Letter Agreement for Short-Term Line of Credit between Deutsche Bank and International Knife & Saw, Inc.

Summary

Deutsche Bank is providing International Knife & Saw, Inc. with a short-term line of credit of $13 million for operating needs. The loan is subject to interest at LIBOR plus 1.25% and a 0.25% commitment fee if less than half is drawn. The company must not pledge receivables or inventory to third parties and must provide financial statements quarterly and annually. Additional collateral may be required if earnings fall significantly below plan. The agreement is governed by German law and remains valid as long as financial conditions are stable.

EX-10.18 5 0005.txt LETTER AGREEMENT - DEUTSCHE BANK AND THE COMPANY Translation of Letter Dated May 12, 1999 From: Deutsche Bank, Mr. Bauermann and Mr. Jakobi Blumenstrasse 13, 42849 Remscheid, Germany To: International Knife & Saw, Inc., Mr. Thomas Meyer C/O IKS Klingelnberg GmbH In der Fleute 18, 42897 Remscheid, Germany Confirmation of Current Lines of Credit Dear Mr. Meyer: We refer to our credit commitment of October 8, 1996; our letter of January 19, 1999; and the discussions we have had with you in recent weeks. We are pleased to confirm that, within the framework of our general business conditions (AGB), we are making available to you a short-term line of credit in the amount of US $13,000,000 for operating needs. Drawdowns on the line will be handled via Euro-Credits in minimum amounts of $1 million at LIBOR + 1.25% per annum. If at least 50% of the credit line has not been drawn down, then we will charge a commitment fee of 0.25%. You commit to us that no third parties have any rights to your receivables or inventories. Upon our demand for such, you agree to grant us these rights. In addition, the following covenants are a condition of our credit commitment: o You will pledge fixed assets as additional collateral, in the event that the result in the consolidated financial statements before interest and taxes (EBIT) is more than 30% under the original plan (1998: $22,041,000; 1999 $25,098,000). o You must provide quarterly financial information and annual financial statements to us. The year end financial statements must be presented to us no later than 4 months after year end. o German law and German courts govern this agreement. This credit commitment is valid until further notice, assuming constant good financial conditions. Please sign the enclosed copy of this letter to indicate your agreement and send it back to us. We thank you for your trust in us and hope for a smooth and trustworthy relationship.