Exhibit 10.3
C R E D I T A G R E E M E N T
Between
RBC ▇▇▇▇▇▇▇▇▇ ▇.▇.
DELEMONT
(hereinafter referred to as the [[Borrower]])
and
CREDIT SUISSE
(hereinafter referred to as the [[Bank]])
Dated December 27, 1999
CONTENTS
1. FACILITIES...................................................................................4
1.2 Amounts and Commitments..................................................................4
1.3 Availability.............................................................................4
1.4 Purpose..................................................................................4
1.5 Commitment Periods.......................................................................5
1.6 Draw down................................................................................5
1.7. Collateral / Security....................................................................5
2. ADVANCES.....................................................................................5
2.1 Utilisation..............................................................................5
2.2 Notice to the Bank.......................................................................5
2.3 Determination of Currency................................................................6
2.4 Maximum Number of Advances...............................................................6
2.5 Maximum outstanding......................................................................6
3. INTEREST.....................................................................................7
3.1 Payment..................................................................................7
3.2 Rate and Calculation.....................................................................7
3.3 Margin...................................................................................7
3.4 Additional Interest Rate.................................................................8
4. REPAYMENT, REDUCTION AND CANCELLATION........................................................8
4.1 Repayment................................................................................8
4.2 Reduction................................................................................8
4.3 Automatic reduction of amounts available.................................................9
4.4 Final Repayment Date / Cancellation......................................................9
4.6 Cancellation by the Borrower............................................................10
4.7 Prepayment and Cancellation.............................................................10
5. PAYMENT AND TAXES...........................................................................10
5.1 Manner of Payment.......................................................................10
5.2 Taxation of the Bank, etc...............................................................10
5.3 Business Days...........................................................................11
5.4 Partial Payment.........................................................................11
6. CHANGES IN CIRCUMSTANCES....................................................................11
6.1 Increased Costs.........................................................................11
6.2 Escape Clause...........................................................................12
6.3 Restriction Clause......................................................................12
6.4 Illegality..............................................................................12
7. UNDERTAKINGS, COVENANTS, ETC................................................................13
7.1 General Undertakings....................................................................13
7.2 Representations and Warranties..........................................................14
7.3 Specific Undertakings...................................................................15
7.4 Financial Covenants.....................................................................15
7.5 Other Covenants.........................................................................17
8. SELLER'S NOTE...............................................................................18
9. EVENTS OF DEFAULT...........................................................................19
9.1 Events:.................................................................................19
9.2 Consequences............................................................................22
10. SET-OFF.....................................................................................22
10.1 Set-off.................................................................................22
10.2 Currency Conversion.....................................................................22
11. INDEMNITIES.................................................................................23
11.1 General Indemnity.......................................................................23
11.2 Currency Indemnity......................................................................23
12. FEES AND EXPENSES...........................................................................23
12.1 Arrangement Fee.........................................................................23
12.2 Expenses................................................................................24
12.3 Value Added Tax.........................................................................24
13. ASSIGNMENT, TRANSFER AND LENDING OFFICES....................................................24
13.1 No assignment by the Borrower...........................................................24
13.2 Assignment and transfer by the Bank:....................................................24
14. NOTIFICATION................................................................................25
14.1 By the Borrower:........................................................................25
14.2 By the Bank.............................................................................25
14.3 Objections..............................................................................26
15. GOVERNING LAW AND JURISDICTION..............................................................26
Annex A - Conditions precedent
Annex B - Short term advance request
Annex C - The Controlling Shareholders' Group
Whereas the Borrower has requested the Bank for credit facilities
(hereafter referred to as [[Facilities]]); and
Whereas the Bank is prepared to grant such Facilities to the Borrower under
certain terms and conditions, therefore the parties agree as follows:
1. FACILITIES
1.1 TYPES OF CREDIT FACILITIES
The Bank has agreed to make various credit facilities ([[facilities]])
available to the Borrower on the terms of this Agreement up to the maximum
amounts specified under Clause 1.2.
1.2 AMOUNTS AND COMMITMENTS
The Bank has agreed to make available to the Borrower Facilities in an aggregate
amount not to exceed CHF 11'000'000.- (Swiss Francs 11 million or equivalent in
any freely convertible currency) divided in 2 sub facilities as defined
hereafter :
Facility A : CHF 10'000'000.-
Facility B : CHF 1'000'000.-
(in aggregate : [[Facilities]])
1.3 AVAILABILITY
During the commitment periods the Borrower may borrow under the Facilities once
the Bank has received and is satisfied with any and all items listed in the
Annex A hereto.
1.4 PURPOSE
The Facilities are available for the following
Facility A : for the financing of the acquisition of the
operating assets of ▇▇▇▇▇▇▇▇▇ ▇.▇., the shares of
Bovagnet and to fund the acquisition of Schaublin
France through a newly created subsidiary of RBC
▇▇▇▇▇▇▇▇▇ ▇.▇.
Facility B : for general corporate purposes including working
capital financing.
1.5 COMMITMENT PERIODS
The Facilities expiry dates will be the final repayment dates (termination
dates) specified in Clause 4.4.
1.6 DRAW DOWN
Shall be carried out by notification to the Bank by the Borrower pursuant to
clause 2.1.
1.7. COLLATERAL / SECURITY
The Shareholders of the Borrower will pledge and assign according to separate
agreement 100% of their present and future share capital in favour of the Bank.
These shares have to be endorsed in favour of the bearer and deposited with the
Bank with a resolution of the Board of Director of the Borrower to accept any
inscription of a shareholder, without any restriction, as designated by the
Bank. This last requirement does not apply to the qualification shares
("Qualifikationsaktien").
2. ADVANCES
2.1 UTILISATION
The Facilities shall be available :
Facility A : in form of fixed term advances (hereafter
collectively referred to as [[Advances]] and
individually "Advance") for periods of up to 12 months.
The Bank may from time to time grant exceptions to the
periods of availability upon the Borrower's request.
Facility B : in the form of current account(s) and or issuance of
guarantees or letters of credit.
The Advance will represent the principal amount initially drawn. In case any one
Advance shall be renewed or its term be extended, the Bank may agree that
accrued interest (if any) shall be added to the original principal amount of
such Advance.
Interest shall be determined separately for each Advance.
2.2 NOTICE TO THE BANK
The Bank's decision to make an Advance on the occasion of each borrowing
requested shall further be subject to the condition precedent that the Bank
shall have received the
draw-down request, as defined in Annex B, at the latest by 12.00 a.m. Zurich
time, three business days prior to the date of such borrowing, however, not
earlier than the second day after the date of this Agreement, specifying (i) the
currency (whether in CHF or any other currency freely convertible into Swiss
Francs) (ii) the term of the Advance and (iii) unless previously supplied,
details of an account to which the Borrower wishes the payments in the currency
specified to be made. Business Day means a day on which banks are open in
Delemont.
2.3 DETERMINATION OF CURRENCY
If the Borrower requests a currency other than Swiss Francs in the Notice to the
Bank, the Advance shall be denominated in the currency specified by the Borrower
unless:
(i) the Bank does not expect to be able to fund the Advance for that
term by obtaining a matching deposit in that currency in the
international inter-bank market and/or the London inter-bank
market at the relevant time; or
(ii) it would be impossible for the Bank or unlawful or contrary to any
present or future directive, regulation, request, requirement,
rule or credit restraint programme of any Agency to make the
currency available.
Should any event mentioned under this clause 2.3 (i) and 2.3 (ii) occur, the
Bank shall immediately and in any event not later than 4.00 p. m. on that second
Business day notify the Borrower. In this event the Advance shall be denominated
in Swiss Francs during such term unless the Bank agree with the Borrower that
the Advance shall be denominated in another currency for the term.
2.4 MAXIMUM NUMBER OF ADVANCES
No more than 8 Advances (Facility A) may be outstanding at any time.
2.5 MAXIMUM OUTSTANDING
The aggregate amount of the Advances requested and drawn by the Borrower under
Facility A may not exceed the amount specified in Clause 1.2 above
The aggregate outstanding under current account(s) or other obligations under
Facility B may not exceed the amount determined by the Bank to be the maximum
amount of such Facility under Clause 1.2 above.
3. INTEREST
3.1 PAYMENT
The Borrower will pay interest accrued on each Advance under Facility A on the
date of maturity of such Advance. Current account debit interest on Facility B
which will be charged on a quarterly basis.
3.2 RATE AND CALCULATION
(i) the interest rate applicable, per annum to each Advance under
Facility A will be the London Interbank Offered Rate ([[LIBOR]]), for the
relevant term & currency plus a margin as defined in clause 3.3.
[[LIBOR]] is defined, in respect of any Advance or unpaid sum, as
the annual percentage rate determined by the Bank to be the rate
which would have been offered to the Bank by prime banks in the
London interbank market at or about 11 a.m. (London time) on the
quotation date for deposits of a comparable amount to that Advance
or other sum, in the same currency and for a period comparable to
its term.
LIBOR shall be the rate displayed on Telerate page 3750 two
business days prior to any draw-down or renewal of such Advances,
rounded to the next 1/16 of a percent. Any and all interest and
fees shall accrue from day to day and shall be calculated on the
basis of a year of 360 days and the actual number of days elapsed
[or in the case of an Advance drawn in Pound Sterling on the basis
of a year of 365 days].
(ii) the interest rate applicable to the Facility B current account
credit limit will be for Swiss francs 5.375% p.a. increased by a
quarterly utilisation fee of 1/4% calculated on the highest used amount
of Facility B. In case of change of the money market conditions, the Bank
has the right to adapt, without notice period and at its sole discretion
the current account debit interest rate. Such change shall only occur in
case the Bank changes the rate on current account credit limits
applicable to borrowers similarly situated to the Borrower or if the Bank
adapts its internal rating.
3.3 MARGIN
The applicable interest margin on Advances drawn under Facility A is set at 275
basis points above the applicable LIBOR rate.
3.4 ADDITIONAL INTEREST RATE
For delayed payments of principal and/or interest, the Bank will notify the
Borrower and charge interest in arrears at 5% above the 30 day LIBOR rate in the
relevant currency fixed at 11.00 London time on the first Business Day following
the occurrence of such delay, calculated on the amount outstanding as from the
respective maturity date until receipt of the amount outstanding.
4. REPAYMENT, REDUCTION AND CANCELLATION
4.1 REPAYMENT
The Borrower shall repay each Advance, in the same currency as the one in which
the Advance was disbursed and on the account to be designated by the Bank, from
time to time, on its repayment date, together with the interest accrued thereon.
4.2 REDUCTION
Following reductions of Facility A are mandatory and such reduction shall
permanently reduce the amount available under Facility A.
MANDATORY REDUCTION OF FACILITY A :
-----------------------------------------------------
Date Reduction in CHF
-----------------------------------------------------
31 March 2001 500'000.--
-----------------------------------------------------
30 June 2001 500'000.--
-----------------------------------------------------
30 September 500'000.--
2001
-----------------------------------------------------
31 December 2001 500'000.--
-----------------------------------------------------
31 March 2002 625'000.--
-----------------------------------------------------
30 June 2002 625'000.--
-----------------------------------------------------
30 September 625'000.--
2002
-----------------------------------------------------
31 December 2002 625'000.--
-----------------------------------------------------
31 March 2003 625'000.--
-----------------------------------------------------
30 June 2003 625'000.--
-----------------------------------------------------
30 September 625'000.--
2003
-----------------------------------------------------
31 December 2003 625'000.--
-----------------------------------------------------
31 March 2004 750'000.--
-----------------------------------------------------
30 June 2004 750'000.--
-----------------------------------------------------
30 September 750'000.--
2004
-----------------------------------------------------
31 December 2004 750'000.--
-----------------------------------------------------
4.3 AUTOMATIC REDUCTION OF AMOUNTS AVAILABLE.
Any amount not drawn under Facility A (the unused portion) 1 month after the
signing of this Agreement or thereafter any unused amount for more than 45 days
under Facility A, will be deemed to be cancelled. Any amount so cancelled shall
permanently reduce the amount available under Facility A.
4.4 FINAL REPAYMENT DATE / CANCELLATION
The Borrower shall repay in full all Advances, principal and accrued interest
including fees and similar expenses or remuneration at the latest :
for Facility A : on 31.12.2004, if a Business Day, otherwise on the last
preceding Business Day (Termination Date Facility A). The Bank's
commitment for Facility A shall automatically terminate on the close of
business of the Termination Date A. The Borrower may not borrow any
Advance, should the last day of its term fall after that date;
for Facility B : within 180 days after notification by the Bank of the
cancellation (cancellation can be made at the Bank's sole discretion) of
Facility B if a Business Day, otherwise on the last preceding Business
Day (Termination Date Facility B).
4.5 Prepayment
The Borrower may prepay at any time, without penalty, advances under Facility A
in minimum amounts of CHF 500'000.-- or equivalent in the currency drawn,
subject to five business days prior written notice to the Bank, provided that
Advances prepaid at any time other than at maturity, including payments prior to
maturity pursuant to Clause 4.7 hereinafter, shall be subject to reimbursement
of funding breakage costs and related expenses, if any. For the purposes hereof,
"funding breakeage costs" shall be solely the actual value of the losses to the
Bank for the balance of the terms of any outstanding Advances under Facility A
arising by reason of a change in LIBOR rates. No such payments are applicable to
reimbursements under Facility B.
4.6 CANCELLATION BY THE BORROWER
On the giving of fifteen days' prior written notice to the Bank, cancellation of
the Facilities will be permitted in minimum amounts of CHF 500'000.-- or
multiple for Facility A. Any amount so cancelled shall permanently reduce the
amount available under the Facility.
4.7 PREPAYMENT AND CANCELLATION
If the Borrower is required to make any payment to the Bank under Clause 5.2
(Taxation of the Bank, etc.) or under Clause 6 (Changes in circumstances), it
may prepay all or any one of the Advances to which the provisions of these
clauses apply by giving the Bank an irrevocable notice of prepayment and
cancellation and the Borrower will prepay the Advances ten Business Days after
such notice is given. The unused portion of the commitment will be deemed to be
cancelled on the date notice is given.
5. PAYMENT AND TAXES
5.1 MANNER OF PAYMENT
Each payment to be made by the Borrower must be:
(a) remitted to any account which the Bank specifies;
(b) made for value on the due date, in the currency in which it is
stated to be payable;
(c) made in the currency of the Advance, freely disposable outside
of bilateral or multilateral payment agreements which may
exist at the time of payment, free and clear of any and all
present and future taxes, levies, imposts, duties, deductions,
withholdings, fees, liabilities and similar charges, now or
hereafter imposed by or on behalf of any taxing authority.
If deduction of any such taxes shall at any time during the
continuance of these Facilities be required by or under the
authority of any government, the Borrower shall pay such
amount in respect of principal and interest as may be
necessary in order that the amounts effectively received by
the Bank after such deduction shall be equal to the respective
amount of principal and interest which would have been paid to
the Bank if no such deduction had been made.
5.2 TAXATION OF THE BANK, ETC.
If the Bank is required to make any payment on account of tax (other than tax
imposed on the net income of its lending office by the jurisdiction in which it
is incorporated or in
which its lending office is located) in respect of any sum received or
receivable by it under this Agreement, or if any liability in respect of any
such payment is asserted, imposed, levied or assessed against the Bank, the
Borrower shall on the Bank's demand, pay the Bank an amount equal to the amount
which the Bank is required to pay, together with any interest, penalties and
expenses payable or incurred in connection with it.
5.3 BUSINESS DAYS
If any payment under this Agreement becomes due on a day which is not a Business
Day, the due date for that payment will be extended to the next day which is a
Business Day, unless such Business Day shall fall in the following calendar
month, in which event the due date will be the immediately preceding Business
Day.
5.4 PARTIAL PAYMENT
If at any time the Bank receives a smaller payment than the amount of any
payment due, it may apply the amount effectively received in or towards
discharge of the Borrower's liabilities in any order selected by the Bank.
6. CHANGES IN CIRCUMSTANCES
6.1 INCREASED COSTS
If the result of any change in any law, regulation or official directive
(whether or not having the force of law), or in the interpretation or
application thereof, or compliance by the Bank with any request or directive of
any applicable monetary or fiscal Bank or authority or banking authority
(whether or not having the force of law) is to increase the cost (including an
increase of costs resulting from an adverse change in the calculation basis of
the Bank's own fund requirements) of the Bank of maintaining or funding any
Advance or is to reduce the amount of principal or interest receivable, then
upon demand by the Bank, the Borrower shall pay to the Bank such amount as shall
compensate the Bank for such additional cost or reduction.
In this case, the Borrower will also have the option to immediately and fully
repay the outstanding amounts without penalty subject to payment to the Bank of
the difference, if negative, if any, of:
(a) the amount of interest which the Bank is able to obtain by placing
an amount equal to the amount prepaid on deposit with prime banks
in the relevant interbank market for the remainder of relevant
interest period, as soon as reasonably practicable after receipt
thereof from the Borrower, less
(b) the amount of interest which would otherwise be payable to the
Bank on the relevant amount received for the remainder of the
relevant interest period (less the margin).
The certificate of the Bank setting out the amount shall, in the absence
of a manifest error, be conclusive evidence thereof.
6.2 ESCAPE CLAUSE
In case the Bank should not be able to grant or renew Advances in the currency
requested by the Borrower owing to any present or future currency restrictions
or similar circumstances (i.e. initiated by Central Banks, Governments or any
other public authority or body) the Bank reserves the right to advance another
freely transferable currency available at that date. The Bank's opinion as to
whether a currency is available or not shall be conclusive and binding on the
Borrower, except in case of a manifest error.
6.3 RESTRICTION CLAUSE
Should the Swiss National Bank or any other government body or authority impose
restrictions of any kind or nature on the Bank affecting these Facilities, the
Bank shall have the right to request that the conditions of the present
Facilities be renegotiated by sending without delay written notice to the
Borrower.
Should no consent be reached following a negotiation period of thirty days, the
Borrower and the Bank shall have the right to cancel the Facilities with
immediate effect and without having to pay any penalty, whereby any and all
amounts owed by the Borrower to the Bank shall immediately become due for
repayment.
6.4 ILLEGALITY
The Bank will notify the Borrower if it reasonably believes that it is, or will
be, acting illegally or contrary to any applicable rules and regulations in
relation to the Facilities ("Notice of Illegality"), specifying the reason
therefor. The Bank shall thereupon use its best efforts to transfer the
commitment under these Facilities to another bank not affected by such
illegality or violation of rules and regulations. If the Bank notifies the
Borrower in writing within twenty Business Days after despatching a copy of the
aforementioned Notice of Illegality to the Borrower, the commitment of the Bank
under this Agreement will thereupon terminate. If the Bank so requires, the
Borrower will prepay any Advance which is affected by any such illegality or
violation on the date specified by the Bank in the notice.
7. UNDERTAKINGS, COVENANTS, ETC.
7.1 GENERAL UNDERTAKINGS
The Borrower agrees that until all of its liabilities under this Agreement have
been discharged and as long as any commitment is outstanding:
(a) DEFAULT: it will notify the Bank immediately if any Event of
Default and if any potential Event of Default occurs or may
reasonably be expected to occur;
(b) INFORMATION: it shall inform the Bank without delay of any
event which is appropriate to adversely affect the credit
quality of these Facilities, in particular major disposals
of assets or acquisitions. It will supply the Bank with any
information regarding the Borrower and any of its
subsidiarie and its financial affairs and those of any of
its subsidiaries which the Bank may request;
(c) PARI PASSU: it will ensure that its liabilities under this
Agreement will rank at least equally with any and all other
present and future liabilities of the Borrower and/or its
subsidiaries other than those which are mandatorily privileged
by law;
(d) NEGATIVE UNDERTAKINGS: it will not without the Bank's prior
written consent:
(i) NEGATIVE PLEDGE: create any encumbrance or permit any
encumbrance to exist over all or any of its assets or
revenues or of the assets or revenues of all or any of its
subsidiaries, other than liens to secure equipment
financing or future permitted loans; or
(ii) MERGER: consolidate with or merge into any other body
corporate, or merge any other body corporate into itself;
or
(iii) DISPOSAL OF ASSETS OR REVENUES: dispose, transfer, grant or
lease its assets or assets of its subsidiaries, other than
in the ordinary course of business, except :
1. if the disposal of equipment and assets is executed
at fair value and the proceeds are redeployed in the
business within a period of 12 months; or
2. if the disposal is made with the prior written
consent of the Bank;
(iv) MAJOR ACQUISITIONS: purchase or undertake to purchase
(either itself or through any of its subsidiaries) assets
other than the planned Capex in kind and amounts as defined
in the Business Plan remitted to the Bank and as limited in
clause 7.5 (b), which will result in a major change in
the ability of the Borrower to fulfil its present and
future obligations in relation to these Facilities, or a
change of its business activities unless approved by the
Bank.
(v) REORGANISATION ETC.: enter into a de-merger or
reorganisation which will result in a major change in the
ability of the Borrower to fulfil its present and future
obligations in relation to the Facilities; or
(vi) GUARANTEES: give any guarantee, indemnity or other security
in connection with any other liability of any other person
otherwise than in the normal course of its business; or
(vii) CAPITAL COMMITMENTS: authorise or accept any capital
commitments outside the normal course of its business.
7.2 REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank that:
(a) the Borrower is a company duly organised and existing in good
standing under the laws of its country of incorporation with full
power and authority under such laws to own its properties and to
conduct its business;
(b) the making and performance of these Facilities as well as any
other signed agreement, has been duly authorised by all necessary
corporate action of the Borrower and
(i) does not contravene any provision of any applicable law or
of the Borrower's Articles of Association, and
(ii) will not result in a breach of or constitute a default
under any contractual provisions;
(c) this Agreement is valid and legally enforceable in accordance with
its terms against the Borrower in its country of incorporation;
(d) there are no actions, suits or proceedings pending or, to the
knowledge of the Borrower, threatened against the Borrower or any
of its subsidiaries before any court, tribunal or governmental
body, agency, authority or other instrumentality which might
substantially adversely affect the financial condition of the
Borrower and/or of any of its subsidiaries or its ability to
perform its obligations hereunder.
7.3 SPECIFIC UNDERTAKINGS
The Borrower agrees that until all of its liabilities under this Agreement have
been discharged and no commitment is outstanding:
(a) the Borrower will remit before the end of each fiscal year a
restated 5 year business plan with key financial projections,
including a liquidity plan for the following year;
(b) the Borrower's accounts and the consolidated accounts of the
Borrower and subsidiaries will be established in line with
accounting standard acceptable to the Bank, for the first time for
the opening balance on 1.1.2000. Such accounts as well as the
audit report have to be provided to the bank at latest 120 days
after the closing of the fiscal year.
(c) the Borrower represent and warrant that it has no knowledge of any
past present or future fact related to the environment, health and
safety, which could affect negatively the Borrower and/or its
subsidiaries.
7.4 FINANCIAL COVENANTS
The following financial covenants to be calculated each based on the
consolidated accounts of the Borrower must be permanently satisfied by the
Borrower and its subsidiaries on a consolidated basis. The calculation of the
ratio shall as a rule be carried out by the Borrower quarterly for the past 12
months (rolling calculation period) and be remitted at the latest to the Bank 60
days after the end of the calculation period. The first calculation period shall
be April 1, 2000 until March 2001. The financial covenants will be restated and
amended in case of a change of the Borrower's and/or any of its subsidiaries
accounting principles/policies (especially in case of dissolution of hidden
reserves, revaluation of assets, capital gains from disposal of assets, change
in accounting method(s), change in depreciation and amortisation policy, etc..)
(a) MINIMUM INTEREST COVERAGE RATIO
DEFINITION:
INTEREST COVERAGE RATIO: EBITDA divided by total gross interest expenses
Minimum ratios as per :
-----------------------------------------------------------------------
31.3.2001 31.3.2002 31.3.2003 31.3.2004
-----------------------------------------------------------------------
7.5x 9x 10x 10x
-----------------------------------------------------------------------
(b) MINIMUM FIXED CHARGE COVERAGE RATIO
DEFINITION:
FIXED CHARGE COVERAGE RATIO: (EBITDA + leasing expenses + rent
expenses) divided by (total gross interests expenses + leasing
expenses + rent expenses + capital expenditures)
Minimum ratios as per :
-----------------------------------------------------------------------
31.3.2001 31.3.2002 31.3.2003 31.3.2004
-----------------------------------------------------------------------
2.20x 2.25x 2.50x 2.25x
-----------------------------------------------------------------------
(c) MAXIMUM LEVERAGE RATIO
DEFINITION:
Maximum net debt capacity ratio : Senior Bank debt / EBITDA.
Senior Bank Debt is being defined as the amount due to the Bank as
of the end of the measuring period, after giving effect to the
principal payment due on such date.
Maximum ratios as per :
------------------------------------------------------------------------
31.3.2001 31.3.2002 31.3.2003 31.3.2004
------------------------------------------------------------------------
2.25x 2.00x 1.25x 1.00x
------------------------------------------------------------------------
(d) DEBT RESTRICTION FOR THE BORROWER AND ITS SUBSIDIARIES:
No other financial debt or similar obligations, provided to the
Borrower and/or its subsidiaries shall be possible without prior
written consent the Bank. Not included are lease obligations
clearly subordinated to the Bank's debt. The Borrower shall not
make available loans to its subsidiaries. The intercompany
accounts receivable of the Borrower shall not exceed the
intercompany payables of the Borrower, not including any
intercompany accounts receivable resulting from ordinary course
intercompany business transactions.
(e) VIOLATION OF FINANCIAL COVENANTS
A violation of any financial covenant described above may be cured
by a capital contribution by the Borrower's parent, i.e. any such
capital contribution shall effectively be treated as an increase
to EBITDA for compliance measurement purposes.
7.5 OTHER COVENANTS
(a) DIVIDEND RESTRICTIONS.
Nor the Borrower nor any one of its subsidiary is allowed to pay
dividends without prior consent of the Bank. However, subsidiaries
are allowed to pay dividends to the Borrower.
(b) CAPITAL EXPENDITURES [[CAPEX]]
Capex are limited to the amounts projected in the business plan,
unless prior written consent of the Bank to increase such Capex.
PROJECTED CAPEX
------------------------------------------------------------------
Period (fiscal year) Max. amounts in CHF
------------------------------------------------------------------
1.1.2000 to 31.3.2001 900'000.--
------------------------------------------------------------------
31.3.2001 to 31.3.2002 950'000.--
------------------------------------------------------------------
31.3.2002 to 31.3.2003 800'000.--
------------------------------------------------------------------
31.3.2003 to 31.3.2004 925'000.--
------------------------------------------------------------------
31.3.2004 to 31.3.2005 925'000.--
------------------------------------------------------------------
The portion of Capex which is not effectively invested within the
planned fiscal year will be rolled over to the next period.
The Bank is allowed to limit the Capex below projected amounts, in
case the EBITDA of the Borrower are not in line with its Business
Plan.
(d) TRANSACTION WITH SHAREHOLDERS / RELATED PARTIES
The Borrower undertakes for itself and its subsidiaries, unless
authorised otherwise by the Bank, for the whole duration of this
credit not to provide any credit or similar financial support to
its Shareholders or any related parties to them as well as to
enter into any obligation or provide any financial or other
support which is not in due course of business.
All transactions in normal course of business between the Borrower
and its ultimate parent company in the USA and the latter's
affiliated companies have to be done on an arm length basis.
(e) INSURANCE COVERAGE AND ENVIRONMENTAL RISK
The Borrower confirms and undertakes for itself and its
subsidiaries and for the whole duration of this Agreement to have
an adequate insurance coverage for its assets, losses due to
interruption of business activities, responsibility claim of third
parties as well as all other usual insurance coverage for such
business activities.
The Borrower confirms and undertakes for itself and its
subsidiaries and for the whole duration of this Agreement not to
enter in business activities which could bear any environmental
risk without prior authorisation of the Bank.
8. SELLER'S NOTE
As part of the purchase price, the Company will issue a Seller's Note to the
order of ▇▇▇▇▇▇▇▇▇ ▇▇ in the amount of CHF 1.7 mio. This Seller's Note will be
subordinated to the Bank's Debt and will bear an interest rate of 5%. The
following amounts are due under the Seller's Note:
December 17, 2000 CHF 700'000.-
December 17, 2001 CHF 1'000'000.-
The Company may make cash payments of up to CHF 700'000.- in respect of the
Seller's Note at any time on or after December 17, 2000 (any amounts of the
Seller's Note set off by the Company against indemnification liabilities of
▇▇▇▇▇▇▇▇▇ ▇▇ shall not be considered payments for the purpose of this sentence).
Additional payments in respect of the Seller's Note can only be made if one of
the following two conditions is satisfied:
1) The full payment of CHF 1'000'000.- may be made if the then
reported Consolidated Net Worth of the Borrower reaches at least
CHF 10 mio.; or
2) A payment of less than CHF 1'000'000.- may be made if the Debt
to Capital ratio (defined as net debt divided by net debt plus net
worth) remains below 45% following such payment.
9. EVENTS OF DEFAULT
9.1 EVENTS:
The occurrence of any of the following is an Event of Default:
(a) NON-PAYMENT: the Borrower, after a remedy period of seven days
from the repayment date shall fail to pay any amount of principal
or interest, or any other amount due hereunder, when same becomes
due and payable under this Agreement; or
(b) BREACH OF OBLIGATIONS: the Borrower and/or any one of its
subsidiaries and/or any third party mentioned in this Agreement
fails to perform or to observe any of the terms and conditions
and/or undertakings contained in this Agreement and (if capable of
remedy) such failure is not remedied within twenty days of its
occurrence; or
(c) MISREPRESENTATION: any representation or warranty made by the
Borrower or any third party under or in connection with this
Agreement shall turn out to have been incorrect or misleading in
any substantial material respect ; or
(d) CROSS-DEFAULT: the Borrower or any of its subsidiaries in respect
of any indebtedness in a principal amount in excess of CHF
250'000.-
(i) after giving effect to any applicable grace period, shall
fail to pay for borrowed money [other than money referred
to under (a) of this clause], or any interest or premium
thereon, when due (whether at scheduled maturity or by
prepayment, acceleration, demand or otherwise) or any other
default under any agreement or instrument relating to any
such indebtedness, or any other event shall occur, if the
effect of such default or event is to accelerate, or to
permit the acceleration of the maturity of such
indebtedness, or any such indebtedness shall be declared to
be due and payable, or required to be prepaid to the stated
maturity thereof; or
(ii) (a) becomes bound to repay prematurely any other loan or
obligation by reason of a default by the Borrower or (as
the case may be) any one of its subsidiaries which is
followed by an appropriate demand of such repayment except
where the Borrower or (as the case may be) any one of its
subsidiaries is taking action in good faith to dispute the
validity of the obligation to repay such other loan or
obligation prematurely; or (b) fails to make any payment of
principal, premium or interest in respect of such other
loan or obligation, or any payment under a guarantee in
respect of any loan or other obligation, on the due date
for such repayment or within any grace period specified in
the agreement or other instrument
constituting such other loan, obligation or guarantee as
aforesaid;
(e) WINDING UP OR DISSOLUTION ETC: any order is made by any competent
court or other authority or resolution passed by the Borrower for
the dissolution or winding-up of the Borrower or any order is made
by any competent court or other authority for the dissolution or
winding-up of any of its subsidiaries or for the appointment of a
liquidator, receiver or trustee of the Borrower or (as the case
may be) any of its subsidiaries or of the whole or any part of the
undertaking or assets of the Borrower or (as the case may be) any
of its subsidiaries which would be material in the context of this
Agreement or the Borrower or (as the case may be) any of its
subsidiaries applies for [[Sursis Concordataire]] (within the
meaning ascribed to that expression by the laws of Switzerland) or
an equivalent legal institution in case of any subsidiary, or
(F) INSOLVENCY: the Borrower or (as the case may be) any of its
subsidiaries stops or threatens or declares its intention to cease
payments or is unable to, or admits to creditors generally its
inability to pay its debts as they fall due, or is finally
adjudicated or found bankrupt or insolvent, or makes any
conveyance or assignment for the benefit of or enters into any
composition or other arrangement with its creditors generally ; or
(G) CHANGE OF CONTROL: any change of control in the Borrower:
For the present purposes "change of control" shall mean:
That RBC ▇▇▇▇▇▇▇▇▇ ▇.▇. is not anymore controlled 100%
directly or indirectly by Roller Bearings Company of
America, Inc.
(i) SECURITY ENFORCEABLE: any present or future Security on, over or
with respect to the Assets of the Borrower and/or any one of its
subsidiaries becomes enforceable or any beneficiary of
encumbrances takes possession or a receiver is appointed of the
whole or any material part of the undertaking, property and Assets
of the Borrower and/or any one of its subsidiaries or a distress
or execution is levied or enforced upon or sued for all or any
material part of the Assets of the Borrower and/or any one of its
subsidiaries; or
(j) GENERAL MATERIAL ADVERSE CHANGE: a change in the business,
operations, sales, costs, assets or liabilities of the Borrower
and/or one of its subsidiaries which, in the opinion of the Bank
has materially affected or is likely in the future to materially
affect the financial condition, net worth and profitability of the
Borrower; or
(l) UNLAWFULNESS, INVALIDITY: it is or becomes unlawful for the
Borrower to perform promptly any of its obligations under this
Agreement or for the Bank to exercise any of its rights under this
Agreement, or if this Agreement for any
other reason becomes invalid or unenforceable or ceases to be in
full force and effect, or if the Borrower does or causes or
permits to be done anything which evidences an intention to
contest or repudiate this Agreement wholly or in part; or
(m) COMPLIANCE WITH LAWS: the Borrower and/or any one of its
subsidiaries ceases or will cease to comply with any law,
regulation or requirement applicable to it in the carrying out of
its business.
9.2 CONSEQUENCES
If an Event of Default occurs, the Bank may and shall within 7 days after notice
of the Event of Default upon notice in writing to the Borrower immediately
terminate the commitment and declare all Advances and all other Bank debts
hereunder to be forthwith due and payable, whereupon the unpaid principal amount
of such Advances and of the current account (Facility B) together with accrued
interest to the date of declaration and all other amounts due hereunder shall
become immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrower.
10. SET-OFF
10.1 SET-OFF
The Bank may at any time take all or any of the following steps:
(a) open a new account in the name of the Borrower and debit that
account, or debit an existing account of the Borrower, with any
amount due to the Bank;
(b) combine or consolidate, regardless of currency, all or any of the
accounts with the Bank in the name of the Borrower or to which the
Borrower is beneficially entitled at any of the Bank's branches in
any country or territory; and
(c) (after taking into account any combination or consolidation of
accounts), set off any amount standing to the credit of any such
account by applying any such credit balance in or towards payment
of any amount due to the Bank.
10.2 CURRENCY CONVERSION
The Bank may at any time use any of the Borrower's credit balances with the Bank
to purchase at the Bank's applicable spot rate of exchange any other currency or
currencies which the Bank considers necessary to reduce or discharge any amount
due to the Bank,
and may apply that currency or those currencies in or towards payment of those
amounts.
11. INDEMNITIES
11.1 GENERAL INDEMNITY
The Borrower will indemnify the Bank against all losses (including but not
limited to losses from liquidating or re-employing deposits from third parties
which were acquired to effect or maintain the Facilities or any part of them)
and expenses which the Bank may incur (after taking into account any payments to
the Bank of interest at a default rate) as a result of the occurrence of:
(a) an Event of Default; and/or
(b) the failure of the Borrower to pay any amount due under this
Agreement on the due date; and/or
(c) any Advance being repaid or prepaid for any reason otherwise than
on the last day of its Term; and/or
(d) any Advance not being borrowed for any reason (excluding default
by the Bank) after a notice requesting that Advance has been sent
to the Bank by the Borrower.
11.2 CURRENCY INDEMNITY
If any payment in connection with this Agreement is made or recovered in a
currency other than that in which it is required to be paid then, if the payment
to the Bank (when converted at the Bank's rate of exchange on the date of
payment or, in the case of a liquidation of the Borrower, the latest date for
the determination of liabilities permitted by the applicable law) falls short of
the amount remaining unpaid under this Agreement, the Borrower will indemnify
the Bank against the amount of such shortfall.
12. FEES AND EXPENSES
12.1 ARRANGEMENT FEE
The Borrower will pay to the Bank an arrangement fee payable within 5 days as
from the signing of this arrangement in the amount of CHF 175'000.--.
12.2 EXPENSES
All out-of-pocket expenses, costs, charges, tax and expenses, including legal
fees, incurred by the Bank in connection with the negotiation, preparation and
completion of this agreement shall be taken in charge by the Bank. For the
avoidance of doubt, any costs incurred by the Bank in reviewing and proposing
amendments to this agreement and in checking on the commercial soundness of
participating in this agreement shall be borne by the Bank.
Out-of-pocket expenses, including legal fees, incurred in connection with any
change, reorganisation, amendment of this Agreement after the signing date shall
be borne by the Borrower.
12.3 VALUE ADDED TAX
All amounts stated in this agreement to be payable by the Borrower are exclusive
of value added tax or any similar tax properly chargeable in respect of services
under this Agreement, and the Borrower will pay all tax of this nature together
with the amounts on which such tax shall be levied.
13. ASSIGNMENT, TRANSFER AND LENDING OFFICES
13.1 NO ASSIGNMENT BY THE BORROWER
The Borrower may not assign or transfer any of its rights or obligations under
this Agreement, except with the prior written approval of the Bank.
13.2 ASSIGNMENT AND TRANSFER BY THE BANK:
The Bank shall be entitled to transfer or assign the whole or any part of its
rights and obligations under these Facilities to an affiliated, controlled or
related company or other entity, provided that such Bank shall retain a majority
interest in or otherwise control such company for the duration of the loan and
provided further, that such assignment will not be prejudicial to the Borrower
from a tax perspective, subject to prior notification of the Borrower. Any other
assignment may be effected with the prior written approval of the Borrower only,
which approval shall not be unduly withheld.
14. NOTIFICATION
14.1 BY THE BORROWER:
All notification by the Borrower to the Bank as well as all correspondence in
connection with these Facilities shall be delivered either in person, or sent
registered express or A-mail and shall be deemed to have been duly given if
addressed to the Bank as follows:
-------------------------------------------------------
CREDIT SUISSE
-------------------------------------------------------
Attn: C. Saucy
-------------------------------------------------------
▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇
-------------------------------------------------------
Case postale 237
-------------------------------------------------------
2800 Delemont 1
-------------------------------------------------------
14.2 BY THE BANK
All notification by the Bank to the Borrower as well as all correspondence in
connection with these Facilities shall be delivered either in person, or sent by
registered express or A-mail or tested telex and shall be deemed to have been
duly given if addressed to:
RBC ▇▇▇▇▇▇▇▇▇ ▇▇
c/o Roller Bearing Company of America, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Tel: 001/(▇▇▇) ▇▇▇-▇▇▇▇
Fax: 001/(▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇
Attention: C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Tel: 001/(▇▇▇) ▇▇▇-▇▇▇▇
Fax: 001/(▇▇▇) ▇▇▇-▇▇▇▇
14.3 OBJECTIONS
Any objection by the Borrower relating to the execution or non-execution of any
order of any kind as well as any objection to any statement of account or to any
other communication, must be made within seven working days upon receipt of the
respective communication; otherwise the execution or non-execution of the order
as well as the pertinent statements and communications are deemed to have been
approved.
15. GOVERNING LAW AND JURISDICTION
This Agreement will be governed by and construed in accordance with Swiss law,
which shall also govern any decision as to the validity of this choice of law
clause.
Any dispute arising out of or in connection with this Agreement shall be settled
by the competent courts of the canton of Jura and the Swiss Confederation, venue
being Delemont, provided always, that the Bank shall be entitled to institute
proceedings against the Borrower before any competent court, including, but not
limited to the court competent at the place or registered office of the Borrower
or any of its subsidiaries.
16. MISCELLANEOUS
The parties hereto have executed this Agreement - constituting the legally
binding Agreement - in four originals:
You will find here enclosed an exemplar of our Bank's general conditions. They
are part and parcel of this Agreement unless stated otherwise within this
Agreement. Accordingly, in the event of any conflicts or inconsistencies between
this Agreement and the general conditions, the provisions of this Agreement
shall apply.
SIGNED on behalf of each of the parties:
[Delemont, 27 December 1999]
THE BORROWER:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
RBC ▇▇▇▇▇▇▇▇▇ ▇.▇. ------------------------------
NAMES
THE BANK:
▇▇▇▇▇▇ ▇▇▇▇▇▇
CREDIT SUISSE ------------------------------
NAMES
ANNEXES
-------
Annex A, B, C
ANNEXE A
CONDITIONS PRECEDENT -
ITEMS REQUIRED BEFORE AN ADVANCE OR OTHER FUNDS MAY BE
BORROWED
1. Copies of the documents which contain or relate to the Borrower's
constitution, up to date and in full force and effect, namely:
a) Certificate of incorporation
b) Memorandum and articles of association
c) Proof of formation and due standing of RBC ▇▇▇▇▇▇▇▇▇ ▇▇ with due
subscription and fully-paid-in share capital
2. Provide evidence of compliance with clause 1.9 (Security) and 8.1 (Events
of Default), in a form satisfactory to the Bank
3. Provide evidence of compliance signature of general conditions of the Bank
4. Provide organisational chart of the Borrower
5. Copy of the signed sale agreement for the assets of RBC ▇▇▇▇▇▇▇▇▇ ▇.▇.,
including the name "Schaublin"
7. The documents of the Borrowers.
8. The purchase price of CHF 13.7 mio. will be satisfied by a cash payment of
CHF 12 mio. and the issuance of a 5% Subordinated Seller's Note of CHF 1.7
mio., payable in two tranches of CHF 0.70 mio. on the First Anniversary of
the Promissory Note dated December 17, 1999 and CHF 1.0 mio. on the Second
Anniversary of the Promissory Note dated December 17, 1999 1), subject to
Article 8 of the Credit Agreement. A minimum cash contribution of CHF 2.75
mio. in fully liberated capital of the Company will have been made.
9. All necessary corporate authorizations for the entry into the transaction
documents.
10. Documentation of the Facilities.
11. Legal opinions given by the legal advisors to the Lenders that the
following is in place: legally binding arrangements between the owners of
▇▇▇▇▇▇▇▇▇ ▇.▇. to purchase all the acquired assets.
12. Legal opinion by the legal advisors to the Lenders that the securities are
legally binding and enforceable.
13. Representation and warranties remain true and correct as of the proposed
date of making such draw down
ANNEXE B
ADVANCE REQUEST
From: RBC ▇▇▇▇▇▇▇▇▇ ▇.▇., Blancherie 9, 2800 Delemont ([[Borrower]])
To: Credit Suisse, 2800 Delemont ([[Agent]])
Date
Dear Sirs,
We refer to the agreement (as from time to time amended, varied, novated or
supplemented, the [[Facility]]) dated ▇▇▇, ▇▇▇▇, and made between RBC ▇▇▇▇▇▇▇▇▇
▇.▇. and the Bank.
We hereby give you notice that we wish to make a short term Advance under this
Facility as follows:
Facility A
--------------------------------------------------
Currency:
---------------------------------------------------
Amount:
---------------------------------------------------
First value date:
---------------------------------------------------
Duration:
---------------------------------------------------
To be transferred to account: No
---------------------------
Beneficiary:
----------------
Bank:
------------------------
We confirm that at the date thereof the representations and undertakings set out
in the Agreement are true and no event which is or may become (with the passage
of time, the giving notice, the making of any determination under the Facility
Agreement or any combination thereof) an Event of default has occurred
Yours Sincerely,
-------------------------------------
For and on behalf of RBC ▇▇▇▇▇▇▇▇▇ ▇▇
ANNEXE C
COMPLIANCE CERTIFICATE
The undersigned officer of RBC ▇▇▇▇▇▇▇▇▇ ▇.▇., hereby certifies that he is the
Chief Financial Officer of the Borrower, and that as such he is authorised to
execute this compliance certificate required to be furnished pursuant to the
credit agreement, dated xxx, 1999 and further certifies that:
1) Attached hereto is a copy of the Borrowers quarterly statements for the
period ending [ ____________ ], which contains the consolidated balance
sheet of RBC ▇▇▇▇▇▇▇▇▇ ▇.▇. and its subsidiaries [ ______________ ], and
the related consolidated statements of income and cash flows of RBC
▇▇▇▇▇▇▇▇▇ ▇.▇. and its subsidiaries for the period ending [ ____________ ],
setting forth in each case in comparable form the figures for the previous
year (collectively the "Financial Statements").
2) The Financial Statements are complete and correct in all material respects
and were prepared in reasonable detail an in accordance with the general
accepted accounting rules applied consistently throughout the periods
reflected therein.
3) The undersigned has no knowledge of any Default or Event of Default.
4) The following calculations as of [ ______________ ] support the statement
made in paragraph 3 above with respect to the credit agreement, dated
______________.
i) Minimum Interest Coverage Ratio
Consolidated Net Income _____________
+ Taxes _____________
+ TOTAL GROSS INTEREST EXPENSES "B" _____________
----------------------------------
EBIT _____________
+ Amortisation of Goodwill _____________
+ DEPRECIATION _____________
-------------
EBITDA "A" _____________
Minimum Interest Coverage Ratio I ("A" divided by "B") _____________
Covenant Minimum _____________
Page 2
ii) Minimum Fixed Charges Coverage
Consolidated EBITDA (as determined in ii) above) _____________
Leasing Expenses _____________
Rent Expenses _____________
Capital Expenditures _____________
Minimum Fixed Charges Coverage
(EBITDA + Leasing expenses + Rent expenses) divided by
(Total Gross Interest Expenses + Leasing Expenses +
Rent Expenses + Capital Expenditures) _____________
Covenant Minimum _____________
iii) Maximum debt capacity ratio
Consolidated Senior Bank Debt "A" _____________
Consolidated EBITDA (as determined in ii) above) "B" _____________
Maximum debt capacity ratio ("A" divided by "B") _____________
Covenant Maximum _____________
RBC ▇▇▇▇▇▇▇▇▇ ▇.▇.
----------------------------
(Name, Title)
----------------------------
(Date)