CONFORMED COPY
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EXHIBIT 10.2
DATED 21ST APRIL 1998
PRESTOLITE ELECTRIC LIMITED
- and -
LOMBARD NATWEST DISCOUNTING LIMITED
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INVOICE DISCOUNTING AGREEMENT
RELATING TO
A COMMITTED INVOICE DISCOUNTING FACILITY OF (Pounds)7,000,000
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WILDE SAPTE
0 Xxxxx Xxxxx
Xxxxxx XX0X 0XX
Tel. 0000 000 0000
Fax. 0000 000 0000
REF. AJW/MNS/XX0000000.10
TABLE OF CONTENTS
CLAUSE HEADING PAGE NUMBER
1. DEFINITIONS AND INTERPRETATION......................... 1
1.1 Definitions............................................ 1
1.2 Headings............................................... 14
1.3 Interpretation......................................... 14
2. INVOICE DISCOUNTING FACILITY........................... 15
2.1 Invoice Discounting Facility........................... 15
2.2 Additional Clients..................................... 15
3. PURPOSE................................................ 15
3.1 Purpose of the Invoice Discounting Facility............ 15
3.2 Undertaking by the Clients............................. 15
3.3 No liability........................................... 16
4. CONDITIONS PRECEDENT................................... 16
4.1 Conditions precedent................................... 16
4.2 Confirmation of satisfaction........................... 16
5. AVAILABILITY OF INVOICE DISCOUNTING FACILITY........... 16
5.1 Clients' offer to sell................................. 16
5.2 Purchase............................................... 16
5.3 Conditions to Payment.................................. 16
5.4 Facility Limit......................................... 17
5.5 Calculation of Available Amount........................ 17
5.6 Variation of Global Deduction Percentage............... 19
5.7 Determination of Substantial Debt Deduction............ 20
5.8 Assignment of Purchased Receivables.................... 20
5.9 Goods.................................................. 21
5.10 Collection............................................. 21
6. REMUNERATION........................................... 22
6.1 Determination of the Funding Amount.................... 22
6.2 Discounting Charge..................................... 23
6.3 Calculation and Payment of Remuneration................ 23
6.4 Default Interest....................................... 23
6.5 Expenses............................................... 23
6.6 Records................................................ 23
6.7 LND's Determination.................................... 23
7. TERMINATION, REPURCHASE AND CANCELLATION............... 24
7.1 Repurchase............................................. 24
7.2 Mandatory repurchase on Sale or Listing................ 24
7.3 Voluntary repurchase of Receivables.................... 24
7.4 Cancellation of Invoice Discounting Facility........... 24
7.5 Refinancing Fees....................................... 24
8. CHANGES IN CIRCUMSTANCES............................... 25
8.1 Illegality............................................. 25
8.2 Certificates........................................... 25
9. PAYMENTS............................................... 25
9.1 Place and time......................................... 25
9.2 Funds.................................................. 25
9.3 Business Days.......................................... 25
9.4 Currency............................................... 25
9.5 Accounts as evidence................................... 26
9.6 Partial payments....................................... 26
9.7 Set-off and counterclaim............................... 26
9.8 Grossing-up............................................ 26
10. SECURITY............................................... 28
10.1 Security Documents..................................... 28
11. REPRESENTATIONS AND WARRANTIES......................... 28
11.1 Representations and warranties......................... 28
11.2 Repetition............................................. 31
12. UNDERTAKINGS........................................... 32
12.1 Information undertakings............................... 32
12.2 Positive undertakings.................................. 35
12.3 Negative undertakings.................................. 38
12.4 Financial undertakings................................. 40
13. DEFAULT................................................ 41
13.1 Default................................................ 41
13.2 Acceleration, etc...................................... 44
14. SET-OFF................................................ 44
15. FEES AND EXPENSES...................................... 44
15.1 Expenses............................................... 44
15.2 Administration fees.................................... 45
15.3 Arrangement Fee........................................ 45
15.4 Documentary Taxes indemnity............................ 45
15.5 VAT.................................................... 45
15.6 Indemnity payments..................................... 45
15.7 Debiting authority..................................... 46
16. WAIVERS: REMEDIES CUMULATIVE.......................... 46
17. MISCELLANEOUS.......................................... 46
17.1 Severance.............................................. 46
17.2 Counterparts........................................... 46
18. NOTICES................................................ 46
18.1 Method................................................. 46
18.2 Delivery............................................... 46
18.3 Addresses.............................................. 47
18.4 Deemed receipt......................................... 47
19. ASSIGNMENTS AND TRANSFERS.............................. 48
19.1 Benefit of Agreement................................... 48
19.2 Assignments and transfers by Clients................... 48
19.3 Assignments by LND..................................... 48
19.4 Transfers by LND....................................... 48
19.5 Disclosure of information.............................. 48
20. INDEMNITIES............................................ 48
20.1 Currency indemnity..................................... 48
20.2 General................................................ 49
21. LAW.................................................... 49
21.1 Law.................................................... 49
SCHEDULE 1 CONDITIONS PRECEDENT................................... 50
SCHEDULE 2 FORM OF ACCESSION AGREEMENT............................ 52
SCHEDULE 3 Part I................................................. 55
SCHEDULE 3 Part II................................................ 56
THIS AGREEMENT is made on 21st April 1998
BY:
(1) PRESTOLITE ELECTRIC LIMITED, a company incorporated in England and Wales
with registered number 01189048 (the "INITIAL CLIENT"); and
(2) LOMBARD NATWEST DISCOUNTING LIMITED of Xxxxx Xxxxx, Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxx XX00 0XX ("LND").
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"ACCESSION AGREEMENT" means an agreement substantially in the form set
out in Schedule 2.
"ACCOUNTANTS' REPORT" means the report dated on or about 5th September
1997 prepared by Messrs. Coopers & Xxxxxxx relating to the Target Assets
and the trading forecasts or the business conducted by operation of the
Target Assets, addressed among others, to LND.
"ACCOUNTING PERIOD" has the meaning given to that term in Clause 12.1(b).
"ACCOUNTING PRINCIPLES" means the GAAP used in the preparation of the
Business Plan.
"ACCOUNTS" means:
(a) in relation to the Initial Client, its audited consolidated
accounts (including all additional information and notes to the
accounts but for the avoidance of doubt excluding the accounts of
the Parent) together with the relevant directors' report and
auditors' report; and
(b) in relation to any other Group Company from time to time, its
audited accounts (including all additional information and notes
to the accounts) together with the relevant directors' report and
auditors' report.
"ACQUISITION AGREEMENTS" means the assets sale and purchase agreement
dated 22nd January 1998 relating to the sale and purchase of various
assets of the Vendor and the LAO Sale and Transition Agreement each made
between the Vendor and the Initial Client.
"ACQUISITION COSTS" means those fees, commissions, costs and expenses
reasonably and properly incurred by the Initial Client in relation to its
acquisition of the Target Assets.
"ACQUISITION DOCUMENTS" means the Acquisition Agreements together with
all other documents referred to in the Acquisition Agreements or relating
to the acquisition of the Target Assets but, for the avoidance of doubt,
shall not include the Disclosure Letter.
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"ACQUISITION GOODWILL" means the net goodwill arising on the acquisition
of the Target Assets.
"ACT" means the Companies Xxx 0000.
"ADVICE TRANSMISSION" means, in relation to a Purchased Receivable, a
modem transmission from the Client to LND in a form acceptable to LND.
"APPROVED CURRENCIES" means each of:
(a) Sterling;
(b) US Dollars; and
(c) such other currency as is approved in writing by LND.
"AUDITORS" means, in relation to each Group Company, Coopers and Xxxxxxx
or any other firm of chartered accountants of internationally recognised
standing that has been appointed as auditors of such Group Company.
"AVAILABLE AMOUNT" means the maximum aggregate amount available to be
drawn down by the Clients under Clause 5.5 and for the time being
undrawn.
"BASE RATE" means:
(a) in relation to Sterling NWB's base rate from time to time; and
(b) in relation to any other Approved Currency LND cost of funding
such Alternative Currency from NWB.
"BLUE CHIP CUSTOMERS" means each of Mitsubishi, RVI (Renault), Volvo and
Daimler-Benz.
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
banks and foreign exchange markets are open for business in:
(a) London; and
(b) in relation to a transaction involving an Approved Currency, in
the principal financial centre of that Approved Currency.
"BUSINESS PLAN" means the bundle of papers prepared by the management of
the Initial Client in the agreed form describing the nature and extent
of, and prospects for, the Group's businesses and operations.
"CAPITAL EXPENDITURE" has the meaning given to that term by GAAP.
"CASHFLOW" means, in respect of the Group in relation to any period, the
aggregate of PBIT and Depreciation charged to the profit and loss account
for that period:
(a) plus the net proceeds of fixed assets disposed of during that
period to the extent included in the Operating Budget which has
been approved by NWB for that period;
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(b) plus any decrease, or minus any increase, in Net Working Capital
during that period;
(c) plus any receipts by way of Extraordinary Items and minus any
payments by way of Extraordinary Items, in each case, received or
made during that period;
(d) minus any dividends paid in respect of minority interests for that
period;
(e) plus any dividends received from other fixed assets investments
during that period;
(f) plus income from participating interests in associated
undertakings to the extent received in cash and minus any payment
made to associated undertakings during that period;
(g) plus any increase or minus any decrease in provisions for
liabilities and charges made in respect of that period;
(h) minus Capital Expenditure in respect of that period paid or
contractually required to be paid during that period;
(i) plus realised exchange gains and minus realised exchange losses
charged during that period to the extent not already taken account
of in PBIT for that period;
(j) minus the aggregate of all corporation or other similar Taxes paid
during that period;
(k) minus the Restructuring Costs for the relevant period;
(l) plus the amount by which the Funding Amount on the last day of the
relative period is in excess of the Funding Amount on the first
day of the relative period or minus the amount by which the
Funding Amount on the last day of the relative period is less than
the Funding Amount on the first day of the relative period; and
(m) plus the Available Amount.
(For the purposes of this definition: "NET WORKING CAPITAL" means the
aggregate of Current Assets (excluding all of cash at bank and cash in
hand, all assets in relation to Tax and accrued interest receivable) less
the aggregate of Current Liabilities (excluding moneys due in relation to
the Invoice Discounting Facility, the Parent Loan and liabilities in
relation to Tax, Extraordinary Items and dividends payable); "CURRENT
ASSETS" means, in relation to the Group, the aggregate value of its
assets which are treated as current assets in accordance with GAAP; and
"CURRENT LIABILITIES" means, in relation to the Group, the aggregate
value of its liabilities which are treated as current liabilities in
accordance with GAAP).
"CERTIFIED COPY" means, in relation to a document, a copy of that
document bearing the endorsement "Certified a true, complete and accurate
copy of the original, which has not been amended otherwise than by a
document, a Certified Copy of which is attached
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hereto", which has been signed and dated by a duly authorised officer of
the relevant company and which complies with that endorsement.
"CHARGING GROUP COMPANIES" means the Initial Client and each of its UK
Subsidiaries (other than any Dormant Subsidiary)which has granted, or is
by the terms of this Agreement to grant, a Guarantee or a Deed of Charge;
and "CHARGING GROUP COMPANY" shall be construed accordingly.
"CLIENTS" means the Initial Client and any other Charging Group Company
that becomes a party to this Agreement pursuant to Clause 2.2; and
"CLIENT" shall be construed accordingly.
"COMMENCEMENT DATE" means the date upon which LND notifies the Initial
Client that all of the conditions set out in Schedule 1 have been
satisfied or waived.
"COMPLETION" means the completion of the sale and purchase of the Target
Assets pursuant to the Acquisition Agreements.
"COMPLIANCE CERTIFICATE" has the meaning given to that term in Clause
12.1(f).
"CONNECTED" has the meaning given to that term by Section 249 of the
Insolvency Xxx 0000.
"CUSTOMER" means the debtor in relation to a Purchased Receivable.
"DANGEROUS MATERIALS" means any element or substance, whether consisting
of gas, liquid, solid or vapour, identified by any Environmental Law to
be, to have been, or to be capable of being or becoming, harmful to
mankind or any living organism or damaging to the Environment.
"DEBENTURE" means a debenture in the agreed form executed or to be
executed by a Group Company in favour of LND.
"DEED OF CHARGE" means an instrument in the agreed form executed or to be
executed by any Charging Group Company in favour of LND over its
respective book and other debts which do not in the case of any Group
Company not acceding to the terms of this Agreement by virtue of an
executed and delivered Accession Agreement vest in LND pursuant to the
terms set out herein.
"DEFAULT" means any event specified as such in Clause 13.1.
"DEFAULT NOTICE" has the meaning given to that term in Clause 13.2.
"DEPRECIATION" has the meaning given to that term by GAAP.
"DISCLOSURE LETTER" has the meaning given to that term in the Acquisition
Agreements.
"DISCOUNTING CHARGE" means the discount charge to be paid by the Initial
Client under Clause 6.2.
"DISCOUNTING DOCUMENTS" means this Agreement, the Security Documents and
any guarantee and any document creating security executed and delivered
after the date of this
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Agreement as security for any of the obligations and liabilities of any
Client under any other Discounting Document.
"DISCOUNTING RATE" means the aggregate of:
(a) the Base Rate; and
(b) the Margin.
"DISPOSAL" means a sale, transfer or other disposal (including by way of
lease or loan) by a person of all or part of its assets, whether by one
transaction or a series of transactions and whether at the same time or
over a period of time.
"DISPOSAL PROCEEDS" means, in respect of a Disposal by a Group Company,
the gross consideration receivable by that Group Company for that
Disposal less all Taxes, costs and expenses directly incurred in respect
of that Disposal.
"DORMANT SUBSIDIARY" means, on any given date, a Group Company (a) which
has been dormant within the meaning of section 250(3) of the Act for the
period of 12 months ending on that date and (b) the value of whose assets
does not exceed in aggregate (Pounds)5,000.
"ENCUMBRANCE" means any mortgage, charge, assignment by way of security,
pledge, hypothecation, lien, right of set-off, retention of title
provision, trust or flawed asset arrangement (for the purpose of, or
which has the effect of, granting security) or any other security
interest of any kind whatsoever, or any agreement, whether conditional or
otherwise, to create any of the same, or any agreement to sell or
otherwise dispose of any asset on terms whereby such asset is or may be
leased to or re-acquired or acquired by any Group Company.
"ENVIRONMENT" means all or any of the following media: air (including air
within buildings or other structures and whether above or below ground);
land (including buildings and any other structures or erections in, on or
under it and any soil and anything below the surface of land); land
covered with water; and water (including sea, ground and surface water).
"ENVIRONMENTAL LAW" means any statutory or common law, treaty,
convention, directive or regulation having legal or judicial effect
whether of a criminal or civil nature, concerning:
(a) pollution or contamination of the Environment;
(b) harm, whether actual or potential, to mankind and human senses,
living organisms and ecological systems;
(c) the generation, manufacture, processing, distribution, use
(including abuse), treatment, storage, disposal, transport or
handling of Dangerous Materials; and
(d) the emission, leak, release or discharge into the Environment of
noise, vibration, dust, fumes, gas, odours, smoke, steam,
effluvia, heat, light, radiation (of any kind), infection,
electricity or any Dangerous Material and any matter or thing
capable of constituting a nuisance or an actionable tort of any
kind in respect of such matters.
5
"ENVIRONMENTAL REPORT" means the report prepared by EAG Environ dated 5th
September 1997 relating to the business to be acquired by the Initial
Client and the business of the Initial Client addressed to the Initial
Client. [JW]
"EXCEPTIONAL ITEMS" has the meaning given to that term in FRS3, but
excluding those items listed in paragraph 20 of FRS3.
"EXTRAORDINARY ITEMS" has the meaning given to that term in FRS3, but
including those items listed in paragraph 20 of FRS3.
"FACILITY LIMIT" means the aggregate principal sum of (Pounds)7,000,000
or the Sterling Equivalent;
"FINANCE LEASE" means any lease, hire agreement, credit sale agreement,
hire purchase agreement, conditional sale agreement or instalment sale
and purchase agreement which should be treated in accordance with SSAP 21
(or any successor to SSAP 21) as a finance lease or in the same way as a
finance lease.
"FINANCE LEASE EXPENDITURE" means the capital value of any asset the
subject of a Finance Lease to which a Group Company is a party.
"FINANCIAL GUARANTEE" means a bank guarantee being a direct credit
substitute to which the Bank of England attributes a credit conversion
factor of 100 per cent. for the purpose of risk asset weighting
calculations in accordance with its notice "Implementation in the United
Kingdom of the Solvency Ratio Directive" (BSD/1990/3 as amended,
supplemented or replaced from time to time).
"FINANCIAL YEAR", in relation to a company, has the meaning given to that
expression in section 223 of the Act.
"FRS" together with a number means the financial reporting standard from
time to time issued by the Accounting Standards Board for application in
England and Wales and identified by reference to that number.
"FUNDING AMOUNT" means the amount calculated under Clause 6.1, and in
relation to an Approved Currency not in sterling is calculated at the
Sterling Equivalent.
"GAAP" means, in relation to a company, accounting principles, concepts,
bases and policies generally adopted and accepted in the jurisdiction of
its incorporation.
"GLOBAL DEDUCTION PERCENTAGE" means twenty per cent. or such other
percentage calculated in accordance with Clause 5.6.
"GOODS" means goods provided by a Client in relation to which a Purchased
Receivable is created.
"GROUP" means the Initial Client and each of its Subsidiaries for the
time being; and "GROUP COMPANY" means any one of them.
"GUARANTEE" means a guarantee in the agreed form executed or to be
executed by a Charging Group Company in favour of LND.
6
"INDEBTEDNESS" means, in relation to a person, its obligation (whether
present or future, actual or contingent, as principal or surety) for the
payment or repayment of money (whether in respect of interest, principal
or otherwise) incurred in respect of:
(a) moneys borrowed or raised;
(b) any bond, note, loan stock, debenture or similar instrument;
(c) any acceptance credit, xxxx discounting, note purchase, factoring
or documentary credit facility;
(d) the supply of any goods or services which is more than 45 days
past the expiry of the period customarily allowed by the relative
supplier after the due date;
(e) any Finance Lease;
(f) any guarantee, bond, stand-by letter of credit or other similar
instrument issued in connection with the performance of contracts;
(g) any interest rate or currency swap agreement or any other hedging
or derivatives instrument or agreement;
(h) any arrangement pursuant to which any asset sold or otherwise
disposed of by that person is or may be leased to or re-acquired
by a Group Company (whether following the exercise of an option or
otherwise); or
(i) any guarantee, indemnity or similar assurance against financial
loss given in respect of the obligation of any person falling
within any of (a) to (h) above.
"INFORMATION PACKAGE" means:
(a) the Accountants' Report;
(b) the Business Plan; and
(c) the Environmental Report.
"INVOICE DISCOUNTING FACILITY" means the invoice discounting facility of
up to (Pounds)7,000,000 referred to in Clause 2.1 or the Sterling
Equivalent.
"LAO SALE AND TRANSITION AGREEMENT" means the sale and transition
agreement dated 22nd January 1998 and made between the Vendor and the
Initial Client.
"LISTING" means a listing of any issued shares in the Initial Client on
the Official List on the London Stock Exchange.
"MANAGEMENT ACCOUNTS" has the meaning given to that term in Clause
13.1(b).
"MARGIN" means, 1.75 per cent. per annum.
"MATERIAL ADVERSE EFFECT" means a material adverse effect in the opinion
of LND (acting reasonably) on (a) the ability of any Group Company to
comply with its obligations under
7
any Discounting Document or (b) the business, financial condition or
assets of the Group taken as a whole.
"MEMORANDUM OF REPAYMENT" means the memorandum relating to a partial
prepayment of the Parent Loan from the Initial Client to the Parent.
"MITSUBISHI" means Mitsubishi Caterpillar Forklift Europe BV a company
incorporated under the laws of the Netherlands with registered number
39052636 Lelystad.
"NOTE INDENTURE" means the indenture governing the Parent's 9/5//8 per
cent. senior notes due 2008.
"NWB" means National Westminster Bank Plc.
"NWB PRIORITY LETTER" means the letter from NWB to LND regarding the
priorities of their respective security.
"NWB SECURITY" means the mortgage debenture dated 22nd January 1987 made
between the Initial Client and NWB and the other security and guarantees
and indemnities in favour of NWB.
"OFFER" means a written offer, substantially in the form set out in
Schedule 3, Part 1, by the Initial Client (on behalf of the Clients) to
LND to sell each of its Receivables to LND.
"OPERATING BUDGET" means, in relation to the Group and the period
starting not later than the date of this Agreement and ending on 31st
December 1998 the budget as disclosed in the Business Plan, and in
relation to each successive 12 month period thereafter during the
Security Period:
(a) a projected consolidated balance sheet;
(b) a projected consolidated profit and loss account;
(c) a projected consolidated cashflow statement; and
(d) projected covenant calculations relating to each financial
undertaking contained in Clause 12.4,
relative to each such period and on a month by month basis and with
Management's commentary drawing on the previous period's performance and
forecast market conditions.
"PARENT" means Prestolite Electric Incorporated a corporation
incorporated under the laws of the state of Delaware.
"PARENT LOAN" means a loan made by the Parent to the Initial Client for
the purposes of the acquisition of the Target Assets pursuant to the
Acquisition Agreements.
"PARENT LOAN AGREEMENT" means the agreement between the Parent and the
Initial Client under which the Parent Loan is made available or is to be
made available.
"PARTY" means a party to this Agreement.
8
"PBIT" means, in relation to any period, the consolidated profit of the
Group for that period before Taxation and Total Debt Costs for that
period, but excluding:
(a) profit attributable to minority interests;
(b) Extraordinary Items;
(c) Exceptional Items;
(d) any profit or loss arising on the disposal of fixed assets;
(e) any amount amortised in respect of Acquisition Costs in accordance
with FRS4;
(f) amounts written off the value of investments;
(g) amounts written off the value attributed to Acquisition Goodwill;
(h) income from participating interests in associated undertakings and
income from any other fixed asset investment;
(i) realised and unrealised exchange gains and losses; and
(j) the Restructuring Costs.
"PERMITTED ENCUMBRANCE" means:
(a) any Encumbrance created under any of the Discounting Documents;
(b) any right of set-off or lien, in each case arising by operation of
law;
(c) any retention of title to goods supplied to a Group Company in the
ordinary course of its trading activities;
(d) any right of set-off over credit balances on bank accounts of
Group Companies created in order to facilitate the operation of
those bank accounts and other bank accounts of other Group
Companies;
(e) any agreement entered into by a Group Company in the ordinary
course of its trading activities to sell or otherwise dispose of
any asset on terms whereby that asset is or may be leased to or
re-acquired or acquired by a Group Company; and
(f) the NWB Security.
"PERMITTED INDEBTEDNESS" means:
(a) Indebtedness arising under any of the Discounting Documents;
(b) Indebtedness existing at the date of this Agreement between Group
Companies;
(c) Indebtedness under any Finance Lease;
9
(d) Indebtedness of any Charging Group Company to another Charging
Group Company;
(e) Indebtedness arising under the Parent Loan;
(f) Indebtedness of any Group Company to the extent that it is the
subject of a Financial Guarantee;
(g) Indebtedness not otherwise referred to in paragraphs (a) to (f)
above (inclusive) in an aggregate principal amount not exceeding
(Pounds)50,000 for the Group taken as a whole.
"POTENTIAL DEFAULT" means an event or omission which, with the giving of
any notice, the lapse of time, the determination of materiality or the
satisfaction of any other condition under Clause 13.1, would be a
Default.
"PURCHASED RECEIVABLE" means each Receivable other than any Unpurchased
Receivable.
"QUARTER DATES" means 31st March, 30th June, 30th September and 31st
December.
"RECEIVABLES" means all the book or other debts of any Client in relation
to the sale of goods or the provision of services in the ordinary course
of its trading by any Client to Customers (including, for the avoidance
of doubt, any debts payable to the Initial Client pursuant to the LAO
Sale and Transition Agreement) which shall also include all such Client's
rights under the relative contract and in the relative goods but
excluding:
(a) any book or other debt until the relative goods or services have
been provided to the Customer; or
(b) those debts payable against documents under an irrevocable letter
of credit confirmed by a bank in the United Kingdom before the
Client parts with possession of such goods.
"REMUNERATION PAYMENT DATE" means in relation to each calendar month the
last Business Day of such period.
"RESERVATIONS" means the principle that equitable remedies are remedies
which may be granted or refused at the discretion of the court, the
limitation of enforcement by laws relating to bankruptcy, insolvency,
liquidation, reorganisation, court schemes, moratoria, administration and
other laws generally affecting the rights of creditors, the time barring
of claims under the Limitation Xxx 0000 the possibility that an
undertaking to assume liability for or to indemnify against non-payment
of United Kingdom stamp duty may be void, defences of set-off or
counterclaim and similar principles.
"RESTRUCTURING COSTS" means the costs of restructuring the business of
the Group after the acquisition of the Target Assets up to a maximum of:
(a) (Pounds)1,800,000 in relation to the Financial Year of the Initial
Client ending on 31st December 1998; and
(b) (Pounds)300,000 in relation to the Financial Year of the Initial
Client ending on 31st December 1999.
10
"SALE" means (i) a sale of the entire issued share capital of the Initial
Client to a single purchaser (or to one or more purchasers as part of a
single transaction) or (ii) a sale of all, or 85% or more of the Initial
Client's assets calculated by reference to the Initial Client's latest
Accounts or Management Accounts.
"SECURITY DOCUMENTS" means:
(a) any Guarantee executed by a Group Company;
(b) any Deed of Charge executed by a Group Company;
(c) the Subordination Agreement;
(d) any guarantee and any document creating security executed and
delivered after the date of this Agreement as security for any of
the obligations and liabilities of any Client and any other Group
Companies under any Discounting Document; and
(e) the NWB Priority Letter.
"SECURITY PERIOD" means the period starting on the date of this Agreement
and ending on the date on which all of the obligations and liabilities of
the Group Companies under each Discounting Document are discharged in
full and LND has no continuing obligation in relation to this Agreement.
"SERVICE" means services provided by the Clients in relation to which a
Purchased Receivable is created.
"SSAP" together with a number means the statement of standard accounting
practice issued by the Institute of Chartered Accountants for application
in England and Wales and identified by reference to that number.
"STERLING" and "(Pounds)" mean the lawful currency for the time being of
the United Kingdom.
"STERLING EQUIVALENT" means in relation to an amount in an Alternative
Currency on the day on which the calculation falls to be made, the amount
of Sterling which could be purchased with that amount of the Alternative
Currency using NWB's spot rate of exchange for purchase in the London
foreign exchange market of Sterling with the Alternative Currency at or
about 11.00 a.m. on the Second Business Day before that date.
"SUBORDINATION AGREEMENT" means the subordination agreement made or to be
made between (1) the Initial Client, (2) the Parent and (3) LND.
"SUBSIDIARY" means a subsidiary within the meaning of section 736 of the
Act.
"SUBSTANTIAL DEBT DEDUCTION" means, in relation to any Customer, the
amount as determined under Clause 5.7.
"SUBSTANTIAL RECEIVABLE" means the aggregate of the Purchased Receivables
from a Customer that exceeds 10 per cent. of the aggregate of the
Purchased Receivables from time to time.
11
"TANGIBLE NET WORTH" means, on any date, the aggregate amount of the paid
up issued share capital of the Initial Client as at that date including
amounts standing to the credit of the share premium account and any
capital redemption reserves plus or minus, as the case may be, the
aggregate amount standing in the Group's capital and revenue reserves (on
a consolidated basis) as at that date:
(a) adjusted as may be appropriate to take account of any variation in
that share capital account and share premium account since the
date to which such accounts shall have been made up;
(b) deducting any amounts attributable to any intangible asset
included as an asset in the Initial Client's latest consolidated
balance sheet excluding amounts attributable to Acquisition
Goodwill and trade marks or similar property;
(c) excluding any capital accounts or reserves derived from any
writing up of book value of any assets of any Group Company above
historic cost less accumulated Depreciation at any time after
Completion;
(d) adding back any diminution due to the writing off of Acquisition
Goodwill;
(e) excluding any minority interest arising on consolidation;
(f) including exchange gains and losses arising on consolidation
accounted for through reserves in accordance with SSAP 20;
(g) adding back any finance or issue costs arising from the
transactions contemplated by the Transaction Documents to which
any Group Company is a party, in accordance with FRS4, to the
extent that they have been written off against either the capital
or revenue reserves;
(h) including the Parent Loan; and
(i) adding or deducting, as the case may be, any credit or any debit
balance on the Group's consolidated profit and loss account
attributable to the period in relation to which the calculation
falls to be made.
"TARGET ASSETS" means those assets acquired by the Initial Client
pursuant to the Acquisition Agreements.
"TAXES" includes all present and future taxes, charges, imposts, duties,
levies, deductions, withholdings or fees of any kind whatsoever, or any
amount payable on account of or as security for any of the foregoing, by
whomsoever on whomsoever and wherever imposed, levied, collected,
withheld or assessed, together with any penalties, additions, fines,
surcharges or interest relating thereto; and "TAX" and "TAXATION" shall
be construed accordingly.
"TERMINATION DATE" means the last Business Day of the 3 year period from
the date of this Agreement or such later date as is agreed in writing
between the Initial Client (on behalf of the Clients) and LND under
Clause 7.1.
"TOTAL DEBT" means the aggregate of:
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(a) that part of the Indebtedness of Group Companies which relates to
obligations for the payment or repayment of money in respect of
principal incurred in respect of (i) moneys borrowed or raised,
(ii) any bond, note, loan stock, debenture or similar instrument,
or (iii) any acceptance credit, xxxx discounting, note purchase,
factoring or documentary credit facility (including, for the
avoidance of doubt, any indebtedness under this Agreement); and
(b) the capital element of all rentals or, as the case may be, other
payments payable under any Finance Lease entered into by any Group
Company.
"TOTAL DEBT COSTS" means, in relation to any period, all interest,
commissions, periodic fees and other financing charges payable by the
Group Companies during that period (including the interest element
payable under any Finance Lease) less any interest receivable in respect
of cash balances, less any sums receivable or plus any sums payable by
any Group Company of whatever description during that period and for the
avoidance of doubt excluding (i) any fees and commission paid in relation
to the acquisition of the Target Assets, and (ii) any amounts amortised
on finance costs and issue costs arising from the acquisition of the
Target Assets in accordance with FRS4.
"TOTAL OBLIGATIONS" means, in relation to any period, without double
counting, the aggregate of:
(a) Total Debt Costs for that period;
(b) any dividends declared payable in respect of that period;
(c) all interest payable on the Parent Loan in respect of that period;
and
(d) the capital element of all rentals or, as the case may be, other
payments payable in that period under any Finance Lease entered
into by any Group Company.
"TRANSACTION DOCUMENTS" means, in relation to a Group Company, each of
the following documents to which it is a party: the Acquisition
Documents, the Discounting Documents, and the Parent Loan Agreement.
"UNPURCHASED RECEIVABLE" means:
(a) any Receivable not denominated in an Approved Currency;
(b) any Receivable where the debtor is Connected with a Client; and
(c) any Receivable arising from the conduct of trading activities of a
Client other than those undertaken at the date of this Agreement
or which LND have approved in writing.
"VAT" means value added tax as provided for in the Value Added Tax Xxx
0000 and legislation (or purported legislation and whether delegated or
otherwise) supplemental to that Act or in any primary or secondary
legislation promulgated by the European Community or any official body or
agency of the European Community, and any tax similar or equivalent to
value added tax imposed by any country other than the United Kingdom and
any similar or turnover Tax replacing or introduced in addition to any of
the same.
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"VENDOR" means Xxxxx Limited of Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxx Xxxxxxxx
X00 0XX, a company incorporated in England and Wales with registered
number 872948.
1.2 HEADINGS
The headings in this Agreement are for convenience only and shall be
ignored in construing this Agreement.
1.3 INTERPRETATION
In this Agreement (unless otherwise provided):
(a) words importing the singular shall include the plural and vice
versa;
(b) references to Clauses and Schedules are to be construed as
references to the clauses of, and schedules to, this Agreement;
(c) references to any Discounting Document or any other document shall
be construed as references to that Discounting Document or that
other document, as amended, varied, novated or supplemented in
writing as the case may be;
(d) references to any statute or statutory provision include any
statute or statutory provision which amends, extends, consolidates
or replaces the same, or which has been amended, extended,
consolidated or replaced by the same, and shall include any
orders, regulations, instruments or other subordinate legislation
made under the relevant statute;
(e) references to a document being "IN THE AGREED FORM" means that
document the form and content of which has been approved by LND
and which has endorsed on it the words "in the agreed form" and
which is initialled by or on behalf of LND and the Initial Client;
(f) references to "ASSETS" shall include revenues and the right to
revenues and property and rights of every kind, present, future
and contingent and whether tangible or intangible (including
uncalled share capital);
(g) the words "INCLUDING" and "IN PARTICULAR" shall be construed as
being by way of illustration or emphasis only and shall not be
construed as, nor shall they take effect as, limiting the
generality of any foregoing words;
(h) the words "OTHER" and "OTHERWISE" shall not be construed ejusdem
generis with any foregoing words where a wider construction is
possible;
(i) references to a "PERSON" shall be construed so as to include that
person's assigns, transferees or successors in title and shall be
construed as including references to an individual, firm,
partnership, joint venture, company, corporation, unincorporated
body of persons or any state or any agency of a state;
(j) where there is a reference in this Agreement to any amount, limit
or threshold specified in Sterling, in ascertaining whether or not
that amount, limit or threshold has been attained, broken or
achieved, as the case may be, a
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non-Sterling amount shall be counted on the basis of the
equivalent in Sterling of that amount using NWB's relevant spot
rate of exchange;
(k) accounting terms shall be construed so as to be consistent with
GAAP;
(l) references to time are to London time; and
(m) the obligations and liabilities of the Clients in this Agreement
are joint and several obligations and liabilities of the Clients.
2. INVOICE DISCOUNTING FACILITY
2.1 INVOICE DISCOUNTING FACILITY
Subject to the terms of this Agreement LND agrees to make available to
the Clients an invoice discounting facility up to the aggregate principal
amount of (Pounds)7,000,000 or the Sterling Equivalent.
2.2 ADDITIONAL CLIENTS
2.2.1 The Initial Client may, on giving notice to LND, nominate a Charging
Group Company incorporated in England and Wales as an additional Client.
2.2.2 A Charging Group Company wishing to become an additional Client shall
execute and deliver a Accession Agreement to LND together with all the
documents referred to in the schedule to that Accession Agreement, each
in form and substance satisfactory to LND.
2.2.3 A Charging Group Company shall accede to this Agreement as a Client on
LND approving and accepting the accession (in its sole discretion) and
counter-signing the relevant Accession Agreement.
3. PURPOSE
3.1 PURPOSE OF THE INVOICE DISCOUNTING FACILITY
The proceeds of the Invoice Discounting Facility shall only be used:
(a) to pay part of the consideration payable to the Vendor by the
Initial Client for the Target Assets purchased by it pursuant to
the Acquisition Agreements and the Acquisition Costs;
(b) to finance the general working capital and corporate requirements
of any Client;
(c) to finance part of the restructuring costs of the Initial Client
after the acquisition of the Target Assets; and
(d) any other purpose sanctioned in writing by LND.
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3.2 UNDERTAKING BY THE CLIENTS
Each Client undertakes that it will only utilise the Invoice Discounting
Facility as permitted by this Clause 3.
3.3 NO LIABILITY
LND shall not be concerned as to the use or application of amounts made
available under the Invoice Discounting Facility.
4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT
Notwithstanding any other term of this Agreement, LND shall not be under
any obligation to make the Invoice Discounting Facility available to the
Clients unless LND has notified the Initial Client that all the
conditions set out in Schedule 1 have been satisfied on or waived in
writing by LND or before 30th April 1998.
4.2 CONFIRMATION OF SATISFACTION
At the request of the Initial Client, LND shall certify whether or not
any one or more of the conditions set out in Schedule 1 have been
satisfied or, as the case may be, waived.
5. AVAILABILITY OF INVOICE DISCOUNTING FACILITY
5.1 CLIENTS' OFFER TO SELL
On or before the Commencement Date the Initial Client (on behalf of each
of the Clients) shall deliver an Offer to LND. Such Offer shall be
accepted in relation to any Receivable specified therein by LND (in its
sole discretion) accepting such Offer in relation to any such Receivable
by sending an acceptance to the Initial Client in the form set out in
Schedule 3, Part II when title to each Receivable specified in the
acceptance shall pass to LND.
5.2 PURCHASE
After operation of Clause 5.1, the Clients shall sell and LND shall
purchase each Purchased Receivable immediately upon the Purchased
Receivable coming into existence free from all Encumbrances upon the
terms of this Agreement. Any such sale and purchase shall be an absolute
sale and purchase and the rights to the relative Purchased Receivable
shall vest in LND.
5.3 CONDITIONS TO PAYMENT
5.3.1 LND shall pay by CHAPS or, commence the payment process by the Bankers
Automated Clearing System, all or part of the Available Amount of the
relative Approved Currency to a Client, on demand by that Client, on or
before 10.30 a.m. (London time) on any Business Day (or, in the case of
an Available Amount of an Approved Currency other than Sterling, on the
second Business Day after receipt of the request for payment) if:
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(a) all of the conditions precedent referred to in Schedule 1 have
been satisfied or otherwise waived in writing by LND;
(b) the matters represented and warranted, or deemed to be represented
and warranted under Clause 11.2(q) to (u) inclusive are true and
accurate at the relative time;
(c) the Invoice Discounting Facility has not expired nor has demand
been made on the Clients under Clause 13.2;
(d) no Default or Potential Default is outstanding;
(e) the Sterling Funding Amount does not, and will not by such
payment, equal or exceed the Facility Limit; and
(f) that Client has provided to LND an Advice Transmission in relation
to the relative Receivable.
5.3.2 The Available Amount in relation to each Approved Currency shall only be
available in the relative Approved Currency.
5.3.3 Payments made under this Clause 5.3 shall, unless otherwise instructed in
writing by the relevant Client acting by any director, be made to NWB and
the account specified, in relation to the Initial Client in Column B
below in relation to the Approved Currency specified opposite in Column A
below (or in relation to an Approved Currency not listed below to NWB and
the account specified in written notice to LND at least 5 Business Days
prior to the request for payment):
COLUMN A COLUMN B
Sterling 04233204
US Dollars 102225530
and, in relation to any other Client to NWB and account specified in
relation to the Approved Currency in its Accession Agreement.
5.4 FACILITY LIMIT
If, at any time, the Sterling Funding Amount exceeds the Facility Limit
the Clients shall promptly pay the difference between such amounts to
LND.
5.5 CALCULATION OF AVAILABLE AMOUNT
The Available Amount in relation to an Approved Currency shall be an
amount, without double counting, equal to the aggregate of:
(a) the face amount of each Purchased Receivable including any VAT and
as is notified on an Advice Transmission to LND;
(b) any monies received by LND from the Clients under this Agreement;
and
(c) any monies received by LND under Clause 5.9;
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LESS:
(i) first, without double counting, the aggregate of:
(1) all payments made to the Clients by LND under this
Agreement;
(2) the amount of any Purchased Receivable in excess of 90 days
from date of original invoice in relation to the relative
Goods or Services as determined by the latest aged debts
listing received by LND;
(3) the amount of any Purchased Receivable subject to any
dispute by the Customer or in relation to which legal
proceedings for their recovery have been threatened or
instigated by the Clients;
(4) the amount of any accumulated retrospective discount
afforded by the Clients to any Customer;
(5) the amount of any Purchased Receivable that relates to
Goods which are situated on premises owned or occupied by
the Clients save in respect of those Goods owned by
Mitsubishi the cost price of which in aggregate do not
exceed (Pounds)100,000;
(6) the amount of any Purchased Receivable that relates to
Goods or Services which add value to such of the Customers'
Goods which are in the custody of the Clients for the
purpose of providing such Goods or Services;
(7) the amount of any Purchased Receivable in relation to which
the Clients do not have available proof of delivery,
satisfactory to LND, of the relative Goods or Services;
(8) the amount of any Purchased Receivable in relation to Goods
supplied on a 'sale or return' basis;
(9) any Purchased Receivable in relation to which the Customer
has not obtained all the authorities necessary under the
regulations in force in the country to which the Goods or
Services are provided or from which payment is to be made
in order to pay such Receivable in accordance with the
relative contract or invoice;
(10) any Purchased Receivable which is not a bona fide
obligation of the Customer arising out of the sale of Goods
or the provision of Services by the Clients in the ordinary
course of its trading;
(11) any Purchased Receivable from a Customer to the extent that
the aggregate of the Purchased Receivable from that
Customer exceeded 40 per cent of all Purchased Receivables;
(12) the amount of any Purchased Receivable from any Customer
who is a supplier of Goods or Services to the Clients;
(13) the amount of all payments due and payable by any Client
under this Agreement (including any payments under Clause
6.1);
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(14) the amount of the full value of all credit notes issued, or
to be issued, by any Client;
(15) the amount of any Purchased Receivable which LND gives
notice to a Client to repurchase under Clause 7.1;
(16) the amount of any Substantial Debt Deduction;
(17) the amount of any agency payment or other direct third
party cost of sale in relation to any Purchased Receivable;
(18) the amount of any Purchased Receivable in relation to which
there is a restriction on the relative Client's ability to
assign the benefit of such Purchased Receivable;
(19) the amount of any surcharges whether by way of credit note
or part exchange or otherwise in relation to any Purchased
Receivable; and
(20) the amount of any set-off the Customers may apply in
relation to any Purchased Receivable including under the
LAO Sale and Transition Agreement.
in the case of all such lettered and numbered items, which are
denominated in that Approved Currency; and
(ii) secondly, from the balance thereof an amount equal to the Global
Deduction Percentage of such balance.
5.6 VARIATION OF GLOBAL DEDUCTION PERCENTAGE
5.6.1 The Global Deduction Percentage shall be varied to the extent determined
by LND if LND, acting reasonably, having complied with Clauses 5.6.3 and
5.6.4, determines that:
(a) the quality of covenant of the Customer base taken as a whole has
materially deteriorated or is likely to do so; and
(b) the quality of the Purchased Receivables taken as a whole has
materially deteriorated or is likely to do so.
5.6.2 The amount of any variation of the Global Deduction Percentage under
Clause 5.6.1 shall be the extent of the deteriorations referred to in
Clause 5.6.1.
5.6.3 LND shall give the Initial Client at least six months' written notice of
the possibility of an increase of the Global Deduction Percentage
specifying the reason for such possible increase (and the amount of any
proposed variation).
5.6.4 If the Initial Client, within one (1) month of receipt of the notice from
LND in Clause 5.6.3, gives written notice to LND that it disagrees with
the reason(s) specified by LND in its notice then LND and the Initial
Client shall consult with each other in good faith to determine whether,
and if so, to what extent, that the Global Deduction Percentage shall be
varied. Any agreement in respect of such variation between LND and the
Initial Client shall be binding on all the Clients. In the absence of
agreement the determination of LND
19
under Clause 5.6.1 shall be binding on all the Clients and the Global
Deduction Percentage varied accordingly.
5.6.5 LND may, at its sole discretion, reduce the Global Deduction Percentage
on written notice to the Initial Client. Such reduction shall take
effect from the date of such notice.
5.6.6 If the Global Deduction Percentage is increased under this Clause and the
Initial Client refinances the Invoice Discount Facility the Initial
Client shall not pay the refinancing fee under Clause 7.5 unless the
Global Deduction Percentage is 20 per cent. or less.
5.7 DETERMINATION OF SUBSTANTIAL DEBT DEDUCTION
5.7.1 A Substantial Debt Deduction (if any) of the relative Substantial
Receivable shall be determined by LND in its sole discretion, acting
reasonably, if LND determines that:
(a) the quality of covenant of the relative Customer has materially
deteriorated or is likely to do so; or
(b) the quality of the relative Substantial Receivable has materially
deteriorated or is likely to do so.
5.7.2 The maximum Substantial Debt Deduction in relation to the relative
Substantial Receivable shall be an amount equal to the amount by which
the relative Substantial Receivable exceeds 10 per cent. of the aggregate
of the Purchased Receivables at such time.
5.7.3 The determination of any Substantial Debt Deduction shall be made and
reviewed promptly by LND after the end of each calendar month.
5.7.4 LND shall promptly notify the Initial Client in writing of its
determination under Clause 5.7.1 and shall (to the extent permitted by
law and not restricted by any confidentiality obligation of LND to any
third party) give the reasons for its determination. If the Initial
Client disagrees with such reasons LND and the Initial Client shall
consult with each other in good faith for a period of not less than 14
days. Any agreement in respect of the determination of a Substantial
Debt Deduction between LND and the Initial Client shall be binding on all
the Clients. In the absence of agreement the determination of the
relative Substantial Debt Deduction by LND shall be binding on all the
Clients.
5.7.5 The Substantial Debt Deduction shall come into effect 14 days after the
Initial Client has received notification of the determination thereof.
5.7.6 The Substantial Debt Deduction may not be applied in relation to any
Substantial Receivable in relation to which a Client has obtained credit
insurance for the full value thereof from Trade Indemnity or NCM or any
other credit insurer approved by LND in form and substance satisfactory
to LND, acting reasonably. Such credit insurance shall be in the joint
names of the relevant Client and LND.
5.8 ASSIGNMENT OF PURCHASED RECEIVABLES
5.8.1 Each Client shall at its own expense and if so requested by LND execute a
separate assignment in writing to LND of any Purchased Receivable sold to
LND in accordance with this Agreement and of any rights which that Client
may have in relation thereto. LND shall not serve notice of such
assignment on any Customer unless a Default has occurred and is
subsisting.
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5.8.2 If in relation to any Purchased Receivable it is not possible for LND to
take a separate assignment the relevant Client will hold such Purchased
Receivable in trust for LND and any payments received in respect thereof
will be immediately paid to LND.
5.9 GOODS
5.9.1 On purchase by LND of any Purchased Receivable any title, property, right
or interest of the relevant Client in the Goods to which such Purchased
Receivable relates (including all such Goods that may be rejected or
returned by the Customers), all the relevant Client's rights as unpaid
vendor and all other rights of the relevant Client under the contract or
contracts pursuant to which the Purchased Receivable comes into existence
(whether such rights be created by contract, statute or other rule of
law) shall be deemed to be assigned and transferred to LND absolutely
whether or not the Goods shall have been delivered by the relevant Client
at the time of the said purchase.
5.9.2 On purchase by LND of any Purchased Receivable there shall vest in LND
the benefit of all guarantees, indemnities, insurances and securities
given to or held by the relevant Client in respect of such Purchased
Receivables or of the relative Goods or Services.
5.9.3 Any Goods recovered by or on behalf of a Client shall be set aside marked
with LND's name and held for LND's account as owner. After a Default has
occurred and (save in relation to a Default under Clause 13.1(a) and
13.1(b)) is subsisting LND shall (in addition to and without prejudice to
any other rights it may have) have the right to take possession of and to
sell or cause to be sold without notice any returned Goods at such prices
to such purchasers and upon such terms and conditions as it may in its
absolute discretion determine. Upon any such sale the relevant Client
shall pay to LND on demand (and without asserting any right of set-off):
(a) the difference between the amount of the Purchased Receivable
relating to such Goods and the amount (if less than the amount of
the relative Purchased Receivable) received by LND on any such
sales; and
(b) any costs and expenses (including legal fees) incurred by LND in
relation to any such repossession and sale.
5.9.4 Each Client as trustee for LND will hold and keep separate from any other
monies of that Client all remittances received by it in payment of any
Purchased Receivable which has been sold to LND. Each Client will
immediately pay all remittances endorsed where required;
(a) direct to the account of LND at the bankers of LND; or
(b) into a trust account in the name of LND.
5.10 COLLECTION
5.10.1 After a Default has occurred and (save in relation to a Default under
Clauses 13.1(a) and 13.1(b))is subsisting and upon the making of a
direction by LND under Clause 12.2(m), LND shall have the sole right of
collecting and enforcing payment of the Purchased Receivables (other than
those re-assigned after payment of the repurchase price) in whatever
manner it may in its absolute discretion decide, whether or not the
relevant Client
21
has been debited with the amount of the Purchased Receivables and each
Client shall co-operate to procure such collection and enforcement.
5.10.2 After a Default has occurred and (save in relation to a Default under
Clauses 13.1(a) and 13.1(b)) is subsisting and upon LND giving notice to
the Initial Client, the conduct of any proceedings shall be with LND who
may (where necessary in the name of any Client) institute, compromise,
settle, abandon or in any manner whatsoever conduct such proceedings upon
such terms as LND in its sole discretion shall decide and each Client
shall be bound by all acts of LND under this Clause 5.10. The Client
shall be responsible for and shall forthwith on demand pay all reasonable
and proper costs, charges and expenses of whatsoever nature incurred by
LND under this Clause 5.10.
5.10.3 Each Client irrevocably:
(a) authorises LND to endorse the name of that Client on any and all
cheques or other forms of remittance received where such
endorsement is required to effect collection or to perfect LND's
title as a holder in due course or for any other reason; and
(b) after a Default has occurred and (save in relation to a Default
under Clauses 13.1(a) and 13.1(b))is subsisting, appoints LND the
attorney of that Client to execute in the name and on behalf of
that Client any assignment requested under Clause 5.8.1.
6. REMUNERATION
6.1 DETERMINATION OF THE FUNDING AMOUNT
The Funding Amount, in relation to an Approved Currency, shall be an
amount equal to the aggregate of (without double counting):
(a) all amounts paid to the Clients by LND under this Agreement;
(b) the aggregate of all of the amounts due and payable by the Clients
to LND under this Agreement; and
(c) the aggregate of all of the amounts paid by LND directly or
indirectly in consequence of any breach of this Agreement by the
Clients or of steps reasonably taken by LND to mitigate such
payment cost or damage or liability;
LESS the aggregate of (without double counting):
(i) all amounts received by LND under this Agreement;
(ii) all amounts received by LND directly from a Customer in relation
to any Purchased Receivable; and
(iii) all amounts paid by the Clients to LND,
in each case, where amounts paid or received are amounts denominated in
that Approved Currency.
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6.2 DISCOUNTING CHARGE
The Initial Client shall on the last Business Day of each calendar month
pay a Discounting Charge on the Funding Amount from time to time at the
Discounting Rate.
6.3 CALCULATION AND PAYMENT OF REMUNERATION
6.3.1 As soon as is practicable following each Remuneration Payment Date, LND
will notify the Client of the relative rate and amount of the
Discounting Charge or other amount payable by the Client for the relative
month.
6.3.2 Any Discounting Charge and default interest due from the Client to LND
under any of the Discounting Documents shall:
(a) accrue from day to day on the relative amount, be calculated on
the basis of the actual number of days elapsed and a 365 days'
year;
(b) be paid in Sterling/the currency of the relative Funding Amount by
the Client to LND by deduction by LND in arrear on each
Remuneration Payment Date; and
(c) be payable after as well as before judgment.
6.4 DEFAULT INTEREST
If any Client fails to pay any amount due and payable to LND under any of
the Discounting Documents on the due date, the Clients shall pay default
interest on such amount to LND from the due date to the date of actual
payment at the rate per annum being the aggregate of:
(a) 1 per cent. per annum; and
(b) the Discounting Rate.
6.5 EXPENSES
Each Client shall pay to LND all reasonable and properly incurred costs
in relation to the transmission of funds by LND to the Clients.
6.6 RECORDS
6.6.1 Upon a Client's request and subject to its compatibility with LND's
software LND shall provide to that Client detailed records of the
Available Amount, the Funding Amounts and the Sterling Funding Amount by
means of a modem communications link.
6.6.2 At the end of each calendar month upon the request and at the cost of the
Clients LND shall provide hard copies of any information specified under
Clause 6.6.1.
6.7 LND'S DETERMINATION
LND's determination of the amount of any of the Discounting Charge and
default interest payable under any of Clause 6 shall be conclusive and
binding on the Client except for manifest error.
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7. TERMINATION, REPURCHASE AND CANCELLATION
7.1 REPURCHASE
The Clients shall repurchase the Purchased Receivables by payment to LND
on the Termination Date (or such later date as is agreed in writing
between the Initial Client (on behalf of the Clients) and LND) of amounts
in each Approved Currency equal to the Funding Amounts on that Date for
each Approved Currency.
7.2 MANDATORY REPURCHASE ON SALE OR LISTING
7.2.1 Notwithstanding Clause 7.1, if so required by LND, on any date on which a
Sale or a Listing occurs the Clients shall repurchase the Purchased
Receivables by payment to LND on that date of amounts in each Approved
Currency equal to the Funding Amounts on that date for each Approved
Currency.
7.2.2 The Initial Client shall give LND at least 30 days' prior notice of the
date upon which a Sale or Listing is proposed to occur.
7.3 VOLUNTARY REPURCHASE OF RECEIVABLES
7.3.1 The Clients may, by giving LND not less than 3 months prior notice,
repurchase all (or part) the Purchased Receivables on a Remuneration
Payment Date by payment to LND on that date of amounts in each Approved
Currency equal to the Funding Amounts (or part) on that date for each
Approved Currency.
7.3.2 Any notice of repurchase shall be irrevocable, shall specify the date on
which the repurchase is to be made of the prepayment, and shall oblige
the Clients to make that repurchase.
7.4 CANCELLATION OF INVOICE DISCOUNTING FACILITY
7.4.1 The Initial Client (on behalf of the Clients) may by no less than 5
Business Days' prior irrevocable written notice to LND, cancel part of
the Invoice Discounting Facility (in minimum amounts of (Pounds)100,000
and subsequent multiples of (Pounds)50,000) without penalty. The
Facility Limit will be reduced accordingly.
7.4.2 The Client may not cancel all or part of the Invoice Discounting Facility
if such cancellation would result in the Sterling Funding Amount
exceeding the Facility Limit.
7.5 REFINANCING FEES
Subject to Clause 5.6.5 if the Funding Amount (or any part thereof) is
repaid from the proceeds of a refinancing with persons other than LND
(other than upon an assignment or transfer by LND under Clause 19.3 or
19.4) and the Facility Limit is cancelled as a consequence of a
refinancing with persons other than LND:
(a) on or before the expiry of the 12 month period from Completion the
Initial Client shall pay to LND a prepayment fee equal to 1 per
cent. of the Facility Limit cancelled;
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(b) before the expiry of the 24 month period from Completion the
Initial Client shall pay to LND a prepayment fee equal to 0.5 per
cent. of the aggregate amount of the Funding Amount prepaid or the
Facility Limit cancelled.
8. CHANGES IN CIRCUMSTANCES
8.1 ILLEGALITY
If after the date of this Agreement it is or becomes illegal for LND to
maintain or to continue to make available or fund all or any part of the
Facility, then:
(a) LND shall notify the Initial Client; and
(b) (i) the obligations of LND under this Agreement shall be
cancelled immediately; and
(ii) the Clients shall repurchase the Purchased Receivables by
payment of amounts equal to the Funding Amount for each
Approved Currency (together with all other amounts owing to
LND under this Agreement) within 30 Business Days of demand
by LND (or, if permitted by the relevant law, on the next
Remuneration Payment Date).
8.2 CERTIFICATES
The certificate or notification of LND as to any of the matters referred
to in Clause 8.1 shall be in reasonable detail and shall be conclusive
and binding on the Clients except for any manifest error.
9. PAYMENTS
9.1 PLACE AND TIME
All payments to be made by a Client in relation to this Agreement shall
be made to LND at its office at Feltham at such time as LND may notify
the Clients for this purpose.
9.2 FUNDS
All payments to LND under this Agreement shall be made for value on the
due date in freely transferable and readily available funds.
9.3 BUSINESS DAYS
If a payment under this Agreement is due on a day which is not a Business
Day, the due date for that payment shall instead be the next Business Day
in the same calendar month (if there is one) or the preceding Business
Day (if there is not).
9.4 CURRENCY
All payments by a Client in respect of a Funding Amount shall be made in
the relative Approved Currency. All payments relating to costs, losses,
expenses or Taxes shall be
25
made in the currency in which the relative costs, losses, expenses or
Taxes were incurred. Any other amount payable under this Agreement shall,
except as otherwise provided, be made in Sterling.
9.5 ACCOUNTS AS EVIDENCE
LND shall maintain in accordance with its usual practice an account which
shall, as between the Clients and LND, be prima facie evidence of the
amounts from time to time paid by, owing to and paid to LND under this
Agreement.
9.6 PARTIAL PAYMENTS
9.6.1 If LND receives a payment insufficient to discharge all the amounts then
due and payable by a Client under this Agreement, LND shall apply that
payment towards the obligations of that Client in the following order:
(a) first, in or towards payment of any unpaid costs and expenses of
LND under this Agreement;
(b) second, in or towards payment pro rata of any accrued interest due
by that Client but unpaid under this Agreement;
(c) third, in or towards payment pro rata of any principal due by that
Client but unpaid under this Agreement; and
(d) fourth, in or towards payment pro rata of any other sum due by
that Client but unpaid under the Discounting Documents.
9.6.2 LND may vary the order set out in Clause 9.6.1(a) to (d) and shall give
notice to the Initial Client of any such variation.
9.6.3 Clause 9.6.1 shall override any appropriation made by any Client.
9.7 SET-OFF AND COUNTERCLAIM
All payments by any Client under this Agreement shall be made without
set-off or counterclaim.
9.8 GROSSING-UP
9.8.1 Subject to Clause 9.8.2, all sums payable to LND pursuant to or in
connection with any Discounting Document shall be paid in full free and
clear of all deductions or withholdings whatsoever except only as may be
required by law.
9.8.2 If any deduction or withholding is required by law in respect of any
payment due from a Client or a Customer to LND pursuant to or in
connection with any Discounting Document, each Client shall:
(a) ensure or procure that the deduction or withholding is made and
that it does not exceed the minimum legal requirement therefor;
(b) pay, or procure the payment of, the full amount deducted or
withheld to the relevant Taxation or other authority in accordance
with the applicable law;
26
(c) increase the payment in respect of which the deduction or
withholding is required so that the net amount received by LND
after the deduction or withholding (and after taking account of
any further deduction or withholding which is required to be made
as a consequence of the increase) shall be equal to the amount
which LND would have been entitled to receive in the absence of
any requirement to make any deduction or withholding; and
(d) promptly deliver or procure the delivery to LND of receipts
evidencing each deduction or withholding which has been made.
9.8.3 If LND determines, in its absolute discretion, that it has received,
realised, utilised and retained a Tax benefit by reason of any deduction
or withholding in respect of which a Client has made an increased payment
under this Clause 9.8, LND shall, provided that it has received all
amounts which are then due and payable by the obligors under any
Discounting Document, pay to that Client (to the extent that LND can do
so without prejudicing the amount of the benefit or repayment and the
right of LND to obtain any other benefit, relief or allowance which may
be available to it) such amount, if any, as LND, in its absolute
discretion shall determine, will leave LND in no worse position than it
would have been in if the deduction or withholding had not been required,
provided that:
(a) LND shall have an absolute discretion as to the time at which and
the order and manner in which it realises or utilises any Tax
benefit and shall not be obliged to arrange its business or its
Tax affairs in any particular way in order to be eligible for any
credit or refund or similar benefit;
(b) LND shall not be obliged to disclose any information regarding its
business, Tax affairs or Tax computations; and
(c) if LND has made a payment to a Client pursuant to this Clause
9.8.4 on account of any Tax benefit and it subsequently transpires
that LND did not receive that Tax benefit, or received a lesser
Tax benefit, that Client shall, on demand, pay to LND such sum as
LND may determine as being necessary to restore its after-tax
position other than corporation tax and any similar tax to that
which it would have been had no adjustment under this Clause 9.8.4
been made. Any sums payable by a Client to LND under this Clause
9.8.4 shall be subject to Clause 15.7.
9.8.4 LND shall not be obliged to make any payment under Clause 9.8.4 if, by
doing so, it would contravene the terms of any applicable law or any
notice, direction or requirement of any governmental or regulatory
authority (whether or not having the force of law).
9.8.5 If a Client is required to make an increased payment for the account of
LND under Clause 9.8.2, then, without prejudice to that obligation and so
long as such requirement exists and subject to the Initial Client (on
behalf of the Clients) giving LND not less than 10 days' prior notice
(which shall be irrevocable), the Clients may repurchase all, but not
part, of the Purchased Receivables by payment to LND of amounts in each
Approved Currency equal to the Funding Amounts on the date of payment for
each Approved Currency. Any such payment shall be subject to Clause
20.1. On any such repurchase the Invoice Discounting Facility shall be
in the case of repurchase by the Initial Client of all Purchased
Receivables automatically cancelled and in the case of part purchase
only, be reduced pro rata (taking into account any previous repurchases
made pursuant to this Clause 9.8.5).
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10. SECURITY
10.1 SECURITY DOCUMENTS
The obligations and liabilities of the Clients to LND under the
Discounting Documents shall be secured by the interests and rights
granted in favour of LND under the Security Documents.
11. REPRESENTATIONS AND WARRANTIES
11.1 REPRESENTATIONS AND WARRANTIES
The Initial Client represents and warrants to LND that:
(a) STATUS: each Charging Group Company is a limited company duly
incorporated under the laws of the jurisdiction of the place of
its incorporation, and it possesses the capacity to xxx and be
sued in its own name and has the power (save in respect of any
Dormant Subsidiary) to carry on its business and to own its
property and other assets;
(b) POWERS AND AUTHORITY: each Charging Group Company has power to
execute, deliver and perform its obligations under the Transaction
Documents and to carry out the transactions contemplated by those
documents and all necessary corporate, shareholder and other
action has been or will be taken to authorise the execution,
delivery and performance of the same. In particular it has no
express limitation on its power or capability to incur
Indebtedness in relation to the purchase of a Receivable or any
utilisation of the Invoice Discounting Facility;
(c) BINDING OBLIGATIONS: subject to the Reservations, the obligations
of each Charging Group Company under the Transaction Documents
constitute its legal, valid, binding and enforceable obligations;
(d) CONTRAVENTIONS: the execution, delivery and performance by each
Charging Group Company of the Transaction Documents does not:
(i) contravene any applicable law or regulation or any order of
any governmental or other official authority, body or
agency or any judgment, order or decree of any court having
jurisdiction over it;
(ii) conflict with, or result in any breach of any of the terms
of, or constitute a default under, any agreement or other
instrument to which it is a party or any licence or other
authorisation to which it is subject or by which it or any
of its property is bound; or
(iii) contravene or conflict with the provisions of its
memorandum and articles of association;
(e) INSOLVENCY: no Group Company has taken any action nor have any
steps been taken or legal proceedings been started or threatened
against it for winding-up,
28
dissolution or re-organisation, the enforcement of any Encumbrance
over its assets or for the appointment of a receiver,
administrative receiver, or administrator, trustee or similar
officer of it or of any of its assets;
(f) NO DEFAULT: no Group Company is (nor would be with any of the
giving of notice, the lapse of time, the determination of
materiality, or the satisfaction of any other condition) in breach
of or in material default under any material agreement to which it
is a party or which is binding on it or any of its assets;
(g) LITIGATION: no action, litigation, arbitration or administrative
proceeding has been commenced, or is pending or threatened,
against any Group Company nor is there subsisting any unsatisfied
judgment or award given against any of them by any court,
arbitrator or other body which, if adversely decided would be for
an amount of (Pounds)50,000 or more;
(h) ACCOUNTS:
(i) each of the latest Accounts of each Charging Group Company
required to be delivered under Clause 12.1(a) is prepared
in accordance with GAAP and gives a true and fair view of
the financial position of the relevant company as at the
date to which they were prepared and for the Financial Year
of that company then ended; and
(ii) each of the latest set of Management Accounts required to
be delivered under Clause 12.1(b) shows with reasonable
accuracy the financial position of the Group or, as the
case may be, the relevant Charging Group Company during the
period to which it relates;
(i) ENCUMBRANCES: no Encumbrance other than a Permitted Encumbrance
exists over all or any part of the assets of any Group Company;
(j) NO ENCUMBRANCES CREATED: the execution of the Discounting
Documents by the Charging Group Companies and the exercise of each
of their respective rights and the performance of each of their
respective obligations under the Discounting Documents will not
result in the creation of, or any obligation to create, any
Encumbrance over or in respect of any of their assets except a
Permitted Encumbrance;
(k) AUTHORISATIONS: other than the registration of particulars of the
Security Documents at the Companies Registration Office pursuant
to section 395 of the Act, registrations at the Land Registry, the
giving of notice in respect of any contracts being assigned, the
stamping of the Acquisition Documents all authorisations,
approvals, licences, consents, filings, registrations, payment of
duties or taxes and notarisations required:
(i) for the conduct of the business, trade and ordinary
activities of each Group Company except to the extent that
failure to make, pay or obtain the same would not have a
Material Adverse Effect;
(ii) for the performance and discharge of the obligations of
each Group Company under the Discounting Documents to which
it is a party; and
29
(iii) in connection with the execution, delivery, validity,
enforceability or admissibility in evidence of the
Discounting Documents,
are in full force and effect;
(l) TAXES: to each Group Company's knowledge (having made due and
careful enquiries) each Group Company has complied with all
Taxation laws in all jurisdictions in which it is subject to
Taxation and has paid all Taxes due and payable by it and no
claims are being asserted against it in respect of Taxes except
for assessments in relation to the ordinary course of its business
or claims contested in good faith and in respect of which adequate
provision has been made and disclosed in the latest Accounts or
other information delivered to LND under this Agreement;
(m) INFORMATION PACKAGE:
(i) the factual information contained in the Information
Package was, at the date of the relevant report or
document, true and accurate in all material respects and
not misleading in any material respect, there are no other
facts the omission of which would make any fact or
statement in the Information Package misleading in any
material respect and nothing has occurred which would
render any fact or statement in the Information Package
untrue or misleading in any material respect; and
(ii) all estimates, forecasts and projections contained or
referred to in the Information Package, and all assumptions
and presumptions upon the basis of which the same were
made, were fair and reasonable at the time they were made,
and nothing has occurred since the date the same were made
which would necessitate a material revision to any of those
estimates, forecasts or projections in order for them to be
fair and reasonable;
(n) ACCOUNTING REFERENCE DATE: the accounting reference date of each
Group Company is 31st December;
(o) DISCLOSURES: there is no disclosure made in the Disclosure
Letter, or any other disclosure to the Acquisition Documents which
has or is reasonably likely to have a material adverse effect on
any of the information, prospects, estimates, forecasts and
projections contained or referred to in the Information Package;
(p) ENVIRONMENTAL: save as disclosed in the Environmental Report,
each Group Company has and has at all times complied with all
applicable Environmental Law, non-compliance with which could
reasonably be expected to have a Material Adverse Effect, every
consent, authorisation, licence or approval required under or
pursuant to any Environmental Law by each Group Company in
connection with the conduct of its business and the ownership,
use, exploitation or occupation of its assets the absence or lack
of which could reasonably be expected to have a Material Adverse
Effect, has been obtained and is in full force and effect, there
has been no default in the observance of the conditions and
restrictions (if any) imposed in, or in connection with, any of
the same which default could reasonably be expected to have a
Material Adverse
30
Effect, and, to the best of the Initial Client's information,
knowledge and belief, no circumstances have arisen (i) which would
entitle any person to revoke, suspend, amend, vary, withdraw or
refuse to amend any of the same or (ii) which might give rise to a
claim against any Group Company which could reasonably be expected
to have a Material Adverse Effect having regard to the cost to
that Group Company of meeting such a claim;
(q) DELIVERY, SERVICE: in relation to each Receivable, the Goods have
been duly delivered or the Services duly provided;
(r) BONA FIDE OBLIGATIONS: it has used all reasonable endeavours to
procure that each Receivable is an existing and bona fide
obligation of the Customer arising out of the sale of Goods or the
provision of Services by a Client in the ordinary course of its
trading;
(s) ENFORCEABILITY: it has used all reasonable endeavours to procure
that no Client is in breach of any of its obligations to the
Customer and the Customer will accept the Goods or the Services
and the invoices therefor (or if the Customer is bankrupt or in
liquidation the Customer's trustee in bankruptcy or liquidation
will accept a proof of debt for the unpaid balance of the invoiced
price) without any dispute or claim whatsoever (whether
justifiable or not) including disputes as to price, terms,
quantity, or quality, set-offs or counter-claim or claims of
release from liability or inability to pay because of any act of
God or public enemy of war or because of the requirement of law
(whether in the United Kingdom or elsewhere) or of rules, orders
or regulations having the force of law;
(t) CUSTOMER AUTHORITIES: it has used all reasonable endeavours to
procure that each Customer has obtained all the authorities
necessary under the regulations in force in the country to which
the Goods or Services are provided or from which payment is to be
made, in order to pay the Receivables in accordance with the
contract or invoice;
(u) CUSTOMER CONTRACTS: every contract with any Customer is governed
by English law and specifies the nature and quantity of the Goods
or Services and the terms and currency of payment; and
(v) NO MATERIAL ADVERSE CHANGE: since 5th September 1997 no event has
occurred which has had or could be reasonably expected to have a
Material Adverse Effect.
11.2 REPETITION
The representations and warranties set out in Clause 11.1 shall survive
the execution of this Agreement and shall be deemed to be repeated as
follows:
(a) each of the said representations and warranties shall be deemed to
be repeated on the Commencement Date; and
(b) each of the said representations and warranties (other than those
made under Clauses 11.1(e), (f), (g), (i), (j), (k), (l), (m),
(o), (p), (r) and (s) inclusive) shall be repeated on each Quarter
Date,
31
in each case, as if made with reference to the facts existing at the time
of repetition.
12. UNDERTAKINGS
12.1 INFORMATION UNDERTAKINGS
The Initial Client undertakes that during the Security Period it shall,
unless LND otherwise agrees:
(a) ACCOUNTS: as soon as the same become available (and in any event
within 120 days after the end of its Financial Years), deliver to
LND a copy of the Accounts for each such Financial Year of each
Group Company together with:
(i) the unconsolidated profit and loss account for the Initial
Client for each such Financial Year; and
(ii) a copy of the management letter (if any) addressed by the
Auditors to the directors of each such company in
connection with its auditing of the relevant Accounts as
soon as reasonably practicable after receipt of the letter
by such company;
(b) MANAGEMENT ACCOUNTS: as soon as the same become available (and in
any event within 30 days after the end of each successive
accounting period (none of which shall be more than 5 weeks in
duration) (each an "ACCOUNTING PERIOD") during each of its
Financial Years), deliver to LND a copy of the management accounts
(the "MANAGEMENT ACCOUNTS") of the Initial Client (in which case
such management accounts shall be consolidated management accounts
relating to the Group) for each such Accounting Period and in such
a form as to disclose with reasonable accuracy the financial
position of the Group and which shall include the following
information in respect of each such Accounting Period:
(i) a statement of profit and loss;
(ii) a balance sheet; and
(iii) a cashflow statement;
together with a comparison, where appropriate, of all such
information with the estimates, forecasts and projections in the
relevant Operating Budget (or any replacement or substitution made
therefor) in relation to each such Accounting Period including an
analysis justifying any variations therefrom and, if necessary,
revised estimates, forecasts and projections;
(c) OPERATING BUDGETS:
(i) provide to LND (in a format acceptable to LND), acting
reasonably, an Operating Budget for each of its Financial
Years during the Security Period, not less than 30 days
prior to the start of each such Financial Year, together
with a comparison of the information, estimates, forecasts
and projections contained therein with any relevant
information, estimates, forecasts and projections contained
32
in the Accountants' Report and the Business Plan including
an analysis justifying any variations therefrom; and
(ii) if any Group Company shall determine that any of the
estimates, forecasts or projections made in relation to any
of its Financial Years should be different from those set
out in the then current Operating Budget (or any
substitution therefor subsequently made and agreed by LND)
such agreement not to be unreasonably withheld, provide to
LND revised estimates, forecasts or projections in respect
of any part of each such Financial Year and such revised
estimates, forecasts or projections shall apply immediately
following their approval by the boards of directors of the
relevant company and the Initial Client;
(d) INFORMATION ON REQUEST: promptly following LND's request, provide
to LND such other information, estimates, forecasts or projections
in relation to any Group Company and any of their respective
businesses, assets, financial condition, ownership or prospects as
LND may, acting reasonably, require;
(e) CASHFLOW FORECASTS: provide to LND on or before each Quarter Date
cashflow forecasts in respect of the Group relating to the 6 month
period commencing on each such Quarter Date;
(f) COMPLIANCE CERTIFICATES: provide to LND within 30 days of each
Quarter Date a certificate (a "COMPLIANCE CERTIFICATE") executed
under the authority of its board of directors certifying that in
relation to the 3 month period ending on each such Quarter Date
all the undertakings on the part of the Clients under this
Agreement are for the time being complied with and including
calculations relating to the financial undertakings set out in
Clause 12.4.1: (For the purpose of this Clause 12.1(f), the
calculations shall be made by reference to the Management Accounts
prepared for the 3 month period in relation to which the relevant
Compliance Certificate is to be given;
(g) AUDITORS CONFIRMATION: if LND disagrees with any calculations
relevant to the financial undertakings contained in Clause 12.4
made for the purposes of Clause 12.1(f) LND shall notify the
Initial Client and promptly thereafter the Initial Client shall
procure that the Auditors shall promptly review such calculations
and notify LND as soon as practicable as to whether such
calculations are made correctly and in accordance with the terms
of this Agreement and if not made correctly, promptly provide LND
with the correct calculations thereof made in accordance with the
terms of this Agreement;
(h) GAAP: ensure that all Accounts and other financial information
submitted to LND have been prepared in accordance with GAAP;
(i) DEFAULT, LITIGATION, ETC: promptly, upon becoming aware of the
same, notify LND of:
(i) any Default or Potential Default;
(ii) any litigation, arbitration or administrative proceeding
commenced against any Group Company involving a potential
liability of any Group Company exceeding (Pounds)20,000;
33
(iii) any Encumbrance (other than a Permitted Encumbrance)
attaching to any of the assets of any Group Company;
(iv) any other occurrence relating to a Group Company (including
any third party claim or liability) which could reasonably
be expected to have a Material Adverse Effect;
(j) RECEIVABLES: within 15 days after the end of each serial
Accounting Period and in relation to each Approved Currency
provide to LND and where appropriate, procure that any other
Client provides to LND:
(i) an aged analysis of the Receivables sold to LND which
remain outstanding at that date from invoice date
separately identifying the outstanding amounts by each
Customer showing Customer balances as follows: total, up to
30 days passed its invoice date, 31-60 days passed its
invoice date, 61-90 days passed its invoice date, more than
90 days passed its invoice date plus a summary giving the
totals of each of these categories and identifying those
accounts which are either disputed or in solicitors' hands;
(ii) a copy of the sales ledger account relating to the
Receivables purchased by LND in the form provided by LND
for such purpose under this Agreement;
(iii) a copy of each Customer's month end statement with LND or
such other open item breakdown of the Purchased Receivables
from a Customer, and in each case in a form acceptable to
LND acting reasonably;
(iv) a copy of each Client's purchase ledger at the end of the
Accounting Period;
(v) an analysis of Purchased Receivables subject to surcharges
whether by way of credit note or part exchange or
otherwise; and
(vi) a copy of all information made available to the Initial
Client under the LAO Sale and Transition Agreement in
relation to Purchased Receivables from the Vendor together
with an analysis of any rights of set-off applied by the
Vendor in relation to any such Purchased Receivable;
(k) ADVICE TRANSMISSION: in relation to each Receivable promptly send
and where appropriate, procure that any other Client to LND an
Advice Transmission (together with such other documents as LND may
require) after the delivery of the relative Goods or the provision
of the relative Services. An Advice Transmission may contain the
aggregate amount of various Receivables;
(l) NOTICE: after a Default has occurred and (save in relation to a
Default under Clauses 13.1(a) and 13.1(b)) is subsisting, give
notice to such of the Customers as LND shall direct that the right
to the Receivables specified in such notice (which may include
Receivables which have not yet come into existence) has been
assigned to LND, such notice to be in such form as LND shall
require; and
34
(m) BOOKS OR RECORDS: procure that all entries relating to the sale of
any Receivable by each Client to LND are duly and promptly
recorded in the books of that Client and to ensure that all
accounts maintained in the books or records of the Clients in the
names of its Customers bear a conspicuous notation that they have
been assigned to LND.
12.2 POSITIVE UNDERTAKINGS
The Initial Client undertakes that during the Security Period it shall,
and it shall procure that each Group Company shall, unless LND otherwise
agrees:
(a) PAY TAXES: pay and discharge all Taxes and governmental charges
payable by or assessed upon it prior to the date on which the same
become overdue unless, and only to the extent that, such Taxes and
charges shall be contested in good faith by appropriate
proceedings, pending determination of which payment may lawfully
be withheld, and there shall (if the Auditors so advise) be set
aside adequate reserves with respect to any such Taxes or charges
so contested in accordance with GAAP;
(b) INSURANCE:
(i) cause all of the property of each Client to be insured and
to be kept insured in such insurance office of repute as
shall have been selected by the Initial Client or with
Lloyd's underwriters on the equivalent basis as insurances
are maintained by prudent companies carrying on businesses
comparable with that of the Initial Client and on a
comparable scale as regards the property and assets
insured, the insured risks and the classes of risk to be
covered and the amount of the insurance cover;
(ii) duly and punctually pay all premiums and other moneys due
and payable under all such insurances as aforesaid and
promptly upon request by LND produce to LND premium
receipts or other evidence of the payment thereof; and
(iii) cause all of the Purchased Receivables other than Purchased
Receivables in relation to the Blue Chip Customers of a
type in relation to which prior to the date of this
Agreement the Vendor arranged credit insurance, to be
credit insured with NCM or another reputable credit
insurer.
(c) AUTHORISATIONS: obtain, maintain and comply with the terms of any
authorisation, approval, licence, consent, exemption, clearance,
filing or registration required:
(i) for the conduct of its business, trade and ordinary
activities; and
(ii) to enable it to perform its obligations under, or for the
validity, enforceability or admissibility in evidence of,
any Discounting Document;
35
(d) ACCESS: immediately upon request being given to the Initial
Client by LND, permit LND and any person (being an accountant,
auditor, solicitor, valuer or other professional adviser of LND)
authorised by LND to have, at all reasonable times during normal
business hours, access to the property, premises and accounting
books and records of any Group Company and to the Management;
(e) FURTHER DOCUMENTS: at the request of LND, do or procure the doing
of all such things and execute or procure the execution of all
such documents as are, in the opinion of LND, necessary or
desirable to ensure that LND obtains all its rights and benefits
under the Discounting Documents;
(f) DELIVERY OF DECLARATIONS, ETC: within any relevant period laid
down in any statute, law or regulation applicable in the United
Kingdom make all necessary declarations and deliver all necessary
forms and documents required to be delivered to, filed with or
registered with any United Kingdom governmental, statutory or
other body or agency by it in connection with the Transaction
Documents and any of the transactions contemplated under the
Transaction Documents;
(g) COMPLIANCE WITH ENVIRONMENTAL LAW: comply in all material
respects with Environmental Law and implement the recommendations
and proposals contained in the Environmental Report substantially
within the time periods specified in that report, or if no such
time periods are specified, as soon as reasonably practicable;
(h) DANGEROUS MATERIALS: ensure that all Dangerous Materials treated,
kept and stored, produced, manufactured, generated, refined or
used from, in, upon, or under any of the real property owned by a
Group Company are held and kept upon such real property in such a
manner and up to such standards as they would be kept by a prudent
company carrying on the same trade as that Group Company;
(i) AUDITORS' CONFIRMATION: use all reasonable endeavours to procure
that, within 15 (fifteen) Business Days of the date of appointment
as auditors of any Charging Group Company, the relevant
accountants deliver to LND a letter from such newly appointed
auditors confirming that they are aware of the provisions of
Clauses 1, and 12.4.1 of this Agreement;
(j) TRANSMISSION BANKING BUSINESS: use all reasonable endeavours to
ensure that all transmission banking business of the Group in the
United Kingdom shall be transferred to NWB within 3 months of the
Commencement Date and be maintained with NWB after that transfer
for a period of at least 3 years after the Commencement Date
(unless the provisions of Clause 7.4 or 7.5 shall apply);
(k) PROTECTION OF RIGHTS UNDER THE ACQUISITION DOCUMENTS: take all
reasonable and practical steps to preserve and enforce its rights
arising under any Acquisition Document;
(l) PERFORMANCE: save in relation to force majeure promptly performs
all its further or continuing obligations of whatsoever nature to
the Customer arising out of the sale of Goods or the provision of
Services;
36
(m) NOTICE: after a Default has occurred, give notice to such of the
Customers as LND shall direct that the right to the Receivables
specified in such notice (which may include Receivables which have
not yet come into existence) has been assigned to LND, such notice
to be in such form as LND shall require;
(n) BOOKS OR RECORDS: procure that all entries relating to the sale of
any Receivable by each Client to LND are duly and promptly
recorded in the books of that Client and to ensure that all
accounts maintained in the books or records of the Clients in the
names of its Customers bear a conspicuous notation that they have
been assigned to LND;
(o) PAYMENT TIMING: procure that any Receivable becomes due and
payable within 30 days of the delivery of the relative invoice;
(p) DELIVERY, SERVICE: procure that in relation to the each
Receivable, the Goods have been duly delivered or the Services
duly provided;
(q) BONA FIDE OBLIGATION: use all reasonable endeavours to procure
that each Receivable is an existing and bona fide obligation of
the Customer arising out of the sale of Goods or the provision of
Services by a Client in the ordinary course of its trading;
(r) CUSTOMER AUTHORITIES: use all reasonable endeavours to procure
that each Customer has obtained all the authorities necessary
under the regulations in force in the country to which the Goods
or Services are provided or from which payment is to be made, in
order to pay the Receivables in accordance with the contract or
invoice;
(s) CUSTOMER CONTRACTS: procure that every contract with any Customer
is governed by English law and specifies the nature and quantity
of the Goods or Services and the terms and currency of payment;
(t) ENFORCEABILITY use all reasonable endeavours to procure that no
Client is in breach of any of its obligations to the Customer and
the Customer will accept the Goods or Services and the invoices
therefor (or if the Customer is bankrupt or in liquidation the
Customer's trustee in bankruptcy or liquidation will accept a
proof of debt for the unpaid balance of the invoiced price)
without any dispute or claim whatsoever (whether justifiable or
not) including disputes as to price, terms, quantity, or quality,
set-offs or counter-claim or claims or release from liability in
inability to pay because of any act of God or public enemy of war
or because of the requirement of law (whether in the United
Kingdom or elsewhere) or of rules, orders or regulations having
the force of law;
(u) RECORDS: it has satisfactory debt record insurance from a
reputable insurer or the sales ledger records are backed up daily
and copy disks stored off site at all times; and
(v) SECURITY DOCUMENTS: procure that each Group Company which is not a
Dormant Subsidiary grants a Deed of Charge and a Guarantee and
there is contemporaneously delivered to LND in form and substance
satisfactory to it:
(i) in respect of any Group Company not incorporated under the
laws of England and Wales a legal opinion addressed to LND;
and
37
(ii) in relation to the relevant Group Company a Certified Copy
of:
(A) its certificate of incorporation and any relative
certificate of incorporation on change of name
(B) its constitutional documents;
(C) the minutes of a meeting of the board of directors
(including the resolutions passed at those
meetings):
(1) approving and authorising the execution,
delivery and performance of the Deed of
Change and Guarantee;
(2) showing that the relevant board meeting was
quorate, that due consideration was given by
all the relevant directors present of the
relevant Group Company's obligations and
liabilities arising under those documents and
that all declarations of interests required
in connection with the Deed of Change and
Guarantee were made; and
(3) authorising any director whose name and
specimen signature is set out in those
minutes to sign or otherwise attest the
execution of those documents and any other
documents to be executed or delivered
pursuant to those documents.
(W) LEGAL OPINION: procure that a legal opinion from the US
Counsel to the Parent is delivered on or before the expiry
of the period of 10 Business Days from the date of this
Agreement stating that the Parent Loan and Subordination
Agreement constitute legal, valid and binding obligations
of the Parent.
12.3 NEGATIVE UNDERTAKINGS
The Initial Client undertakes that during the Security Period it shall
not, and it shall procure that none of the Group Companies shall, unless
LND otherwise agrees:
(a) NEGATIVE PLEDGE: create or permit to subsist any Encumbrance over
any of its assets other than Permitted Encumbrances;
(b) CHANGE OF BUSINESS: make any substantial change to the general
nature or scope of the business of the Group as a whole from that
carried on at the date of this Agreement;
(c) MERGERS: enter into any amalgamation, demerger, merger or
reconstruction or any joint venture or partnership agreement;
38
(d) INDEBTEDNESS: incur or permit to subsist any Indebtedness other
than Permitted Indebtedness;
(e) ACQUISITIONS: acquire any business of, or shares or securities
of, any company (other than a Charging Group Company);
(f) DEALINGS WITH RECEIVABLES: other than in favour of LND, sell,
factor, discount or otherwise dispose of or enter into any
agreement under which it may be or become obliged to sell, factor,
discount, or dispose of any Receivable; nor
(g) DEALINGS WITH GROUP COMPANIES: provide Goods or Services to a
Subsidiary, co-subsidiary, parent or associated company of any
Client or under the same director or shareholder control as any
Client;
(h) SUBSIDIARIES: have any Subsidiaries other than wholly owned
Subsidiaries; nor
(i) DIVIDENDS AND PAYMENTS ON THE PARENT LOAN: make, pay or declare
any dividend or other distribution in relation to any shares
forming part of its issued share capital or repay or prepay,
redeem or purchase the Parent Loan or pay any interest in respect
of the Parent Loan other than (i) payment of interest at a rate of
up to a maximum of 10 per cent per annum on the Parent Loan in
accordance with the terms of the Parent Loan or (ii) payment of
dividends, or (iii) any other cash distribution by the Initial
Client to the Parent solely in order for the Parent to pay
interest (including any additional interest) at the applicable
rate specified in the Note Indenture where:
(A) no sum is due and unpaid under this Agreement;
(B) no Default or Potential Default has occurred and is
continuing;
(C) the directors of the Initial Client issue a certificate to
LND to the effect that the payment of such dividend, or
such interest or the making of such cash distribution
(including the payment of any related advance corporation
tax), as the case may be, will not result in a breach of
any of the financial undertakings contained in Clause
12.4.1 in the subsequent period of 6 months;
(D) the Initial Client shall have delivered to LND one or more
Compliance Certificates in relation to the period in
respect of which such dividend, or such interest is to be
paid or such distribution is to be made (including the
provision of any applicable Auditor's confirmation); and
(E) such payments are or distribution is made at least 5 days
after the delivery to LND of the relevant accounting
information and any Compliance Certificate for the period
to which they relate.
12.4 FINANCIAL UNDERTAKINGS
12.4.1 The Initial Client undertakes to ensure that during the Security Period,
unless LND otherwise agrees:
39
(a) PBIT
the PBIT for each period referred to in Column A below shall not
be less than the figure set out opposite that period in Column B
below:
COLUMN A COLUMN B (Pounds)'000
PERIOD ABSOLUTE PBIT
Completion to 31st March 1998 1,000
Completion to 30th June 1998 2,000
Completion to 30th September 1998 3,000
Completion to 31st December 1998 4,500
1st April 1998 to 31st March 1999 4,940
1st July 1998 to 30th June 1999 5,390
1st October 1998 to 30th September 1999 5,840
1st January 1998 to 31st December 1999 6,500
For each 12 month period ending on a
Quarter Date thereafter 6,500
(b) CASHFLOW TO TOTAL OBLIGATIONS
the ratio of Cashflow to Total Obligations for each period
referred to in Column A below shall not be less than the ratio set
out opposite that period in Column B below:
COLUMN A COLUMN B
PERIOD RATIO
Completion to 31st March 1998 1.35:1
Completion to 30th June 1998 1.35:1
Completion to 30th September 1998 1.35:1
Completion to 31st December 1998 1.35:1
For each 12 month period ending on a
Quarter Date thereafter 1.35:1
(c) GEARING
the ratio of Total Debt to Tangible Net Worth at any time during
each period referred to in Column A below shall not be greater
than the ratio set out opposite that period in Column B below:
COLUMN A COLUMN B
PERIOD RATIO
Completion to 29th June 1998 0.32:1
30th June 1998 to 30th December 1998 0.31:1
31st December 1998 to 29th June 1999 0.30:1
30th June 1999 to 30th December 1999 0.29:1
31st December 1999 to 30th June 2000 0.28:1
Thereafter 0.28:1
40
12.4.2 (a) If the directors of any Group Company determine at any time during
the Security Period that the accounting reference date of that
Group Company has or should be changed or any of the accounting
principles applied in the preparation of any of the Accounts and
the Management Accounts shall be different from the Accounting
Principles, or if as a result of the introduction or
implementation of any SSAP or FRS or any change in any of them or
in any applicable law such accounting principles are required to
be changed, the Initial Client shall promptly give notice to LND
of that change, determination or requirement.
(b) If LND believes that the financial undertakings set out in this
Clause 12.4 need to be amended as a result of any such change,
determination or requirement, the Initial Client shall negotiate
with LND in good faith to amend the existing financial
undertakings so as to provide LND with substantially the same
protections as the financial undertakings set out in this Clause
12.4 (but which are not materially more onerous).
(c) If the Initial Client and LND cannot agree such amended financial
undertakings within 30 days of that notice, the Initial Client and
LND shall jointly nominate a firm of chartered accountants to
settle the amended financial undertakings, or in default of such
nomination LND shall request the President for the time being of
the Institute of Chartered Accountants in England and Wales (or
his nominee) to nominate a firm of chartered accountants for that
purpose. Such accountants shall act as experts and not
arbitrators and their decision shall be final and binding on the
Parties. The costs of such accountants shall be paid by the
Initial Client.
12.4.3 The calculation of ratios and other amounts under this Clause 12.4 shall
be made by LND by reference to the latest Accounts, Management Accounts
and other financial information of the Group Companies for the Financial
Year of the Initial Client, or other period in relation to which the
calculation falls to be made. Each determination of LND under this
Clause 12.4 shall be conclusive and binding on the Clients except for any
manifest error.
13. DEFAULT
13.1 DEFAULT
Each of the following shall be a Default:
(a) NON-PAYMENT: a Client does not pay on the due date any amount
payable by it under this Agreement at the place at and in the
currency and funds in which it is expressed to be payable unless
the failure to pay such amount is due solely to administrative or
technical delays in the transmission of funds which are not the
fault of that Client and such amount is paid within 3 Business
Days after its due date for payment; or
(b) BONA FIDE OBLIGATION: if on more than one occasion any of Clause
12.2(q) is breached or any Group Company retains the proceeds of
any Purchased Receivable; or
(c) OTHER DEFAULTS: subject to Clause 13.2, any Charging Group
Company breaches any of its obligations under any Discounting
Document (other than the
41
obligations referred to in Clause 13.1(a)) and, if that breach is
capable of remedy, it is not remedied within 15 Business Days
after notice of that breach has been given by LND to the Initial
Client; or
(d) BREACH OF REPRESENTATION OR WARRANTY: any representation,
warranty or statement made or deemed to be made or repeated by any
Charging Group Company under any Discounting Document or in any
document delivered by or on behalf of any Client under or in
connection with any Discounting Document is incorrect when made or
deemed to have been repeated; or
(e) UNLAWFULNESS OR REPUDIATION: it is unlawful for any Charging
Group Company to perform or comply with, or any Charging Group
Company repudiates, any of its obligations under any Discounting
Document; or
(f) CROSS-DEFAULT: any Indebtedness of all or any of the Group
Companies in excess of, in aggregate, (Pounds)20,000:
(i) is not paid when due or within any originally applicable
grace period; or
(ii) is declared to be or otherwise becomes due and payable
prior to its specified maturity,
or any creditor of all or any of the Group Companies becomes
entitled to declare any such Indebtedness due and payable prior to
its specified maturity; or
(g) ATTACHMENT OR DISTRESS: a creditor or encumbrancer attaches or
takes possession of, or a distress, execution, sequestration or
other process is levied or enforced upon or sued out against, any
of the assets of any Group Company (having a value of at least
(Pounds)5,000) and such process is not discharged within 21 days;
or
(h) ENFORCEMENT OF SECURITY: any Encumbrance over any of the assets
of any Group Company becomes enforceable; or
(i) INABILITY TO PAY DEBTS: any Group Company (other than a Dormant
Subsidiary):
(i) suspends payment of its debts or is unable or admits its
inability to pay its debts as they fall due; or
(ii) begins negotiations with any creditor with a view to the
readjustment or rescheduling of any of its Indebtedness; or
(iii) proposes or enters into any composition or other
arrangement for the benefit of its creditors generally or
any class of creditors; or
(j) INSOLVENCY PROCEEDINGS: any person takes any action or any legal
proceedings are started or other steps taken (including the
presentation of a petition) for:
(i) any Group Company (other than a Dormant Subsidiary) to be
adjudicated or found insolvent; or
42
(ii) the winding-up or dissolution of any Group Company other
than (A) in respect of a Dormant Subsidiary, (B) in
connection with a solvent reconstruction, the terms of
which have been previously approved in writing by LND, or
(C) a winding-up petition which is proved to the
satisfaction of LND to be frivolous or vexatious and which
is, in any event, discharged within 14 days of its
presentation and before it is advertised; or
(iii) the appointment of a trustee, receiver, administrative
receiver or similar officer in respect of any Group Company
or any of its assets; or
(k) ADJUDICATION OR APPOINTMENT: any adjudication, order or
appointment is made under or in relation to any of the proceedings
referred to in Clause 13.1(i); or
(l) ADMINISTRATION ORDER: an application is made to the court for an
administration order under the Insolvency Xxx 0000 with respect to
any Group Company (other than a Dormant Subsidiary); or
(m) ANALOGOUS PROCEEDINGS: any event occurs or proceeding is taken
with respect to any Group Company (other than a Dormant
Subsidiary) in any jurisdiction to which it is subject which has
an effect equivalent or similar to any of the events mentioned in
Clause 13.1(g), (i), (j), (k) or (l); or
(m) CESSATION OF BUSINESS: any Group Company (other than a Dormant
Subsidiary) suspends, ceases or threatens to suspend or cease to
carry on all or a substantial part of its business; or
(n) CHANGE OF CONTROL: a person, other than a Subsidiary of the
Parent, (whether alone or together with any associated person or
persons) becomes the beneficial owner of shares in the issued
share capital of the Initial Client carrying the right to exercise
more than 50 per cent. of the votes exercisable at a general
meeting of the Initial Client (for the purposes of this Clause
13.1(n), "ASSOCIATED PERSON" means, in relation to any person, a
person who is (i) "acting in concert" (as defined in the City Code
on Takeovers and Mergers) with that person or (ii) a "connected
person" (as defined in section 839 of the Income and Corporation
Taxes Act 1988) of that person); or
(o) MATERIAL ADVERSE CHANGE: any event or series of events occur
which, in the opinion of LND, has or could reasonably be expected
to have a Material Adverse Effect; or
(p) REDEMPTION OF SHARES BY THE INITIAL CLIENT: The Initial Client,
without the prior written consent of LND, makes any redemption of
any of its shares, purchases any of its shares or otherwise
reduces its issued share capital; or
13.2 ACCELERATION, ETC.
If a Default occurs and remains unremedied LND may, by notice (a "DEFAULT
NOTICE") to the Initial Client:
43
(a) cancel the Invoice Discounting Facility and require the Clients
immediately to repurchase the Purchased Receivables by payment to
LND of amounts in each Approved Currency equal to the Funding
Amounts for each Approved Currency and to pay all other sums
payable under this Agreement, whereupon they shall become
immediately due and payable. Upon the service of any Default
Notice LND's obligations under this Agreement shall be terminated
and the Invoice Discounting Facility shall be cancelled; or
(b) place all or any part of the Invoice Discounting Facility
repayable on demand, so that the Initial Client shall be obliged
to immediately repurchase the Purchased Receivables purchased by
LND for an amount equal to the Funding Amount together with
interest accrued thereon which shall be due and payable on LND's
demand.
14. SET-OFF
LND may set off any matured obligation owed by a Client under any
Discounting Document against any obligation (whether or not matured) owed
by LND to that Client, regardless of the place of payment, booking branch
or currency of either obligation. If the obligations are in different
currencies, LND may convert either obligation at the relevant spot rate
of exchange of LND for the purpose of effecting such set-off. LND shall
promptly notify the Client upon the exercise or purported exercise of any
right of set-off giving full details in relation thereto.
15. FEES AND EXPENSES
15.1 EXPENSES
The Initial Client shall on demand pay all reasonable and proper expenses
incurred (including legal, valuation and accounting fees and any VAT on
those expenses:
(a) by LND in connection with the negotiation, preparation and
execution of the Discounting Documents and the other documents
contemplated by the Discounting Documents;
(b) by LND in connection with the granting of any release, waiver or
consent or in connection with any amendment or variation of any
Discounting Document; and
(c) by LND in enforcing, perfecting, protecting or preserving (or
attempting so to do) any of its rights, or in suing for or
recovering any sum due from a Client or any other person under any
Discounting Document, or in investigating any possible Default.
15.2 ADMINISTRATION FEES
The Initial Client shall pay to LND an annual administration fee of
(Pounds)25,000 plus VAT. In relation to the first year such fee shall be
paid at Completion and each subsequent administration fee shall be paid
in one amount and on each anniversary of this Agreement.
15.3 ARRANGEMENT FEE
44
On the Commencement Date the Initial Client shall pay to LND a fee of
(Pounds)90,000 plus VAT.
15.4 DOCUMENTARY TAXES INDEMNITY
All stamp, documentary, registration or other like duties or Taxes,
including any penalties, additions, fines, surcharges or interest
relating to those duties and Taxes, which are imposed or chargeable on or
in connection with any Discounting Document shall be paid by the Clients.
LND shall be entitled but not obliged to pay any such duties or Taxes
(whether or not they are its primary responsibility). If LND does so the
Clients shall on demand indemnify LND against those duties and Taxes and
against any costs and expenses incurred by LND in discharging them.
15.5 VAT
15.5.1 All payments made by a Client under the Discounting Documents are
calculated without regard to VAT. If any such payment constitutes the
whole or any part of the consideration for a taxable or deemed taxable
supply (whether that supply is taxable pursuant to the exercise of an
option or otherwise) by LND, the amount of that payment shall be
increased by an amount equal to the amount of VAT which is chargeable in
respect of the taxable supply in question.
15.5.2 No payment or other consideration to be made or furnished to a Client by
LND pursuant to or in connection with any Discounting Document or any
transaction or document contemplated in any Discounting Document may be
increased or added to by reference to (or as a result of any increase in
the rate of) any VAT which shall be or may become chargeable in respect
of any taxable supply.
15.6 INDEMNITY PAYMENTS
Where in any Discounting Document a Client has an obligation to indemnify
or reimburse LND in respect of any loss or payment, the calculation of
the amount payable by way of indemnity or reimbursement shall take
account of the likely Tax treatment in the hands of LND (as determined by
LND's auditors) of the amount payable by way of indemnity or
reimbursement and of the loss or payment in respect of which that amount
is payable.
15.7 DEBITING AUTHORITY
The Clients authorise LND to debit the amount of any fees payable by any
of them under this Agreement from any account held by it with LND.
16 WAIVERS: REMEDIES CUMULATIVE
The rights of LND under the Discounting Documents:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general
law; and
(c) may be waived only in writing and specifically.
45
Delay in exercising or non-exercise of any such right is not a waiver of
that right.
17. MISCELLANEOUS
17.1 SEVERANCE
If any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not effect:
(a) the legality, validity or enforceability in that jurisdiction of
any other provision of this Agreement; or
(b) the legality, validity or enforceability in any other jurisdiction
of that or any other provision of this Agreement.
17.2 COUNTERPARTS
This Agreement may be executed in any number of counterparts and this
shall have the same effect as if the signatures on the counterparts were
on a single copy of this Agreement.
18. NOTICES
18.1 METHOD
Each notice or other communication to be given under this Agreement shall
be given in writing in English and, unless otherwise provided, shall be
made by fax or letter.
18.2 DELIVERY
Any notice or other communication to be given by one Party to the other
under this Agreement shall (unless one Party has by 15 days' notice to
the other Party specified another address) be given to that other Party
at the respective addresses given in Clause 18.3 or, in the case of
Clients (other than the Initial Client) as set out in the schedule to its
relevant Accession Agreement.
18.3 ADDRESSES
The address and fax number of the Initial Client and LND are:
(A) PRESTOLITE ELECTRIC LIMITED:
Xxxxxxxxx Xxxx
Xxxxxxx
Xxxxxxxxxx
XX0 0XX
Attention: The Finance Director
Fax: 00000 000 000
Copy: The Finance Director
46
Fax: 0000 000 0000
(B) LND:
Xxxxx Xxxxx
Xxxxxxx Xxxxxx
Xxxxxxx
Xxxxxxxxx
XX00 0XX
Attention: the Company Secretary
Fax: 0000 000 0000
with copies to: Prestolite Electric Inc
Fax: 000 000 000 0000
18.4 DEEMED RECEIPT
18.4.1 Any notice or other communication given by LND shall be deemed to
have been received:
(a) if sent by telex with the relevant answerback appearing at the
beginning and end of the telex, on the day on which transmitted;
(b) if sent by fax, with a confirmed receipt of transmission from the
receiving machine, on the day on which transmitted;
(c) in the case of a written notice given by hand, on the day of
actual delivery; and
(d) if posted, on the second Business Day following the day on which
it was despatched by first class mail postage prepaid,
provided that a notice given in accordance with the above but received on
a day which is not a Business Day or after normal business hours in the
place of receipt shall only be deemed to have been received on the next
Business Day.
18.4.2 Any notice or other communication given to LND shall be deemed to
have been given only on actual receipt.
19. ASSIGNMENTS AND TRANSFERS
19.1 BENEFIT OF AGREEMENT
This Agreement shall be binding upon and enure to the benefit of each
Party and its successors and assigns.
19.2 ASSIGNMENTS AND TRANSFERS BY CLIENTS
No Client shall be entitled to assign or transfer any of its rights or
obligations under this Agreement.
47
19.3 ASSIGNMENTS BY LND
LND may assign any of its rights and benefits under the Discounting
Documents to another bank or other financial institution.
19.4 TRANSFERS BY LND
LND may transfer any of its rights and obligations under the Discounting
Documents to another bank or other financial institution. The Initial
Client shall enter into such documents as LND may reasonably stipulate in
order to effect any such transfer.
19.5 DISCLOSURE OF INFORMATION
LND may disclose to its professional advisers and to any actual or
potential assignee, transferee or sub-participant any information which
LND has acquired under or in connection with any Discounting Document.
20. INDEMNITIES
20.1 CURRENCY INDEMNITY
20.1.1 Any payment made to or for the account of or received by LND in
respect of any moneys or liabilities due, arising or incurred by a Client
to LND in a currency (the "CURRENCY OF PAYMENT") other than the currency
in which the payment should have been made under this Agreement (the
"CURRENCY OF OBLIGATION") in whatever circumstances (including as a
result of a judgment against a Client) and for whatever reason shall
constitute a discharge to that Client only to the extent of the Currency
of Obligation amount which LND is able on the date of receipt of such
payment (or if such date of receipt is not a Business Day, on the next
succeeding Business Day) to purchase with the Currency of Payment amount
at its spot rate of exchange (as conclusively determined by LND) in the
London foreign exchange market.
20.1.2 If the amount of the Currency of Obligation which LND is so able
to purchase falls short of the amount originally due to LND under this
Agreement, then the relevant Client shall immediately on demand indemnify
LND against any loss or damage arising as a result of that shortfall by
paying to LND that amount in the Currency of Obligation certified by LND
as necessary so to indemnify it.
20.2 GENERAL
20.2.1 The indemnities in this Clause 20.1 shall constitute a separate
and independent obligation from the other obligations contained in this
Agreement, shall give rise to a separate and independent causes of
action, shall apply irrespective of any indulgence granted from time to
time and shall continue in full force and effect notwithstanding any
judgment or order for a liquidated sum or sums in respect of amounts due
under this Agreement or under any such judgment or order.
20.2.2 The certificate of LND as to the amount of any loss or damage
sustained or incurred by it shall be conclusive and binding on the
Clients except for any manifest error.
48
21. LAW
21.1 LAW
This Agreement is governed by and shall be construed in accordance with
English law.
IN WITNESS whereof the Parties have caused this Agreement to be duly executed on
the date set out above.
49
SCHEDULE 1
CONDITIONS PRECEDENT
The conditions referred to in Clause 4.1 are as follows:
1. DELIVERY OF CERTIFIED COPIES
LND is satisfied that no Default or Potential Default is continuing and
shall have received a Certified Copy of each of the following in form and
substance satisfactory to it:
(a) the certificate of incorporation (and any relative certificate of
incorporation on change of name) of the Initial Client and each
Group Company;
(b) the memorandum and articles of association of the Initial Client
and each Group Company; and
(c) the minutes of a meeting of the board of directors of the Initial
Client and each Charging Group Company (including the resolutions
passed at those meetings):
(i) approving and authorising the execution, delivery and
performance of each Transaction Document to which it is to
be a party on the terms and conditions of those documents;
(ii) showing that the relevant board meeting was quorate, that
due consideration was given by all the relevant directors
present of the relevant company's obligations and
liabilities arising under those documents and that all
declarations of interests required in connection with any
Transaction Document to which it is to be a party were
made; and
(iii) authorising any director whose name and specimen signature
is set out in those minutes to sign or otherwise attest the
execution of those documents and any other documents to be
executed or delivered pursuant to those documents.
(d) the Parent Loan Agreement;
(e) the Memorandum of Repayment;
(f) a valuation by Messrs Xxxxxxx Xxxxx Hampton addressed to the
Initial Client of the property at Xxxxxx Xxxx, Xxxxx, Xxxxxx;
(g) the Acquisition Documents; and
(h) the Disclosure Letter.
2. DELIVERY OF ORIGINAL NON-SECURITY DOCUMENTATION, ETC.
LND shall have received each of the following in form and substance
satisfactory to it:
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(a) all items forming the Information Package;
(b) a certificate from a Director of the Initial Client, addressed to
LND, that no further banking facilities are required within the
next 3 years other than those facilities as contained within the
Discounting Documents;
(c) a letter to LND from the insurance broker to the Group confirming
that all required insurances are in effect and that no other
insurance is necessary;
(d) a letter from the Auditors addressed to LND confirming that they
are aware of the provisions of Clauses 1, and 12.4 of this
Agreement;
(e) confirmation from Xxxxxxx Xxxxxx that arrangements for the
transfer of pensions obligations and contributions of the Vendor
are satisfactory;
(g) a certificate from a secretary of the Initial Client that:
(i) the Parent has made the subscriptions for Ordinary Shares
in accordance with the Memorandum of Repayment and that the
shares subscribed for have been issued fully paid; and
(ii) the Parent Loan was drawn down so that the Initial Client
has available to it the sum of (Pounds)18,453,000 and that
such sum was applied prior to the first utilisation under
this Agreement;
(h) deeds of release in respect of any security in favour of Citicorp
Industrial Credit Inc. and Cheltenham & Gloucester; and
(i) the NWB Priority Letter and a Letter of Waiver from NWB to LND in
relation to (among other things) the NWB Security.
3. DELIVERY OF SECURITY DOCUMENTS
LND shall have received each of the following in form and substance
satisfactory to it:
(a) a Deed of Charge duly executed by the Initial Client;
(b) the Subordination Agreement duly executed by the parties to it.
together with, in each case, all documents deliverable with them.
4. MISCELLANEOUS
(a) LND shall be satisfied with its "pre-completion operational
survey" of the Initial Client; and
(b) LND shall have received the administration fee for the first 12
month period under Clause 15.2 and the arrangement fee payable
under Clause 15.3.
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SCHEDULE 2
FORM OF ACCESSION AGREEMENT
THIS AGREEMENT is made this [ ] day of [ ] 19[ ] by
[ ] (the "NEW PARTY") in favour of the other parties to the Invoice
Discounting Agreement (as defined below).
RECITALS:
(A) This Agreement is supplemental to an invoice discounting agreement (the
"INVOICE DISCOUNTING AGREEMENT") dated [ ] made between
(1) Prestolite Electric Limited and (2) Lombard NatWest Discounting
Limited.
(B) The New Party wishes to accede to the Invoice Discounting Agreement as a
Client.
(C) It is a term of the Invoice Discounting Agreement that, in order to
accede as a Client, the New Party must enter into this Agreement.
NOW THIS DEED WITNESSES AS FOLLOWS
1. Terms defined and references construed in the Invoice Discounting
Agreement shall have the same meanings and construction in this
Agreement.
2. The New Party:
(a) shall accede to the Invoice Discounting Agreement immediately upon
LND countersigning this Agreement and shall be bound by all the
terms and conditions of the Invoice Discounting Agreement insofar
as they relate to a Client as if the New Party was a party to the
Invoice Discounting Agreement in such capacity from date of this
Agreement;
(b) represents and warrants to LND in the terms of Clauses [11.1(a) to
(g)] but such representations and warranties shall be given so as
to apply, mutatis mutandis, to the New Party only; and
(c) confirms that it has delivered to LND the documents specified in
the Schedule to this Agreement.
3. NWB and accounts of the New Party for the purpose of Clause 5.3.3 are as
follows:
COLUMN A COLUMN B
*[Approved Currency] *[bank and account]
IN WITNESS whereof the New Party has caused this Agreement to be executed on the
day set out above.
THE NEW PARTY
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SIGNED by
[ ]
for and on behalf of
[NEW PARTY] LIMITED
LND
SIGNED by
[ ]
for and on behalf of
LOMBARD NATWEST DISCOUNTING LIMITED
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SCHEDULE
(a) A Certified Copy of our memorandum and articles of association or
equivalent constitutional documents.
(b) A Certified Copy of the resolution of our Board of Directors approving
the transactions contemplated by this Agreement and authorising the
execution of this Agreement and any other documents contemplated by the
Invoice Discounting Agreement.
(c) Certified Copies of all other resolutions, authorisations, approvals,
consents and licences, corporate, official or otherwise, necessary or
desirable, to enable us to give effect to the transactions contemplated
by this Agreement and for the validity and enforceability of this
Agreement.
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SCHEDULE 3
PART I
To: Lombard NatWest Discounting Limited
Xxxxx Xxxxx
Xxxxxxx Xxxxxx
Xxxxxxx
Xxxxxxxxx
XX00 0XX
[Date]Date]
Dear Sirs
COMMITTED INVOICE DISCOUNTING AGREEMENT DATED ** (THE "CIDA").
We refer to the CIDA. Terms defined in the CIDA shall have the same meaning in
this letter. This letter is the Offer referred to in the CIDA.
Under Clause [5.1] of the CIDA each Client offers to you for purchase each of
its Receivables [a schedule of which is enclosed with this letter] on the terms
of the CIDA.
This Offer shall be governed by, and construed in accordance with, English law.
Yours faithfully
For and on behalf of
**
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SCHEDULE 3
PART II
To: [Client]
[address]
[Date]
Dear Sirs
COMMITTED INVOICE DISCOUNTING AGREEMENT DATED ** (THE "CIDA").
We refer to Clause 5.1 of the CIDA and accept your offer for sale of each of the
Receivables marked "*" on the enclosed schedule, on the terms of the CIDA.
This acceptance shall be governed by, and construed in accordance with, English
law.
Yours faithfully
For and on behalf of
LOMBARD NATWEST DISCOUNTING LIMITED
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The Initial Client
SIGNED by J XXXXXXXXX )
)
for and on behalf of ) J XXXXXXXXX
PRESTOLITE ELECTRIC LIMITED )
LND
SIGNED by XXXXXX XXXXXXX )
)
for and on behalf of ) XXXXXX XXXXXXX
LOMBARD NATWEST DISCOUNTING LIMITED )
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