DATED: 29 OCTOBER 2002
XXXXXXXX CASTING UK LIMITED
and others as Facility Companies
and/or Guarantors
and
BURDALE FINANCIAL LIMITED
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SUPPLEMENTAL AGREEMENT
in relation to a Facility Agreement
dated 17 September 2001
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CONTENTS
Clause Page
1. INTERPRETATION..........................................1
2. AMENDMENTS TO FACILITY..................................1
3. REPRESENTATIONS AND WARRANTIES..........................6
4. OBLIGOR CONFIRMATIONS...................................6
5. COUNTERPARTS............................................7
6. FEE.....................................................7
7. GOVERNING LAW AND JURISDICTION..........................7
SCHEDULE 1 The Obligors......................................8
SCHEDULE 2 Conditions Precedent..............................9
SIGNATORIES.................................................10
THIS AGREEMENT is dated 29 October 2002
BETWEEN:
(1) XXXXXXXX CASTING UK LIMITED (Registered in England and Wales No. 3514183)
(the "Company");
(2) THE COMPANIES identified in Part I of Schedule 1 as Facility Companies;
(3) THE COMPANIES identified in Part II of Schedule 1 as Guarantors; and
(4) BURDALE FINANCIAL LIMITED (Registered in England and Wales No. 2656007)
("Burdale").
BACKGROUND
(A) Pursuant to the terms of a facility agreement dated 17 September 2001 (as
amended and supplemented from time to time, the "Facility Agreement")
between Xxxxxxxx Casting UK Limited and others as Facility Companies and/or
Guarantors and Burdale, Burdale has made available a receivables finance
facility and a revolving credit facility to the Facility Companies.
(B) The Obligors (as defined in the Facility Agreement) have requested that
certain amendments be made to the Facility Agreement, which Burdale has
agreed to upon the terms and subject to the conditions set out in this
Supplemental Agreement.
IT IS AGREED:
1. INTERPRETATION
1.1 In this Supplemental Agreement, unless the context requires otherwise:
"Effective Date" means the date on which Burdale confirms to the
Company that it has received all of the items specified in Schedule 2 in a
form and substance satisfactory to it.
"Standard Security" means the standard security dated 17 September
2001 granted by Sheffield Forgemasters Rolls Limited in favour of Burdale
over land and buildings at Xxxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxxxxxxx.
1.2 Capitalised terms defined in the Facility Agreement have the same meaning
when used in this Supplemental Agreement unless the context requires
otherwise.
2. AMENDMENTS TO FACILITY
2.1 On and from the Effective Date, the Facility Agreement shall be amended as
follows:
(a) the following new definitions shall be inserted into Clause 1.1:
(i) ""Consolidated Tangible Net Worth" means the aggregate amount
from time to time paid up or credited as paid up on the share
capital of the Company and the amount standing to the credit of
its consolidated capital and reserves (including any share
premium account or capital redemption reserve, but excluding any
goodwill (whether positive or negative) and/or any intangible
assets) plus or minus the amount
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standing to the credit or debit of the consolidated profit or
loss account of the Company (but excluding any provision for a
deficit in the Company's pension scheme in accordance with FRS17)
all as determined from the most recent consolidated monthly
management accounts of the Company delivered to Burdale pursuant
to Clause 14.1(b).";
(ii) ""EBITDA" means for any period the Company's earnings before
interest, tax, depreciation and amortisation (as defined in
accordance with GAAP and calculated consistently with the
policies and practices of the Company as at today's date) for
such period (but excluding any provision for a deficit in the
Company's pension scheme in accordance with FRS17), calculated on
a consolidated basis as determined from the most recent
consolidated monthly management accounts of the Company delivered
to Burdale pursuant to Clause 14.1(b).";
(iii) ""Net Income" means for any period the Company's profit before
tax (as defined in accordance with GAAP and calculated
consistently with the policies and practices of the Company as at
today's date) less any amount of interest paid during such period
by the Company to Xxxxxxxx Casting Corporation pursuant to the
intercompany indebtedness owed by the Company to Xxxxxxxx Casting
Corporation(but excluding any provision for a deficit in the
Company's pension scheme in accordance with FRS17), calculated on
a consolidated basis as determined from the most recent
consolidated monthly management accounts of the Company delivered
to Burdale pursuant to Clause 14.1(b)."; and
(iv) ""Uncleared Effects" means any cheques which have been paid into
a Blocked Account but which have not yet cleared into available
funds and which Burdale is aware are uncleared either because it
lodged such cheques into such Blocked Account or because of
information available to it from the Barclays Business Master
Service.":
(b) A new Clause 5.9 shall be inserted after the existing Clause 5.8 as
follows:
"5.9 Cash Restriction
The aggregate amount of all Loans and all Outstanding Purchase
Price shall not at any time exceed £10,750,000."
(c) Clause 9.5 shall be deleted and replaced with the following:
"9.5 Application
(a) For the purposes of calculating interest in respect of the
Loans and for calculating any Purchase Commission or
commission in respect of the Forex Transactions, payments or
other funds received by Burdale will be applied (conditional
upon final collection) in satisfaction or reduction of the
relevant Facility Company's liabilities under the Finance
Documents one Business Day following the date of receipt of
funds by Burdale.
(b) For the purposes of calculating the amount of the Loans and
Outstanding Purchase Price available to the Facility
Companies, the Receivables Limit and the Forex Limit such
payments will be
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applied (but, subject as provided below, conditional upon
final collection) in satisfaction or reduction of the
relevant Facility Company's liabilities under the Finance
Documents on the Business Day of receipt by Burdale PROVIDED
THAT Burdale may (in its absolute discretion) include in
such calculation an amount of up to 75% of the daily total
of Uncleared Effects.
(c) For each Utilisation of the Facilities which involves the
application of the proviso to paragraph (b) above, the
relevant Facility Company requesting such Utilisation shall
pay to Burdale a fee of £2,500."
(d) Clause 13.10(b) shall be amended by inserting the following at the end
of the Clause:
"PROVIDED THAT the aggregate of all payments made by or on behalf of
the Obligors (or any of them) shall not exceed £30,000 (or its
equivalent in another currency or currencies) in any month and may
only be made in the event that Burdale is satisfied (acting
reasonably) that such amounts will be used by Xxxxxxxx Casting
Corporation in respect of salaries paid to employees located in the
United States of America";
(c) A new Clause 13.24 shall be inserted as follows:
"13.24 EBITDA
The Company shall procure that EBITDA in respect of the
months set out in column (1) below is not less than the
relevant amount set out in column (2):
(1) (2)
Month Applicable EBITDA
September 2002 £(286,000)
October 2002 £(113,000)
November 2002 £(97,000)
December 2002 £3,000
January 2003 £121,000
February 2003 £140,000
March 2003 £94,000
April 2003 £156,000
May 2003 £112,000
June 2003 £140,000
(d) A new Clause 13.25 shall be inserted as follows:
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"13.25 Net Income
The Company shall procure that Net Income in respect of the
months set out in column (1) below is not less than the relevant
amount set out in column (2):
(1) (2)
Month Applicable Net Income
September 2002 £(456,000)
October 2002 £(247,000)
November 2002 £(292,000)
December 2002 £(154,000)
January 2003 £(26,000)
February 2003 £nil
March 2003 £(61,000)
April 2003 £24,000
May 2003 £(44,000)
June 2003 £(12,000)
(e) A new Clause 13.26 shall be inserted as follows:
"13.26 Consolidated Tangible Net Worth
(a) The Company shall procure that Consolidated Tangible Net Worth is
at all times during the months set out in column (1) below not
less than the relevant amount set out in column (2):
(1) (2)
Month Applicable Consolidated Tangible
Net Worth
September 2002 £(417,000)
October 2002 £(886,000)
November 2002 £(1,410,000)
December 2002 £(1,791,000)
January 2003 £(2,052,000)
February 2003 £(2,290,000)
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March 2003 £(2,569,000)
April 2003 £(2,781,000)
May 2003 £(3,062,000)
June 2003 £(3,401,000)
(b) In the event that the intercompany indebtedness owed to Xxxxxxxx
Casting Corporation and referred to in Clause 13.12(e) is
converted into equity by the allotment of shares in the capital
of the Company then the figures contained in column (2) above
shall be increased by the amount of share capital so allotted;
(g) Clause 14.1(b) shall be deemed amended by:
(i) deleting the reference to "30" in the first line and inserting a
reference to "20"; and
(ii) inserting the following at the end of the Clause:
"together with such calculations as may be necessary to establish
in respect of that month:
(i) EBITDA;
(ii) Net Income; and
(iii) Consolidated Tangible Net Worth;"
(h) Clause 14.3(b) shall be deleted and replaced with the following
Clauses 14.3(b) and 14.3(c) (and the existing Clause 14.3(c) shall be
renumbered 14.3(d) accordingly):
"(b) as soon as practicable and in any event within 15 days of the end
of each month or more frequently as Burdale may reasonably
request, ageings of creditors and Receivables with details of all
dated invoices in a format to be agreed with Burdale (acting
reasonably);
(c) on a weekly basis (within five Business Days of the last Business
Day of the end of each week), full details of all Stock by
category, location and supplier in a format to be agreed with
Burdale (acting reasonably); and"; and
(i) Clause 16.1 shall be amended by inserting the following new sub-clause
(o):
"(o) Fonderie d'Autun SA Guarantee: Demand is made by any person under
any guarantee provided by Sheffield Forgemasters Engineering
Limited in respect of the acquisition of Fonderie d'Autun SA".
(j) Until such time as Burdale may (in its absolute discretion)
determine, any Receivable owed to any Facility Company by Weirton
Steel Corporation shall not be an Ineligible Receivable by reason
only of the application of paragraph (i) of the definition of
"Ineligible Receivables" in Clause 1.1 PROVIDED THAT the
aggregate amount of Receivables owed by Weirton Steel
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Corporation which constitute Eligible Receivables shall not at
any time exceed £300,000.
2.2 On and from the Effective Date, the Facility Agreement shall have effect as
supplemented and amended by this Supplemental Agreement and all references
in the Facility Agreement to "this Agreement" and like terms shall be
construed as a reference to the Facility Agreement as supplemented and
amended by this Supplemental Agreement.
2.3 The parties agree that this Supplemental Agreement is a Finance Document.
3. REPRESENTATIONS AND WARRANTIES
Each Obligor represents and warrants to Burdale that:
(a) it has the power to execute and deliver this Supplemental Agreement
and to enter into and exercise its rights and perform its obligations
under this Supplemental Agreement;
(b) all corporate and other action required to authorise the execution and
delivery by it of this Supplemental Agreement and its performance of
its obligations under this Supplemental Agreement has been duly taken;
(c) all authorisations required or desirable:
(i) to enable it lawfully to enter into, exercise its rights and
comply with its obligations in this Supplemental Agreement; and
(ii) to make this Supplemental Agreement admissable in evidence in its
jurisdiction of incorporation,
have been obtained or effected and are in full force and effect;
(d) under the law of its jurisdiction of incorporation it is not necessary
that this Supplemental Agreement 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 this
Supplemental Agreement or the transactions contemplated by this
Supplemental Agreement;
(e) the obligations expressed to be assumed by it in this Supplemental
Agreement are, subject to any principles of law affecting creditors'
rights generally, legal, valid, binding and enforceable obligations;
(f) the entry into and performance by it of, and the transactions
contemplated by, this Supplemental Agreement do not and will not
conflict with:
(i) any law or regulation applicable to it;
(ii) its constitutional documents; or
(iii) any agreement or instrument binding upon it or any of its assets
in any way which would have a Material Adverse Effect.
4. OBLIGOR CONFIRMATIONS
4.1 Each Guarantor consents to the execution, delivery and performance by the
other
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Obligors of this Supplemental Agreement and each Guarantor confirms that
the guarantee and indemnity given by it in the Facility Agreement remains
in full force and effect and extends to guarantee the obligations of the
Facility Companies to Burdale under the Finance Documents as supplemented
and amended by this Supplemental Agreement.
4.2 In addition (and without limitation) to the consent and confirmation given
by it in Clause 4.1, each Obligor in its capacity as a Chargor (as defined
in the Debenture) under the Debenture further confirms that the Security
Interests created by it in favour of Burdale in the Debenture remain in
full force and effect and are a continuing security for the Secured
Liabilities (as defined in the Debenture) as supplemented and amended by
this Supplemental Agreement.
4.3 In addition (and without limitation) to the consent and confirmation given
by it in Clauses 4.1 and 4.2, Sheffield Forgemasters Rolls Limited in its
capacity as Company under the Standard Security further confirms that the
Security Interests created by it in favour of Burdale in the Standard
Security remain in full force and effect and are a continuing security for
the Secured Liabilities (as defined in the Standard Security) as
supplemented and amended by this Supplemental Agreement.
5. COUNTERPARTS
This Supplemental Agreement may be entered into in any number of
counterparts and by the parties to it on separate counterparts, each of
which when so executed and delivered shall be an original, but all the
counterparts shall together constitute one and the same agreement.
6. FEE
In consideration of Burdale entering into this Supplemental Agreement at
the request of the Company, the Company shall pay to Burdale a fee of
£30,000 which shall be due and payable immediately (and, for the
avoidance of doubt, whether or not the Effective Date occurs).
7. GOVERNING LAW AND JURISDICTION
This Supplemental Agreement shall be governed by English law and the
parties submit to the non-exclusive jurisdiction of the English Courts.
This Supplemental Agreement has been entered into on the date stated at the
beginning of this Supplemental Agreement.
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SCHEDULE 1
The Obligors
Part I - Facility Companies
Name Registration number
(or equivalent if any)
Sheffield Forgemasters Rolls Limited 441372
Sheffield Forgemasters Engineering Limited 1919676
Part II - Guarantors
Name Registration number
(or equivalent if any)
Xxxxxxxx Casting UK Limited 3514183
Sheffield Forgemasters Group Limited 3120721
Sheffield Forgemasters Limited 2245637
Sheffield Forgemasters Rolls Limited 441372
Sheffield Forgemasters Engineering Limited 1919676
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SCHEDULE 2
Conditions Precedent
1. A certified copy of board minutes for each Obligor authorising the
execution and delivery of this Supplemental Agreement.
2. Satisfactory results to company and winding up searches in relation to each
Obligor.
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SIGNATORIES
The Company
XXXXXXXX CASTING UK LIMITED
By: /s/ G.A. Xxxxxxxx
The Facility Companies
SHEFFIELD FORGEMASTERS ROLLS LIMITED
By: /s/ P. Xxxxxxx
XXXXXXXXX FORGEMASTERS ENGINEERING LIMITED
By: /s/ G.A. Xxxxxxxx
The Guarantors
XXXXXXXX CASTING UK LIMITED
By: /s/ G.A. Xxxxxxxx
SHEFFIELD FORGEMASTERS GROUP LIMITED
By: /s/ P. Xxxxxxx
XXXXXXXXX FORGEMASTERS LIMITED
By: /s/ P. Xxxxxxx
XXXXXXXXX FORGEMASTERS ROLLS LIMITED
By: /s/ P. Xxxxxxx
XXXXXXXXX FORGEMASTERS ENGINEERING LIMITED
By: /s/ G.A. Xxxxxxxx
Burdale
BURDALE FINANCIAL LIMITED
By: /s/ X. Xxxxxx
/s/ X. Xxxxx
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