AG
For further credit to The Bank of Nova
Scotia London, Reference: Mettler
Toledo
Frankfurt, Germany
Swift Code: DEUTDEFF
Swiss Franc Denominated: Swiss Bank Corp.
For further credit to The Bank of Nova
Scotia London, Reference: Mettler
Toledo
Zurich, Switzerland
Swift Code: SBCOCHZZ80A
U.S. Account
Administrator:
The Bank of Nova Scotia Tilsa Cora
One Liberty Plaza, 26th Floor Tel: (212) 225-5044
New York, NY 10006 Fax: (212) 225-5145
CH Account
Administrator:
Scotiabank (U.K.) Ltd. Rick Bastiani
Scotia House
33 Finsbury Square Tel: (44-171) 826-5625
London, EC2A 1B8 Fax: (44-171) 638-8488
Primary Secondary
Credit Contact: Credit Contact:
The Bank of Nova Scotia Todd S. Meller Jerome Noto
One Liberty Plaza, 26th Floor Tel: (212) 225-5096 Tel: (212) 225-5146
New York, NY 10006 Fax: (212) 225-5090 Fax: (212) 225-5090
<PAGE>
SCHEDULE 1.1(b)
METTLER-TOLEDO, INC.
CALCULATION OF THE MLA COST
(a) MLA Cost for a Loan in Pounds Sterling is calculated in accordance
with the following formula:
BY - L(Y-X) + S(Y-Z) % per annum = MLA Cost
-----------------------
100 - (B+S)
where on the day of application of the formula:
B is the percentage of the Administrative Agent's eligible
liabilities which the Bank of England requires the
Administrative Agent to hold on a non-interest-bearing deposit
account in accordance with its cash ratio requirements;
Y is the rate at which deposits in Pounds Sterling are offered
by the Administrative Agent to leading banks in the London
interbank market at or about 11:00 a.m. on that day for the
relevant period;
L is the percentage of eligible liabilities which (as a result of
the requirements of the Bank of England) the Administrative
Agent maintains as secured money with members of the London
Discount Market Associates and/or in certain marketable or
callable securities approved by the Bank of England, which
percentage shall (in the absence of evidence that any other
figure is appropriate) be conclusively presumed to be 5%;
X is the rate at which secured deposits in Pounds Sterling may be
placed by the Administrative Agent with members of the London
Discount Market Association at or about 11:00 a.m. on that day
for the relevant period or, if greater, the rate at which bills
of exchange in Pounds Sterling (of a tenor equal to the
duration of the relevant period) eligible for rediscounting at
the Bank of England can be discounted in the London Discount
Market at or about 11:00 a.m. on that day;
S is the percentage of the Administrative Agent's eligible
liabilities which the Bank of England requires the
Administrative Agent to place as a special deposit; and
Z is the interest rate per annum allowed by the Bank of
England on special deposits.
(b) For the purposes of this Schedule 1.1(b):
(i) "eligible liabilities" and "special deposits" have the
meanings given to them at the time of application of the
formula by the Bank of England;
(ii) "relevant period" in relation to a Loan, means:
(A) if its Interest Period is three months or less, its
Interest Period; or
(B) if its Interest Period is more than three
months, three months.
<PAGE>
SCHEDULE 1.7(a)
METTLER-TOLEDO, INC.
<PAGE>
SCHEDULE 1.7(b)
METTLER-TOLEDO, INC.
<PAGE>
SCHEDULE 1.7(c)
METTLER-TOLEDO, INC.
<PAGE>
SCHEDULE 1.7(d)
METTLER-TOLEDO, INC.
<PAGE>
SCHEDULE 1.7(e)
METTLER-TOLEDO, INC.
<PAGE>
SCHEDULE 2.1
METTLER-TOLEDO, INC.
ALLOCATIONS
<PAGE>
SCHEDULE 2.1(c)
METTLER-TOLEDO, INC.
CANADIAN LENDERS AND PERCENTAGES
<PAGE>
SCHEDULE 8.2(i)(A)
METTLER-TOLEDO, INC.
- -------------------------------------------------------------------------------
Company/Description Square Meters Estimated value in U.S.
millions, before Selling
Costs and Taxes
- --------------------------------------------------------------------------------
Europe
Greifensee Noppenrief 28'050 (land) $13.0
494 EH 1'082 (land) 0.5
653 EH 0.4
Stata 11215/30 2,848 (land) 1.3
11035 0.2
buildings 1.5
Volketswil West 23'479 (land) 8.9
MT-D, Steinbach, Germany 6,460 (land) 2.6
MT-F, Conflans, France 4'584 (land + building) 0.3
North America
MT/MICO, Hightstown 121'005 (land + building) 4.0
SP, Inman 58'882 (land) 0.6
MT-CDN, Burlington 18'997 (land + building 2.0
- -------------------------------------------------------------------------------
<PAGE>
FORM OF AGREEMENT OF MERGER
AGREEMENT OF MERGER (this "Agreement"), dated as of
November ___, 1997, by and between MT Investors Inc., a Delaware corporation
(the "Company"), and Mettler-Toledo Holding Inc., a Delaware corporation
("Holding"). The Company and Holding are hereinafter sometimes collectively
called the "Constituent Corporations."
RECITALS
WHEREAS, the Board of Directors of each of the Constituent
Corporations deems it advisable and to the welfare and advantage of such
Constituent Corporation and its respective stockholders that the Constituent
Corporations merge under and pursuant to Section 251 of the General Corporation
Law of the State of Delaware into a single corporation, to wit, the Company
shall be the surviving corporation, and have approved this Agreement and the
merger contemplated hereby (the "Merger");
WHEREAS, the registered office of the Company in the State of
Delaware is located at Corporation Trust Center, 1209 Orange Street in the City
of Wilmington, County of New Castle, and the name of its registered agent at
such address is The Corporation Trust Company; and the registered office of
Holding in the State of Delaware is located at Corporation Trust Center, 1209
Orange Street in the City of Wilmington, County of New Castle, and the name of
its registered agent at such address is The Corporation Trust Company.
NOW, THEREFORE, the corporations, parties to this Agreement,
in consideration of the mutual covenants, agreements and provisions hereinafter
contained do hereby prescribe the terms and conditions of said merger and mode
of carrying the same into effect as follows:
ARTICLE 1.
THE MERGER
1.1. Surviving Corporation. In accordance with the provisions
of this Agreement and the applicable laws of the State of Delaware, at the
Effective Time (as defined in Section 1.2 hereof), Holding shall be merged with
and into the Company, and the Company shall be the surviving corporation (such
corporation in its capacity as such surviving corporation being hereinafter
sometimes called the "Surviving Corporation") and shall continue its corporate
existence and organization under the laws of the State of Delaware, and the
separate existence of Holding shall thereupon cease.
1.2. Effective Time. A certificate of merger in substantially
the form annexed hereto as Annex A (the "Certificate of Merger") shall be filed
with the Secretary
<PAGE>
of State of the State of Delaware by the Company to effect the Merger. The term
"Effective Time" shall mean the time at which the Certificate of Merger is filed
with the Secretary of State of the State of Delaware.
1.3. Certificate of Incorporation. At the Effective Time, the
form of Amended and Restated Certificate of Incorporation attached hereto as
Exhibit A shall become and constitute the Amended and Restated Certificate of
Incorporation of the Surviving Corporation until further amended or changed as
provided therein or by law.
1.4. Bylaws. At the Effective Time, the form of amended
Bylaws attached hereto as Exhibit B shall become and constitute the Bylaws of
the Surviving Corporation until amended or changed as provided therein or by
law.
1.5. Directors. The directors of the Company at the
Effective Time shall be and remain the directors of the Surviving Corporation
and each shall hold office until their respective successors are duly elected
and qualified.
1.6. Officers. The officers of the Company at the
Effective Time shall be and remain the officers of the Surviving Corporation
and shall hold office until their respective successors are duly elected or
appointed and qualified.
1.7. Effect of the Merger. The Surviving Corporation shall
succeed, without other transfer, to all the rights and property of Holding and
shall be subject to all the debts and liabilities thereof in the same manner as
if the Surviving Corporation had itself incurred them. All rights of creditors
and all liens put on the property of each of the Constituent Corporations shall
be preserved unimpaired.
1.8. Confirmatory Instruments. If any time after the Effective
Time the Surviving Corporation shall consider or be advised that any instruments
of further assurance are desirable in order to evidence the vesting in it of the
title of either of the Constituent Corporations to any of the property rights of
the Constituent Corporations, the appropriate officers or directors of either of
the Constituent Corporations, are hereby authorized to execute, acknowledge and
deliver all such instruments of further assurance and to do all other acts or
things, either in the name of the Company or in the name of Holding, as may be
requisite or desirable to carry out the provisions of this Agreement.
ARTICLE 2.
MANNER AND BASIS OF CONVERTING SECURITIES
2.1. Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of the Company,
Holding or the holders thereof:
(i) all of the issued and outstanding shares of
capital stock of Holding shall be canceled;
<PAGE>
(ii) each share of Class A Common Stock, par value
$.01, of Holding which are issued and outstanding immediately
prior to the Effective Time shall be converted into and
represent the right to receive 12.58392 shares of Common
Stock, $.01 par value, of the Surviving Corporation;
(iii) each share of Class B Common Stock, par value
$.01, of the Company which are issued and outstanding
immediately prior to the Effective Time shall be converted
into and represent the right to receive 12.58392 shares of
Common Stock, $.01 par value, of the Surviving Corporation;
and
(iv) each share of Class C Common Stock, par value
$.01, of the Company which are issued and outstanding
immediately prior to the Effective Time shall be converted
into and represent the right to receive 12.58392 shares of
Common Stock $.01 par value, of the Surviving Corporation.
At and after the Effective Time, all of the outstanding certificates which
immediately prior to the Effective Time represented shares of Class A Common
Stock, Class B Common Stock or Class C Common Stock of the Company shall be
deemed for all purposes to evidence ownership of, and to represent, shares of
Common Stock of the Surviving Corporation into which the shares of Class A
Common Stock, Class B Common Stock or Class C Common Stock of the Company
formerly represented by such certificates have been converted as herein
provided. The registered owner on the books and records of the Company of any
such outstanding stock certificate without taking any action shall, until such
certificate shall have been surrendered for transfer or otherwise accounted for
to the Surviving Corporation or its transfer agent, have and be able to exercise
any voting and all other rights with respect to and receive any dividend or
other distributions upon the Common Stock of the Surviving Corporation evidenced
by such outstanding certificate as provided.
2.2. Fractional Securities. No fractional shares shall be
issued by the Surviving Corporation as part of the merger consideration. Each
shareholder of the Company who otherwise would be entitled to a fractional
interest in a share of Common Stock of the Surviving Corporation shall receive
an amount of cash (without interest) equal to the market value of any fractional
share of Common Stock to which any person becomes entitled as a result of the
conversion ratio set forth herein. For such purpose, the market value of a share
of Common Stock shall be $___, or such other price as shall be set by the Board
of Directors of the Surviving Corporation.
<PAGE>
ARTICLE 3.
MISCELLANEOUS
3.1. Conditions. The consummation of the Merger is
subject to the following condition: approval of the Merger by the
stockholders of the Constituent Corporations as required by Delaware law.
3.2. Termination of Merger. Anything herein or elsewhere to
the contrary notwithstanding, this Agreement may be terminated and abandoned by
the board of directors of any Constituent Corporation at any time prior to the
date of filing the Certificate of Merger with the Secretary of State of the
State of Delaware. This Agreement may be amended by the boards of directors of
the Constituent Corporations at any time prior to the date of filing the
Certificate of Merger with the Secretary of State, provided that an amendment
made subsequent to the adoption of the Agreement by the stockholders of any
Constituent Corporation shall not (1) alter or change the amount or kind of
shares, securities, cash, property and/or rights to be received in exchange for
or on conversion of all or any of the shares of any class or series thereof of
such Constituent Corporation, (2) alter or change any term of the Certificate of
Incorporation of the Surviving Corporation to be effected by the merger, or (3)
alter or change any of the terms and conditions of this Agreement if such
alteration or change would adversely affect the holders of any class or series
thereof of such Constituent Corporation.
3.3. Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have caused
these presents to be executed by an authorized officer and attested by the
Secretary of each party hereto as the respective act, deed and agreement of each
of said corporations, on this day of November, 1997.
MT INVESTORS INC.
By___________________________
Name:
Title:
ATTEST:
By___________________________
Christine J. Smith
Secretary
METTLER-TOLEDO HOLDING INC.
By___________________________
Name:
Title:
ATTEST:
By___________________________
Christine J. Smith
Secretary
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
1997 AMENDED AND RESTATED
STOCK OPTION PLAN
ARTICLE 1
GENERAL
1.1 Purpose. The purpose of this Mettler-Toledo International Inc.
Stock Option Plan (the "Plan") is to provide for certain key employees and/or
directors of Mettler-Toledo International Inc., a Delaware corporation ("MTI"),
its successors and assigns and its subsidiaries and affiliates (MTI and such
other entities, collectively, the "Company"), an incentive (i) to join and/or
remain in the service of the Company, (ii) to maintain and enhance the long-term
performance and profitability of the Company and (iii) to acquire a proprietary
interest in the success of the Company. The grant and exercise of Options under
the Plan is intended to meet the requirements of Rule 16b-3 of the 1934 Act (as
hereinafter defined) at all times during which the Company and its Insiders (as
hereinafter defined) are subject to the requirements of Section 16 of the 1934
Act. The Options are intended to be "performance-based" compensation under
Section 162(m)(4)(C) of the Code at all times during which the deductibility of
compensation attributable to Options could be subject to the deduction
limitation of Section 162(m) of the Code.
1.2 Definition of Certain Terms.
(a) "Agreement" means an agreement issued pursuant to Section 2.1.
(b) "Board" means the Board of Directors of MTI.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Committee appointed to administer the
Plan in accordance with Section 1.3.
<PAGE>
(e) "Company" means MTI, a Delaware corporation, its successors
and assigns and its subsidiaries and affiliates.
(f) "Common Stock" means the shares of Common Stock, par value
$.01 per share, of MTI and, subject to Section 2.5, any other shares into
which such common stock shall thereafter be exchanged by reason of a
recapitalization, merger, consolidation, split-up, combination, exchange of
shares or the like. All shares of Class A common stock of MTI underlying
previous grants of Options will be deemed to be an equivalent number of shares
of Common Stock pursuant to this Plan.
(g) "Date of Grant" means the date as of which an Option is
granted by the Committee under an Agreement.
(h) "Fair Market Value" per share as of a particular date means
(i) the closing sales price per share of Common Stock on the national
securities exchange on which the Common Stock is principally traded for the last
date (including the Date of Grant) on which there was a sale of such Common
Stock on such exchange, or (ii) if the shares of Common Stock are not then
traded on a national securities exchange, the average of the closing bid and
asked prices for the shares of Common Stock in the over-the-counter market on
which the Common Stock is principally traded for the last date (including the
Date of Grant) on which there was a sale of such Common Stock in such market, or
(iii) if the shares of Common Stock are not then listed on a national securities
exchange or traded in an over-the-counter market, such value as the Committee,
in its sole discretion, shall determine.
(i) "Insider" means an insider as so defined for purposes of
Section 16 of the 1934 Act.
(j) "Option" means a "nonqualified" stock option, as described in
Section 1.5, granted under the Plan.
(k) "Optionee" means an employee or director of the Company who
has been awarded any Option under this Plan.
-2-
<PAGE>
(l) The terms "parent corporation" and "subsidiary corporation" as
used herein shall have the meaning given those terms in Code Section 424(e) and
(f), respectively. A corporation shall be deemed a parent or a subsidiary only
for such periods during which the requisite ownership relationship is
maintained.
(m) "Plan" means this Mettler-Toledo International Inc. 1997
Amended and Restated Stock Option Plan and any predecessor plan.
(n) "Termination With Cause," with respect to any Optionee, means
termination by the Company of such Optionee's employment or directorship for:
(i) misappropriation of corporate funds, (ii) conviction of a felony or a crime
involving moral turpitude, (iii) failure to comply with directions of the Chief
Executive Officer of the Company or other superiors of the Optionee or the Board
of Directors of the Company, or (iv) gross negligence or willful misconduct.
(o) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
1.3 Administration.
(a) Subject to Section 1.3(e), the Plan shall be administered by
a committee of the Board which shall consist of at least two members of the
Board and which shall have the power of the Board to authorize awards under the
Plan. At all times during which MTI and its Insiders are subject to the
requirements of Section 16 of the 1934 Act, all members of the Committee shall
be "Non-Employee Directors" as described in Rule 16b-3 of the 1934 Act. All
members of the Committee or a subcommittee thereof shall be "outside directors"
for purposes of Section 162(m) of the Code with respect to Optionees whose
compensation may be subject to the deductibility limitation of Section 162(m) of
the Code. The members of the Committee shall be appointed by, and may be changed
from time to time in the discretion of, the Board.
(b) The Committee shall have the authority (i) to exercise all of
the powers granted to it under the Plan, (ii) to construe, interpret and
implement the Plan and any Agreement executed pursuant to Section 2.1, (iii) to
prescribe, amend and rescind rules
-3-
<PAGE>
and regulations relating to the Plan, (iv) to make all determinations necessary
or advisable in administering the Plan, (v) to correct any defect, supply any
omission and reconcile any inconsistency in the Plan and (vi) to grant Options
on such terms, not inconsistent with the Plan, as it shall determine.
(c) The determination of the Committee on all matters relating to
the Plan or any Agreement shall be conclusive.
(d) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any award
thereunder.
(e) Notwithstanding anything to the contrary contained herein, the
Board may, in its sole discretion, at any time and from time to time, resolve to
administer the Plan. In such event, the term "Committee" as used herein shall be
deemed to mean the Board.
1.4 Persons Eligible for Awards. Awards under the Plan may be made
from time to time to such key employees and directors of the Company as the
Committee shall in its sole discretion select, provided, however, that subject
to Section 3.4, the Committee may not award Options to any such employee with
respect to more than 2,110,323 shares of Common Stock in any fiscal year
during the term of the Plan. The Committee may condition the grant of Options on
the prospective Optionee owning shares of Common Stock.
1.5 Types of Awards Under the Plan. Awards may be made under the Plan
in the form of stock options which shall be "nonqualified" stock options, all as
more fully set forth in Article 2.
1.6 Shares Available for Awards.
(a) Subject to Section 3.4 (relating to adjustments upon changes
in capitalization), as of any date the total number of shares of Common Stock
with respect to which Options may be granted under the Plan shall be equal to
the excess (if any) of (i) 4,258,122 shares over (ii) the sum of (A) the number
of shares subject to outstanding
-4-
<PAGE>
Options granted under the Plan and (B) the number of shares previously issued
pursuant to the exercise of Options granted under the Plan. In accordance with
(and without limitation upon) the preceding sentence, but subject to the
requirements of Rule 16b-3 of the 1934 Act, if applicable, shares of Common
Stock covered by Options granted under the Plan which expire or terminate for
any reason shall again become available for award under the Plan.
(b) Shares that are issued upon the exercise of Options awarded
under the Plan shall be authorized and unissued or treasury shares of Common
Stock.
(c) Without limiting the generality of the preceding provisions of
this Section 1.6, the Committee may, but solely with the Optionee's consent,
agree to cancel any award of Options under the Plan and issue new Options in
substitution therefor, provided that the Options as so substituted shall satisfy
all of the requirements of the Plan as of the date such new Options are awarded.
1.7 Option Price. Except as the Committee may otherwise provide, the
exercise price of each share of Common Stock subject to an Option shall not be
less than 100% of the Fair Market Value of a share of Common Stock as of the
Date of Grant.
ARTICLE 2
STOCK OPTIONS
2.1 Agreements Evidencing Stock Options.
(a) Options awarded under the Plan shall be evidenced by
Agreements which shall not be inconsistent with the terms and provisions of the
Plan, and which shall contain such provisions as the Committee may in its sole
discretion deem necessary or desirable. Without limiting the generality of the
foregoing, the Committee may in any Agreement impose such restrictions or
conditions upon the exercise of such Option or upon the sale or other
disposition of the shares of Common Stock issuable upon exercise of such Option
as the Committee may in its sole discretion determine. By accepting an
-5-
<PAGE>
award pursuant to the Plan each Optionee shall thereby agree that each such
award shall be subject to all of the terms and provisions of the Plan,
including, but not limited to, the provisions of Section 1.3(d).
(b) Each Agreement shall set forth the number of shares of Common
Stock subject to the Option granted thereby.
(c) Each Agreement relating to Options shall set forth
the amount payable by the Optionee to MTI upon exercise of the Option evidenced
thereby, subject to adjustment by the Committee to reflect changes in
capitalization as contemplated by Section 3.4.
2.2 Term of Options.
(a) Each Agreement shall set forth the period during which the
Option evidenced thereby shall be exercisable, whether in whole or in part, and
any vesting provisions applicable to the Option, such terms to be determined by
the Committee in its discretion.
(b) Each Agreement shall set forth such other terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem appropriate.
2.3 Exercise of Options. Subject to the provisions of this Article
2, each Option granted under the Plan shall be exercisable as follows:
(a) An Option shall become exercisable at such times and subject
to such conditions as the applicable Agreement or the Committee may provide.
(b) Unless the applicable Agreement otherwise provides, an Option
granted under the Plan may be exercised from time to time as to all or part of
the shares as to which such Option shall then be exercisable.
(c) An Option shall be exercised by the filing of a written
notice of exercise with MTI, on such form and in such manner as the Committee
shall in its sole discretion prescribe.
-6-
<PAGE>
(d) Any written notice of exercise of an Option shall be
accompanied by payment of the exercise price for the shares being purchased.
Except as the Committee may otherwise provide, such payment shall be made by
certified or official bank check payable to MTI (or the equivalent thereof,
including shares of Common Stock, as may be acceptable to the Committee). As
soon as practicable after receipt of such payment, MTI shall deliver to the
Optionee a certificate or certificates for the shares of Common Stock so
purchased.
2.4 Termination of Options.
(a) Notwithstanding anything to the contrary in this Plan, except
as the Agreement or the Committee may otherwise provide and as set forth in
Section 2.4(b) and Section 2.4(d), Options granted to an Optionee (and already
vested but not yet exercised) shall terminate on the date which is 45 days after
termination of his employment with the Company for any reason (other than death
or disability, in which case the Options shall terminate on the date which is
180 days after the date of such termination), which termination shall be deemed
to occur on the last day of Optionee's employment with the Company.
(b) Notwithstanding anything to the contrary in this Plan, all
Options granted to an Optionee shall immediately expire and cease to be
exercisable and all rights granted to an Optionee under this Plan and such
Optionee's Agreement shall immediately expire in the event of a Termination With
Cause of the Optionee by the Company at any time.
(c) Unless the applicable Agreement or the Committee expressly
provides otherwise, Options awarded to Optionees under the terms of the Plan
will be exercisable only in accordance with the following vesting schedule:
-7-
<PAGE>
Cumulative
Percentage of
Applicable Date Total Shares
--------------- -------------
On the first anniversary
of the Date of Grant 20%
On the second anniversary
of the Date of Grant 40%
On the third anniversary
of the Date of Grant 60%
On the fourth anniversary
of the Date of Grant 80%
On the fifth anniversary
of the Date of Grant 100%
The Committee may modify this vesting schedule in any manner that it deems
appropriate in any Agreement or otherwise, and may provide different vesting
schedules in different Agreements in its sole discretion. Except as set forth in
an Agreement or as the Committee in its sole discretion may determine, in the
event that an Optionee's employment with the Company is terminated for any
reason prior to the date on which the Optionee's right to exercise the Options
has fully vested pursuant to this Section 2.4(c), the Options will immediately
cease to be exercisable with respect to any and all shares which have not vested
as of the date of such termination.
2.5 In the event of a Non-Control Transaction (as hereinafter
defined), (A) all outstanding Options shall remain outstanding and subject to
the terms and conditions of the Plan, including the vesting schedule contained
in Section 2.4(c), and (B) each Optionee shall be entitled to receive in respect
of each share of Common Stock subject to the Option, upon exercise of such
Option after the vesting thereof, the same amount and kind of stock, securities,
cash, property or other consideration that each holder of a share of Common
Stock was entitled to receive in the Non-Control Transaction in respect of a
share. Unless otherwise determined by the Committee coincident with the grant of
an Option or subsequently, in the event of a Transaction (as hereinafter
defined), each outstanding Option shall vest, and, as of the date of the
-8-
<PAGE>
occurrence of the Transaction (the "Transaction Date"), the Company shall have
the right to cancel any or all Options which have not been exercised as of the
Transaction Date, subject to the payment of the purchase price described below.
The purchase price payable by the Company to the Optionee upon the cancellation
of each vested and non-vested but unexercised Option will be the Fair Market
Value of the Common Stock underlying each such Option determined as of the
Transaction Date less the aggregate exercise price of each such Option.
A "Transaction" shall mean the occurrence during the term of the Plan
of:
(a) An acquisition (other than directly from MTI) of any voting
securities of MTI (the "Voting Securities") by any "Person" (as the term person
is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of twenty percent (20%) or more of the then outstanding shares of
Common Stock or the combined voting power of MTI's then outstanding Voting
Securities; provided, however, in determining whether a Transaction has
occurred, shares of Common Stock or Voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Transaction. A "Non-Control Acquisition" shall
mean an acquisition by (i) an employee benefit plan (or a trust forming a part
thereof) maintained by (A) MTI or (B) any corporation or other Person of which a
majority of its voting power or its voting equity securities or equity interest
is owned, directly or indirectly, by MTI (for purposes of this definition, a
"Subsidiary"), (ii) MTI or its Subsidiaries, (iii) any Person in connection with
a "Non-Control Transaction" (as hereinafter defined), or (iv) AEA Investors Inc.
alone or in concert with any other Person;
(b) The individuals who, as of the effective date of the Plan,
are members of the Board of Directors of MTI (the "Incumbent Board"), ceasing
for any reason to constitute at least two-thirds of the members of the Board of
Directors; provided,
-9-
<PAGE>
however, that if the election, or nomination for election by MTI's common
stockholders, of any new director was approved by a vote of at least two-thirds
of the Incumbent Board, such new director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board; provided further, however, that
no individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board of Directors (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization with or into
MTI or in which securities of MTI are issued, unless such merger,
consolidation or reorganization is a "Non-Control Transaction."
A "Non-Control Transaction" shall mean a merger, consolidation or
reorganization with or into MTI or in which securities of MTI are issued where:
(A) the stockholders of MTI, immediately before such merger,
consolidation or reorganization, own directly or indirectly
immediately following such merger, consolidation or
reorganization, at least fifty and one-tenth percent (50.1%) of
the combined voting power of the outstanding voting securities of
the corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization,
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for
such
-10-
<PAGE>
merger, consolidation or reorganization constitute at least
two-thirds of the members of the board of directors of the
Surviving Corporation, or a corporation beneficially directly or
indirectly owning a majority of the Voting Securities of the
Surviving Corporation, and
(C) no Person other than (i) MTI, (ii) any Subsidiary, (iii)
any employee benefit plan (or any trust forming a part thereof)
that, immediately prior to such merger, consolidation or
reorganization, was maintained by MTI or any Subsidiary, or (iv)
AEA Investors Inc. alone or in concert with any other person, has
Beneficial Ownership of twenty percent (20%) or more of the
combined voting power of the Surviving Corporation's then
outstanding voting securities or its common stock.
(ii) A complete liquidation or dissolution of MTI; or
(iii) The sale or other disposition of all or substantially
all of the assets of MTI to any Person (other than a transfer to
a Subsidiary).
Notwithstanding the foregoing, a Transaction shall not be deemed to occur solely
because any Person (the "Subject Person") acquired Beneficial Ownership of more
than the permitted amount of the then outstanding shares of Common Stock or
Voting Securities as a result of the acquisition of shares of Common Stock or
Voting Securities by MTI which, by reducing the number of shares of Common Stock
or Voting Securities then outstanding, increases the proportional number of
shares Beneficially Owned by the Subject Persons, provided that if a Transaction
would occur (but for the operation of this sentence) as a result of the
acquisition of shares of Common Stock or Voting Securities by MTI, and after
such share acquisition by MTI, the Subject Person becomes the Beneficial Owner
of any additional shares of Common Stock or Voting Securities which increases
the percentage of the then outstanding shares of Common Stock or Voting
Securities Beneficially Owned by the Subject Person, then a Transaction shall
occur.
-11-
<PAGE>
2.6 Rule 16b-3. Notwithstanding anything in the Plan to the contrary,
the Plan shall be administered, and Options shall be granted and exercised, in
accordance with the 1934 Act and, specifically, Rule 16b-3 thereof.
ARTICLE 3
MISCELLANEOUS
3.1 Amendment of the Plan; Modification of Awards.
(a) The Board may, without stockholder approval, from time to
time suspend or discontinue the Plan or revise or amend it in any respect
whatsoever, provided that no such amendment shall adversely alter or impair any
rights or obligations under any award theretofore made under the Plan without
the consent of the person to whom such award was made, provided, further, that
an amendment (i) that increases the total number of shares of Common Stock with
respect to which Options may be granted under the Plan pursuant to Section
1.6(a) hereof (under than an increase pursuant to Section 3.4 hereof) or (ii)
which requires stockholder approval in order for the Plan to continue to comply
with any law, regulation or stock exchange requirement, shall not be effective
unless approved by the requisite vote of stockholders.
(b) With the consent of the Optionee and subject to the terms and
conditions of the Plan (including Section 3.1(a)), the Committee may amend
outstanding Agreements with such Optionee, for example, to (i) accelerate the
time or times at which an Option may be exercised or (ii) extend the scheduled
expiration date of the Option.
(c) The Plan amends and restates the existing MT Investors Inc.
Stock Option Plan.
(d) The validity and enforceability of any Options granted under
the Plan prior to any amendment thereof shall not be affected by any such
amendment.
-12-
<PAGE>
3.2 Nonassignability. Except as the Committee may otherwise provide,
no right granted to any Optionee under the Plan or under any Agreement shall be
assignable or transferable other than by will or by the laws of descent and
distribution. Except as the Committee may otherwise provide, during the life of
the Optionee, all rights granted to the Optionee under the Plan or under any
Agreement shall be exercisable only by him.
3.3 Withholding of Taxes.
(a) The Company shall be entitled to withhold from any payments
to an Optionee an amount sufficient to satisfy any federal, state and other
governmental tax required to be withheld in connection with an Option. Whenever
under the Plan an Option is granted or shares of Common Stock are to be
delivered upon exercise of an Option, the Company shall be entitled to require
as a condition of grant or delivery that the Optionee remit an amount sufficient
to satisfy all federal, state and other governmental tax withholding
requirements related thereto.
3.4 Adjustments Upon Changes in Capitalization. If and to the extent
specified by the Committee, the number of shares of Common Stock or other stock
or securities which may be issued pursuant to the exercise of Options granted
under the Plan and the exercise price of Options may be appropriately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from the subdivision or combination of shares of Common Stock or other
capital adjustments, or the payment of a stock dividend after the effective date
of this Plan, or other increase or decrease in the number of such shares of
Common Stock effected without receipt of consideration by MTI; provided,
however, that any Options to purchase fractional shares of Common Stock
resulting from any such adjustment shall be eliminated. Adjustments under this
Section 3.4 shall be made by the Committee, whose determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive.
3.5 Right of Discharge Reserved. Nothing in this Plan or in any
Agreement shall confer upon any employee or other person the right to continue
in the employment or
-13-
<PAGE>
service of the Company or affect any right which the Company may have to
terminate the employment or service of such employee or other person.
3.6 No Rights as a Stockholder. No Optionee or other person holding an
Option shall have any of the rights of a stockholder of MTI with respect to
shares subject to an Option until the issuance of a stock certificate to him for
such shares. Except as otherwise provided in Section 3.4, no adjustment shall be
made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) for which the
record date is prior to the date such stock certificate is issued.
3.7 Nature of Payments.
(a) Any and all payments of shares of Common Stock or cash
hereunder shall be granted, transferred or paid in consideration of services
performed by the Optionee for the Company.
(b) All such grants, issuances and payments shall constitute a
special incentive payment to the Optionee and shall not, unless otherwise
determined by the Committee or by local law, be taken into account in computing
the amount of salary or compensation of the Optionee for the purposes of
determining any pension, retirement, death or other benefits under (i) any
pension, retirement, life insurance or other benefit plan of the Company or (ii)
any agreement between the Company and the Optionee.
3.8 Non-Uniform Determinations.
The Committee's determinations under the Plan need not be uniform
and may be made by it selectively among persons who receive, or are eligible to
receive, awards under the Plan (whether or not such persons are similarly
situated). Without limiting the generality of the foregoing, the Committee shall
be entitled, among other things, to make non-uniform and selective
determinations, and to enter into non-uniform and selective Agreements, as to
(i) the persons to receive awards under the Plan, and (ii) the terms and
provisions of awards under the Plan.
-14-
<PAGE>
3.9 Other Payments or Awards. Nothing contained in the Plan shall be
deemed in any way to limit or restrict the Company or the Committee from making
any award or payment to any person under any other plan, arrangement or
understanding, whether now existing or hereafter in effect.
3.10 Restrictions.
(a) If the Committee shall at any time determine that any Consent
(as hereinafter defined) is necessary or desirable as a condition of, or in
connection with, the granting of any award under the Plan, the issuance or
purchase of shares or other rights thereunder or the taking of any other action
thereunder (each such action being hereinafter referred to as a "Plan Action"),
then such Plan Action shall not be taken, in whole or in part, unless and until
such Consent shall have been effected or obtained to the full satisfaction of
the Committee. Without limiting the generality of the foregoing, if (i) the
Committee is entitled under the Plan to make any payment in cash, Common Stock
or both, and (ii) the Committee determines that a Consent is necessary or
desirable as a condition of, or in connection with, payment in any one or more
of such forms, the Committee shall be entitled to determine not to make any
payment whatsoever until such Consent shall have been obtained in the manner
aforesaid.
(b) The term "Consent" as used herein with respect to any Plan
Action means (i) any and all listings, registrations or qualifications in
respect thereof upon any securities exchange or under any federal, state or
local law, rule or regulation, (ii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made and (iii) any and all consents,
clearances and approvals in respect of a Plan Action by any governmental or
other regulatory bodies.
-15-
<PAGE>
3.11 Section Headings. The section headings contained herein are for
the purposes of convenience only and are not intended to define or limit the
contents of said sections.
3.12 Interpretation. Unless expressly stated in the relevant
Agreement, each Option is intended to be performance-based compensation within
the meaning of Section 162(m)(4)(C) and the Committee shall interpret the Plan
accordingly.
3.13 Effective Date and Term of Plan.
(a) This Plan shall be adopted and become effective on November
19, 1997, subject to approval of the Plan by a majority of the voting
stockholders of MTI.
(b) The Plan shall terminate 10 years after its adoption by the
Board, and no awards shall thereafter be made under the Plan. Notwithstanding
the foregoing, all awards made under the Plan prior to the date on which the
Plan terminates shall remain in effect until such awards have been satisfied or
terminated in accordance with the terms and provisions of the Plan.
-16-
<PAGE>
MT INVESTORS INC.
FORM OF PARTICIPANTS' SUBSCRIPTION AGREEMENT
--------------------------------------------
AGREEMENT made as of [Date] by and among MT INVESTORS INC., a Delaware
corporation (the "Corporation"), and each of the persons, corporations,
partnerships and other entities whose names are subscribed hereto
("Subscribers").
WHEREAS, each of the Subscribers has heretofore entered into a
Commitment Agreement (individually, a "Commitment Agreement," and collectively,
the "Commitment Agreements") with AEA Advisers Inc., in which such Subscriber
agreed to invest in equity ownership interests in the amounts and at the times
called upon (a "Call"); and
WHEREAS, a Call has been made under the Commitment Agreements
for the parties thereto to purchase up to a maximum of 1,200,000 shares of Class
A Common Stock of the Corporation at $100 per share; and
WHEREAS, the authorized capital stock of the Corporation is
being increased to 2,233,117 shares of Class A Common Stock (the "Class A
Stock"), 10,000 shares of Class B Common Stock (the "Class B Stock") and 532,859
shares of Class C Common Stock (the "Class C Stock"), with the respective terms
and provisions set forth in the proposed form of Restated Certificate of
Incorporation and the amendment thereto, which, together with the By-Laws of the
Corporation, are attached hereto as Exhibit A; and
WHEREAS, the Corporation intends to issue and sell (i) 95,000
shares of Class A Stock, 500 shares of Class B Stock and 26,643 shares of Class
C Stock to Ciba-Geigy AG pursuant to a subscription agreement (the "Ciba
Subscription Agreement"), (ii) 455,000 shares of Class A Stock and 130,001
shares of Class C Stock to certain other investors pursuant to subscription
agreements (the "Investors' Subscription Agreements"), (iii) approximately
53,489 shares of Class A Stock and approximately 15,282 shares of Class C Stock
to members of senior management of Mettler-Toledo (as defined below) or any of
its affiliates, pursuant to subscription agreements (the "GMC Subscription
Agreements") and (iv) approximately 94,157 shares of Class A Stock and
approximately 26,902 shares of Class C Stock to other employees of
Mettler-Toledo, or any of its affiliates, pursuant to subscription agreements
(the "Employee Subscription Agreements," and, together with the Ciba
Subscription Agreement, the Investors' Subscription Agreements and the GMC
Subscription Agreements, the "Other Subscription Agreements"); and
WHEREAS, the Corporation desires to issue and sell to the
Subscribers, and the Subscribers desire to purchase, pursuant to this Agreement
in fulfillment of the Call, 1,200,000 shares of the Class A Stock, the proceeds
of which, together with the proceeds and other consideration from the sale of
shares of the Class A Stock and the Class C Stock pursuant to the Other
Subscription Agreements, will be contributed to Mettler-Toledo Holding Inc., a
Delaware corporation and a direct wholly-owned subsidiary of the Corporation
("Holding"), which may in turn contribute such proceeds to MT Acquisition Corp.,
a Delaware corporation and an indirect wholly-owned subsidiary of the
Corporation ("Acquisition") or an assignee of Holding or Acquisition, which will
enable Holding, Acquisition or such assignee to acquire all of the outstanding
capital
<PAGE>
stock or other equity interests and certain indebtedness of the entities
comprising the Mettler-Toledo Group (collectively, "Mettler-Toledo") of AG Fur
Prazisionsinstrumente Greifensee, Switzerland ("Seller"), pursuant to that
certain Stock Purchase Agreement, dated as of April 2, 1996, among Seller,
Ciba-Geigy AG and the Corporation (the "Purchase Agreement"); and
WHEREAS, the Corporation intends to reserve 333,117 shares of
the Class A Stock for stock options or other incentive arrangements for certain
members of management of Mettler-Toledo or its affiliates;
NOW, THEREFORE, the parties agree as follows:
Section 1. Agreement to Sell and Purchase Securities. The
Corporation agrees to sell to each Subscriber, and each Subscriber subscribes
and agrees to pay for, upon the terms and conditions hereinafter set forth, that
number of shares of the Class A Stock set forth on the Investment Confirmation
Form attached hereto, at a purchase price of $100 per share. The shares of the
Class A Stock to be purchased by the Subscribers pursuant to this Agreement are
hereinafter sometimes referred to as the "Shares."
Section 2. Payment for Shares.
(a) Each Subscriber, promptly after executing this Agreement,
will make payment for the Shares being purchased by such Subscriber by
delivering to The Bank of Nova Scotia Trust Company of New York, as Agent for
the Corporation (the "Agent"), pursuant to an Agency Agreement, a copy of which
is attached hereto as Exhibit B (the "Agency Agreement"), funds in the full
amount of the purchase price of the Shares being purchased by such Subscriber.
Each Subscriber, by executing this Agreement, approves and agrees to the
provisions of the Agency Agreement and authorizes the delivery by the
Corporation of such Subscriber's Shares by insured or registered mail or other
means selected by the Corporation in its sole discretion.
(b) In the event the acquisition of Mettler-Toledo pursuant to
the Purchase Agreement is not consummated for any reason, the Corporation will
cancel this Agreement and refund to the Subscriber the full amount paid for the
Shares purchased by such Subscriber.
Section 3. Representations and Warranties by the Corporation.
The Corporation represents and warrants to the Subscribers that:
(a) The Corporation has not carried on any business or had any
revenues or income, and does not have any liabilities of any nature whatsoever,
except for (i) the expenses which it has paid or incurred in connection with its
incorporation, organization and financing, and for legal and audit services and
any other miscellaneous expenses incident to its pre-operating period; (ii) the
transactions under the Other Subscription Agreements; and (iii) liability
relating to the acquisition of Mettler-Toledo.
(b) The Corporation has delivered a copy of the confidential
memorandum entitled "Executive Summary Concerning the Acquisition of the
Entities Comprising the Mettler-Toledo Group by MT Investors Inc. - September
1996" (the "Memorandum") and the Preliminary Prospectus, dated September 16,
1996, which forms a part of the Registration Statement on Form S-1 filed by
Acquisition and Holding with the Securities and Exchange Commission with respect
to the offering of debt securities of Acquisition, to each of the Subscribers.
-2-
<PAGE>
(c) The Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority for the transactions contemplated by
this Agreement.
(d) In addition to the shares of the Class A Stock being
purchased pursuant to this Agreement and the shares of the Class A Stock, the
Class B Stock and the Class C Stock being purchased pursuant to the Other
Subscription Agreements, the only other shares of any class of stock of the
Corporation which are and/or will be outstanding at the date of issuance of the
Shares are 9,500 shares of the Class B Stock and 333,358 shares of the Class C
Stock, all of which have been duly and validly issued for nominal consideration.
All of the outstanding shares of the Class B Stock will be owned by AEA and its
management employees and Ciba-Geigy AG and all of the outstanding shares of the
Class C Stock as of the date of issuance of the Shares will be owned by AEA,
stockholders and management employees of AEA or their associates and the
subscribers under the Other Subscription Agreements.
(e) The Corporation has full power and authority to enter into
this Agreement, and to issue and deliver the Shares and to incur and perform the
obligations provided for herein, all of which have been duly authorized by all
necessary corporate action. The execution and performance of this Agreement does
not, and the issuance of the Shares will not, violate any provision of any
applicable law or the Restated Certificate of Incorporation or the By-Laws of
the Corporation or any agreement or instrument by which it is bound and will not
result in the creation of any encumbrance or charge upon any of its assets. This
Agreement constitutes the valid and legally binding obligation of the
Corporation, enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or by general equitable
principles.
(f) Shares of the Class A Stock, when issued and delivered
pursuant to this Agreement, will be validly issued, fully paid and
non-assessable.
(g) Except as described in the Preliminary Prospectus, there
is no action, proceeding or investigation pending or, to the knowledge of the
Corporation, threatened, nor is there any basis, to its knowledge, for any
action, proceeding or investigation, against it or any of its properties or
assets.
Section 4. Representations and Warranties of Subscribers.
Each Subscriber for himself represents, warrants and agrees that:
(a) Such Subscriber is acquiring the Shares to be acquired by
him hereunder for his own account, for investment and not with a view to the
sale or distribution thereof, nor with any present intention of distributing or
selling the same; subject, nevertheless, to any requirement of law that the
disposition of property shall at all times be within such Subscriber's control.
(b) Such Subscriber will not sell, assign, transfer, pledge or
otherwise dispose of any of the Shares acquired by him hereunder unless and
until the same are registered under the Securities Act of 1933, as amended (the
"Securities Act"), and any applicable state securities law, or an exemption from
such registration is available, and until the Corporation shall have received a
written opinion of counsel to the Corporation that the disposition is in
compliance with the requirements of the Securities Act and any applicable state
securities law.
-3-
<PAGE>
(c) Such Subscriber has read, reviewed and is familiar with
the Memorandum, this Agreement and the exhibits attached hereto. The Subscriber
acknowledges that the Corporation has offered to provide the Subscriber with
such additional information about the business and financial condition of the
Corporation, Mettler-Toledo and the transaction described in the Memorandum and
the Purchase Agreement, as the Subscriber may deem advisable or appropriate.
(d) Such Subscriber acknowledges and agrees that the Shares
will contain an appropriate legend restricting the transfer thereof. The Shares
are not registered under the Securities Act, and except as expressly provided in
Section 7 of this Agreement, the Subscriber will have no right to require such
registration and must bear the economic risk of the Subscriber's investment for
an indefinite period of time. There is not now and there may never be any public
market for the Shares, and the Subscriber cannot now and may never be able to
avail himself of the benefits of Rule 144 adopted by the Securities and Exchange
Commission with respect to the resale of the Shares.
(e) Such Subscriber has the full legal right and power and all
authority and approval required to enter into, execute and deliver this
Agreement and to perform fully his obligations hereunder. This Agreement has
been duly executed and delivered and is the valid and binding obligation of the
Subscriber enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or by general equitable
principles. The execution and delivery of this Agreement and the performance by
the Subscriber of this Agreement in accordance with its terms and conditions
will not (i) require the approval or consent of any other person, including
without limitation the approval or consent of any governmental or regulatory
body; or (ii) conflict with or result in any breach or violation of any of the
terms and conditions of, or constitute (or with notice or lapse of time or both
constitute) a default under, any statute, regulation, order, judgment or decree
applicable to such Subscriber, or any instrument, contract or other agreement to
which such Subscriber is a party or by or to which such Subscriber is bound or
subject.
Section 5. Opinion of Counsel. Each Subscriber shall receive,
with the stock certificate for the Shares being purchased by such Subscriber, an
opinion from Christine J. Smith, Esq., General Counsel of AEA, to the effect
that:
(i) The Corporation is duly organized, validly existing and
in good standing under the laws of the State of Delaware, and
has all requisite corporate power and authority for the
transactions contemplated by this Agreement;
(ii) The Shares to be issued hereunder, when they shall have
been issued and sold pursuant to this Agreement, will have
been validly issued and will be outstanding, fully paid and
non-assessable;
(iii) The Corporation has full power and authority to enter
into this Agreement, to issue and deliver the Shares and to
incur and perform the obligations to be incurred and
performed by it, all as provided for herein;
(iv) This Agreement has been duly authorized by the
Corporation and has been duly executed and delivered by it
and, assuming due authorization, execution and delivery of
this Agreement by each of the Subscribers, is a legal, valid
and binding
-4-
<PAGE>
obligation of it, enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally or by general
equitable principles and except that no opinion is expressed
with respect to indemnification for securities law
liabilities;
(v) Based upon the representations contained herein and
information furnished by the Corporation and by subscribers
to the Corporation's stock, it is not necessary, in
connection with the offer, sale and delivery of the Shares
pursuant to this Agreement to register the Shares under the
Securities Act as then in effect;
(vi) The execution and performance of this Agreement does
not, and the issuance by the Corporation of the Shares will
not, either with the giving of notice or lapse of time or
both, violate the Restated Certificate of Incorporation or
the By-Laws of the Corporation or any agreement or
instrument, known to such counsel, by which it is bound and
will not result in the creation of any encumbrance or charge
upon any of its assets; and
(vii) To the knowledge of such counsel, there is no action,
proceeding or investigation pending or threatened against the
Corporation or any of its properties or assets.
Section 6. Books, Records and Reports.
(a) The Corporation shall cause to be kept on an appropriate
basis, and each stockholder of the Corporation shall have access to, appropriate
books, records and accounts. The books and records of the Corporation shall each
be audited as of the end of each calendar year by a firm of independent public
accountants of national standing selected by the Corporation.
(b) Within 90 days of the end of each fiscal year, the
Corporation shall mail to each of its stockholders a report setting forth an
audited balance sheet as at the end of such fiscal year and audited statements
of income and source and use of funds for such fiscal year of the Corporation,
and any other information the Corporation deems necessary or desirable. The
Corporation will furnish quarterly financial statements to its stockholders as
requested.
(c) The Corporation also will furnish to each of its
stockholders such other information as such stockholder may from time to time
reasonably request.
Section 7. Registration of Shares.
7.01 Legend on Securities. Each stock certificate evidencing
Shares issued pursuant to this Agreement, including any such stock certificates
representing shares issued to subsequent transferees, shall (unless otherwise
permitted by this Agreement) be stamped or otherwise imprinted with a legend or
legends in substantially the following form:
"The securities represented hereby have not been
registered under the Securities Act of 1933 and may not be
sold, assigned, transferred, pledged or otherwise disposed of
except in compliance with the requirements of such Act and
until the Corporation shall
-5-
<PAGE>
have received the written opinion of counsel to the
Corporation to that effect."
"The securities represented hereby are subject to
restrictions on transfer contained in a Subscription
Agreement, a copy of which is on file at the office of AEA
Investors Inc."
Each stock certificate evidencing any of the Shares described
above in this Section 7.01 which bears the legend set forth above is hereinafter
in this Section 7 referred to as a "Restricted Certificate."
7.02 Transfers. Each holder of a Restricted Certificate, by
acceptance thereof, agrees, prior to any offer to sell, sale or other
disposition of part or all of the securities evidenced by such Restricted
Certificate, to give written notice to the Corporation of such holder's
intention to effect such sale or other disposition. Each such notice shall
describe the manner and circumstances of the proposed sale or other disposition
in sufficient detail and may be accompanied by an opinion of counsel to such
holder. Promptly upon receipt of such notice, the Corporation shall present a
copy thereof (together with any accompanying opinion of counsel to such holder)
to its counsel, and the following provisions shall apply:
(a) If, in the opinion of counsel to such holder, satisfactory
in form and substance to the Corporation and its counsel, or if such notice was
not accompanied by an opinion of counsel to such holder, then, if, in the
opinion of counsel to the Corporation, the proposed sale or other disposition
may be effected without registering the securities involved under the Securities
Act, such holder shall be entitled to transfer such securities in accordance
with the terms of the notice delivered to the Corporation. The Corporation will
advise such holder, within 10 business days after submission of such notice,
whether such holder is entitled to so transfer the securities. If such holder is
entitled to so transfer, he shall submit the Restricted Certificate to the
Corporation in proper form for transfer and accompanied by appropriate
instruments of transfer. Such Restricted Certificate shall also be accompanied
by an undertaking in writing by the transferee to be bound by all the terms of
this Agreement. Each Restricted Certificate thus transferred (and each of the
stock certificates evidencing any untransferred balance of the securities
evidenced by such Restricted Certificate) shall bear the restrictive legend set
forth in Section 7.01 above, unless, in the opinion of both such counsel (or
counsel to the Corporation if such holder did not present an opinion of his
counsel), such legend is not required by the applicable provisions of the
Securities Act; and
(b) If in the opinion of either of such counsel (or counsel to
the Corporation if such holder did not present an opinion of his counsel), the
proposed sale or other disposition cannot be effected without registering the
securities involved under the Securities Act, such holder shall not offer to
sell, sell or otherwise dispose of such securities unless and until such
securities have been registered under the Securities Act for such purpose or an
exemption becomes available.
7.03 Registrations Under the Securities Act.
(a) All shares which at the time are evidenced by Restricted
Certificates and all other shares of the Class A Stock, the Class B Stock and
the Class C Stock which at the time are evidenced by stock certificates bearing
restrictive legends substantially similar to those set forth in Section 7.01
above pursuant to Subscription Agreements which contain or are subject to
provisions substantially similar to this Section 7.03 are hereinafter in this
Section 7 referred to collectively as "Restricted Securities." As soon as
practicable after receipt by the Corporation of each Qualified Request (as
defined in
-6-
<PAGE>
subparagraph (i) below) from one or more holders of Restricted
Securities to register under the Securities Act part or all of the Restricted
Securities held by such holder or holders, the Corporation will cause a
Registration Statement on Form S-1 (or on Form S-2 or Form S-3 if either such
form can be used) under the Securities Act, or any comparable form then in
force, to be filed and shall use its best efforts to cause the Registration
Statement to become effective, subject to the following:
(i) If no securities of the Corporation theretofore
have been sold pursuant to a Registration Statement under the
Securities Act, a Qualified Request shall be a written
request or requests to the Corporation from one or more
persons who hold Restricted Securities evidencing securities
which aggregate at least 51% of the sum of all outstanding
shares of the Class A Stock, the Class B Stock and the Class
C Stock which are then Restricted Securities. After
securities of the Corporation first have been sold pursuant
to a Registration Statement under the Securities Act, a
Qualified Request shall be a written request or requests to
the Corporation from one or more persons who hold Restricted
Securities evidencing securities which aggregate at least 25%
of the sum of all outstanding shares of the Class A Stock,
the Class B Stock and the Class C Stock which are then
Restricted Securities, and which have an estimated value of
no less than $5,000,000;
(ii) The Corporation shall give written notice to
all other holders of Restricted Securities of its intention
to file such a Registration Statement at least 10 days prior
to the filing thereof, and if requested in writing by any
such holder within 5 days after receipt of such notice, the
Corporation will include in such Registration Statement any
Restricted Securities held by such holder;
(iii) If such Registration Statement is for a
prospective underwritten offering and in the opinion of the
prospective underwriters the inclusion of all of the
securities requested by holders of Restricted Securities
would be detrimental to the prospective offering, the
Corporation may reduce the amount of securities to be
included from all holders who requested to be included. In
making such reduction, the Corporation shall include in the
Registration Statement for each holder requesting inclusion
the same proportion of his total holdings at that time of
securities of the Corporation which are Restricted Securities
as each other holder who requested inclusion;
(iv) The Corporation shall be required to include in
any such Registration Statement only those Restricted
Securities as to which (x) in the opinion of counsel to the
Corporation or to the holder thereof, registration of the
securities proposed to be sold or otherwise disposed of under
the Securities Act is required as a matter of law for such
sale or other disposition, or (y) the holder advises the
Corporation in writing that prospective underwriters believe
that in order to effect the proposed disposition of the
securities, registration is desirable even if not legally
necessary;
(v) The Corporation shall not be required to file
any such Registration Statement within six months after the
effective date of
-7-
<PAGE>
any earlier Registration Statement pursuant to this Section
7.03(a) or the comparable provisions of the Other
Subscription Agreements or any other agreements relating to
any of the Restricted Securities, nor shall it be required to
file a total of more than three Registration Statements
pursuant to this Section 7.03(a) or the comparable provisions
of the Other Subscription Agreements or any other agreements
relating to any of the Restricted Securities;
(vi) Securities to be offered by the Corporation or
by persons other than holders of Restricted Securities shall
not be included in any such Registration Statement unless the
holder or holders initially requesting such registration
shall consent thereto;
(vii) The Corporation will pay the expense of such
registration, except that each holder of Restricted
Securities whose securities are included in such registration
shall pay all underwriting discounts and commissions
applicable to his securities and all legal fees and expenses
of his own counsel, if any; and
(viii) If the Corporation is, at the time it
receives such Qualified Request, filing or is about to file a
Registration Statement for an offering of its securities and
the Board of Directors of the Corporation reasonably believes
that such offering would be adversely affected by the
registration requested, the Corporation shall be entitled to
postpone the filing of any such requested Registration
Statement until 90 days after the effective date of the
Registration Statement for the Corporation's offering.
(b) In the event that at any time while Restricted Securities
are outstanding, the Corporation proposes to file a Registration Statement under
the Securities Act registering shares of its stock of any class on a form other
than Form S-8 or Form S-18, it will give written notice to each holder of
Restricted Securities at least 30 days prior to the date of filing of the
proposed Registration Statement. Upon written request by any such holder within
15 days after receipt of such notice, the Corporation will include in the
securities to be registered by such Registration Statement all of the securities
of the Corporation that such holder desires to sell, subject to the following:
(i) The Corporation will pay the expense of such
registration, except that each holder of Restricted
Securities whose securities are included in such registration
shall pay all underwriting discounts and commissions
applicable to his securities and all legal fees and expenses
of his own counsel, if any; provided that if the expense of
such registration is being borne by a person other than the
Corporation, each holder of Restricted Securities whose
securities are included in such registration shall pay his
pro rata share of the incremental expense of his securities
being included in such registration;
(ii) The Corporation shall have received an opinion
of counsel to such holder or of counsel to the Corporation
stating that registration under the Securities Act of the
securities proposed to be sold or otherwise disposed of by
the holder is required as a matter of law; and
-8-
<PAGE>
(iii) If such Registration Statement is for a
prospective underwritten offering, the holder agrees to sell
his securities, if the Corporation so requests, on the same
basis as the other securities covered by such Registration
Statement are being sold. The Corporation may withdraw any
such Registration Statement before it becomes effective or
postpone the offering of securities contemplated by such
Registration Statement without any obligation to the holder
of any Restricted Securities. If such Registration Statement
is for a prospective underwritten offering by the Corporation
for its own account and in the opinion of the prospective
underwriters or the Corporation the inclusion in the
Registration Statement of part or all of the securities
requested by the holder or holders of Restricted Securities
would be detrimental to the prospective offering, the
Corporation may (x) reduce the amount of securities to be
included from all holders who requested to be included (in
making such reduction, the Corporation shall include in the
Registration Statement for each holder requesting inclusion
the same proportion of his total holdings at that time of
Restricted Securities as each other holder who requested
inclusion) or (y) refuse to include any securities held by
any or all such holders, in which case it need not give the
notice referred to in the first sentence of this Section 7.03 (b).
(c) In connection with any Registration Statement filed
pursuant to (a) or (b) of this Section 7.03, the Corporation shall file any
post-effective amendment or amendments to the Registration Statement which may
be required under the Securities Act during the period reasonably required to
effect the distribution contemplated thereby, provided that the Corporation
shall not be required to file any post-effective amendment to any Registration
Statement described in (a) or (b) of this Section 7.03 more than 90 days after
the effective date of the Registration Statement.
(d) During the period for which the Corporation is required to
file and keep effective a Registration Statement pursuant to this Agreement, the
Corporation shall furnish each selling securityholder with the number of copies
of the Registration Statement (including exhibits) and Prospectuses that he
reasonably requests for the purposes contemplated by the Securities Act. The
Corporation shall notify each selling securityholder selling securities covered
by such Registration Statement during the period such Registration Statement is
required to remain effective, or at any time when a Prospectus relating thereto
is required to be delivered under the Securities Act, of the happening of any
event as a result of which the Registration Statement or the Prospectus
contained in such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing. Each selling securityholder agrees,
upon receipt of such notice, forthwith to cease making offers and sales of such
securities pursuant to such Registration Statement or deliveries of the
Prospectus contained therein for any purpose and to return to the Corporation
the copies of such Prospectus not theretofore delivered by such selling
securityholder. Subject to Section 7.03(c) above, at the request of such selling
securityholder, the Corporation shall prepare and furnish to such selling
securityholder a reasonable number of copies of any supplement to or an
amendment of such Prospectus that may be necessary so that, as thereafter
delivered to the purchaser of such shares, such Prospectus shall not include any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing. The Corporation shall promptly
notify all selling securityholders of any stop order or similar proceeding
-9-
<PAGE>
initiated by State or Federal regulatory bodies and, subject to Section 7.03(c)
above, use its best efforts to take all necessary steps expeditiously to remove
such stop order or similar proceeding.
(e) As a condition to the Corporation's obligation under (a),
(b) and (c) of this Section 7.03 to cause the Registration Statement or an
amendment to be filed or shares to be included in the Registration Statement,
the holder of any Restricted Securities which are to be included in such
Registration Statement shall provide such information and execute such documents
(including any agreement or undertaking relating to expenses, indemnification or
other matters contemplated by this Agreement) as may reasonably be required by
the Corporation in connection with such registration.
(f) Any distribution of securities registered pursuant to this
Agreement shall be made in an orderly manner and without undue disruption of any
then existing market for securities of the Corporation.
(g) Notwithstanding the foregoing, in connection with any
Registration Statement provided for in this Agreement, the Corporation shall not
be obligated to furnish any audited financial statements other than the audited
financial statements customarily prepared at the end of its fiscal year or to
furnish any unaudited financial information with respect to any period other
than interim quarterly periods, unless the holder or holders whose securities
are to be included in such Registration Statement undertake to pay the
additional cost to the Corporation for such financial statements or financial
information.
(h) After the first Registration Statement under the
Securities Act for any securities of the Corporation shall have become
effective, the Corporation will use its best efforts to file in timely fashion
all reports required to be filed by it pursuant to the Securities Exchange Act
of 1934 and, upon the request of any holder of Restricted Securities, to furnish
such holder such information as may be necessary to enable him to effect sales
of his securities pursuant to Rule 144 of the Securities and Exchange
Commission, as such rule may from time to time be amended or supplemented.
(i) As expeditiously as possible after the effectiveness of
any Registration Statement provided for in this Section 7.03, the Corporation
will deliver in exchange for any stock certificate evidencing securities so
registered, new stock certificates not bearing the legend set forth in Section
7.01 of this Agreement. In the event that any of such securities remain unsold
when such Registration Statement ceases to be effective, the stock certificates
not bearing such legend evidencing such unsold securities shall be delivered to
the Corporation in exchange for stock certificates with such legend.
7.04 Other Matters.
(a) State Securities Laws. In connection with the offering of
any securities registered pursuant to this Section 7, the Corporation shall use
its best efforts to qualify or register the securities to be sold under the
securities or "Blue Sky" laws of such jurisdictions as may be reasonably
requested by the holder of any securities so registered; provided, however, that
the Corporation shall not be obligated to qualify as a foreign corporation to do
business under the laws of any such jurisdiction in which it is not then
qualified or to file any general consent to service of process. The expense of
such qualification or registration shall be borne by the party or parties
bearing the expenses of the related registration under the Securities Act.
(b) Earnings Statement. The Corporation will, at its first
quarterly reporting date at which it can do so, make generally available to its
securityholders an
-10-
<PAGE>
earnings statement covering a period of at least twelve
months beginning after the effective date of each Registration Statement
including any Restricted Securities.
7.05 Indemnification. In connection with any registration of
securities pursuant to this Agreement, to the extent permitted by law, the
Corporation shall indemnify the offering securityholders and the offering
securityholders shall indemnify the Corporation in the manner provided in this
Section 7.05:
(a) The Corporation shall indemnify and hold harmless each
offering securityholder, each officer and each director, if any, of such
offering securityholder, each underwriter, if any, for the sale or distribution
of such offering securityholder's securities, and each person, if any, who
controls such offering securityholder or underwriter within the meaning of the
Securities Act, against all losses, claims, damages or liabilities, joint or
several, to which such offering securityholder, officer, director, underwriter
or controlling person may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement,
Prospectus or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
and, subject to Section 7.05(c) of this Agreement, the Corporation shall
reimburse each offering securityholder, officer, director, underwriter and
controlling person, for any legal or other expenses reasonably incurred by such
offering securityholder, officer, director, underwriter or controlling person,
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Corporation shall not be
required to indemnify and hold harmless or reimburse an offering securityholder,
officer, director, underwriter or controlling person, as the case may be, to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission in any document made in reliance upon and in conformity with
written information furnished to the Corporation by or on behalf of such
offering securityholder, officer, director, underwriter or controlling person
for use in the preparation of such documents.
(b) Each offering securityholder shall indemnify and hold
harmless the Corporation, each of its directors and officers, each person, if
any, who controls the Corporation within the meaning of the Securities Act, and
each other offering securityholder against all losses, claims, damages or
liabilities to which the Corporation or any such director or officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue or alleged untrue statement
of any material fact contained in any Registration Statement, Prospectus or any
amendment or supplement thereto, or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case, to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Corporation by and on behalf of such
offering securityholder for use in the preparation thereof; and subject to
Section 7.05(c), such offering securityholder shall reimburse the Corporation or
any such director or officer, offering securityholder or controlling person for
any legal or other expenses reasonably incurred by the Corporation or any such
director or officer or offering securityholder or controlling person in
connection with investigating or defending against any such loss, claim, damage,
liability or action; provided, however, that the maximum amount of liability in
respect of such indemnification shall be limited, in the case of any such
offering securityholder, to an amount equal to the net proceeds
-11-
<PAGE>
actually received by such offering securityholder from the sale of securities
effected pursuant to such registration.
(c) Promptly after receipt by an indemnified party under (a)
or (b) above of notice of the commencement of any action, the indemnified party
shall notify the indemnifying party. The failure to so notify the indemnifying
party shall relieve it from any liability hereunder with respect to the action
but not for any other liability which it may have to any other party. In case
any such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to assume and control the defense of the action at its expense and if
the indemnifying party gives notice to such indemnified party of its election to
assume and control the defense, the indemnifying party will not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense or investigation of the
action.
7.06 Standby.
(a) Each holder of Restricted Securities agrees that, with
respect to any Registration Statement under the Securities Act that the
Corporation may file (other than on Form S-8), such holder will not sell any
securities of the Corporation (whether or not such securities are Restricted
Securities, and however acquired) other than securities, if any, of such holder
included in such Registration Statement, for a period of at least 5 days before,
and until 90 days after, the date such Registration Statement is declared
effective, provided that notice of the proposed and actual effective dates of
such Registration Statement has been given to such holder.
(b) The Corporation agrees that any registration rights that
it may grant with respect to its securities subsequent to the date of this
Agreement (other than in the Other Subscription Agreements and securities issued
pursuant to employee stock option plans) will provide that upon receipt of a
request from a holder or holders of Restricted Securities pursuant to Section
7.03(a) of this Agreement, the Corporation shall not be obligated to file a
Registration Statement under the Securities Act at the request of any holder or
holders of subsequently issued securities of the Corporation until at least 90
days after the date on which the Registration Statement filed pursuant to
Section 7.03(a) of this Agreement becomes effective.
7.07 Mergers, Etc. The Corporation agrees that, as a condition
to any merger, consolidation or the sale of all or substantially all of its
assets in exchange for securities of another company, it will use its best
efforts to require the surviving, consolidated or purchasing corporation to
enter into an agreement to register the securities of such surviving,
consolidated or purchasing corporation, to be received by the holders of
Restricted Securities, on substantially the same terms and provisions as are
provided in this Agreement.
7.08 Assignment. The registration rights contained in this
Agreement shall be transferable by a Subscriber or transferee of a Subscriber to
any person who acquired Restricted Securities from such Subscriber or transferee
(including any pledgee but excluding any person who acquires such shares in a
transaction with respect to which a Registration Statement under the Securities
Act is effective at the time or in a sale complying with Regulation A or Rule
144 of the Securities and Exchange Commission), provided that such person agrees
to be bound by the terms and provisions of this Agreement.
7.09 Class B Stock and Class C Stock. The Corporation will
obtain from each holder of outstanding shares of the Class B Stock and the Class
C Stock who is not a
-12-
<PAGE>
party to this Agreement or the Other Subscription
Agreements a written agreement to be bound by all of the provisions of this
Section 7, whereupon each such holder shall be entitled to all of the rights and
benefits of a holder of Restricted Securities under this Section 7.
Section 8. Fees. The Corporation will pay, and save each
Subscriber harmless against all liability for the payment of, (i) all costs and
expenses incurred by the Corporation in connection with the preparation of this
Agreement and the Memorandum, the issue and sale of the Shares pursuant to this
Agreement and the Corporation's performance of and compliance with all other
agreements and conditions contained herein on its part to be performed or
complied with; and (ii) the Corporation's delivering to each Subscriber by mail,
insured as to the value thereof, the Shares purchased by such Subscriber. The
Corporation further agrees that it will pay, and will save each Subscriber
harmless from, any and all liability with respect to any stamp or similar taxes
(other than transfer taxes) which may be determined to be payable in connection
with the execution and delivery of this Agreement or any modification, amendment
or alteration of the terms and provisions of this Agreement, and that it will
similarly pay and hold each Subscriber harmless from all issue taxes in respect
of the issuance of the Shares.
Section 9. Survival of Representations, Warranties and
Agreements. All representations, warranties and agreements contained in this
Agreement shall survive the execution hereof and the delivery of the Shares.
Section 10. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be signed by the Corporation and
one or more Subscribers and all of which shall be deemed to be one and the same
agreement binding upon the Corporation and each of the Subscribers.
Section 11. Notices. All notices hereunder shall be in writing
and shall be deemed to have been duly given if delivered in person or by
registered or certified mail, return receipt requested, to the Corporation at
its principal place of business, or to the Subscribers at the addresses set
forth opposite their respective names below or such other address as any such
Subscriber shall have given to the Corporation for such purpose. Notice shall be
deemed to have been effectively given when mailed by certified mail, return
receipt requested, to the proper address or delivered in person.
Section 12. Changes. The terms and provisions of this
Agreement may not be modified or amended, or any of the terms or provisions
hereof waived, except pursuant to the written consent of the Corporation and
Subscribers for Shares for which the purchase price represents more than 50% of
the aggregate purchase price of all Shares for which subscriptions under this
Agreement have been obtained (subject to Section 17 hereof).
Section 13. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
Section 14. Governing Law. This Agreement shall be governed by
and construed in accordance with the law of the State of New York applicable to
agreements made and to be performed entirely within such State.
Section 15. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the legal representatives, successors
and assigns of the parties hereto, whether so expressed or not. In addition,
whether or not any express assignment shall have been made, the provisions of
this Agreement shall also be binding
-13-
<PAGE>
upon, for the benefit of, and enforceable by any subsequent holder of any of the
Shares other than a holder who acquired his shares in a transaction for which a
Registration Statement under the Securities Act was effective at the time or in
a sale complying with Regulation A or Rule 144 of the Securities and Exchange
Commission.
Section 16. Holder of Regulated Shares. The Corporation agrees
that it will not be a party to any merger, consolidation, recapitalization or
other transaction pursuant to which any Subscriber who holds Regulated Shares is
required, as a holder of Shares to take (i) any voting securities which would
cause such Subscriber to violate any law, regulation or other requirement of any
governmental authority applicable to such Subscriber and its affiliates, or (ii)
any securities convertible into voting securities which if such conversion took
place would cause such Subscriber to violate any law, regulation, rule or other
requirement of any governmental authority applicable to such Subscriber and its
affiliates. "Regulated Shares" means any of the Shares which are owned by a
person which is subject to any law, regulation or other requirement of any
governmental authority prohibiting such person from owning voting securities or
otherwise limiting the quantity of voting securities which such person may own,
control or have the power to vote (including, but not limited to, the Bank
Holding Company Act); provided that if such securities are transferred to a
person which is not subject to any such law, regulation or other requirement of
any governmental authority, such securities shall cease to be Regulated Shares.
Each Subscriber who holds Regulated Shares agrees that it will cooperate with
the Corporation in endeavoring to arrange any such merger, consolidation,
recapitalization or other transaction in such a manner that such Subscriber
would not be required to take voting securities or securities convertible into
voting securities which would cause such violation, including without limitation
such Subscriber's accepting non-voting securities which in the judgment of the
Board of Directors of the Corporation are of equivalent value and have
equivalent equity characteristics. The provisions of this Section 16 shall apply
to any Subscriber's transferee who holds Regulated Shares, but only if (x) such
transferee is a parent or subsidiary of the Subscriber or another subsidiary of
the parent, or (y) prior to transfer the Subscriber shall have given all other
holders of the Shares written notice of the proposed transfer and an opportunity
during a period of not less than 30 days to purchase the Shares proposed to be
transferred upon the same terms and conditions as the prospective transferee
(such purchase by the holders of Shares to be in proportion to their holdings of
Securities and with right of overcall).
Section 17. Tag-Along. In the event that, before securities of
the Corporation first have been sold pursuant to a Registration Statement under
the Securities Act, the holders of the Class A Stock subscribed for under this
Agreement (the "Participants' Shares") sell all or substantially all of the
outstanding Participants' Shares in a single private transaction or series of
related private transactions, the subscribers to the Class A Stock under the
Other Subscription Agreements (the "Other Subscribers") shall be afforded the
opportunity to sell, in the same transaction or transactions, at the same price
and on the same terms, the same proportion of the total number of shares of the
Class A Stock owned by the Other Subscribers as the number of shares of
Participants' Shares being sold bears to the total number of then outstanding
Participants' Shares. The Corporation further agrees to cause the aggregate
consideration payable to the holders of the Class A Stock, Class B Stock and
Class C Stock of the Corporation in any merger or other transaction in which the
Corporation or the outstanding shares of capital stock of the Corporation shall
be acquired to be allocated in a manner that respects the respective liquidation
preferences of each such class of stock as set forth in the Corporation's
charter. This Section 17 shall not be eliminated or amended without the prior
written consent of (i) holders of a majority of the outstanding shares of the
Shares, and (ii) holders of a majority of outstanding shares of the Class A
Stock held by the Other Subscribers.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first above written.
MT INVESTORS INC.
c/o AEA Investors Inc.
65 East 55th Street
New York, New York 10022
By___________________________________
Vice President
SUBSCRIBER
If Individual:
Print Name___________________________
Signature____________________________
If Corporation, Partnership or Trust:
_____________________________________
[print or type name of entity]
By:__________________________________
Name:________________________________
Title:_______________________________
Subscriber's Taxpayer I.D. No.:
_____________________________________
Subscriber's address for notices:
_____________________________________
_____________________________________
_____________________________________
Nominee Registration
____________________
If shares of the Class A Stock are to be issued in the name of
the Subscriber's nominee, such nominee's name and address are as follows:
Nominee's name____________________________ Address_____________________________
_____________________________
_____________________________
-15-
<PAGE>
MT INVESTORS INC.
FORM OF GMC SUBSCRIPTION AGREEMENT
AGREEMENT made as of [Date] by and between MT
Investors Inc., a Delaware corporation (the "Corporation"), and [Name] (the
"Subscriber").
WHEREAS, the Corporation has agreed to acquire all of the
issued and outstanding stock or other equity interests and certain indebtedness
of the entities comprising the Mettler-Toledo Group (collectively,
"Mettler-Toledo") of AG Fur Prazisionsinstrumente Greifensee, Switzerland
("Seller"), pursuant to that certain Stock Purchase Agreement, dated as of April
2, 1996, among Seller, Ciba-Geigy AG and the Corporation (the "Purchase
Agreement"); and
WHEREAS, at the Closing referred to herein, the authorized
capital stock of the Corporation will consist of 2,233,117 shares of Class A
Common Stock (the "Class A Stock"), 10,000 shares of Class B Common Stock (the
"Class B Stock") and 532,859 shares of Class C Common Stock (the "Class C
Stock"), all with par value $.01 per share, with the respective terms and
provisions set forth in the proposed form of Restated Certificate of
Incorporation and Amendment to Restated Certificate of Incorporation of the
Corporation, which, together with the By-Laws of the Corporation, are attached
hereto as Exhibit A; and
WHEREAS, in connection with, and in order to provide part of
the funds for, the acquisition of Mettler-Toledo, the Corporation proposes to
issue and sell (i) 1,200,000 shares of Class A Stock pursuant to subscription
agreements to be entered into with stockholders of AEA Investors Inc. ("AEA")
and certain personnel of AEA (the "Participants' Subscription Agreements"), (ii)
95,000 shares of Class A Stock, 500 shares of Class B Stock and 26,643 shares of
Class C Stock to Ciba-Geigy AG pursuant to a subscription agreement (the "Ciba
Subscription Agreement"), (iii) 455,000 shares of Class A Stock and 130,001
shares of Class C Stock to certain other investors pursuant to subscription
agreements (the "Investors' Subscription Agreements"), (iv) approximately 24,157
shares of Class A Stock and approximately 6,902 shares of Class C Stock to
members of middle management of Mettler-Toledo or any of its affiliates pursuant
to subscription agreements (the "Middle Management Subscription Agreements"),
(v) approximately 70,000 shares of Class A Stock and approximately 20,000 shares
of Class C Stock to other employees of Mettler-Toledo or any of its affiliates
pursuant to subscription agreements (the "Employee Subscription Agreements,")
and (vi) approximately 53,489 shares of Class A Stock and approximately 15,282
shares of Class C Stock to members of senior management of Mettler-Toledo or any
of its affiliates pursuant to this Agreement and subscription agreements similar
to this Agreement (the "Other GMC Subscription Agreements," and, together with
the Participants' Subscription Agreements, the Ciba Subscription Agreement, the
Investors' Subscription Agreements, the Middle Management Subscription
Agreements and the Employee Subscription Agreements, the "Other Subscription
Agreements"); and
WHEREAS, the Subscriber wishes to purchase at the Closing
"Class_A_Shares" shares of Class A Stock for $100 per share, in cash, and
"Class_C_Shares" shares of Class C Stock for approximately $.03 per share, in
cash, and thereby make an investment in the Corporation and the Corporation
wishes to issue and sell the same to the Subscriber, upon the terms and
conditions hereinafter set forth;
<PAGE>
NOW, THEREFORE, the parties agree as follows:
Section 1. Agreement to Sell and Purchase Securities. The
Corporation agrees to sell to the Subscriber, and the Subscriber subscribes and
agrees to pay for, upon the terms and conditions hereinafter set forth,
"Class_A_Shares" shares of the Class A Stock, at a purchase price of $100 per
share, and "Class_C_Shares" shares of the Class C Stock, at a purchase price of
approximately $.03 per share. The shares of the Class A Stock and the Class C
Stock to be purchased by the Subscriber pursuant to this Agreement are
hereinafter sometimes referred to as the "Shares."
Section 2. Closing. The issuance and delivery of the Shares to
the Subscriber, and all other transactions contemplated hereby and under the
Purchase Agreement shall take place at a closing (the "Closing") at the offices
of Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New
York 10004 at 10:00 a.m., New York time, on or about October 15, 1996 or at such
other place or such other time or date as the Corporation and the Subscriber may
agree in writing. At the Closing, the Subscriber shall pay for the Shares in
immediately available funds or by such other form of payment acceptable to the
Corporation and the Corporation will issue and deliver to him certificates for
the Shares being purchased by him. The time and date at and upon which the
Closing occurs is herein called the "Closing Date."
Section 3. Representations and Warranties by the
Corporation. The Corporation represents and warrants to the Subscriber that:
(a) At the time of the Closing, the Corporation will own all
of the issued and outstanding shares of stock of Mettler-Toledo Holding Inc.
("Holding"); and none of the Corporation or Holding will have carried on any
business or had any revenues or income. The Corporation will not have any
liabilities of any nature whatsoever, except for (i) the expenses which it has
paid or incurred in connection with its incorporation, organization and
financing, and for legal and audit services and any other miscellaneous expenses
incident to its pre-operating period; (ii) the transactions under the Other
Subscription Agreements; and (iii) liability relating to the acquisition of
Mettler-Toledo.
(b) The Corporation has delivered to the Subscriber a copy of
the confidential memorandum entitled "Executive Summary Concerning the
Acquisition of the Entities Comprising the Mettler-Toledo Group by MT Investors
Inc. - September 1996" (the "Memorandum") and the Preliminary Prospectus, dated
September 16, 1996, which forms a part of the Registration Statement on Form S-1
filed by MT Acquisition Corp. ("Acquisition") and Holding with the Securities
and Exchange Commission with respect to the offering of the debt securities of
Acquisition.
(c) The Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority for the transactions contemplated by
this Agreement.
(d) In addition to the shares of the Class A Stock, the Class
B Stock and the Class C Stock being purchased pursuant to this Agreement and the
Other Subscription Agreements, the only other shares of any class of stock of
the Corporation which are and/or will be outstanding at the date of issuance of
the Shares are 9,500 shares of the Class B Stock and 333,358 shares of the Class
C Stock, all of which have been duly and validly issued for nominal
consideration. All of the outstanding shares of the Class B Stock will be owned
by AEA and its management employees and/or certain of its stockholders and
Ciba-Geigy AG and all of the outstanding shares of the Class C Stock as
-2-
<PAGE>
of the date of issuance of the Shares will be owned by the subscriber
under this Agreement and the Other Subscription Agreements, AEA, AEA
stockholders and management employees of AEA or their associates.
(e) The Corporation has full power and authority to enter into
this Agreement, and to issue and deliver the Shares and to incur and perform the
obligations provided for herein, all of which have been duly authorized by all
necessary corporate action. The execution and performance of this Agreement does
not, and the issuance of the Shares will not, violate any provision of any
applicable law or the Restated Certificate of Incorporation or the By-Laws of
the Corporation or any agreement or instrument by which it is bound and will not
result in the creation of any encumbrance or charge upon any of its assets. This
Agreement constitutes the valid and legally binding obligation of the
Corporation, enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or by general equitable
principles.
(f) Shares of the Class A Stock and the Class C Stock, when
issued and delivered pursuant to this Agreement, will be validly issued, fully
paid and non-assessable.
(g) Except as described in the Preliminary Prospectus, there
is no action, proceeding or investigation pending or, to the knowledge of the
Corporation, threatened, nor is there any basis, to its knowledge, for any
action, proceeding or investigation, against it or any of its properties or
assets.
Section 4. Representations and Warranties of Subscriber.
The Subscriber for himself represents, warrants and agrees that:
(a) The Subscriber is acquiring the Shares to be acquired by
him hereunder for his own account, for investment and not with a view to the
sale or distribution thereof, nor with any present intention of distributing or
selling the same; subject, nevertheless, to any requirement of law that the
disposition of property shall at all times be within the Subscriber's control.
(b) The Subscriber will not sell, assign, transfer, pledge, or
otherwise dispose of any of the Shares acquired by him hereunder unless and
until the same are registered under the Securities Act of 1933, as amended (the
"Securities Act"), and any applicable state securities law, or an exemption from
such registration is available, and until the Corporation shall have received a
written opinion of counsel to the Corporation that the disposition is in
compliance with the requirements of the Securities Act and any applicable state
securities law.
(c) The Subscriber acknowledges and agrees that the Shares
will contain an appropriate legend restricting the transfer thereof. The Shares
are not registered under the Securities Act, and except as expressly provided in
Section 6 of this Agreement, the Subscriber will have no right to require such
registration and must bear the economic risk of the Subscriber's investment for
an indefinite period of time. There is not now and there may never be any public
market for the Shares, and the Subscriber cannot now and may never be able to
avail himself of the benefits of Rule 144 adopted by the Securities and Exchange
Commission with respect to the resale of the Shares.
(d) The Subscriber has the full legal right and power and all
authority and approval required to enter into, execute and deliver this
Agreement and to perform fully his obligations hereunder. This Agreement has
been duly executed and delivered and is
-3-
<PAGE>
the valid and binding obligation of the Subscriber enforceable in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or by general
equitable principles. The execution and delivery of this Agreement by
the Subscriber and the performance by the Subscriber of this Agreement
in accordance with its terms and conditions will not (i) require the
approval or consent of any other person, including without limitation
the approval or consent of any governmental or regulatory body; or (ii)
conflict with or result in any breach or violation of any of the terms
and conditions of, or constitute (or with notice or lapse of time or
both constitute) a default under, any statute, regulation, order,
judgment or decree applicable to the Subscriber, or any instrument,
contract or other agreement to which the Subscriber is a party or by or
to which the Subscriber is bound or subject.
(e) The Subscriber is an Executive Officer of the Corporation
and is familiar with its business and prospects. The Subscriber has not relied
on any information in the Memorandum or otherwise provided to Subscriber by AEA
or its affiliates, regarding Mettler-Toledo, or its business and prospects, or
the industries described therein, or on any financial projections or forecasts.
The Subscriber acknowledges that the Corporation has offered to provide the
Subscriber with such additional information about the business and financial
condition of the Corporation, Mettler-Toledo, the transaction described in the
Preliminary Prospectus and the Purchase Agreement, as the Subscriber may deem
advisable or appropriate and that the Subscriber has either not requested any
such additional information or has received such additional information as the
Subscriber has requested.
(f) Subscriber acknowledges that he may have access to certain
confidential, non-public and proprietary information (the "Confidential
Information") concerning the Corporation and its subsidiaries and affiliates
(the "Affiliates") and its officers, directors, shareholders, employees, agents
and representatives and agrees that: (i) unless pursuant to prior written
consent by the Corporation, the Subscriber shall not disclose any Confidential
Information or the provisions of this Agreement or knowledge of this Agreement's
existence to any person for any purpose whatsoever; (ii) the Subscriber shall
treat as confidential all Confidential Information and shall take reasonable
precautions to prevent unauthorized access to the Confidential Information;
(iii) the Subscriber shall not use the Confidential Information in any way
detrimental to the Corporation or the Affiliates and shall use the Confidential
Information for the exclusive purpose of effecting his duties of employment with
the Corporation; and (iv) the Subscriber agrees that the Confidential
Information obtained during his employment with the Corporation shall remain the
exclusive property of the Corporation, and the Subscriber shall promptly return
to the Corporation all material which incorporates, or is derived from, all such
Confidential Information upon termination of his employment with the
Corporation. Subscriber shall be responsible for any breach of the terms of this
Section 4(f) by any Permissible Transferee (as defined herein) of the Shares.
Section 5. Books, Records and Reports.
(a) The Corporation shall cause to be kept on an appropriate
basis, and each stockholder of the Corporation shall have access to, appropriate
books, records and accounts. The books and records of the Corporation shall each
be audited as of the end of each calendar year by a firm of independent public
accountants of national standing selected by the Corporation.
(b) Within 90 days of the end of each fiscal year, the
Corporation shall mail to each of its stockholders a report setting forth an
audited balance sheet as at the
-4-
<PAGE>
end of such fiscal year and audited statements of income and source and
use of funds for such fiscal year of the Corporation, and any other
information the Corporation deems necessary or desirable. The
Corporation will furnish quarterly financial statements to its
stockholders as requested.
(c) The Corporation also will furnish to each of its
stockholders such other information as such stockholder may from time to time
reasonably request.
Section 6. Restrictions on Transfers.
6.01 Legend on Securities. Each stock certificate evidencing
Shares issued pursuant to this Agreement, including any such stock certificates
representing shares issued to subsequent transferees, shall (unless otherwise
permitted by this Agreement) be stamped or otherwise imprinted with a legend or
legends in substantially the following form:
"The securities represented hereby have not been registered
under the Securities Act of 1933 and may not be sold, assigned,
transferred, pledged or otherwise disposed of except in compliance
with the requirements of such Act and until the Corporation shall
have received the written opinion of counsel to the Corporation to
that effect."
"The securities represented hereby are subject to restrictions
on transfer contained in a Subscription Agreement, a copy of which
is on file at the office of AEA Investors Inc."
Each stock certificate evidencing any of the shares described
above in this Section 6.01 which bears the legend set forth above is hereinafter
in this Section 6 referred to as a "Restricted Certificate."
6.02 Transfers. Each holder of a Restricted Certificate, by
acceptance thereof, agrees, prior to any offer to sell, sale or other
disposition of part or all of the securities evidenced by such Restricted
Certificate, to give written notice to the Corporation of such holder's
intention to effect such sale or other disposition. Each such notice shall
describe the manner and circumstances of the proposed sale or other disposition
in sufficient detail and may be accompanied by an opinion of counsel to such
holder. Promptly upon receipt of such notice, the Corporation shall present a
copy thereof (together with any accompanying opinion of counsel to such holder)
to its counsel, and the following provisions shall apply:
(a) If, in the opinion of counsel to such holder, satisfactory
in form and substance to the Corporation and its counsel, or if such notice was
not accompanied by an opinion of counsel to such holder, then, if, in the
opinion of counsel to the Corporation, the proposed sale or other disposition
may be effected without registering the securities involved under the Securities
Act, such holder shall, subject to Section 6.02 (c) below, be entitled to
transfer such securities in accordance with the terms of the notice delivered to
the Corporation. The Corporation will advise such holder, within 10 business
days after submission of such notice, whether such holder is entitled to so
transfer the securities. If such holder is entitled to so transfer, he shall
submit the Restricted Certificate to the Corporation in proper form for transfer
and accompanied by appropriate instruments of transfer. Such Restricted
Certificate shall also be accompanied by an undertaking in writing by the
transferee to be bound by all the terms of this Agreement. Each Restricted
Certificate thus transferred (and each of the stock certificates evidencing any
-5-
<PAGE>
untransferred balance of the securities evidenced by such Restricted
Certificate) shall bear the restrictive legend set forth in Section 6.01 above,
unless, in the opinion of both such counsel (or counsel to the Corporation if
such holder did not present an opinion of his counsel), such legend is not
required by the applicable provisions of the Securities Act.
(b) If in the opinion of either of such counsel (or counsel to
the Corporation if such holder did not present an opinion of his counsel), the
proposed sale or other disposition cannot be effected without registering the
securities involved under the Securities Act, such holder shall not offer to
sell, sell or otherwise dispose of such securities unless and until such
securities have been registered under the Securities Act for such purpose or an
exemption becomes available.
(c) Except as permitted by Sections 6.02(d) or pursuant to the
"tag-along" rights provided to the Subscriber pursuant to Section 18, the
Subscriber shall not, at any time from the date hereof until the fifth
anniversary thereof (the "Restricted Period"), without the consent of the
Corporation, transfer, sell, exchange, assign, pledge, or otherwise dispose of,
by testamentary bequest, inter vivos transfer or otherwise (hereinafter referred
to as a "transfer"), any Shares owned by him ("Restricted Shares").
(d) Notwithstanding any provision to the contrary contained in
this Agreement and upon compliance with Section 6.02(a):
(i) The Subscriber may transfer Restricted Shares to:
(1) a spouse or any lineal ancestor or descendant; (2) the trustee
or trustees of a trust or trusts at any time established for the
primary benefit of the Subscriber or the spouse or any lineal
ancestor or descendant of the Subscriber, provided that each and
every trustee who may vote any Restricted Shares shall be the
Subscriber or a person referred to in this Section 6.02(d)(i) or a
bank or trust company; (3) a partnership or partnerships, all of
the general and limited partners of which are Subscribers and/or
one or more of the persons referred to in this Section 6.02(d)
(other than a bank or trust company); provided that, (x) any such
trust or partnership shall have no terms inconsistent with the
obligations of a Subscriber under this Agreement, and (y) as a
condition of transfer, any Permissible Transferee shall execute
and deliver to the Corporation an agreement in form and substance
reasonably satisfactory to the Corporation pursuant to which the
Permissible Transferee agrees to be bound by all of the provisions
of this Agreement. Any person receiving any Restricted Shares in a
transaction pursuant to this Section 6.02(d) is herein referred to
as a "Permissible Transferee" with respect to such transaction. If
any Restricted Shares are transferred to a Permissible Transferee,
such Permissible Transferee shall take and hold such Restricted
Shares, and such Restricted Shares shall be, subject to this
Agreement and to the rights, obligations and restrictions provided
herein with respect to the original Subscriber of such Restricted
Shares as of the date of this Agreement, as if such Permissible
Transferee were such original Subscriber.
(ii) Any transfer of Restricted Shares otherwise
permitted by this Section 6.02 shall not be made unless in
compliance with all applicable laws, including, without
limitation, the securities laws of the United States and the
states thereof.
-6-
<PAGE>
(e) No purported transfer of any Restricted Shares or the
shares represented by Restricted Certificates in violation of this Agreement
shall be of any force or effect, and no such transfer shall be made or recorded
on the books of the Corporation.
Section 7. Certain Consequences of Termination of
Subscriber's Employment.
7.01 Termination Other than Death or Disability. In the event
of the Subscriber's termination of employment at Mettler-Toledo or any of its
affiliates for any reason other than for death or permanent disability, the
Corporation shall have an option (a "Call Option") to purchase from the
Subscriber and the Permissible Transferees of such Subscriber all (but not less
than all) of the Subscriber's Shares which are evidenced by Restricted
Certificates that are owned by the Subscriber and the Permissible Transferees of
such Subscriber at a price per share equal to the fair market value of the
Shares determined as of the date of repurchase by the Board of Directors of the
Corporation in its sole discretion provided that if such termination is for
cause, as determined under applicable law, the repurchase price shall be the
lesser of said fair market value or the price paid by the Subscriber pursuant to
Section 1. If the Corporation desires to exercise the Call Option, it shall give
written notice thereof to the Subscriber and the Permissible Transferees of such
Subscriber within 60 days of the occurrence of the event giving rise to such
Call Option; such Call Option shall expire if such notice is not given within
such 60-day period. The Subscriber and the Permissible Transferees of such
Subscriber shall deliver to the Corporation certificates representing the
Shares, free and clear of all claims, liens, or encumbrances, together with
blank stock powers, duly executed with all signature guarantees at a closing at
the principal office of the Corporation on the third business day after notice
has been given to the Subscriber, or at such other place and time and in such
manner as may be mutually agreed to by the Subscriber and the Corporation. The
proceeds from the purchase of the Shares pursuant to the Call Option (the "Call
Option Proceeds") shall be paid by a check, which shall be delivered to the
Subscriber at the closing of such purchase.
7.02 Termination of Call Option. All rights and obligations
created pursuant to Section 7.01 shall be extinguished upon the earlier of (i)
the fifth anniversary of this Agreement or (ii) an underwritten public offering
by the Corporation of the outstanding capital stock of the Corporation.
7.03 Rights in the Event of Permanent Disability or Death. In
the event of (i) the permanent disability of the Subscriber so that he is unable
substantially to perform his services as an employee of Mettler-Toledo or any of
its affiliates for an aggregate of 180 days during any twelve-month period or
(ii) the death of the Subscriber, the Subscriber or, in the event of death, the
deceased Subscriber's administrator or executor, shall have the option (the
"Subscriber Option"), exercisable by the giving of notice thereof to the
Corporation within 120 days of the occurrence of the event giving rise to such
Subscriber Option, which, in the case of permanent disability, shall mean the
180th day of inability to perform services as an employee of Mettler-Toledo or
any of its affiliates, to sell to the Corporation, and the Corporation upon
exercise of such Subscriber Option shall buy from the Subscriber or the deceased
Subscriber's administrator or executor, as the case may be, all (but not less
than all) of the Subscriber's Shares, at a price per share equal to the fair
market value of the Shares determined as of the date of repurchase by the Board
of Directors of the Corporation in its sole discretion. Such Subscriber Option
shall expire if such notice is not given within such 120-day period. The
Subscriber, or the deceased Subscriber's administrator or executor, shall
deliver to the Corporation certificates representing the Shares, free and clear
of all claims, liens, or
-7-
<PAGE>
encumbrances, together with blank stock powers, duly executed with all
signature guarantees at a closing at the principal office of the
Corporation on the third business day after notice has been given to the
Corporation or at such other place and time and in such manner as may be
mutually agreed to by the Subscriber, or the deceased Subscriber's
administrator or executor, and the Corporation. The proceeds from the
purchase of the Shares pursuant to the Subscriber Option (the
"Subscriber Option Proceeds") shall be paid by a check, which shall be
delivered to the Subscriber at the closing of such purchase. The
obligations of the Corporation to purchase the Subscriber's Shares
pursuant to this Section 7.03 shall be deferred during any period in
which such purchase would not be permitted by applicable law or could
cause the Corporation to be in default under any agreement to which it
or its affiliates are a party.
7.04 Termination of Subscriber Option. All rights and
obligations created pursuant to Section 7.03 shall be extinguished upon the
earlier of (i) the fifth anniversary of this Agreement or (ii) an underwritten
public offering by the Corporation of the outstanding capital stock of the
Corporation.
Section 8. Conditions of Closing.
8.01 The Corporation's Conditions. The obligation of the
Corporation to issue the Shares to the Subscriber pursuant to this Agreement is
subject to the fulfillment as of the Closing of the following conditions
precedent:
(a) At the Closing, the representations and warranties of the
Subscriber contained in Section 4 shall be true and correct with the same effect
as if such representations and warranties had been made at and as of that time,
and the Corporation shall have received a certificate to that effect, dated the
Closing Date, and signed by the Subscriber.
(b) Simultaneously with the Closing, the Corporation or its
assignee shall have acquired all of the issued and outstanding capital stock or
other equity interests of, and certain indebtedness of, Mettler-Toledo, pursuant
to the Purchase Agreement.
(c) Simultaneously with the Closing, various investors shall
have purchased 1,200,000 shares of Class A Stock pursuant to the Participants'
Subscription Agreements and up to 700,000 shares of Class A Stock, 500 shares of
Class B Stock and up to 199,501 shares of Class C Stock pursuant to this
Agreement and the Other Subscription Agreements, excluding the Participants'
Subscription Agreements.
8.02 Subscriber's Conditions. The obligation of the Subscriber
to purchase the Shares from the Corporation pursuant to this Agreement is
subject to the fulfillment as of the Closing of the following conditions
precedent:
(a) At the Closing, the representations and warranties of the
Corporation contained in Section 3 shall be true and correct with the same
effect as though such representations and warranties had been made at and as of
that time, and the Subscriber shall have received a certificate to that effect,
dated the Closing Date, and signed by an officer of the Corporation.
(b) Simultaneously with the Closing, the Corporation or its
assignee shall have acquired all of the issued and outstanding capital stock or
other equity interests of, and certain indebtedness of, Mettler-Toledo, pursuant
to the Purchase Agreement.
-8-
<PAGE>
(c) Simultaneously with the Closing, various investors shall
have purchased 1,200,000 shares of Class A Stock pursuant to the Participants'
Subscription Agreements and up to 700,000 shares of Class A Stock, 500 shares of
Class B Stock and up to 199,501 shares of Class C Stock pursuant to this
Agreement and the Other Subscription Agreements, excluding the Participants'
Subscription Agreements.
(d) At the Closing, the Subscriber shall have received from
Christine J. Smith, Esq., General Counsel of AEA, an opinion, dated the Closing
Date, to the effect that:
(i) The Corporation is duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has all
requisite corporate power and authority for the transactions
contemplated by this Agreement;
(ii) The Shares to be issued hereunder, when they shall have
been issued and sold pursuant to this Agreement, will have been
validly issued and will be outstanding, fully paid and
nonassessable;
(iii) The Corporation has the full power and authority to
enter into this Agreement, to issue and deliver the Shares and to
incur and perform the obligations to be incurred and performed by
it, all as provided for herein;
(iv) This Agreement has been duly authorized by the
Corporation and has been duly executed and delivered by it and,
assuming due authorization, execution and delivery of this
Agreement by the Subscriber, is a legal, valid and binding
obligation of it, enforceable in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement
of creditors' rights generally or by general equitable principles
and except that no opinion is expressed with respect to
indemnification for securities law liabilities;
(v) Based upon the representations contained herein and
information furnished by the Corporation and by subscribers to the
Corporation's stock, it is not necessary, in connection with the
offer, sale and delivery of the Shares pursuant to this Agreement,
to register the Shares under the Securities Act as then in effect;
(vi) The execution and performance of the Agreement does not,
and the issuance by the Corporation of the Shares will not, either
with the giving of notice or lapse of time or both, violate the
Restated Certificate of Incorporation or the By-Laws of the
Corporation or any agreement or instrument, known to such counsel,
by which it is bound and will not result in the creation of any
encumbrance or charge upon any of its assets; and
(vii) To the knowledge of such counsel, there is no action,
proceeding or investigation pending or threatened against the
Corporation or any of its properties or assets.
-9-
<PAGE>
Section 9. AEA Management Agreement. The Subscriber hereby
acknowledges and agrees that, pursuant to a Management Agreement between AEA and
Mettler-Toledo, AEA will receive management and other fees from Mettler-Toledo.
Section 10. Fees. The Corporation will pay, and save the
Subscriber (other than solely in its capacity as a stockholder of this
Corporation) harmless against all liability for the payment of, (i) all costs
and expenses incurred by the Corporation in connection with the preparation of
this Agreement and the Memorandum, the issue and sale of the Shares pursuant to
this Agreement and the Corporation's performance of and compliance with all
other agreements and conditions contained herein on its part to be performed or
complied with; and (ii) the Corporation's delivering to the Subscriber by mail,
insured as to the value thereof, the Shares purchased by the Subscriber. The
Corporation further agrees that it will pay, and will save the Subscriber
harmless from, any and all liability with respect to any stamp or similar taxes
(other than transfer taxes) which may be determined to be payable in connection
with the execution and delivery of this Agreement or any modification, amendment
or alteration of the terms and provisions of this Agreement, and that it will
similarly pay and hold the Subscriber harmless from all issue taxes in respect
of the issuance of the Shares.
Section 11. Survival of Representations, Warranties and
Agreements. All representations, warranties and agreements contained in this
Agreement shall survive the execution hereof and the delivery of the Shares.
Section 12. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be signed by the Corporation and
the Subscriber and all of which shall be deemed to be one and the same agreement
binding upon the Corporation and the Subscriber.
Section 13. Notices. All notices hereunder shall be in writing
and shall be deemed to have been duly given if delivered in person or by
registered or certified mail, return receipt requested, to the Corporation at
its principal place of business, or to the Subscriber at the addresses set forth
opposite his name below or such other address as the Subscriber shall have given
to the Corporation for such purpose. Notice shall be deemed to have been
effectively given when mailed by certified mail, return receipt requested, to
the proper address or delivered in person.
Section 14. Changes. The terms and provisions of this
Agreement may not be modified or amended, or any of the terms or
provisions hereof waived, except pursuant to the written consent of the
Corporation and the Subscriber.
Section 15. Headings. The headings of the various sections
of this Agreement have been inserted for convenience of reference only
and shall not be deemed to be a part of this Agreement.
Section 16. Governing Law. This Agreement shall be governed by
and construed in accordance with the law of the State of New York applicable to
agreements made and to be performed entirely within such State.
Section 17. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the legal representatives, successors
and assigns of the parties hereto, whether so expressed or not. In addition,
whether or not any express assignment shall have been made, the provisions of
this Agreement shall also be binding upon, for the benefit of, and enforceable
by any subsequent holder of any of the Shares other than a holder who acquired
his shares in a transaction for which a Registration
-10-
<PAGE>
Statement under the Securities Act was effective at the time or in a sale
complying with Regulation A or Rule 144 of the Securities and Exchange
Commission.
Section 18. Tag-Along. In the event that, before securities of
the Corporation first have been sold pursuant to a Registration Statement under
the Securities Act, the holders of the Class A Stock subscribed for under the
Participants' Subscription Agreements (the "Participants' Shares") sell all or
substantially all of the outstanding Participants' Shares in a single private
transaction or series of related private transactions, the Subscriber under this
Agreement shall be afforded the opportunity to sell, in the same transaction or
transactions, at the same price and on the same terms, the same proportion of
the total number of shares of the Class A Stock owned by such Subscriber as the
number of shares of Class A Stock of the Participants' Shares being sold bears
to the total number of then outstanding shares of Class A Stock of the
Participants' Shares.
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first above written.
MT INVESTORS INC.
c/o AEA Investors Inc.
65 East 55th Street
New York, New York 10022
By:_________________________________
Vice President
SUBSCRIBER
____________________________________
[Name]
Address:
____________________________________
____________________________________
____________________________________
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
AUSTRALIA
Mettler-Toledo Limited
AUSTRIA
Mettler-Toledo Ges.m.b.H.
BELGIUM
N.V. Mettler-Toledo S.A.
BERMUDA
Mettler-Toledo Finance Ltd.
BRAZIL
Mettler-Toledo Industria e Commercio Ltda.
CANADA
Mettler-Toledo Inc.
CHINA
Changzhou Toledo Electronic Scale Ltd.
Mettler-Toledo Instruments (Shanghai) Ltd.
Mettler-Toledo International Trading (Shanghai) Corp.
Panzhihua Toledo Electronic Scale Ltd.
Xinjiang Toledo Electronic Scale Ltd.
CROTIA
Mettler-Toledo d.o.o.
CZECH REPUBLIC
Mettler-Toledo spol. s.r.o.
DENMARK
Mettler-Toledo A/S
FRANCE
Mettler-Toledo SA
Mettler-Toledo Analyse Industielle S.a.r.l.
Ohaus S.a.r.l.
Safeline SA
GERMANY
Mettler-Toledo (Albstadt) GmbH
Garvens Automation GmbH
Mettler-Toledo GmbH
Getmore Gesell fur Marketing & Media Service GmbH
Ohaus Waagen Vertriebsgesellschaft GmbH
Mettler-Toledo Management Holding Deutschland GmbH
Safeline GmbH
HONG KONG
Mettler-Toledo (HK) Ltd.
HUNGARY
Mettler-Toledo Kereskedelml Kft.
ITALY
Mettler-Toledo grandi impianti S.r.l.
Mettler-Toledo S.p.A.
<PAGE>
JAPAN
Mettler-Toledo K.K.
KOREA
Mettler-Toledo (Korea) Ltd.
MALAYSIA
Mettler-Toledo (M) Sdn. Bhd.
MEXICO
Mettler-Toledo S.A. de C.V.
Ohaus de Mexico S.A. de C.V.
NETHERLANDS
Mettler-Toledo B.V.
Mettler-Toledo Holding B.V.
NORWAY
Mettler-Toledo A/S
Cargoscan A/S
Cargoscan Holding A/S
POLAND
Mettler-Toledo Sp.z.o.o.
RUSSIA
3A0 Mettler-Toledo Vostok
SINGAPORE
Mettler-Toledo (S) Pte.Ltd.
SLOVAK REPUBLIC
Mettler-Toledo Service s.r.o.
Mettler-Toledo spol. s.r.o.
SLOVENIA
Mettler-Toledo d.o.o.
SPAIN
Mettler-Toledo S.A.E.
SWEDEN
Mettler-Toledo AB
SWITZERLAND
Mettler-Toledo Holding AG
Mettler-Toledo GmbH
Mettler-Toledo Logistik AG
Mettler-Toledo Pac Rim AG
Mettler-Toledo (Schweiz) AG
Microwa Prazisionswaagen AG
Pivott Instrumente AG
TAIWAN
Mettler-Toledo Pac Rim AG-Taiwan Branch
THAILAND
Mettler-Toledo (Thailand) Ltd.
2
<PAGE>
UNITED KINGDOM
Mettler-Toledo Ltd.
Ohaus Europe Ltd.
Safeline Limited
Safeline Holding Company
UNITED STATES OF AMERICA
ACME Scale & Supply Inc. (PA)
Hi-Speed Checkweigher Co., Inc. (NY)
Mettler-Toledo Holding Inc.
Mettler-Toledo, Inc.
Mettler-Toledo Process Analytical, Inc. (MA)
Ohaus Corp. (NJ)
Safeline Inc.
3
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' REPORT ON SCHEDULES AND CONSENT
The Board of Directors
MT Investors Inc.
The audits of MT Investors Inc. referred to in our report dated April 18, 1997,
included the related financial statement schedules as of December 31, 1996, and
for each of the years ended December 31, 1994 and 1995 and for the period
January 1, 1996 to October 14, 1996, the Predecessor period, and for the period
October 15, 1996 to December 31, 1996, the Successor period, included in the
registration statement. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statement schedules based on our audits. In our
opinion, such financial statement schedules when considered in relation to the
basic consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
We consent to the use of our reports included herein and to the reference to our
firm under the headings 'Selected Historical Financial Information' and
'Experts' in the prospectus.
KPMG Fides Peat
Zurich, Switzerland
November 10, 1997
