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Exhibit 4.(a)(iii)
G E CAPITAL
COMMERCIAL FINANCE LIMITED
DATE 1ST OCTOBER 1999
FINANCING AGREEMENT
WITH
XXXXX NETWORKS LIMITED
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FINANCING AGREEMENT
(1) GE CAPITAL COMMERCIAL FINANCE LIMITED a company incorporated in England
with official registration number 1,030,032
AND
(2) The Client(s) whose details appear immediately below
Key * Delete as appropriate
CLIENT PARTICULARS - CORPORATE CLIENT(S)
NAME: XXXXX NETWORKS LIMITED
COMPANIES REGISTRY NO: 2011579
PRINCIPAL PLACE OF BUSINESS: WEXHAM SPRINGS, XXXXXXXXX XXXX,
XXXXXX, XXXXXX XX0 0XX
NATURE OF YOUR BUSINESS: COMPUTER NETWORK PRODUCTS
EACH OF WHICH IS SUBJECT TO THE PARTICULARS APPEARING IMMEDIATELY BELOW
The condition numbers referred to in parentheses indicate where, inter alia,
these Particulars are referred to in the Conditions and the clause letters where
such Particulars are referred to in this document.
A THE PARTICULARS
A1 MODULES INCORPORATED IN THIS AGREEMENT:
* Definitions and Interpretations
* Foreign Currency
CONDITIONS INCORPORATED IN THIS AGREEMENT: * Standard Conditions for Invoice
Discounting (Edition A/99)
A2 (a) DATE THIS AGREEMENT IS MADE:
(b) COMMENCEMENT DATE: 1ST OCTOBER 1999
(Condition 2.1)
(c) MINIMUM PERIOD OF THIS AGREEMENT: TWENTY FOUR months from
(Condition 2.1) the Commencement Date
(d) MINIMUM NOTICE PERIOD: THREE MONTHS provided that no notice shall
(Condition 2.1) be given which would expire before 6
months from the Commencement Date
A3 DEBTS TO WHICH THIS AGREEMENT All Debts
APPLIES:
(Clause C and Condition 1.1)
N.B. In paragraph A4 to A14 of these Particulars
(i) the provisions in the column headed UK Debts shall only apply to UK
Debts and the
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provisions in the column (if any) headed Export Debts shall only
apply to Export Debts;
(ii) if we keep the Current Account and the Asset Account in respect of
UK Debts in currencies other than sterling then any sum expressed in
sterling shall be treated as if the words "or its currency
equivalent" were also added.
A4 CURRENT ACCOUNT LIMIT: The aggregate Current Account Limit shall be
(Condition 5.4) $30,000,000
A5 ADVANCE PERCENTAGE: 75%
(Definitions of "Advance" and "Availability")
A6 DEBTOR CONCENTRATION: 20% (30% for The Xxxxxx Micro group of
(Definitions of "Unapproved companies)
Debt" and "Debtor
Concentration")
A7 ADVANCE PERIOD:
(Definitions of"Unapproved 60 days from the invoice due date
Debt" and "Advance Period")
A8 DISCOUNT: 1.25% above Base Rate
(Condition 6.1 )
A9 SERVICE CHARGE: L2,500 per calendar month payable in advance on
the first day of the calendar month
A10 MINIMUM SERVICE CHARGE: N/A
(Condition 6.3)
A11 YOUR PAYMENT AND 90 days with a settlement discount not
SETTLEMENT DISCOUNT TERMS: exceeding 5%.
(Condition 13.1.7)
A12SHORTFALL AMOUNT: N/A
(Condition 9.4)
A13 CHAPS ADMINISTRATION
CHARGE: L25.00 or its currency equivalent
A14 CONDITIONS PRECEDENT TO BE COMPLIED WITH BEFORE WE COMMENCE ADVANCES:
Our making any Advances to you is subject to you fulfilling each of the
conditions set out below (including providing the specified documents in form
and substance satisfactory to us) to our satisfaction. If any such condition has
not been satisfied by 24th October 1999 we shall be entitled to serve notice on
you (the time for compliance with which shall be of the essence) requiring you
to satisfy all such conditions by close of business on such date as we may
specify in such notice, failing which we shall be under no further obligation to
purchase Debts, make Advances to you or otherwise provide any credit facility or
financial accommodation to you.
a) Copies, certified (by one of your directors or your solicitors) as
true, complete and up to date, of:
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i) Certificate of Incorporation for the Client and Xxxxx Logistics
Limited ("MLL");
ii) Memoranda and Articles of Association of the Client and MLL;
iii) Board resolutions of the Client and MLL approving the entering into
of the
Financing Documents to which they are or are intended to be a party
and authorising a named person or persons to sign such documents and
any documents to be delivered pursuant thereto.
b) A copy, certified (by one of your directors or your solicitors) as true,
complete and accurate, of the Sale and Purchase Agreement dated
31 August 1999 entered into by Olicom A/S as seller and Xxxxx Networks NV
as buyer ("the Sale and Purchase Agreement") and each of the ancillary
documents thereto, namely the Escrow Agreement, the IPR Agreement, the
Inventory Agreement, the Patent Licence, the Trade Xxxx Licence, the
Assignment of Patent Applications and the Assignment of Trade Marks.
c) A letter addressed to us from the Client's solicitors, Messrs. Bird &
Bird, confirming in the agreed form:
i) that the written consents of the management board and the
supervisory board of Xxxxx required to authorise Xxxxx to enter
into the Sale and Purchase Agreement and the Ancillary Agreements
have been obtained and that, so far as we are aware but without
having made any enquiry thereinto, no other consents were
required to make the entry into the Sale and Purchase Agreement
and the Ancillary Agreements by Xxxxx legally binding against
Xxxxx;
ii) that all the conditions required to be fulfilled on or before
Completion (as defined in the Sale and Purchase Agreement) as set
out in Part A of schedule 2 of the Sale and Purchase Agreement have
been fulfilled; and
iii) that all material third party consents or permissions required by
Xxxxx to acquire unencumbered title to or, as the case may be, the
right to use the assets intended to be transferred or sold under the
Sale and Purchase Agreement and the Ancillary Agreements to Xxxxx
have been obtained or are in the course of being obtained.
d) A Composite Guarantee and Debenture in our favour in the agreed form duly
executed by the Client and MLL creating certain first ranking fixed
charges over certain assets defined therein and creating first ranking
floating charges over all other assets of such companies.
e) In respect of all indebtedness owing by any of the Client and / or MLL to
Xxxxx Networks NV or other companies party thereto, a subordination
agreement executed by such parties in the agreed form.
f) Satisfactory evidence that Xxxxx Networks NV and its subsidiary
undertakings have unEncumbered cash balances totalling not less than
$35,000,000 in aggregate as at the opening of business on the date of this
Agreement.
g) A copy of the Accountant's Report prepared by Ernst & Young, in relation
to the Sale and Purchase Agreement and ancillary matters.
h) Evidence that all assets of the Client and MLL (including assets acquired
under the Sale and Purchase Agreement) are unEncumbered save for Permitted
Encumbrances.
i) Evidence that all insurances required to be taken out or maintained by the
Client and or MLL under the Guarantee and Debenture referred to in
paragraph d) above have been taken out and are in full force and effect
together with confirmation that our interest has been duly noted on such
policies of insurance.
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j) A letter from Ernst & Young confirming their understanding that Xxxxx
Networks NV and its subsidiaries have reorganised their business such
that:
i) subject to obtaining a Dutch capital tax ruling, Xxxxx.connect B.V. will
become the sole shareholder of Xxxxx Networks (UK) Holdings Limited;
ii) Xxxxx Networks (UK) Holdings Limited is intended to remain the sole
shareholder of the Client;
iii) certain assets, liabilities and contracts which do not relate to the
Token Ring business have or will be transferred out of the Client
and its subsidiaries (as detailed in the Asset Sale Agreement
between the Client and Xxxxx.web Limited dated on or about 1 October
1999 and that the Client and MLL will, following the completion of
the transfer contained in the said Agreement, continue to be able to
access the assets, rights and licences necessary to conduct the
Token Ring business.
A15 SPECIAL CONDITIONS:
(a) During the currency of this Agreement, you will deliver to us the
following:
ITEM PERIOD DUE DATE
Signed audited consolidated Yearly Within 6 months of each financial year end
accounts for Xxxxx Networks NV
Signed audited accounts for each of Yearly Within 6 months of each financial year end
the Client and MLL
Copies of the 6 - K statement for Quarterly Within 10 days of delivery to NASDAQ
Xxxxx Networks NV
Management accounts (including Monthly Within 21 days of each Month end
profit and loss account and balance
sheet) for the Client (to be in a
format Consistent with, and using
accounting principles and policies
consistent with, the Proforma
Report annexed to this Agreement
and marked "A")
Inventory Report for MLL Monthly Within 21 days of each
Month end
Aged Debt Analysis and each Monthly Within 10 Working Days
Reconciliation Report for ID for Month end
those ledgers against which we
have agreed to make Advances
Purchase Ledger Monthly Within 21 days of each Month end
Marketing Support and Training Monthly Within 10 Working Days of each Month end
Invoices +
Retrospective discount + Monthly Within 10 Working Days of each Month end
A report in respect of Contracts Monthly Within 10 Working Days of each Month End
of Sale where services have yet
to be completed (condition 13.1.2) +
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+ We reserve the right to hold special reserves in respect of marketing
support and training, contra accounts and/or retrospective discounts and
Notified Debts in excess of the amount stated in condition 13.1.2 where
the relevant services remain to be completely performed as appropriate.
b) The Monthly returns due date referred to in Condition 16.5 is the 21st day
of the Month immediately following the end of the Month to which the
return relates. For the purposes of this Special Condition A 15, reference
to "Month" refers to your accounting periods of not less than four but not
more than five weeks, and "Monthly" and similar terms shall be construed
accordingly.
c) Upon or promptly following the Commencement Date, we require a letter to
be sent to all debtors who pay by BACS advising them of the change in bank
account details.
d) During the currency of this Agreement, debts reported on the MENA,
International, France, South Africa and Asia sales ledgers shall not be
Notified to us.
e) During the currency of this Agreement, we shall require that signed proofs
of delivery or collection are obtained for each Debt and that these are
held to our order.
f) During the currency of this Agreement, we shall require that the value
of credit notes (excluding those raised in respect of retrospective
discounts and your internal provisions) as a percentage of your
notified turnover does not exceed 12% when measured on a rolling three
Month basis. This covenant will be measured Monthly by us. If this
covenant is breached we may reduce the Advance Percentage by the amount
by which the 12% target is exceeded. (For Example, if value of credit
notes is 14% then Advance Percentage could reduce to 73%).
g) During the currency of this Agreement, we shall require that debt turn
does not exceed 97 days (when measured on a cash collections basis, on a
rolling 3 Month basis, this being the result of dividing the total of your
end of Month debtor balances by the cash collections from or on account of
your debtors for the period and multiplying the result by 30.5 for a
monthly average). This covenant will be measured Monthly by us, and will
be reviewed in conjunction with you on or about 1March 2000 subject to our
discretion to vary the required debt turn following such review.
h) During the currency of this Agreement, the ratio of the Client's Earnings
Before Interest, Tax, Depreciation and Amortisation (EBITDA) net of any
exceptional costs (including redundancy and capitalised deal costs) to
Total Interest and Discount Costs (net of any interest received by you)
shall not be less than:
(a) 1:1 up to and including February 2000; and
(b) 1.5:1 thereafter
when measured on a rolling 3 Months basis. This covenant will be measured
Monthly by us starting in December 1999.
i) (Intentionally left blank.)
j) All legal costs incurred by us in relation to:
(i) the negotiation of all documents setting out or relating to this
Agreement and in respect of our satisfaction with your compliance
with the conditions in these Special Conditions A15 up to L17,500
plus VAT and reasonable disbursements; and
(ii) being satisfied in connection with Special Condition A15(k) below
are for the account of the Client and we are authorised to debit the
same from your current
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account. (We acknowledge that you have received an indicative
quotation for your legal costs under (j) (ii) of $20,500 plus
disbursements and taxes.)
k) In order to make accounts receivable currently owned by Xxxxx Networks Inc
eligible for inclusion within this facility as your Debts, we will require
the following, in each case in form and substance satisfactory to us:
i) A copy, certified as true, complete and up to date, of an agreement
providing for the sale by Xxxxx Networks, Inc of all of its accounts
receivable to you for fair consideration and on arm's length terms;
ii) Evidence that all Encumbrances over such accounts receivable have
been discharged or released prior to their sale to you;
iii) An opinion of your US Counsel confirming, in relation to the sale
referred to in (i) above, that such sale constitutes a true sale and
recites the circumstances in which such sale could be set aside as a
fraudulent conveyance (or similar) under applicable US laws; and
iv) Such other documents and evidence as we may reasonably require in
order to satisfy ourselves as to your unEncumbered ownership of such
accounts receivable.
l) There will be an arrangement fee of L50,000 payable at the commencement of
this Agreement in consideration for the payment of which we agree not to
charge any arrangement fee for any proposed inventory facility we may
grant to MLL in future and we acknowledge that we have already been paid
L20,000 of this L50,000 by the Client.
m) You will pay to us a monthly non-utilisation fee calculated in accordance
with the following formula:
Fee = x x (Average Availability minus Average Utilisation)
-
100
where,
"Average Availability" means the average Availability during the month in
respect of which the calculation is made; and
"Average Utilisation" means the average debit balance on your Current Account
during the month in respect of which the calculation is made; and
"x" equals 0.5 for the first 12 months commencing on ls'October 1999, and 0.25
thereafter.
The monthly non-utilisation fee will be debited by us monthly on or about the
first Working Day of the next month. (For example, the fee for October 1999 will
be debited on or about the first Working Day of November 1999.)
n) Where any provision of any of the Financing Documents provides for you to
reimburse or indemnify us in respect of any costs or expenses, we shall
not seek nor shall we be entitled to claim reimbursement or indemnity from
you in respect thereof under any other provision of any of the Financing
Documents.
PARTIES TO THE AGREEMENT: INTERPRETATION
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B. In this Agreement references in this Agreement to "us" shall be construed
as referring to GE Capital Commercial Finance Limited and its immediate or
derivative successors and assigns, including persons to whom this Agreement
may be novated from time to time.
PURPOSE
C. This is an Agreement for us to provide you with financing services,
including the sale by you and purchase by us of those of your Debts
referred to in the Particulars.
INCORPORATION OF CONDITIONS
D. This Agreement incorporates the Conditions, referred to in the
Particulars, which have been supplied by us to you. Reference to "the
Agreement" or"this Agreement" here and in the Conditions shall include
this document, the Conditions, and any additional Modules referred to in
the Particulars. This Agreement includes all terms agreed between us to
the exclusion of any representations or statements made by or on our
behalf whether orally or in writing prior to the date of this Agreement.
Certain words used have special meanings. They start with capital letters
and their meanings are explained in the Definitions and Interpretation
Module.
POWER TO ACT IN YOUR NAME
E.1 So that we may, if necessary, perfect our title to any Debt or its
Associated Rights or exercise our rights under any Financing Documents or
otherwise and to secure that you carry out your obligations to us and that
Debtors carry out their obligations to us you irrevocably appoint us and
every officer of ours (and any person to whom we transfer or novate this
Agreement or any of the Financing Documents) at any time jointly and
severally to be your attorneys. This power of attorney shall not expire
until all monies and obligations due to us under any Financing Documents
(from all parties not just you) have been paid and discharged and we are
under no further obligation to the Client under any of the Financing
Documents. This will enable us (but shall not oblige us) for the aforesaid
purposes in our discretion and without notice to you to:
(i) execute or sign any deeds or documents (including assignments);
(ii) obtain payment of Debts;
(iii) complete, deal with, negotiate or endorse Remittances;
(iv) institute, conduct, compromise or defend any legal proceedings;
(v) settle your indebtedness to us or to Debtors; (vi) perform such other
lawful acts, as we in our absolute discretion, may consider reasonably
necessary or expedient.
E.2 Any attorney appointed above may in turn appoint and remove any substitute
attorney or agent for you for the matters set out above.
E.3 You will ratify anything lawfully done by any attorney, substitute
attorney or agent under the powers set out above.
UNDERSTANDING
You acknowledge:
(i) having received, read, understood and agreed to all the terms of the
Agreement fincluding our Standard Conditions); and
(ii) having had the opportunity before signing it to take independent legal
advice as to the rights and obligations of each party under this
Agreement.
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DECLARATION
Each Director signing this Agreement hereby authorises us to hold on computer
all information obtained by us about that Director (which, without limitation,
shall include the Director's name and address, any guarantees, indemnities,
warranties, assurances or other security given to us by such Director and
details of any credit history or credit scoring concerning such Director; to
disclose that information and any compliance or failure to comply with any such
guarantees, indemnities, warranties, assurances or other security by that
Director to persons in such other countries (including the United States of
America) in which we or any affiliated company carry on business (including any
credit reference agencies so that it can be used to make lending and/or
financing decisions, trace debtors and occasionally to prevent fraud).
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This Agreement has been duly executed and delivered as a deed by you and us as
set out below.
SIGNED as a Deed by
GE CAPITAL COMMERCIAL
FINANCE LIMITED
acting by
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Xxxx Xxxxxxxxx (a Director) /s/ Xxxx Xxxxxxxxx
----------------------- ------------------
and by
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Xxx Xxxxxxx /s/ Xxx Xxxxxxx
----------------------- ---------------
(Director)
CORPORATE CLIENT
----------------
SIGNED as a Deed by
XXXXX NETWORKS LIMITED
acting by
---------
Xxxxxxxxxxx Xxxxxxx (a Director) /s/ Xxxxxxxxxxx Xxxxxxx
----------------------- -----------------------
and by
-----------------------
Xxxxxxx Xxxxxx /s/ Xxxxxxx Xxxxxx
----------------------- ------------------
(Director)
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