EXHIBIT 99.1
EXECUTION COPY
L61,000,000
FACILITY AGREEMENT
dated 23rd December 2005
for
(1) SALTON HOLDINGS LIMITED
(2) SALTON EUROPE LIMITED
Provided by
(3) THE LENDERS LISTED HEREIN AND
(4) BURDALE FINANCIAL LIMITED AS AGENT AND
(5) BURDALE FINANCIAL LIMITED AS SECURITY TRUSTEE
Nabarro Xxxxxxxxx
Xxxxx Xxxxx
Xxxxxxxx'x Xxxx
Xxxxxx XX0X 0XX
Tel: 000 0000 0000
CONTENTS
CLAUSE PAGE
------ ----
1. Definitions and Interpretation..................................... 1
2. The Facilities..................................................... 17
3. Purpose............................................................ 18
4. Conditions of Utilisation.......................................... 18
5. Utilisation........................................................ 19
6. Restrictions Applicable to Individual Facilities................... 20
7. Receivables Finance................................................ 21
8. Provisions Concerning L/Cs......................................... 22
9. Cure Rights........................................................ 24
10. Repayment.......................................................... 24
11. Illegality, Prepayment and Cancellation............................ 27
12. Interest and Purchase Commission................................... 30
13. Fees............................................................... 30
14. Set-Off and Tax Gross Up........................................... 31
15. Increased Costs.................................................... 32
16. Other Indemnities.................................................. 33
17. Costs and Expenses................................................. 34
18. Guarantee and Indemnity............................................ 35
19. Representations and Earranties..................................... 37
20. Information and Financial Undertakings............................. 40
21. General Undertakings............................................... 40
22. Events of Default.................................................. 44
23. Changes to the Lenders............................................. 47
24. Changes to the Obligors............................................ 47
25. Role of the Agent.................................................. 48
26. Conduct of business by the Finance Parties......................... 53
27. Sharing among the Finance Parties.................................. 54
28. Payment Mechanics.................................................. 55
29. Set-Off............................................................ 56
30. Notices............................................................ 57
31. Miscellaneous Provisions........................................... 57
32. Remedies and Waivers............................................... 58
33. Counterparts....................................................... 58
34. Governing law...................................................... 59
35. Enforcement........................................................ 59
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SCHEDULE 1 The Original Obligors......................................... 60
SCHEDULE 2 Conditions precedent for initial utilisation.................. 61
SCHEDULE 3 REPORTING AND FINANCIAL UNDERTAKINGS.......................... 65
SCHEDULE 4 Forms of Request.............................................. 75
SCHEDULE 5 Form of Accession Letter...................................... 84
ii
THIS AGREEMENT is dated 23rd December 2005 and made between:
(1) SALTON HOLDINGS LIMITED (the "COMPANY");
(2) SALTON EUROPE LIMITED ("SEL");
(3) THE AFFILIATES of the Company listed in Part I of Schedule 1 as original
borrowers (together with the Company the "ORIGINAL BORROWERS", and each an
"ORIGINAL BORROWER");
(4) THE AFFILIATES of the Company listed in Part II of Schedule 1 as original
guarantors (together with the Company the "ORIGINAL GUARANTORS", and each
an "ORIGINAL GUARANTOR");
(5) THE FINANCIAL INSTITUTIONS listed under the heading "ORIGINAL LENDERS" on
the execution pages of this Agreement (the "ORIGINAL LENDERS"); and
(6) BURDALE FINANCIAL LIMITED (Registered in England and Wales No 2656007)
(together with its successors and assigns) in its capacity as agent (the
"AGENT") and in its capacity as the security trustee ("SECURITY TRUSTEE").
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"AMAP" means Amalgamated Appliances Pty Limited.
"AMAP DISPOSAL PROCEEDS" means amounts received by the Company in respect
of the sale of the entire issued share capital of AMAP that are to be
distributed in the manner as shall be agreed between the Company and their
tax advisors.
"ACCESSION LETTER" means a document substantially in the form set out in
Schedule 5 (Form of Accession Letter).
"ACTUAL DATE OF PAYMENT" means in relation to a Purchased Receivable, the
date on which full payment in respect of that Purchased Receivable is made
into a Blocked Account by the relevant account debtor or the relevant
Borrower.
"ADDITIONAL BORROWER" means a company which becomes an Additional Borrower
in accordance with Clause 24.2 (Additional Borrowers).
"ADDITIONAL GUARANTOR" means a company which becomes an Additional
Guarantor in accordance with Clause 24.4 (Additional Guarantors).
"ADDITIONAL OBLIGOR" means an Additional Borrower or an Additional
Guarantor.
"AFFILIATE" means in relation to any person, a Subsidiary of that person or
a Holding Company of that person or any other Subsidiary of that Holding
Company.
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"AMAZON TERMS" means the trading terms entered into by SEL with
Xxxxxx.xx.xx Ltd (having its principal place of business at Xxxxxxx Xxxxx
0-0 Xxx Xxxxx, Xxxxxx, Xxxxxxxxx XX0 0XX) from time to time.
"APPRAISAL" means the method agreed between the Company and the Agent for
the Assessment of Stock.
"ARGOS TERMS" means the trading terms entered into by SEL with Argos
Limited (having its principal place of business at Avebury, 489 - 499
Avebury Boulevard, Saxon Xxxx Xxxx, Xxxxxxx Xxxxxx Xxxxxx, XX0 0XX) from
time to time.
"AUTHORISATION" means an authorisation, consent, approval, resolution,
licence, exemption, filing, notarisation or registration.
"AVAILABLE HEADROOM" means, at any relevant time:
(a) the Total Availability;
LESS
(b) the amounts outstanding in respect of the Revolving Credit
Facility and the Receivables Finance Facility.
"AVAILABILITY LIMIT" means each of the limits on the utilisation of the
Facilities established or referred to in Clause 6 (Restrictions applicable
to Individual Facilities).
"AVAILABILITY PERIOD" means:
(a) in relation to the Property Loan Facility and the IP Loan, the
period from and including the date of this Agreement to and
including the date falling five Business Days after such date;
and
(b) in relation to the Revolving Credit Facility and the Receivables
Finance Facility, the period from and including the date of this
Agreement to and including the date falling five Business Days
prior to the Final Repayment Date or (in each case) such later
date as the Lenders may allow.
"BEAUMARK CONTRACT" means the terms of trade entered into between SEL and
Beaumark Limited (having its principal place of business at X0 Xxxxxxxxxx
Xxxxx, Xxxxxxxxxxx, Xxxxxx 00 Xxxxxxx) from time to time.
"BDC CONTRACT" means the terms of trade entered into between SEL and
BRIDISCO Limited (having its principal place of business at of Devonshire
House, 550 White Xxxx Xxxx, Xxxxxx X00 0XX) from time to time.
"BLOCKED ACCOUNTS" has the meaning given to it in the Debenture.
"BORROWER" means an Original Borrower or an Additional Borrower.
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which banks
are open for general business in London and in any country in which a
transfer or payment of funds is required to be made on that day.
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"CASH REQUEST" means a request in the form set out in Part II of Schedule 4
(Forms of Request).
"CHARGED ACCOUNTS" means the Blocked Accounts and the Other Accounts.
"COMMITMENT" means:
(a) in relation to an Original Lender, the amount stated as such in
relation to that Original Lender on the execution pages of this
Agreement; and
(b) in relation to any other Lender, the amount of any Commitment
transferred to it under this Agreement, to the extent not
cancelled, reduced or transferred by it under this Agreement,
provided however, that for so long as Wachovia Bank, National
Association is a Lender, Burdale Financial Limited undertake that its
percentage of such Commitments shall at all times be equal to or
greater than the Commitment of Wachovia Bank, National Association.
"CONSTITUTIONAL DOCUMENTS" means the certificate of incorporation,
memorandum of association and articles of association of each Obligor (or
if not a company incorporated in England and Wales the equivalent thereof
in its jurisdiction of incorporation).
"CONTROL" means
(a) the power (whether by way of ownership of shares, proxy,
contract, agency or otherwise) to:
(i) cast, or control the casting of, more than 50% of the
maximum number of votes that might be cast at a general
meeting of the Company;
(ii) appoint or remove all, or the majority, of the directors or
other equivalent officers of the company; or
(iii) give directions with respect to the operating and financial
policies of the Company with which the directors or other
equivalent officers of the Company are obliged to comply; or
(b) the holding beneficially of more than 50% of the issued share
capital of the Company (excluding any part of that issued share
capital that carries no right to participate beyond a specified
amount in a distribution of either profits or capital).
"CORE BRANDS" means the following trademarks:
(i) Xxxxxx,
(ii) Xxxxx; and
(iii) Xxxxxxx Xxxxx
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including in each case, without limitation, all other indicia associated
with these brands and all rights in relation to any of the foregoing from
time to time (whether registered or unregistered including applications of
any of them and the rights to apply for them) in any part of the world.
"DEBENTURE" means the first-ranking debenture executed or to be executed by
the Obligors in favour of the Agent in its capacity as Security Trustee.
"DEED OF ACCESSION" has the meaning given to it in the Debenture.
"DEFAULT" means an Event of Default or any event or circumstance which
would (with the expiry of a grace period, the lapse of time, the giving of
notice, the making of any determination under the Finance Documents or any
combination of any of the foregoing) be an Event of Default.
"DILUTION RATE" means the monthly value of credit notes (including journal
entries) issued or made by a Borrower as a percentage of the monthly value
of sales of such Borrower.
"DOCUMENTS" means (i) in the case of a trade or commercial L/C issued in
connection with the purchase of any Goods, any and all documents which
represent or relate to those Goods and/or the possession of and/or
ownership of and/or insurance of and/or warehousing of and/or any other
dealing in or with those Goods and (ii) in the case of a standby L/C issued
in order to secure the performance of an obligation or any liability
arising in respect of a breach of an obligation, a demand and any other
document required under such L/C to be presented by the beneficiary of such
L/C.
"DORMANT SUBSIDIARY" means each of the following:
(i) Pifco Limited (CRN:01713199);
(ii) Headstart Limited (CRN: 01753485);
(iii) Optec Elements Limited (CRN: 02920706);
(iv) Mountain Breeze Limited (CRN:00539169);
(v) Best Products Limited (CRN:00316436);
(vi) Xxxxxxx Xxxxx Tower Limited (CRN:00765557);
(vii) Hi-Tech Industries Limited (CRN:01749436);
(viii) X.X. Xxxxx Limited (CRN:00617666);
(ix) Xxxxxx Limited (CRN:00834782);
(x) Pifco Distribution Limited (CRN:00194751); and
(xi) Hi-Tech Batteries Limited (CRN:02199387).
(xii) EsaltonEurope Limited (CRN:01936735)
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"ELIGIBLE RECEIVABLES" has the meaning given to it in Schedule 3 Part I
(Reporting and Financial Undertakings).
"ELIGIBLE STOCK" has the meaning given to it in Schedule 3 Part I
(Reporting and Financial Undertakings).
"ENVIRONMENTAL REPORTS" means the reports prepared by Environmental
Resources Management in form and substance satisfactory to the Agent.
"EUROPEAN SUBSIDIARIES" means each of (i) Salton Deutschland GmBH, (ii)
Salton Productos Espana S.A., (iii) Salton France S.A. and (iv) Salton
Italia S.r.l.
"EVENT OF DEFAULT" means any event or circumstance specified as such in
Clause 22 (Events of Default).
"EUROPEAN SALES ENTITY" means any European Subsidiary.
"EXCHANGE RATE" means the prevailing spot rate of exchange of such bank as
the Agent may select for the purpose, at or around 11 am on the date on
which any conversion of or calculation in any currency is to be made under
this Agreement.
"EXISTING INDEBTEDNESS" means amounts owing to HSBC Invoice Finance and
HSBC Bank plc pursuant to a facility letter dated 22 July 2004.
"EXISTING INTER-COMPANY LOANS" means the Salton Deutschland Loan, the
Salton France Loan, the Salton Espana Loan and the Salton Italia Loan as
each is adjusted in any financial year provided however, that the maximum
total amount outstanding under all Existing Inter-Company Loans shall not
exceed L18,800,000 at the date of this Agreement.
"EXPIRY DATE" means, in relation to an L/C, the last day of its Term.
"FACILITY" means the Property Loan Facility, the IP Loan Facility, the
Receivables Finance Facility and the Revolving Credit Facility.
"FACILITY LIMIT" means L61,000,000.
"FEE LETTER" means any letter or letters dated on or about the date of this
Agreement between the Agent and the Company (or the Security Trustee and
the Company) setting out any of the fees referred to in Clause 13 (Fees).
"FINAL REPAYMENT DATE" means the date falling 36 months after the date of
this Agreement.
"FINANCE DOCUMENT" means this Agreement, any Fee Letter, the Security
Documents, any Accession Letter, any Utilisation Request, the Hong Kong
Waiver and Amendment Letter and any other document designated as a "FINANCE
DOCUMENT" in writing by the Agent and the Company.
"FINANCE PARTY" means the Agent, the Lenders and the Security Trustee.
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"FINANCIAL INDEBTEDNESS" means any indebtedness for or in respect of:
(a) moneys borrowed;
(b) any amount raised by acceptance under any acceptance credit
facility or dematerialised equivalent;
(c) any amount raised pursuant to any note purchase facility or the
issue of bonds, notes, debentures, loan stock or any similar
instrument;
(d) the amount of any liability in respect of any lease or hire
purchase contract which would, in accordance with GAAP, be
treated as a finance or capital lease;
(e) receivables sold or discounted (other than any receivables to the
extent they are sold on a non-recourse basis);
(f) any amount raised under any other transaction (including any
forward sale or purchase agreement) having the commercial effect
of a borrowing;
(g) any derivative transaction entered into in connection with
protection against or benefit from fluctuation in any rate or
price (and, when calculating the value of any derivative
transaction, only the marked to market value shall be taken into
account);
(h) any counter-indemnity obligation in respect of a guarantee,
indemnity, bond, standby or documentary letter of credit or any
other instrument issued by a bank or financial institution; and
(i) (without double counting) the amount of any liability in respect
of any guarantee or indemnity for any of the items referred to in
paragraphs (a) to (h) above.
"FOREX EXPOSURE" means, in relation to any unmatured Forex Transaction, the
Forex Percentage of such transaction.
"FOREX LIMIT" means L2,000,000 (or such higher limit as the Lenders may
from time to time agree).
"FOREX PERCENTAGE" means (i) 10 per cent. in relation to euros and US
dollars and (ii) 20 per cent. in relation to any other currency or (in each
case) such higher percentage as the Agent may determine having regard to
the nature of the currencies involved in any Forex Transaction.
"FOREX REQUEST" means a request in the form set out in Part IV of Schedule
4 (Forms of Request).
"FOREX TRANSACTION" means a foreign exchange transaction entered into as a
result of a Utilisation of the Revolving Credit Facility.
"GAAP" means generally accepted accounting principles policies, standards
and practices in the United Kingdom or other country of incorporation where
applicable at the date of this Agreement and approved or adopted by the
Accounting Standards Board.
6
"GOODS" means all Stock, produce, inventory and/or other goods and in
respect of which an L/C has been issued.
"GROUP" means the Company and its Subsidiaries as at the date of this
Agreement (which for the avoidance of doubt shall include the European
Subsidiaries and The Dormant Subsidiaries).
"GROUP STRUCTURE CHART" means the group structure chart prepared by the
Company and provided to the Agent in the agreed form detailing the group
structure for the Ultimate Parent and its Subsidiaries.
"GUARANTOR" means an Original Guarantor or an Additional Guarantor.
"XXXXXXX CONTRACT" means the terms of trade entered into between SEL and
Xxxxxxx Xxxxxxxxx Limited (having its principal place of business at
Xxxxxxx Xxx, Xxxxxxxx, Xx Xxxxxxxxx, Xxxx Xxxxxxxxx XX00 0XX) from time to
time.
"HOLDING COMPANY" means, in relation to a company or corporation, any other
company or corporation in respect of which it is a Subsidiary.
"HONG KONG WAIVER AND AMENDMENT LETTER" means the letter dated on or about
the date hereof between Salton Hong Kong Limited, SEL and Burdale Financial
Limited as Agent.
"IP LOAN" means a loan made in respect of the IP Loan Facility.
"IP LOAN FACILITY" has the meaning given to it in Clause 2.1(d).
"IP LOAN FACILITY LIMIT" shall be the maximum amount made available in
Clause 2.1(d).
"IP VALUATION" means a valuation of the Mortgaged IP, prepared by valuers
and on a basis acceptable to the Agent.
"L/C" means a letter of credit, performance bond, guarantee or similar
assurance which is from time to time either (i) opened or issued by the
Agent or a Lender for the account of a Borrower or (ii) with respect to
which the Agent or a Lender has agreed to indemnify the issuer or to
guarantee the obligations of a Borrower to such issuer.
"L/C EXPOSURE" means:
(a) in relation to an L/C opened and in issue for the purpose of
purchasing Eligible Stock, the face amount of such L/C less the
aggregate of (i) the relevant Stock Percentage of the cost of
such Eligible Stock covered by that L/C and (ii) all freight,
taxes, duties and other amounts estimated by the Agent to be
payable in order to ensure the delivery of such Eligible Stock to
the premises of the relevant Borrower or its nominee in the
United Kingdom; and
(b) in relation to any other L/C, the face amount of such L/C in
issue and other commitments assumed by the Agent or a Lender with
respect thereto (other than in relation to the BACS Indemnity up
to an amount of
7
L400,000 where, provided there has been no Default, such Exposure
shall not be treated as LC Exposure).
"L/C LIMIT" means L20,000,000 (or such higher limit as the Lenders may from
time to time agree).
"L/C REQUEST" means a request in the form set out in Part III of Schedule 4
(Forms of Request).
"LENDER" means:
(a) any Original Lender; and
(b) any person who has become a Party to this Agreement in accordance
with Clause 23 (Changes to the Lenders)
which in each case has not ceased to be a Party in accordance with the
terms of this Agreement;
"LIBOR" means:
(a) in relation to any amount, the 30 day LIBOR rate for the currency
in which such amount is denominated or outstanding on the first
day of each month in the Financial Times, London edition as
conclusively determined by the Agent; or
(b) (if, for any reason, the Financial Times, London edition ceases
or fails to quote such a rate) the Agent's cost of funds from
whichever source it may reasonably select.
"LOAN" means an outstanding loan (including any Property Loan, IP Loan,
Receivables Loan or Revolving Loan) made in respect of any of the
Facilities (whether made pursuant to the terms of any Utilisation Request
or deemed to be made pursuant to Clause 6.7 (Deemed Utilisations).
"MANDATORY COST" means the cost (calculated as a percentage rate per annum)
of the London branch of any bank from which the Lenders obtain funding for
their provision of the Facilities of complying with the requirements of the
Bank of England and/or the Financial Services Authority and/or any other
applicable regulatory authority in the UK in respect of monetary control,
liquidity or otherwise.
"MARGIN" has the meaning set out in the Fee Letter.
"MAJORITY LENDERS" means:
(a) if there are no Loans outstanding, a Lender or Lenders whose
Commitments aggregate more than 66 2/3 per cent of the Total
Commitments (or, if the Total Commitments have been reduced to
zero, aggregated more than 66 2/3 per cent of the Total
Commitments immediately prior to the reduction);
8
(b) at any other time, a Lender or Lenders whose participations in
the Loans then outstanding aggregate 66 2/3 per cent of all the
Loans then outstanding; or
(c) notwithstanding anything to the contrary contained herein, in the
event that there are only two (2) Lenders, then "Majority
Lenders" shall mean both of such Lenders and if there are more
than two (2) Lenders but one (1) Lender has more than sixty six
and two thirds (66 2/3%) per cent of the aggregate of the
Commitments of the Lenders then "Majority Lenders" shall mean
such Lender and one other Lender.
"MARKETING RE-CHARGE" means payments in any financial year by the Company
to the Ultimate Parent in an aggregate amount not exceeding L700,000 in
respect of marketing support.
"MATERIAL ADVERSE EFFECT" means an effect which (in the reasonable opinion
of the Majority Lenders) results in or is likely to result in a material
adverse change in (i) the ability of any Obligor to perform any of its
respective financial obligations under any of the Finance Documents; or
(ii) in the legality, validity, priority or enforceability of any
obligations or security created by or arising under any Finance Document.
"MATURITY DATE" means, in relation to a Receivable, the Business Day which
is, or immediately succeeds, the date which is the earlier of (i) 60 days
after the contractual due date for payment in respect of such Receivable
and 90 days after the date of the invoice in respect of such Receivables,
(ii) 60 days after the contractual due date for payment in respect of such
Receivable if such Receivable arises under the BDC Contract, the Xxxxxxx
Contract or the Powerforce Contract or 120 days after the date of the
invoice in respect of such Receivable if such Receivable arises under the
BDC Contract, the Xxxxxxx Contract or the Powerforce Contract and (iii) 60
days after the contractual due date for payment in respect of such
Receivable if such Receivable arises under the Beaumark Contract or 150
days after the date of the invoice in respect of such Receivable if such
Receivable arises under the Beaumark Contract.
"MORTGAGED IP" means any intellectual property which is from time to time
charged in favour of the Finance Parties by way of first fixed charge
pursuant to any of the Security Documents.
"MORTGAGED PROPERTY" means any real property which is from time to time
charged in favour of the Finance Parties by way of first legal mortgage.
"MINIMUM AVAILABLE HEADROOM" means L4,000,000 (subject to adjustment in
accordance with the provisions of paragraph B.2 of Schedule 3 Part I).
"NET STOCK VALUE" means the net value of Eligible Stock as determined by
the relevant Obligor in accordance with its customary practices and
procedures (as disclosed to the Agent prior to the date of this Agreement
and as may be varied from time to time with the Agent's prior written
consent).
"OBLIGOR" means a Borrower or a Guarantor.
"ORIGINAL OBLIGOR" means an Original Borrower or an Original Guarantor.
9
"OTHER ACCOUNTS" has the meaning given to it in the Debenture.
"OUTSTANDING PURCHASE PRICE" means the aggregate amount from time to time
outstanding in respect of the Purchase Prices paid or deemed to be paid by
the Lenders under this Agreement.
"OVERALL GROUP" means the Ultimate Parent and its Subsidiaries.
"PARTY" means a party to this Agreement.
"PERMITTED CURRENCY" means Sterling, US $ and Euro.
"PERMITTED DISPOSALS" means:
(i) the Wombourne Disposal;
(ii) disposal of the lighting and general batteries business carried
on under the Pifco Trademark; and
(iii) licencing or sub-licencing of any trademarks for Obligors for
trademarks that do not relate to the Core Brands.
"PERMITTED SECURITY INTEREST" means:
(a) any Security Interest granted in favour of the Agent; and
(b) any Security Interest which arises by operation of law in the
ordinary course of business
"POWERFORCE CONTRACT" means the terms of trade entered into between SEL and
Powerforce Distribution Limited (having its principal place of business at
Bute Street, Xxxxxx, Stoke on Trent, Staffs ST4 3PR) from time to time.
"PROPERTY LOAN FACILITY" has the meaning given to it in Clause 2.1(c).
"PROPERTY LOAN FACILITY LIMIT" shall be the maximum amount made available
in Clause 2.1(c).
"PROPERTY VALUATION" means a valuation of the Mortgaged Property carried
out by a valuer appointed or approved by the Agent on the basis of market
value with a six month marketing period.
"PURCHASE COMMISSION" means the purchase commission payable pursuant to
Clause 12.1 (Calculation of Interest and Purchase Commission).
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"PURCHASE PERCENTAGE" means:
(a) in relation to an Eligible Receivable which is owing by an
account debtor established and carrying on business in the United
Kingdom 85 per cent; and
(b) in relation to an Eligible Receivable which is owing by an
account debtor and which is credit insured under arrangements or
which are otherwise acceptable to the Agent in its complete
discretion 85 per cent;
"PURCHASE PRICE" means, in respect of an Eligible Receivable, the amount
produced by (i) deducting from the face amount of such Eligible Receivable
the maximum discounts, credits and allowances of any nature which may be
taken by or granted to such account debtor or any other person in
connection with such Eligible Receivable and (ii) multiplying the resultant
balance by the Purchase Percentage.
"PURCHASE REQUEST" means a request in the form of Part I of Schedule 4
(Forms of Request).
"PURCHASED RECEIVABLE" means a Receivable purchased by the Agent under this
Agreement.
"QUALIFYING LENDER" means a bank or financial institution which is
beneficially entitled to interest payable to it in respect of an advance
under a Finance Document and which is either:
(i) a company resident in the United Kingdom for United Kingdom tax
purposes; or
(ii) a company not so resident in the United Kingdom which carries on a
trade in the United Kingdom through a permanent establishment and
which brings into account in computing its chargeable profits (for the
purposes of section 11(2) of the Income and Corporation Taxes Act 1988
("ICTA")) the whole of any share of interest payable in respect of
that advance that falls to it by reason of sections 114 and 115 of
ICTA; or
(iii) a Treaty Lender.
"QUARANTINE REPORT" means a report produced by the Company on Goods which
have been put into quarantine by the Company and have remained in
quarantine for a period of more than 15 Business Days.
"RECEIVABLE" means any debt owing to a Borrower, together with all
connected rights, claims, deposits and payments.
"RECEIVABLES FINANCE FACILITY" means the receivables finance facility made
available under this Agreement as described in Clause 2.1(a).
"RECEIVABLES LOAN" means a loan made in respect of the Receivables Finance
Facility.
"RECEIVABLES LIMIT" means L30,000,000.
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"RESERVES" means reserves from time to time established by the Agent and
notified by the Agent to the Borrower to reflect (i) the full amount of any
liabilities or amounts which may (by virtue of any Security Interest
granted to any person other than the Agent, the provisions of the
Enterprise Xxx 0000, any other statutory provision or otherwise) rank
equally with or in priority to the Security Interests granted to the Agent
under the Finance Documents other than for any holiday pay and accrued
unpaid pension deductions where such Reserve shall only be made for amounts
in excess of L100,000 in total or to reflect any amounts secured by the
Security Interests intended to be created pursuant to the Finance Documents
and which may be unavailable to the Agent in the event of an insolvency,
(ii) the amounts believed by the Agent (acting reasonably) to be necessary
to provide for possible inaccuracies in any report or in any information
provided to the Agent in connection with this Agreement, (iii) the amounts
believed by the Agent to represent three months of all third party
warehouse costs in relation to warehouses where Eligible Stock is for the
time being stored and similar liabilities, (iv) any Reserve arising by
virtue of the operation of Clause 7.3(d) (Order of Application), (v) a
reserve of L2,000,000 until the criteria set out in Schedule 3 Part I
(Reporting and Financial Undertaking) paragraph B.2 are satisfied and (vi)
a reserve of L2,000,000 until the criteria set out in Schedule 3 Part I
paragraph B.1 are satisfied.
"REVIEW PERIOD" means:
(a) each period (i) beginning on the date of this Agreement and (ii)
ending on the last day of each fiscal month during the Company's
present financial year; and
(b) each twelve month period ending on the last day of each
subsequent fiscal month.
"REVOLVING CREDIT FACILITY" means the revolving credit facility made
available under this Agreement as described in Clause 2.1(b).
"REVOLVING CREDIT LIMIT" means L30,000,000.
"REVOLVING LOAN" means a Loan made in respect of the Revolving Credit
Facility.
"SALTON DEUTSCHLAND LOAN" means a L6,500,000 loan made by SEL to Salton
Deutschland GmBH.
"SALTON ESPANA LOAN" means a L4,700,000 loan made by SEL to Salton
Productos Espana S.A.
"SALTON FRANCE LOAN" means a L4,250,000 loan made by SEL to Salton France
S.A.
"SALTON ITALIA LOAN" made by L3,400,000 loan made by SEL to Salton Italia
s.r.l.
"SECURITY DOCUMENTS" includes (i) the Debenture, and (ii) any other
document from time to time executed by any person by way of security for
the obligations of any Obligor pursuant to this Agreement.
"SECURITY INTEREST" means a mortgage, charge, pledge, lien or other
security interest securing any obligation of any person, or any arrangement
having similar effect.
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"SECURITY TRUSTEE" means the Agent acting in its capacity as a security
trustee pursuant to the Security Documents.
"SEL" means Salton Europe Limited a company incorporated in England and
Wales and Company Registration Number 00073700.
"STERLING" means the currency for the time being of the United Kingdom.
"STERLING EQUIVALENT" means, in relation to any amount outstanding
denominated or expressed in a currency other than Sterling, the amount in
Sterling which can be purchased with such amount at the Exchange Rate on
any relevant day.
"STOCK" means each Borrower's stock and inventory at any time.
"STOCK LIMIT" means L30,000,000.
"STOCK PERCENTAGE" means with respect to Stock which constitutes finished
goods (i) during the period January - August in any year, 70 per cent. and
(ii) during the period September - December in any year, 75 per cent;
"SUBSIDIARY" means a subsidiary within the meaning of Section 736 of the
Companies Xxx 0000.
"TAX" means any tax, levy, impost, duty or other charge or withholding of a
similar nature (including any penalty or interest payable in connection
with any failure to pay or any delay in paying any of the same).
"TAX CREDIT" means a credit against, relief or remission for, or repayment
of any Tax.
"TAX DEDUCTION" means a deduction or withholding for or on account of Tax
from a payment under a Finance Document.
"TAX PAYMENT" means an increased payment made by an Obligor to the Agent
under Clause 14.2 (Tax gross-up) or a payment under Clause 14.3 (Tax
indemnity).
"TERM" means each period determined under this Agreement for which the
Agent or a Lender is under a liability under or with respect to an L/C,
"TERM LOAN" means any IP Loan and any Property Loan.
"TERM LOAN REQUEST" means a request in the form set out in Part V of
Schedule 4 (Forms of Request).
"TOTAL AVAILABILITY" means at any relevant time, (i) the Total Receivables
Availability; PLUS (ii) the Total Stock Availability LESS (iii) the amount
of the Reserves.
"TOTAL COMMITMENTS" means the aggregate of the Commitments of all of the
Lenders.
"TOTAL RECEIVABLES AVAILABILITY" means at any time the aggregate of the
Purchase Prices of all of the Eligible Receivables.
"TOTAL STOCK AVAILABILITY" means at any time, the Stock Percentage of the
Net Stock Value of Eligible Stock at such time.
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"TRADING CASHFLOW" means in relation to any Review Period or any other
period, the consolidated profit before tax on ordinary activities of the
Company and its Subsidiaries for that period:
(c) adding back any depreciation or amortisation;
(d) deducting any unrealised currency gains;
(e) excluding any extraordinary or exceptional profits;
(f) deducting any capital expenditure; and
(g) making such other adjustments as the Agent may from time to time
reasonably require or approve in writing.
"TREATY LENDER" means a Lender which:
(a) is treated as a resident of a Treaty State for the purposes of
the Treaty; and
(b) does not carry on a business in the United Kingdom through a
permanent establishment with which that Lender's participation in
any part of the Facility is effectively connected
"TREATY STATE" means a jurisdiction having a double taxation on agreement
(a "TREATY") with the United Kingdom which makes provision for full
exemption from tax imposed by the United Kingdom on interest.
"ULTIMATE PARENT" means Salton Inc, a corporation incorporated in the State
of Delaware.
"ULTIMATE PARENT CHANGE OF CONTROL" means the Ultimate Parent ceasing to
Control the Company by virtue of a sale to a third party that is not a part
of the Overall Group at the date of this Agreement;
"UNPAID SUM" means any sum due and payable but unpaid by an Obligor under
the Finance Documents.
"UK CHANGE OF CONTROL" means a change in the Control of the Company as such
is existing at the date of this Agreement;
"US DEBT DOCUMENTS" means:
(i) the Amended and Restated Credit Agreement dated as of May 9,
2003 and amended and restated as of June 15, 2004, as
further amended (the "FIRST LIEN CREDIT AGREEMENT"), among
the financial institutions named therein the ("FIRST LIEN
LENDERS", Xxxxx Fargo Foothill, Inc., as administrative
agent and collateral agent (the "FIRST LIEN AGENT"), Silver
Point Finance, LLC, as the co-agent, syndication agent,
documentation agent (the "FIRST LIEN CO-AGENT"), arranger
and book runner, Salton Inc, each of its subsidiaries that
are signatories thereto as the borrowers and each of its
other subsidiaries that are signatories thereto as
guarantors;
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(ii) the Credit Agreement dated as of August 26, 2005, as
amended, among the financial institutions named therein, as
the lenders, The Bank of New York, as the agent, Salton
Inc., each of its subsidiaries that are signatories thereto,
as the borrowers, and each of its other subsidiaries that
are signatories thereto, as guarantors;
(iii) the Indenture, dated as of December 16, 1998, as
supplemented, among Salton Inc., the guarantors (as defined
therein) and SunTrust Bank, as successor in interest to
Norwest Bank Minnesota National Association, as Trustee;
(iv) the Indenture dated as of April 23, 2001, as supplemented,
among Salton Inc, the Guarantors (as defined therein) and
SunTrust Bank, as successor in interest to Xxxxx Fargo Bank
Minnesota N.A., as Trustee;
(v) the Waiver and Consent Under Amended and Restated Credit
Agreement dated on or about the date hereof, among the
First Lien Lenders, the First Lien Agent, the First Lien
Co-Agent, Salton Inc., each of its subsidiaries that are
signatories thereto as the borrowers and each of its other
subsidiaries that are signatories thereto as guarantors,
relating to the Facility Agreement; and
(vi) the Notice to the Second Lien Agent dated on or about the
date hereof, relating to the Facility Agreement executed by
the Company, the First Lien Agent and the First Lien
Co-Agent.
"UTILISATION" means a utilisation of a Facility.
"UTILISATION DATE" means the date on which a Utilisation is made.
"UTILISATION REQUEST" includes (as the context may require) a Purchase
Request, a Cash Request, an L/C Request, a Forex Request and a Term Loan
Request.
"VAT" means value added tax as provided for in the Value Added Tax Xxx 0000
and any other tax of a similar nature.
"WOMBOURNE DISPOSAL" means the sale by SEL of the freehold land described
as "Land and buildings on the east side of Heath Mill Road, Wombourne" with
title number SF327891.
"WOMBOURNE SALE AND LEASEBACK" means the sale and leaseback transaction
entered into between Matrix Properties (I) Limited, Matrix Properties (II)
Limited and SEL dated 31st January 2005 in relation to the leasehold
property with title number SF497550 and described as "Land on the east side
of Heath Mill Road, Wombourne".
"YEAR 1 ADDITIONAL INTER COMPANY LOANS" means in the first twelve months
from the date of this Agreement the maximum amount of Euro 5,200,000.
1.2 CONSTRUCTION
(a) Unless a contrary indication appears, any reference in this
Agreement to:
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(i) the Lender or to any Obligor shall be construed so as to
include its successors in title, permitted assigns and
permitted transferees;
(ii) "ASSETS" includes present and future properties, revenues
and rights of every description;
(iii) a "FINANCE DOCUMENT" or any other agreement or instrument
is a reference to that Finance Document or other agreement
or instrument as amended or novated;
(iv) a document being "in the agreed form" means that document
which has endorsed on it the words "in the agreed form" and
which is initialled by or on behalf of the Agent and the
Company;
(v) "INDEBTEDNESS" includes any obligation (whether incurred as
principal or as surety) for the payment or repayment of
money, whether present or future, actual or contingent;
(vi) a "PERSON" includes any person, firm, company, corporation,
government, state or agency of a state or any association,
trust or partnership (whether or not having separate legal
personality) or two or more of the foregoing;
(vii) a "REGULATION" includes any regulation, rule, official
directive, request or guideline (whether or not having the
force of law) of any governmental, intergovernmental or
supranational body, agency, department or regulatory,
self-regulatory or other authority or organisation;
(viii) a "MONTH" means a period starting on one day in a calendar
month and ending on the numerically corresponding day in the
next calendar month but (i) if such numerically
corresponding day is not a Business Day, then such period
shall end on the preceding Business Day and (ii) if there is
no numerically corresponding day, then such period shall end
on the last Business Day in that month;
(ix) the singular includes the plural and vice versa;
(x) a provision of law is a reference to that provision as
amended or re-enacted; and
(xi) a time of day is a reference to London time.
(b) Clause and Schedule headings are for ease of reference only.
(c) A Default (other than an Event of Default) is continuing if it
has not been remedied or waived and an Event of Default is
continuing if it has not been waived.
1.3 THIRD PARTY RIGHTS
A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) Xxx 0000 to enforce or to enjoy the
benefit of any term of this Agreement.
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1.4 CURRENCY EQUIVALENTS
Where there is a reference in this Agreement to any amount, limit or
threshold expressed in a currency other than Sterling, in ascertaining
whether or not that amount, limit or threshold has been attained, exceeded
or achieved, an amount denominated in a currency other than Sterling shall
be taken into account at its Sterling Equivalent.
1.5 INTRA-GROUP ARRANGEMENTS
Where, under the terms of this Agreement, any amount owing to a Finance
Party by one Obligor is in fact paid or repaid (wholly or in part) out of
amounts which constitute the property of another Obligor, then (i) the
first Obligor shall thereby become indebted to the second Obligor in an
amount equal to the amount so paid or repaid and (ii) the amount so owing
shall, as between those Obligors, be repayable on demand (but without
prejudice to any provision of this Agreement which prohibits such
repayments).
1.6 CROSS-COLLATERAL
Each Obligor acknowledges that:
(a) the obligations of each Obligor are cross-collateralised to the
extent stated in the Finance Documents; and
(b) in consequence, moneys and assets owned by that Obligor may be
applied in or towards the discharge of moneys owing under the
Finance Documents by another Obligor.
2. THE FACILITIES
2.1 THE FACILITIES
Subject to the terms of this Agreement, and during the Availability Period,
the Lenders make available:
(a) to the Borrowers, a Permitted Currency receivables finance
facility (the "RECEIVABLES FINANCE FACILITY") up to the
Receivables Limit pursuant to which the Agent on behalf of the
Lenders will from time to time during the Availability Period
purchase Receivables from the Borrowers;
(b) to the Borrowers, a Permitted Currency revolving credit facility
(the "REVOLVING CREDIT FACILITY") up to the Revolving Credit
Limit pursuant to which the Lenders will from time to time (i)
make Revolving Loans to the Borrowers, (ii) issue or procure the
issue of L/Cs for the account of the Borrowers and (iii) buy or
sell foreign currencies (acceptable to the Lenders) spot and/or
forward for delivery at a future date on behalf of the Borrowers;
(c) to the Borrowers, a single Property Loan denominated in Sterling
of up to the lesser of (x) 80 per cent of the Property Valuation
delivered to the Agent prior to the date of this Agreement and
(y) L5,000,000 (the "PROPERTY LOAN FACILITY"); and
(d) to the Borrowers, a single IP Loan denominated in Sterling of up
to the lesser of (x) 20 per cent of the IP valuation delivered to
the Agent prior to the date of this Agreement and (y) L6,000,000
(the "IP LOAN FACILITY").
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2.2 FINANCE PARTIES' RIGHTS AND OBLIGATIONS
(a) The obligations of each Finance Party under the Finance Documents
are several. Failure by a Finance Party to perform its
obligations under the Finance Documents does not affect the
obligations of any other Party under the Finance Documents. No
Finance Party is responsible for the obligations of any other
Finance Party under the Finance Documents.
(b) The rights of each Finance Party under or in connection with the
Finance Documents are separate and independent rights and any
debt arising under the Finance Documents to a Finance Party from
an Obligor shall be a separate and independent debt.
(c) A Finance Party may, except as otherwise stated in the Finance
Documents, separately enforce its rights under the Finance
Documents.
3. PURPOSE
3.1 PURPOSE
Each Borrower shall apply all amounts borrowed or raised by it in respect
of the Facilities:
(a) to refinance the Existing Indebtedness; and
(b) for its general corporate and working capital purposes.
3.2 MONITORING
No Finance Party is bound to monitor or verify the application of any
amount borrowed pursuant to this Agreement. A contravention of Clause 3.1
shall not affect the obligations of the Obligors under the Finance
Documents.
4. CONDITIONS OF UTILISATION
4.1 INITIAL CONDITIONS PRECEDENT
No Borrower may deliver the initial Utilisation Request in respect of any
Facility unless the Agent has received all of the documents and other
evidence listed in Schedule 2 Part I (Initial Conditions precedent) in form
and substance satisfactory to the Agent.
4.2 FURTHER CONDITIONS PRECEDENT
The Lenders will only be obliged to comply with the terms of a Utilisation
Request if on the date on which it is given and on the proposed Utilisation
Date:
(a) no Default is continuing or would result from the proposed
Utilisation; and
(b) the representations and warranties set out in Clause 19
(Representations and Warranties) are true in all material
respects with reference to the facts and circumstances then
subsisting.
4.3 CONDITIONS FOR REQUESTING UTILISATIONS RELATING TO STOCK LOCATED IN
EUROPEAN JURISDICTIONS
No Borrower may deliver a Utilisation Request for Loans to be made in
relation to Stock located in any European jurisdiction unless the Agent has
received all of the documents and other evidence for the relevant European
Sales Entity incorporated in such European
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Jurisdiction listed at Schedule 2 Part II (Additional Conditions Precedent
for Lending in Relation to Stock in European Jurisdictions). For the
avoidance of doubt the provisions of this Clause 4.3 shall not apply to
Stock that is in transit to an Obligor and where the conditions of
paragraph 12 sub-paragraph (k) of the definition of Eligible Stock set out
in Schedule 3 have been complied with.
5. UTILISATION
5.1 DELIVERY OF A UTILISATION REQUEST
A Borrower may utilise a Facility by delivery to the Agent of a duly
completed Utilisation Request with respect to the relevant Facility not
later than 11.00 a.m. on the Business Day preceding the proposed
Utilisation Date. The relevant Borrower will deliver the form of
Utilisation Request appropriate to the desired form of Utilisation.
5.2 COMPLETION OF A UTILISATION REQUEST
Each Utilisation Request is irrevocable and will not be regarded as having
been duly completed unless:
(a) the proposed Utilisation Date is a Business Day within the
Availability Period applicable to the Facility in question;
(b) the Utilisation Request complies with the terms of Clause 6
(Restrictions Applicable to Individual Facilities) and with all
other relevant provisions of this Agreement; and
(c) the Utilisation Request is expressed in a Permitted Currency and
it otherwise complies with (and contains the information and
enclosures required by) the applicable form of Utilisation
Request.
Only one Utilisation may be requested in each Utilisation Request.
5.3 LENDER'S PARTICIPATION
If the conditions set out in this Agreement have been met, then:
(a) the Agent will promptly notify each Lender of any proposed
Utilisation and of that Lender's participation in it;
(b) each Lender shall make its participation in each Loan or other
Utilisation available to the Borrower on the proposed Utilisation
Date in accordance with the terms of this Agreement;
(c) the amount of each Lender's participation in each Loan or other
Utilisation will be the proportion which its Commitment bears to
the Total Commitments immediately prior to the making of the Loan
or Utilisation (as the case may be).
5.4 REUTILISATION
Subject to the terms of this Agreement, the Revolving Credit Facility is of
a revolving nature and amounts recovered or repaid in respect of the
Revolving Credit Facility may accordingly be redrawn. For this purpose,
amounts received in respect of the Revolving Credit Facility will be
applied in reduction of the relevant Obligor's liabilities on the Business
Day of actual receipt by the Agent.
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6. RESTRICTIONS APPLICABLE TO INDIVIDUAL FACILITIES
6.1 PROPERTY LOAN FACILITY/IP LOAN FACILITY
The Property Loan Facility and the IP Loan Facility must each be drawn down
in full in one amount before the end of the applicable Availability Period.
The amount which may be drawn down in respect of the Property Loan Facility
and the IP Loan Facility may not exceed the limits established pursuant to
Clauses 2.1(c) and (d) (The Facilities).
6.2 OVERALL FACILITY LIMIT
The aggregate amount of (i) the Outstanding Purchase Price, (ii) all
Revolving Loans, (iii) all L/C Exposures, (iv) all Forex Exposures, (v) the
Property Loan and (vi) the IP Loan shall not at any time exceed the
Facility Limit.
6.3 SPECIFIC FACILITY LIMITS
(a) The aggregate amount of (i) the Outstanding Purchase Price, (ii)
all Revolving Loans, (iii) all L/C Exposures and (iv) all Forex
Exposures shall not at any time exceed the Total Availability.
(b) The aggregate amount of (i) all Revolving Loans, (ii) all L/C
Exposures and (iii) all Forex Exposures shall not at any time
exceed the Revolving Credit Limit.
(c) The Outstanding Purchase Price shall not at any time exceed the
Receivables Limit.
(d) The aggregate amount of outstanding Revolving Loans shall not at
any time exceed the Revolving Credit Limit.
(e) The aggregate amount of all L/C Exposures shall not at any time
exceed the L/C Limit.
(f) The aggregate amount of all Forex Exposures shall not at any time
exceed the Forex Limit.
6.4 AVAILABLE HEADROOM
No Utilisation may be made if the Available Headroom would, as a result, be
less than the Minimum Available Headroom.
6.5 ADJUSTMENTS
The Agent may (after consultation with the Company and acting reasonably)
from time to time:
(a) reduce the Purchase Price to reflect the fact that the Dilution
Rate (taking into consideration any adjustments in relation to
co-op advertising or rebates) has increased to more than 5%;
(b) reduce the Total Stock Availability (or any component of it) to
reflect (i) any reduction in the rate of turnover, quality,
liquidation value or other matter affecting patterns of sale or
(ii) any reduction in any applicable Availability Limit pursuant
to any provision of this Agreement;
(c) allocate the Reserves among the Borrowers in such proportions as
the Agent may deem appropriate save that in the case of Borrowers
20
incorporated in the United Kingdom the Agent shall allocate
Reserves to SEL; and
(d) establish, in relation to each Borrower, such sub-limits with
respect to the Utilisation of the Facilities (whether by
reference to the Total Availability attributable to the assets of
particular Borrowers or otherwise) as the Agent may deem
appropriate.
6.6 PROHIBITION ON UTILISATIONS
No Utilisation may be made if it would cause any of the limits referred to
in the foregoing provisions of this Clause 6 to be exceeded.
6.7 DEEMED UTILISATIONS
If the Agent makes any payment (i) pursuant to or in respect of any L/C or
(ii) upon the maturity of any Forex Transaction, then (and in each such
case) the Obligor for whose account such payment was made shall be deemed
on the date of such payment to have received the proceeds of a Utilisation.
A Utilisation so deemed to be made shall, at the option of the Agent, be
deemed to be either a payment of the Outstanding Purchase Price or a
Revolving Loan and the other provisions of this Agreement (as to Purchase
Commission, interest, repayment and otherwise) shall apply to such
Utilisation accordingly. The Agent may give effect to the provisions of
this Clause 6.7 even though this may cause any of the limits referred to in
this Clause 6 to be exceeded. If it can do so, the Agent shall allocate
such Utilisation in such manner as not to cause a Default.
7. RECEIVABLES FINANCE
7.1 SALE OF RECEIVABLES
(a) Each Borrower shall offer to sell all of its present and future
Receivables to the Agent by delivery to the Agent of the first
Purchase Request on the Business Day following the date on which
the conditions specified in Clause 4 (Initial Conditions
Precedent) are first satisfied.
(b) Each offer made by a Borrower to sell Receivables to the Agent
made pursuant to (a) above shall be deemed to be accepted by the
Agent upon receipt of the first Purchase Request from the
Borrower concerned.
(c) Acceptance of an offer of Receivables in accordance with (b)
above shall (without further act or document) suffice to
constitute the assignment of all of the relevant Borrower's
present and future Receivables in favour of the Agent.
(d) Each Borrower shall deliver to the Agent duly completed Purchase
Requests on each date on which a Utilisation is requested and on
a weekly basis in order to enable the Agent to monitor the
Receivables which have been sold to it pursuant to (a) above.
(e) Payment of the Purchase Price of any Receivables shall be made by
the Lenders against delivery of a Cash Request and in accordance
with and subject to the provisions of Clause 7.3 (Order of
Application).
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(f) The Borrowers acknowledge that payments made by the account
debtors will flow through the Blocked Accounts and that they will
receive credit for, or payment in respect of, such Receivables in
the manner and to the extent set out in Clause 10.2 (Application
from Blocked Accounts).
7.2 DETERMINATION OF PURCHASE PRICE
The Agent (acting reasonably and in accordance with the other provisions of
this Agreement) shall determine the Purchase Price for the Receivables
specified in a Purchase Request and will (upon determination thereof)
advise the relevant Borrower of such determination. For the avoidance of
doubt the Agent shall not have the authority to increase the Purchase
Percentage.
7.3 ORDER OF APPLICATION
(a) Any amounts paid by the Lenders pursuant to a Cash Request shall
be deemed to be applied (firstly) in the payment of any
outstanding and unpaid Purchase Price and (secondly) in the
drawing of a Revolving Loan.
(b) The Lenders' obligation to pay the Purchase Price of any
Receivable (or any unpaid portion of it) shall terminate on the
earlier of (i) the date on which the relevant account debtor pays
such Receivable and (ii) the Maturity Date.
(c) If a Borrower delivers a Cash Request in an amount which exceeds
the Total Availability attributable to the Borrower, then the
Agent may in their discretion nevertheless agree to make the
requested Utilisation available. In that event, the Agent shall
impose an equivalent Reserve against other Borrowers in such
order and manner as it may reasonably see fit.
(d) Where, as a result of the application of sub-clause (c) above,
any moneys paid by the Lenders to a Borrower (the "DEBTOR
COMPANY") represent payment of Purchase Price in relation to the
Purchased Receivables of another Obligor (the "CREDITOR COMPANY")
then (without double counting with the provisions of Clause 6.7
(Deemed Utilisations)) the Creditor Company shall be deemed to
have made an on-demand loan (an "INTERCOMPANY LOAN") to the
Debtor Company in an amount equal to the amount of such payment
by the Lenders. Nothing in this Clause 7.3(d) shall derogate from
or affect the Agent's right to establish sub-limits or to take
any other action pursuant to Clause 6.5 (Adjustments).
8. PROVISIONS CONCERNING L/CS
8.1 DELIVERY OF L/C REQUESTS.
No L/C Request may be delivered unless the form and content of the
requested L/C has previously been approved by the Agent.
8.2 PAYMENT OF L/CS AGAINST DEMAND.
A Borrower which requests the Agent to issue or to arrange the issue of an
L/C:
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(a) acknowledges that the Agent may at its option arrange for the
issue of such L/C through another institution selected by it and,
in that event, (i) such Borrower authorises the Agent to provide
such counter-indemnities and other undertakings as the issuing
institution may reasonably require but on terms no more onerous
than the indemnities and other protections granted to the Agent
by this clause 8.2 and (ii) the indemnities and other protections
granted to the Agent pursuant to this Clause 8.2 shall apply
equally to the counter-indemnities and other undertakings so
given by the Agent to the issuing institution;
(b) authorises the Agent and the Lenders to pay any claim made or
purported to be made under such L/C and which appears on the face
of it to be in order (a "CLAIM");
(c) undertakes immediately and unconditionally on demand (i) to pay
to the Agent an amount equal to the amount of any claim and (ii)
to indemnify the Agent and the Lenders against any cost, loss or
liability incurred by the Agent or the Lenders in arranging for
the issue of any L/C;
(d) acknowledges that (i) the Agent is not obliged to carry out any
investigation or to seek any confirmation from such Borrower or
any other person before paying a claim, (ii) the Agent will deal
in Documents only and will thus not be concerned with any matters
concerning any Goods or other issues relating to the underlying
transaction or underlying obligation (as the case may be) and
(iii) such Borrower will be bound by any action taken by the
Agent in good faith in relation to any L/C (including any
decision to amend or extend the L/C and any interpretation of the
terms or effect of any L/C); and
(e) acknowledges that its obligations of payment and reimbursement
under this Clause 8.2 will not be in any way prejudiced, affected
or diminished by (i) any unenforceability of, or amendment to or
extension of, any L/C or any other document or security, (ii) the
validity, legitimacy or accuracy of any document or claim
submitted pursuant to any L/C or any action taken or omitted with
respect thereto or (iii) any other matter or thing which (but for
this provision) might otherwise have the effect of diminishing or
extinguishing the Borrower's liability pursuant to this Clause
8.2.
8.3 PLEDGE
All Goods and Documents are hereby and shall upon despatch from the
supplier of any Goods be deemed to be pledged by the relevant Borrower to
the Security Trustee and the Goods and the proceeds of all insurances in
relation to them and all sales of them and all of the relevant Borrower's
rights as unpaid seller of them shall be a continuing security for the
payment and discharge in full of all of the obligations of the relevant
Borrower under the Finance Documents.
8.4 PERFECTION OF PLEDGE
The Security Trustee shall be entitled at its option to obtain possession
of the Goods in order to perfect the pledge made by Clause 8.3 (Pledge).
The relevant Borrower assigns
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to the Security Trustee its right, title and interest in and to the
Documents and all claims and rights arising from them and the relevant
Borrower irrevocably and unconditionally authorises the Security Trustee to
sign all documents and do all such other things as may be necessary to
obtain possession of and to realise the Goods, and to apply the proceeds in
reduction of amounts owing under this Agreement.
8.5 TRUST RECEIPTS
The Goods and the Documents shall only be released to the relevant Borrower
by the Agent against receipt by the Agent of a duly executed trust receipt
from the relevant Borrower in the Agent's standard form at the time or
(failing such execution) shall be deemed to be subject to a trust receipt
in such form.
8.6 SEPARATION
Each Borrower undertakes to keep the Documents and the Goods separate and
distinct from any other bills of lading, documents of title or goods.
8.7 LENDERS' INDEMNITY
Each Lender shall (in the proportion which its Commitment bears to the
Total Commitments) immediately on demand indemnify the Agent against any
loss, cost or liability incurred by it in issuing or arranging any L/C.
9. CURE RIGHTS
9.1 CURE DEFAULTS
The Agent (acting in the name of and on behalf of, the relevant Obligor)
may, at its option and upon notice to the Company to that effect:
(a) cure any default by any Obligor under any agreement with respect
to a Receivable or under any other agreement with a third party
as the Agent may consider necessary to facilitate the collection
of Receivables or to facilitate access to any security under any
of the Security Documents upon the same becoming unenforceable;
(b) make any payment, reach any settlement or compromise, issue, make
or pay any bond, appeal any judgment against an Obligor or take
any other action it may deem necessary to prevent any
repossession, seizure, execution, attachment or similar process
against any plant, machinery or other asset of an Obligor which
might impair the security (or the enforcement of any security)
granted to the Security Trustee under any Security Document; and
(c) discharge any Taxes and any other Security Interests from time to
time subsisting with respect to any asset of any Obligor.
10. REPAYMENT
10.1 RECEIVABLES FINANCE
(a) If the Agent determines that it has not received (in accordance
with Schedule 3 Part I paragraph 8) full payment in respect of a
Purchased Receivable on the applicable Maturity Date, then the
relevant Borrower
24
shall on demand pay to the Agent an amount equal to the
Outstanding Purchase Price in respect of such Purchased
Receivable.
(b) Nothing in paragraph (a) above shall prevent the Agent from
pursuing payment in respect of the relevant Purchased Receivable
from the account debtor or from receiving payment of such
Purchased Receivable to the credit of a Blocked Account. Each
Obligor shall render such assistance as the Agent may reasonably
require for that purpose.
(c) The Agent may deduct from payments in respect of Purchased
Receivables made by account debtors or any of the Obligors into a
Blocked Account the then Outstanding Purchase Price in respect of
such Purchased Receivables. Any balance remaining after such
deduction shall be applied in accordance with Clause 10.2
(Application from Blocked Accounts).
10.2 APPLICATION FROM BLOCKED ACCOUNTS
Subject to the other provisions of this Agreement, all amounts standing to
the credit of the Blocked Accounts shall be applied in the following order:
(a) in or towards payment of any Outstanding Purchase Price;
(b) in repayment of the outstanding principal amount of any Loans in
such order and manner as the Agent may determine;
(c) in payment of any fees, costs and expenses due from any Obligor
to the Agent under any Finance Document;
(d) in payment of (i) all interest due on any Loans made or deemed to
be made under this Agreement and (ii) all Purchase Commission
outstanding or falling due for payment on the last Business Day
of the then current month;
(e) in or towards payment of any other amounts owing by any Obligor
under any Finance Document; and
(f) (by way of refund of amounts paid by account debtors in respect
of Receivables and which remain due to the relevant Borrower
following the application of paragraphs (a) - (e) above), in
payment to the relevant Borrower by credit to such Other Account
as it may specify.
10.3 REVISION OF ORDER OF APPLICATION
(a) If an Event of Default is continuing, Clause 10.2 (Application
from Blocked Accounts) shall not apply and all amounts standing
to the credit of a Blocked Account shall be applied to the
liabilities of the Obligors under the Finance Documents in such
order and manner as the Majority Lenders may determine.
(b) If any amount standing to the credit of one Borrower's Blocked
Account is applied in discharge of the liabilities of another
Obligor, then such
25
Obligor shall become indebted to the relevant Borrower on the
basis set out in Clause 7.3(d) (Order of Application) with
necessary adaptations.
10.4 CURRENCIES
Where (i) any amount is held or is to be applied by the Agent in reduction
of amounts owing under this Agreement and (ii) the relevant amounts are
denominated in different currencies, the Agent may apply the amounts so
held or to be applied in the purchase of the latter currency at the
Exchange Rate (including commissions). Alternatively, the Agent may hold
those funds pending receipt of the Company's instructions.
10.5 REPAYMENT OF TERM LOANS
(a) The relevant Borrower shall repay the IP Loan in full on the
Final Repayment Date.
(b) The relevant Borrower shall repay the Property Loan in monthly
instalments. The first instalment shall be payable on the first
day of the calendar month commencing after the date of this
Agreement. Each such instalment shall be equal to 1.39 per cent
of the original amount utilised under the Property Loan. The
relevant Borrower shall repay any remaining balance of the
Property Loan in full on the Final Repayment Date.
10.6 REPAYMENTS AND FACILITY LIMITS
(a) The relevant Borrower shall from time to time on demand of the
Agent make such prepayments as may be necessary to ensure that
the IP Loan at no time exceeds 20 per cent of the then most
recent IP Valuation.
(b) The relevant Borrower shall from time to time on demand of the
Agent make such prepayments as may be necessary to ensure that
the Property Loan at no time exceeds 80 per cent of the then most
recent Property Valuation.
(c) Any amounts repaid pursuant to (a) or (b) above shall be applied
against the relevant repayment instalments under Clause 10.5
(Repayment of Term Loans) in reverse order of maturity.
(d) If at any time and for any reason (whether by reason of any
Receivables ceasing to be Eligible Receivables, any Stock ceasing
to be Eligible Stock, by reason of any fluctuation in the rate of
exchange of any currency as against sterling, whether affecting
the Sterling Equivalent of any outstanding Utilisations, the
Sterling Equivalent value of any Receivable or of any Stock or
otherwise howsoever) any outstanding Utilisations cause any
Availability Limit to be exceeded, then the Company will
immediately repay or procure the repayment of such amounts
(together with accrued interest on such amounts) as may be
necessary to remedy the position. If necessary for that purpose,
the Company shall also provide or procure the provision of cash
cover to the Agent in respect of any Outstanding Purchase Price
and/or any contingent obligations assumed by the Agent or the
Lenders pursuant to this Agreement.
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10.7 FINAL REPAYMENT
On the Final Repayment Date, the Borrower will pay (or procure payment) to
the Lenders:
(a) in full all outstanding amounts and unpaid liabilities under the
Finance Documents (whether by way of principal, interest,
commission, fees, costs, expenses or otherwise); and
(b) such amount as is necessary to provide full cash collateral for
any Outstanding Purchase Price and any outstanding obligations
(contingent or otherwise) assumed by the Agent or a Lender
pursuant to the terms of this Agreement.
10.8 BUSINESS DAYS
If any payment under any Finance Document would otherwise be due on a day
which is not a Business Day, it will be due on the next Business Day or (if
that Business Day falls in the following month) on the preceding Business
Day.
10.9 CALCULATION OF INTEREST
All interest, commitment fee and Purchase Commission under this Agreement
shall be calculated on the basis of actual days elapsed and a 365 day year
(in the case of sterling) or a 360 day year (in any other case). For the
purposes of calculating interest and Purchase Commission, any repayments
received in respect of the Facilities concerned shall be credited to the
relevant Facility two Business Days following receipt by the Lender.
10.10 CASH COLLATERAL
Any amount to be provided under this Agreement by way of cash collateral in
respect of any contingent liability shall stand charged to the Security
Trustee by way of cash cover in respect of such obligation and shall be
held by the Security Trustee in a blocked interest bearing account for
application against such contingent liability. Withdrawals from such
account may only be made in order to pay amounts owing to the Security
Trustee or a Lender in respect of the liability concerned and (if so
requested by the Security Trustee) the relevant Borrower shall execute a
charge over such account in such form as the Security Trustee may require.
After such liability has expired or has been settled to the satisfaction of
the Agent any remaining balance shall be applied (i) in settlement of any
other amounts then owing to the Agent or the Lenders under any Finance
Documents and (ii) in repayment to the Obligor which provided such cash
collateral.
11. ILLEGALITY, PREPAYMENT AND CANCELLATION
11.1 ILLEGALITY
If after the date of this Agreement it becomes unlawful in any applicable
jurisdiction for a Lender to perform or maintain any of its obligations as
contemplated by this Agreement then:
(a) that Lender shall promptly notify the Agent upon becoming aware
of that event;
27
(b) upon the Agent notifying the relevant Borrowers, the Commitment
of that Lender shall be immediately cancelled;
(c) the Borrowers to which outstanding Utilisations have been made
shall upon demand (i) pay to that Lender all amounts then owing
by them under this Agreement (including any accrued interest,
Purchase Commission, fees and other amounts) and (ii) provide
cash cover to that Lender in respect of all L/Cs or other
contingent obligations assumed at the request of that Borrower or
in respect of which that Lender is subject to a reimbursement
obligation under the terms of this Agreement.
11.2 MANDATORY PREPAYMENT OR REPAYMENT
(a) Upon the occurrence of the sale or other disposal (including
transfer or lease) of any asset relating to either the IP Loan or
the Property Loan the Company shall ensure that the proceeds of
such sale, disposal, transfer or lease are applied in reduction
of any outstanding Loans for the relevant Facility. Upon such
prepayment the IP Loan Facility Limit or the Property Loan
Facility Limit shall be reduced by the corresponding amount so
prepaid and the amount of the IP Loan Facility or the Property
Loan Facility so reduced shall be cancelled and shall not be
available to be re-drawn or re-borrowed PROVIDED THAT if any such
proceeds of the sale, disposal, transfer or lease of any assets
when applied in reduction of any outstanding Loans result in
either the IP Loan or the Property Loan being reduced to zero and
cancelled, the Company shall be permitted to retain the balance
of any such proceeds upon confirmation by the Agent that the
relevant Facility has been repaid in full and cancelled.
(b) Upon a UK Change of Control or an Ultimate Parent Change of
Control the Facilities will be cancelled and all outstanding
Loans, together with accrued interest, and all other amounts
accrued under the Finance Documents, shall become immediately due
and payable.
(c) In the event that the Company re-finances the whole of the
Facility it shall repay all amounts outstanding under the Finance
Documents together with accrued interest and the Facilities shall
be reduced to zero and cancelled.
11.3 VOLUNTARY PREPAYMENT OF REVOLVING LOANS
A Borrower to which a Revolving Loan has been made may, if it gives to the
Agent not less than 10 Business Day's prior written notice, prepay the
whole or any part of that Loan (but, if in part, being an amount that
reduces the amount of any Revolving Loan by a minimum amount of
L200,000).
11.4 VOLUNTARY CANCELLATION
The Company may, if it gives the Agent not less than 10 Business Days'
prior written notice, cancel the whole or any part of a Facility whereupon
such Facility shall be cancelled to the extent stated in such notice. Any
such cancellation shall reduce the Commitments of the Lenders rateably. No
cancellation notice may be given in respect of amounts represented by
outstanding Utilisations.
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11.5 PREPAYMENT AND CANCELLATION FEE
If the whole or any part of a Facility is pre-paid or cancelled as a result
of (i) a notice given by the Agent or the Borrowers under this Clause 11 or
(ii) a notice given by the Agent under Clause 22 (Events of Default) then
and in each such case the relevant Borrower shall pay to the Lenders on the
effective date of such pre-payment or cancellation a pre-payment or
cancellation fee calculated as a percentage of the amount of the Facilities
so prepaid or cancelled, as follows (save that in the case of a partial
pre-payment of any Term Loan the Facility Limit shall remain the same and
only the IP Loan Facility Limit or the Property Loan Facility Limit (as the
case may be) shall reduce):
(1)
Number of Months (2)
from date of this Agreement Applicable Percentage
--------------------------- ---------------------
0 - 12 3 per cent
12 - 24 1 per cent
24 - 36 0.5 per cent
If termination occurs as a result of a change of control of the Company to
a third party during the first twelve month period following the date of
this Agreement, the termination fee shall be reduced to one percent.
11.6 RESTRICTIONS AND CONDITIONS
(a) Any notice of cancellation or prepayment given pursuant to this
Clause 11 shall be irrevocable and, shall specify the date or
dates upon which the relevant cancellation or prepayment is to be
made and the amount of that cancellation or prepayment.
(b) Any repayment or prepayment under this Agreement shall be made
together with accrued interest, Purchase Commission, and any
other amounts owing in respect of the amount repaid or prepaid.
(c) No amount of any Facility which is cancelled may subsequently be
reinstated. Save as provided by Clause 5.4 (Reutilisation) no
amount repaid or prepaid may be redrawn.
(d) The Borrowers shall not repay, prepay or cancel the Facilities or
any part of them except at the times and in the manner expressly
provided for in this Agreement.
(e) If the Agent receives a notice under this Clause 11 it shall
promptly forward that to the relevant Lender.
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12. INTEREST AND PURCHASE COMMISSION
12.1 CALCULATION OF INTEREST AND PURCHASE COMMISSION
The rate of interest on each Loan and the rate of Purchase Commission
payable in respect of the Outstanding Purchase Price for each Purchased
Receivable shall be the percentage rate per annum which is the aggregate
of:
(a) the Margin;
(b) LIBOR; and
(c) the Mandatory Cost.
12.2 PAYMENT OF INTEREST AND PURCHASE COMMISSION
(a) Each Borrower to which a Loan has been made shall pay accrued
interest on that Loan on the last Business Day of each month.
(b) Each Borrower which has sold a Receivable to the Agent shall on
the last Business Day of each month pay accrued Purchase
Commission with respect to the Purchase Price thereof calculated
from the date on which the Purchase Price was paid in response to
the applicable Cash Request until the Actual Date of Payment.
12.3 DEFAULT INTEREST
If an Event of Default has occurred and so long as the same is continuing,
interest or Purchase Commission (as the case may be) shall accrue on all
amounts owing under the Finance Documents at a rate which is two per cent.
higher than the rate ascertained pursuant to Clause 12.1 (Calculation of
interest and Purchase Commission). Any interest or Purchase Commission
accruing under this Clause 12.3 shall be payable on demand and may be
compounded on such basis as the Agent deems appropriate.
13. FEES
13.1 COMMITMENT FEE
The Company shall pay to the Agent on behalf of the Lenders in respect of
their Commitment a fee as set out in the Fee Letter in relation to the
daily undrawn/unutilised amount of the Facility Limit. The accrued
commitment fee is payable on the last day of each calendar month which ends
during the relevant Availability Period, on the last day of the
Availability Period for the relevant Facility and, if cancelled in full, on
the effective date of such cancellation.
13.2 ARRANGEMENT FEE
The Company shall pay to the Agent on the date of this Agreement an
arrangement fee as set out in the Fee Letter.
13.3 MONITORING FEE
The Company shall pay to the Agent a monitoring fee as set out in the Fee
Letter.
13.4 L/C FEE
Each Borrower shall pay to the Agent on behalf of the Lenders in respect of
their Commitment a fee as set out in the Fee Letter in relation to the face
amount of each L/C issued at the request of that Borrower in respect of the
period from the date of issue until
30
the expiry of such L/C. Such fee shall be paid monthly in arrears and on
the Expiry Date of such L/C.
14. SET-OFF AND TAX GROSS UP
14.1 NO SET-OFF BY OBLIGORS
All payments to be made by an Obligor under the Finance Documents shall be
calculated and be made without (and free and clear of any deduction for)
any set-off or counterclaim.
14.2 TAX GROSS-UP
(a) Each Obligor shall make all payments to be made by it without any
Tax Deduction, unless a Tax Deduction is required by law.
(b) The Company shall promptly upon becoming aware that an Obligor
must make a Tax Deduction (or that there is any change in the
rate or the basis of a Tax Deduction) notify the Agent
accordingly.
(c) If a Tax Deduction is required by law to be made by an Obligor,
the amount of the payment due from that Obligor shall be
increased to an amount which (after making any Tax Deduction)
leaves an amount equal to the payment which would have been due
if no Tax Deduction had been required.
(d) If an Obligor is required to make a Tax Deduction, that Obligor
shall make that Tax Deduction and any payment required in
connection with that Tax Deduction within the time allowed and in
the minimum amount required by law.
(e) Within thirty days of making either a Tax Deduction or any
payment required in connection with that Tax Deduction, the
Obligor making that Tax Deduction shall deliver to the Agent for
the relevant Finance Party evidence reasonably satisfactory to
that Finance Party that the Tax Deduction has been made or (as
applicable) any appropriate payment paid to the relevant taxing
authority.
14.3 TAX INDEMNITY
(a) The Company shall (within three Business Days of demand by the
Agent) pay to the relevant Finance Party an amount equal to the
loss, liability or cost which a Finance Party determines will be
or has been (directly or indirectly) suffered for or on account
of Tax by that Finance Party in respect of a Finance Document.
(b) Paragraph (a) above shall not apply to any Tax assessed on a
Finance Party if that Tax is imposed on or calculated by
reference to the net income received or receivable (but not any
sum deemed to be received or receivable) by that Finance Party.
14.4 EXCLUDED CLAIMS
If a Lender is not or ceases to be a Qualifying Lender, no Obligor shall be
liable to pay to the Agent under Clause 14.2 (Tax Gross-up) or 14.3 (Tax
Indemnity) any amount in
31
respect of losses levied or imposed in excess of the amount that on Obligor
would have been obliged to pay if that Lender had been or had not ceased to
be a Qualifying Lender save to the extent that such increase is a result of
a change in any law after the date hereof.
14.5 TAX CREDIT
If an Obligor makes a Tax Payment and the relevant Finance Party determines
that:
(a) a Tax Credit is attributable to that Tax Payment; and
(b) that Finance Party has obtained, utilised and retained that Tax
Credit,
that Finance Party shall pay an amount to the Obligor which it determines
will leave it (after that payment) in the same after-Tax position as it
would have been in had the Tax Payment not been made by the Obligor. An
Obligor may, upon reasonable written request, require the Agent promptly to
produce reasonable evidence as to whether or not the criteria in this
clause 14.5 are satisfied.
14.6 STAMP TAXES
The Company shall pay and, within three Business Days of demand, indemnify
each Finance Party against any cost, loss or liability that Finance Party
incurs in relation to all stamp duty, registration and other similar Taxes
payable in respect of or in order to register or enforce any Finance
Document.
14.7 VALUE ADDED TAX
(a) All consideration expressed to be payable under a Finance
Document by an Obligor to Finance Party shall be deemed to be
exclusive of any VAT. If VAT is chargeable on any supply made by
that Finance Party to an Obligor in connection with a Finance
Document, that Obligor shall pay to that Finance Party (in
addition to and at the same time as paying the consideration) an
amount equal to the amount of the VAT and the Agent shall issue a
VAT invoice in respect of such amount to the extent that it is
reasonably able to do so.
(b) Where a Finance Document requires an Obligor to reimburse a
Finance Party for any costs or expenses, that Obligor shall also
at the same time pay and indemnify a Finance Party against all
VAT incurred by the Agent in respect of the costs or expenses to
the extent that a Finance Party reasonably determines that it is
not entitled to credit or repayment of the VAT.
15. INCREASED COSTS
15.1 INCREASED COSTS
(a) Subject to Clause 15.3 (Exceptions) the Company shall, within
three Business Days of a demand by the Agent, pay for the account
of a Finance Party the amount of any Increased Costs incurred by
that Finance Party or any of its Affiliates as a result of (i)
the introduction of or any change in (or in the interpretation,
administration or application of) any law or regulation in each
case which arises after the date hereof or (ii)
32
compliance with any law or regulation applicable to each Lender
or its Affiliate made after the date of this Agreement.
(b) In this Agreement "INCREASED COSTS" means:
(i) a reduction in the rate of return from the Facility or on a
Finance Party's (or its Affiliate's) overall capital;
(ii) an additional or increased cost; or
(iii) a reduction of any amount due and payable under any Finance
Document,
which is incurred or suffered by a Finance Party or any of its Affiliates
to the extent that it is attributable to that Finance Party having entered
into this Agreement or funding or performing its obligations under any
Finance Document.
15.2 INCREASED COST CLAIMS
If a Finance Party intends to make a claim pursuant to Clause 15.1
(Increased costs) it shall notify the Company and the Agent of the event
giving rise to the claim.
15.3 EXCEPTIONS
Clause 15.1 (Increased costs) does not apply to the extent any Increased
Cost is:
(a) attributable to a Tax Deduction required by law to be made by an
Obligor;
(b) compensated for by Clause 14.3 (Tax indemnity) (or would have
been compensated for under Clause 14.3 (Tax indemnity) but was
not so compensated solely because the exclusion in paragraph (b)
of Clause 14.3 (Tax indemnity) applied);
(c) compensated for by the payment of the Mandatory Cost; or
(d) attributable to the wilful breach or default or negligence by a
Finance Party or its Affiliates of any law or regulation.
16. OTHER INDEMNITIES
16.1 CURRENCY INDEMNITY
If any sum due from an Obligor under the Finance Documents (a "SUM"), or
any order, judgment or award given or made in relation to a Sum, has to be
converted from the currency (the "FIRST CURRENCY") in which that Sum is
payable into another currency (the "SECOND CURRENCY") for the purpose of:
(a) making or filing a claim or proof against that Obligor;
(b) obtaining or enforcing an order, judgment or award in relation to
any litigation or arbitration proceedings,
that Obligor shall as an independent obligation, within three Business Days
of demand, indemnify the relevant Finance Party against (i) any cost, loss
or liability arising out of or as a result of the conversion including any
discrepancy between (A) the rate of exchange used to convert that Sum from
the First Currency into the Second Currency
33
and (B) the rate or rates of exchange available to that person at the time
of its receipt of that Sum and (ii) the costs involved in effecting any
such currency conversion.
16.2 FOREIGN EXCHANGE INDEMNITY
Each Obligor agrees to assume all risks associated with any Forex
Transaction entered into at its request. Accordingly each Obligor shall on
demand indemnify each Finance Party against any cost, loss, liability or
expense which a Finance Party may suffer or incur as a result of or in
connection with the conclusion, execution or performance of any Forex
Transaction.
16.3 OTHER INDEMNITIES
The Company shall (or shall procure that an Obligor will), within three
Business Days of demand, indemnify each Finance Party against any cost,
loss or liability (including loss of Margin and redeployment costs)
incurred by that Finance Party as a result of:
(a) the occurrence of any Event of Default;
(b) a failure by an Obligor to pay any amount due under a Finance
Document on its due date;
(c) funding, or making arrangements to fund, a Utilisation requested
by a Borrower in a Utilisation Request but not made by reason of
the operation of any one or more of the provisions of this
Agreement; or
(d) a Loan (or part of a Loan) not being prepaid in accordance with a
notice of prepayment given by a Borrower or the Company.
16.4 INDEMNITY TO THE AGENT
The Company shall promptly indemnify the Agent against any cost, loss or
liability incurred by the Agent (acting reasonably) as a result of:
(a) investigating any event which it reasonably believes is a
Default; or
(b) acting or relying on any notice, request or instruction which it
reasonably believes to be genuine, correct and appropriately
authorised.
17. COSTS AND EXPENSES
17.1 TRANSACTION EXPENSES
The Company shall on demand pay the Agent for the account of the Finance
Parties the amount of all costs and expenses (including legal and valuation
fees) reasonably incurred by it in connection with the negotiation,
preparation, printing and execution of:
(a) this Agreement and any other documents referred to in this
Agreement;
(b) any other Finance Documents executed after the date of this
Agreement; and
(c) any Property Valuation, any IP Valuation and any Appraisal
delivered pursuant to the terms of any Finance Document, if and
to the extent to which the Agent has paid, or has agreed with the
valuer to pay, the costs thereof.
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17.2 AMENDMENT COSTS
If an Obligor requests an amendment, waiver or consent, the Company shall,
within three Business Days of demand, reimburse the Agent for the account
of the Finance Parties for the amount of all costs and expenses (including
legal fees) reasonably incurred by the Agent in responding to, evaluating,
negotiating or complying with that request or requirement.
17.3 COLLECTION COSTS
The Company shall on demand pay the Agent for the account of the Finance
Parties the amount of all costs and expenses (including legal fees)
incurred by the Agent in connection with:
(a) the remission of loan proceeds, collection of cheques and other
items, the issue, maintenance and renewal of L/Cs, establishing
and maintaining Charged Accounts, together with the Agent's
associated and customary fees; and
(b) all out of pocket expenses and costs from time to time (including
those incurred prior to the date of this Agreement) during the
course of periodic field examinations and appraisals of the
Obligor's assets and operations plus a daily charge at the rate
of L650 for the Agent's examinations in the field and office for
up to four such specific field examinations in any 12 month
period prior to a Default and for any other or additional such
examinations following a default.
17.4 ENFORCEMENT AND OTHER COSTS
The Company shall, within three Business Days of demand, pay to the Agent
for the account of the Finance Parties the amount of all costs and expenses
(including legal fees) incurred by any Finance Party in connection with the
exercise or enforcement of, or the preservation of any rights or
discretions under, any Finance Document (including, without limitation, any
payments made to third parties in accordance with the terms of the Finance
Documents to preserve, protect or enhance any Security Interest granted to
the Agent).
17.5 STAMP DUTY ON TRANSFERS
No obligor shall be liable for any stamp duty payable in relation to any
transfer of any Loan or any part thereof from one to another Finance Party.
18. GUARANTEE AND INDEMNITY
18.1 GUARANTEE AND INDEMNITY
Each Guarantor irrevocably and unconditionally jointly and severally:
(a) guarantees to each Finance Party punctual performance by each
Borrower of all that Borrower's obligations under the Finance
Documents;
(b) undertakes with each Finance Party that whenever a Borrower does
not pay any amount when due under or in connection with any
Finance Document, that Guarantor shall immediately on demand pay
that amount as if it was the principal obligor; and
35
(c) indemnifies each Finance Party immediately on demand against any
cost, loss or liability suffered by each Finance Party if any
obligation guaranteed by it is or becomes unenforceable, invalid
or illegal. The amount of the cost, loss or liability shall be
equal to the amount which each Finance Party would otherwise have
been entitled to recover.
18.2 CONTINUING GUARANTEE
This guarantee is a continuing guarantee and will extend to the ultimate
balance of sums payable by any Obligor under the Finance Documents,
regardless of any intermediate payment or discharge in whole or in part.
18.3 REINSTATEMENT
If any payment by an Obligor or any discharge given by each Finance Party
(whether in respect of the obligations of any Obligor or any security for
those obligations or otherwise) is avoided or reduced as a result of
insolvency or any similar event:
(a) the liability of each Obligor shall continue as if the payment,
discharge, avoidance or reduction had not occurred; and
(b) that Finance Party shall be entitled to recover the value or
amount of that security or payment from each Obligor, as if the
payment, discharge, avoidance or reduction had not occurred.
18.4 WAIVER OF DEFENCES
The obligations of each Guarantor under this Clause 18 will not be affected
by an act, omission, matter or thing which, but for this Clause, would
reduce, release or prejudice any of its obligations under this Clause 18
(without limitation and whether or not known to it or a Finance Party)
including:
(a) any time, waiver or consent granted to, or composition with, any
Obligor or other person;
(b) the release of any other Obligor or any other person under the
terms of any composition or arrangement with any creditor of any
Obligor;
(c) the taking, variation, compromise, exchange, renewal or release
of, or refusal or neglect to perfect, take up or enforce, any
rights against, or security over assets of, any Obligor or other
person or any non-presentation or non-observance of any formality
or other requirement in respect of any instrument or any failure
to realise the full value of any security;
(d) any incapacity or lack of power, authority or legal personality
of or dissolution or change in the members or status of an
Obligor or any other person;
(e) any amendment (however fundamental) or replacement of a Finance
Document or any other document or security;
(f) any unenforceability, illegality or invalidity of any obligation
of any person under any Finance Document or any other document or
security; or
36
(g) any insolvency or similar proceedings.
18.5 IMMEDIATE RECOURSE
Each Guarantor waives any right it may have of first requiring a Finance
Party (or any trustee or agent on its behalf) to proceed against or enforce
any other rights or security or claim payment from any person before
claiming from that Guarantor under this Clause 18. This waiver applies
irrespective of any law or any provision of a Finance Document to the
contrary.
18.6 APPROPRIATIONS
Until all amounts which may be or become payable by the Obligors under or
in connection with the Finance Documents have been irrevocably paid in
full, each Finance Party (or any trustee or agent on its behalf) may:
(a) refrain from applying or enforcing any other moneys, security or
rights held or received by the agent (or any trustee or agent on
its behalf) in respect of those amounts, or apply and enforce the
same in such manner and order as it sees fit (whether against
those amounts or otherwise) and no Guarantor shall be entitled to
the benefit of the same; and
(b) hold in an interest-bearing suspense account any moneys received
from any Guarantor or on account of any Guarantor's liability
under this Clause 18.
18.7 DEFERRAL OF GUARANTORS' RIGHTS
Until all amounts which may be or become payable by the Obligors under or
in connection with the Finance Documents have been irrevocably paid in full
and unless the Agent otherwise directs, no Guarantor will exercise any
rights which it may have by reason of performance by it of its obligations
under the Finance Documents:
(a) to be indemnified by an Obligor;
(b) to claim any contribution from any other guarantor of any
Obligor's obligations under the Finance Documents; and/or
(c) to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Finance Parties
under the Finance Documents or of any other guarantee or security
taken pursuant to, or in connection with, the Finance Documents
by any Finance Party.
18.8 ADDITIONAL SECURITY
This guarantee is in addition to and is not in any way prejudiced by any
other guarantee or security now or subsequently held by any Finance Party.
19. REPRESENTATIONS AND WARRANTIES
Each Obligor makes the representations and warranties set out in this
Clause 19 to each Finance Party on the date of this Agreement.
19.1 STATUS
(a) It is a corporation, duly incorporated and validly existing under
the law of its jurisdiction of incorporation.
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(b) It has the power to own its assets and carry on its business as
it is being conducted.
19.2 BINDING OBLIGATIONS
The obligations expressed to be assumed by it in each Finance Document are
legal, valid, binding and enforceable obligations.
19.3 NON-CONFLICT WITH OTHER OBLIGATIONS
The entry into and performance by it of, and the transactions contemplated
by, the Finance Documents do not and will not conflict with:
(a) any law or regulation applicable to it;
(b) its Constitutional Documents; or
(c) any agreement or instrument binding upon it or any of its assets.
19.4 POWER AND AUTHORITY
It has the power to enter into, perform and deliver, and has taken all
necessary action to authorise its entry into, performance and delivery of,
the Finance Documents to which it is a party and the transactions
contemplated by those Finance Documents.
19.5 VALIDITY AND ADMISSIBILITY IN EVIDENCE
All Authorisations required or desirable:
(a) to enable it lawfully to enter into, exercise its rights and
comply with its obligations in the Finance Documents to which it
is a party; and
(b) to make the Finance Documents to which it is a party admissible
in evidence in its jurisdiction of incorporation,
have been obtained or effected and are in full force and effect.
19.6 NO FILING OR STAMP TAXES
Under the law of its jurisdiction of incorporation it is not necessary that
the Finance Documents be filed, recorded or enrolled with any court or
other authority in that jurisdiction or that any stamp, registration or
similar tax be paid on or in relation to the Finance Documents or the
transactions contemplated by the Finance Documents.
19.7 NO DEFAULT
(a) No Event of Default is continuing or might reasonably be expected
to result from the making of any Utilisation.
(b) No other event or circumstance is outstanding which constitutes a
default under any other agreement or instrument which is binding
on it or any of its Affiliates or to which its (or its
Affiliates') assets are subject which might have a Material
Adverse Effect.
19.8 NO MISLEADING INFORMATION
(a) Any information provided by the Company or any of its Affiliates
(i) in connection with the negotiation of the Facilities and the
Finance Documents and (ii) in connection with any valuations or
reports required to be prepared for the purposes of this
Agreement was (in each case) true
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and accurate in all material respects as at the date it was
provided or as at the date (if any) at which it is stated.
(b) Nothing has occurred since the date on which such information was
provided which would render it untrue or misleading as at the
date it was provided or as at the date at which it is stated in
any material respect.
19.9 FINANCIAL STATEMENTS
(a) Its latest audited financial statements were prepared in
accordance with GAAP consistently applied.
(b) Its latest audited financial statements fairly represent its
financial condition and operations (consolidated in the case of
the Company) during the relevant financial year.
(c) There has been no material adverse change in its business or
financial condition (consolidated in the case of the Company)
since the date to which its latest audited financial statements
were made up.
19.10 PARI PASSU RANKING
Its payment obligations under the Finance Documents rank at least pari
passu with the claims of all its other unsecured and unsubordinated
creditors, except for obligations mandatorily preferred by law applying to
companies generally.
19.11 NO PROCEEDINGS PENDING OR THREATENED
No litigation, arbitration or administrative proceedings of or before any
court, arbitral body or agency which, if adversely determined, might
reasonably be expected to have a Material Adverse Effect have (to the best
of its knowledge and belief) been started or threatened against it or any
of its Affiliates.
19.12 RETENTION OF TITLE
Any list provided to the Agent prior to the date of this Agreement and
which provides details of those suppliers whose terms of business include
retention of title provisions is complete and accurate in all material
respects and (apart from those named in any such list), there are no
suppliers which impose such provisions.
19.13 BANK ACCOUNTS
All the accounts maintained or used by any Obligor at any bank or financial
institution have been included within the definition of Charged Accounts.
19.14 DORMANT SUBSIDIARIES
Each of the companies listed as a Dormant Subsidiary has not traded in the
last financial year.
19.15 REPETITION
The representations and warranties in this Clause 19 (other than those set
out in Clause 19.6 (No filings or stamp duty) are deemed to be made by each
Obligor by reference to the facts and circumstances then existing on the
date of each Utilisation Request and on each Utilisation Date.
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20. INFORMATION AND FINANCIAL UNDERTAKINGS
The undertakings in this Clause 20 remain in force from the date of this
Agreement for so long as any amount is outstanding under the Finance
Documents or any Facility remains available for utilisation.
20.1 NOTIFICATION OF DEFAULT
Each Obligor shall notify the Agent of any Default (and the steps, if any,
being taken to remedy it) promptly upon becoming aware of its occurrence.
20.2 REPORTING AND FINANCIAL UNDERTAKINGS
(a) Each Obligor will comply with each of the undertakings set out in
Schedule 3 (Reporting and Financial Undertakings).
(b) Upon the accession of any Additional Obligor each Obligor will
comply with the Additional Reporting and Financial Undertakings
for an Additional Obligor as set out in Schedule 3 Part II
(Additional Reporting and Financial Undertakings from Additional
Obligors).
21. GENERAL UNDERTAKINGS
The undertakings in this Clause 21 remain in force from the date of this
Agreement for so long as any amount is outstanding under the Finance
Documents or any Facility remains available for utilisation.
21.1 AUTHORISATIONS
Each Obligor shall promptly:
(a) obtain, comply with and do all that is necessary to maintain in
full force and effect; and
(b) supply certified copies to the Agent of,
any Authorisation required under any law or regulation of its jurisdiction
of incorporation to enable it to perform its obligations under the Finance
Documents and to ensure the legality, validity, enforceability or
admissibility in evidence in its jurisdiction of incorporation of any
Finance Document.
21.2 COMPLIANCE WITH LAWS
Each Obligor shall comply in all respects with all laws to which it may be
subject, if failure so to comply would materially impair its ability to
perform its obligations under the Finance Documents.
21.3 NEGATIVE PLEDGE
(a) No Obligor shall create or permit to subsist any Security
Interest (other than a Permitted Security Interest) over any of
its assets.
(b) No Obligor shall:
(i) sell, transfer or otherwise dispose of any of its assets on
terms whereby they are or may be leased to or re-acquired by
an Obligor;
40
(ii) enter into any arrangement under which money or the benefit
of a bank or other account may be applied, set-off or made
subject to a combination of accounts; or
(iii) enter into any other preferential arrangement having a
similar effect,
in circumstances where the arrangement or transaction is entered
into primarily as a method of raising Financial Indebtedness or
of financing the acquisition of an asset.
21.4 DISPOSALS
(a) No Obligor shall enter into a single transaction or a series of
transactions (whether related or not) and whether voluntary or
involuntary to sell, lease, transfer or otherwise dispose of any
asset.
(b) Paragraph (a) above does not apply to any sale, lease, transfer
or other disposal:
(i) that is a Permitted Disposal;
(ii) relating to the disposal of Stock and made in the ordinary
course of business;
(iii) of assets in exchange for other assets comparable or
superior as to type, value and quality;
(iv) relating to the application of cash in the acquisition of
goods and services in the ordinary course of trading and in
a manner consistent with the Finance Documents;
(v) relating to the disposal of obsolete assets where any
proceeds of sale are paid into a Blocked Account;
(vi) relating to any disposal of any asset (other than Eligible
Equipment) where the higher of the market value or
consideration receivable (when aggregated with the higher of
the market value or consideration receivable for any other
sale, lease, transfer or other disposal, other than any
permitted under paragraphs (i) to (iii) above) does not
exceed L100,000 (or its equivalent in another currency or
currencies) in any financial year and the proceeds are paid
into a Blocked Account.
(vii) relating to the transfer of shares or other ownership
interests in the Company or an Original Borrower by a member
of the Group to another member of the Group.
(viii) that is made on an intra-Group basis to another Obligor.
(ix) which has been approved in writing by the Majority Lenders.
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21.5 MERGERS AND ACQUISITIONS
No Obligor shall enter into any amalgamation, demerger, merger or corporate
reconstruction or acquire any business, undertaking or (except in the
ordinary course of business) other assets of any kind (other than as part
of a reconstruction, amalgamation or reorganisation on terms previously
agreed with the Majority Lenders.
21.6 CHANGE OF BUSINESS
The Company shall procure that no substantial change is made to the general
nature of the business of the Company or any Obligor from that carried on
at the date of this Agreement.
21.7 INTRA-GROUP ARRANGEMENTS
(a) No Obligor will, without obtaining the Agent's prior written
consent:
(i) pay any dividend or make any other distribution of any of
its assets to its shareholders or any of them other than in
respect of AMAP Disposal Proceeds; or
(ii) pay any other moneys, whether by way of interest, management
fees or otherwise howsoever, to any Affiliate, Subsidiary
(including any Dormant Subsidiary) or any shareholder,
director or employee except for payments in the ordinary
course of, and pursuant to the reasonable requirements of,
trading and on arms length commercial terms; or
(iii) redeem any of its ordinary or preference share capital.
Notwithstanding the foregoing provisions of this Clause 21.7, the
Company may pay the Marketing Re-Charge.
21.8 FINANCIAL INDEBTEDNESS
No Obligor will incur any Financial Indebtedness other than:
(a) under the Finance Documents;
(b) normal trade credit granted to it in the ordinary course of
business;
(c) equipment, vehicle and operating leases and hire purchase
transactions entered into in the ordinary course of business
where the total annual Financial Indebtedness for such leases and
transactions for the Obligors as a whole does not exceed L500,000
at any one time; or
(d) the Wombourne Sale and Leaseback;
(e) with respect to loans made to it by another Obligor which is a
Chargor under the Debenture and loans permitted pursuant to
paragraph (c) of Clause 21.9 (Making Loans).
21.9 MAKING LOANS
No Obligor will be a creditor with respect to any Financial Indebtedness
except for:
(a) the grant of normal trade credit in the ordinary course of its
trade;
42
(b) loans made by it to another Obligor which is a Chargor under the
Debenture;
(c) from the date of this Agreement for a period of twelve months
Existing Inter-Company Loans PLUS Year 1 Additional Inter Company
Loans; and
(d) after the expiry of twelve months from the date of this Agreement
an Obligor shall be permitted to incur an increase in the amount
of Existing Inter-Company Loans and the Additional Inter Company
Loans by an amount not greater than Net Trading Cashflow minus
Fixed Charge for the immediately preceding 12 month period.
any amounts referred to in (d) above shall be adjusted to reflect any
Stock that is considered for Utilisations made in relation to Stock in
European Jurisdictions where a European Sales Entity has satisfied the
conditions of Schedule 2 part II (Additional Conditions Precedent for
Lending in Relation to Stock in European Jurisdictions).
21.10 BANK ACCOUNTS
No Obligor will open or maintain any account of any type with any bank or
financial institution providing like services other than the Charged
Accounts.
21.11 INSURANCE
Each Obligor will:
(a) as regards all its assets and property of any kind (i) arrange
and maintain in full force and effect insurances (including
consequential loss, business interruption and public liability
and damage and other insurances usually maintained by companies
carrying on the same type of business under similar circumstances
and generally available in the market) in such amounts, on such
terms and with such insurers as the Agent may approve and (ii)
arrange and maintain such further and other insurances as the
Agent may reasonably request;
(b) procure that the Agent's interest is noted on the following
policies: (i) RKK 270407 held with Royal and Sun Alliance, (ii)
NK/14465575 held with Allianz Cornhill Engineering and (iii)
2002/5/000002493 held with CAN Maritime Insurance Company Limited
in such manner as the Agent may in its absolute discretion
require and will use all reasonable endeavours to ensure that the
Agent is named as sole loss payee (but without having any
obligation for premiums);
(c) ensure that every policy of insurance contains a standard
mortgagee clause, whereby such insurance will not be invalidated,
vitiated or avoided as against a mortgagee (or such other terms
as the Agent may agree);
(d) supply to the Agent copies of all such policies of insurance and
all endorsements and renewals of such policies, together with
receipts for premiums;
43
(e) duly and punctually pay all premiums in respect of its insurances
and not do or omit to do any act, matter or thing whereby any
such insurance may be or becomes void or voidable at the option
of the insurers or settle any claim in respect of those
insurances except for claims not exceeding L5,000 without the
prior wriTTEN consent of the Agent, such consent not to be
unreasonably withheld or delayed;
(f) comply with, enforce and not waive, release, terminate or vary
(or agree so to do) any material obligations arising under all
policies of insurance and in particular, but without limitation,
it shall notify the Agent immediately upon receiving notice from
any insurer that the details of any insurance policy are to
change in any way and upon receiving notice from any insurer
terminating any insurance policies;
(g) in the event that it receives from any insurer notice that such
insurer is terminating any insurance policy, it shall use all
reasonable endeavours to enter into a corresponding policy with
an insurer approved by the Agent and procure that such steps are
taken as may be necessary to ensure that such policy complies in
all respects with the terms of this Agreement; and
(h) immediately give notice to the Agent of any occurrence which
gives rise, or might give rise, to a single claim exceeding
L50,000 under any policy of insurance.
If any Obligor at any time fails to perform any of its obligations
contained in this Clause, 21.11 the Agent may effect or renew such
insurance as it thinks fit and such Obligor shall reimburse the Agent for
the costs thereby incurred on demand.
21.12 FINANCIAL YEAR END/CHANGE OF AUDITORS
No Obligor will alter its financial year end or replace its auditors
without (in each case) the prior written consent of the Agent unless such
another is ranked in the top ten of auditors as determined by the Society
of Chartered Accountants.
21.13 TAXES
Each Obligor will promptly pay all Taxes as and when they fall due (except
where the Agent agrees that any relevant amounts are subject to a bona fide
dispute).
21.14 CHANGE OF NAME
No Obligor will change its name without giving the Agent 30 days' prior
written notice of the proposed new name and will supply a copy of the
relevant certificate of incorporation on change of name to the Agent as
soon as it becomes available.
21.15 REALISATION OF CREDIT TERMS
Each Obligor shall in a timely manner collect and pursue the collection of
all Receivables owing to it by all account debtors and shall ensure that
such sums are paid into the relevant Blocked Account in accordance with the
terms of Schedule 3 Part I paragraph 9 (Reporting and Financial
Undertakings).
22. EVENTS OF DEFAULT
Each of the events or circumstances set out in this Clause 22 is an Event
of Default.
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22.1 NON-PAYMENT
An Obligor does not pay on the due date any amount payable pursuant to a
Finance Document at the place at and in the currency in which it is
expressed to be payable unless (i) its failure to pay is caused by
administrative or technical or other manifest error (not attributable to an
Obligor) and (ii) payment is made within two Business Days of its due date.
22.2 OTHER OBLIGATIONS
(a) An Obligor does not comply with the provisions of Clauses 21.3
(Negative Pledge), 21.4 (Disposals), 21.8 (Financial
Indebtedness), 21.9 (Making Loans), 21.11 (Insurance) or any of
the undertakings set out in Schedule 3 Parts I and II (as
applicable) (Reporting and Financial Undertakings) and where such
non-compliance if capable of remedy, such Obligor fails to remedy
the same within five Business Days thereof; or
(b) An Obligor does not comply with any other provision of the
Finance Documents and, where such non-compliance is capable of
remedy, such Obligor fails to remedy same within ten Business
Days of becoming aware thereof.
22.3 MISREPRESENTATION
Any representation, warranty or statement made or deemed to be made by an
Obligor in the Finance Documents or any other document delivered by or on
behalf of any Obligor under or in connection with any Finance Document is
or proves to have been incorrect or misleading in any material respect when
made or deemed to be made.
22.4 CROSS DEFAULT
(a) Any Financial Indebtedness of any Obligor exceeding L100,000 (or
its equivalent in other currencies) in the aggregate is not paid
when due and such sum is not to be challenged by the Obligor with
a bona fide claim.
(b) An event of default (however described) occurs under any document
relating to Financial Indebtedness of any Obligor exceeding
L50,000 (or its equivalent in other currencies).
(c) Any Security Interest with respect to any Financial Indebtedness
of any Obligor becomes enforceable.
(d) An amount in excess of L1,000,000 in aggregate owed to trade
creditors of any Obligor remains outstanding following the expiry
of any customary trade credit period and such sum is not to be
challenged by the Obligor with a bona fide claim.
22.5 INSOLVENCY
(a) An Obligor is unable or admits inability to pay its debts as they
fall due, suspends making payments on any of its debts or, by
reason of actual or anticipated financial difficulties, commences
negotiations with one or more of its creditors with a view to
rescheduling any of its indebtedness.
(b) The value of the assets of any Obligor is less than its
liabilities (taking into account contingent and prospective
liabilities).
45
(c) A moratorium is declared in respect of any indebtedness of any
Obligor.
22.6 INSOLVENCY PROCEEDINGS
Any corporate action, legal proceedings or other procedure or step is taken
in relation to:
(a) the suspension of payments, a moratorium of any indebtedness,
winding-up, dissolution, administration or reorganisation (by way
of voluntary arrangement, scheme of arrangement or otherwise) of
any Obligor;
(b) a composition, compromise, assignment or arrangement with any
creditor of any Obligor;
(c) the appointment of a liquidator, receiver, administrative
receiver, administrator compulsory manager or other similar
officer in respect of any Obligor or any of its assets; or
(d) enforcement of any Security Interest over any assets of any
Obligor, or any analogous procedure or step is taken in any
jurisdiction.
22.7 CESSATION OF BUSINESS
Any Obligor ceases or threatens to cease, to carry on all or a substantial
part of its business.
22.8 CREDITORS' PROCESS
Any expropriation, attachment, sequestration, distress or execution affects
any asset of any Obligor and is not discharged within 10 Business Days.
22.9 CHARGED ACCOUNT ARRANGEMENTS
Any bank repudiates or purports to terminate the arrangements set out in
the Debenture in relation to any Charged Account or a cash-sweep or payment
required to be made under any Finance Document from a Charged Account is
not made in the amount and manner required other than as a result of
administrative error which is remedied within 2 Business Days of becoming
aware thereof.
22.10 MATERIAL ADVERSE CHANGE
An event or series of events occurs which, in the reasonable opinion of the
Majority Lenders, could be reasonably expected to have a Material Adverse
Effect.
22.11 ACCELERATION
On and at any time after the occurrence of an Event of Default which is
continuing the Agent may, by notice to the Company:
(a) declare that an Event of Default has occurred; and/or
(b) cancel the Facilities whereupon they shall immediately be
cancelled; and/or
(c) declare that all or part of the Loans, together with accrued
interest, and all other amounts accrued or outstanding under the
Finance Documents be immediately due and payable, whereupon they
shall become immediately due and payable; and/or
46
(d) declare that all or part of the Loans be payable on demand,
whereupon they shall immediately become payable on demand by the
Lenders; and/or
(e) declare that the Company shall immediately pay or procure the
payment of cash cover in respect of the Outstanding Purchase
Price, the L/Cs and the Forex Transactions, whereupon such
amounts shall become immediately due and payable. The provisions
of Clause 10.10 (Cash collateral) shall apply to any cash cover
to be provided under this Clause 22.11(e).
22.12 AGENT'S RIGHTS FOLLOWING DEFAULT
Without prejudice to the other provisions of this Clause 22 or any of its
other rights under any Finance Documents, the Agent may, at any time while
a Default is continuing (and without incurring any liability for the
exercise or non-exercise of any such power):
(a) require each Obligor immediately to deliver to it all original
documents relating to the Receivables and the contracts giving
rise to them; and/or
(b) give notice (or require the relevant Obligors to give notice) to
the account debtors to the effect that the Receivables have been
assigned to the Agent and requiring that payment be made to such
account as the Agent may specify; and/or
(c) extend the time for payment of any Receivable or otherwise enter
into any arrangements for the settlement, compromise, release or
discharge of any receivable; and/or
(d) generally take such action as it may deem fit for the protection
of any rights, remedies or security conferred upon it by any of
the Finance Documents.
23. CHANGES TO THE LENDERS
23.1 ASSIGNMENTS AND TRANSFERS BY THE LENDERS
The consent of the Company is required for (i) an assignment or transfer by
an Original Lender (unless such transfer is to an Affiliate of such Lender)
resulting in more than two Lenders existing at any time under this
Agreement and (ii) an assignment or transfer by Burdale Financial Limited
(unless such transfer is to an Affiliate of Burdale Financial Limited)
(such consent not to be unreasonably withheld or delayed) provided that no
such consent is required following the occurrence of any Default.
24. CHANGES TO THE OBLIGORS
24.1 ASSIGNMENTS AND TRANSFER BY OBLIGORS
No Obligor may assign any of its rights or transfer any of its rights or
obligations under the Finance Documents.
24.2 ADDITIONAL BORROWERS
The Company may request that any of its Subsidiaries becomes an Additional
Borrower. That Subsidiary shall become an Additional Borrower if:
(a) the Agent approves the addition of that Subsidiary;
47
(b) the Company delivers to the Agent a duly completed and executed
Accession Letter and Deed of Accession;
(c) the Company confirms that no Default is continuing or would occur
as a result of that Subsidiary becoming an Additional Borrower;
and
(d) the Agent has received with respect to the Additional Borrower,
documentation corresponding to that listed in paragraphs (A) and
(B) of Schedule 2 Part I (Initial Conditions precedent) in
relation to that Additional Borrower, together with the
additional conditions listed in Schedule 2 Part II (Additional
Conditions Precedent for Lending in Relation to Stock in European
Jurisdictions) each in form and substance satisfactory to the
Agent.
24.3 ACKNOWLEDGEMENT AND AUTHORISATION BY OBLIGORS
(a) Without limiting the other provisions of this Clause 24, the
Obligors acknowledge that any Subsidiary which becomes an
Additional Borrower will become bound by, and entitled to the
benefit of all provisions of this Agreement applicable as between
the Obligors themselves (including, without limitation, Clause
7.3(d) (Order of Application)) and 10.3(b) (Revision of Order of
Application).
(b) Each Obligor irrevocably authorises the Company to execute any
Letter of Accession and Deed of Accession on its behalf and
without further reference to it.
24.4 ADDITIONAL GUARANTORS
The Company shall procure that each of its Subsidiaries is a Guarantor. If
any company becomes a Subsidiary after the date of this Agreement, the
Company shall procure that such Subsidiary becomes an Additional Guarantor
by delivering to the Agent:
(a) a duly completed and executed Accession Letter and Deed of
Accession; and
(b) all of the corresponding documents and other evidence listed in
paragraphs (A) and (B) of Schedule 2 Part I (Initial Conditions
precedent) in relation to that Additional Guarantor each in form
and substance satisfactory to the Agent.
24.5 REPETITION OF REPRESENTATIONS
Delivery of an Accession Letter constitutes confirmation by the relevant
Subsidiary that the representations and warranties contained in Clause 19
(Representations and Warranties) are true and correct in relation to it as
at the date of delivery as if made by reference to the facts and
circumstances existing at the time of such delivery.
25. ROLE OF THE AGENT
25.1 APPOINTMENT OF THE AGENT
(a) Each other Finance Party appoints the Agent to act as its agent
under and in connection with the Finance Documents.
48
(b) Each other Finance Party authorises the Agent to exercise the
rights, powers, authorities and discretions specifically given to
the Agent under or in connection with the Finance Documents
together with any other incidental rights, powers, authorities
and discretions.
25.2 DUTIES OF THE AGENT
(a) The Agent shall promptly forward to a Party the original or a
copy of any document which is delivered to the Agent for that
Party by any other Party.
(b) Except where a Finance Document specifically provides otherwise,
the Agent is not obliged to review or check the adequacy,
accuracy or completeness of any document it forwards to another
Party.
(c) If the Agent receives notice from a Party referring to this
Agreement, describing a Default and stating that the circumstance
described is a Default, it shall promptly notify the Finance
Parties.
(d) If the Agent is aware of the non-payment of any principal,
interest, commitment fee or other fee payable to a Finance Party
(other than the Agent or the Arranger) under this Agreement it
shall promptly notify the other Finance Parties.
(e) The Agent's duties under the Finance Documents are solely
mechanical and administrative in nature.
25.3 NO FIDUCIARY DUTIES
(a) Nothing in this Agreement constitutes the Agent as a trustee or
fiduciary of any other person.
(b) The Agent shall not be bound to account to any Lender for any sum
or the profit element of any sum received by it for its own
account.
25.4 BUSINESS WITH THE OBLIGORS/BORROWERS
The Agent may accept deposits from, lend money to and generally engage in
any kind of banking or other business with the Obligors or any of its
Affiliates.
25.5 RIGHTS AND DISCRETIONS OF THE AGENT
(a) The Agent may rely on:
(i) any representation, notice or document believed by it to be
genuine, correct and appropriately authorised; and
(ii) any statement made by a director, authorised signatory or
employee of any person regarding any matters which may
reasonably be assumed to be within his knowledge or within
his power to verify.
(b) The Agent may assume (unless it has received notice to the
contrary in its capacity as agent for the Lenders) that:
(i) no Default has occurred (unless it has actual knowledge of a
Default arising under Clause 22.1 (Non-payment));
49
(ii) any right, power, authority or discretion vested in any
Party or the Majority Lenders has not been exercised; and
(iii) any notice or request made by the Company (other than a
Utilisation Request or Selection Notice) is made on behalf
of and with the consent and knowledge of all the Obligors.
(c) The Agent may engage, pay for and rely on the advice or services
of any lawyers, accountants, surveyors or other experts.
(d) The Agent may act in relation to the Finance Documents through
its personnel and agents.
(e) The Agent may disclose to any other Party any information it
reasonably believes it has received as agent under this
Agreement.
(f) Notwithstanding any other provision of any Finance Document to
the contrary, the Agent is not obliged to do or omit to do
anything if it would or might in its reasonable opinion
constitute a breach of any law or regulation or a breach of a
fiduciary duty or duty of confidentiality.
25.6 MAJORITY LENDERS' INSTRUCTIONS
(a) Unless a contrary indication appears in a Finance Document, the
Agent shall (i) exercise any right, power, authority or
discretion vested in it as Agent in accordance with any
instructions given to it by the Majority Lenders (or, if so
instructed by the Majority Lenders, refrain from exercising any
right, power, authority or discretion vested in it as Agent) and
(ii) not be liable for any act (or omission) if it acts (or
refrains from taking any action) in accordance with an
instruction of the Majority Lenders.
(b) Unless a contrary indication appears in a Finance Document, any
instructions given by the Majority Lenders will be binding on all
the Finance Parties.
(c) In the absence of instructions from the Majority Lenders, (or, if
appropriate, the Lenders) the Agent may act (or refrain from
taking action) as it considers to be in the best interest of the
Lenders.
(d) The Agent is not authorised to act on behalf of a Lender (without
first obtaining that Lender's consent) in any legal or
arbitration proceedings relating to any Finance Document.
25.7 RESPONSIBILITY FOR DOCUMENTATION
The Agent:
(a) is not responsible for the adequacy, accuracy and/or completeness
of any information (whether oral or written) supplied by the
Agent, or an Obligor or any other person given in or in
connection with any Finance Document; or
50
(b) is not responsible for the legality, validity, effectiveness,
adequacy or enforceability of any Finance Document or any other
agreement, arrangement or document entered into, made or executed
in anticipation of or in connection with any Finance Document.
25.8 EXCLUSION OF LIABILITY
(a) Without limiting paragraph (b) below for any action taken by it
under or in connection with any Finance Document, unless directly
caused by its gross negligence or wilful misconduct.
(b) No Party (other than the Agent) may take any proceedings against
any officer, employee or agent of the Agent in respect of any
claim it might have against the Agent or in respect of any act or
omission of any kind by that officer, employee or agent in
relation to any Finance Document and any officer, employee or
agent of the Agent may rely on this Clause.
(c) The Agent will not be liable for any delay (or any related
consequences) in crediting an account with an amount required
under the Finance Documents to be paid by the Agent if the Agent
has taken all necessary steps as soon as reasonably practicable
to comply with the regulations or operating procedures of any
recognised clearing or settlement system used by the Agent for
that purpose.
(d) Nothing in this Agreement shall oblige the Agent to carry out any
"know your customer" or other checks in relation to any person on
behalf of any Lender and each Lender confirms to the Agent that
it is solely responsible for any such checks it is required to
carry out and that it may not rely on any statement in relation
to such checks made by the Agent.
25.9 LENDERS' INDEMNITY TO THE AGENT
Each Lender shall (in proportion to its share of the Total Commitments or,
if the Total Commitments are then zero, to its share of the Total
Commitments immediately prior to their reduction to zero) indemnify the
Agent, within three Business Days of demand, against any cost, loss or
liability incurred by the Agent (otherwise than by reason of the Agent's
gross negligence or wilful misconduct) in acting as Agent under the Finance
Documents (unless the Agent has been reimbursed by an Obligor pursuant to a
Finance Document).
25.10 AGENT AS SECURITY TRUSTEE
(a) The protections extended to the Agent pursuant to the foregoing
provisions of this Clause 25 shall apply to it equally (and with
necessary adaptations) in its capacity as Security Trustee
pursuant to the Security Documents.
(b) The Agent in its capacity as Security Trustee or otherwise shall
not be responsible for any failure, omission or defect in
perfecting the security constituted or created pursuant to any
Finance Document including, without limitation, any failure to:
51
(i) register the same in accordance with the provision of any of
the documents of title of the relevant Obligor to any of the
assets thereby charged; and
(ii) effect or procure registration of or otherwise protect the
security created by any Security Document under any
registration laws in any jurisdiction.
(c) The Agent in its capacity as Security Trustee or otherwise may
accept without enquiry such title as any Borrower may have to any
of the assets charged pursuant to any of the Security Documents.
(d) The Agent in its capacity as trustee or otherwise shall not be
under any obligation to hold any title deed, Finance Document or
any other documents in connection with the property charged by
any Finance Document or any other security in its own possession
or take any steps to protect or preserve the same.
25.11 RESIGNATION OF THE AGENT
(a) The Agent may resign and appoint one of its Affiliates as
successor by giving notice to the other Finance Parties and the
Company.
(b) Alternatively the Agent may resign by giving notice to the other
Finance Parties and the Company, in which case the Majority
Lenders (after consultation with the Company) may appoint a
successor Agent.
(c) If the Majority Lenders have not appointed a successor Agent in
accordance with paragraph (b) above within 30 days after notice
of resignation was given, the Agent (after consultation with the
Company) may appoint a successor Agent.
(d) The retiring Agent shall, at its own cost, make available to the
successor Agent such documents and records and provide such
assistance as the successor Agent may reasonably request for the
purposes of performing its functions as Agent under the Finance
Documents.
(e) The Agent's resignation notice shall only take effect upon the
appointment of a successor.
(f) Upon the appointment of a successor, the retiring Agent shall be
discharged from any further obligation in respect of the Finance
Documents but shall remain entitled to the benefit of this Clause
25. Its successor and each of the other Parties shall have the
same rights and obligations amongst themselves as they would have
had if such successor had been an original Party.
(g) After consultation with the Company, the Majority Lenders may, by
notice to the Agent, require it to resign in accordance with
paragraph (b) above. In this event, the Agent shall resign in
accordance with paragraph (b) above.
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25.12 CONFIDENTIALITY
(a) In acting as agent for the Finance Parties, the Agent shall be
regarded as acting through its agency division which shall be
treated as a separate entity from any other of its divisions or
departments.
(b) If information is received by another division or department of
the Agent, it may be treated as confidential to that division or
department and the Agent shall not be deemed to have notice of
it.
25.13 RELATIONSHIP WITH THE LENDERS
(a) The Agent may treat each Lender as a Lender, entitled to payments
under this Agreement and acting through its Facility Office
unless it has received not less than five Business Days prior
notice from that Lender to the contrary in accordance with the
terms of this Agreement.
(b) Each Lender shall supply the Agent with any information required
by the Agent in order to calculate the Mandatory Cost applicable
to that Lender.
25.14 CREDIT APPRAISAL BY THE LENDERS
Without affecting the responsibility of any Obligor for information
supplied by it or on its behalf in connection with any Finance Document,
each Lender confirms to the Agent that it has been, and will continue to
be, solely responsible for making its own independent appraisal and
investigation of all risks arising under or in connection with any Finance
Document including but not limited to:
(a) the financial condition, status and nature of each Obligor;
(b) the legality, validity, effectiveness, adequacy or enforceability
of any Finance Document and any other agreement, arrangement or
document entered into, made or executed in anticipation of, under
or in connection with any Finance Document;
(c) whether that Lender has recourse, and the nature and extent of
that recourse, against any Party or any of its respective assets
under or in connection with any Finance Document, the
transactions contemplated by the Finance Documents or any other
agreement, arrangement or document entered into, made or executed
in anticipation of, under or in connection with any Finance
Document; and
(d) the adequacy, accuracy and/or completeness of information
provided by the Agent, any Party or by any other person under or
in connection with any Finance Document, the transactions
contemplated by the Finance Documents or any other agreement,
arrangement or document entered into, made or executed in
anticipation of, under or in connection with any Finance
Document.
26. CONDUCT OF BUSINESS BY THE FINANCE PARTIES
No provision of this Agreement will:
(a) interfere with the right of any Finance Party to arrange its
affairs (tax or otherwise) in whatever manner it thinks fit;
53
(b) oblige any Finance Party to investigate or claim any credit,
relief, remission or repayment available to it or the extent,
order and manner of any claim; or
(c) oblige any Finance Party to disclose any information relating to
its affairs (tax or otherwise) or any computations in respect of
Tax.
27. SHARING AMONG THE FINANCE PARTIES
27.1 PAYMENTS TO FINANCE PARTIES
If a Finance Party (a "RECOVERING FINANCE PARTY") receives or recovers any
amount from an Obligor other than in accordance with Clause 28 (Payment
mechanics) and applies that amount to a payment due under the Finance
Documents then:
(a) the Recovering Finance Party shall, within three Business Days,
notify details of the receipt or recovery, to the Agent;
(b) the Agent shall determine whether the receipt or recovery is in
excess of the amount the Recovering Finance Party would have been
paid had the receipt or recovery been received or made by the
Agent and distributed in accordance with Clause 28 (Payment
mechanics), without taking account of any Tax which would be
imposed on the Agent in relation to the receipt, recovery or
distribution; and
(c) the Recovering Finance Party shall, within three Business Days of
demand by the Agent, pay to the Agent an amount (the "SHARING
PAYMENT") equal to such receipt or recovery less any amount which
the Agent determines may be retained by the Recovering Finance
Party as its share of any payment to be made, in accordance with
Clause 7.3 (Order of Application).
27.2 REDISTRIBUTION OF PAYMENTS
(a) The Agent shall treat the Sharing Payment as if it had been paid
by the relevant Obligor and distribute it between the Finance
Parties (other than the Recovering Finance Party) in accordance
with Clause 7.3 (Order of Application).
27.3 RECOVERING FINANCE PARTY'S RIGHTS
(a) On a distribution by the Agent under Clause 27.2 (Redistribution
of payments), the Recovering Finance Party will be subrogated to
the rights of the Finance Parties which have shared in the
redistribution.
(b) If and to the extent that the Recovering Finance Party is not
able to rely on its rights under paragraph (a) above, the
relevant Obligor shall be liable to the Recovering Finance Party
for a debt equal to the Sharing Payment which is immediately due
and payable.
54
27.4 REVERSAL OF REDISTRIBUTION
If any part of the Sharing Payment received or recovered by a Recovering
Finance Party becomes repayable and is repaid by that Recovering Finance
Party, then:
(a) each Finance Party which has received a share of the relevant
Sharing Payment pursuant to Clause 27.2 (Redistribution of
payments) shall, upon request of the Agent, pay to the Agent for
account of that Recovering Finance Party an amount equal to the
appropriate part of its share of the Sharing Payment (together
with an amount as is necessary to reimburse that Recovering
Finance Party for its proportion of any interest on the Sharing
Payment which that Recovering Finance Party is required to pay);
and
(b) that Recovering Finance Party's rights of subrogation in respect
of any reimbursement shall be cancelled and the relevant Obligor
will be liable to the reimbursing Finance Party for the amount so
reimbursed.
27.5 EXCEPTIONS
(a) This Clause 27 shall not apply to the extent that the Recovering
Finance Party would not, after making any payment pursuant to
this Clause, have a valid and enforceable claim against the
relevant Obligor.
(b) A Recovering Finance Party is not obliged to share with any other
Lender any amount which the Recovering Finance Party has received
or recovered as a result of taking legal or arbitration
proceedings, if:
(i) it notified that other Finance Party of the legal or
arbitration proceedings; and
(ii) the other Finance Party had an opportunity to participate in
those legal or arbitration proceedings but did not do so as
soon as reasonably practicable having received notice and
did not take separate legal or arbitration proceedings.
28. PAYMENT MECHANICS
28.1 PAYMENTS TO THE AGENT
(a) On each date on which an Obligor or a Lender is required to make
a payment under a Finance Document, that Obligor or Lender shall
make the same available to the Agent (unless a contrary
indication appears in a Finance Document) for value on the due
date at the time and in such funds specified by the Agent as
being customary at the time for settlement of transactions in the
relevant currency in the place of payment.
(b) Payment shall be made to such account with such bank as the Agent
specifies.
28.2 DISTRIBUTIONS BY THE AGENT
Each payment received by the Agent under the Finance Documents for another
Party shall, subject to Clause 28.3 (Distributions to an Obligor) and
Clause 28.4 (Clawback) be made available by the Agent as soon as
practicable after receipt to the Party entitled to
55
receive payment in accordance with this Agreement (in the case of a Lender,
for the account of its Facility Office), to such account as that Party may
notify to the Agent by not less than five Business Days' notice.
28.3 DISTRIBUTIONS TO AN OBLIGOR
The Agent may (with the consent of the Obligor or in accordance with Clause
29 (Set-off)) apply any amount received by it for that Obligor in or
towards payment (on the date and in the currency and funds of receipt) of
any amount due from that Obligor under the Finance Documents or in or
towards purchase of any amount of any currency to be so applied.
28.4 CLAWBACK
28.4.1 Where a sum is to be paid to the Agent under the Finance Documents
for another Party, the Agent is not obliged to pay that sum to that
other Party (or to enter into or perform any related exchange
contract) until it has been able to establish to its satisfaction that
it has actually received that sum.
28.4.2 If the Agent pays an amount to another Party and it proves to be the
case that the Agent had not actually received that amount, then the
Party to whom that amount (or the proceeds of any related exchange
contract) was paid by the Agent shall on demand refund the same to the
Agent together with interest on that amount from the date of payment
to the date of receipt by the Agent, calculated by the Agent to
reflect its cost of funds.
28.5 NO SET-OFF BY OBLIGORS
All payments to be made by an Obligor under the Finance Documents shall be
calculated and be made without (and free and clear of any deduction for)
set-off or counterclaim.
28.6 BUSINESS DAYS
(a) Any payment which is due to be made on a day that is not a
Business Day shall be made on the next Business Day in the same
calendar month (if there is one) or the preceding Business Day
(if there is not).
(b) During any extension of the due date for payment of any principal
or Unpaid Sum under this Agreement interest is payable on the
principal or Unpaid Sum at the rate payable on the original due
date.
28.7 CURRENCY OF ACCOUNT
28.7.1 Subject to paragraphs (b) and (c) below, Sterling is the currency of
account and payment for any sum due from an Obligor under any Finance
Document.
28.7.2 Each payment in respect of costs, expenses or Taxes shall be made in
the currency in which the costs, expenses or Taxes are incurred.
28.7.3 Any amount expressed to be payable in a currency other than Sterling
shall be paid in that other currency.
29. SET-OFF
A Finance Party may set off any matured obligation due from an Obligor
under the Finance Documents (to the extent beneficially owned by that
Finance Party) against any matured obligation owed by that Finance Party to
that Obligor, regardless of the place of
56
payment, booking branch or currency of either obligation. If the
obligations are in different currencies, the Finance Party may convert
either obligation at a market rate of exchange in its usual course of
business for the purpose of the set-off.
30. NOTICES
30.1 COMMUNICATIONS
Any communication, consent or other approval to be made or given under or
in connection with the Finance Documents shall be made in writing, may be
made by fax or letter and shall be deemed to have been received as follows:
(a) if by way of fax, when received in legible form; or
(b) if by way of letter, when it has been left at the relevant
address or two Business Days after being deposited in the post
postage prepaid in an envelope addressed to it at that address.
30.2 ADDRESS
Any notice to be given to the Company or any Obligor shall be given to the
Company at the address or fax number of the Company set out on the
execution pages. Each Obligor irrevocably appoints the Company as its agent
for the purpose of receiving any such notice. Any notice to be given to the
Agent or a Lender shall be given to it at the address or fax number set out
on the execution pages. Any party may change these details by notice to the
other parties.
31. MISCELLANEOUS PROVISIONS
31.1 CERTIFICATES AND DETERMINATIONS
Any certification or determination by the Agent of a rate or amount under
any Finance Document is, in the absence of manifest error, conclusive
evidence of the matters to which it relates.
31.2 DISCLOSURE OF INFORMATION
(a) Each Lender may disclose to any person with whom it proposes to
enter into (or has entered into) any assignment, transfer,
participation or other arrangement (whether by way of delegation
or otherwise) with respect to this Agreement such information
concerning the Obligors and the Facilities as it thinks fit, and
may advertise or publicise the transaction evidenced by this
Agreement to such extent and in such manner as it sees fit.
(b) Each Lender may disclose to any of its Affiliates such
information concerning the Obligors as it may think fit.
31.3 PARTIAL INVALIDITY
If, at any time, any provision of the Finance Documents is or becomes
illegal, invalid or unenforceable in any respect under any law of any
jurisdiction, neither the legality, validity or enforceability of the
remaining provisions nor the legality, validity or enforceability of such
provision under the law of any other jurisdiction will in any way be
affected or impaired.
57
31.4 DELEGATION
Each Lender may at any time and from time to time delegate to any of its
Affiliates or to any other person the performance of such of the Lenders
rights, obligations and functions under the Finance Documents as such
Lender may see fit.
31.5 AMENDMENTS
(a) Subject to Clause 31.6 (Exceptions) any term of the Finance
Documents may be amended or waived only with the consent of the
Majority Lenders and the Obligors and any such amendment or
waiver will be binding on all Parties.
(b) The Agent may effect, on behalf of any Finance Party, any
amendment or waiver permitted by this Clause.
31.6 EXCEPTIONS
(a) An amendment or waiver that has the effect of changing or which
relates to:
(i) the definition of "Majority Lenders" in Clause 1
(Definitions);
(ii) an extension to the date of payment of any amount under the
Finance Documents;
(iii) a reduction in the Margin or a reduction in the amount of
any payment of principal, interest, fees or commission
payable;
(iv) an increase in or an extension of any Commitment;
(v) a change to the Borrowers or Guarantors other than in
accordance with Clause 24 (Changes to the Obligors); or
(vi) Clause 22 (Finance Parties' rights and obligations), Clause
23 (Changes to the Lenders) or this Clause 31,
shall not be made without the prior consent of all the Lenders.
(b) An amendment or waiver which relates to the rights or obligations
of the Agent may not be effected without the consent of the
Agent.
32. REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of the
Agent or any Lender, any right or remedy under the Finance Documents shall
operate as a waiver, nor shall any single or partial exercise of any right
or remedy prevent any further or other exercise or the exercise of any
other right or remedy. The rights and remedies provided in this Agreement
are cumulative and not exclusive of any rights or remedies provided by law.
33. COUNTERPARTS
Each Finance Document may be executed in any number of counterparts, and
this has the same effect as if the signatures on the counterparts were on a
single copy of the Finance Document.
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34. GOVERNING LAW
This Agreement is governed by English law.
35. ENFORCEMENT
35.1 JURISDICTION OF ENGLISH COURTS
(a) The courts of England have exclusive jurisdiction to settle any
dispute arising out of or in connection with this Agreement
(including a dispute regarding the existence, validity or
termination of this Agreement) (a "DISPUTE").
(b) The parties agree that the courts of England are the most
appropriate and convenient courts to settle Disputes and
accordingly no Party will argue to the contrary.
(c) This Clause 35.1 is for the benefit of the Agent and the Lenders
only. As a result, the Agent and the Lenders shall not be
prevented from taking proceedings relating to a Dispute in any
other courts with jurisdiction. To the extent allowed by law,
they may take concurrent proceedings in any number of
jurisdictions.
THIS AGREEMENT HAS BEEN ENTERED INTO ON THE DATE STATED AT THE BEGINNING OF THIS
AGREEMENT.
59
SCHEDULE 1
THE ORIGINAL OBLIGORS
PART I
THE ORIGINAL BORROWERS
Name of Original Borrower Registration number (or equivalent, if any)
--------------------------- -------------------------------------------
SALTON HOLDINGS LIMITED 00114036
SALTON EUROPE LIMITED 00073700
PART II
THE ORIGINAL GUARANTORS
Name of Original Guarantor Registration number (or equivalent, if any)
--------------------------- -------------------------------------------
SALTON HOLDINGS LIMITED 000114036
SALTON EUROPE LIMITED 00073700
PIFCO LIMITED 01713199
HEADSTART LIMITED 01753485
OPTEC ELEMENTS LIMITED 02920706
MOUNTAIN BREEZE LIMITED 00539169
BEST PRODUCTS LIMITED 00316436
XXXXXXX XXXXX TOWER LIMITED 00765557
HI-TECH INDUSTRIES LIMITED 01749436
X.X. XXXXX LIMITED 00617666
XXXXXX LIMITED 00834782
PIFCO DISTRIBUTION LIMITED 00194751
HI-TECH BATTERIES LIMITED 02199387
ESALTONEUROPE LIMITED 01936735
60
SCHEDULE 2
PART I
CONDITIONS PRECEDENT FOR INITIAL UTILISATION
(A) CORPORATE DOCUMENTS
1. A certified copy of the Constitutional Documents of each Original Obligor.
2. A certified copy of a resolution of the board of directors of each Original
Obligor approving the execution of the Finance Documents and the taking of
any action required or permitted pursuant thereto.
3. Written resolutions of those Obligors required to amend their
Constitutional Documents in order to remove any restrictions on the
transfer of shares.
4. A certified copy of a resolution of the board of directors of Salton Inc.,
in form and substance satisfactory to the Agent.
5. A specimen of the signature of each person authorised to give notices on
behalf of each Original Obligor.
6. A certificate of each Original Obligor (signed by a director) confirming
that the execution and performance of this Agreement does not cause any
borrowing, guaranteeing or similar limit binding on any Original Obligor to
be exceeded.
7. Satisfactory company and/or other searches against each Original Obligor.
8. Copies of passports, utility invoices or other acceptable evidence of
identification in relation to each director and shareholder of each
Borrower, together with such further information and documentation as the
Agent may require, in order to comply with anti-money laundering
legislation.
9. Legal opinions from the following:
(a) Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP in relation to matters of US Law,
including but not limited to, an opinion that states that the
execution of this Agreement and the terms hereof and of any other
Finance Documents shall not cause a breach of any of the provisions of
the US Debt Documents; and
(b) Xxxxxxxx Xxxxxx, Hong Kong in relation to matters of Hong Kong law,
including but not limited to, opinions to trading terms and amendments
to trading terms and that licences are valid, binding and enforceable.
10. Group Structure Chart
61
(B) SECURITY AND OTHER DOCUMENTS
11. The Finance Documents, duly executed by the parties thereto together with
such further documents as the Agent may require in connection with the
completion, registration, perfection or enforceability thereof or of any
security intended to be created thereby.
12. Any Fee Letters.
13. Certified copies of (i) all notices of assignment and other notices
required to be given pursuant to the Debenture and (ii) all
acknowledgements required to be given with respect thereto, duly executed
by the recipient.
14. A report or other evidence as to the insurances maintained by each Obligor
and their conformity to the terms of the Finance Documents (including a
letter in form and substance satisfactory to the Agent that the broker for
each policy has confirmed that within 20 Business Days the Agent will be
noted as mortgagee and loss payee on the following policies RKK270407 held
with Royal and Sun Alliance, NK/14465575 held with Allianz Cornhill
Engineering and 2002/5/000002493 held with CNA Maritime Insurance Company
Limited).
15. All title documents to the Mortgaged Property, together with a report on
title acceptable to the Agent.
16. An Environmental Report.
17. A Property Valuation.
18. An IP Valuation.
19. Such certificates of registration, application forms and other documents
(together with appropriate fees) as may be necessary to complete and
register the security created pursuant to the Finance Documents.
20. Such consents, waivers or other acknowledgments as the Agent may require
from any person (including landlords, financial institutions, warehouse
owners and others dealing with any Obligor) who may from time to time have
or claim any Security Interest over any asset of any Obligor.
21. Share certificates of SEL and its Subsidiaries (together with executed,
blank transfer forms) in respect of all shares and other securities charged
to the Security Trustee pursuant to the Debenture.
22. Evidence that the Blocked Accounts have been opened, together with copies
of the completed mandates.
23. Duly executed Amendment Agreement between Salton Inc. and SEL dated on or
about the date hereof.
24. Hong Kong Waiver and Amendment Letter.
25. A report prepared by the Company and addressed to the Agent dated on or
about the Date of this Agreement that sets out the details of all Goods in
transit at the date of first Utilisation and that attaches a copy of each
xxxx of lading available for such shipment.
62
26. Details of the amounts standing to the credit of each Charged Account as at
the date on which such details are delivered.
27. Deeds of release in relation to:
(i) HSBC Invoice Finance; and
(ii) HSBC Bank plc.
Together in each case with duly executed forms 403(a).
28. A telephone, facsimile and e-mail indemnity executed by each Borrower.
29. A duly completed Purchase Request from each Borrower.
(C) AVAILABILITY LIMIT INFORMATION
30. Such information as the Agent may require in order to determine, as at the
date of this Agreement, (i) the amount of the Eligible Receivables, (ii)
the Net Stock Value and (iii) the Availability Limits pursuant to Clause 6
(Restrictions applicable to individual Facilities) and (ii) the Reserves.
31. Such information as the Agent may require in order to identify or determine
(i) those Suppliers of Stock to the Obligors which supply on title
retention terms, (ii) those customers of the Obligors which acquire stock
on sale or return terms, (iii) which Stock is supplied by any Obligor
otherwise than as principal (whether as a consignee or otherwise) and (iv)
the nature of the payment terms which apply as between the Obligors and
their customers.
32. Evidence that the total amount available for Utilisation (immediately
following the first Utilisation) will be not less than L7,500,000.
63
PART II
ADDITIONAL CONDITIONS PRECEDENT FOR LENDING IN RELATION TO STOCK
IN EUROPEAN JURISDICTIONS
1. A legal opinion from local counsel in the jurisdiction of incorporation of
the European Sales Entity in which such Stock is located in form and
substance satisfactory to the Agent.
2. Any amendment agreement deemed necessary by the Agent in order to ensure
that the relevant terms of trade of such European Sales Entity are
satisfactory to the Agent for the purposes of this Agreement.
3. Evidence satisfactory to the Agent that all credit terms relating to the
relevant European Sales Entity are on a basis satisfactory to the Agent.
4. Copies of any relevant licence for the operation of the business of the
relevant European Sales Entity together with any amendment or assignment or
other security as the Agent shall consider necessary for the purposes of
this Agreement.
5. The relevant European Sales Entity shall deliver a duly executed agreement
to sell the relevant Stock to SEL (or such other entity as the Agent may
specify) together with any other necessary document required to complete or
perfect such sale (unless the Agent has received evidence that such is not
necessary).
6. For each relevant European Sales Entity duly executed acknowledgements from
any warehouse in that jurisdiction confirming that it shall only act upon
the Agent's instruction to release any Stock.
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SCHEDULE 3
PART I
REPORTING AND FINANCIAL UNDERTAKINGS
(A) REPORTING UNDERTAKINGS
1. IMMEDIATE REPORTING REQUIREMENTS
Each Obligor will furnish to the Agent full details of each of the
following matters as soon as such Obligor becomes aware thereof:
(a) (i) any material delay in such Obligor's performance of its
obligations to an account debtor, (ii) any assertion by any account
debtor of any right of set-off, defence, counterclaim or similar right
with respect to any Receivable, (iii) any information coming to its
attention which may be materially adverse to the financial condition
of any account debtor and (iv) any information coming to its attention
which might lead the Agent to consider any Receivables as no longer
constituting Eligible Receivables;
(b) any return of only one particular item of Stock by an account debtor
where that one item of Stock is faulty or defective and has a value in
excess of L50,000 in one fiscal month.
(c) any supplier who imposes retention of title clauses, other than any
mentioned in a list provided for the purposes of Clause 19.12
(Retention of Title);
(d) details of any litigation, arbitration or administrative proceedings
which are current, threatened or pending against any Obligor, and
which might, if adversely determined, have a Material Adverse Effect.
(e) any Quarantine Report as soon as it has been prepared.
2. DAILY REPORTING REQUIREMENTS
(a) On the date of any Utilisation each Obligor will furnish to the Agent
schedules of Receivables, collections and credits and Receivables
which are (or are alleged by the account debtor to be) subject to any
restriction on assignment or charge and in addition each Obligor shall
use its reasonable efforts to furnish to the Agent on a daily basis
such schedules of Receivables, collections and credits
(b) Each Obligor will furnish to the Agent on a daily basis a report
detailing outstanding BACS payments where the total is in excess of
L100,000.
3. WEEKLY REPORTING REQUIREMENTS
(a) Each Obligor shall furnish to the Agent on a weekly basis a Purchase
Request and details of any restriction on assignment or charge in
respect of Receivables.
65
(b) A report detailing all Goods in transit and such report shall identify
those Goods supported by bills of lading within the control of the
Company or its UK agent.
4. MONTHLY REPORTING REQUIREMENTS
Each Obligor will furnish to the Agent (in a format acceptable to the
Agent):
(a) within 15 days of the end of each fiscal month or at such other times
and with respect to such other periods as the Agent may require, a
stock report in the form from time to time required by the Agent;
(b) within 15 days of the end of each fiscal month or at such other times
and with respect to such other periods as the Agent may require, full
details (in such form as the Agent may from time to time require) of
(i) all ageings of payables and Receivables with dated invoices, (ii)
all Stock by category, location and supplier and (iii) a sales ledger
control account and a reconciliation of the Blocked Accounts;
(c) as soon as the same become available, but in any event within 30 days
after the end of each fiscal month (and in each case in a format
acceptable to the Agent) full individual and consolidated accounts for
that period for itself and each Obligor, including Stock figures and
valuations for that fiscal month, a breakdown of the value and
identity of preferential creditors for that fiscal month and details
of all input and output VAT;
(d) together with the accounts referred to in (c) above, a certificate
from a Director of the Company confirming that the Company was in
compliance with the financial undertakings in paragraph (B) of this
Schedule as at the date to which such accounts were made up.
(e) upon its reasonable endeavours obtain confirmation from Salton Hong
Kong Limited that any sums paid to Salton Hong Kong Limited have been
paid to end suppliers for amounts owing by Salton Europe Limited.
5. ANNUAL REPORTING REQUIREMENTS
The Company shall supply to the Agent:
(a) as soon as the same become available, but in any event within 120 days
after the end of each of its financial years:
(i) its audited financial statements (consolidated where appropriate)
for that financial year (other than in the case of the financial
year ending 2005 where such accounts must be delivered prior to
the end of April 2006); and
(ii) the audited financial statements of each Obligor for that
financial year;
66
(b) together with the accounts referred to in (a) above, a certificate
from its auditors confirming that the Company was in compliance with
the financial undertakings in paragraph (B) of this Schedule as at the
date to which such accounts were made up;
(c) on each of the dates falling at 12 monthly intervals after the date of
this Agreement
(i) a Property Valuation;
(ii) an IP Valuation.
provided that so long as no Default has occurred, updates only of the
previous Property Valuation or IP Valuation shall be undertaken. In
respect of a Property Valuation, this shall include a visit to each
site by a valuer and market research but shall not include any
physical measurements of the relevant site unless there have been
material physical changes to the property or the site itself since the
last valuation or update which are likely to have a negative impact on
the value shown in the previous valuation or update.
6. ON REQUEST AND OTHER REPORTING REQUIREMENTS
Each Obligor will furnish to the Agent (in a format acceptable to the
Agent) upon the Agent's request and in any event semi-annually to that
effect:
(a) an appraisal of its Stock addressed to the Agent and in a form and
prepared by an appraiser acceptable to the Agent; and
(b) such further information regarding the financial condition, business,
assets and operations of any Obligor as the Agent may reasonably
request.
7. REPORTING REQUIREMENTS ON ISSUE
Each Obligor will furnish to the Agent all documents dispatched by the
Company to its shareholders (or any class of them) or its creditors
generally at the same time as they are dispatched.
8. PROVISIONS WITH RESPECT TO STOCK, RECEIVABLES AND OTHER ASSETS
(a) If any Stock is returned to an Obligor by an account debtor or is
the subject of a counterclaim the related Receivable will cease
to be an Eligible Receivable.
(b) Each Obligor undertakes to maintain complete, accurate and up to
date debtor records (including transport documents evidencing
that goods have been despatched and payment is due), and to allow
to the Agent access to those records on request.
(c) Each Obligor acknowledges that the Agent may take such steps as
it may deem appropriate to verify the ownership, condition or any
other matter relating to, any asset of such Obligor (whether by
direct enquiry with account debtors or otherwise howsoever).
67
(d) Each Obligor will (on one Business Day's notice or, if an Event
of Default is continuing immediately upon request) afford to the
Agent or its nominee complete access to such Obligor's premises
during normal business hours for the purpose of inspecting,
verifying and auditing the books, records and assets of such
Obligor. Each Obligor will, on request, provide to the Agent or
its nominee copies or extracts from such book or records as it
may require.
9. PROVISIONS WITH RESPECT TO RECEIVABLES
With respect to the collection of Receivables, each Obligor undertakes with
the Agent as follows:
(a) it will collect and hold the proceeds of such Receivables as
agent and trustee for the Agent and immediately pay all amounts
so received into a Blocked Account (but pending such payment will
not commingle such amounts with any other funds);
(b) in complying with its obligations under (a) above, it will act as
agent for the Agent on an undisclosed basis (except to the extent
to which the Data Protection Xxx 0000 or any other legislation
compels such Obligor to disclose the Agent's interest to the
debtor concerned);
(c) if any account debtor makes a payment into any account which is
not a Blocked Account, it will immediately (i) transfer the
relevant amounts to a Blocked Account and (ii) direct the
relevant account debtor to make future payments to a Blocked
Account;
(d) the payments and collections described in (a) and (b) above shall
be carried out on a daily basis or (following a Default) at such
other intervals as the Agent may require;
(e) to the extent to which the Agent does not obtain title to any
Purchased Receivable, it will hold such Receivable on trust for
the Agent and deal with it in accordance with the other
provisions of this paragraph 8;
(f) it will not grant any credit, discount or similar allowance in
respect of any Receivable except in the ordinary course of
business in accordance with its normal policies or with the
Agent's consent; and
(g) it will indemnify the Agent on demand against any liability
incurred to any bank or person involved in the operation of a
Blocked Account.
10. PROVISIONS WITH RESPECT TO STOCK
With respect to its Stock, each Obligor undertakes with the Agent as
follows:
(a) it will at all times maintain perpetual stock records in the
manner set out in the Appraisal, which shall accurately itemise
and describe (i) the kind, type, quality and quantity of such
Stock, (ii) the cost of such Stock and (iii) the daily additions
to/withdrawals from such Stock;
68
(b) it will conduct a physical count of such Stock ensuring each item
is counted at least once a year and (if an Event of Default is
continuing) at such other times as the Agent may require, and
deliver to the Agent a report acceptable to it with respect to
such count;
(c) it will (except for sales of Stock in the ordinary course of
business and movements of Stock previously approved by the Agent
in writing) not remove any Stock from property controlled by it
or from a public warehouse unless such removal is to and from
property controlled by it;
(d) it will produce, use, store and maintain its Stock with
reasonable care and in accordance with all insurance requirements
necessary to ensure continuance of insurance cover and to the
best of its knowledge regulatory requirements;
(e) other than pursuant to the Argos Terms or the Amazon Terms, it
will not, without the Agent's prior written consent, sell any
Stock exceeding L100,000 on sale or return or similar terms;
(f) it will keep the Stock in good and marketable condition and not
(without the prior written consent of the Agent) accept any
consignment stock.
11. PROVISIONS WITH RESPECT TO FINANCIAL STATEMENTS AND AUDIT
Each set of financial statements delivered by the Company pursuant the
provisions of this schedule shall be certified by a director of the
relevant company as fairly representing its financial condition as at
the date as at which those financial statements were drawn up. The
Company shall procure that all audited financial statements so
delivered are (i) prepared by auditors who are ranked amongst the top
10 firms of auditors as assessed by the Institute for Chartered
Accountants (ii) prepared in accordance with GAAP and using accounting
principles and policies which are consistently applied.
12. DEFINITIONS
"ELIGIBLE RECEIVABLES" means, at any time, any Receivables at such time which
are evidenced by an invoice rendered by a Borrower to account debtors save for
any Receivable which (in the opinion of the Agent):
(a) does not arise from the actual and bona fide sale and delivery of
goods or rendering of services in the ordinary course of the
business of the relevant Borrower;
(b) remains fully or partly unpaid after its Maturity Date or such
longer period as may be agreed by the Agent;
(c) is owing by a single account debtor if Receivables representing
50% or more of the aggregate balance owing by such account debtor
to the Borrowers are not Eligible Receivables by reason of the
operation of paragraph (b) above;
(d) is owed by a director, officer, employee or Affiliate of any
Obligor;
69
(e) is the subject of an (alleged) counterclaim or set off to the
extent of such (alleged) counterclaim or set off.
(f) arises from or relates to a contract in respect of which (i)
performance has not been completed by the relevant Borrower, (ii)
no invoice has been rendered or (iii) the relevant Borrower is
not entitled to effect an assignment;
(g) involves an account debtor which is the subject of any winding
up, administration or similar procedure indicative of insolvency;
(h) other than in respect of Receivables arising pursuant to the
Argos Terms or the Amazon Terms, involves an account debtor whose
obligation to pay the Receivable is in any respect conditional or
subject to any right of return, rejection or similar right;
(i) is owed by an account debtor incorporated or resident outside the
United Kingdom and is not credit insured under arrangements which
are acceptable to the Agent in its complete discretion;
(j) is owed by an account debtor whose total indebtedness to the
Obligors exceeds any credit limit set by the Agent from time to
time provided however that the Borrowers may from time to time
provide evidence from a reputable credit insurer in relation to
such account debtor showing that such credit insurance would be
available above the credit limit set by the Agent; and
(k) is affected by proceedings or actions which are threatened or
pending against the relevant account debtors and which may result
in any material adverse change in any such account debtor's
financial condition.
"ELIGIBLE STOCK" means all Stock save for any Stock which, at any time and in
the opinion of the Agent:
(a) is obsolete, not in good condition or not currently usable or
saleable in each case using the methods applied in the Appraisal
for any analysis;
(b) is slow-moving to the extent that such slow-moving Stock has a
net value in excess of L2,000,000;
(c) is held at third party premises without acceptable access
arrangements for the Agent;
(d) constitutes materials over which the Security Trustee does not
have a valid first ranking fixed or floating charge under the
Security Documents;
(e) constitutes consumables used in a Borrower's business or
constitutes packaging or shipping materials;
(f) constitutes damaged or defective materials;
(g) is held by a Borrower as consignee for a third party;
(h) is not the property of the relevant Borrower by virtue of
retention of title or Romalpa provisions in favour of any person;
(i) is spare parts or scrap;
70
(j) is in transit outside property which is owned and controlled by
any Obligor which is a warehouse approved by the Agent except in
cases where they are (i) in transit between such properties or
warehouse and the aggregate value of such Stock does not at any
time exceed the sum of L100,000 or (ii) in transit to a an
OblIGOR and the Agent has direct access to all originals of the
bills of lading or other documents of title with respect to such
Stock and has received all such other documents as the Agent
requires to perfect its security and to obtain possession from
any third party;
(k) in the reasonable opinion of the Agent ought to cease to be
Eligible Stock as a consequence of any legal or regulatory
change; or
(k) is located in a European Jurisdiction and where the conditions of
Schedule 2 Part II (Additional Conditions Precedent for Lending
in Relation to Stock in European Jurisdictions) have not been
satisfied in relation to that Stock and that location.
(B) FINANCIAL UNDERTAKINGS
1. The Company shall procure that:
(a) The Fixed Charge Coverage Ratio in respect of any fiscal monthly
period set out in Column 1 shall not be less than the ratio set
out in Column 2 below opposite that relevant period and the first
such test shall be on 30April 2006 (such test shall be at the end
of each fiscal month and based on the immediately preceding
twelve months);
COLUMN 1 COLUMN 2
Relevant period Ratio
--------------- --------
12 months from the date of this Agreement 0.8:1
24 months from the date of this Agreement 1.3:1
36 months from the date of this Agreement 1.6:1
For the purposes of this Clause the following definitions shall apply:
"CAPEX" means any expenditure or obligation arising out of the purchase of
equipment or other assets of the Group which shall be treated as fixed or
intangible in accordance with UK GAAP;
"EBITDA" means for any period the total consolidated Group profit for that
period:
(a) before talking into account all extraordinary profits and all
exceptional profits;
71
(b) before deducting corporation tax;
(c) before taking into account interest accrued and other finance
charges during that period, whether or not paid, deferred or
capitalised;
(d) before any amount attributable to amortisation of intangible
assets and depreciation of tangible assets; and
(e) excluding any costs incurred in connection with the Finance
Documents.
"FIXED CHARGE COVERAGE RATIO" means:
EBITDA + FIXED CHARGE - CAPEX + UNPAID ROYALTIES
------------------------------------------------
FIXED CHARGE + INTEREST
"FIXED CHARGE" to include:
- Lease payments;
- scheduled term loan repayments;
- dividends;
- (excluding Interest) any other scheduled or fixed repayments not
already taken into account in EBITDA
"INTEREST" means any cost for any indebtedness incurred by any member of
the Group;
"UNPAID ROYALTIES" means any Xxxxxx Xxxxxxx royalty payments that are
charged in calculating the EBITDA which have not been paid in relation to
paragraph 3 (Xxxxxx Xxxxxxx) below.
2 PRE TAX PROFIT, NET TRADING CASHFLOW & MINIMUM HEADROOM
These targets have been set to achieve (a) reduction in the minimum headroom
condition of L4,000,000 down to L2,000,000 and (b) the release of the L2,000,000
availability block forming part of the definition of Reserves.
Provided that there is no Default if the following criteria are satisfied the
following reductions shall be made.
PTP REQUIREMENT NTC REQUIREMENT HEADROOM
--------------- --------------- ----------
REDUCTION OF MINIMUM
AVAILABLE HEADROOM TO
L2,000,000 L4,000,000 L6,000,000 L8,000,000
RELEASE OF THE L2,000,000
FORMING PART OF THE
DEFINITION OF RESERVES L7,000,000 L10,000,000 L8,000,000
72
"PTP" means the profit before tax as disclosed in the audited consolidated
accounts of the Group after deducting any exceptional or extraordinary
profits in the most recent financial year;
"NTC" means PTP adding back depreciation and amortisation and deducting
Capex;
"HEADROOM" means the minimum level of Minimum Available Headroom over the
last 30 days taking into consideration that trade creditors have been paid
in accordance with the relevant terms applicable to such trades creditor.
3 XXXXXX XXXXXXX
Provided there is no Default Xxxxxx Xxxxxxx royalty payments shall be permitted
provided that the following criteria are satisfied in the table below
SUBJECT TO MINIMUM
TRIGGER POINT HEADROOM
------------- ------------------
XXXXXX XXXXXXX PAYMENT Royalty payments that arise in connection with the L8m
TRIGGER POINTS Xxxxxx Xxxxxxx licence between Salton Inc. and SEL
shall be permitted upon receipt by the Agent of (i) the
audited accounts of the Group for the most recent
twelve month period and (ii) a certificate from the
Directors of SHL confirming that the Fixed Charge
Coverage Ratio equals or exceeds 2:1 for the
immediately preceding 12 months (the "2:1 Ratio")
AND PROVIDED THAT (i) had such payment of royalties
been made 30 days prior to the proposed payment date
there would have been Minimum Headroom of L8,000,000
for the succeeding 30 days (ii) such royalty payments
can only be made to the extent that the 2:1 Ratio would
not be breached as a result of such payments
73
PART I
ADDITIOINAL REPORTING AND FINANCIAL UNDERTINGS FOR AN
ADDITIONAL OBLIGOR
REPORTING UNDERTAKINGS
1. Daily Reporting Requirements
On the date of any Utilisation and in any event at least once a week to the
extent of any Additional Obligor is a European Subsidiary, the Company or
SEL will furnish to the Agent on a daily basis copies of all e-mails or
other correspondence from the relevant European Subsidiary or requests for
the release of any Stock to that European Subsidiary.
2. Monthly Reporting Requirements
If a European Subsidiary becomes an Additional Borrower the relevant
Obligor shall use all reasonable endeavours to furnish to the Agent at the
end of each fiscal month a report that details the levels of creditors owed
by Salton Hong Kong Limited for goods supplied to the relevant European
Subsidiary.
74
SCHEDULE 4
PART 1
FORMS OF REQUEST
PART I - FORM OF PURCHASE REQUEST
[On letterhead of relevant Borrower]
Date: __________
To: Burdale Financial Limited
(as Agent)
00 Xxxxx Xxxx Xxxxxx
XXXXXX X0X 0XX
Attention: Finance Director
Dear Sirs,
FACILITY AGREEMENT DATED [__] DECEMBER 2005 AND MADE BETWEEN SALTON HOLDINGS
LIMITED, SALTON EUROPE LIMITED, THE ORIGINAL BORROWERS, THE ORIGINAL GUARANTORS
AND BURDALE FINANCIAL LIMITED AS AGENT AND SECURITY TRUSTEE (THE "AGENT" AND
"SECURITY TRUSTEE") (THE "FACILITY AGREEMENT").
We refer to the Facility Agreement, terms defined in which have the same meaning
when used in this Purchase Request.
1. [We hereby offer to sell to the Agent all our present and future
Receivables (during the continuance of the Facility Agreement) subject to
the terms of the Facility Agreement (including in relation to the
calculation of the Purchase Price). This offer shall be regarded as a
single composite offer which may be accepted or rejected in its entirety
but not in part only. Your acceptance of this offer shall be demonstrated
in the manner set out in Clause 7.1 (Sale of Receivables) of the Facility
Agreement]. [NB - PARAGRAPH TO BE INSERTED IN FIRST PURCHASE REQUEST ONLY].
2. We wish to confirm our sale to the Lender, pursuant to the terms of our
first Purchase Request, of the Receivables numbered _____ amounting to
L_____ details of which are set out in the attached Schedule, initialled on
each page for the purposes of identification.
3. We hold the invoices strictly to your order and agree to supply it, or a
copy (certified by an officer of the relevant Borrower or otherwise as the
Agent may from time to time approve) together with certified copies of
relevant shipping documents in respect
75
of such Receivables, and a copy of our irrevocable instructions to the
account debtor to pay the full invoice amount of the relevant Receivable
(without deduction, withholding or set off) on the Maturity Date to a
Blocked Account, forthwith upon your request.
4. We further confirm that the relevant Receivables referred to in this letter
are readily identifiable from our books.
We confirm that no Default has occurred and is continuing or would result from
the Lender purchasing the Receivables offered, no Availability Limit will be
breached as a result of the Lender purchasing the Receivables offered and all
the representations and warranties in Clause 19 (Representations and Warranties)
of the Facility Agreement which are to be made or repeated as at the date of
this Purchase Request are true and correct.
Yours faithfully
-------------------------------------
for and on behalf of
[Borrower]
SCHEDULE
INVOICE NO ACCOUNT DEBTOR INVOICE DATE
---------- -------------- ------------
76
PART II - FORM OF CASH REQUEST
[On letterhead of relevant Borrower]
Date: ___________
To: Burdale Financial Limited
(as Agent)
00 Xxxxx Xxxx Xxxxxx
XXXXXX X0X 0XX
Attention: Finance Director
Dear Sirs,
FACILITY AGREEMENT DATED [__] DECEMBER 2005 AND MADE BETWEEN SALTON HOLDINGS
LIMITED, SALTON EUROPE LIMITED, THE ORIGINAL BORROWERS, THE ORIGINAL GUARANTORS
AND BURDALE FINANCIAL LIMITED AS AGENT AND SECURITY TRUSTEE (THE "AGENT" AND
"SECURITY TRUSTEE") (THE "FACILITY AGREEMENT").
We refer to the Facility Agreement. Terms defined in the Facility Agreement have
the same meaning when used in this Cash Request.
Pursuant to the terms of the Facility Agreement, we wish you to pay to us the
sum of L_______ ([WRITE AMOUNT IN WORDS ALSO]) as follows:
(a) Utilisation Date: __________
(b) Payment Instructions: Please credit the following account:
Account Name: ________
Bank: ________ Bank plc
Branch: ________ Branch
Account No: ________
Sort Code: __-__-____
We confirm that no Default has occurred and remains outstanding or would result
from the requested Utilisation being made, no Availability Limit would be
breached by the making of the requested Utilisation and that all the
representations and warranties in Clause 19 of the Facility Agreement
(Representations and Warranties) which are to be made or repeated as at the date
of this Cash Request are true and correct.
77
Yours faithfully
-------------------------------------
for and on behalf of [Borrower]
78
PART III - FORM OF L/C REQUEST
[On letterhead of relevant Borrower]
Date: ___________
To: Burdale Financial Limited
(as Agent)
00 Xxxxx Xxxx Xxxxxx
XXXXXX X0X 0XX
Attention: Finance Director
Dear Sirs,
FACILITY AGREEMENT DATED [__] DECEMBER 2005 AND MADE BETWEEN SALTON HOLDINGS
LIMITED, SALTON EUROPE LIMITED, THE ORIGINAL BORROWERS, THE ORIGINAL GUARANTORS
AND BURDALE FINANCIAL LIMITED AS AGENT AND SECURITY TRUSTEE (THE "AGENT" AND
"SECURITY TRUSTEE") (THE "FACILITY AGREEMENT").
We refer to the Facility Agreement. Terms defined in the Facility Agreement have
the same meaning when used in this L/C Request.
We wish to have [state type of L/C] opened for our account under the Facility
Agreement as follows:
(a) Issue Date: ________
(b) Expiry Date: ________
(c) Requested Amount: ________
(d) Beneficiary: ________
(e) Beneficiary's bank account: ________
(f) Concerning: [Reference the agreement under which the
liability arises, describe its nature and
quantify it]
We confirm that no Default has occurred and is continuing or would result from
the requested Utilisation, no Availability Limit will be breached as a result of
the requested Utilisation and all the representations and warranties in Clause
19 (Representations and Warranties) of the Facility Agreement which are to be
made or repeated as at the date of this L/C Request are true and correct.
79
Yours faithfully
-------------------------------------
for and on behalf of [Borrower]
80
PART IV - FORM OF FOREX REQUEST
[On letterhead of relevant Facility Company]
Date: ________
To: Burdale Financial Limited
(as Agent)
00 Xxxxx Xxxx Xxxxxx
XXXXXX X0X 0XX
Attention: Finance Director
Dear Sirs,
FACILITY AGREEMENT DATED [__] DECEMBER 2005 AND MADE BETWEEN SALTON HOLDINGS
LIMITED, SALTON EUROPE LIMITED, THE ORIGINAL BORROWERS, THE ORIGINAL GUARANTORS
AND BURDALE FINANCIAL LIMITED AS AGENT AND SECURITY TRUSTEE (THE "AGENT" AND
"SECURITY TRUSTEE") (THE "FACILITY AGREEMENT").
We refer to the Facility Agreement. Terms defined in the Facility Agreement have
the same meaning when used in this Forex Request.
We wish you to make available a Utilisation pursuant to the Revolving Credit
Facility by executing a contract for the [sale/purchase] of Foreign Currency:
(a) Spot/forward (Date): ________
(b) Foreign Currency: ________
(c) Amount: ________
We confirm that no Default has occurred and is continuing or would result from
the requested Utilisation, no Availability Limit will be breached as a result of
the requested Utilisation and that all the representations and warranties in
Clause 19 (Representations and Warranties) of the Facility Agreement which are
to be made or repeated as at the date of this Forex Request are true and
correct.
Yours faithfully
-------------------------------------
for and on behalf of [Borrower]
81
PART V - FORM OF TERM LOAN REQUEST
[On letterhead of Company/________]
Date: ________
To: Burdale Financial Limited
(as Agent)
00 Xxxxx Xxxx Xxxxxx
XXXXXX X0X 0XX
Attention: Finance Director
Dear Sirs,
FACILITY AGREEMENT DATED [__] DECEMBER 2005 AND MADE BETWEEN SALTON HOLDINGS
LIMITED, SALTON EUROPE LIMITED, THE ORIGINAL BORROWERS, THE ORIGINAL GUARANTORS
AND BURDALE FINANCIAL LIMITED AS AGENT AND SECURITY TRUSTEE (THE "AGENT" AND
"SECURITY TRUSTEE") (THE "FACILITY AGREEMENT").
We refer to the Facility Agreement. Terms defined in the Facility Agreement have
the same meaning when used in this Request.
We wish to draw the [IP Loan] [and the] [Property Loan] as follows:
(a) Amount: IP Loan L________ ([AMOUNT IN WORDS])
Property Loan L________ ([AMOUNT IN WORDS])
(b) Utilisation Date: IP Loan ________
Property Loan ________
(c) Payment Instructions: [In each case, please][Please] credit the following
account:
Account Name: ________
Bank: ________ Bank plc
Branch: ________ Branch
Account No: ________
Sort Code: __-__-____
We confirm that no Default has occurred and remains outstanding or would result
from the requested Utilisation being made, no Availability Limit will be
breached by the making of the requested Utilisation and that all the
representations and warranties in Clause 19 (Representations and Warranties) of
the Facility Agreement which are to be made or repeated as at the date of this
Term Loan Request are true and correct.
82
Yours faithfully
-------------------------------------
for and on behalf of
[the Company/________]
83
SCHEDULE 4
FORM OF ACCESSION LETTER
To: Burdale Financial Limited as Agent
From: [Subsidiary]
and [Company] (acting on behalf of itself and the other Obligors listed
below).
Dated: ________
Dear Sirs
[COMPANY] [LIST OF OTHER OBLIGORS] (TOGETHER THE "OBLIGORS") - [________]
FACILITY AGREEMENT DATED [________] (THE "AGREEMENT")
1. We refer to the Agreement. This is an Accession Letter. Terms defined in
the Agreement have the same meaning in this Accession Letter unless given a
different meaning in this Accession Letter.
2. [Subsidiary] agrees to become an Additional [Borrower]/[Guarantor] and to
be bound by the terms of the Agreement as an Additional
[Borrower]/[Guarantor] pursuant to Clause [24.2 (Additional
Borrowers)]/[Clause 24.3 (Additional Guarantors)] of the Agreement as if it
had been an Original Borrower and/or an Original Guarantor (as the case may
be). [Subsidiary] is a company duly incorporated under the laws of [name of
relevant jurisdiction].
3. [Subsidiary's] administrative details are as follows:
Address: ________
Fax No: ________
Attention: ________
4. [Subsidiary] acknowledges the effect of Clause 7.3(d) (Order of
Application), clause (Application from Blocked Accounts) and Clause 10.3(b)
(Revision of Order of Application) of the Agreement.
5. The Company confirms that no Default has occurred or will occur as a result
of the execution of this Accession Letter.
6. The Company executes this Accession Letter on its own behalf and on behalf
of all the other Obligors.
7. This Accession Letter is governed by English law.
84
EXECUTED as a DEED by [COMPANY] )
On behalf of itself and the other Obligors
referred to above. )
EXECUTED as a DEED by [SUBSIDIARY] )
)
85
EXECUTION PAGES
THE COMPANY
SIGNED for and on behalf of
)
SALTON HOLDINGS LIMITED )..............................
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
THE ORIGINAL BORROWERS
SIGNED for and on behalf of )
SALTON HOLDINGS LIMITED )
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )..............................
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
SIGNED for and on behalf of
SALTON EUROPE LIMITED )
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )..............................
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
86
THE ORIGINAL GUARANTORS
SIGNED for and on behalf of )
SALTON HOLDINGS LIMITED )..............................
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
SIGNED for and on behalf of )
SALTON EUROPE LIMITED )..............................
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )
Fax No: 0000 000 0000 )..............................
Attention: The Company Secretary )
SIGNED for and on behalf of )
PIFCO LIMITED )
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )..............................
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
SIGNED for and on behalf of )
HEADSTART LIMITED )..............................
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
SIGNED for and on behalf of )
OPTEC ELEMENTS LIMITED )
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )..............................
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
SIGNED for and on behalf of )
MOUNTAIN BREEZE LIMITED )
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )..............................
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
SIGNED for and on behalf of )
BEST PRODUCTS LIMITED )
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )..............................
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
87
SIGNED for and on behalf of )
XXXXXXX XXXXX TOWER LIMITED )
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )..............................
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
SIGNED for and on behalf of )
HI-TECH INDUSTRIES LIMITED )
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )..............................
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
SIGNED for and on behalf of )
X.X. XXXXX LIMITED )
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )..............................
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
SIGNED for and on behalf of )
XXXXXX LIMITED )
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )..............................
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
SIGNED for and on behalf of )
PIFCO DISTRIBUTION LIMITED )
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )..............................
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
SIGNED for and on behalf of )
HI-TECH BATTERIES LIMITED )
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )..............................
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
SIGNED for and on behalf of )
ESALTONEUROPE LIMITED )
Address: Xxxxxxxxxx, Xxxxxxxxxx X00 0XX )..............................
Fax No: 0000 000 0000 )
Attention: The Company Secretary )..............................
88
THE ORIGINAL LENDERS
SIGNED for and on behalf of )
BURDALE FINANCIAL LIMITED )..............................
Address: 00 Xxxxx Xxxx Xxxxxx, Xxxxxx X0X 0XX )
Fax No: 000 0000 0000 )..............................
Attention: Mr N Xxxxx, Finance Director )
Commitment : L36,000,000
SIGNED for and on behalf of )
WACHOVIA BANK, NATIONAL ASSOCIATION )
Address:1133 Avenue of the Americas, New York, )
Xxx Xxxx 00000 )
Fax No: x000 000 0000
Attention: Portfolio Manager
Commitment : L25,000,000
THE AGENT
SIGNED for and on behalf of )
BURDALE FINANCIAL LIMITED )
Address: 00 Xxxxx Xxxx Xxxxxx, Xxxxxx X0X 0XX )
Fax No: 000 0000 0000 )
Attention: Mr N Xxxxx, Finance Director )
THE SECURITY TRUSTEE
SIGNED for and on behalf of )
BURDALE FINANCIAL LIMITED )
Address: 00 Xxxxx Xxxx Xxxxxx, Xxxxxx X0X 0XX )
Fax No: 000 0000 0000 )
Attention: Mr N Xxxxx, Finance Director )
89
