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EXHIBIT 10.3
[LOGO]
AGREEMENT
BETWEEN
THE ROYAL BANK OF SCOTLAND PLC
AND
CORGI CLASSICS LIMITED
(in respect of a Revolving Advance Facility of GBP3,000,000)
Registered in Scotland No 90312 Registered Office:
00 Xx Xxxxxx Xxxxxx, Xxxxxxxxx XX0 0XX
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THIS IS AN IMPORTANT DOCUMENT WHICH SETS OUT THE TERMS AND CONDITIONS OF THE
FACILITY. WE RECOMMEND THAT YOU TAKE INDEPENDENT LEGAL ADVICE IF YOU HAVE ANY
DOUBTS REGARDING THE TERMS AND CONDITIONS OUTLINED.
THIS AGREEMENT is made between:-
(1) THE ROYAL BANK OF SCOTLAND PLC; and
(2) CORGI CLASSICS LIMITED
by which it is agreed as follows:-
1 PURPOSE AND DEFINITIONS
1.1 This Agreement sets out the terms and conditions upon and subject
to which the Bank agrees to make available to the Borrower for the
purpose of its business (including working capital purposes of the
Group's businesses in the United Kingdom and the United States of
America) a revolving advance facility of GBP3,000,000 in terms
of which the Bank will make Advances to the Borrower.
1.2 The Bank and the Borrower may, under a separate dealing line, enter
into foreign exchange transactions subject to the standard terms of
the 1992 ISDA Master Agreement. Any such transactions will reduce
the amount of the Facility available under this Agreement for the
duration of the relevant transactions. The extent of the reduction
will be determined by the Bank applying a 10% weighting to the
Sterling equivalent nominal amounts of the transactions (in the
case of transactions not involving the sale of sterling, such
sterling equivalents being calculated at an appropriate valuation
rate (in respect of the currency being sold) as determined by the
Bank at 4.15 p.m. (London Time) the previous Business Day).
1.3 In this Agreement unless the context otherwise requires:-
"ADVANCE" means any utilisation pursuant to Clause 3;
"BANK" means The Royal Bank of Scotland plc and its successors and
assigns;
"BASE ACCOUNTS" means the audited financial statements of the
Borrower and the consolidated audited financial statements of the
Group for the period ended 31 March 2000;
"BORROWER" means Corgi Classics Limited, Company Number 03034370;
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on
which banks are open for general business in London;
"COMMITMENT PERIOD" means the period commencing on the last date on
which this Agreement is signed and ending on 30th June 2005 or such
other date as may be agreed by the Bank pursuant to Clause 2;
"CORGI CLASSICS, INC." means Corgi Classics, Inc., a company
registered in the United States of America and having its address
at Xxxxx 000, 000 Xxxx Xxxx, Xxxxxxx, XX 00000 XXX;
"CORPORATE OFFICE" means the Bank's Leicestershire Corporate
Business Centre at Xx Xxxx'x Xxxxx, Xxxx Xxxxxx, Xxxxxxxxx XX0 0XX
or such other branch/office as the Bank may notify to the Borrower
from time to time;
"EVENT OF DEFAULT" means any of the events described in Clause 12;
"FACILITY" means the revolving advance facility provided pursuant
to this Agreement;
"FACILITY AMOUNT" means GBP3,000,000 or such lesser amount as
may result from the cancellation of any portion of the Facility
pursuant to Clause 2;
"GAAP" means generally accepted accounting practice in the United
Kingdom;
"GROUP" means at any time the Borrower and its Subsidiary
Undertakings at such time;
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"ICON" means Icon Collectibles Limited, Company Number 03542813;
"IIH" means Interval Investment Holdings Ltd, a company registered
in the British Virgin Islands and having its address at PO Box 119,
Palm Xxxxxxxx, Road Town, Tortola, British Virgin Islands;
"LLEDO" means Lledo Collectibles Limited, Company Number 03229017;
"MARGIN" means a rate of 1.75% per annum until 31st March 2002.
Thereafter the rate will be calculated with reference to the
following table, dependent upon the ratio of PBIT to Borrowing
Costs achieved pursuant to Clause 10.1(c). The Margin will be
reviewed annually on receipt of the audited financial statements of
the Borrower pursuant to Clause 9.3(a)(i) and the relative
certificate of compliance produced pursuant to Clause 9.3(a)(v) and
the resultant Margin will be backdated to the beginning of the
Borrower's current financial year and will apply for the whole of
that financial year.
Ratio Margin to apply
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Less than 2.25 : 1 2% (subject to Bank's agreement
being given pursuant to Clause 12.2)
2.25 : 1 (or greater) and less than 4 : 1 1.75%
4 : 1 and above 1.5%
The Bank will notify the Borrower in writing of any changes in the
Margin and if there is any dispute as to the calculation by the
Bank of the Margin to apply, the decision of the Bank will, in the
absence of manifest error, be conclusive and binding on the
Borrower;
"PARENT" means Corgi Classics Holdings Limited, Company Number
03811954;
"QUALIFYING BANK" means any bank which is for the purposes of
Section 349 of the Income and Corporation Taxes Act 1988 within the
charge to United Kingdom corporation tax as regards any interest
payable to it in terms of this Agreement;
"SBLC Facility Agreement" means the facility agreement dated 28
July 1999 amongst (a) Zindart, (b) Xxx Xxxx Holdings Company
Limited and Xxx Xxxx Printing Holdings Limited, (c) ABN Amro Bank
NV and others, (d) ABN Amro Bank NV, Hong Kong Branch (as agent),
(e) ABN Amro Bank NV, Hong Kong Branch (as fronting bank) and (f)
others and the term loan between (i) the Parent and ABN Amro Bank
NV, London Branch, as such agreements may be amended, varied or
replaced;
"STERLING" and the sign "GBP" means the lawful currency of the
United Kingdom;
"SUBSIDIARY" shall have the meaning ascribed to it in Section 736
of the Companies Xxx 0000;
"SUBSIDIARY UNDERTAKING" shall have the meaning ascribed to it in
Section 258 of the Companies Xxx 0000;
"TAXES" means all present and future income and other taxes,
levies, imposts, deductions, charges, fees, compulsory loans or
withholdings of whatsoever nature together with interest thereon
and penalties in respect thereof if any and "Taxation" shall be
construed accordingly;
"TRADE RECEIVABLES" means the sum of up to US$5,400,000 outstanding
at the date hereof and due from the Borrower to Zindart (HK) in
respect of the purchase of products manufactured or sold by Zindart
(HK);
"ZINDART (BERMUDA)" means Zindart Limited, a company registered in
Bermuda and having its address at Xxxxxxxxx Xxxxx, 0 Xxxxxx Xxxxxx,
PO Box HM666, Xxxxxxxx HMCX, Bermuda; and
"ZINDART (HK)" means Zindart Limited, a company registered in Hong
Kong and having its address at Xxxx X&X, 00 X0, Xxxxx 0, Xxx Ping
Industrial Centre, 57 Xxxx Xxx Road, Tai Po, New Territories, Hong
Kong .
1.4 Headings in this Agreement are inserted for convenience only and
shall be ignored in construing this Agreement. Unless the context
otherwise requires, words denoting the singular number only shall
include the plural and vice versa.
2 AVAILABILITY AND CANCELLATION
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2.1 Subject to the other provisions of this Agreement the Bank agrees
to make the Facility available for drawing by the Borrower during
the Commitment Period. If requested by the Borrower, the Bank may
at its sole discretion extend the Commitment Period on terms
acceptable to the Bank and the Borrower.
2.2 The Borrower shall during the Commitment Period by notice to the
Corporate Office be entitled to cancel any unutilised portion of
the Facility. Such notice shall be unconditional and irrevocable.
Any portion cancelled shall not be available for drawing and the
Facility Amount shall be reduced accordingly.
3 UTILISATION
3.1 The Facility shall be drawn in Advances, up to the Facility Amount,
as and when required during the Commitment Period.
3.2 Each request for an Advance shall be made to the Corporate Office
specifying:-
(a) the amount of the Advance which shall be not less
than GBP25,000 or such other amount which is
acceptable to the Bank;
(b) the date on which the Advance is required, which must be
a Business Day; and
(c) the duration of the Advance which shall be 3, 6, 9 or 12
months (or such other duration which is acceptable to the
Bank) subject to the proviso that the duration of any
Advance shall not extend beyond the expiry date of the
Commitment Period.
Each request shall be unconditional and irrevocable and unless
otherwise agreed by the Bank shall require to be received not later
than 11 a.m. on the date on which the Advance is required.
3.3 The amount of each Advance shall be debited to a specifically
designated account ("the Loan Account") in the name of the Borrower
with the Bank and credited to a current account ("the Current
Account") in name of the Borrower with the Bank. The details
thereof shall be confirmed to the Borrower in writing by the Bank.
4 INTEREST
4.1 The Borrower shall pay to the Bank interest at a rate which is
equivalent to the Margin above the Bank's Base Rate. As at 18th
January 2001 this formula produced a rate of 7.75%. The Bank's Base
Rate may vary from time to time.
4.2 For the purpose of calculating interest, the total of the cleared
credit balance on the Current Account shall be netted against the
cleared debit balance on the Loan Account.
4.3 Interest shall be calculated on the net balance calculated pursuant
to Clause 4.2 both before and after demand, court decree or
judgment on a daily basis and on a year of 365 days and shall be
payable quarterly on the penultimate Business Day of March, June,
September and December in each year and on final repayment of the
last Advance. Any interest unpaid when payable shall be compounded.
4.4 Interest shall unless otherwise mutually agreed be debited to a
current account maintained by the Borrower with the Bank.
5 REPAYMENT AND PREPAYMENT
5.1 Each Advance shall be repaid on maturity by payment of the relevant
amount to the Corporate Office.
5.2 The Borrower may prepay any Advance or part thereof (this part to
be an integral multiple of GBP25,000) by giving notice to be
received by the Bank at the Corporate Office not later than 11 a.m.
two Business Days prior to the prepayment being made. This notice
shall be unconditional and irrevocable.
5.3 Any repayment/prepayment made pursuant to Clause 5.1 or 5.2 will be
available for redrawing as an Advance during the Commitment Period
subject to the provisions of Clauses 2 and 3.
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6 INCREASED COSTS
6.1 If by reason of (i) the introduction of or any change in law or its
interpretation or administration and/or (ii) compliance with any
request or requirement of any central bank or other fiscal,
monetary or other authority (including without limitation, a
request or requirement which affects the manner in which the Bank
allocates capital resources to its obligations hereunder):-
(a) the Bank incurs a cost as a result of entering into this
Agreement performing its obligations and/or assuming or
maintaining its commitment hereunder and/or making the
Facility available; or
(b) the Bank is unable to obtain the rate of return on its
overall capital which it would have been able to achieve
but for its entering into this Agreement, performing its
obligations and/or assuming or maintaining its commitment
hereunder and/or making the Facility available; or
(c) there is any increase in the cost to the Bank of funding
or maintaining all or any of the advances comprised in a
class of advances formed by or including the Facility; or
(d) the Bank incurs a cost as a result of its having made the
Facility available or the Bank becomes liable to make any
payment on account of tax or otherwise (other than a tax
imposed on its overall net income) on or calculated by
reference to the amount of the Facility and/or any sum
received or receivable by it hereunder, or any liability
in respect of any such payment is imposed, levied or
assessed against the Bank
then the Borrower shall from time to time within three Business
Days of a demand by the Bank, pay to the Bank amounts sufficient to
indemnify the Bank against, as the case may be, (i) such costs,
(ii) such reduction in the rate of return (or such proportion of
such reduction as is in the opinion of the Bank attributable to its
obligations hereunder), (iii) such increased costs (or such
proportion of such increased costs as is in the opinion of the Bank
attributable to its funding the Facility), or (iv) such cost or
liability (or such proportion thereof as is in the opinion of the
Bank attributable to making the Facility available).
6.2 If the Bank makes a claim pursuant to Clause 6.1 it shall promptly
after it becomes aware of the circumstances giving rise to such
claim deliver to the Borrower a certificate to that effect setting
out in reasonable detail the basis of such claim. This certificate
shall be conclusive in the absence of manifest error.
7 CONDITIONS PRECEDENT
7.1 The Bank shall be under no obligation to make the Facility or any
Advance available until it has received the following and is
satisfied with the same:-
(a) the duplicate of this Agreement signed on behalf of the
Borrower;
(b) a certified copy of the Resolution of the Board of
Directors of the Borrower approving the transaction
contemplated by this Agreement and authorising a
specified person/s to:-
(i) sign this Agreement on behalf of the Borrower;
(ii) negotiate the drawing of any Advances under
this Agreement on behalf of the Borrower;
(iii) sign and/or endorse any documents required
under this Agreement on behalf of the Borrower
together with a specimen of the signature of the person/s
so authorised;
(c) deeds of subordination regulating the facilities granted
to the Borrower by (i) the Bank and (ii) facilities in
aggregate of GBP8,106,000 granted by Zindart (HK) and
the Parent, in form and substance satisfactory to the
Bank;
(d) legal opinions addressed to the Bank, provided by the
Borrower's legal advisers, on Zindart (HK) and Corgi
Classics, Inc. in form and substance satisfactory to the
Bank and the Bank's legal advisers;
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(e) evidence satisfactory to the Bank that Corgi Classics,
Inc. and Zindart (Bermuda) are wholly owned Subsidiaries
of the Borrower;
(f) letters of consent addressed to Zindart (HK) and to the
Parent respectively from (i) ABN Amro Bank NV and the
Instructing Banks (all as defined in the SBLC Facility
Agreement) and (ii) ABN Amro Bank, London, agreeing to
the provision of the Facility to the Borrower and, where
appropriate, to the security granted or to be granted in
terms of Clause 11.1;
(g) a post closing obligation letter from Corgi Classics,
Inc. to the Bank in a form and substance satisfactory to
the Bank.
7.2 The Bank shall furthermore not be obliged to make the Facility or
any Advance available unless the following conditions are
satisfied:-
(a) the security referred to in Clause 11.1(b) has been
completed to the Bank's satisfaction;
(b) no Event of Default (or event which with the giving of
notice, lapse of time or other conditions under this
Agreement may constitute an Event of Default) has
occurred and is continuing or might result from the
drawing of an Advance under the Facility; and
(c) the representations and warranties in Clause 8 are true
with respect to the facts and circumstances then
existing.
8 REPRESENTATIONS AND WARRANTIES
8.1 The Borrower represents and warrants (save as disclosed to and
agreed by the Bank) that:-
STATUS
(a) it and its Subsidiaries are duly incorporated and validly
existing and has power to own their property and assets
and carry on their business as presently conducted;
POWERS AND AUTHORITY
(b) it has power to execute, deliver and perform its
obligations under this Agreement and it and its
Subsidiaries have power to execute, deliver and perform
their obligations under any security provided by it
pursuant to Clause 11, all necessary corporate,
shareholder or other action has been taken to authorise
the execution, delivery and performance of this Agreement
and of any security provided, and no limitation on the
powers of the Borrower or the powers of its Directors
shall be exceeded as a result of the drawing of an
Advance under the Facility;
LEGAL VALIDITY
(c) this Agreement and any security provided by it and its
Subsidiaries pursuant to Clause 11 constitute legal,
valid and binding obligations on it and its Subsidiaries;
NON-CONFLICT
(d) the entry into and performance of the terms and
conditions of this Agreement and of any security provided
by it and its Subsidiaries pursuant to Clause 11 do not
and shall not contravene or conflict with their
respective memoranda and articles of association, any
law, statute, regulation or other instrument binding on
it and its Subsidiaries or any of its/their assets, or
any agreement or document to which they are a party or is
binding on it or its Subsidiaries or any of their assets;
AUTHORISATIONS AND COMPLIANCE
(e) it and its Subsidiaries hold and are in compliance in all
material respects with (i) all necessary licences,
permits, consents or other authorisations required for
conducting their business and (ii) all applicable laws
and regulations or other legal requirements;
BREACH OF OTHER AGREEMENTS
(f) it is not (nor with the giving of notice, lapse of time
or satisfaction of any other condition would be) in
breach of or in default under any agreement or document
to which it is party or by which it or any part of its
assets may be bound which could have a material adverse
effect on the business, assets or financial condition of
the Borrower or on its ability to perform fully its
obligations under this Agreement or under any security
provided pursuant to Clause 11;
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ACCOUNTS
(g) the Base Accounts/its latest audited financial statements
and where appropriate the latest consolidated audited
financial statements of the Group as provided to the Bank
have been prepared in accordance with GAAP and fairly
represent its financial condition and where appropriate
the financial condition of the Group and there has been
no material adverse change in its business or financial
condition or the business or financial condition of the
Group since the date of those financial statements;
LITIGATION
(h) no litigation, arbitration or administrative proceeding
is taking place (including without limitation any action
under any environmental law or regulation), pending or to
the knowledge of its officers threatened against it or
its Subsidiaries or any part of their undertaking, assets
or revenues which, if adversely determined would give
rise to a judgement or enforcement action for an amount
(in any one case) of more than GBP50,000;
ENCUMBRANCES
(i) no charges or other encumbrances in the nature of a
security interest exist on its assets or the assets of
any of its Subsidiaries other than any charges or
encumbrances in favour of the Bank or security rights
arising in the ordinary course of business by operation
of law;
ENVIRONMENT
(j) so far as it is aware, it and its Subsidiaries (i) are in
compliance with all applicable environmental laws,
regulations and practices, (ii) hold and are in
compliance with all necessary licences, permits, consents
or other authorisations essential for the conduct of
their business; and (iii) have not previously conducted
nor are currently conducting their business in any manner
which could form the basis of any environmental claim
against them;
INFORMATION
(k) all written information provided to the Bank by the
Borrower regarding the Group is, as far as it relates to
facts, true and accurate in all material respects and, so
far as it consists of projections, such projections, when
made, were prepared in good faith, after careful
consideration and on the basis of reasonable assumptions
and there is no additional undisclosed information which
is in the possession of the Borrower, had it been
disclosed to the Bank, could have been reasonably
expected to cause the Bank to withdraw its offer of
Facilities to the Borrower; and
NO DEFAULT
(l) no Event of Default has occurred.
REPETITION
8.2 The representations and warranties contained in Clause 8.1, (other
than 8.1(g) in respect of the Base Accounts and 8.1(k) in respect
of information provided to the Bank prior to the date of this
Agreement) shall survive the signing of this Agreement and shall be
deemed repeated on the drawing of each Advance under this
Agreement.
9 UNDERTAKINGS
9.1 The undertakings in this Clause 9 shall continue in effect for so
long as the Agreement remains in force.
USE
9.2 The Borrower shall use the Facility for the purpose specified in
Clause 1.1.
FINANCIAL INFORMATION
9.3 (a) The Borrower shall supply to the Bank:-
(i) as soon as they become available but in any
event within 180 days after the end of its
financial year the audited financial
statements of the Borrower and the
consolidated audited financial statements of
the Group for that year;
(ii) as soon as they become available but in any
event within 30 days after the end of the
accounting period to which they relate, and in
a format acceptable to the Bank, monthly
management accounts of the Borrower and the
consolidated monthly management accounts of
the Group incorporating balance sheet and
profit and loss account, cash flow statement
and aged lists of debtors and creditors;
(iii) promptly all notices or other documents sent
by the Borrower to all or a class of its
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shareholders and/or its creditors;
(iv) promptly such further information in the
possession of the Borrower regarding the
financial condition and operations of the
Borrower and the Group as the Bank may
reasonably request provided that (i) the Bank
will only be entitled to request additional
accounts of the Borrower if the Borrower is in
breach of the financial covenants set out in
Clause 10.1 or the Bank believes the Borrower
may be in breach of such covenants and (ii)
the Borrower will only be requested to pass
information to the Bank which may be subject
to confidentiality agreements if the Bank
satisfies any or all confidentiality requests
set out in such agreements
(v) on each occasion financial statements are
supplied to the Bank pursuant to Clause
9.3(a)(i), a certificate, in a format shown in
the schedule to this Agreement, signed by a
Director/the Secretary of the Borrower
confirming compliance or otherwise with the
financial covenants detailed in Clause 10.1
outlining the financial covenant levels and
including detailed workings.
(b) The Borrower undertakes to ensure that all accounts and
other financial information submitted to the Bank
pursuant to Clause 9.3(a) are prepared consistently and
in accordance with GAAP.
NOTIFICATION OF DEFAULT
9.4 The Borrower shall notify the Bank of any Event of Default
immediately upon becoming aware of its occurrence.
NEGATIVE PLEDGE
9.5 The Borrower shall not, nor shall it permit any of its Subsidiaries
to, create nor permit to subsist any charge, lien or other
encumbrance in the nature of a security interest (except a lien or
other security interest arising by the operation of law in the
ordinary course of business) on the whole or any part of the
present or future assets of the Borrower or its Subsidiaries except
(i) with the prior written consent of the Bank or (ii) any
liability in respect of any purchase price for products
manufactured or sold by Zindart (HK) or any of its Subsidiary
Undertakings or any manufacturer or supplier to the Borrower in the
normal course of business on arm's length commercial terms.
OTHER OBLIGATIONS
9.6 The Borrower shall not, nor shall it permit any of its Subsidiaries
to, enter into any obligations whether by way of borrowing from
another source, leasing commitments, factoring of debts, granting
of guarantees or by any other means (other than as already
disclosed to the Bank prior to the date of this Agreement) except
(i) with the prior written consent of the Bank or (ii) any
liability in respect of any purchase price for products
manufactured or sold by Zindart (HK) or any of its Subsidiary
Undertakings or any manufacturer or supplier to the Group in the
normal course of business on arm's length commercial terms and for
the avoidance of doubt, the Borrower shall not be prevented from
repaying such liabilities as referred to in points (i) and (ii) or
Trade Receivables to Zindart (HK).
MATERIAL CHANGE IN BUSINESS
9.7 The Borrower shall not, nor shall it permit any of its Subsidiaries
to, make or threaten to make any material change in the nature of
its business as presently conducted except with the prior written
consent of the Bank.
DISPOSAL OF ASSETS
9.8 The Borrower shall not, nor shall it permit any of its Subsidiaries
to, sell, transfer, lease (or where a lease is already in
existence, consent to the lease being assigned) or otherwise
dispose of all or a substantial part of the assets of the Borrower
or its Subsidiaries except with the prior written consent of the
Bank provided that, with the specific exception of those assets
detailed in Clause 9.10, disposals of assets (i) not exceeding
GBP50,000 in aggregate in any financial year or (ii) subject to
a floating charge only, made in the ordinary course of business of
the Borrower or the business of its Subsidiaries shall be
permitted.
RESTRICTIONS ON REPAYMENT OF EQUITY/LOAN
9.9 The Borrower shall not without the prior written consent of the
Bank:-
(a) declare or pay or permit the payment of any dividend on
any of its shares; or
(b) pay or permit the payment of any unpaid arrears and
accruals of any dividend in respect of its share
capital; or
(c) make any other distribution of income to any of its
members; or
(d) make any distribution of capital (whether in cash or in
specie) to its members; or
(e) redeem or purchase any of its shares; or
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(f) otherwise reduce its capital; or
(g) without the prior consent of the Bank, repay any
equity/loan funding provided to it by any
person other than the Bank unless and until the Facility
has been repaid in full; or
(h) pay or permit the payment of any interest in respect of
any such loans or any fees, costs, expenses or commission
to the relevant lender.
TRADENAMES
9.10 The Borrower shall procure that all trademarks, tradenames, service
marks, logos, designs and emblems relating to the 'Corgi', 'Lledo'
and 'Icon' businesses shall, throughout the term of the Facility,
remain the sole and exclusive property of the Borrower or a Group
company which has granted appropriate security to the Bank and that
all other intellectual property rights used by the Borrower and the
Group in connection with its/their business shall throughout the
term of the Facility remain either the sole and exclusive property
of the Borrower or a Group company which has granted appropriate
security to the Bank or be used under valid licence agreements.
INSURANCES
9.11 The Borrower shall, and shall procure that each of its Subsidiaries
shall, effect and maintain such insurance over its assets and
business in such manner and to such extent as is reasonable and
customary for a business engaged in the same or a similar activity
and the same or similar localities to the Borrower or its
Subsidiaries subject to the terms of any security provided by the
Borrower or its Subsidiaries.
CURRENT ACCOUNT
9.12 The Borrower shall maintain its current account banking business
with the Bank and with Standard Xxxxxxxxx Xxxx, XXX Xxx 00, Xxxx
Xxxx and Corgi Classics, Inc. shall maintain its current account
banking business with La Salle, 000 Xxxxx Xx Xxxxx Xxxxxx, Xxxxxxx,
XXX.
ENVIRONMENT
9.13 The Borrower shall, and shall procure that each of its Subsidiaries
shall:-
(a) comply with any applicable environmental laws,
regulations or practices and comply with and renew all
licences, permits, consents or other authorisations held
in respect of the Borrower's/its Subsidiaries business;
(b) conduct its business in a manner which cannot form the
basis of an environmental claim against it; and
(c) as soon as it becomes aware of the same, promptly notify
the Bank of any breach of any environmental law,
regulation or practice or any licence, permit, consent or
other authorisation held and remedy at the Borrower's
expense any such breach by use of the best available
techniques not entailing excessive cost.
AUTHORISATIONS AND COMPLIANCE
9.14 The Borrower shall, and shall procure that each of its Subsidiaries
shall:-
(a) comply in all material aspects with all licences,
permits, consents or other authorisations held and with
any applicable laws, regulations or other legal
requirements; and
(b) as soon as it becomes aware of the same, promptly notify
the Bank of any breach of (i) any law, regulation or
other legal requirement and/or (ii) any licence, permit,
consent or other authorisation held and immediately
remedy such breach.
ILLEGALITY
9.15 The Borrower shall on receiving notice from the Bank repay all
Advances outstanding either forthwith or on a future specified date
together with interest accrued to the date of repayment and all
other amounts payable under this Agreement by the Borrower if any
change in or the introduction of any law, regulation, treaty,
official directive or rule of any regulatory authority or
organisation having jurisdiction or any change in the
interpretation or application thereof should render it unlawful or
a breach thereof for the Bank to make the Facility available or to
give effect to its obligations and exercise its rights contemplated
by this Agreement.
POST CLOSING OBLIGATIONS LETTER
9.16 The Borrower shall procure that Corgi Classics, Inc. satisfies its
obligations under the post closing obligations letter, dated of
even date herewith, from Corgi Classics, Inc. to the Bank.
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10 FINANCIAL COVENANTS
COVENANTS
10.1 The Borrower undertakes that, in relation to the financial covenant
in (a) below at each date for compliance specified in Clause 10.3
and in relation to the financial covenants in (b) and (c) below for
each accounting period ending on such date, the financial
position/performance of the Group shall be/have been such that:-
MINIMUM NET TANGIBLE ASSETS
(a) Consolidated Net Tangible Assets are not less than the
amount set out in Column A below at any date for
compliance falling within the period detailed in Column B
below opposite such amount:-
Column A Column B
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GBP9,000,000 date of drawdown of the Facility to 31 March 2003
GBP10,000,000 1 April 2003 and thereafter
Net Cash Flow:Borrowing Costs Paid
(b) the ratio of Consolidated Net Cash Flow to Consolidated
Borrowing Costs Paid shall not be less than 1 : 1
PBIT:Borrowing Costs
(c) the ratio of Consolidated PBIT to Consolidated Borrowing
Costs shall not be less than the ratio set out in Column
A below for any accounting period ending during the
period detailed in Column B below opposite such ratio:-
Column A Column B
-------- --------
2.25 : 1 date of drawdown of the Facility to 31 March 2002
3 : 1 1 April 2002 to 31 March 2003
4 : 1 1 April 2003 and thereafter.
FINANCIAL DEFINITIONS
10.2 For the purposes of Clause 10.1 the following definitions shall
have the meanings shown opposite them:-
"Consolidated Borrowing Costs" means, in relation to any accounting
period of the Group, the aggregate of all interest, commission,
fees, and charges payable by the Group in respect of its
Consolidated Gross Borrowings during such period including without
limitation:-
(i) capitalised interest;
(ii) finance lease charges; and
(iii) dividends on shares issued on the basis that they are or
may become redeemable; but excluding interest payable by
associates and joint ventures;
"Consolidated Borrowing Costs Paid" means, in relation to any
accounting period of the Group, the aggregate of all interest,
commission, fees, and charges paid and due to be paid by the Group
in respect of its Consolidated Gross Borrowings during such period
including without limitation:-
(i) capitalised interest;
(ii) finance lease charges; and
(iii) dividends on shares issued on the basis that they are or
may become redeemable; but excluding interest paid by
associates and joint ventures;
"Consolidated Gross Borrowings" means at any time the aggregate of
all obligations of the Group for the repayment of money, whether
present or future, actual or contingent incurred in respect of:-
(i) money borrowed from all sources;
(ii) any bonds, notes, loan stock, debentures or similar
instruments;
(iii) acceptance credits, bills of exchange or documentary
credits;
(iv) shares issued on the basis that they are or may become
redeemable (at redemption value);
(v) gross obligations under finance leases;
(vi) the factoring of debts;
(vii) guarantees, indemnities or other assurances against
financial loss; and
(viii) amounts raised or obligations incurred in respect of any
other transaction which has the commercial effect of
borrowing.
11
For the avoidance of doubt, any liabilities in relation to trade
debts, including any amounts owing to Zindart (HK) and any of its
Subsidiary Undertakings which arise as a result of the supply of
goods and services to the Group in the normal course of business
and in relation to the Trade Receivables (the "Trade Debt"), shall
be excluded in computing Consolidated Gross Borrowings. However,
any amounts owed to Zindart (HK) and the Parent by the Group other
than the Trade Debt (including the GBP8,106,000 subordinated
loans outstanding at the date of this Agreement) shall be included
in computing Consolidated Gross Borrowings;
"Consolidated Net Cash Flow" means in relation to any accounting
period of the Group, the Group's net cash flow from operating
activities less the aggregate of (i) tax paid and (ii) Dividends
paid;
"Consolidated Net Tangible Assets" means at any time the aggregate
of the amount paid up or credited as paid up on the issued share
capital of the Borrower plus or minus (a) any amount standing to
the credit or debit of the consolidated capital and revenue
reserves of the Group (including any share premium account or
capital redemption reserve) and (b) any credit or debit balance on
the consolidated profit and loss account of the Group (excluding
for the avoidance of doubt any amount attributable to minority
interests), less the aggregate of any amounts attributable to:-
(i) pension fund prepayments (net of related deferred tax
provisions), capitalised goodwill or any other intangible
assets;
(ii) shares issued on the basis that they are or may become
redeemable (at redemption value);
(iii) advance corporation tax recoverable or deferred tax assets;
and
(iv) the upward revaluation of any asset after 31 March 2000
except to the extent that such revaluation is approved in
writing for the purposes of this definition by the Bank;
"Consolidated PBIT" means, in relation to any accounting period of
the Group, the profit/loss of the Group on ordinary activities
before tax and after exceptional items but after ADDING back:-
(i) Consolidated Borrowing Costs (net of capitalised interest
and dividends on redeemable shares);
(ii) amortisation of goodwill and other intangible assets;
(iii) interest payable by associates and joint ventures;
(iv) the Group's share of operating losses arising in associates
and joint ventures; and
(v) the Group's share of exceptional losses arising in
associates and joint ventures;
and after DEDUCTING:-
(vi) the Group's share of operating profits arising in
associates and joint ventures;
(vii) interest receivable by associates and joint ventures;
(viii) the Group's share of exceptional gains arising in
associates and joint ventures;
(ix) interest receivable and other similar income; and
(x) income from fixed asset investments; and
"Dividends" means, in relation to any accounting period of the
Group, all dividends on the Borrower's:-
(i) ordinary share capital; and
(ii) preference share capital (other than redeemable preference
shares).
COMPLIANCE DATES
10.3 (a) The dates for compliance with Clauses 10.1 are :-
(i) each date as at which the financial statements
produced pursuant to Clause 9.3(a)(i) are
prepared;
(ii) each date as at which the management accounts
produced pursuant to Clause 9.3(a)(ii) are
prepared for the financial periods ended 31
March and 30th September each year (commencing
30 September 2001); and
(iii) each date as at which any additional accounts
produced pursuant to Clause 9.3(a)(iv) are
prepared.
CALCULATION
10.4 The calculation of the financial covenants detailed in Clause 10.1
shall:-
(a) be confirmed by the Bank with reference to the
accounts/financial statements/compliance certificates
produced pursuant to Clause 9.3(a). The calculation of
financial covenants detailed in Clause 10.1(b) and (c)
which are undertaken with reference to management
accounts produced in accordance with Clause 9.3(a)(ii)
shall be based on cumulative figures for the 12-month
period ended on each relevant date for compliance;
(b) be in accordance with the accounting principles and
policies applied in connection with the Base Accounts.
12
CONSISTENT APPLICATION OF ACCOUNTING PRINCIPLES
10.5 If any member of the Group (a) changes its accounting policies as
applied in connection with the preparation of the Base Accounts
whether as a result of a change in GAAP or otherwise, and/or (b)
changes its financial year end, it shall immediately notify the
Bank of the change to enable the Bank to determine whether the
change affects the financial covenants in Clause 10.1. The Borrower
and the Bank shall at the Bank's request negotiate in good faith
with a view to agreeing such amendments to the financial covenants
and/or the relevant definitions as set out in Clause 10.2 as may be
necessary to provide the Bank with protection comparable to that
granted as at the date of this Agreement. Any such amendments will
be documented by means of a supplementary agreement between the
Borrower and the Bank.
COMPUTATION
10.6 If there is any dispute as to any computation under this Clause 10
(including any amendment sought pursuant to Clause 10.5) or as to
the interpretation of any of the relevant definitions in Clause
10.2, the decision of the Bank shall, in the absence of manifest
error, be conclusive and binding on the Borrower.
Duration
10.7 The financial covenants set out in this Clause 10 shall remain in
force so long as the Facility is available to the Borrower.
11 SECURITY
11.1 The obligations of the Borrower to the Bank under this Agreement
shall be secured by:-
(a) all existing security, if any, held by the Bank for the
Borrower's liabilities; and
(b) security in the Bank's preferred form as follows:-
(i) a Debenture creating fixed and floating
charges over the Borrower's whole property and
assets;
(ii) an Unlimited Inter-company Guarantee among the
Borrower, Corgi Classics, Inc., Lledo and Icon
supported by:-
(first) a Security Agreement by Corgi
Classics, Inc. creating fixed and
floating charges over its whole
property and assets;
(second) a Debenture by Lledo creating fixed
and floating charges over its whole
property and assets; and
(third) a Debenture by Icon creating fixed
and floating charges over its whole
property and assets;
(iii) a charge(s) in a form satisfactory to the Bank
of sums standing to the credit of all accounts
at La Salle Bank, 000 Xxxxx Xx Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx in the name of Corgi
Classics, Inc.;
(iv) a Letter of Non-reactivation in a form
satisfactory to the Bank in relation to Corgi
Sales Limited, Company Number 3057179, Corgi
Toys Limited, Company Number 3057178, Xxxxxxx
Lowke Limited, Company Number 3228564,
Xxxxxxx-Xxxxx (Railways) Limited, Company
Number 3240766, Blow-ko Limited, Company
Number 3228159, Zindart (Bermuda) and IIH; and
(c) all future security which the Bank may from time to time
hold for the Borrower's liabilities.
11.2 The Bank reserves the right, at any time and from time to time
hereafter at its discretion, to require the Borrower or any Group
company to enter into or procure the entering into of such
additional or replacement security acceptable to the Bank as the
Bank may satisfy.
11.3 For the avoidance of doubt the Borrower acknowledges that all
security held and to be held by the Bank shall unless the security
document expressly states otherwise secure all the liabilities of
the Borrower to the Bank of whatsoever nature.
13
12 EVENTS OF DEFAULT
12.1 In the event that:-
NON PAYMENT
(a) the Borrower fails to repay any Advance and/or interest
thereon on the due date (other than where the Borrower
demonstrates to the satisfaction of the Bank that such
failure is due to an administrative or technical payment
error, in which case the Borrower shall have 3 Business
Days from the due date to make such payment); or
(b) the Borrower fails to pay any other amount payable under
this Agreement within 3 Business Days of its due date; or
MISREPRESENTATION
(c) any representation or warranty made or repeated by the
Borrower in this Agreement is or proves to have been
incorrect in any material respect when made or repeated;
or
BREACH OF OTHER OBLIGATIONS
(d) the Borrower fails to comply with any provision of this
Agreement or the Borrower or any other grantor of
security fails to comply with any provision of the
security provided pursuant to Clause 11 and, where
capable of remedy, such failure is not remedied to the
reasonable satisfaction of the Bank within 10 Business
Days of the Bank giving notice to the Borrower or other
grantor requiring the Borrower or other grantor to remedy
the same; or
CROSS DEFAULT
(e) the Borrower or any of its Subsidiaries defaults in the
performance of any other agreement for borrowed monies so
as to accelerate the due date of repayment thereunder or
such borrowed monies are not repaid in full on the due
date or repayment of any such borrowed monies is due on
demand and is not paid in full forthwith on such demand
being made provided that in the absence of any other
Event of Default, this provision shall not apply to
demand being made in respect of on demand facilities
being made available by the Bank to the Borrower from
time to time; or
INSOLVENCY AND ANALOGOUS PROCEEDINGS
(f) the Borrower or any of its Subsidiaries is unable to pay
its debts within the meaning of Section 123 of the
Insolvency Xxx 0000 or the Borrower or any of its
Subsidiaries otherwise becomes insolvent or suspends
making payments to all or any class of its creditors or
announces an intention to do so; or
(g) any distress, diligence, execution, attachment or other
legal process affects the whole or a material part of the
assets of the Borrower or any of its Subsidiaries and is
not discharged within 21 days; or
(h) an administrative or other receiver or similar officer is
appointed of the whole or any part of the assets of the
Borrower or any of its Subsidiaries or the Borrower or
any of its Subsidiaries requests any person to appoint
such a receiver or similar officer or any other steps are
taken to enforce any charge or other security over any of
the property of the Borrower or any of its Subsidiaries;
or
(i) any order is made or any effective resolution is passed
or a petition (other than a petition which is frivolous
or vexatious or which is withdrawn within 21 days of
presentation for advertisement provided the Bank has been
notified of such petition prior to its advertisement) is
presented or other steps are taken for:-
(i) the winding up, dissolution or liquidation of
the Borrower or any of its Subsidiaries other
than for the purpose of a reconstruction or
amalgamation the terms of which have
previously been approved by the Bank in
writing; or
(ii) the making of an administration order against
the Borrower or any of its Subsidiaries; or
(j) any steps are taken by another creditor to repossess any
goods in the possession of the Borrower
14
or any of its Subsidiaries under any hire purchase,
conditional sale, leasing, retention of title or similar
agreement in relation to an undischarged debt in excess
of GBP50,000; or
CONTROL
(k) control of the Borrower passes without the consent of the
Bank to any person, firm or company acting either
individually or in concert or control of any of its
Subsidiaries passes without the consent of the Bank to
any party outside the Group; or
US BANK ACCOUNT
(l) any steps are taken by another creditor which affect the
Bank's security over Corgi Classics, Inc.'s bank account
at La Salle Bank; or
MATERIAL ADVERSE CHANGE
(m) any event occurs which in the reasonable opinion of the
Bank is likely to have a material adverse effect on the
ability of the Borrower to comply with its obligations
under this Agreement; or
OTHER JURISDICTIONS
(n) any event occurs which, under the applicable law of any
relevant jurisdiction, has an analogous or equivalent
effect to any of the events detailed in this Clause 12.1
then in any such case and at any time thereafter while such event
is continuing the Bank may by written notice to the Borrower cancel
the Facility, terminate the obligations of the Bank under this
Agreement and declare:-
(i) any Advances outstanding together with accrued interest;
and
(ii) all other sums owing under this Agreement
to be immediately due and payable whereupon the same shall become
due and payable.
12.2 Without prejudice to the Bank's rights and remedies upon the
occurrence of an Event of Default as detailed in Clause 12.1, in
the event of a breach of the financial covenant detailed in Clause
10.1(c), the Bank may, at its sole discretion, agree to waive the
default in which case, interest will be charged at the Margin over
the Bank's Base rate applicable at the relevant time.
12.3 Interest and/or commission shall continue to be charged on any
outstanding Advances under this Agreement until all Advances are
repaid and the outstanding interest, commission and other sums due
in terms of this Agreement are paid in full.
13 FEES AND EXPENSES
13.1 The Borrower shall meet all costs, charges and expenses reasonably
incurred (including the fees and expenses of any legal advisers
whether directly employed by the Bank or who provide other services
to the Bank) in connection with:-
(a) the preparation and execution of this Agreement; and
(b) the constitution and discharge of the security detailed
in Clause 11 and any further security granted in favour
of the Bank pursuant to Clause 11.
13.2 The Borrower shall meet all costs, charges and expenses incurred
(including the fees and expenses of any legal advisers whether
directly employed by the Bank or who provide other services to the
Bank) in connection with:-
(a) the enforcement or preservation of the Bank's rights
under this Agreement and the security held by the Bank;
(b) any breach of any environmental law or regulation by the
Borrower or its Subsidiaries; and
(c) the occurrence of any Event of Default.
13.3 The Borrower shall pay to the Bank an arrangement fee of
GBP30,000 on the date which is the earlier of (i) the date on
which the Borrower first utilises the Facility and (ii) the date
which is 5 Business Days after
15
this Agreement is signed on behalf of the Borrower.
13.4 The Borrower shall pay to the Bank a commitment commission
calculated at the rate of 0.5% per annum on that part of the
Facility Amount which remains unutilised from time to time during
the Commitment Period. The commitment commission shall be charged
with effect from 19th January 2001 and on the basis of actual days
elapsed and a year of 365 days. Any sum due in respect of
commitment commission shall be debited to a current account in name
of the Borrower with the Bank quarterly in arrears. For the
purposes of calculating commitment commission any reduction in the
Facility Amount during a quarter will be deemed to take effect from
the end of that quarter.
13.5 The Borrower authorises the Bank to debit any unpaid costs,
charges, fees and expenses incurred pursuant to this Agreement to a
current account in name of the Borrower with the Bank.
14 NOTICES
14.1 Every notice or other communication made under this Agreement shall
unless otherwise stated be in writing (by way of letter, telex or
facsimile transmission) and shall be given:-
(a) in the case of the Borrower to its registered office
marked for the attention of "The Company Secretary";
(b) in the case of the Bank to the Corporate Office.
14.2 Every notice or other communication shall be deemed to have been
received:-
(a) in the case of a letter when delivered personally or two
days after its posting by first class post;
(b) in the case of a telex or facsimile transmission when
despatched.
15 MISCELLANEOUS
15.1 The Borrower may not assign or transfer any of its rights or
obligations under this Agreement.
15.2 The Bank may assign all or any part of its rights or benefits under
this Agreement to a Qualifying Bank without the consent of the
Borrower provided that following any such assignment the Borrower
will have no greater obligation to the assignee than it had to the
Bank under the terms of this Agreement prior to such assignment and
the Borrower will not be liable for any costs and expenses incurred
in relation to any such assignment. The Bank may disclose to a
prospective assignee or to any other person who may propose
entering into contractual relations with the Bank in relation to
this Agreement such information about the Borrower as the Bank
shall consider appropriate.
15.3 No delay or omission on the part of the Bank in exercising any of
its rights powers or privileges under this Agreement shall operate
as a waiver thereof nor shall any single or partial exercise of any
right power or privilege preclude any other or further exercise
thereof or the exercise of any other right power or privilege.
15.4 The provisions of this Agreement will remain in full force and
effect until the later of (a) the expiry date of the Commitment
Period and (b) the date on which all Advances outstanding together
with interest thereon and all other sums outstanding under the
Agreement are repaid in full.
15.5 To the extent that there is any conflict between the terms of this
Agreement and the security referred to in Clause 11, the provisions
of this Agreement shall prevail.
16 LAW
16.1 This Agreement shall be governed by and construed in accordance
with the laws of England.
16
IN WITNESS WHEREOF this Agreement is executed by the duly authorised
representatives of the Bank and the Borrower.
For and on behalf of the Bank
Signature /s/ XXXX XXXXX
......................
Date January 24, 2001
...........................
For and on behalf of the Borrower
Signature /s/ XXX XXXXXX
......................
Date January 24, 2001
...........................
17
SCHEDULE
CERTIFICATE OF COMPLIANCE
To: The Royal Bank of Scotland plc
Leicestershire Corporate Business Centre
Xx Xxxxx Xxxxx
Xxxx Xxxxxx
Xxxxxxxxx
XX0 0XX
Dear Sirs
CORGI CLASSICS LIMITED -(GBP)3,000,000 REVOLVING ADVANCE FACILITY AGREEMENT
DATED [ ] 2001 (THE "FACILITY AGREEMENT")
CERTIFICATE OF COMPLIANCE IN RESPECT OF THE FINANCIAL YEAR ENDED [ ]
The calculations of the tests set out in the financial covenants detailed in
Clause 10.1 are attached and the Borrower hereby confirms that the financial
covenants have been complied with on the Compliance Dates referred to in Clause
10.3 of the Facility Agreement.
Yours faithfully
for and on behalf of
CORGI CLASSICS LIMITED
.........................................
Director/Secretary
18
Extract from the Minutes of a Meeting of the Directors of
CORGI CLASSICS LIMITED (the "Company")
"After due consideration of all the circumstances and on being satisfied that it
is for the benefit of the Company and in the interests of the Company for the
purpose of carrying on its business to enter into a facility agreement (the
"AGREEMENT") in the form now produced in respect of a revolving advance facility
of GBP3,000,000 from The Royal Bank of Scotland plc (the "BANK")
It was resolved:
1. That * be authorised to sign the Agreement on behalf
of the Company; and
2. That * be authorised to negotiate the drawing of any
Advances under the Agreement and to sign and/or endorse any documents
and notices required in connection with the Agreement on behalf of the
Company."
I HEREBY CERTIFY that the foregoing is a true extract from the Minutes of a
Meeting of the Directors of the Company at which (all appropriate interests
having been declared) a quorum entitled to vote was present duly held on the
* day of and that a true copy of the Agreement has been
retained by the Company.
Secretary
* Please complete
