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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________
FORM 8-K
______________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
AUGUST 25, 1998
------------------------------
Date of report (Date of earliest
event reported)
WILSHIRE REAL ESTATE INVESTMENT TRUST INC.
(Exact name of registrant as specified in its charter)
MARYLAND 0-23911 52-2081138
- --------------- ---------------------- ----------------------
(State or other Commission File Number (I.R.S. Employer
jurisdiction of Identification Number)
incorporation)
1776 SW MADISON STREET, PORTLAND, OR 97205
-----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(503) 223-5600
Registrant's telephone number, including area code
Not Applicable
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Page 1
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 25, 1998, Wilshire Real Estate Investment Trust Inc. (the
"Company") made a loan for approximately $49.7 million (at exchange rates in
effect on August 24, 1998) secured by a second lien on five luxury hotels in
London, England, including the Savoy Hotel, the Connaught Hotel and Claridge's
Hotel. Such loan has a five-year maturity and may be prepaid at any time. The
loan was made in pounds sterling and bears interest at a LIBOR based rate.
The Company has hedged its exposure to pounds sterling on the $49.7 million
through an exchange rate swap with an international investment bank. The
borrower is an unaffiliated third party. The source of the funds used to make
the loan was a $37.2 million repurchase facility from Merrill Lynch Mortgage
Capital Inc. and available cash.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) As of the date of this Form 8-K, the applicable financial statements
relating to the underlying collateral securing the loan is not available,
but will be filed by the Company on Form 8-K as soon as practicable.
(b) As of the date of this Form 8-K, the applicable pro forma financial
information is not available, but will be filed by the Company on Form 8-K
as soon as practicable.
(c) Exhibits.
10.1 Junior Loan Facility, between Blackstone Hotel Acquisitions Company
and lists parties, dated April 30, 1998.
10.2 Intercreditor Agreement, between Blackstone Hotel Acquisitions
Company and listed parties, dated April 30, 1998.
10.3 Debenture, between Blackstone Hotel Acquisitions Company and Bankers
Trust Company, dated April 7, 1998.
10.4 Novation Certificate, between Bankers Trust Company and listed banks
and financial institutions, dated August 18, 1998.
-2-
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WILSHIRE REAL ESTATE
INVESTMENT TRUST INC.
Date: September 29, 1998 By: /s/ Chris Tassos
----------------------------
Chris Tassos
Executive Vice President and
Chief Financial Officer
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EXHIBIT 10.1
CONFORMED COPY
(incorporating amendments to 17th August, 1998)
DATED 30th April, 1998
(Pounds)100,600,000
JUNIOR MORTGAGE LOAN FACILITY
FOR
BLACKSTONE HOTEL ACQUISITIONS COMPANY
ARRANGED BY
MERRILL LYNCH INTERNATIONAL
WITH
BANKERS TRUST COMPANY
as Junior Agent and Security Trustee
THIS JUNIOR FACILITY AGREEMENT IS ENTERED INTO WITH THE
BENEFIT OF AND SUBJECT TO THE TERMS OF AN
INTERCREDITOR AGREEMENT DATED 30TH APRIL, 1998 (AS AMENDED)
ALLEN & OVERY
London
OSO:32170.2
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INDEX
CLAUSE PAGE
1. Interpretation.................................................... 1
2. The Facility...................................................... 15
3. Purpose........................................................... 16
4. Conditions Precedent.............................................. 16
5. Advances.......................................................... 17
6. Repayment......................................................... 18
7. Prepayment and Cancellation....................................... 18
8. Interest.......................................................... 20
9. Payments.......................................................... 21
10. Taxes............................................................. 22
11. Market Disruption................................................. 23
12. Increased Costs................................................... 24
13. Illegality........................................................ 25
14. Mitigation........................................................ 26
15. Guarantee......................................................... 26
16. Representations and Warranties.................................... 28
17. Undertakings...................................................... 32
18. Financial and Minimum Value Covenants............................. 42
19. Default........................................................... 43
20. The Junior Agent, The Security Trustee, The Arranger and The Joint
Arrangers......................................................... 46
21. Fees.............................................................. 50
22. Expenses.......................................................... 51
23. Stamp Duties...................................................... 51
24. Indemnities....................................................... 51
25. Evidence and Calculations......................................... 52
26. Amendments and Waivers............................................ 52
27. Changes to the Parties............................................ 53
28. Disclosure of Information......................................... 55
29. Set-Off........................................................... 55
30. Pro Rata Sharing.................................................. 56
31. Severability...................................................... 56
32. Counterparts...................................................... 57
33. Notices........................................................... 57
34. Jurisdiction...................................................... 57
35. Governing Law..................................................... 58
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SCHEDULES
1. Various Parties................................................... 59
2. Conditions Precedent Documents.................................... 60
Part I - To be delivered before the First Advance............ 60
Part II - To be delivered before the First Advance........... 62
Part III - To be delivered by a Subsidiary Guarantor......... 63
3. Calculation of the MLA Cost....................................... 65
4. Form of Request................................................... 67
5. Forms of Accession Documents...................................... 68
Part I - Novation Certificate................................ 68
Part II - Subsidiary Guarantor Accession Agreement........... 69
6. Initial Properties................................................ 70
Part I - Initial Properties.................................. 70
Part II - Connaught Apartments............................... 71
7. Form of Compliance Certificate.................................... 72
8. Existing Financing Agreements..................................... 74
SIGNATORIES............................................................ 75
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THIS AGREEMENT is dated 30th April, 1998 between:
(1) BLACKSTONE HOTEL ACQUISITIONS COMPANY (Registered No. 3543429) (the
"BORROWER");
(2) MERRILL LYNCH INTERNATIONAL as arranger and underwriter (in this capacity
the "ARRANGER");
(3) THE FINANCIAL INSTITUTIONS listed in Part I of Schedule 1 as Joint
Arrangers;
(4) THE FINANCIAL INSTITUTIONS listed in Part II of Schedule 1 as banks (the
"JUNIOR LENDERS");
(5) BANKERS TRUST COMPANY as agent for the Junior Lenders (in this capacity the
"JUNIOR AGENT"); and
(6) BANKERS TRUST COMPANY as security trustee for the Junior Finance Parties
(in this capacity the "SECURITY TRUSTEE").
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"ACCOUNT BANK"
means such London branch of such bank as the Junior Agent may from time to
time approve, such approval not to be withheld if such bank has already
been appointed Account Bank pursuant to the Senior Facility Agreement.
"ACCOUNTING PRINCIPLES"
means accounting principles and practices generally accepted in the United
Kingdom (or as the case may be, in the jurisdiction of incorporation of the
company concerned), as applicable to the relevant company or (where
applicable) group of companies.
"ACQUISITION"
means the acquisition by a member of the Group (except from another member
of the Group), whether by one transaction or a series of transactions, of
any interest in:
(a) any real property; or
(b) all or a majority of the share capital or equivalent (or any business
or undertaking or assets constituting a separate line of business or
undertaking), of any company or other person.
"ADVANCE"
means an advance made by the Junior Lenders under the Facility.
"AFFILIATE"
means, in relation to a body corporate, any of its holding companies (as
defined in Section 736 of the Companies Act 1985) or Subsidiaries or any
other Subsidiary of any of its holding companies.
"ANNIVERSARY"
means an anniversary of the date of this Agreement.
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2
"BLACKSTONE"
means Blackstone Real Estate Advisors L.P.
"BLACKSTONE AFFILIATE"
means an entity controlling, controlled by or under common control with
Blackstone.
"BORROWINGS"
shall, in relation to any member of the Group, be construed as a reference
to any indebtedness of such member of the Group for or in respect of:
(a) moneys borrowed;
(b) amounts raised by acceptance under any acceptance credit facility;
(c) amounts raised pursuant to any note purchase facility or the issue of
bonds, notes, debentures, loan stock or similar instruments;
(d) amounts raised pursuant to any issue of shares of such member of the
Group which are expressed to be redeemable at any time before the
Final Maturity Date;
(e) the amount of any liability in respect of leases or hire purchase
contracts which would, in accordance with Accounting Principles, be
treated as finance or capital leases;
(f) the amount of any liability in respect of any purchase price for
assets or services the payment of which is deferred for a period in
excess of 180 days but excluding:
(i) any such liability incurred in the ordinary course of the
business of such member of the Group and not primarily as a means
of raising finance; and
(ii) any such liability related to construction works or the
acquisition of fixed assets which will become payable only upon
fulfilment of conditions related to or comprising completion or
commissioning of certain stages in such works or in the supply
programme or the granting of any planning permission for such
works or fixed assets and which has not yet become payable by
reason of the non-fulfilment of any such condition;
(g) any guarantee, indemnity, letter of credit or other legally binding
instrument to assure the payment of, or against loss in respect of
non-payment of, any of the indebtedness specified in this definition
and any counter-indemnity in respect of any thereof; and
(h) amounts raised under any other transaction (including any forward sale
or purchase agreement) having the commercial effect of a borrowing.
"BUSINESS DAY"
means a day (other than a Saturday or a Sunday) on which banks are open for
business in London.
"CERTAIN FUNDS PERIOD"
means the period beginning on the date the Offers are announced and ending
on:
(a) if the condition specified in section 429(1) Companies Act 1985 for
giving a notice under that sub-section in respect of any shares in the
Target (a "SECTION 429 NOTICE") is not satisfied at the end of the
period of four months beginning with the date of the Offers, the
expiry of such four month period; or, as the case may be,
(b) if such condition is satisfied within such four month period, the
first Business Day after the expiry of six weeks from the date on
which the last section 429 notice is given,
but in any event on cancellation in full of all the Commitments.
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"CERTIFICATE OF TITLE"
means a certificate of title addressed to the Junior Agent on behalf of
itself and the Junior Lenders in agreed form in relation to an Initial
Property delivered by Herbert Smith.
"CLEAN-UP PERIOD"
means the period beginning on the date of this Agreement and ending on the
date which is three months after the Unconditional Date.
"CODE"
means the City Code on Takeovers and Mergers.
"COMMITMENT"
means, in respect of a Junior Lender, the amount in Sterling set opposite
the name of that Junior Lender in Schedule 1 or as determined in accordance
with the provisions of Clause 27.2 (Transfers by Junior Lenders), in each
case to the extent not cancelled or reduced under this Agreement.
"COMMITMENT PERIOD"
means the period commencing on the date of this Agreement and ending on 7th
April, 1999.
"CONNAUGHT APARTMENTS"
means the properties described in Part II of Schedule 6.
"DANGEROUS SUBSTANCES"
means any radioactive emissions and any natural or artificial substance
(whether in solid or liquid form or in the form of gas or vapour and
whether alone or in combination with any other substance) capable of
causing harm to humans or any other living organism or damaging the
environment or public health or welfare, including any controlled, special,
hazardous, toxic, radioactive or dangerous waste.
"DEBENTURE"
means each debenture executed or to be executed by the Borrower and/or the
Guarantors in favour of, amongst others, the Security Trustee for the
benefit of, amongst others, the Junior Finance Parties substantially in the
agreed form, including, without limitation, the debenture dated 7th April,
1998 executed by the Borrower in favour of the Security Trustee, as amended
and restated pursuant to the Deed of Amendment and Restatement.
"DEBT SERVICE COVERAGE RATIO"
means, for any Ratio Period, the ratio of Net Operating Income to Total
Debt Service.
"DEEDS OF AMENDMENT AND RESTATEMENT"
means the deeds of amendment and restatement dated 30th April, 1998 and
17th August, 1998 between, among others, the Borrower, the Arranger,
Merrill Lynch International, Bankers Trust Company and the Banks.
"DEFAULT"
means an Event of Default or an event which, with the giving of notice or
expiry of any cure period, in each case as specified in Clause 19.1 (Events
of Default), would constitute an Event of Default.
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4
"DORMANT SUBSIDIARY"
means a member of the Group which:
(a) is dormant within the meaning of Section 250(3) of the Companies Act,
1985;
(b) has no legal or beneficial interest in any Initial Property; and
(c) has gross assets with a book value of less than (Pounds)50,000.
"DRAWDOWN DATE"
means the date an Advance is made.
"ENVIRONMENT"
means all gases, air, water vapour, controlled waters (including ground and
surface water), soil (surface and sub-surface), flora and fauna and all
other natural resources.
"ENVIRONMENTAL CLAIMS"
means any material claim by any person:
(a) in respect of losses or liabilities suffered or incurred by that
person as a result of or in connection with any violation of
Environmental Laws by any member of the Group; or
(b) that arises as a result of environmental contamination and that could
give rise to any remedy or penalty (whether interim or final) that may
be enforced or assessed by private or public legal action or
administrative order or proceedings.
"ENVIRONMENTAL LAWS"
means all laws and regulations concerning pollution, the Environment or
Dangerous Substances, if and to the extent such laws and regulations affect
any property in the Portfolio.
"EVENT OF DEFAULT"
means an event specified as such in Clause 19.1 (Events of Default).
"EXISTING FINANCING AGREEMENTS"
means the agreements evidencing Financial Indebtedness of the Target Group
listed in Schedule 8.
"FACILITY"
means the facility made available by the Junior Lenders to the Borrower
under Clause 2.1 (Facility).
"FACILITY OFFICE"
means the office(s) notified by a Junior Lender to the Junior Agent:
(a) on or before the date it becomes a Junior Lender; or
(b) by not less than five Business Days' notice,
as the office(s) through which it will perform all or any of its
obligations under this Agreement.
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5
"FEE LETTERS"
means:
(a) the letters dated 7th April, 1998, 30th April, 1998 and 10th June,
1998 between the Arranger and the Borrower;
(b) the letter dated on or about 30th April, 1998 between the Junior Agent
and the Borrower; and
(c) the letter dated on or about 30th April, 1998 between the Security
Trustee and the Borrower,
setting out the amount of various fees referred to in Clause 21 (Fees).
"FF&E ACCOUNT"
means the account with that designation opened in the name of the Borrower
with the Account Bank on or before the Unconditional Date.
"FINAL MATURITY DATE"
means 30th June, 2003.
"FINANCE DOCUMENT"
means each of:
(a) this Agreement;
(b) the Intercreditor Agreement;
(c) each Fee Letter;
(d) each Debenture;
(e) each Junior Share Mortgage;
(f) each Hedging Agreement;
(g) the Novation Certificates;
(h) the Subsidiary Guarantor Accession Agreements; and
(i) any other document designated as such in writing by the Junior Agent
and the Borrower.
"FINANCIAL INDEBTEDNESS"
means any indebtedness of any person for or in respect of:
(a) Borrowings;
(b) documentary credit facilities; and
(c) interest rate swaps, currency swaps, forward foreign exchange
transactions, cap, floor, collar or option transactions or any other
treasury transactions or any combination thereof or any other
transaction entered into in connection with the management of risks
related to Financial Indebtedness (and the amount of the Financial
Indebtedness in relation to any such transaction with a particular
counterparty that is subject to an effective netting arrangement shall
be the net amount payable by the relevant person under all such
transactions with that counterparty and in any case shall be
calculated by reference to the mark-to-market valuation of each such
transaction at the relevant time and on a net basis).
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6
"GROUP"
means the Borrower and its Subsidiaries.
"GROUP ACCOUNTS"
means the latest annual audited consolidated accounts of the Group or, for
the financial year ending 31st December, 1997, the Original Target Group
Accounts.
"GUARANTOR"
means each Subsidiary Guarantor.
"HEDGING AGREEMENTS"
has the meaning given to it in Clause 17.9 (Hedging Agreements).
"HEDGING BANKS"
means the Banks and other financial institutions party to the Hedging
Agreements.
"HOLDCO"
means the ultimate holding company of the Borrower, being, at the date of
this Agreement, BRE/Satellite L.L.C. (a Delaware limited liability
corporation) (which is to be reconstituted as BRE/Satellite L.P. (a
Delaware limited partnership)).
"HOTEL PROJECT"
means the acquisition (other than from a member of the Group), development
and/or operation of any interest in a hotel property or the share capital
(or equivalent) or hotel business or undertaking or assets constituting a
substantial part of the hotel business or undertaking, of any company or
other person with a hotel or similar business.
"Hotel Project Borrowing"
means any Financial Indebtedness to finance a Hotel Project:
(a) which is incurred by a Hotel Project Vehicle and whose liabilities in
respect of the Financial Indebtedness concerned are not directly or
indirectly the subject of a guarantee, indemnity or any other form of
assurance, undertaking, support or Security Interest from any member
of the Group other than a Security Interest over the shares of such
Hotel Project Vehicle which does not give the holder of such Security
Interest any claim or rights against the member of the Group granting
such Security Interest other than the right to enforce such Security
Interest against such shares; and
(b) in respect of which the person or persons making such Financial
Indebtedness available to the Hotel Project Vehicle have no recourse
whatsoever to any member of the Group for the repayment of or payment
of any sum relating to such Borrowing other than recourse to the Hotel
Project Vehicle.
"HOTEL PROJECT VEHICLE"
means a member of the Group:
(a) which does not have any interest in an Initial Property;
(b) which is a single purpose company formed for the purposes of, and
whose assets are substantially comprised of, a Hotel Project; and
(c) in respect of which no other member of the Group (other than another
Hotel Project Vehicle) has directly or indirectly given a guarantee,
indemnity or other form of assurance, undertaking or support.
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7
"INFORMATION PACKAGE"
means any written information prepared for and provided by or on behalf of
the Borrower to the Junior Agent specifically for distribution to financial
institutions in connection with the syndication of this Agreement
including:
(a) the information memorandum to be prepared in connection with primary
syndication of the Facility;
(b) a business plan of the Group consequent upon the Target Acquisition
(including projections);
(c) the Initial Valuation; and
(d) an environmental report in relation to the Target Group prepared by
Alexander Gibbs and dated on or about 9th April, 1998; and
(e) a legal due diligence report in relation to the Target Group by
Herbert Smith dated on or about 7th April, 1998.
"INITIAL PROPERTY"
means each of the properties or groups of properties described in Part I of
Schedule 6, being The Savoy Hotel, Claridge's, The Berkeley Hotel, The
Connaught Hotel, The Lygon Arms and Simpson's-in-the-Strand.
"INITIAL VALUATION"
means a Valuation dated on or about 6th April, 1998 of each of the Initial
Properties by HVS International.
"INTERCREDITOR AGREEMENT"
means the intercreditor agreement dated 30th April, 1998 and amended and
restated on 17th August, 1998 between, amongst others, the Borrower, the
Agent and the Security Trustee in relation to, among other things, the
ranking of the Facility, the facility under the Senior Facility Agreement
and the Subordinated Investor Debt.
"INTEREST PAYABLE"
has the meaning given to it in Clause 18.1 (Financial definitions).
"INTEREST PERIOD"
in respect of an Advance, has the meaning given to it in Clause 8.1
(Selection of Interest Periods for Advances), or, in respect of overdue
amounts, Clause 8.4 (Default interest).
"INVESTORS"
means the members at the relevant time of Holdco.
"JOINT ARRANGER"
means:
(a) each financial institution listed in Part I of Schedule 1; and
(b) each Junior Lender designated as a Joint Arranger in a Novation
Certificate with the prior written approval of the Arranger.
"JUNIOR FINANCE PARTY"
means each of the Arranger, each Joint Arranger, each Junior Lender, the
Junior Agent and the Security Trustee.
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8
"JUNIOR SHARE MORTGAGES"
means each share mortgage given pursuant to Clause 17.22(e)(iii).
"LIBOR"
means, in relation to any period in respect of which an interest rate is to
be determined in relation to any Advance or unpaid sum:
(i) the rate quoted on the Telerate Screen Page 3750 for Sterling
deposits, for such period at or about 11.00 am on the relevant
Drawdown Date or, as the case may be, on the first day of the relevant
Interest Period; or
(ii) if no such rate is quoted, the arithmetic mean (rounded, if necessary,
up to the nearest four decimal places) of the rates (as notified to
the Junior Agent) at which each of the Reference Junior Lenders was
offering to prime banks in the London interbank market deposits in
Sterling for such period at or about 11.00 am on the relevant Drawdown
Date or, as the case may be, on the first day of the relevant Interest
Period.
"MAJORITY JUNIOR LENDERS"
means, at any time, Junior Lenders:
(a) whose participations in the Advances then outstanding aggregate 66 2/3
per cent. or more of all the Advances then outstanding; or
(b) if there are no Advances then outstanding, whose Commitments then
aggregate 66 2/3 per cent. or more of the Total Commitments; or
(c) if there are no Advances then outstanding and the Total Commitments
have been reduced to nil, whose Commitments aggregated 66 2/3 per
cent. or more of the Total Commitments immediately before the
reduction.
"MANDATORY COST"
means, in relation to an Advance, the cost imputed to the Junior Lenders of
compliance with the mandatory cost requirements of the Bank of England
during an Interest Period, expressed as a rate per annum and determined in
accordance with Schedule 3.
"MARGIN"
means 4.00 per cent. per annum.
"MINIMUM DISPOSAL AMOUNT"
means, in relation to an Initial Property, the amount set out opposite that
Initial Property in the column headed "Minimum Disposal Amount" in Part I
of Schedule 6.
"MINIMUM PREPAYMENT AMOUNT"
means, in relation to an Initial Property, the amount set out opposite that
Initial Property in the column headed "Minimum Prepayment Amount" in Part I
of Schedule 6.
"NET OPERATING INCOME"
has the meaning given to it in Clause 18.1 (Financial definitions).
"NOVATION CERTIFICATE"
has the meaning given to it in Clause 27.3 (Procedure for novations).
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9
"OBLIGOR"
means the Borrower, each Subsidiary Guarantor and (from the date it becomes
a Subsidiary of the Borrower) each company that is required by Clause 27.4
(Subsidiary Guarantors) to become a Subsidiary Guarantor.
"OFFER"
means each offer for each class of the Shares made or to be made by or on
behalf of the Borrower on the terms and conditions referred to in the Press
Release and "OFFERS" means both such offers.
"OFFER TERMINATION DATE"
means, in relation to an Offer, the earliest date (as notified by the
Borrower to the Junior Agent in writing) on which all of the following have
occurred:
(a) all payments in respect of acceptances of that Offer have been made in
full;
(b) no further such acceptances are possible; and
(c) all procedures pursuant to sections 428 - 430(F) of the Companies Act
1985 which are capable of being implemented have been completed and
all payments pursuant thereto to shareholders in the Target have been
made in full.
"ORIGINAL TARGET GROUP ACCOUNTS"
means the audited consolidated annual accounts of the Target Group for the
period ending 31st December, 1997.
"PANEL"
means the Panel on Takeovers and Mergers.
"PARTY"
means a party to this Agreement.
"PERMITTED SECURITY INTEREST"
means:
(a) any Security Interest created or subsisting pursuant to the Finance
Documents, the Senior Share Mortgages or, if after the Senior
Discharge Date, with the prior written consent of the Majority Junior
Lenders;
(b) any lien or right of set off arising by operation of law or contained
in a contract for the purchase of goods or services by a member of the
Group in the ordinary course of the business of the member of the
Group creating the same;
(c) any Security Interest over any assets acquired by a member of the
Group after the date of this Agreement (or over the assets of any
person that is acquired by and becomes a member of the Group after the
date of this Agreement) but not, in either case, any member of the
Target Group, provided that:
(i) any such Security Interest was in existence before such
acquisition and was not created in contemplation of such
acquisition; and
(ii) the maximum principal, nominal or capital amount secured by such
Security Interest does not exceed, at any time after such
acquisition, the maximum amount agreed to be secured thereby (in
accordance with the terms, as in force at the date of the
acquisition of the asset or person concerned, on which such
Security Interest was created) as at the date of such
acquisition;
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10
(d) any Security Interest arising or created in connection with any cash
management or netting arrangements made between any banks or other
financial institutions and any member or members of the Group;
(e) any Security Interest created prior to the date of this Agreement
whose existence has been disclosed in writing to the Junior Agent
prior to execution of this Agreement PROVIDED THAT the maximum
principal, nominal or capital amount agreed to be secured by such
Security Interest (as so disclosed) is not increased after the date of
this Agreement;
(f) any Security Interest (a "SUBSTITUTE SECURITY INTEREST") which
replaces any other Permitted Security Interest and which secures a
maximum principal, capital or nominal amount not exceeding the maximum
principal, capital or nominal amount agreed to be secured (in
accordance with the terms as in force at the date of replacement) by
such Permitted Security Interest at the time it is replaced together
with any interest accruing on such amounts from the date such
Substitute Security Interest is created or arises and any fees or
expenses incurred in relation thereto PROVIDED THAT the Permitted
Security Interest to be replaced is released and all amounts secured
thereby paid or otherwise discharged in full at or prior to the time
of such Substitute Security Interest being created or arising;
(g) any Security Interest arising out of title retention provisions in a
supplier's standard conditions of supply for goods acquired in the
ordinary course of business;
(h) any Security Interest over assets of or, on the basis described in
paragraph (a) of the definition of Hotel Project Borrowing, shares in
a Hotel Project Vehicle securing Hotel Project Borrowings;
(i) the Savoy Debenture Stock Mortgages, but only to the extent that they
secure the Savoy Debenture Stock on the same terms, and in amounts not
exceeding, the terms and amounts respectively of the relevant Savoy
Debenture Stock on the date of this Agreement; and
(j) any other Security Interest over assets other than the Initial
Properties securing Financial Indebtedness the aggregate amount of
which does not exceed (Pounds)250,000 or its equivalent at any
relevant time in any other currency or currencies.
"PORTFOLIO"
means the Initial Properties and all other hotels or similar property owned
by the Group.
"PRESS RELEASE"
means the press release referred to in Part II of Schedule 2 made by or on
behalf of the Borrower on or about 7th April, 1998 announcing an intention
to make the Offers.
"QUALIFYING BANK"
means, at any time, a bank or financial institution which is at that time:
(a) a bank for the purposes of section 840A of the Income and Corporation
Taxes Act 1988 which, at the time when interest to which it is
beneficially entitled is paid under this Agreement, is within the
charge to corporation tax as regards all interest received by it under
this Agreement; or
(b) (i) resident (as such term is defined in the appropriate double
taxation treaty) in a country with which the United Kingdom has an
appropriate double tax treaty giving residents of that country
complete exemption from United Kingdom Taxation on interest including,
for the avoidance of doubt, complete exemption from the imposition of
any withholding or deduction for or on account of United Kingdom
Taxation on qualifying interest and (ii) which does not carry on
business in the United Kingdom through a permanent establishment with
which the indebtedness under this Agreement in respect of which the
interest is paid is effectively connected and (iii) which can secure
relief from United Kingdom Taxation in respect of interest to be paid
to it under this Agreement pursuant to such treaty and is not
prevented from securing such relief by reason of circumstances
<PAGE>
11
affecting or relating to the Borrower (a "TREATY LENDER"); for this
purpose "DOUBLE TAXATION TREATY" means any convention or agreement
between the government of the United Kingdom and any other government
for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income and capital gains; or
(c) a building society within the meaning of the Building Societies Act
1986, provided that for the year of assessment in which the interest
is payable, the regulations under Section 477A(1) of the Income and
Corporation Taxes Act 1988 apply.
"RATIO PERIOD"
means each of:
(a) the period beginning on the first Drawdown Date and ending on 31st
December, 1998; and
(b) thereafter, each period of 12 months (or such shorter period as begins
on the first Drawdown Date) ending on the last day of each financial
quarter of the Group.
"REFERENCE BANKS"
means, subject to Clause 27.5 (Reference Banks), the principal London
offices of Bankers Trust Company, Barclays Bank PLC and National
Westminster Bank Plc.
"REQUEST"
means a request made by a Borrower to utilise the Facility, substantially
in the form of Schedule 4.
"REQUESTED AMOUNT"
means the amount of the Advance requested in a Request.
"REQUIRED EQUITY AMOUNT"
means (Pounds)200,000,000 less:
(a) the principal amount of Subordinated Loan Notes of the kind described
in paragraph (a) of the definition of Subordinated Loan Notes to be
issued to shareholders in the Target on or about the Unconditional
Date (as certified to the Junior Agent on or before the Unconditional
Date by a director of the Borrower); and
(b) 35 per cent. of the amount by which the aggregate consideration
payable by the Borrower under the Offers for all the Shares (assuming
full acceptance and exercise in full of all the options for which the
exercise price (if any) is less than the relevant offer price) is
below (Pounds)520,000,000.
"RESTRICTED PERSON"
means:
(a) any Investor, Holdco and any other shareholder of the Borrower; or
(b) any Affiliate of an Investor, Holdco or any other shareholder of the
Borrower or any partnership in which any Investor, Holdco or any other
shareholder of the Borrower or any of their respective Affiliates is a
partner (either directly or through any intermediate partnerships or
any other person).
"RESTRICTED PURCHASE"
means any payment (whether in cash, property, securities or otherwise) on
account of the purchase, redemption, reduction or other acquisition or
retirement of any of the share capital of any member of the Group not held
by another member of the Group.
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12
"SAVOY DEBENTURE STOCK"
means the debenture stock constituted by the Savoy Debenture Stock Trust
Deeds.
"SAVOY DEBENTURE STOCK MORTGAGES"
means the mortgages over the properties known as the Savoy Hotel and the
Savoy Theatre constituted by the Savoy Debenture Stock Trust Deeds.
"SAVOY DEBENTURE STOCK RESERVE ACCOUNT"
means the account with that designation opened in the name of the Borrower
with the Account Bank on or before the Unconditional Date or any account
opened in the name of the Target or the Savoy Theatre Limited as
contemplated by Clause 17.24 (Accounts).
"SAVOY DEBENTURE STOCK TRUST DEEDS"
means the trust deeds referred to in paragraphs 1 and 2 of Schedule 8.
"SECURITY INTEREST"
means any mortgage, pledge, lien, charge, assignment for the purpose of
providing security, hypothecation or other security interest or arrangement
having the effect of conferring security.
"SENIOR DISCHARGE DATE"
has the meaning given to it in the Intercreditor Agreement.
"SENIOR FACILITY AGREEMENT"
means the (Pounds)275,000,000 senior mortgage loan facility agreement dated
7th April, 1998 between, amongst others, the Borrower as borrower, the
Arranger as arranger and the Banks, as amended and restated pursuant to the
Deeds of Amendment and Restatement.
"SENIOR SHARE MORTGAGES"
has the meaning given to it in the Senior Facility Agreement.
"SHARES"
means all the issued shares of each class in the capital of the Target
(including any shares of the Target issued while either Offer remains open
for acceptance).
"STERLING" or "(Pounds)"
means the lawful currency for the time being of the United Kingdom.
"SUBORDINATED INVESTOR DEBT"
has the meaning given to it in the Intercreditor Agreement.
"SUBORDINATED LOAN NOTES"
means loan notes which are issued by the Borrower to persons accepting an
Offer:
(a) (i) the terms of which provide that no repayment, prepayment or
payment of principal, interest or other amounts in respect of
such loan notes may be made while any amount is, or may become,
outstanding under the Finance Documents; and
(ii) in respect of which no guarantee, indemnity or any other form of
support has been given other than on terms that the provider of
the guarantee, indemnity or other support has no right of
subrogation or other recourse to any member of the
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13
Group in respect of payments made or liabilities incurred under
the guarantee, indemnity or other support; or
(b) with respect to which the Borrower has deposited in a blocked special
purpose account funds sufficient to discharge in full the obligations
under such loan notes and the recourse of the noteholders is solely to
that account.
"SUBSIDIARY"
means:
(a) a subsidiary within the meaning of Section 736 of the Companies Act
1985 as amended by Section 144 of the Companies Act 1989; and
(b) with respect to the preparation of the financial information specified
in Clause 17.2 (Financial information) and the calculation of the
financial covenants in Clause 18 (Financial and Minimum Value
Covenants), a subsidiary undertaking within the meaning of Section 21
of the Companies Act 1989.
"SUBSIDIARY GUARANTOR"
means a Subsidiary of the Borrower which becomes a Subsidiary Guarantor in
accordance with Clause 27.4 (Subsidiary Guarantors).
"SUBSIDIARY GUARANTOR ACCESSION AGREEMENT"
means a deed substantially in the form of Part II of Schedule 5 with such
amendments, as the Junior Agent (acting reasonably) may approve or require.
"TARGET"
means The Savoy Hotel, PLC.
"TARGET ACQUISITION"
means acquisition of the Shares pursuant to the Offers.
"TARGET GROUP"
means the Target and its Subsidiaries.
"TAX CHANGE"
means, in relation to any Junior Lender, the introduction of, suspension,
withdrawal or cancellation of, or changing, or changing the official
interpretation, administration or application of, any law, tax treaty or
regulation having the force of law or any published practice or published
concession of any relevant taxing or fiscal authority in any jurisdiction
with which that Junior Lender has a connection and which affects the Junior
Lender's participation in the Facility occurring after the date of this
Agreement.
"TAXES"
means all income and other taxes and levies, imposts, duties, charges,
deductions and withholdings in the nature of or on account of tax together
with interest thereon and penalties and fees with respect thereto, if any,
and any payments made on or in respect thereof, and "TAX" and "TAXATION"
shall be construed accordingly.
"TAX ON OVERALL NET INCOME"
of a person shall be construed as a reference to Tax (other than Tax
deducted or withheld from any payment) imposed on that person by any
jurisdiction on:
(a) the net income, profits or gains of that person worldwide; or
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14
(b) such of its income, profits or gains as arise in, or relate to, the
jurisdiction in which it is resident or in which its principal office
(and/or its Facility Office) is located.
"TOTAL COMMITMENTS"
means the aggregate for the time being of the Commitments (being
(Pounds)100,600,000 at the date of this Agreement).
"TOTAL DEBT SERVICE"
has the meaning given to it in Clause 18.1 (Financial definitions).
"UNCONDITIONAL DATE"
means the date upon which both Offers have become or have been declared
unconditional in all respects.
"VALUATION"
means the Initial Valuation and, subsequently, an existing use valuation of
an Initial Property by a Valuer addressed to the Junior Finance Parties and
delivered to the Junior Agent on the basis of a letter of instruction
substantially in agreed form from the Junior Agent to the Valuer, in
accordance with Clause 17.10 (Valuations).
"VALUE"
means at any time, in relation to an Initial Property, the value of that
property determined in accordance with the latest Valuation available at
that time.
"VALUER"
means HVS International or such other firm of chartered surveyors as the
Borrower, the Agent and the Junior Agent (acting on the instructions of the
Majority Junior Lenders) agree in writing.
1.2 CONSTRUCTION
(a) In this Agreement, unless the contrary intention appears, a reference to:
(i) documents being in the "AGREED FORM" means documents (i) in a form
previously agreed in writing by or on behalf of the Junior Agent and
the Borrower, or (ii) in a form substantially as set out in any
Schedule to any Finance Document, or (iii) (if not falling within
(i) or (ii) above) in form and substance satisfactory to the Junior
Agent (acting on the instructions of the Majority Junior Lenders);
(ii) "ASSETS" includes properties, revenues and rights of every
description;
"INDEBTEDNESS" shall be construed so as to include any obligation
(whether incurred as principal or as surety) for the payment or
repayment of money, whether present or future, actual or contingent;
an "AUTHORISATION" includes an authorisation, consent, approval,
resolution, licence, exemption, filing and registration;
a "MONTH" is a reference to a period starting on one day in a
calendar month and ending on the numerically corresponding day in
the next calendar month, except that, if there is no numerically
corresponding day in the month in which that period ends, that
period shall end on the last day in that calendar month;
a "REGULATION" includes any regulation, rule, official directive,
request or guideline (whether or not having the force of law) of any
governmental or supranational body, agency, department or
regulatory, self-regulatory or other authority or organisation;
(iii) a provision of law is a reference to that provision as amended or
re-enacted;
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15
(iv) a Clause or a Schedule is a reference to a clause of or a schedule
to this Agreement;
(v) a person includes its successors and assigns;
(vi) a Finance Document or another document is a reference to that
Finance Document or other document as amended, novated or
supplemented; and
(vii) a time of day is a reference to London time.
(b) Unless the contrary intention appears or such term is defined herein, a
term used in the Senior Facility Agreement, any other Finance Document or
in any notice given under or in connection with any Finance Document has
the same meaning in this Agreement as in the Senior Facility Agreement,
that Finance Document or that notice.
(c) The terms "NET OPERATING INCOME", "TOTAL DEBT SERVICE" and "INTEREST" shall
be calculated on a consolidated basis and in accordance with the Accounting
Principles as at the date of this Agreement.
(d) An entity (the "CONTROLLED ENTITY") is "CONTROLLED" by another entity (the
"CONTROLLER") where the Controller (whether by ownership of share capital
or equivalent rights, the possession of voting power or by contract) has
the power to appoint and/or remove the majority of the governing body of
the Controlled Entity or otherwise controls or has the power to control the
affairs and policies generally of the controlled entity; and "CONTROL" and
"CONTROLLING" shall be construed accordingly.
(e) The index to and the headings in this Agreement are for convenience only
and are to be ignored in construing this Agreement.
(f) Words used in the Finance Documents importing the singular shall include
the plural and vice versa.
(g) No waiver of an Event of Default under the Senior Facility Agreement shall
be or be deemed to be a waiver of any Event of Default under this
Agreement.
1.3 INTERCREDITOR AGREEMENT
This Agreement is entered into with the benefit of, and subject to, the
terms of the Intercreditor Agreement. To the extent that any provision of
this Agreement is inconsistent with the provisions of the Intercreditor
Agreement, the provisions of the Intercreditor Agreement shall prevail.
2. THE FACILITY
2.1 FACILITY
The Junior Lenders grant to the Borrower a committed Sterling term loan
facility, under which the Junior Lenders shall, when requested by the
Borrower, make Sterling Advances to the Borrower, subject to the terms of
this Agreement. Each Junior Lender will participate in the Facility by
providing Advances through its Facility Office.
2.2 OVERALL FACILITY LIMIT
The aggregate amount of all outstanding Advances shall not at any time
exceed the Total Commitments at that time and no Junior Lender is obliged
to make an Advance if the amount of that Advance would when aggregated with
the amount of each other Advance made by that Junior Lender then
outstanding cause its Commitment to be exceeded.
2.3 NUMBER OF REQUESTS AND ADVANCES
The Borrower may not serve a Request for an Advance if this would result in
more than 5 Advances outstanding in aggregate at any one time.
<PAGE>
16
2.4 NATURE OF A JUNIOR FINANCE PARTY'S RIGHTS AND OBLIGATIONS
(a) The obligations of a Junior Finance Party under the Finance Documents are
several. Failure of a Junior Finance Party to carry out those obligations
does not relieve any other Party of its obligations under the Finance
Documents. No Junior Finance Party is responsible for the obligations of
any other Junior Finance Party under the Finance Documents.
(b) The rights of a Junior Finance Party under the Finance Documents are
divided rights. A Junior Finance Party may, except as otherwise stated in
the Finance Documents, separately enforce those rights.
2.5 CHANGE OF CURRENCY
(a) If more than one currency or currency unit are at the same time recognised
by the central bank of any country as the lawful currency of that country,
then:
(i) any reference in the Finance Documents to, and any obligations arising
under the Finance Documents in, the currency of that country shall be
translated into, or paid in, the currency or currency unit of that
country designated by the Junior Agent; and
(ii) any translation from one currency or currency unit to another shall be
at the official rate of exchange recognised by the central bank for
the conversion of that currency or currency unit into the other,
rounded up or down by the Junior Agent acting reasonably and in
accordance with any law or regulation concerning the translation.
(b) If a change in any currency of a country occurs, this Agreement will be
amended to the extent the Junior Agent specifies (acting reasonably and
after consultation with the Borrower) to be necessary to reflect the change
in currency and to put the Junior Lenders in the same position, so far as
possible, that they would have been in if no change in currency had
occurred.
3. PURPOSE
(a) Each Advance will be applied in or towards:
(i) financing the acquisition of those of the Shares to be acquired by
the Borrower pursuant to the Offers;
(ii) financing fees and expenses incurred by the Borrower in relation to
the Offers;
(iii) refinancing Financial Indebtedness under the Existing Financing
Agreements; and
(iv) providing cash collateral as contemplated by paragraph (b) of the
definition of Subordinated Loan Notes.
(b) Without affecting the obligations of the Borrower in any way, no Junior
Finance Party is bound to monitor or verify the application of the proceeds
of any Advance.
4. CONDITIONS PRECEDENT
4.1 DOCUMENTARY CONDITIONS PRECEDENT
The obligations of each Junior Finance Party to the Borrower under this
Agreement are subject to the condition precedent that the Junior Agent has
notified the Borrower and the Junior Lenders that it has received all of
the documents set out in Part I of Schedule 2 in form and substance
satisfactory to it. The Junior Agent will promptly notify the Borrower
upon such receipt.
4.2 FURTHER CONDITIONS PRECEDENT
The obligations of any Junior Finance Party to the Borrower to make any
Advance are subject to the further conditions precedent specified in Part
II of Schedule 2.
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17
4.3 INITIAL INVESTMENT AND SENIOR LOAN
The obligations of each Junior Finance Party to the Borrower are also
subject to the conditions precedent that the Junior Agent has received
evidence in form and substance satisfactory to it that:
(a) the Investors have directly or through Holdco subscribed in cash for
equity share capital in the Borrower and/or the Borrower has received
the proceeds of Subordinated Investor Debt, in an aggregate amount of
not less than the Required Equity Amount;
(b) the Required Equity Amount has been or will be applied by the Borrower
in or towards the purposes specified in Clause 3(a) (Purpose); and
(c) the Junior Agent is satisfied that an amount which bears the same
proportion to the Total Commitments under and as defined in the Senior
Facility Agreement as the requested Advance bears to the Total
Commitments under this Agreement has been requested to be drawndown
under the Senior Facility Agreement at the same time as the requested
Advance.
4.4 FURTHER GENERAL CONDITIONS PRECEDENT
Subject to Clause 4.5 (Certain Funds Period), the obligations of each
Junior Lender to participate in an Advance are subject to the further
conditions precedent that on the date of the Request for the Advance and on
its Drawdown Date:
(a) the representations and warranties in Clause 16 (Representations and
Warranties) to be repeated on those dates are correct and will be
correct immediately after the disbursement of the Advance;
(b) no Default is outstanding or would result from the disbursement of the
Advance; and
(c) the Advance would not cause Clause 2.2 (Overall facility limit) to be
contravened.
4.5 CERTAIN FUNDS PERIOD
To assist the Borrower in meeting its obligations to ensure it has
sufficient funds available to fulfil its obligations under the Offers, the
Junior Lenders agree that the conditions precedent to drawdown specified in
Clauses 4.4(a) and (b) (Further general conditions precedent) will be
applicable to any Advance during the Certain Funds Period only to the
extent that a Default is outstanding or would result from the Advance:
(a) under Clause 19.2 (Non-payment), 19.6 (Invalidity), 19.8 (Insolvency),
19.9 (Liquidation and administration), 19.11 (Repudiation) or 19.14(a)
(Change of control);
(b) under Clause 19.3 (Misrepresentation), by reason of a
misrepresentation under Clause 16.2 (Status), 16.3 (Powers and
authority), 16.4 (Legal validity), 16.5 (a) or (b) (Non-conflict),
16.7 (Authorisations) or 16.19 (The Borrower); or
(c) by reason of a breach of Clause 17.8 (Pari passu ranking), 17.13
(Negative pledge), 17.15 (Restriction on Disposals), 17.18
(Restriction on borrowing), 17.19 (Acquisitions), 17.20 (Dividend and
other restrictions), 17.21 (The Offers) or 17.26 (Savoy Debenture
Stock),
but this Clause 4.5 does not affect the rights of the Junior Finance
Parties in respect of any other Default upon expiry of the Certain Funds
Period.
5. ADVANCES
5.1 RECEIPT OF REQUESTS
The Borrower may borrow Advances if the Junior Agent receives, not later
than 11.00 am on the Business Day before the proposed Drawdown Date, a duly
completed Request.
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18
5.2 COMPLETION OF REQUESTS
A Request for an Advance will not be regarded as having been duly completed
unless:
(a) the Drawdown Date is a Business Day falling during the Commitment
Period;
(b) the Requested Amount is a minimum of (Pounds)1,000,000 or the balance
of the undrawn Total Commitments; and
(c) the payment instructions comply with Clause 9 (Payments).
5.3 AMOUNT OF EACH JUNIOR LENDER'S ADVANCE
Subject to Clause 2.2 (Overall facility limit), the amount of a Junior
Lender's Advance under this Clause 5 will be the proportion of the
Requested Amount which its Commitment bears to the Total Commitments, in
each case on the date of receipt of the relevant Request.
5.4 NOTIFICATION OF THE JUNIOR LENDERS
The Junior Agent shall, not later than 5.00 pm on the Business Day before
each Drawdown Date, notify each Junior Lender of the details of the
requested Advances under this Clause 5 and the amount of its Advance.
5.5 PAYMENT OF PROCEEDS
Subject to the terms of this Agreement, each Junior Lender shall make its
Advance available to the Junior Agent for the Borrower on the relevant
Drawdown Date.
6. REPAYMENT
The Borrower shall repay the Advances in full on the Final Maturity Date.
7. PREPAYMENT AND CANCELLATION
7.1 MANDATORY PREPAYMENT ON LISTING
If any of the shares of the Borrower or any company of which the Borrower
is a Subsidiary shall be listed on any recognised stock exchange or shall
be sold or issued by way of flotation or public offering then the Majority
Junior Lenders may require the Junior Agent to demand by notice to the
Borrower that on the effective date of listing, flotation or public
offering, to the extent sufficient funds (net of associated costs and
expenses) are raised and subject always to the prior right of the Banks to
make like demand pursuant to clause 7.1 of the Senior Facility Agreement,
all outstanding Advances together with accrued interest and all other
amounts due to the Junior Finance Parties under the Finance Documents be
immediately due and payable and the Total Commitments cancelled without
premium or penalty (other than in accordance with Clause 24 (Indemnities))
whereupon all such amounts shall become immediately due and payable and the
Total Commitments automatically cancelled on that date.
7.2 VOLUNTARY PREPAYMENT
The Borrower may, by giving not less than 5 Business Days' prior notice to
the Junior Agent (expiring not earlier than the date the Total Commitments
have been fully drawn or cancelled), prepay without premium or penalty the
whole or any part of an Advance (but if in part in a minimum amount of
(Pounds)1,000,000 or, if more, integral multiples of (Pounds)1,000,000).
If a prepayment is made on a date other than on the last day of an Interest
Period for the relevant Advance, the prepayment must be accompanied by all
amounts payable under Clause 24.2(c) (Indemnities) on the amount prepaid.
7.3 VOLUNTARY CANCELLATION
The Borrower may, by giving not less than 5 Business Days' prior notice to
the Junior Agent, cancel the unutilised portion of the Total Commitments in
whole or in part (but, if in part, in a minimum amount of (Pounds)1,000,000
and an integral multiple of (Pounds)1,000,000) but no such cancellation
will take effect before the earlier of (a) 30 days after the Unconditional
Date and (b) the date
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19
both Offers have lapsed or expired. Any cancellation in part shall be
applied against the relevant Commitment of each Junior Lender pro rata.
7.4 AUTOMATIC CANCELLATION
(a) The undrawn amount (if any) of the Total Commitments shall automatically be
cancelled at close of business in London on the last day of the Commitment
Period.
(b) The Total Commitments shall automatically be cancelled at close of business
in London on the date which is 7 days after the date of this Agreement if
the Press Release in respect of all the Offers has not been issued on or
before that date.
7.5 ADDITIONAL RIGHT OF PREPAYMENT AND CANCELLATION
If:
(a) an Obligor is required to pay to a Junior Lender any additional amount
under Clause 10 (Taxes); or
(b) an Obligor is required to pay to a Junior Lender any amount under
Clause 12 (Increased Costs); or
(c) interest on a Junior Lender's participation in an Advance is being
calculated in accordance with Clause 11 (Market Disruption),
then, without prejudice to the obligations of any Obligor under those
Clauses, the Borrower may, whilst the circumstances continue, serve a
notice of prepayment and cancellation on that Junior Lender through the
Junior Agent. On the date falling five Business Days after the date of
service of the notice:
(i) the Borrower will prepay without penalty or premium (but subject to
payment of any amount payable under Clause 24.2(c) (Other Indemnities)
on the amount prepaid) that Junior Lender's participation in all the
Advances; and
(ii) that Junior Lender's undrawn Commitment will be cancelled.
7.6 MANDATORY PREPAYMENT ON DISPOSAL OF INITIAL PROPERTIES
(a) If there is any sale, lease (other than a lease of an immaterial part of an
Initial Property for less than one year at a rack rent without payment of
any premium, or a disposal permitted by Clauses 17.15(e), (f) or (i)
(Restrictions on Disposals)) or other disposal (a "DISPOSAL") of any of the
Initial Properties, the Borrower shall pay or shall procure that
immediately upon completion of the Disposal, the Required Prepayment Amount
is forthwith applied in permanent prepayment of Advances.
(b) For the purposes of paragraph (a) above, the "REQUIRED PREPAYMENT AMOUNT"
in respect of a particular Disposal is an amount equal to the higher of:
(i) the Minimum Prepayment Amount in respect of the relevant Initial
Property; and
(ii) 22.77 per cent. of the aggregate gross value of the consideration for
the Disposal.
7.7 PRIORITY OF SENIOR FACILITY AGREEMENT
Any amount which would otherwise be or be required to be applied in
prepayment of an Advance or any other sum outstanding under the Finance
Documents shall only be so applied, and shall only be required to be so
applied (notwithstanding the relevant provisions of this Agreement), if and
to the extent that such amount is not required to be applied in making
payments to the Banks under the Senior Facility Agreement and such payment
is in any event permitted under the Intercreditor Agreement.
7.8 MISCELLANEOUS PROVISIONS
(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable. The Junior Agent shall notify the Junior Lenders promptly of
receipt of any such notice.
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20
(b) All prepayments under this Agreement shall be made together with:
(i) accrued interest on the amount prepaid; and
(ii) the amount (if any) payable in respect of that prepayment under Clause
24 (Indemnities).
(c) No prepayment or cancellation is permitted except in accordance with the
express terms of this Agreement.
(d) No amount prepaid under Clause 7.5 (Additional right of prepayment and
cancellation), 7.6 (Mandatory prepayment on Disposal of Initial Properties)
or in respect of an Advance may subsequently be re-borrowed. No amount of
a Commitment cancelled under this Agreement may subsequently be reinstated.
8. INTEREST
8.1 SELECTION OF INTEREST PERIODS FOR ADVANCES
(a) Each Interest Period for an Advance will commence on its Drawdown Date or
the expiry of its preceding Interest Period.
(b) Subject to the following provisions of this Clause 8.1, the first Interest
Period for each Advance begins on its Drawdown Date and ends on 30th
September, 1998 and each successive Interest Period is a period of
approximately 3 months beginning on the last day of the previous Interest
Period and ending on 31st December, 31st March, 30th June or 30th September
(as appropriate).
(c) If an Interest Period would otherwise end on a day which is not a Business
Day, that Interest Period shall instead end on the next Business Day in
that calendar month (if there is one) or the preceding Business Day (if
there is not).
8.2 INTEREST RATE FOR ALL ADVANCES
The rate of interest on each Advance for each applicable Interest Period is
the rate per annum determined by the Junior Agent to be the aggregate of
the applicable:
(a) Margin;
(b) LIBOR; and
(c) Mandatory Cost.
8.3 DUE DATES
Except as otherwise provided in this Agreement, accrued interest on each
Advance is payable by the Borrower on the last day of each Interest Period
applicable to that Advance.
8.4 DEFAULT INTEREST
(a) If an Obligor fails to pay any amount payable by it under this Agreement,
it shall forthwith on demand by the Junior Agent pay interest on the
overdue amount from the due date up to the date of actual payment, both
before and after judgement, at a rate (the "DEFAULT RATE") determined by
the Junior Agent to be one per cent. (1%) per annum above the higher of:
(i) the rate on the overdue amount under Clause 8.2 (Interest rate for all
Advances) immediately before the due date (if of principal); and
(ii) the rate which would have been payable if the overdue amount had,
during the period of non-payment, constituted an Advance in the
currency of the overdue amount for such successive Interest Periods of
such duration as the Junior Agent may determine (each a "DESIGNATED
INTEREST PERIOD").
(b) The default rate will be determined by the Junior Agent on each Business
Day or the first day of the relevant Designated Interest Period as
appropriate.
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21
(c) If the Junior Agent determines that deposits in the currency of the overdue
amount are not at the relevant time being made available by more than one
Reference Bank to leading banks in the London interbank market, the default
rate will be determined by reference to the cost of funds to the Junior
Agent from whichever sources it selects in good faith.
(d) Default interest will be compounded at the end of each Designated Interest
Period but not more often than monthly.
8.5 NOTIFICATION
The Junior Agent shall promptly notify each relevant Party of the
determination of a rate of interest under this Agreement.
9. PAYMENTS
9.1 PLACE
All payments by the Borrower or a Junior Lender under this Agreement shall
be made by payment in Sterling for value the same day, to the account
notified to the Borrower and the Junior Lender by the Junior Agent on or
about the date of this Agreement or to such other account or bank as the
Junior Agent may by not less than five Business Days' prior notice have
specified for this purpose.
9.2 CURRENCY
All amounts payable under the Finance Documents are payable in Sterling.
9.3 FUNDS
Payments under this Agreement to the Junior Agent shall be made for value
on the due date at such times and in such funds as the Junior Agent may
specify to the Party concerned as being customary at the time for the
settlement of transactions in the relevant currency in the place for
payment.
9.4 DISTRIBUTION
(a) Each payment received by the Junior Agent under this Agreement for another
Party shall, subject to paragraphs (b) and (c) below, be made available by
the Junior Agent to that Party by payment (on the date and in the currency
and funds of receipt) to its account with such bank in the United Kingdom
as it may notify to the Junior Agent for this purpose by not less than five
Business Days' prior notice.
(b) The Junior Agent may apply any amount received by it for the Borrower in or
towards payment (on the date and in the currency and funds of receipt) of
any amount due from the Borrower under this Agreement.
(c) Where a sum is to be paid under this Agreement to the Junior Agent for the
account of another Party, the Junior Agent is not obliged to pay that sum
to that other Party until it has established that it has actually received
that sum. The Junior Agent may, however, assume that the sum has been paid
to it in accordance with this Agreement and, in reliance on that
assumption, make available to that other Party a corresponding amount. If
the sum has not in fact been made available but the Junior Agent has paid a
corresponding amount to another Party, that Party shall forthwith on demand
refund the corresponding amount to the Junior Agent together with interest
on that amount from the date of payment to the date of receipt, calculated
at a rate determined by the Junior Agent in good faith to reflect its cost
of funds.
9.5 SET-OFF AND COUNTERCLAIM
All payments made by an Obligor under the Finance Documents will be made
without set-off or counterclaim.
9.6 NON-BUSINESS DAYS
If a payment under this Agreement is due on a day which is not a Business
Day, the due date for that payment shall instead be the next Business Day
in the same calendar month (if there is one)
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22
or the preceding Business Day (if there is not). During any extension of
the due date for payment of any principal under this Agreement interest is
payable on that principal at the rate payable on the original due date.
9.7 PARTIAL PAYMENTS
(a) If the Junior Agent receives a payment insufficient to discharge all the
amounts then due and payable by the Obligors under the Finance Documents,
the Junior Agent shall apply that payment towards the obligations of the
Obligors under the Finance Documents in the following order:
(i) FIRST, in or towards payment pro rata of any unpaid costs, fees and
expenses of the Junior Agent and the Security Trustee properly
incurred under the Finance Documents;
(ii) SECONDLY, in or towards payment pro rata of any accrued interest due
but unpaid under the Finance Documents;
(iii) THIRDLY, in or towards payment pro rata of any principal due but
unpaid under the Finance Documents; and
(iv) FOURTHLY, in or towards payment pro rata of any other sum due but
unpaid under the Finance Documents.
(b) The Junior Agent shall, if so directed by all the Junior Lenders, vary the
order set out in sub-paragraphs (a)(ii) to (iv) above.
(c) Paragraphs (a) and (b) above shall override any appropriation made by an
Obligor.
10. TAXES
10.1 GROSS-UP
Subject to Clause 10.3 (Qualifying Bank), all payments by an Obligor under
the Finance Documents shall be made without any deduction and free and
clear of and without deduction for or on account of any Taxes levied or
imposed by the United Kingdom or any taxing authority of or in the United
Kingdom other than Tax on Overall Net Income, except to the extent that the
Obligor is required by law to make payment subject to the deduction of any
such Taxes. If any such Tax or amounts in respect of such Tax must be
deducted, or any other deductions must be made, from any amounts payable or
paid by an Obligor, or paid or payable by the Junior Agent to a Junior
Lender, under the Finance Documents, the Obligor shall pay such additional
amounts as may be necessary to ensure that the relevant Junior Finance
Party receives a net amount equal to the full amount which it would have
received had payment not been made subject to tax.
10.2 TAX RECEIPTS
All taxes required by law to be deducted or withheld by an Obligor from any
amounts paid or payable under the Finance Documents shall be paid by the
relevant Obligor when due and the Obligor shall, within 15 days of the
payment being made, deliver to the Junior Agent for the relevant Junior
Lender evidence satisfactory to that Junior Lender (including all relevant
tax receipts) that the payment has been duly remitted to the appropriate
authority.
10.3 QUALIFYING BANK
If:
(a) at the time it becomes a Party, a Junior Lender is not a Qualifying
Bank; or
(b) a Junior Lender ceases to be a Qualifying Bank other than as a result
of a Tax Change,
then no Obligor who is tax resident in the United Kingdom will be liable to
pay to such a Junior Lender under Clause 10.1 (Gross-up) any amount in
respect of Taxes levied or imposed by the United Kingdom or any taxing
authority of or in the United Kingdom ("UK TAXES") in excess of the amount
it would have been obliged to pay if such Junior Lender had been and
remained a Qualifying Bank.
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23
10.4 TAX WARRANTY
Except as otherwise notified in writing to the Borrower, each Junior Lender
warrants to the Borrower that it is a Qualifying Bank. That warranty will
be deemed to be repeated by each Junior Lender on the due date for payment
of interest to that Junior Lender unless that Junior Lender is not able to
make it on that date as a result of a Tax Change. If at any time after it
becomes a party to this Agreement, a Junior Lender is aware that it is, or
will become, unable to make that warranty (for whatever reason) it will
promptly notify the Borrower and the Junior Agent.
10.5 TREATY LENDERS
Within 10 Business Days after becoming a Junior Lender, a Treaty Lender
will deliver to the Treaty Lender's local revenue authority such forms as
that Treaty Lender is required and lawfully able to complete to claim
exemption from UK Taxes and thereafter will make all reasonable efforts to
obtain clearance from such local revenue authority that it is able to claim
exemption from UK Taxes under the relevant double taxation treaty. No
Obligor will be liable to pay to such Treaty Lender under Clause 10.1
(Gross-up) any additional amount if those forms have not been so delivered
or if such reasonable efforts have not been made.
10.6 TAX SAVING
(a) In the event that, following the imposition of any Tax on any payment by
any Obligor (or any corresponding payment by the Junior Agent to any other
Junior Finance Party under this Agreement) in consequence of which such
Obligor is required under Clause 10.1 (Gross-up) to pay such Tax or to pay
any additional amount in respect of it, any Junior Finance Party shall in
its sole opinion and based on its own interpretation of any relevant laws
or regulations receive or be granted a repayment of Tax or a credit against
or remission for or deduction from or in respect of any Tax payable by it,
or shall obtain any other relief in respect of Tax, which in such Junior
Finance Party's opinion is both reasonably identifiable and quantifiable by
it (any of the foregoing, to the extent so reasonably identifiable and
quantifiable, being referred to as a "SAVING"), such Junior Finance Party
shall, to the extent that it can do so without prejudice to the retention
of the relevant saving and subject to such Obligor's obligation to repay
the amount reimbursed to it under this Clause 10.6(a) to such Junior
Finance Party if the relevant saving is subsequently disallowed or
cancelled (which repayment shall be made promptly on receipt of notice by
the relevant Obligor from such Junior Finance Party of such disallowance or
cancellation), reimburse such Obligor promptly after receipt of such saving
by such Junior Finance Party with such amount as such Junior Finance Party
shall in its sole opinion have concluded to be the amount or value of the
relevant saving.
(b) Nothing contained in this Agreement shall interfere with the right of any
Junior Finance Party to arrange its tax and other affairs in whatever
manner it thinks fit and, in particular, no Junior Finance Party shall be
under any obligation to claim relief from tax on its corporate profits, or
from any similar tax liability, in respect of the tax, or to claim relief
in priority to any other claims, reliefs, credits or deductions available
to it or to disclose details of its tax affairs. No Junior Finance Party
shall be required to disclose any confidential information relating to the
organisation of its affairs.
11. MARKET DISRUPTION
(a) If, in relation to any Advance, at or about 11.00 am on the first day of an
Interest Period for that Advance:
(i) the Junior Agent determines that paragraph (ii) of the definition of
LIBOR applies and less than two of the Reference Banks is offering to
prime banks in the London interbank market deposits in Sterling for
the proposed duration of such Interest Period; or
(ii) the Junior Agent receives notification from Junior Lenders whose
participations in the proposed Advance would exceed 50 per cent. of
the Advance that, in their opinion:
(A) matching deposits may not be available to them in the London
interbank market in the ordinary course of business to fund their
participations in that Advance for the relevant Interest Period;
or
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24
(B) the cost to them of obtaining matching deposits in the London
interbank market would be in excess of LIBOR for the relevant
Interest Period,
the Junior Agent shall promptly notify the Borrower and the Junior Lenders
of that fact and that this Clause 11 is in operation.
(b) After any notification under paragraph (a) above:
(i) if the Advance has not been made, the Advance shall still be made
but it shall have an Interest Period of one month and the interest
payable on that Advance shall be determined in accordance with sub-
paragraphs (iii) to (vii) below;
(ii) if the Advance has been borrowed, that Advance shall remain
outstanding (without prejudice to Clauses 7.5 (Additional right of
prepayment and cancellation) and 14 (Mitigation)) but it shall have
an Interest Period of one month and the interest payable on that
Advance shall be determined in accordance with sub-paragraphs (iii)
to (vii) below;
(iii) promptly after receipt of the notification, the Borrower and the
Junior Agent shall enter into negotiations in good faith for a
period of not more than one month with a view to agreeing a
substitute basis for determining the rate of interest and/or funding
applicable to the Advance affected by the notification;
(iv) any substitute basis agreed under sub-paragraph (iii) above shall
be, with the prior consent of all the Junior Lenders, binding on all
the Parties;
(v) if no substitute basis is agreed under sub-paragraph (iii) above,
each Junior Lender (through the Junior Agent) shall certify on or
before the last day of the relevant Interest Period an alternative
basis for maintaining its participation in that Advance;
(vi) any alternative basis referred to in sub-paragraph (v) above must
reflect the cost to that Junior Lender of funding its participation
in that Advance from whatever sources it may reasonably select (each
Junior Lender's cost of funding being certified by the Junior Lender
with a copy to the Junior Agent) plus the Margin and any Mandatory
Cost; and
(vii) each alternative basis so certified shall be binding on the Borrower
and the certifying Junior Lender and treated as part of this
Agreement.
12. INCREASED COSTS
12.1 INCREASED COSTS
Subject to Clause 12.2 (Exceptions), if the result of:
(a) any change in or the introduction of, or any change in the
interpretation, administration or application by any competent court,
authority or organisation in the relevant jurisdiction of, any law,
regulation or treaty or in or of any official directive or official
request from, or the rules of, any governmental, fiscal, monetary or
regulatory (including self-regulatory) authority, organisation or
agency (whether or not having the force of law but, if not having the
force of law, being a regulation, treaty, official directive, official
request or rule which it is the practice of banks in the relevant
jurisdiction to comply with) after the date of this Agreement which
affects banks or financial institutions of the same type as any Junior
Finance Party in that jurisdiction; or
(b) compliance by any Junior Finance Party (or any holding company of such
Junior Finance Party) with any such change or introduction,
including, in each case without limitation, those relating to taxation,
reserves, special deposit, cash ratio, liquidity or capital adequacy
requirements or other forms of banking, fiscal, monetary or regulatory
controls, is that:
(i) such Junior Finance Party incurs an increased cost as a result of it
having entered into, and/or performing and/or maintaining and/or
funding its obligations under, any Finance Document; or
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25
(ii) such Junior Finance Party incurs an increased cost in making,
funding or maintaining all or any advances comprised in a class of
advances formed by or including its participation in some or all of
the Advances made or to be made under this Agreement; or
(iii) such amount receivable by such Junior Finance Party under any
Finance Document is reduced or the effective rate of return to such
Junior Finance Party under any Finance Document or on its capital
employed for the purposes of this Agreement is reduced; or
(iv) such Junior Finance Party makes any payment or forgoes any interest
or other return on or calculated by reference to any amount received
or receivable by it from any Obligor or the Junior Agent or any
other Junior Finance Party under any Finance Document,
then and in each such case (but subject to Clause 12.2 (Exceptions)):
(A) such Junior Finance Party shall notify the Borrower through the Junior
Agent of that event promptly upon its becoming aware of the event
including, in reasonable detail, particulars of the event; and
(B) within five Business Days after receipt by the Borrower of a demand
from time to time by such Junior Finance Party through the Junior
Agent, the Borrower shall pay to the Junior Agent for the account of
such Junior Finance Party such amount as shall compensate such Junior
Finance Party for such increased cost (or, in the case of (i) or (ii)
above, the portion of such increased cost as is attributable to its
making, funding or maintaining Advances or maintaining its obligation,
if any, to provide Advances under this Agreement), reduction, payment
or forgone interest or other return.
Nothing in this Clause shall oblige any Junior Finance Party or the Junior
Agent to disclose any confidential information relating to the organisation
of its affairs.
12.2 EXCEPTIONS
Clause 12.1 (Increased Costs) shall not apply so as to oblige the Borrower
to compensate any Junior Finance Party for any increased cost, reduction,
payment or forgone interest or other return:
(a) resulting from any change in or the introduction of, or any change in
the interpretation or application of, any law, regulation, treaty,
directive, request or rules relating to, or any change in the rate of,
Tax on Overall Net Income of such Junior Finance Party; or
(b) resulting from the implementation by the applicable authorities having
jurisdiction over such Junior Finance Party and/or its Facility Office
of the matters set out in the statement of the Basle Committee on
Banking Regulation and Supervisory Practices dated July, 1988 and
entitled "International Convergence of Capital Measurement and Capital
Standards", to the extent, at the rates and according to the timetable
provided for therein; or
(c) compensated for by the payment of the Mandatory Cost; or
(d) attributable to any Tax or amounts in respect of Tax which must be
deducted from any amounts payable or paid by an Obligor under the
Finance Documents giving rise to an obligation to gross up under
Clause 10.1 (Gross-up) or which would give rise to such an obligation
but for Clauses 10.3 (Qualifying Bank) or 10.5 (Treaty Lenders).
13. ILLEGALITY
If any change in or the introduction of any law, regulation, treaty or
(whether or not having the force of law but, if not having the force of
law, being one with which it is the practice of persons in the position of
the relevant Junior Lender(s) in the relevant jurisdiction to comply)
official directive or rule of any governmental, fiscal, monetary or
regulatory (including self regulatory) authority, organisation or agency,
having jurisdiction (together "LAWS"), or any change in the interpretation,
administration or application of Laws by a competent court or the relevant
authority, organisation or agency or compliance by any Junior Finance Party
with any such change or introduction of Laws or change in interpretation,
administration or application of Laws, shall make it (or make it apparent
that it is) unlawful or a breach of Laws for any Junior Finance Party to
make available or fund or maintain the Advances or any part of the Advances
<PAGE>
26
under this Agreement or to give effect to its obligations and exercise its
rights as contemplated by this Agreement, that Junior Finance Party may, by
notice to the Obligor concerned through the Junior Agent, declare that to
the extent necessary to avoid any such illegality or breach of Laws its
obligations to the Obligor concerned under this Agreement shall be
terminated forthwith or, if later, on the latest date to which the
obligations may remain in effect without causing such Junior Finance Party
to be in breach of Laws, whereupon:
(a) PREPAY: the Obligor, if the Borrower, will forthwith, or by such
later date as shall be immediately prior to the illegality or breach
in question taking effect, prepay such part of such Junior Finance
Party's participation in the Advances together with all interest and
other charges accrued thereon to the date of the prepayment and all
other amounts payable to such Junior Finance Party under the Finance
Documents as shall be necessary to avoid any such illegality or breach
by such Junior Finance Party of any Laws; and
(b) COMMITMENTS: to the extent necessary to avoid any such illegality or
breach of Laws such Junior Finance Party's Commitments shall be
cancelled and reduced to nil.
14. MITIGATION
If circumstances arise in respect of any Junior Finance Party which would,
or upon the giving of notice would, result in the operation of Clauses 10
(Taxes), 11 (Market Disruption), 12 (Increased Costs) or 13 (Illegality) to
the detriment of an Obligor:
(a) such Junior Finance Party shall promptly upon becoming aware of the
same notify the Obligor and, upon the written request of the Obligor,
shall enter into discussions with the Obligor with a view to
determining what mitigating action might be taken by such Junior
Finance Party, including discussion of the possibility of a change in
its Facility Office or transfer of its participation in the Facility
and its Commitments to another bank or financial institution; and
(b) at the request of the Obligor, the Junior Agent will enter into
discussions with the Obligor with a view to determining what
mitigating action might be taken by the Junior Agent with respect to
the administration of this Agreement by it.
Without limiting or reducing the obligations of the Obligors (or any of
them) under Clauses 10 (Taxes), 11 (Market Disruption), 12 (Increased
Costs) or 13 (Illegality), the relevant Junior Finance Party shall, upon
the written request of the Obligor, take such reasonable steps as may be
practical and open to it to mitigate or remove the effects of such
circumstances including, without limitation, a change in its Facility
Office or transfer of its participation in the Facility and its Commitment
to another bank or financial institution reasonably acceptable to the
Obligor or the restructuring of its participation in this Agreement in a
manner which will avoid the circumstances in question and on terms
acceptable to the Junior Agent acting on the instructions of the Majority
Junior Lenders and the Obligor. Nothing in this Clause 14, however, shall
oblige any Junior Finance Party to take any such step if, in the opinion of
such Junior Finance Party (such opinion being conclusive) any such step
might reasonably be expected to have an adverse effect upon its business,
operations or financial condition or the management of its tax affairs or
its return in relation to its participation in the Advances or cause it to
incur any material costs or expenses.
15. GUARANTEE
15.1 GUARANTEE
Each Guarantor irrevocably, unconditionally, jointly and severally:
(a) as principal obligor guarantees to each Junior Finance Party prompt
performance by the Borrower of all its obligations under the Finance
Documents;
(b) undertakes with each Junior Finance Party that whenever the Borrower
does not pay any amount when due under or in connection with any
Finance Document, that Guarantor shall forthwith on demand by the
Junior Agent pay that amount as if that Guarantor instead of the
Borrower were expressed to be the principal obligor; and
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27
(c) indemnifies each Junior Finance Party on demand against any loss or
liability suffered by it if any obligation guaranteed by that
Guarantor is or becomes unenforceable, invalid or illegal.
15.2 CONTINUING GUARANTEE
This guarantee is a continuing guarantee and will extend to the ultimate
balance of all sums payable by the Borrower under the Finance Documents,
regardless of any intermediate payment or discharge in whole or in part.
15.3 REINSTATEMENT
(a) Where any discharge (whether in respect of the obligations of any Obligor
or any security for those obligations or otherwise) is made in whole or in
part or any arrangement is made on the faith of any payment, security or
other disposition which is avoided or must be restored on insolvency,
liquidation or otherwise without limitation, the liability of each
Guarantor under this Clause 15 (Guarantee) shall continue as if the
discharge or arrangement had not occurred.
(b) Each Junior Finance Party may concede or compromise any claim that any
payment, security or other disposition is liable to avoidance or
restoration.
15.4 WAIVER OF DEFENCES
The obligations of each Guarantor under this Clause 15 (Guarantee) will not
be affected by an act, omission, matter or thing which, but for this
provision, would reduce, release or prejudice any of its obligations under
this Clause 15 (Guarantee) or prejudice or diminish those obligations in
whole or in part, including (whether or not known to it or any Junior
Finance Party):
(a) any time or waiver granted to, or composition with, the Borrower or
other person; or
(b) 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; or
(c) any incapacity or lack of powers, authority or legal personality of or
dissolution or change in the members or status of the Borrower or any
other person; or
(d) any variation (however fundamental) or replacement of a Finance
Document or any other document or security so that references to that
Finance Document in this Clause 15 (Guarantee) shall include each
variation or replacement; or
(e) any unenforceability, illegality or invalidity of any obligation of
any person under any Finance Document or any other document or
security, to the intent that each Guarantor's obligations under this
Clause 15 (Guarantee) shall remain in full force and its guarantee be
construed accordingly, as if there were no unenforceability,
illegality or invalidity; or
(f) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of any Obligor under a
Finance Document resulting from any insolvency, liquidation or
dissolution proceedings or from the law, regulation or order so that
each such obligation shall for the purposes of the Guarantor's
obligations under this Clause 15 (Guarantee) be construed as if there
were no such circumstance.
15.5 IMMEDIATE RECOURSE
Each Guarantor waives any right it may have of first requiring any Junior
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 15 (Guarantee).
15.6 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 Junior Finance Party (or any trustee or agent on its behalf)
may:
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28
(a) refrain from applying or enforcing any other moneys, security or
rights held or received by that Junior Finance Party (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 a suspense account any moneys received from any Guarantor or
on account of any Guarantor's liability under this Clause 15
(Guarantee) which shall bear interest at an appropriate commercial
rate as reasonably determined by such Junior Finance Party.
15.7 NON-COMPETITION
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, no Guarantor shall, after a claim has been made, or by virtue of any
payment or performance by it, under this Clause 15 (Guarantee):
(a) be subrogated to any rights, security or moneys held, received or
receivable by any Junior Finance Party (or any trustee or agent on its
behalf) or be entitled to any right of contribution or indemnity in
respect of any payment made or moneys received on account of that
Guarantor's liability under this Clause 15 (Guarantee); or
(b) claim, rank, prove or vote as a creditor of any Obligor or its estate
in competition with any Junior Finance Party (or any trustee or agent
on its behalf); or
(c) receive, claim or have the benefit of any payment, distribution or
security from or on account of any Obligor, or exercise any right of
set-off as against any Obligor.
Each Guarantor shall hold in trust for and forthwith pay or transfer to the
Junior Agent for the Junior Finance Parties any payment or distribution or
benefit of security received by it contrary to this Clause 15.7.
15.8 ADDITIONAL SECURITY
This guarantee is in addition to and is not in any way prejudiced by any
other security now or subsequently held by any Junior Finance Party.
16. REPRESENTATIONS AND WARRANTIES
16.1 REPRESENTATIONS AND WARRANTIES
Each Obligor makes the representations and warranties set out in this
Clause 16 (Representations and Warranties) to each Junior Finance Party.
16.2 STATUS
It is a limited liability company (or, in the case of the Borrower an
unlimited liability company), duly incorporated and validly existing under
the laws of the jurisdiction of its incorporation and has the power to own
its assets and carry on its business as it is being conducted.
16.3 POWERS AND AUTHORITY
It has the power to enter into and perform, and has taken all necessary
action to authorise the entry into, performance and delivery of, the
Finance Documents to which it is or will be a party and the transactions
contemplated by those Finance Documents.
16.4 LEGAL VALIDITY
Each Finance Document to which it is or will be a party constitutes, or
when executed in accordance with its terms will constitute, its legal,
valid and binding obligation enforceable (subject to applicable insolvency,
bankruptcy, reorganisation, moratorium or similar laws affecting creditors'
rights generally and subject to equitable principles of general
application) in accordance with its terms.
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29
16.5 NON-CONFLICT
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 or judicial or official order applicable to it;
or
(b) its constitutional documents (or any of its resolutions having
current effect); or
(c) any agreement or instrument to which it or any member of the Group is
party or which is binding on any of them or their assets in such a
manner or to an extent which is reasonably likely to have a material
adverse effect on its ability to perform its obligations under the
Finance Documents, provided that this paragraph (c) shall not apply
to any Existing Financing Agreement during the Clean-up Period.
16.6 NO DEFAULT
(a) No Event of Default has occurred and is continuing which has not been
waived.
(b) No event has occurred and is continuing which has not been waived which
constitutes (or with the giving of notice, lapse of time, determination of
materiality or the fulfilment of any other applicable condition or any
combination of the foregoing, might constitute) a default under any
agreement or instrument which is binding on any member of the Group or any
asset of any member of the Group to an extent or in a manner which is
reasonably likely to have a material adverse effect on its ability to
perform its obligations under the Finance Documents, provided that this
paragraph (b) shall not apply to any Existing Financing Agreement during
the Clean-up Period.
16.7 AUTHORISATIONS
All authorisations required in connection with the entry into,
performance, validity and enforceability of, and the transactions
contemplated by, the Finance Documents have been obtained or effected (as
appropriate) and are in full force and effect.
16.8 ACCOUNTS
(a) Its accounts most recently delivered to the Junior Agent from time to time
under Clause 17.2 (Financial information):
(i) have been prepared in accordance with Clause 17.6 (Accounting
standards); and
(ii) (in the case of audited accounts) present a true and fair view of or
(in the case of unaudited accounts) fairly present the consolidated
financial condition of the Group as at the date to which they were
drawn up and/or (as appropriate) the results of operations and (in
the case of annual accounts) changes in financial position during the
financial period concerned.
(b) Its audited accounts have not been qualified in any materially adverse
way.
16.9 LITIGATION
No litigation, arbitration or administrative proceedings are current or,
to its knowledge, pending or threatened, which are reasonably likely, if
adversely determined, to have a material adverse effect on its ability to
perform its obligations under the Finance Documents.
16.10 INFORMATION PACKAGE AND CERTIFICATES OF TITLE
(a) All factual information in respect of the Group, the Target Group, the
Investors and the Initial Properties contained in the Information Package
was true (or, in the case of information relating to the Target Group or
the Initial Properties was true to the best of the Borrower's knowledge
and belief and, other than where provided by advisors, after reasonable
enquiry) in all material respects at the respective dates as of which that
information speaks. All expressions of opinion or intention in respect of
the Group, the Target Group, the Investors and the Initial Properties and
all forecasts and projections contained in the Information Package in
respect of the Group, the Target Group, the Investors and the Initial
Properties were arrived at after careful consideration
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30
and to the best of the Borrower's knowledge and belief were based on
grounds believed to be reasonable. The Information Package as of its date
(insofar as based on information relating to the Target Group or the
Initial Properties, to the best of the Borrower's knowledge and belief
after reasonable enquiry) was not misleading in any material respect in
respect of the Group, the Target Group, the Investors and the Initial
Properties and did not omit to disclose any matter which failure to
disclose would result in any information contained in the Information
Package in respect of the Group, the Target Group, the Investors and the
Initial Properties being misleading in any material respect.
(b) All material information provided by or on behalf of the Borrower, or (to
the best of the Borrower's knowledge and belief) the Target Group, to the
firms which prepared each Certificate of Title and contained or referred
to therein, was true in all material respects at the date the information
was given.
(c) To the best of the Borrower's knowledge and belief, the Certificates of
Title are not misleading in any material respect and do not omit to
disclose any matter which failure to disclose would result in any
information or conclusion therein being misleading in any material respect
and which would materially and adversely affect the value or marketability
of the Initial Properties and the security given to the Security Trustee
in respect of the Initial Properties for the amounts owed under the
Finance Documents, in each case, as of the date of issue of the relevant
Certificate of Title.
(d) Since the date of the material contained in the Information Package and
the Certificates of Title respectively, nothing has (to the best of the
knowledge and belief of the Borrower) occurred or come to light which
renders any of the information, expressions of opinion or intention,
forecasts, projections or conclusions warranted to in paragraphs (a), (b)
or (c) above and contained in the Information Package or the Certificates
of Title, as the case may be, inaccurate or misleading in any respect
which could reasonably be expected to have a material adverse effect on
the ability of any Obligor to perform its obligations under this
Agreement.
16.11 TITLE TO INITIAL PROPERTIES
Except to the extent disclosed in the relevant Certificate of Title in
relation to each Initial Property, the relevant Obligor (and, prior to
them becoming Obligors, each member of the Target Group) has a good and
marketable legal and beneficial title to that Initial Property free from
any encumbrances or other matters which would be reasonably likely
materially and adversely to affect the value or marketability of that
Initial Property.
16.12 VALUATION
(a) All information provided by it to the Valuer for the purposes of each
Valuation is accurate in all material respects and no information has been
omitted which would make that information misleading and which would
materially and adversely affect the value or marketability of the Initial
Properties and the security given, or proposed to be given, to the
Security Trustee in respect of the Initial Properties for the amounts owed
under the Finance Documents;
(b) save as disclosed to the Junior Agent in writing, there has been no
material change to the information provided pursuant to paragraph (a)
above in respect of the most recent Valuation between the date such
information was provided and each date on which this representation and
warranty is repeated which would materially and adversely affect the value
or marketability of the Initial Properties and the security given, or
proposed to be given, to the Junior Agent in respect of the Initial
Properties for the amounts owed under the Finance Documents; and
(c) no information has been withheld by it from the Valuer which may be
material to any Valuation and which would materially and adversely affect
the value or marketability of the Initial Properties and the security
given, or proposed to be given, to the Junior Agent in respect of the
Initial Properties for the amounts owed under the Finance Documents,
PROVIDED THAT in the case of the Initial Valuation, the representations
and warranties in paragraphs (a), (b) and (c) above are made to the best
of the Borrower's knowledge and belief.
16.13 DOCUMENTS
The originals of documents delivered to the Junior Agent by it or on its
behalf pursuant to Clause 4.1 (Documentary conditions precedent) and any
other provision of the Finance
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31
Documents were genuine and in the case of copy documents, were at the date
of delivery true, complete and accurate copies in all material respects,
of originals which had not been amended, varied, supplemented or
superseded in any way which would be reasonably likely to have a material
adverse effect on the ability of any Obligor to perform its obligations
under the Finance Documents.
16.14 ENVIRONMENTAL MATTERS
There is no Environmental Claim pending or threatened against it which is
reasonably likely to be decided against it and which if so decided would
be reasonably likely to have a material adverse effect on the ability of
it to perform its obligations under this Agreement.
16.15 RANKING OF SECURITY
(a) Subject to registration where required, the security conferred by the
Debentures constitute a first priority security interest of the type
therein described over the security assets therein referred to which are
not subject to any prior or pari passu Security Interests (other than as
permitted by Clause 17.13 (Negative pledge) and those whose claims are
preferred solely by any bankruptcy, insolvency or other similar laws of
general application to creditors) and which are not liable to avoidance on
liquidation or administration.
(b) Save as permitted under Clause 17.13 (Negative pledge) no Security
Interest exists over all or any of the present or future revenues or
assets of any member of the Group.
16.16 REGISTRATION REQUIREMENTS
Except for due registration of each Debenture under Section 395 of the
Companies Act 1985 and under the Land Registration Acts 1925 to 1986, it
is not necessary that any of the Finance Documents be filed, recorded or
enrolled with any authority or that any stamp, registration or similar tax
be paid on or in respect thereof.
16.17 PARI PASSU RANKING
Its obligations under the Finance Documents rank at least pari passu with
all its other unsecured and unsubordinated obligations, except for
obligations which are mandatorily preferred by law applying to creditors'
rights generally.
16.18 TITLE TO SHARES
All of the Shares which are acquired by the Borrower pursuant to the
Offers or the implementation of the procedures under Sections 428-430(F)
of the Companies Act 1985 are beneficially owned by the Borrower and the
Borrower will be entitled forthwith (subject to payment of stamp duty and
registration in the shareholders' register of the Target of the transfer
of those Shares, which registration will be completed as soon as possible
unless the Security Trustee requires that the shares be registered in the
name of the Security Trustee or its nominee pursuant to the Debenture, in
which case that registration will be completed as soon as possible) to
become the legal registered owner of such Shares free from any Security
Interest (other than those created by the Debenture).
16.19 THE BORROWER
On the first Drawdown Date, the Borrower will not have any material
commitments or indebtedness except for:
(a) under or in relation to the Finance Documents; or
(b) pursuant to, or in connection with, the Offers.
16.20 TIMES FOR MAKING REPRESENTATIONS AND WARRANTIES
(a) The representations and warranties set out in this Clause 16 (with the
exception of Clause 16.10 (Information Package and Certificates of
Title)):
(i) in the case of an Obligor which is a Party on the date of this
Agreement, are made by that Obligor on the date of this Agreement;
and
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32
(ii) in the case of an Obligor which becomes Party after the date of this
Agreement, will be deemed to be made by that Obligor on the date it
executes a Subsidiary Guarantor Accession Agreement (as the case may
be).
(b) The representation and warranty set out in Clause 16.10 (Information
Package and Certificates of Title) is made on the date of the first
Request, the first Drawdown Date and the earlier of:
(i) the date falling six months after the first Drawdown Date; and
(ii) the date of completion of general syndication,
with reference to the facts and circumstances existing at that time.
(c) The representations and warranties set out in this Clause 16 (with the
exception of Clause 16.10 (Information Package and Certificates of Title)
and 16.13 (Documents) are deemed to be repeated by the Obligors on the
date of each Request, each Drawdown Date and the first day of each
Interest Period with reference to the facts and circumstances then
existing.
16.21 SAVOY DEBENTURE STOCK MORTGAGES
The existence of the Savoy Debenture Stock Mortgages on the basis
permitted by this Agreement shall not of itself give rise to any breach of
the representations and warranties in this Clause 16.
17. UNDERTAKINGS
17.1 DURATION
The undertakings in this Clause 17 (Undertakings) remain in force from the
date of this Agreement for so long as any amount is or may be outstanding
under this Agreement or any Commitment is in force.
17.2 FINANCIAL INFORMATION
The Borrower shall supply to the Arranger and to the Junior Agent in
sufficient copies for all the Junior Lenders:
(a) not later than 30 days before the commencement of each financial year
of the Group, a budget which includes a monthly estimate of projected
revenues, expenses and capital expenditure for the Group for such
year, together with details of the principal assumptions underlying
such projections;
(b) as soon as the same are available (and in any event within 120 days
of the end of each of its financial years):
(i) in the case of the Borrower, the Group Accounts for that
financial year; and
(ii) in the case of each Subsidiary Guarantor, its audited accounts
for that financial year;
(c) (commencing with the first quarter to begin after the first Drawdown
Date) as soon as the same are available (and in any event within 45
days of the end of each quarter of its financial year) quarterly
profit and loss and cashflow statements for the Group for the Ratio
Period ending on the last day of such quarter in agreed form;
(d) together with the statements delivered under paragraph (c) above, a
comparison of the material items in the Group's actual results for
the relevant financial year up to the last day of the quarter to
which the relevant statements under paragraph (c) relate against the
projections for the same period in the budget for that financial year
delivered under paragraph (a) above;
(e) together with the Group Accounts delivered under paragraph (b) above,
a certificate signed by its auditors substantially in the form set
out in Part I of Schedule 7 setting out in reasonable detail
computations establishing whether the financial ratios in Clause 18
(Financial and Minimum Value Covenants) were complied with; and
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33
(f) together with the annual accounts specified in paragraph (b)(i) and
the quarterly statements specified in paragraph (c) above (and, in the
case of (ii) below, promptly at any other time if the Junior Agent so
requests), a certificate in the form set out in Part II of Schedule 7
signed by an officer of the Borrower on its behalf:
(i) in the case of the quarterly statements only, setting out in
reasonable detail computations establishing whether the
financial ratios in Clause 18 (Financial and Minimum Value
Covenants) were complied with; and
(ii) certifying that, no Default is outstanding or, if such a Default
is outstanding, specifying the Default and the steps, if any,
being taken to remedy it.
17.3 INFORMATION - MISCELLANEOUS
Each Obligor shall supply to the Junior Agent:
(a) (in the case of the Borrower only) all documents despatched by it to
its shareholders in their capacity as shareholders or its creditors
generally (or any class of them) at the same time as they are
despatched;
(b) promptly upon becoming aware of them, details of any litigation,
arbitration or administrative proceedings which are current,
threatened or pending against it, and which are reasonably likely, if
adversely determined, to have a material adverse effect on the ability
of that Obligor to perform its obligations under the Finance
Documents; and
(c) promptly, such further information in its possession or control
regarding its financial condition or the financial condition of any
other member of the Group and not previously provided as any Junior
Finance Party may reasonably request through the Junior Agent,
in sufficient copies for all of the Junior Lenders, if the Junior Agent so
requests.
17.4 NOTIFICATION OF DEFAULT
Each Obligor shall notify the Junior Agent of any Default with respect to
it (and the steps, if any, being taken to remedy it) forthwith upon
becoming aware of it.
17.5 AUDIT AND ACCOUNTING DATES
The Borrower will ensure that:
(a) the Group Accounts are audited by Deloitte & Touche or such other firm
of internationally recognised auditors as the Majority Junior Lenders
may approve (such approval not to be unreasonably withheld or
delayed);
(b) it will at all times have duly appointed auditors and each Obligor
shall at all times have duly appointed auditors (where required by
law); and
(c) it will not, and no Obligor will, change its accounting reference date
without the prior written consent of the Majority Junior Lenders (not
to be unreasonably withheld) other than to conform its financial year
end to that of the Borrower or the Target.
17.6 ACCOUNTING STANDARDS
(a) The Borrower will ensure that all accounts to be delivered pursuant to
Clause 17.2 (Financial Information) shall be prepared in accordance with
the Accounting Principles or shall indicate in notes to or accompanying
such accounts any material departures from the Accounting Principles.
(b) The Borrower shall, at the same time as it delivers to the Junior Agent the
Group Accounts and any quarterly statements under Clause 17.2(c) (Financial
information), deliver to the Junior Agent a letter explaining any
differences between the format, headings and characterisations used in the
Group Accounts or in the quarterly statements of the Group, as the case may
be, from those in the Original Target Group Accounts (where those
differences would affect the ability of the Junior Agent to calculate the
components of the financial ratios in Clause 18 (Financial and
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34
Minimum Value Covenants)) in sufficient detail to enable the financial
covenants to be calculated as though there were no such differences.
17.7 AUTHORISATIONS
Each Obligor shall promptly:
(a) obtain, maintain and comply with the terms of; and
(b) supply certified copies to the Junior Agent of,
any authorisation required under any law or regulation to enable it to
perform its obligations under, or for the validity or enforceability of,
any Finance Document.
17.8 PARI PASSU RANKING
Each Obligor shall procure that its payment obligations under the Finance
Documents do and will rank at least pari passu with all its other present
and future unsecured and unsubordinated obligations (other than obligations
which are mandatorily preferred by law applying to creditors' rights
generally).
17.9 HEDGING AGREEMENTS
(a) The Borrower confirms that on or prior to the date of this Agreement it has
hedged its interest rate exposure in respect of an initial notional
principal amount of (Pounds)375,600,000 (taking into account the Repayment
Instalments under and as defined in the Senior Facility Agreement) for a
period commencing on the first Drawdown Date and ending on the Final
Maturity Date.
(b) Each hedging agreement solely to effect the hedging referred to in
paragraph (a) above is a "HEDGING AGREEMENT".
(c) The claims of a Hedging Bank under a Hedging Agreement will be secured by
the Debentures, pari passu with the claims of the Banks under the Senior
Facility Agreement.
17.10 VALUATIONS
(a) The Borrower shall deliver to the Junior Agent:
(i) not more than 30 days before the first Drawdown Date;
(ii) together with the Group Accounts for each financial year of the
Group; and
(iii) at any time upon not less than 30 days' request by the Junior Agent
acting on the instructions of the Majority Junior Lenders,
(in the case of (i)) a complete and expanded version of the Initial
Valuation and (in any other case) a Valuation of the Initial Properties as
at the end of the financial year of the Borrower (starting with the
financial year ending 31st December, 1999) ended immediately prior to the
delivery of such Valuation (in the case of (ii) above) and as at a date no
earlier than 30 days before it is delivered (in the case of (i) and (iii)
above) and in each case prepared on the same basis and in a similar level
of detail as is agreed with the Arranger on or before the date of this
Agreement, subject to such variations requested by the Borrower as the
Junior Agent (acting upon the instructions of the Majority Junior Lenders)
may approve in writing.
(b) Valuations under (a)(i) and (ii) above will be at the Borrower's expense.
Valuations under (a)(iii) above will be at the Junior Lenders' expense (pro
rata to their outstandings at the date the Valuation is requested) unless
an Event of Default has occurred and is continuing unwaived at the date of
the Junior Agent's notice or if the Valuation itself demonstrates that an
Event of Default has occurred, in which case the Valuation shall be at the
Borrower's expense.
(c) The Borrower shall be given a reasonable opportunity to review a draft of
each Valuation and make comments to the Valuer on such draft. Any such
comments shall be copied to the Junior Agent at the same time as they are
given to the Valuer. However, the Valuer shall not be under any obligation
to act on any such comments and shall not incur any liability to any
Obligor if it does not act on any such comments.
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35
17.11 ENVIRONMENTAL UNDERTAKINGS
Each Obligor shall, and the Borrower shall procure that each member of the
Group shall, comply in all material respects (consistently with the manner
in which similar businesses operating in the relevant jurisdiction comply)
with:
(a) all applicable material Environmental Laws; and
(b) the terms of all material environmental approvals necessary for the
ownership and operation of its facilities and businesses as owned and
operated from time to time,
non-compliance with which is reasonably likely to have a material adverse
effect on the ability of any Obligor to perform its obligations under this
Agreement.
17.12 INSURANCE
In addition to any specific insurance requirements in any Debenture, each
Obligor will maintain (or in the case of landlord's insurances use its
reasonable endeavours to procure the maintenance of) insurances on and in
relation to its business and assets with reputable underwriters or
insurance companies against such risks and to such extent as is usual for
companies carrying on a business such as that carried on by such Obligor
and the Borrower will use its reasonable endeavours to procure that the
interest of the Junior Finance Parties will be noted against all policies
taken out in respect of insurances.
17.13 NEGATIVE PLEDGE
No Obligor will, and the Borrower will procure that no other member of the
Group will, create or permit to subsist any Security Interest on any of
its assets other than a Permitted Security Interest.
17.14 SALE AND LEASEBACK AND OTHER TRANSACTIONS
No Obligor will, and the Borrower will procure that no other member of the
Group will:
(a) sell, transfer or otherwise dispose of any of its assets on terms
whereby it is or may be leased to or re-acquired or acquired by a
member of the Group or any of its related entities in circumstances
where the transaction is entered into primarily as a method of
raising finance or of financing the acquisition of an asset; or
(b) factor or discount assets, enter into or permit to subsist any hire
purchase or conditional sale agreement in relation to any assets or
otherwise deal with its assets under any similar arrangements
provided that assets may be so factored, discounted, subject to hire
purchase or conditional sale agreements, or otherwise dealt with if
the total aggregate book value of such assets being factored,
discounted subject to hire purchase or conditional sale agreements or
otherwise dealt with by members of the Group at any time does not
exceed (Pounds)5,000,000 or its equivalent in other currencies,
provided that this Clause 17.14 shall not apply to any Existing Financing
Agreement during the Clean-up Period.
17.15 RESTRICTION ON DISPOSALS
No Obligor will, and the Borrower will procure that no other member of the
Group will, either in a single transaction or in a series of transactions,
whether related or not and whether voluntarily or involuntarily, sell,
transfer, grant any option or lease or otherwise dispose of any (or any
interest in any) Initial Property or all or any material part of its other
assets except that this Clause 17.15 does not apply to:
(a) sales of stock in trade in the ordinary course of business;
(b) disposals of non-material parts of any properties in the Portfolio
other than the Initial Properties on arm's length terms provided the
value of consideration receivable does not exceed (Pounds)1,000,000
for any one transaction or (Pounds)3,000,000 in aggregate in any
financial year of the Borrower;
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36
(c) disposals at arm's length and on normal commercial terms of obsolete
assets (other than Initial Properties);
(d) the payment of cash as consideration for the acquisition of any
asset or provision of any services at arm's length and on normal
commercial terms for the purpose of carrying on its business;
(e) disposals from one Obligor to another Obligor (including, without
limitation, any hive down of properties in the Initial Portfolio,
subject to such properties continuing to be subject to the security
created by the Finance Documents);
(f) disposals from any other member of the Group to an Obligor;
(g) the disposal of an Initial Property for cash received in full when
the disposal is substantially completed provided the proceeds of
such disposal after costs fairly attributable to the disposal equal
or exceed the Minimum Disposal Amount in respect of such Initial
Property;
(h) the disposal of the Connaught Apartments on arm's length terms; and
(i) leases of restaurant space, shops or other retail units in
properties in the Portfolio in the ordinary course of business at a
rack rent without any premium,
PROVIDED THAT notwithstanding any other provisions of this Agreement,
there shall be no disposals from an Obligor to a non-Obligor member of the
Group (other than disposals of assets in the ordinary course of business
which are not Initial Properties or assets subject to a fixed charge or
mortgage under the Debenture).
17.16 CHANGE OF BUSINESS ETC.
The Borrower will not, and will procure that no member of the Group will,
carry on any material business other than, in the case of the Borrower
that of a holding company, and in the case of every other member of the
Group the ownership, operation, financing and management of hotels and
related activities.
17.17 MERGERS
No Obligor will enter into any amalgamation, demerger, merger,
consolidation or transfer its business or part thereof to any other person
or business except as permitted by Clause 17.15 (Restriction on
Disposals).
17.18 RESTRICTION ON BORROWING
The Borrower will procure that no member of the Group will:
(a) incur or permit to subsist any Financial Indebtedness; or
(b) to the extent not restricted by paragraph (a), give or have
outstanding any guarantees or similar assurances against loss in
respect of Financial Indebtedness,
except this Clause 17.18 will not apply to:
(i) Financial Indebtedness under or in connection with the Finance
Documents or any Hedging Agreement;
(ii) Financial Indebtedness under the Senior Facility Agreement in a
principal amount not exceeding (Pounds)275,000,000 plus the Senior
Headroom (as defined in the Intercreditor Agreement);
(iii) Hotel Project Borrowings;
(iv) Financial Indebtedness under overdraft and working capital
facilities not exceeding an aggregate principal amount of
(Pounds)10,000,000 at any time;
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37
(v) Borrowings under the Subordinated Loan Notes;
(vi) Subordinated Investor Debt;
(vii) other Financial Indebtedness in an aggregate principal amount not
exceeding (Pounds)250,000;
(viii) (until the relevant Savoy Debenture Stock is redeemed as
contemplated in Clause 17.26 (Savoy Debenture Stock)) Borrowings in
a principal amount not exceeding (Pounds)450,000 under the Savoy
Debenture Stock issued by the Target and in a principal amount not
exceeding (Pounds)80,000 under the Savoy Debenture Stock issued by
the Savoy Theatre Limited;
(ix) (during the Clean-up Period only) Financial Indebtedness under the
Existing Financing Agreements (other than those specified in
paragraphs 6 to 16 (inclusive) of Schedule 8), provided any
increase in any such Financial Indebtedness during the Clean-up
Period only arises as a result of the utilisation of existing
commitments under those Existing Financing Agreements in the
ordinary course of trading of the Target Group;
(x) Financial Indebtedness under the Existing Financing Agreements
specified in paragraphs 6 to 16 (inclusive) of Schedule 8, provided
any increase in such Financial Indebtedness after the date of this
Agreement arises as a result of the utilisation of existing
commitments under those Existing Financing Agreements in the
ordinary course of trading of the Target Group; or
(xi) Borrowings owed by one Obligor to another Obligor.
17.19 ACQUISITIONS
The Borrower will procure that no member of the Group makes any
Acquisition except that this Clause 17.19 does not apply to:
(a) the Target Acquisition; or
(b) a Hotel Project.
17.20 DIVIDEND AND OTHER RESTRICTIONS
(a) Subject to paragraph (b) below, no Obligor shall, and the Borrower shall
procure that no other member of the Group will:
(i) make or resolve to make any distribution, dividend, Restricted
Purchase or other payment (in cash or kind) on or in respect of any
share capital or equivalent of a member of the Group except to or
for the benefit of an Obligor;
(ii) make or resolve to make any redemption, repurchase, defeasance,
retirement, return or repayment of any of its share capital or
equivalent of a member of the Group except to or for the benefit of
an Obligor;
(iii) make or resolve to make any repayment, prepayment or payment (in
cash or in kind) of the principal of, interest (whether or not
capitalised) or other amount on or in respect of Subordinated
Investor Debt or any sub-participation or cash collateral
arrangement in respect of any Subordinated Investor Debt;
(iv) enter into any material transaction with or incur any material
liability to or for the benefit of any Restricted Person or incur
any material indebtedness for Borrowings to or for the benefit of
any Restricted Person otherwise than in respect of Subordinated
Investor Debt or under agreements which are on terms no worse for
the Group than on arm's length terms in the ordinary course of
business; or
(v) be the creditor of any Financial Indebtedness of a Hotel Project
Vehicle or in any way dispose of or transfer any assets to a Hotel
Project Vehicle.
(b) Notwithstanding paragraph (a), after 31st December, 1998 the Borrower may
pay cash dividends to Restricted Persons and the Borrower may pay interest
on Subordinated Investor Debt either in
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38
cash or by issuing further Subordinated Investor Debt in lieu of such
interest in cash or by redeeming Subordinated Investor Debt previously
issued in lieu of interest in cash if:
(i) no Default has occurred and is continuing or would result from the
relevant payment; and
(ii) there is no breach of any of the covenants contained in Clause 18
(Financial and Minimum Value Covenants) and the Debt Service
Coverage Ratio is equal to or greater than 1.30:1 with respect to
the Ratio Period ending on the last day of the financial quarter of
the Group immediately preceding the financial quarter during which
the proposed payment is to be made; and
(iii) the relevant payment is paid not less than five and not more than 30
Business Days after the Junior Agent has received the quarterly
statements of the Group under Clause 17.2(c) (Financial information)
for the quarter which ended immediately before the proposed payment
date; and
(iv) the Borrower has given the Junior Agent before the relevant payment,
a certificate signed by a director of the Borrower dated no earlier
than five Business Days before the relevant payment certifying
compliance with the matters in paragraphs (i) to (iii) above,
PROVIDED THAT:
(A) for the purposes of this paragraph (b) only, there shall be added
back in the calculation of Net Operating Income for the purposes of
calculating the Debt Service Coverage Ratio any amount that would
otherwise be deducted by virtue of FRS3 from or otherwise not be
included in Net Operating Income for the relevant Ratio Period on
account of exceptional profits arising on the disposal of the
Connaught Apartments; and
(B) any payment of interest on Subordinated Investor Debt in cash or by
redeeming Subordinated Investor Debt previously issued in lieu of
interest in cash may only be made under this Clause 17.20 to the
extent any amounts would otherwise be available at the relevant time
to pay dividends to shareholders of the Borrower.
17.21 THE OFFERS
(a) Promptly upon the occurrence of each Offer Termination Date the Borrower
shall give notice to the Junior Agent (who shall notify the Junior
Lenders) that the same has occurred.
(b) Promptly upon (and in any event within 14 days after the Unconditional
Date) acquisition (including by virtue of acceptances to an Offer or by
contracting to acquire) by it of 90 per cent. in value of the class of the
share capital in Target to which each Offer relates, the Borrower shall
implement the procedures set out in Section 429 of the Companies Act 1985
and use its reasonable endeavours to acquire 100 per cent. of the issued
share capital of Target of that class within 6 weeks of its implementation
of such procedure.
(c) The Borrower undertakes that:
(i) without the prior agreement of the Arranger and the Majority Junior
Lenders it will not:
(A) amend or vary in any material respect any material term or
condition of an Offer other than by virtue of any extension of
the time for acceptance of that Offer permitted under paragraph
(d) below;
(B) agree to, or take any step to, reduce the condition in any
Offer relating to the required minimum percentage of valid
acceptances of Shares to which that Offer relates to less than
90 per cent. of that class of Shares;
(C) take or permit to be taken any step as a result of which the
offer price stated in an Offer is, or may be required to be,
increased beyond the level agreed between the Borrower and the
Junior Lenders from time to time; or
(D) issue or allow to be issued any press release or other
publicity, the text of which has not been previously agreed
with the Arranger, which makes reference to the Facility or to
some or all of the Junior Finance Parties unless the publicity
is
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39
required by law, the Code or any stock exchange (in which case
the Borrower shall notify the Junior Agent and the Junior
Lenders as soon as practicable upon becoming aware that the
publicity is required);
(ii) in all material respects relevant in the context of an Offer, it
will comply with the Code (subject to any applicable waivers by the
Panel), the Financial Services Act 1986, the Companies Act 1985 and
all other applicable statutes, laws and regulations; and
(iii) it will keep the Arranger informed as to the status and progress of
the Offers and, in particular, will from time to time and promptly
on request give to the Arranger reasonable details as to the current
level of acceptances of each Offer (including a copy of every
certificate delivered by the receiving agent to the Borrower and/or
its advisers pursuant to the Code) and such other matters relevant
to each Offer as the Arranger may reasonably request.
(d) The Borrower shall not extend the time for the acceptance of an Offer
without the prior written consent of the Arranger and Majority Junior
Lenders if anything has occurred since the date of this Agreement or, as
the case may be, the last extension of the time for the acceptance of that
Offer which has had, or could reasonably be expected to have, a material
adverse effect on the assets, business, financial condition or prospects
of the Target Group and which could reasonably be expected to have a
material adverse effect on the ability of the Obligors to perform their
obligations under the Finance Documents when compared to the position that
would have applied had the material adverse effect in relation to the
Target Group not occurred. In any event, if the Borrower is able to extend
the time for the acceptance of an Offer, it shall not do so unless it also
extends the time for the acceptance of the other Offer for the same
period.
(e) The Borrower shall give the Junior Agent and the Arranger not less than
five Business Days prior written notice of any proposed extension of the
time for the acceptance of the Offers, together with a certificate signed
by two directors of the Borrower confirming that as at the date of the
certificate (which shall not be more than 10 Business Days before the
current expiry date of the Offers), to the best of their knowledge and
belief (after reasonable enquiry) no material adverse effect in relation
to the Target Group of the kind described in paragraph (d) above has
occurred.
(f) If the Borrower becomes aware (whether through notice from the Arranger,
the Junior Agent or any Junior Lender or otherwise) of a circumstance or
event which is or could reasonably be construed to be covered by any
condition of the Offers which, if not waived, would entitle the Borrower
(with the Panel's consent, if needed) to lapse the Offers, the Borrower
shall promptly notify the Arranger and the Junior Agent and, if the
Arranger and the Majority Junior Lenders, acting reasonably, state that in
their opinion such circumstance or event would adversely affect the
ability of the Group to comply with its obligations under the Finance
Documents (when compared to the position that would have applied had the
circumstance or event not occurred), the Borrower shall promptly request
the Panel to confirm (and shall use its best endeavours to ensure that the
Panel does confirm, including the exercise in full of all rights of
appeal) that the Panel will not object to the lapsing of the Offers as a
result of the non-satisfaction of that condition. If the Panel gives a
confirmation substantially in those terms, the Borrower shall not waive
that condition or treat it as fulfilled and shall declare both Offers
lapsed at the earliest opportunity.
17.22 ACCESSION OF THE TARGET GROUP AND HIVE-DOWN
(a) (i) As soon as practicable after the first Drawdown Date (and in any
event within 3 months after that date), the Borrower shall ensure
that the Target and its Subsidiaries (except for Subsidiaries which
are Dormant Subsidiaries) become Subsidiary Guarantors in accordance
with Clause 27.4 (Subsidiary Guarantors) and will provide the Junior
Agent with all of the items specified in Part III of Schedule 2.
(ii) The Borrower shall also ensure that any company which becomes a
member of the Group (other than a Hotel Project Vehicle) after the
date of this Agreement becomes a Subsidiary Guarantor in accordance
with Clause 27.4 (Subsidiary Guarantors).
(b) The Borrower shall ensure that, prior to giving any security or guarantees
as required under paragraph (a) above, the Target and its Subsidiaries
promptly carry out the procedures set out in Sections 155-158 of the
Companies Act 1985 required to enable them to become Subsidiary Guarantors
and grant the security contemplated by Clause 27.4 (Subsidiary
Guarantors).
<PAGE>
40
(c) The Borrower shall, and shall ensure that the Target Group does, promptly
give the Junior Agent all assistance it reasonably requires in relation to
the security and guarantees to be granted by the Target Group including,
without limitation, promptly answering all reasonable questions and
requisitions of the Junior Agent and its advisors in relation to the
assets of the Target Group.
(d) The Borrower shall ensure that any Subsidiary of the Target which is a
Dormant Subsidiary becomes a Subsidiary Guarantor in accordance with
paragraphs (a)(ii), (b) and (c) above as and when it ceases to be a
Dormant Subsidiary.
(e) The Borrower shall ensure that on or before 9th December, 1998:
(i) all right, title or interest in any title to all the Initial
Properties is transferred to one or more wholly owned special
purpose Subsidiaries of the Target which have become Subsidiary
Guarantors in accordance with paragraphs (a), (b) and (c) above;
(ii) all such special purpose Subsidiaries give the Security Trustee a
Debenture over all their assets (including any right, title or
interest so transferred to them) and take all the other steps
required by paragraphs (a), (b) and (c) above; and
(iii) the owners of the shares in each such special purpose Subsidiary
give the Security Trustee a mortgage for the benefit of the Junior
Finance Parties over all the shares in each such special purpose
Subsidiary.
(f) On and from the first Drawdown Date, the Borrower shall use all reasonable
endeavours to procure that legal title to the Initial Properties which
comprise the Savoy Hotel and the Savoy Theatre is registered at HM Land
Registry with absolute title in the Target or, as the case may be, Savoy
Theatre Limited.
17.23 SHARE SECURITY
The Borrower shall promptly take all steps required in relation to the
Shares by Clauses 6.5 and 6.6 of the Debenture.
17.24 ACCOUNTS
(a) The Borrower shall procure that the deposits required by Clause 18.4 (FF&E
Reserve) are made to the FF&E Account. The Borrower may also make such
other deposits in the FF&E Account from time to time as it sees fit.
(b) Subject to the Debenture, the Borrower may only withdraw amounts from the
FF&E Account for application in or towards capital expenditure (including
expenditure required in relation to fixtures, furnishings and equipment)
for the Initial Properties which are hotels.
(c) If a cash collateral account is established as contemplated by paragraph
(b) of the definition of Subordinated Loan Notes, the Borrower may
withdraw amounts from such accounts for application in making payments of
principal under the Subordinated Loan Notes.
(d) The Savoy Debenture Stock Reserve Account shall be under the sole control
of the Security Trustee and no withdrawals may be made from it without the
prior written consent of the Security Trustee except pursuant to paragraph
(e) below. However, the Security Trustee may consent to the release of
funds standing to the credit of the Savoy Debenture Stock Reserve Account
(and is hereby authorised by the Junior Finance Parties and the Obligors
to do so) for application in payment to the trustee of the relevant Savoy
Debenture Stock Trust Deed:
(i) under or in connection with an agreement with the relevant trustee
for the redemption of any Savoy Debenture Stock or other release of
any Savoy Debenture Stock Mortgage, in any case on terms approved by
the Junior Lenders and the Arranger under Clause 17.26 (Savoy
Debenture Stock); or
(ii) upon any Savoy Debenture Stock becoming redeemable in accordance
with its terms.
(e) If at the time when the Target and/or The Savoy Theatre Limited become
Subsidiary Guarantors in accordance with Clause 17.22 (Accession of the
Target Group and Hive-down), any Savoy Debenture Stock is outstanding, the
Borrower shall, if the Arranger so requires, ensure that the Target and/or
The Savoy Theatre Limited open accounts (the "NEW SAVOY DEBENTURE STOCK
<PAGE>
41
RESERVE ACCOUNTS") charged to the Security Trustee on the same basis as
the Savoy Debenture Stock Reserve Account and transfer from the Savoy
Debenture Stock Reserve Account in the name of the Borrower to the new
Savoy Debenture Stock Reserve Accounts such amount as the Arranger may
require to ensure that the amount in each account reflects on a rateable
basis the principal amount outstanding under each issue of Savoy Debenture
Stock together with a rateable allowance for interest which may accrue
before the Final Maturity Date. The Target and The Savoy Theatre Limited
shall take such steps to perfect the Security Trustee's security over the
new Savoy Debenture Stock Reserve Accounts as the Security Trustee may
require consistently with the corresponding steps taken in relation to the
original Savoy Debenture Stock Reserve Account.
17.25 SYNDICATION
At all times up to and including the date six months after the first
Drawdown Date, the Borrower and all other members of the Group will assist
the Arranger in sub-underwriting and subsequent syndication of the
Facility, including (a) the preparation with the Arranger of a
confidential information memorandum and other marketing and financial
materials for use in syndication and (b) direct contact, including the
hosting of one or more bank meetings, between senior management of
Blackstone (and, after the Unconditional Date, of the Target) on the one
hand and potential Junior Lenders and participants (in each case chosen by
the Arranger in consultation with the Borrower) on the other hand, and
comply with all reasonable requests for information from potential Junior
Lenders and participants made through the Arranger. The Arranger shall
from time to time consult with the Borrower with respect to the foregoing.
17.26 SAVOY DEBENTURE STOCK
(a) The Borrower shall use all reasonable efforts to reach an agreement with
the trustee of each Savoy Debenture Stock Trust Deed for the redemption of
the Savoy Debenture Stock and the discharge of each Savoy Debenture Stock
Mortgage within 14 days after the date of this Agreement and if such
agreement is not reached within 14 days the Borrower will continue to use
such reasonable efforts. The terms of any such agreement must be approved
by the Junior Lenders and the Arranger. The Borrower shall promptly
implement any such agreement as soon as it is reached.
(b) The Borrower will consult with the Arranger and keep the Arranger informed
as to the progress of any discussions in relation to a proposed agreement
as referred to in paragraph (a) above and shall discuss with each trustee
under the Savoy Debenture Stock Trust Deeds any proposal the Arranger
(acting reasonably) considers appropriate in the context of those
discussions and having regard to the need to procure the redemption of the
Savoy Debenture Stock and the release of the Savoy Debenture Stock
Mortgages as soon as possible.
(c) The Borrower shall not take (or, to the extent within its power, permit)
any steps to change the trustee under any Savoy Debenture Stock Trust Deed
or appoint any new trustees thereunder and the Borrower shall not agree to
any such change or appointment or permit any such change or appointment to
be made.
(d) The Borrower shall ensure that at all times on and from the first Drawdown
Date until the redemption of the Savoy Debenture Stock in full there is
deposited in the Savoy Debenture Stock Reserve Account an amount of not
less than (Pounds)96,000, less (i) the principal amount of any Savoy
Debenture Stock which has been redeemed after the date of this Agreement
and (ii) any amount standing to the credit of the Savoy Debenture Stock
Reserve Account which is referable to interest on the relevant Savoy
Debenture Stock which would have accrued up to the Final Maturity Date on
the amount redeemed. If the Arranger requires new Savoy Debenture Stock
Reserve Accounts to be opened in accordance with Clause 17.24(e)
(Accounts), the amount required to be held in all the Savoy Debenture
Stock Reserve Accounts shall not exceed (Pounds)96,000 in aggregate and
that maximum amount shall be apportioned, if required, between the Savoy
Debenture Stock Reserve Accounts as provided in Clause 17.24(e)
(Accounts).
(e) The Borrower shall notify the Junior Agent and the Security Trustee
immediately upon becoming aware of:
(i) any Savoy Debenture Stock Trust Deed or the security constituted
thereby becoming enforceable;
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42
(ii) any action or decision, or threat of action or decision by the
trustee under any Savoy Debenture Stock Trust Deed to take any
enforcement action under any Savoy Debenture Stock Trust Deed to
declare the relevant Savoy Debenture Stock redeemable or the
relevant Savoy Debenture Stock Mortgage enforceable (or any
direction by the relevant stockholders to such trustee to any such
effect); or
(iii) any circumstances which might be grounds for the taking of any
action referred to in paragraphs (i) or (ii) above.
18. FINANCIAL AND MINIMUM VALUE COVENANTS
18.1 FINANCIAL DEFINITIONS
In this Clause 18.1:
"GROSS REVENUE"
means, for any month, the gross revenues of the Group arising out of those
of the Initial Properties which constitute part of the hotels commonly
known as The Savoy Hotel, Claridge's Hotel, The Connaught Hotel, The
Berkeley and the Lygon Arms for that month.
"INTEREST PAYABLE"
means, in respect of a Ratio Period, the aggregate amount of:
(a) interest and commitment fees accrued in respect of Borrowings
(including under this Agreement and the Senior Facility Agreement but
excluding Hotel Project Borrowings and Subordinated Investor Debt)
during that Ratio Period (whether or not due and payable);
(b) all interest (including the interest element of leasing and hire
purchase payments and capitalised interest) commission, commitment
fees and other finance payments of the Group accrued in respect of
Borrowings (including under this Agreement and the Senior Facility
Agreement but excluding Hotel Project Borrowings and Subordinated
Investor Debt) in respect of that Ratio Period; and
(c) all hedging payments and expenses accrued during that Ratio Period
(whether or not due and payable) (including under the Hedging
Agreements),
all as determined on a consolidated basis by reference to the most recent
financial statements and certificates delivered pursuant to Clauses 17.2(b)
and (c) (Financial information).
"NET OPERATING INCOME"
means, in respect of any Ratio Period, total operating profit of the Group
(excluding Hotel Project Vehicles) for continuing operations, acquisitions
(as a component of continuing operations) and discontinued operations as
set out in FRS 3 (excluding, for the avoidance of doubt, any exceptional
profits or losses in the sale or termination of an operation, exceptional
costs of a fundamental reorganisation or restructuring and any exceptional
profits or losses on the disposals of fixed assets or investments whether
tangible or not and extraordinary items for such Ratio Period as set out in
FRS 3) prior to the deduction of:
(a) Interest Payable and all other interest payments; and
(b) corporation tax on the overall income of the Group payable in respect
of the Ratio Period concerned,
but adjusted:
(c) to add back depreciation on fixed assets;
(d) to add back any debits arising as a result of amortisation of
goodwill, acquisition costs and other intangible assets; and
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43
(e) by deducting all amounts paid into FF&E Account in that Ratio Period
and a notional management fee of two per cent. of Gross Revenue for
that Ratio Period,
all as determined by reference to the most recent financial statements and
certificates delivered pursuant to Clauses 17.2(b) and (c) (Financial
information).
"TOTAL DEBT SERVICE"
means, for any Ratio Period:
(a) the aggregate of Interest Payable (other than front end fees payable
under, or written off in consequence of, this Agreement or the Senior
Facility Agreement) accruing during the Ratio Period; and
(b) any scheduled repayments of Borrowings (including, but not limited to,
scheduled repayments under this Agreement and the Senior Facility
Agreement, but excluding repayments on Hotel Project Borrowings and
Subordinated Investor Debt) made during the Ratio Period,
all as determined by reference to the most recent financial statements and
certificates delivered pursuant to Clauses 17.2(b) or (c) (Financial
information).
18.2 DEBT SERVICE COVERAGE RATIO
The Borrower shall procure that the ratio of Net Operating Income to Total
Debt Service for each Ratio Period set out in Column (1) below shall not
fall below the ratio set opposite that Ratio Period in Column (2) below:
<TABLE>
<S> <C>
(1) (2)
The first 4 Ratio Periods: 1.05:1
Ratio Periods 5 to 8 (both inclusive): 1.10:1
Ratio Period 9 and each Ratio Period thereafter: 1.15:1
</TABLE>
18.3 LOAN TO VALUE RATIO
The Borrower will procure that at all times the aggregate principal amount
of the Advances and the advances under the Senior Facility Agreement (plus
the undrawn Total Commitments and the undrawn total commitments under the
Senior Facility Agreement) is not greater than 75 per cent. of the
aggregate Value of the Initial Properties.
18.4 FF&E RESERVE
The Borrower shall procure that not more than five Business Days after the
end of each month (commencing with the first month to begin after the first
Drawdown Date) there is credited to the FF&E Account an amount equal to
four per cent. of Gross Revenue for that month.
19. DEFAULT
19.1 EVENTS OF DEFAULT
Each of the events set out in Clauses 19.2 (Non-payment) to 19.16
(Security) (inclusive) is an Event of Default (whether or not caused by any
reason whatsoever outside the control of any Obligor or any other person).
19.2 NON-PAYMENT
Any Obligor fails to pay any sum due from it under any Finance Document
within three Business Days of the due date for payment.
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44
19.3 MISREPRESENTATION
Any representation, warranty or statement made or repeated by any Obligor
in any Finance Document or in any notice or other certificate delivered by
it pursuant thereto or in connection therewith is or proves to have been
incorrect or misleading in any material respect when made.
19.4 COMPLIANCE
Any Obligor fails to perform any obligation expressed to be assumed by it
in any Finance Document (other than as referred to in Clause 19.2) and
such failure (if capable of remedy) is not remedied within 30 days after
the earlier of the Obligor becoming aware of that failure and the Junior
Agent having given notice of such failure to such Obligor.
19.5 CROSS DEFAULT
Subject to the terms of the Intercreditor Agreement, any other Financial
Indebtedness of any member of the Group (other than Hotel Project
Borrowings) in excess of (Pounds)1,000,000 in aggregate is not paid when
due (or within any originally stated applicable grace period relating
thereto) or any such Financial Indebtedness is, or is capable of being,
declared to be or otherwise becomes due and payable prior to its specified
maturity by reason of default (however described) by a member of the
Group, PROVIDED THAT during the Clean-up Period this Clause 19.5 does not
apply to Financial Indebtedness under the Existing Financing Agreements.
19.6 INVALIDITY
Any of the Finance Documents shall cease to be in full force and effect in
any material respect or shall cease to constitute the legal, valid and
binding obligation of any Obligor party to it or it shall be unlawful for
any Obligor to perform any of its material obligations under any of the
Finance Documents.
19.7 CREDITOR'S PROCESS
Any execution, diligence or distress is levied against, or a receiver,
trustee or similar officer is appointed or an encumbrancer takes
possession of the whole or any material part of, the undertaking or assets
of any Obligor and is not satisfied, removed or discharged within 21 days.
19.8 INSOLVENCY
Any Obligor is unable to pay its debts as they fall due or otherwise
becomes or is declared insolvent, or commences negotiations with any one
or more of its creditors with a view to the general readjustment or
rescheduling of its indebtedness, or makes or proposes to make a general
assignment of its indebtedness for the benefit of or a composition with
its creditors.
19.9 LIQUIDATION AND ADMINISTRATION
(a) Any order is made or an effective resolution is passed or a petition is
presented (not being such an action or petition which the Borrower is able
to demonstrate to the reasonable satisfaction of the Majority Junior
Lenders will be, or is likely to be, unsuccessful and which is discharged
within 14 days of being taken or presented) for the winding-up,
dissolution, liquidation or reconstruction of any Obligor (save for the
purposes of, and followed by, an amalgamation, merger or reconstruction
while solvent and on terms previously approved in writing by the Majority
Junior Lenders, such approval not be unreasonably withheld) for the
appointment of a receiver, administrative receiver, trustee or similar
officer of it or the whole or any material part of its revenues and assets
or any such receiver, administrative receiver, trustee or similar officers
is so appointed.
(b) Any administration order is made or an effective resolution is passed or a
petition is presented for the making of an administration order or an
administrator is appointed in each case in respect of any Obligor.
19.10 CESSATION OF BUSINESS
Any Obligor shall suspend all or a substantial part of its operations, or
ceases to carry on its business as at the date hereof.
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45
19.11 REPUDIATION
Any Obligor repudiates, or does or causes to be done any act or thing
evidencing an intention to repudiate, any Finance Document.
19.12 GUARANTEES
The guarantee of any Guarantor under this Agreement is not effective or is
alleged by an Obligor to be ineffective for any reason.
19.13 OWNERSHIP OF SUBSIDIARY GUARANTORS
A Subsidiary Guarantor is not or ceases to be a wholly owned Subsidiary of
the Borrower.
19.14 CHANGE OF CONTROL OR INVESTMENT
Without the prior written consent of all the Junior Lenders:
(a) the Borrower is not, or ceases to be, controlled, directly or
indirectly, by one or more Blackstone Affiliates; or
(b) after the Offer Termination Date, the Target is not or ceases to be a
wholly owned Subsidiary of the Borrower; or
(c) 50 per cent. or more of the outstanding Subordinated Investor Debt
from time to time (if any) is at any time owed to any person or
persons who are not Blackstone Affiliates.
19.15 MATERIAL ADVERSE CHANGE
Any event or series of events occurs which is reasonably likely to have a
material and adverse effect on the ability of any Obligor to comply with
its obligations under the Finance Documents.
19.16 SECURITY
Any Debenture is not, or is claimed by the relevant Obligor not to be,
binding on or enforceable against the Obligor concerned or effective to
create the Security Interests intended to be created by it.
19.17 ACCELERATION
Subject to the terms of the Intercreditor Agreement, on and at any time
after the occurrence of an Event of Default the Junior Agent may, and
shall if so directed by the Majority Junior Lenders, by notice to the
Borrower:
(a) cancel the Total Commitments; and/or
(b) demand that all the Advances, together with accrued interest and all
other amounts accrued under this Agreement be immediately due and
payable, whereupon they shall become immediately due and payable;
and/or
(c) demand that all the Advances be payable on demand, whereupon they
shall immediately become payable on demand,
PROVIDED THAT all Events of Default other than those specified in
paragraphs (a), (b) and (c) of Clause 4.5 (Certain Funds Period) shall be
suspended for the purposes of this Clause 19.17 during the Certain Funds
Period to the extent they would otherwise permit action to be taken under
paragraphs (a), (b) or (c) above in relation to Advances drawndown to
finance the purchase of Shares.
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46
20. THE JUNIOR AGENT, THE SECURITY TRUSTEE, THE ARRANGER AND THE JOINT
ARRANGERS
20.1 APPOINTMENT AND DUTIES OF THE JUNIOR AGENT
(a) Each Junior Finance Party (other than the Junior Agent) approves the form
of each Finance Document (other than the Fee Letters and the Hedging
Agreements) which is in agreed form and, subject to Clause 20.15
(Resignation and removal), irrevocably appoints the Junior Agent to act as
its agent under and in connection with the Finance Documents, and, subject
to Clause 20.15 (Resignation and removal), irrevocably authorises the
Junior Agent on its behalf to perform the duties and to exercise the
rights, powers and discretions that are specifically delegated to it under
or in connection with the Finance Documents, together with any other
incidental rights, powers and discretions. The Junior Agent has only those
duties which are expressly specified in this Agreement, and those duties
are solely of a mechanical and administrative nature. The Obligors shall
be entitled to assume that any consent, notice or other written
communication issued to all or any of them by the Junior Agent at any time
is duly authorised by all the Junior Lenders and Junior Finance Parties and
shall not be concerned to enquire whether the Junior Agent was actually so
empowered in accordance with any provision of this Clause 20 or otherwise.
(b) Each Junior Finance Party (other than the Security Trustee) approves the
form of each Finance Document (other than the Fee Letters) which is in
agreed form to which the Security Trustee is, or is to be, party and
irrevocably appoints the Security Trustee to act as its trustee under and
in connection with the Finance Documents to which it is party, and
irrevocably authorises the Security Trustee on its behalf to perform the
duties and to exercise the rights, powers and discretions that are
specifically delegated to it under or in connection with such Finance
Documents, together with any other incidental rights, powers and
discretions. The Security Trustee has only those duties which are expressly
specified in such Finance Documents, and those duties are solely of a
mechanical and administrative nature. The Obligors shall be entitled to
assume that any consent, notice or other written communication issued to
all or any of them by the Security Trustee at any time is duly authorised
by all the Junior Lenders and Junior Finance Parties and shall not be
concerned to enquire whether the Security Trustee was actually so empowered
in accordance with any provision of this Clause 20 or otherwise.
20.2 ROLE OF THE ARRANGERS
Except as specifically provided in this Agreement, the Arranger and the
Joint Arrangers (in this Clause 20, each an "ARRANGER") have no obligations
of any kind to any other Party under or in connection with any Finance
Document.
20.3 RELATIONSHIP
The relationship between the Junior Agent and the other Junior Finance
Parties is that of agent and principal only. Nothing in this Agreement
constitutes the Junior Agent as trustee or fiduciary for any other Party or
any other person and the Junior Agent need not hold in trust any moneys
paid to it for a Party or be liable to account for interest on those
moneys.
20.4 MAJORITY JUNIOR LENDERS' DIRECTIONS
The Junior Agent or, as the case may be, the Security Trustee will be fully
protected if it acts in accordance with the instructions of the Majority
Junior Lenders (or, in the case of the Security Trustee, the Junior Agent)
in connection with the exercise of any right, power or discretion or any
matter not expressly provided for in this Agreement. Any such instructions
given by the Majority Junior Lenders (or, in the case of the Security
Trustee, the Junior Agent) will be binding on all the Junior Lenders. In
the absence of such instructions, the Junior Agent or, as the case may be,
the Security Trustee may act as it considers to be in the best interests of
all the Junior Lenders.
20.5 DELEGATION
The Junior Agent and the Security Trustee may act under the Finance
Documents through their personnel and agents.
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47
20.6 RESPONSIBILITY FOR DOCUMENTATION
Neither the Junior Agent, the Security Trustee nor any Arranger is
responsible to any other Party for:
(a) the execution, genuineness, validity, enforceability or sufficiency
of any Finance Document or any other document; or
(b) the collectability of amounts payable under any Finance Document; or
(c) the accuracy of any statements (whether written or oral) made in or
in connection with any Finance Document (including the Information
Package).
20.7 DEFAULT
(a) Neither the Junior Agent or the Security Trustee is obliged to monitor or
enquire as to whether or not a Default has occurred. The Junior Agent will
not be deemed to have knowledge of the occurrence of a Default. However,
if the Junior Agent or the Security Trustee receives notice from a Party
referring to this Agreement, describing the Default and stating that the
event is a Default, it shall promptly notify the Junior Lenders.
(b) The Junior Agent or, as the case may be, the Security Trustee may require
from the Junior Finance Parties the receipt of security satisfactory to
it, whether by way of payment in advance or otherwise, against any
liability or loss which it will or may incur in taking any proceedings or
action arising out of or in connection with any Finance Document before it
commences those proceedings or takes that action.
20.8 EXONERATION
(a) Without limiting paragraph (b) below, neither the Junior Agent nor the
Security Trustee will be liable to any other Junior Finance Party for any
action taken or not taken by it under or in connection with any Finance
Document, unless directly caused by its gross negligence or wilful
misconduct.
(b) No Party may take any proceedings against any officer, employee or agent
of the Junior Agent or the Security Trustee in respect of any claim it
might have against the Junior Agent or in respect of any act or omission
of any kind (including gross negligence or wilful misconduct) by that
officer, employee or agent in relation to any Finance Document.
20.9 RELIANCE
The Junior Agent and the Security Trustee may:
(a) rely on any notice or document believed by it to be genuine and
correct and to have been signed by, or with the authority of, the
proper person;
(b) rely on any statement made by a director or employee of any person
regarding any matters which may reasonably be assumed to be within
his knowledge or within his power to verify; and
(c) engage, pay for and rely on legal or other professional advisers
selected by it (including those in the Junior Agent's or the Security
Trustee's employment and those representing a Party other than the
Junior Agent or the Security Trustee).
20.10 CREDIT APPROVAL AND APPRAISAL
Without affecting the responsibility of any Obligor for information
supplied by it or on its behalf in connection with any Finance Document,
each Junior Lender confirms that it:
(a) has made its own independent investigation and assessment of the
financial condition and affairs of each Obligor and their related
entities in connection with its participation in this Agreement and
has not relied exclusively on any information provided to it by the
Junior Agent, the Security Trustee or any Arranger in connection with
any Finance Document; and
<PAGE>
48
(b) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and their related entities while any
amount is or may be outstanding under the Finance Documents or any
Commitment is in force.
20.11 INFORMATION
(a) The Junior Agent or, as the case may be, the Security Trustee shall
promptly forward to the person concerned the original or a copy of any
document which is delivered to the Junior Agent or, as the case may be,
the Security Trustee by a Party for that person.
(b) Except where this Agreement specifically provides otherwise, neither the
Junior Agent or the Security Trustee is obliged to review or check the
accuracy or completeness of any document it forwards to another Party.
(c) Except as provided above, neither the Junior Agent or the Security Trustee
has any duty:
(i) either initially or on a continuing basis to provide any Junior
Lender with any credit or other information concerning the financial
condition or affairs of any Obligor or any related entity of any of
them whether coming into its possession before, on or after the date
of this Agreement; or
(ii) unless specifically requested to do so by a Junior Lender in
accordance with this Agreement, to request any certificates or other
documents from any Obligor.
20.12 THE JUNIOR AGENT, THE SECURITY TRUSTEE AND THE ARRANGERS INDIVIDUALLY
(a) If it is also a Junior Lender, each of the Junior Agent, the Security
Trustee and each Arranger has the same rights and powers under this
Agreement as any other Junior Lender and may exercise those rights and
powers as though it were not the Junior Agent, the Security Trustee or an
Arranger.
(b) Each of the Junior Agent, the Security Trustee and each Arranger may:
(i) carry on any business with an Obligor or their related entities;
(ii) act as agent or trustee for, or in relation to any financing
involving, an Obligor or their related entities; and
(iii) retain any profits or remuneration in connection with its activities
under this Agreement or in relation to any of the foregoing.
(c) In acting as Junior Agent or, as the case may be, the Security Trustee,
the agency or trustee division of the Junior Agent or, as the case may be,
the Security Trustee, will be treated as a separate entity from its other
divisions and departments. Any information acquired by the Junior Agent
or, as the case may be, the Security Trustee, otherwise than in its
capacity as Junior Agent or, as the case may be, Security Trustee, may be
treated as confidential by that Junior Agent or, as the case may be,
Security Trustee, and will not be deemed to be information given to or
possessed by the Junior Agent, or, as the case may be, the Security
Trustee (or their agency or trustee divisions) in its capacity as such.
20.13 INDEMNITIES
(a) Without limiting the liability of any Obligor under the Finance Documents,
each Junior Lender shall forthwith on demand indemnify the Junior Agent
and the Security Trustee for its proportion of any liability or loss
incurred by the Junior Agent or the Security Trustee in any way relating
to or arising out of its acting as the Junior Agent or Security Trustee,
except to the extent that the liability or loss arises directly from the
Junior Agent's or, as the case may be, the Security Trustee's gross
negligence or wilful misconduct.
(b) A Junior Lender's proportion of the liability set out in paragraph (a)
above will be the proportion which its participation in the Advances (if
any) bear to all the Advances on the date of the demand. If, however,
there are no Advances outstanding on the date of demand, then the
proportion will be the proportion which its Commitment bears to the Total
Commitments at the date of demand or, if the Total Commitments have then
been cancelled, bore to the Total Commitments immediately before being
cancelled.
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(c) The Borrower shall forthwith on demand reimburse each Junior Lender for
any payment properly made by it under paragraph (a) above.
20.14 COMPLIANCE
(a) The Junior Agent and the Security Trustee may refrain from doing anything
which might, in its opinion, constitute a breach of any law or regulation
or be otherwise actionable at the suit of any person, and may do anything
which, in its opinion, is necessary or desirable to comply with any law or
regulation of any jurisdiction.
(b) Without limiting paragraph (a) above, neither the Junior Agent or the
Security Trustee need disclose any information relating to any Obligor or
any of their related entities if the disclosure might, in the opinion of
the Junior Agent or, as the case may be, the Security Trustee, constitute
a breach of any law or regulation or any duty of secrecy or
confidentiality or be otherwise actionable at the suit of any person.
20.15 RESIGNATION AND REMOVAL
(a) Notwithstanding its irrevocable appointment:
(i) the Junior Agent and/or the Security Trustee may resign by giving
notice to the Junior Lenders and the Borrower, in which case the
Junior Agent or, as the case may be, the Security Trustee may
forthwith appoint one of its Affiliates as successor Junior Agent
or, as the case may be, the Security Trustee or, failing that, the
Majority Junior Lenders may appoint a successor Junior Agent or, as
the case may be, Security Trustee subject to prior consultation with
the Borrower; and
(ii) the Junior Agent may be removed by notice from the Majority Junior
Lenders, in which case the Majority Junior Lenders may appoint a
successor Junior Agent subject to prior consultation with the
Borrower.
(b) If the appointment of a successor Junior Agent or, as the case may be,
Security Trustee is to be made by the Majority Junior Lenders but they
have not, within 30 days after notice of resignation, appointed a
successor Junior Agent or, as the case may be, Security Trustee which
accepts the appointment, the Junior Agent or, as the case may be, the
Security Trustee may appoint a successor Junior Agent or, as the case may
be, Security Trustee.
(c) The resignation or removal of the Junior Agent or, as the case may be, the
Security Trustee and the appointment of any successor Junior Agent or, as
the case may be, Security Trustee will both become effective only upon the
successor Junior Agent or, as the case may be, Security Trustee notifying
all the Parties that it accepts its appointment. On giving the
notification, the successor Junior Agent or, as the case may be, Security
Trustee will succeed to the position of the Junior Agent or, as the case
may be, the Security Trustee and the term "JUNIOR AGENT" will mean the
successor Junior Agent or, as the case may be, the term "SECURITY TRUSTEE"
will mean the successor Security Trustee.
(d) The retiring or removed Junior Agent or, as the case may be, Security
Trustee shall, at its own cost, make available to the successor Junior
Agent or, as the case may be, Security Trustee such documents and records
and provide such assistance as the successor Junior Agent or, as the case
may be, the Security Trustee may reasonably request for the purposes of
performing its functions as the Junior Agent or, as the case may be, the
Security Trustee under this Agreement.
(e) Upon its resignation or removal becoming effective, this Clause 20 shall
continue to benefit the retiring Junior Agent or, as the case may be,
Security Trustee in respect of any action taken or not taken by it under
or in connection with the Finance Documents while it was the Junior Agent
or, as the case may be, the Security Trustee, and, subject to paragraph
(d) above, it shall have no further obligations under any Finance
Document.
20.16 JUNIOR LENDERS
The Junior Agent may treat each Junior Lender as a Junior Lender, entitled
to payments under this Agreement and as acting through its Facility
Office(s) until it has received not less than five Business Days' prior
notice from that Junior Lender to the contrary.
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20.17 PROTECTIONS OF THE SECURITY TRUSTEE
(a) The Security Trustee in its capacity as trustee or otherwise under the
Finance Documents:
(i) is not liable for any failure, omission or defect in perfecting or
registering the security constituted or created by any Finance
Document;
(ii) may accept without enquiry such title as any Obligor may have to any
asset secured by any Finance Document; and
(iii) (save where the Security Trustee holds a legal mortgage over, or an
interest in, real property or shares) is not under any obligation to
hold any Finance Document or any other document in connection with
the Finance Documents or the assets secured by any Finance Document
(including title deeds) in its own possession or to take any steps
to protect or preserve the same. The Security Trustee may permit an
Obligor to retain any such Finance Document or other document in its
possession.
(b) Save as otherwise provided in the Finance Documents, all moneys which
under the trusts contained in the Finance Documents are received by the
Security Trustee in its capacity as trustee or otherwise may be invested
in the name of or under the control of the Security Trustee in any
investment authorised by English law for the investment by trustees of
trust money or in any other investments which may be selected by the
Security Trustee. Additionally, the same may be placed on deposit in the
name of or under the control of the Security Trustee at such bank or
institution (including the Security Trustee) and upon such terms as the
Security Trustee may think fit.
21. FEES
21.1 ARRANGEMENT FEE
The Borrower shall pay to the Arranger an arrangement and underwriting fee
in the amount and on the date specified in the relevant Fee Letter.
21.2 COMMITMENT FEE
(a) The Borrower shall pay to the Junior Agent for each Junior Lender a
commitment fee at the rate of 1 (one) per cent. per annum payable
quarterly in arrear (with the first payment on the first Drawdown Date) on
the daily undrawn, uncancelled portion of such Junior Lender's Commitment.
(b) Accrued commitment fee will also be payable on the cancellation of the
Commitments on the amount cancelled.
21.3 JUNIOR AGENT'S FEE
The Borrower shall pay to the Junior Agent for its own account the agency
fees in the amounts and at the times agreed in the relevant Fee Letter.
21.4 SECURITY TRUSTEE FEE
The Borrower shall pay to the Security Trustee for its own account the
security trustee fees in the amounts and at the times agreed in the
relevant Fee Letter.
21.5 VAT
Any fee referred to in this Clause 21 (Fees) is exclusive of any value
added tax or any other tax which might be chargeable in connection with
that fee. If any value added tax or other tax is so chargeable, it shall
be paid by the Borrower at the same time as it pays the relevant fee.
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22. EXPENSES
22.1 INITIAL AND SPECIAL COSTS
Except to the extent separately agreed, the Borrower shall forthwith on
demand pay the Junior Agent, the Security Trustee and the Arranger the
amount of all costs and expenses (including legal fees) reasonably incurred
by any of them in connection with:
(a) the negotiation, preparation, printing and execution of:
(i) this Agreement and any other documents referred to in this
Agreement; and
(ii) any other Finance Document (other than a Novation Certificate)
executed after the date of this Agreement;
(b) any amendment, waiver, consent or suspension of rights (or any
proposal for any of the foregoing) requested by or on behalf of an
Obligor and relating to a Finance Document or a document referred to
in any Finance Document; and
(c) any other matter, not of an ordinary administrative nature, arising
out of or in connection with a Finance Document.
22.2 ENFORCEMENT COSTS
The Borrower shall forthwith on demand pay to each Junior Finance Party the
amount of all costs and expenses (including legal fees) properly incurred
by it:
(a) in connection with the enforcement of, or the preservation of any
rights under, any Finance Document; or
(b) in investigating any possible Default where the relevant Junior
Finance Party has reasonable grounds to believe that a Default may
have occurred.
23. STAMP DUTIES
The Borrower shall pay and forthwith on demand indemnify each Junior
Finance Party against any liability it incurs in respect of any stamp,
registration and similar tax which is or becomes payable in connection with
the entry into, performance or enforcement of any Finance Document.
24. INDEMNITIES
24.1 CURRENCY INDEMNITY
If a Junior Finance Party receives an amount in respect of any Obligor's
liability under the Finance Documents or if that liability is converted
into a claim, proof, judgement or order in a currency other than the
currency (the "CONTRACTUAL CURRENCY") in which the amount is expressed to
be payable under the relevant Finance Document:
(a) the Obligor shall indemnify that Junior Finance Party as an
independent obligation against any loss or liability arising out of or
as a result of the conversion;
(b) if the amount received by that Junior Finance Party, when converted
into the contractual currency at a market rate in the usual course of
its business on the date of receipt or, if that is not practicable,
the following day, is less than the amount owed in the contractual
currency, the Obligor shall forthwith on demand pay to that Junior
Finance Party an amount in the contractual currency equal to the
deficit; and
(c) the Obligor shall pay to the Junior Finance Party concerned on demand
any exchange costs and taxes payable in connection with any such
conversion.
Each Obligor waives any right it may have in any jurisdiction to pay any
amount under the Finance Documents in a currency other than that in which
it is expressed to be payable except to the extent required to do so by
applicable law or regulation.
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24.2 OTHER INDEMNITIES
Each Obligor shall forthwith on demand indemnify each Junior Finance Party
against any loss or liability which that Junior Finance Party incurs as a
consequence of:
(a) the occurrence of any Event of Default;
(b) the operation of Clause 19.17 (Acceleration) or Clause 30 (Pro Rata
Sharing);
(c) any payment of principal or an overdue amount being received from any
source otherwise than on the last day of a relevant Interest Period or
Designated Interest Period (as defined in Clause 8.4 (Default
interest)) relative to the amount so received; or
(d) (other than by reason of negligence or default by a Junior Finance
Party) an Advance not being made after a Borrower has delivered a
Request or an Advance (or part of an Advance) not being prepaid in
accordance with a notice of prepayment.
The liability of each Obligor in each case includes any loss or expense on
account of funds borrowed, contracted for or utilised to fund any amount
payable under any Finance Document, any amount repaid or prepaid or any
Advance.
25. EVIDENCE AND CALCULATIONS
25.1 ACCOUNTS
Accounts maintained by a Junior Finance Party in connection with this
Agreement are prima facie evidence of the matters to which they relate.
25.2 CERTIFICATES AND DETERMINATIONS
Any certification or determination by a Junior Finance Party of a rate or
amount under this Agreement is, in the absence of manifest error,
conclusive evidence of the matters to which it relates.
25.3 CALCULATIONS
Interest (including any applicable Mandatory Cost) and the fee payable
under Clause 21.2 (Commitment fee) accrue from day to day and are
calculated on the basis of the actual number of days elapsed and a year of
365 days.
26. AMENDMENTS AND WAIVERS
26.1 PROCEDURE
(a) Subject to Clause 26.2 (Exceptions), any term of the Finance Documents may
be amended or waived with the agreement of the Borrower, the Majority
Junior Lenders and the Junior Agent. The Junior Agent may effect, on behalf
of the Majority Junior Lenders, an amendment or waiver to which they have
agreed.
(b) The Junior Agent shall promptly notify the other Parties of any amendment
or waiver effected under paragraph (a) above, and any such amendment or
waiver shall be binding on all the Parties.
26.2 EXCEPTIONS
An amendment or waiver which:
(a) changes the principal amount of or currency of any Advance or defers
the maturity of any Advance;
(b) changes any Commitment or the Commitment Period;
(c) changes the Margin, changes the amount or currency or defers the date
for any payment of interest, fees or any amount payable under the
Finance Documents to any Junior Finance Party;
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53
(d) amends or modifies the definition of Majority Junior Lenders;
(e) releases any asset from the security constituted by the Debenture
otherwise than as allowed by Clause 17.15 (Restriction on Disposals);
(f) relates to a change in the Subsidiary Guarantors otherwise than in
accordance with Clause 27.4 (Subsidiary Guarantors);
(g) changes a term of a Finance Document which expressly requires the
consent of each Junior Lender; or
(h) changes Clause 30 (Pro Rata Sharing) or this Clause 26 (Amendments and
Waivers),
may not be effected without the consent of each Junior Lender.
26.3 WAIVERS AND REMEDIES CUMULATIVE
The rights of each Junior Finance Party under the Finance Documents:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general law;
and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of
that right.
27. CHANGES TO THE PARTIES
27.1 TRANSFERS BY OBLIGORS
No Obligor may assign, transfer, novate or dispose of any of, or any
interest in, its rights and/or obligations under this Agreement.
27.2 TRANSFERS BY JUNIOR LENDERS
(a) A Junior Lender (the "EXISTING JUNIOR LENDER") may at any time assign,
transfer or novate any of its rights and/or obligations under the Finance
Documents to another Qualifying Bank (the "NEW JUNIOR LENDER").
(b) (i) An assignment or transfer of rights and/or obligations to an entity
which falls within paragraphs (a) or (c) of the definition of
"QUALIFYING BANK" contained herein will be effective only if the
rights and obligations of the Existing Junior Lender under the Finance
Documents are novated to the New Junior Lender in accordance with
Clause 27.3 (Procedure for novations); and
(ii) otherwise, a transfer of obligations will be effective only if either:
(A) the obligations are novated in accordance with Clause 27.3
(Procedure for Novations); or
(B) the New Junior Lender confirms to the Junior Agent and the
Obligors that it undertakes to be bound by the terms of the
Finance Documents as a Junior Lender in form and substance
satisfactory to the Junior Agent. On the transfer becoming
effective in this manner the Existing Junior Lender shall be
relieved of its obligations under this Agreement to the extent
that they are transferred to the New Junior Lender.
(c) Nothing in this Agreement restricts the ability of a Junior Lender to sub-
contract an obligation if that Junior Lender remains liable under the
Finance Documents for that obligation.
(d) On each occasion an Existing Junior Lender assigns, transfers or novates
any of its rights and/or obligations under the Finance Documents, the New
Junior Lender shall, on the date the assignment, transfer and/or novation
takes effect, pay to the Junior Agent for its own account a fee of
(Pounds)750.
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(e) An Existing Junior Lender is not responsible to a New Junior Lender for:
(i) the execution, genuineness, validity, enforceability or sufficiency
of any Finance Document or any other document; or
(ii) the collectability of amounts payable under any Finance Document; or
(iii) the accuracy of any statements (whether written or oral) made in or
in connection with any Finance Document.
(f) Each New Junior Lender confirms to the Existing Junior Lender and the other
Junior Finance Parties that it:
(i) has made its own independent investigation and assessment of the
financial condition and affairs of each Obligor and its related
entities in connection with its participation in this Agreement and
has not relied exclusively on any information provided to it by the
Existing Junior Lender in connection with any Finance Document; and
(ii) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities while any
amount is or may be outstanding under this Agreement or any Commitment
is in force.
(g) Nothing in any Finance Document obliges an Existing Junior Lender to:
(i) accept a re-transfer from a New Junior Lender of any of the rights
and/or obligations assigned, transferred or novated under this Clause;
or
(ii) support any losses incurred by the New Junior Lender by reason of the
non-performance by any Obligor of its obligations under this Agreement
or otherwise.
(h) Any reference in this Agreement to a Junior Lender includes a New Junior
Lender but excludes a Junior Lender if no amount is or may be owed to or by
it under this Agreement and its Commitment has been cancelled or reduced to
nil.
27.3 PROCEDURE FOR NOVATIONS
(a) A novation is effected if:
(i) the Existing Junior Lender and the New Junior Lender deliver to the
Junior Agent a duly completed certificate, substantially in the form
of Part I of Schedule 5, with such amendments as the Junior Agent
may approve (a "NOVATION CERTIFICATE"); and
(ii) the Junior Agent executes it.
(b) Each Party (other than the Existing Junior Lender and the New Junior
Lender) irrevocably authorises the Junior Agent to execute any duly
completed Novation Certificate on its behalf.
(c) To the extent that they are expressed to be the subject of the novation in
the Novation Certificate:
(i) the Existing Junior Lender and the other Parties (the "EXISTING
PARTIES") will be released from their obligations to each other (the
"DISCHARGED OBLIGATIONS");
(ii) the New Junior Lender and the existing Parties will assume
obligations towards each other which differ from the discharged
obligations only insofar as they are owed to or assumed by the New
Junior Lender instead of the Existing Junior Lender;
(iii) the rights of the Existing Junior Lender against the existing
Parties and vice versa (the "DISCHARGED RIGHTS") will be cancelled;
(iv) the New Junior Lender and the existing Parties will acquire rights
against each other which differ from the discharged rights only
insofar as they are exercisable by or against the New Junior Lender
instead of the Existing Junior Lender; and
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(v) the New Junior Lender will, if it is not already, become party to
the Intercreditor Agreement as a Junior Creditor,
all on the date of execution of the Novation Certificate by the Junior
Agent or, if later, the date specified in the Novation Certificate.
27.4 SUBSIDIARY GUARANTORS
(a) The Borrower shall procure that each company which is or becomes one of its
Subsidiaries (except for a Subsidiary which is and remains a Hotel Project
Vehicle or a Dormant Subsidiary) becomes a Subsidiary Guarantor by
delivering to the Junior Agent a Subsidiary Guarantor Accession Agreement
and a Debenture, each duly executed by that Subsidiary. Subject to Clause
17.22(a)(i), all the actions specified in this paragraph (a) must be
completed within 14 days after the date on which the relevant company
becomes a Subsidiary of the Borrower.
(b) Upon execution and delivery of a Subsidiary Guarantor Accession Agreement,
the relevant Subsidiary will become a Subsidiary Guarantor.
(c) The Borrower shall procure that, at the same time as a Subsidiary Guarantor
Accession Agreement is delivered to the Junior Agent, there is also
delivered to the Junior Agent all those other documents listed in Part III
of Schedule 2, in each case in form and substance satisfactory to the
Junior Agent acting reasonably.
(d) Each Subsidiary which becomes a Subsidiary Guarantor shall at the same time
become a party to the Intercreditor Agreement as an Obligor in accordance
with the procedures set out in the Intercreditor Agreement.
(e) The execution of a Subsidiary Guarantor Accession Agreement constitutes
confirmation by the Subsidiary concerned that the representations and
warranties set out in Clause 16 (Representations and Warranties) to be made
by it on the date of the Subsidiary Guarantor Accession Agreement are
correct, as if made with reference to the facts and circumstances then
existing.
27.5 REFERENCE BANKS
If a Reference Bank (or, if a Reference Bank is not a Junior Lender, the
Junior Lender of which it is an Affiliate) ceases to be a Junior Lender,
the Junior Agent shall (in consultation with the Borrower) appoint another
Junior Lender or an Affiliate of a Junior Lender to replace that Reference
Bank.
27.6 REGISTER
The Junior Agent shall keep a register of all the Parties and shall supply
any other Party (at that Party's expense) with a copy of the register on
request.
28. DISCLOSURE OF INFORMATION
A Junior Lender may disclose to one of its Affiliates or any person
approved in accordance with Clause 27.2(a) (Transfers by Junior Lenders)
with whom it is proposing to enter, or has entered into, any kind of
transfer, participation or other agreement in relation to this Agreement:
(a) a copy of any Finance Document; and
(b) any information which that Junior Lender has acquired under or in
connection with any Finance Document,
provided such Affiliate or any person approved in accordance with Clause
27.2(a) (Transfers by Junior Lenders) has agreed with the relevant Junior
Lender to keep any such Finance Document or information confidential.
29. SET-OFF
A Junior Finance Party may set off any matured obligation owed by an
Obligor under this Agreement (to the extent beneficially owned by that
Junior Finance Party) against any obligation (whether or not matured) owed
by that Junior Finance Party to that Obligor, regardless of the
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56
place of payment, booking branch or currency of either obligation. If the
obligations are in different currencies, the Junior 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. If either obligation is
unliquidated or unascertained, the Junior Finance Party may set off in an
amount estimated by it in good faith to be the amount of that obligation.
30. PRO RATA SHARING
30.1 REDISTRIBUTION
Subject to the terms of the Intercreditor Agreement, if any amount owing by
an Obligor under this Agreement to a Junior Finance Party (the "RECOVERING
JUNIOR FINANCE PARTY") is discharged by payment, set-off or any other
manner (other than through the Junior Agent in accordance with Clause 9
(Payments)) (a "RECOVERY"), then:
(a) the recovering Junior Finance Party shall, within three Business Days,
notify details of the recovery to the Junior Agent;
(b) the Junior Agent shall determine whether the recovery is in excess of
the amount which the recovering Junior Finance Party would have
received had the recovery been received by the Junior Agent and
distributed in accordance with Clause 9 (Payments);
(c) subject to Clause 30.3 (Exception), the recovering Junior Finance
Party shall within three Business Days of demand by the Junior Agent
pay to the Junior Agent an amount (the "REDISTRIBUTION") equal to the
excess;
(d) the Junior Agent shall treat the redistribution as if it were a
payment by the Obligor concerned under Clause 9 (Payments) and shall
pay the redistribution to the Junior Finance Parties (other than the
recovering Junior Finance Party) in accordance with Clause 9.7
(Partial payments); and
(e) after payment of the full redistribution, the recovering Junior
Finance Party will be subrogated to the portion of the claims paid
under paragraph (d) above and that Obligor will owe the recovering
Junior Finance Party a debt which is equal to the redistribution,
immediately payable and of the type originally discharged.
30.2 REVERSAL OF REDISTRIBUTION
If under Clause 30.1 (Redistribution):
(a) a recovering Junior Finance Party must subsequently return a recovery,
or an amount measured by reference to a recovery, to an Obligor; and
(b) the recovering Junior Finance Party has paid a redistribution in
relation to that recovery,
each Junior Finance Party shall, within three Business Days of demand by
the recovering Junior Finance Party through the Junior Agent, reimburse the
recovering Junior Finance Party all or the appropriate portion of the
redistribution paid to that Junior Finance Party. Thereupon, the
subrogation in Clause 30.1(e) (Redistribution) will operate in reverse to
the extent of the reimbursement.
30.3 EXCEPTION
A recovering Junior Finance Party need not pay a redistribution to the
extent that it would not, after the payment, have a valid claim against the
Obligor concerned in the amount of the redistribution pursuant to Clause
30.1(e) (Redistribution).
31. SEVERABILITY
If a provision of any Finance Document is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:
(a) the validity or enforceability in that jurisdiction of any other
provision of the Finance Documents; or
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(b) the validity or enforceability in other jurisdictions of that or any
other provision of the Finance Documents.
32. COUNTERPARTS
This Agreement 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 this Agreement.
33. NOTICES
33.1 COMMUNICATIONS IN WRITING
Each communication to be made hereunder shall be made in writing and shall
be made by telefax or letter.
33.2 DELIVERY BY LETTER
Any communication or document (unless made by telefax) to be made or
delivered by one person to another pursuant to this Agreement shall (unless
that other person has by 15 days' written notice to the Junior Agent
specified another address) be made or delivered to that other person by
letter at the address identified with its signature below (or, in the case
of a New Junior Lender, at the end of the Novation Certificate to which it
is a party as transferee) and shall be deemed to have been made or
delivered when left at that address or (as the case may be) 10 days after
being deposited in the post postage prepaid in an envelope addressed to it
at that address PROVIDED THAT any communication or document to be made or
delivered to the Junior Agent by letter shall be effective only when
received by the Junior Agent and then only if the same is expressly marked
for the attention of the department or officer identified with the Junior
Agent's signature below (or such other department or officer as the Junior
Agent shall from time to time specify for this purpose by not less than 5
Business Days' notice to the Borrower).
33.3 COMMUNICATIONS BY TELEFAX
Any communication by telefax shall be made by one person to another person
at the relevant telefax number specified by it from time to time for the
purpose and shall be deemed to have been received when transmission has
been completed and, in the case of the Junior Agent, when received by its
agency division. Each such telefax communication, if made to the Junior
Agent by an Obligor, shall be signed by the person or persons authorised by
the Obligor in the certificate delivered pursuant to Schedule 2 (Conditions
Precedent Documents) and shall be expressed to be for the attention of the
department or officer whose name has been notified for the time being for
that purpose by the Junior Agent to the Obligor.
34. JURISDICTION
34.1 SUBMISSION
For the benefit of each Party, each other Party agrees that the courts of
England have jurisdiction to settle any disputes in connection with any
Finance Document and accordingly submits to the jurisdiction of the English
courts.
34.2 SERVICE OF PROCESS
Without prejudice to any other mode of service, each Obligor (other than an
Obligor incorporated in England and Wales):
(a) irrevocably appoints the Borrower as its agent for service of process
relating to any proceedings before the English courts in connection
with any Finance Document (and the Borrower irrevocably accepts such
appointment);
(b) agrees that failure by a process agent to notify the Obligor of the
process will not invalidate the proceedings concerned; and
(c) consents to the service of process relating to any such proceedings by
prepaid posting of a copy of the process to its address for the time
being applying under Clause 33 (Notices).
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34.3 FORUM CONVENIENCE AND ENFORCEMENT ABROAD
Each Party:
(a) waives objection to the English courts on grounds of inconvenient
forum or otherwise as regards proceedings in connection with a Finance
Document; and
(b) agrees that a judgement or order of an English court in connection
with a Finance Document is conclusive and binding on it and may be
enforced against it in the courts of any other jurisdiction.
34.4 NON-EXCLUSIVITY
Nothing in this Clause 34 limits the right of a Finance Party to bring
proceedings against an Obligor in connection with any Finance Document:
(a) in any other court of competent jurisdiction; or
(b) concurrently in more than one jurisdiction.
35. GOVERNING LAW
This Agreement is governed by English law.
This Agreement has been entered into on the date stated at the beginning of this
Agreement.
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SCHEDULE 1
VARIOUS PARTIES
PART I
JOINT ARRANGERS
None as at the date of this Agreement.
PART II
BANKS AND COMMITMENTS
BANKS
Merrill Lynch Mortgage Capital Inc. (Pounds)100,600,000
TOTAL (Pounds)100,600,000
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SCHEDULE 2
CONDITIONS PRECEDENT DOCUMENTS
PART I
TO BE DELIVERED BEFORE THE FIRST ADVANCE
1. CONSTITUENT DOCUMENTS OF THE BORROWER
A copy of the memorandum and articles of association and certificate of
incorporation of the Borrower.
2. CORPORATE AUTHORITIES OF THE BORROWER
(a) A copy of a resolution of the board of directors of the Borrower:
(i) approving the terms of, and the transactions contemplated by, this
Agreement and resolving that it execute the Finance Documents to
which it is a party;
(ii) authorising a specified person or persons to execute and deliver the
Finance Documents to which it is a party on its behalf; and
(iii) authorising a specified person or persons, on its behalf, to sign
and/or despatch all documents and notices to be signed and/or
despatched by it under or in connection with this Agreement.
(b) A specimen of the signature of each person authorised by the resolution
referred to in paragraph (a) above.
(c) A certificate of a director of the Borrower confirming that the borrowing
of the Total Commitments in full would not cause any borrowing limit
binding on the Borrower to be exceeded.
(d) A certificate of an authorised signatory of the Borrower certifying that
each copy document specified in Part I of this Schedule 2 is correct,
complete and in full force and effect as at a date no earlier than the date
of this Agreement.
3. FINANCE DOCUMENTS
(a) Each Finance Document, duly executed and delivered by the persons expressed
to be parties to it (other than the Junior Finance Parties).
(b) The Borrower has transacted the Hedging Agreements at a rate approved by
the Arranger as required by Clause 17.9(a) (Hedging Agreements) with a
trade date on or prior to the date of this Agreement.
(c) The Deed of Amendment and Restatement.
4. PROPERTY DOCUMENTS
(a) The Initial Valuation, confirming to the Junior Lenders' satisfaction that
the Value of the Initial Properties is not less than (Pounds)550,000,000.
(b) The agreed basis for the Valuations to be delivered under Clause 17.10
(Valuations).
(c) A Certificate of Title in relation to each of the Initial Properties.
(d) The environmental report referred to in the definition of "Information
Package" addressed to the Junior Finance Parties.
5. FINANCIAL INFORMATION
(a) Copies of the Original Target Group Accounts.
<PAGE>
61
(b) The business plan referred to in the definition of "Information Package".
(c) Confirmation from Deloitte & Touche in relation to the ability of the
Target Group after the Unconditional Date to complete all the steps
contemplated by Clause 17.22(b) (Accession of the Target Group) after the
Unconditional Date.
6. DUE DILIGENCE
The legal due diligence report referred to in the definition of
"Information Package" addressed to the Junior Finance Parties.
7. LEGAL OPINION
A legal opinion of Allen & Overy, legal advisers to the Junior Agent,
addressed to the Junior Finance Parties.
<PAGE>
62
SCHEDULE 2
PART II
TO BE DELIVERED BEFORE THE FIRST ADVANCE
The conditions precedent referred to in Clause 4.2 (Further conditions
precedent) are that:
(a) the Press Release has been issued substantially in a form approved by the
Arranger;
(b) the Borrower has made both Offers;
(c) the Unconditional Date has occurred;
(d) copies of the irrevocable undertakings in the agreed form to accept the
relevant Offer as specified in the Press Release have been received by the
Borrower;
(e) the Borrower has complied with its obligations under Clause 6.6(a) of the
Debenture;
(f) the Junior Agent has received the certifications required under paragraph
(a) of the definition of Required Equity Amount;
(g) the FF&E Account and the Savoy Debenture Stock Reserve Account have been
opened with the Account Bank and the requirements of Clause 8.3(a) and (b)
of the Debenture have been complied with in relation to both of those
accounts; and
(h) the Arranger is satisfied that the amounts required by Clause 17.26(d)
(Savoy Debenture Stock) to be deposited in the Savoy Debenture Stock
Reserve Account have been, or on the first Drawdown Date will be, deposited
in the Savoy Debenture Stock Reserve Account.
<PAGE>
63
SCHEDULE 2
PART III
TO BE DELIVERED BY A SUBSIDIARY GUARANTOR
(a) A Subsidiary Guarantor Accession Agreement and a debenture, duly executed
as a deed by the Subsidiary Guarantor.
(b) A copy of the memorandum and articles of association and certificate of
incorporation of the Subsidiary Guarantor.
(c) A copy of a resolution of the board of directors of the Subsidiary
Guarantor:
(i) approving the terms of, and the transactions contemplated by, the
Subsidiary Guarantor Accession Agreement and the Debenture and
resolving that it execute the Subsidiary Guarantor Accession
Agreement and the Debenture as a deed;
(ii) authorising a specified person or persons to execute as a deed the
Guarantor Accession Agreement and the Debenture on behalf of the
Subsidiary Guarantor; And
(Iii) authorising a specified person or persons, on its behalf, to sign
and/or despatch all documents to be signed and/or despatched by it
under or in connection with this Agreement and the Debenture.
(d) A Copy of a resolution, signed by all the holders of the issued or allotted
shares in the Subsidiary Guarantor, approving the terms of, and the
transactions contemplated by, the Subsidiary Guarantor Accession Agreement
and the Debenture.
(e) A Copy of a resolution of the board of directors of each corporate
shareholder in the Subsidiary Guarantor:
(i) approving the terms of the resolution referred to in paragraph (d)
above; and
(ii) authorising a specified person or persons to sign the resolution on
its behalf.
(f) A certificate of a director of the Subsidiary Guarantor certifying that the
borrowing of the total Commitments in full would not cause any borrowing
limit binding on it to be exceeded.
(g) Receipt of all title documents, searches, land registry applications,
landlord's consents, insurance documents (including broker's undertakings)
and the completion of all other steps considered necessary and desirable by
the Junior Agent to effect registration of security over land and otherwise
in relation to the perfection of the security constituted by the Debenture
over any freehold or leasehold property owned by the Subsidiary Guarantor.
(h) A Copy of any other authorisation or other document, opinion, report or
assurance which the Junior Agent reasonably considers to be necessary or
desirable in connection with the entry into and performance of, and the
transactions contemplated by, the Subsidiary Guarantor Accession Agreement
and the Debenture and the perfection of the security created by the
Debenture or for the validity and enforceability of any finance document in
respect of the Subsidiary Guarantor.
(i) A specimen of the signature of each person authorised by the resolutions
referred to in paragraphs (c) and (e) above.
(j) A copy (if any have been produced) of the latest audited accounts of the
Subsidiary Guarantor.
(k) A legal opinion of Allen & Overy, legal advisers to the Junior Agent,
addressed to the Junior Finance Parties in respect of the Subsidiary
Guarantor and any Finance Documents to which it is a party.
(l) A certificate of an authorised signatory of the Subsidiary Guarantor
certifying that each copy document specified in Part III of this Schedule 2
is correct, complete and in full force and effect as at a date no earlier
than the date of the Subsidiary Guarantor Accession Agreement.
<PAGE>
64
(m) If the Subsidiary Guarantor is incorporated outside England, a legal
opinion from legal advisers in the relevant jurisdiction addressed to the
Junior Finance Parties.
<PAGE>
65
SCHEDULE 3
CALCULATION OF THE MANDATORY COST
(a) The Mandatory Cost for an Advance for an Interest Period is the rate
determined by the Junior Agent to be equal to the arithmetic mean (rounded
upward, if necessary, to four decimal places) of the respective rates
notified by each of the Reference Banks to the Junior Agent and calculated
in accordance with the following formulae:
BY + S(Y-Z) + F x 0.01 % per annum = Mandatory Cost
----------------------
100-(B + S)
where on the day of application of the formula:
B is the percentage of the Reference Bank's eligible liabilities (in
excess of any stated minimum) which the Bank of England requires the
Reference Bank to hold on a non-interest-bearing deposit account in
accordance with its cash ratio requirements;
Y is the rate at which Sterling deposits are offered by the Reference
Bank to leading banks in the London interbank market at or about 11.00
a.m. on that day for the relevant period;
S is the percentage of the Reference Bank's eligible liabilities which
the Bank of England requires the Reference Bank to place as a special
deposit;
Z is the interest rate per annum allowed by the Bank of England on
special deposits; and
F is the charge payable by the Reference Bank to the Financial Services
Authority under paragraph 2.02 or 2.03 (as appropriate) of the Fees
Regulations but where for this purpose the figure in paragraph 2.02b
and 2.03b will be deemed to be zero expressed in pounds per (Pounds)1
million of the fee base of the Reference Bank.
(b) For the purposes of this Schedule 3:
(i) "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the meanings
given to them at the time of application of the formula by the Bank
of England;
(ii) "FEE BASE" has the meaning given to it in the Fees Regulations;
(iii) "FEES REGULATIONS" means:
(1) prior to 31st March, 1999, the Banking Supervision (Fees)
Regulations 1998; and
(2) on and after 31st March, 1999, any regulations governing the
payment of fees for banking supervision; and
(iv) "RELEVANT PERIOD" in relation to each Interest Period, means:
(A) if it is three months or less, that Interest Period; or
(B) if it is more than three months, each successive period of
three months and any necessary shorter period comprised in that
Interest Period.
(c) In the application of the formula, B, Y, S and Z are included in the
formula as figures and not as percentages, e.g. if B = 0.5% and Y = 15%, BY
is calculated as 0.5 x 15.
(d) If a Reference Bank does not supply a rate to the Junior Agent, the
applicable Mandatory Cost will be determined on the basis of the rate(s)
supplied by the remaining Reference Banks.
(e) (i) The formula is applied on the first day of each relevant period
comprised in the relevant Interest Period.
<PAGE>
66
(ii) Each rate calculated in accordance with the formula is, if necessary,
rounded upward to four decimal places.
(e) If the Agent determines that a change in circumstances has rendered, or
will render, the formula inappropriate, the Junior Agent (after
consultation with the Junior Lenders) shall notify the Borrower of the
manner in which the Mandatory Cost will subsequently be calculated. The
manner of calculation so notified by the Junior Agent shall, in the absence
of manifest error, be binding on all the Parties.
<PAGE>
67
SCHEDULE 4
FORM OF REQUEST
To: [ ] as Junior Agent
From: Blackstone Hotel Acquisitions Company
Date:[ ]
BLACKSTONE HOTEL ACQUISITIONS COMPANY - (Pounds)100,600,000 JUNIOR FACILITY
AGREEMENT DATED [ ], 1998 (AS AMENDED)
1. We wish to borrow an Advance as follows:
(a) Drawdown Date: [ ]
(b) Amount: (Pounds)[ ]
(c) Payment Instructions: [ ].
2. We certify the purpose of the Advance is [ ].
3. We confirm that each condition specified in Clause 4.4 (Further general
conditions precedent) is satisfied on the date of this Request.
By:
Blackstone Hotel Acquisitions Company
Authorised Signatory
<PAGE>
68
SCHEDULE 5
FORMS OF ACCESSION DOCUMENTS
PART I
NOVATION CERTIFICATE
TO: [ ] AS JUNIOR AGENT
FROM: [THE EXISTING JUNIOR LENDER] AND [THE NEW JUNIOR LENDER]
Date: [ ]
BLACKSTONE HOTEL ACQUISITIONS COMPANY - (Pounds)100,600,000 JUNIOR FACILITY
AGREEMENT DATED [ ], 1998 (AS AMENDED) (THE "CREDIT
FACILITY")
WE REFER TO CLAUSE 27.3 (PROCEDURE FOR NOVATIONS) OF THE CREDIT FACILITY.
1. We [ ] (The "EXISTING JUNIOR LENDER") and [ ] (The "NEW
JUNIOR LENDER") agree to the Existing Junior Lender and the New Junior
Lender novating all the Existing Junior Lender's rights and obligations
referred to in the Schedule and (if the New Junior Lender is not already a
party to the Intercreditor Agreement as a Junior Creditor) the New Junior
Lender becoming a party to the Intercreditor Agreement as a Junior
Creditor, all in accordance with Clause 27.3 (Procedure for Novations).
2. The specified date for the purposes of Clause 27.3(c) is [date of
novation].
3. The Facility Office and address for notices of the New Junior Lender for
the purposes of Clause 33 (notices) are set out in the Schedule.
[4. The New Junior Lender is hereby designated as a Joint Arranger.
[4/5. This Novation Certificate is governed by English Law.]
THE SCHEDULE
RIGHTS AND OBLIGATIONS TO BE NOVATED
[Details of the rights and obligations of the Existing Junior Lender to be
novated].
[NEW JUNIOR LENDER]
[Facility Office and address for notices]
[Agent]
By:
Date:
[Existing Junior Lender] [New Junior Lender]
By: By:
Date: Date:
<PAGE>
69
SCHEDULE 5
PART II
SUBSIDIARY GUARANTOR ACCESSION AGREEMENT
To: [ ] as Junior Agent
From: [PROPOSED SUBSIDIARY GUARANTOR]
Date: [ ]
BLACKSTONE HOTEL ACQUISITIONS COMPANY - (Pounds)100,600,000 JUNIOR FACILITY
Agreement dated [ ], 1998 (as amended) (the "Credit
Facility")
We refer to Clause 27.4 (Subsidiary Guarantors) of the Credit Facility.
We, [name of company] of [Registered Office] (Registered no. [ ]) agree
to become a Subsidiary Guarantor, to be bound by the terms of the Credit
Facility as a Subsidiary Guarantor in accordance with Clause 27.4 (Subsidiary
Guarantors) and to be bound by the terms of the Intercreditor Agreement (as
defined in the Credit Facility) as a [Subsidiary Guarantor] in accordance with
clause [ ] of the Intercreditor Agreement.
Our address for notices for the purposes of Clause 33 (Notices) is:
[
]
This Deed is governed by English law.
THE COMMON SEAL of )
[PROPOSED SUBSIDIARY GUARANTOR] )
was affixed in )
the presence of: )
Director
Director/Secretary
<PAGE>
70
SCHEDULE 6
CERTAIN PROPERTIES
PART I
INITIAL PROPERTIES
<TABLE>
<CAPTION>
PROPERTY OWNER TITLE NUMBER
<S> <C> <C> <C>
1. THE SAVOY HOTEL
The Savoy Hotel and Savoy Theatre The Savoy Hotel Limited Unregistered
The Savoy Theatre Savoy Theatre Limited Unregistered
East Block of Savoy Hotel The Worcester Buildings Company NGL694002
Limited
96-104 (inclusive) Strand, Savoy Court and The Savoy Hotel Limited NGL414120
part Savoy Hotel
Unit 1, Savoy Hotel The Savoy Hotel Limited NGL668135
Land on Southwest side of Savoy Steps The Savoy Hotel Limited NGL29927
(being land to rear of 107 Strand)
11 and 12 Savoy Buildings The Savoy Hotel Limited 142317
Vault under part Savoy Court The Savoy Hotel Limited 87039
N.B. Such parts of the above titles as may
comprise part or all of the restaurant
known as Simpson's-in-the-Strand are
excluded from the definition of The Savoy
Hotel
2. CLARIDGE'S
Claridge's Hotel, 45-47 Brook Street Claridge's Hotel Limited NGL633367
21 Three Kings Yard Claridge's Hotel Limited 169042
3. THE BERKELEY HOTEL
Berkeley Hotel, Wilton Place The Worcester Buildings Company NGL310812
Limited
Part of Berkeley Hotel The Worcester Buildings Company NGL338774
Limited
4. THE CONNAUGHT HOTEL
The Connaught Hotel, Carlos Place The Connaught Hotel Limited LN52023
5. THE LYGON ARMS
The Lygon Arms Hotel and related land The Lygon Arms Limited Unregistered
1 Lemington Road, Broadway The Lygon Arms Limited HW136316
75 Morris Road, Broadway The Lygon Arms Limited HW42910
</TABLE>
<TABLE>
<CAPTION>
PROPERTY Minimum Disposal MINIMUM PREPAYMENT
Amount AMOUNT
<S> <C> <C> <C>
1. THE SAVOY HOTEL (Pounds)147,750,000 (Pounds)39,575,000
The Savoy Hotel and Savoy Theatre
The Savoy Theatre
East Block of Savoy Hotel
96-104 (inclusive) Strand, Savoy Court and
part Savoy Hotel
Unit 1, Savoy Hotel
Land on Southwest side of Savoy Steps
(being land to rear of 107 Strand)
11 and 12 Savoy Buildings
Vault under part Savoy Court
N.B. Such parts of the above titles as may
comprise part or all of the restaurant
known as Simpson's-in-the-Strand are
excluded from the definition of The Savoy
Hotel
2. CLARIDGE'S (Pounds)146,875,000 (Pounds)39,325,000
Claridge's Hotel, 45-47 Brook Street
21 Three Kings Yard
3. THE BERKELEY HOTEL (Pounds)104,000,000 (Pounds)27,850,000
Berkeley Hotel, Wilton Place
Part of Berkeley Hotel
4. THE CONNAUGHT HOTEL (Pounds)48,375,000 (Pounds)12,950,000
The Connaught Hotel, Carlos Place
5. THE LYGON ARMS (Pounds)14,500,000 (Pounds)3,875,000
The Lygon Arms Hotel and related land
1 Lemington Road, Broadway
75 Morris Road, Broadway
</TABLE>
<PAGE>
71
<TABLE>
<CAPTION>
PROPERTY OWNER TITLE NUMBER
<S> <C> <C>
3 Parker Place The Lygon Arms Limited HW37889
6. SIMPSON'S-IN-THE-STRAND (Pounds)8,000,000 (Pounds)2,125,000
The restaurant known as The Savoy Hotel Plc (as to the
Simpson's-in-the-Strand, comprised under freehold) and The Worcester
part of Title Number NGL 414120 and a Buildings Company Limited (as to
leasehold interest in which is comprised the leasehold)
under part of Title Number NGL 694002
</TABLE>
PART II
CONNAUGHT APARTMENTS
<TABLE>
<CAPTION>
No. PROPERTY OWNER TITLE NUMBER
<S> <C> <C> <C>
1. 10, 11 and 12 Mount Street and 10 and 11 Mount Street, Mansions Limited NGL46336
Adam's Row
2. 12 Adam's Row The Connaught Hotel Limited Unregistered
</TABLE>
<PAGE>
72
SCHEDULE 7
PART I
FORM OF AUDITORS' COMPLIANCE CERTIFICATE
BLACKSTONE HOTEL ACQUISITIONS COMPANY
To: [Junior Agent]
(as Junior Agent for the Junior Lenders
participating in the Junior
Credit Agreement referred to below)
Date: [ ]
Dear Sirs,
BLACKSTONE HOTEL ACQUISITIONS COMPANY - (Pounds)100,600,000 JUNIOR FACILITY
AGREEMENT DATED [ ], 1998 (AS AMENDED) (THE "JUNIOR CREDIT
AGREEMENT")
We refer to the Junior Credit Agreement made between, amongst others,
Blackstone Hotel Acquisitions Company as Borrower, [Junior Agent] as Junior
Agent and the financial institutions defined therein as Junior Lenders.
Terms defined in the Junior Credit Agreement shall bear the same meaning herein.
The information set out in this letter is based on information which has been
properly extracted from the audited annual consolidated financial statements and
unaudited semi-annual consolidated financial statements of Blackstone Hotel
Acquisitions Company and subsidiary undertakings for the period ended [ ],
is clerically accurate and has been calculated in accordance with the Junior
Credit Agreement.
We confirm that based upon the information and defined terms described above in
respect of the Ratio Period ending on [ ], Net Operating Income was
[ ] and Total Debt Service was [ ] and the ratio of Net
Operating Income to Total Debt Service was therefore [ ] for such
Ratio Period.
This letter is provided solely for the information of the Junior Agent and the
Junior Lenders in connection with the Junior Credit Agreement. It can only be
relied on by the Junior Agent and the Junior Lenders in this connection and is
not to be referred to or made available in whole or in part to any other person
without our prior written consent. For the avoidance of doubt, we shall not be
liable to any party other than the Junior Agent and the Junior Lenders in
respect of this letter.
..............................
for and on behalf of
[name of auditors of
Blackstone Hotel Acquisitions Company]
<PAGE>
73
SCHEDULE 7
PART II
FORM OF DIRECTOR'S COMPLIANCE CERTIFICATE
BLACKSTONE HOTEL ACQUISITIONS COMPANY
To: [Junior Agent]
(as Junior Agent for the Junior Lenders
participating in the Junior
Credit Agreement referred to below)
Date: [ ]
Dear Sirs,
BLACKSTONE HOTEL ACQUISITIONS COMPANY - (Pounds)100,600,000 JUNIOR FACILITY
AGREEMENT DATED [ ], 1998 (AS AMENDED) (THE "JUNIOR CREDIT
AGREEMENT")
We refer to the Junior Credit Agreement made between, amongst others, Blackstone
Hotel Acquisitions Company as Borrower, [Junior Agent] as Junior Agent and the
financial institutions defined therein as Junior Lenders.
Terms defined in the Junior Credit Agreement shall bear the same meaning herein.
We confirm that, in respect of the Ratio Period ending on [ ], Net
Operating Income was [ ] and Total Debt Service was [ ]
and the ratio of Net Operating Income to Total Debt Service was therefore
[ ] for such Ratio Period.
We further confirm that [no Default is outstanding] [the Default set out in
Clause [ ] of the Junior Credit Agreement is outstanding as a result of
[ ] and we are taking the following action to remedy such Default.]*
..............................
Director/Authorised Officer
Blackstone Hotel Acquisitions Company
* delete as applicable
<PAGE>
74
SCHEDULE 8
EXISTING FINANCING AGREEMENTS
1. Trust deed dated 13th May, 1893, a supplemental trust deed dated 24th June,
1903 and a further supplemental trust deed dated 24th March, 1910 each
between The Savoy Hotel Limited and The Law Debenture Corporation Limited
constituting the outstanding (Pounds)450,000 4 per cent. First Mortgage
Perpetual Debenture Stock of the Target.
2. Trust deed dated 20th October, 1897 between The Savoy Theatre and Operas
Limited and The Right Honourable Sir Edward Bootle-Wilbratham G.C.B. P.C.
Earl of Lathom, Carl Meyer and Richard D'Oyly Carte constituting the
outstanding (Pounds)80,000 4 per cent. First Mortgage Debenture Stock of
the Savoy Theatre Limited.
3. Letter agreement dated 11th January, 1991 between Barclays Bank PLC and the
Target related to a (Pounds)4,000,000 term loan for the purchase of The
Lancaster Hotel, Paris, France.
4. Letter agreement dated 13th March, 1997 between Barclays Bank PLC and the
Target related to short term facilities of up to (Pounds)29,815,000.
5. Letter agreement dated 13th March, 1997 between Barclays Bank PLC and the
Target related to an overdraft facility of up to (Pounds)7,500,000.
6. Lease dated 24th December, 1992 between IBM United Kingdom Financial
Services Limited and the Target.
7. Lease dated 20th September, 1993 between Lombard North Central PLC and the
Target.
8. Lease dated 21st December, 1993 between IBM United Kingdom Financial
Services Limited and the Target.
9. Lease dated 8th February, 1994 between Lombard North Central PLC and the
Target.
10. Lease dated 30th June, 1994 between Lombard North Central PLC and the
Target.
11. Lease dated 30th September, 1994 between Lombard North Central PLC and the
Target.
12. Lease dated 9th November, 1994 between Lombard North Central PLC and the
Target.
13. Lease dated 30th September, 1996 between Lombard North Central PLC and the
Target related to Mitel telephone system and associated equipment.
14. Lease dated 8th February, 1994 between Lombard North Central PLC and the
Target related to Remanco computer system and associated equipment.
15. Lease dated 1st April, 1997 between Lombard North Central PLC and the
Target.
16. Lease dated 30th June, 1997 between Forward Trust Limited and the Target.
17. Credit agreement related to a secured loan borrowed by the Target and
repayable in 1998 as referred to in note 16 to the Original Target Group
Accounts.
<PAGE>
75
SIGNATORIES
BORROWER
BLACKSTONE HOTEL ACQUISITIONS COMPANY
By: JONATHAN GRAY
Address for notices: c/o Savoy Hotel Limited
1 Savoy Hill
London WC2R 2HE
Attention: Alan Fort
ARRANGER
MERRILL LYNCH INTERNATIONAL
By: GORDON PEARCE
Address for notices: Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Attention: John Nacos / Stephen Green
with a copy to: David Mahoney
Merrill Lynch International
World Financial Centre
North Tower
250 Vesey Street
New York
Ny 10281
JUNIOR LENDERS
MERRILL LYNCH MORTGAGE CAPITAL INC.
By: GORDON PEARCE
Address for notices: Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Attention: John Nacos / Stephen Green
JUNIOR AGENT
BANKERS TRUST COMPANY
By: DERMOT MURPHY
Address for notices: 1 Appold Street
London EC2A 2HE
<PAGE>
76
Attention: Dermot Murphy
(any communication by telefax to be copied
to Elizabeth Keegan on 00 353 1 670 1708)
SECURITY TRUSTEE
BANKERS TRUST COMPANY
By: Dermot Murphy
Address for notices: 1 Appold Street
London EC2A 2HE
Attention: Dermot Murphy
(any communication by telefax to be copied
to Elizabeth Keegan on 00 353 1 670 1708)
<PAGE>
EXHIBIT 10.2
CONFORMED COPY
(incorporating amendments to 17th August, 1998)
INTERCREDITOR AGREEMENT
Dated 30th April, 1998
Between
BLACKSTONE HOTEL ACQUISITIONS COMPANY
as the Borrower
THE SENIOR CREDITORS, HEDGING BANKS,
JUNIOR CREDITORS AND SUBORDINATED INVESTORS
BANKERS TRUST COMPANY
as Senior Agent, Junior Agent and Security Trustee
and
BRE/SATELLITE L.P.
as Subordinated Investors' Agent
ALLEN & OVERY
London
OSO:32172.2
<PAGE>
CONTENTS
CLAUSE PAGE
1. Definitions and Interpretation 1
2. Purpose and Ranking 11
3. Undertakings of Obligors 11
4. Amendments 13
5. Accession and Undertakings of Hedging Banks 17
6. Undertakings of Junior Creditors 20
7. Undertakings of Subordinated Investors 21
8. Permitted Payments 22
9. Suspension of Permitted Payments 23
10. Turnover 24
11. Subordination on Insolvency etc. 25
12. Priority of Security 27
13. Restrictions on Enforcement 28
14. Permitted Junior Enforcement 29
15. Proceeds of Enforcement of Security 32
16. Enforcement of Security 33
17. Senior Creditor and Hedging Bank Loss Sharing Arrangements 35
18. Voting 36
19. Consents and Limits 36
20. Information 37
21. Subrogation 39
22. Protection of Subordination 39
23. Preservation of Debt 41
24. Power of Attorney 41
25. Expenses 42
26. Changes to the Parties 42
27. Status of Obligors 50
28. Notices 50
29. Waivers, Remedies Cumulative 50
30. Governing Law 50
31. Jurisdiction 51
32. The Security Trustee 52
33. Severability 57
34. Counterparts 57
<PAGE>
Schedules Page
1. Guarantors 58
2. Junior Creditors 59
3. Senior Creditors 60
4. Hedging Banks and Hedging Documents 61
5. Subordinated Investors 62
6. Calculation of Hedging Liabilities 63
7. Deed of Accession for New Obligors 64
8. Creditors' Deed of Accession 65
9. Subordinated Investors' Deed of Accession 66
10. Agent's Deed of Accession 67
SIGNATORIES 68
<PAGE>
THIS AGREEMENT is dated 30th April, 1998 and is made BETWEEN:
(1) BLACKSTONE HOTEL ACQUISITIONS COMPANY (the "BORROWER");
(2) THE COMPANIES named in Schedule 1 as Guarantors;
(3) THE FINANCIAL INSTITUTIONS named in Schedule 5 as Subordinated Investors;
(4) THE BANKS AND FINANCIAL INSTITUTIONS named in Schedule 2 as Junior
Creditors;
(5) THE BANKS AND FINANCIAL INSTITUTIONS named in Schedule 3 as Senior
Creditors;
(6) THE BANKS AND FINANCIAL INSTITUTIONS named in Schedule 4 as Hedging Banks;
(7) BRE/SATELLITE L.P. as Subordinated Investors' Agent;
(8) BANKERS TRUST COMPANY as Junior Agent;
(9) BANKERS TRUST COMPANY as Senior Agent; and
(10) BANKERS TRUST COMPANY as Security Trustee.
IT IS AGREED AS FOLLOWS:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"BUSINESS DAY"
has the meaning given to it in the Senior Facility Agreement.
"DEFAULT"
means a Default as defined in the Senior Facility Agreement or a Default as
defined in the Junior Facility Agreement (as the context requires).
"ENFORCEMENT EVENT"
means the Senior Agent (after receipt of instructions from the Majority
Senior Creditors) (i) first exercising any of its rights under Clauses
19.17(a) or (b) of the Senior Facility Agreement or (ii) having exercised
its rights under Clause 19.17(c) of the Senior Facility Agreement, first
making demand with respect to some or all of the Advances.
<PAGE>
"ENFORCEMENT NOTICE"
has the meaning given to it in Clause 14 (Permitted Junior Enforcement).
"EVENT OF DEFAULT"
means an Event of Default as defined in the Senior Facility Agreement or an
Event of Default as defined in the Junior Facility Agreement (as the
context requires).
"FINANCE DOCUMENTS"
means each of the Senior Finance Documents, the Hedging Documents, the
Junior Finance Documents and the Subordinated Investor Debt Documents.
"GROUP"
means the Borrower and its Subsidiaries.
"GUARANTOR"
means each company listed in Schedule 1 or any Subsidiary Guarantor (as
defined in the Senior Facility Agreement or the Junior Facility Agreement,
as the case may be).
"HEDGING BANK"
means each bank and financial institution named in Schedule 4 (if any) and
any other bank or financial institution which becomes party hereto as a
Hedging Bank under Clause 5.1 (Accession of Hedging Banks) in each case in
its capacity as provider of interest rate hedging facilities to the
Borrower, and includes any person to whom any Hedging Liabilities may be
payable or owing (whether or not matured) from time to time.
"HEDGING DOCUMENT"
means each master agreement or other document specified against the name of
a Hedging Bank in Schedule 4 (if any) and each master agreement or other
document delivered by a Hedging Bank to the Security Trustee under Clause
5.1 (Accession of Hedging Banks) or Clause 19.5 (Limits on Hedging
Liabilities) and approved by the Senior Agent and the Junior Agent for the
purposes of such Clause 5.1, in each case providing for interest rate
and/or other hedging facilities to be made available to the Borrower
(including any contract entered into or confirmation given thereunder), and
in each case as, and including, any instrument pursuant to which the same
is novated, varied, supplemented or amended from time to time
(collectively, the "HEDGING DOCUMENTS").
"HEDGING LIABILITIES"
means all present and future liabilities (actual or contingent) payable or
owing by the Borrower to the Hedging Banks or any of them under or in
connection with the Hedging Documents, whether or not matured and whether
or not liquidated, together in each case with:
<PAGE>
(a) any novation, deferral or extension of any of those liabilities
permitted by the terms of this Agreement and the Hedging Documents;
(b) any claim for damages or restitution arising out of, by reference to
or in connection with any of the Hedging Documents;
(c) any claim flowing from any recovery by the Borrower or a receiver or
liquidator of the Borrower or any other person of a payment or
discharge in respect of any of those liabilities on grounds of
preference or otherwise; and
(d) any amounts (such as post-insolvency interest) which would be included
in any of the above but for any discharge, non-provability,
unenforceability or non-allowability of the same in any insolvency or
other proceedings,
PROVIDED THAT, for the purposes of this Agreement only and without
prejudice to the liabilities secured by the Security Documents, the term
Hedging Liabilities excludes (as against the Junior Creditors):
(i) any amount outstanding in excess of the limits specified in Clause
19.5 (Limits on Hedging Liabilities);
(ii) any amount outstanding and owed to a Hedging Bank which would not have
been outstanding but for a breach of this Agreement by that Hedging
Bank; and
(iii) any amount attributable to a transaction which is not under a
Hedging Document details of which are specified in Schedule 4 or for
which consent has been given under Clause 5.1 (Accession of Hedging
Banks).
"JUNIOR AGENT"
means such bank, fund, trust or financial institution as is party to or
accedes to the Junior Facility Agreement (and to this Agreement) as Junior
Agent or, if the context so requires, the Junior Agent under (and as
defined in) the Junior Facility Agreement, and any replacement therefor
thereunder.
"JUNIOR CREDITOR"
means each of:
(a) the banks and financial institutions named in Schedule 2 in their
capacity as Junior Lenders under and as defined in the Junior Facility
Agreement; and
(b) the Arranger and the Joint Arrangers party to (and as defined in) the
Junior Facility Agreement and the Junior Agent,
and in each case any successor thereto and any assigns, transferees or
substitutes thereof or therefor (whether pursuant to any Novation
Certificate, as defined in the Junior Facility Agreement, or otherwise),
and includes any person to whom any Junior Debt may be payable or owing
(whether or not matured) from time to time.
<PAGE>
"JUNIOR DEBT"
means all present and future liabilities (actual or contingent) payable or
owing by the Obligors or any of them to the Junior Creditors or any of them
pursuant to the Junior Finance Documents, whether or not matured and
whether or not liquidated, together with:
(a) any refinancing, novation, refunding, deferral or extension of any of
those liabilities;
(b) any further advances which may be made by a Junior Creditor to any
Obligor under any agreement expressed to be supplemental to any of the
Junior Finance Documents, plus all interest, fees and costs in
connection therewith;
(c) any claim for damages or restitution arising out of, by reference to,
or in connection with, any of the Junior Finance Documents;
(d) any claim flowing from any recovery by an Obligor or a receiver or
liquidator thereof or any other person of a payment or discharge in
respect of those liabilities on grounds of preference or otherwise;
and
(e) any amounts (such as post-insolvency interest) which would be included
in any of the above but for any discharge, non-provability,
invalidity, unenforceability or non-allowability of the same in any
insolvency or other proceedings.
"JUNIOR DISCHARGE DATE"
means the date on which all Junior Debt has been fully paid and discharged
and all Commitments under (and as defined in) the Junior Facility Agreement
are cancelled to the satisfaction of the Junior Agent acting reasonably,
whether or not as the result of an enforcement, PROVIDED THAT the Junior
Agent will disregard contingent risks and liabilities (such as the risk of
clawback flowing from a preference or similar claim) for the purposes of
determining whether the Junior Debt has been so paid or discharged except
to the extent that the Junior Agent reasonably believes (after taking such
legal advice as it considers appropriate) that there is a reasonable
likelihood that those contingent risks and liabilities will become actual
liabilities.
"JUNIOR ENFORCEMENT EVENT"
means the Junior Agent (after receipt of instructions of the Majority
Junior Creditors) (i) first exercising any of its rights under Clause
19.17(a) or (b) of the Junior Facility Agreement or (ii) having exercised
its rights under Clause 19.17(c) of the Junior Facility Agreement, first
making demand with respect to some or all of the Advances (as defined in
the Junior Facility Agreement).
"JUNIOR FACILITY AGREEMENT"
means the (Pounds)100,600,000 Junior Mortgage Loan Facility Agreement dated
30th April, 1998 and amended and restated on 17th August, 1998 between,
among others, the Borrower and the Junior Creditors, providing for a
sterling denominated term loan facility (as, and including any instrument
pursuant to which the same is, novated, varied, supplemented or amended
from time to time).
<PAGE>
"JUNIOR FINANCE DOCUMENTS"
means the "Finance Documents" as defined in the Junior Facility Agreement
save that for the purposes of this Agreement the Hedging Agreements shall
be excluded from that definition.
"JUNIOR SHARE MORTGAGE"
has the meaning given to it in the Junior Facility Agreement.
"JURISDICTION PARTY"
has the meaning given to it in Clause 31.1 (Submission).
"MAJORITY CREDITORS"
means the Majority Senior Creditors and the Majority Junior Creditors,
acting together.
"MAJORITY JUNIOR CREDITORS"
means the Majority Junior Lenders as defined in the Junior Facility
Agreement.
"MAJORITY SENIOR CREDITORS"
means the Majority Banks as defined in the Senior Facility Agreement,
PROVIDED THAT for the purposes only of calculating voting rights under this
Agreement in accordance with this definition, each Hedging Bank will be
deemed to be a Bank under the Senior Facility Agreement and the Total
Commitments under the Senior Facility Agreement will be notionally
increased by an aggregate amount calculated in accordance with Schedule 6
with respect to each Hedging Bank's interest in the Hedging Documents and
each Hedging Bank will be deemed to have the aggregate amount of its
Commitments increased by the amount calculated in accordance with Schedule
6 with respect to the Hedging Documents to which it is party (or if it is
not a Bank under the Senior Facility Agreement, it will be deemed to be a
Bank with Commitments calculated in accordance with Schedule 6 with respect
to the Hedging Documents to which it is party).
"MATERIAL ADVERSE EFFECT"
means any event or series of events which is reasonably likely to have a
material and adverse effect on the ability of any Obligor to comply with
its obligations under the Senior Finance Documents or (as the case may be)
the Junior Finance Documents.
"MATERIAL INSOLVENCY EVENT"
means any Event of Default arising under Clauses 19.7 to 19.9 (inclusive)
of the Senior Facility Agreement
<PAGE>
"MATERIAL SENIOR DEFAULT"
means any Material Insolvency Event and any other Senior Default arising
under:
(a) Clause 19.4 of the Senior Facility Agreement as a result of any breach
of Clause 18 of the Senior Facility Agreement; or
(b) Clause 19.4 of the Senior Facility Agreement as a result of a breach
of any undertaking in Clause 17 of the Senior Facility Agreement in
any respect which the Majority Senior Creditors acting reasonably
consider is likely to have, has or has had a Material Adverse Effect;
or
(c) Clause 19 of the Senior Facility Agreement by reason of any failure of
any Obligor to comply with any of its obligations under the Security
Documents in any respect which the Majority Senior Creditors acting
reasonably consider has had or is likely to have a material adverse
effect on the validity or enforceability or value of the security
contemplated by any of the Security Documents to which the Obligor is
party; or
(d) Clause 19.3 of the Senior Facility Agreement by reason of any
representation or warranty given, made or repeated by any Obligor
under any of the Senior Finance Documents being incorrect in any
respect where such misrepresentation or the fact or circumstance
causing such misrepresentation is considered by the Majority Senior
Creditors (acting reasonably) to have had a Material Adverse Effect;
or
(e) Clauses 19.5, 19.6 or 19.10 to 19.16 (both inclusive) of the Senior
Facility Agreement.
"NEW OBLIGOR"
has the meaning given to it in Clause 26.3 (New Obligors).
"NON-PAYMENT EVENT"
means failure by any Obligor to pay on the due date:
(a) any principal (whether falling due by reason of scheduled repayment,
mandatory prepayment or any other reason) or interest; or
(b) any other amount which alone (or when aggregated with other unpaid
amounts falling within this paragraph (b)) exceeds (Pounds)100,000,
in either case under any of the Senior Finance Documents or Hedging
Documents PROVIDED THAT the amount concerned qualifies as Senior Debt or
Hedging Liabilities (as the case may be) if prior to the Senior Discharge
Date and thereafter under any of the Junior Finance Documents PROVIDED THAT
the amount concerned qualifies as Junior Debt.
"OBLIGOR"
means the Borrower, each Guarantor and each New Obligor.
<PAGE>
"PURCHASE AMOUNT"
has the meaning given to it in Clause 26.13 (Option to Purchase).
"RECOVERY"
means any sum of money received or recovered by the Senior Creditors or the
Hedging Banks or any of them on or at any time after the occurrence of an
Enforcement Event on account of any amount outstanding under any Senior
Finance Document and/or any Hedging Document, whether as proceeds of
enforcement of security, the exercise of a right of set-off, the receipt or
recovery of payment or otherwise howsoever after deducting therefrom (a)
the reasonable and proper costs and expenses (including without limitation
the reasonable costs of legal advisers) incurred by the relevant Senior
Creditor or Hedging Bank in effecting such recovery, and (b) any sums
required by law or court order to be paid to third parties on account of
claims preferred by law over the claims of the Senior Creditors or the
Hedging Banks, as the case may be (together the "RECOVERIES").
"REPORT"
means:
(a) each Valuation and each Certificate of Title (each as defined in the
Senior Facility Agreement or the Junior Facility Agreement);
(b) the environmental report and the legal due diligence reports referred
to in the definition of "Information Package" in the Senior Facility
Agreement or the Junior Facility Agreement;
(c) the confirmation from Deloitte & Touche referred to in paragraph 5(c)
of Part I of Schedule 2 to the Senior Facility Agreement or the Junior
Facility Agreement; and
(d) each other report delivered to any Senior Creditor or Junior Creditor
pursuant to the terms of any Senior Finance Document or Junior Finance
Document.
"REPORT PROVIDER"
means, in relation to a Report, the person who provided that Report.
"SECURITY DOCUMENTS"
means:
(a) each Debenture as defined in the Senior Facility Agreement;
(b) each Senior Share Mortgage; and
(b) each Junior Share Mortgage.
<PAGE>
"SECURITY TRUSTEE"
means such bank or financial institution as is party to or accedes to the
Senior Facility Agreement, the Junior Facility Agreement and this Agreement
as agent and trustee for the Senior Creditors, the Hedging Banks and the
Junior Creditors of the security under the Security Documents and any
replacement therefor thereunder, and any sub-agent, sub-trustee or
custodian appointed by it and/or such replacement to hold any such
security.
"SENIOR AGENT"
means such bank or financial institution as is party to or accedes to the
Senior Facility Agreement (and to this Agreement) as Agent under (and as
defined in) the Senior Facility Agreement, and any replacement therefor
thereunder.
"SENIOR CREDITOR"
means each of:
(a) the banks and financial institutions named in Schedule 3 in their
capacity as Banks under and in each case as defined in the Senior
Facility Agreement; and
(b) the Arranger and the Joint Arrangers party to (and as defined in) the
Senior Facility Agreement, the Senior Agent and the Security Trustee,
and in each case any successor thereto and any assigns, transferees or
substitutes thereof or therefor (whether pursuant to any Novation
Certificate, as defined in the Senior Facility Agreement, or otherwise).
"SENIOR DEBT"
means all present and future liabilities (actual or contingent) payable or
owing by the Obligors or any of them to the Senior Creditors or any of them
pursuant to or in respect of (or calculated by reference to) the Senior
Finance Documents, whether or not matured and whether or not liquidated
together in each case with:
(a) any refinancing, novation, refunding, deferral or extension of any of
those liabilities by any of the Senior Creditors permitted by the
terms of this Agreement and the Senior Finance Documents;
(b) any further advances which may be made by a Senior Creditor to any
Obligor under any agreement expressed to be supplemental to any of the
Senior Finance Documents plus all interest, fees and costs in
connection therewith;
(c) any claim for damages or restitution arising out of, by reference to,
or in connection with, any of the Senior Finance Documents;
(d) any claim flowing from any recovery by an Obligor or a receiver or
liquidator thereof or any other person of a payment or discharge in
respect of those liabilities on grounds of preference or otherwise;
and
<PAGE>
(e) any amounts (such as post-insolvency interest) which would be included
in any of the above but for any discharge, non-provability,
invalidity, unenforceability or non-allowability of the same in any
insolvency or other proceedings,
PROVIDED THAT any Hedging Liabilities are excluded, and also, for the
purposes of this Agreement only and without prejudice to the liabilities
secured by the Security Documents, the term Senior Debt excludes (as
against the Junior Creditors, but not any Subordinated Investors):
(i) any amount outstanding in excess of the limits specified in Clause
19.4 (Limits on Senior Debt); and
(ii) any amount outstanding and owed to any Senior Creditor which would not
have been outstanding and owed but for a breach by that Senior
Creditor of the provisions of this Agreement.
"SENIOR DEFAULT"
means an Event of Default under the Senior Facility Agreement.
"SENIOR DISCHARGE DATE"
means the date on which all Senior Debt and Hedging Liabilities have been
fully paid and discharged and all Commitments of the Senior Creditors and
commitments or obligations of the Hedging Banks have been terminated to the
satisfaction of the Senior Agent acting reasonably (in the case of the
Senior Debt) and the Hedging Banks acting reasonably (in the case of the
Hedging Liabilities), whether or not as the result of an enforcement,
PROVIDED THAT the Senior Agent and each Hedging Bank will disregard
contingent risks and liabilities (such as the risk of clawback flowing from
a preference or similar claim) for the purposes of determining whether the
Senior Debt and Hedging Liabilities (as the case may be) have been so paid
or discharged except to the extent that the Senior Agent or a Hedging Bank
(as the case may be) reasonably believes (after taking such legal advice as
it considers appropriate) that there is a reasonable likelihood that those
contingent risks and liabilities will become actual liabilities.
"SENIOR FACILITY AGREEMENT"
means the (Pounds)275,000,000 Senior Mortgage Loan Facility Agreement dated
7th April, 1998 and amended by deeds of amendment and restatement dated
30th April, 1998 and 17th August, 1998 between the Borrower, the Senior
Creditors, the Security Trustee and the Senior Agent providing for a
Sterling denominated term loan facility (as, and including any instrument
pursuant to which the same is, novated, varied, supplemented or amended
from time to time).
"SENIOR FINANCE DOCUMENTS"
means the "Finance Documents" as defined in the Senior Facility Agreement
save that for the purposes of this Agreement the Hedging Documents shall be
excluded from that definition.
"SENIOR HEADROOM"
means (Pounds)20,000,000.
<PAGE>
"SENIOR SHARE MORTGAGE"
has the meaning given to it in the Senior Facility Agreement.
"SPECIFIED SHARES"
means the shares subject to the security created by the Junior Share
Mortgages which are also subject to the security created by the Senior
Share Mortgages.
"STOP NOTICE"
has the meaning given to it in Clause 9.2 (Other Defaults).
"SUBORDINATED INVESTOR DEBT"
means all present and future liabilities (actual or contingent) payable or
owing by the Borrower to the Subordinated Investors (or any of them) under
or in connection with the Subordinated Investor Debt Documents, in each
case whether or not matured and whether or not liquidated, together in each
case with:
(a) any refinancing, novation, refunding, deferral or extension of any of
those liabilities;
(b) any further advances which may be made by a Subordinated Investor to
any Obligor under, or under any agreement expressed to be supplemental
to, any of the Subordinated Investor Debt Documents, plus all
interest, fees and costs in connection therewith;
(c) any claim for damages or restitution arising out of, by reference to,
or in connection with, the Subordinated Investor Debt Documents;
(d) any claim flowing from any recovery by an Obligor or a receiver or
liquidator thereof or any other person of a payment or discharge in
respect of those liabilities on grounds of preference or otherwise;
and
(e) any amounts (such as post-insolvency interest) which would be included
in any of the above but for any discharge, non-provability,
invalidity, unenforceability or non-allowability of the same in any
insolvency or other proceedings.
"SUBORDINATED INVESTOR DEBT DOCUMENTS"
means:
(a) the (Pounds)60,000,000 Credit Agreement entered into or to be entered
into between the Borrower as Borrower and BRE/Satellite L.P. as Lender
and each note or other document entered into pursuant to that Credit
Agreement; and
(b) any agreement or instrument which may be designated as such in a deed
of accession in the form of Schedule 9 together with all other
agreements or instruments issued under or pursuant to any such
agreement or instrument, in each case as, and
<PAGE>
including, any instrument pursuant to which the same is, novated,
varied, supplemented or amended from time to time.
"SUBORDINATED INVESTORS"
means the person(s) named in Schedule 5 and any person who becomes a party
hereto as a Subordinated Investor in accordance with Clause 26.9(b)
(Subordinated Investors).
"SUBORDINATED INVESTORS' AGENT"
means BRE/Satellite L.P. in its capacity as agent for the Subordinated
Investors under and for the purposes of this Agreement.
"SUBSIDIARY"
has the meaning given to it in the Senior Facility Agreement.
1.2 AMENDMENTS AND VARIATIONS
References in this Agreement to (or to any provisions of, or definitions
contained in) this Agreement or any other document shall be construed as
references to this Agreement, that provision, that definition or that
document as in force for the time being and as amended, varied,
supplemented or novated from time to time but only to the extent that any
such amendment, variation, supplement or novation has not been made in
contravention of the terms of this Agreement.
1.3 INTERPRETATION
(a) References to the Subordinated Investors' Agent, the Obligors, the Senior
Creditors, the Hedging Banks, the Junior Creditors and the Subordinated
Investors include their respective successors, assigns, transferees and
substitutes.
(b) Headings are for convenience of reference only and shall be ignored in the
interpretation of this Agreement.
(c) In this Agreement, unless the context otherwise requires:
(i) references to Clauses and Schedules are to be construed as
references to the clauses of, and the schedules to, this Agreement;
(ii) words importing the singular shall include the plural, and vice
versa; and
(iii) references to persons shall include any firm, body corporate,
company, corporation, government, state or agency of a state or any
association or partnership (whether or not having separate legal
personality) of two or more of the foregoing.
(d) Terms defined in or whose interpretation is provided for in the Senior
Facility Agreement shall have the same meaning when used in this Agreement
unless separately defined or interpreted in this Agreement.
<PAGE>
1.4 INTERCREDITOR AGREEMENT TO PREVAIL
In the event of any conflict between any provision of this Agreement and
another Finance Document this Agreement shall prevail.
2. PURPOSE AND RANKING
The principal purpose of this Agreement is that (subject only as expressly
provided to the contrary in this Agreement) the Senior Debt, Hedging
Liabilities, Junior Debt and the Subordinated Investor Debt should rank in
the following order:
FIRST the Senior Debt and the Hedging Liabilities (pari passu, without any
preference between themselves);
SECOND the Junior Debt; and
THIRD the Subordinated Investor Debt,
and that the Security Documents (to the extent that they secure or purport
to secure the Junior Debt) should secure the Senior Debt and the Hedging
Liabilities in priority to the Junior Debt.
3. UNDERTAKINGS OF OBLIGORS
3.1 COVENANT TO PAY
Each Obligor covenants in favour of the Security Trustee to pay the Senior
Debt, the Hedging Liabilities and the Junior Debt to the Security Trustee
when and to the extent due from it under (and subject always to any express
limits on the amounts capable of becoming due from it set out in) the terms
of the Senior Finance Documents, the Hedging Documents or the Junior
Finance Documents, as the case may be, to such bank account as the Security
Trustee may direct, except that each Obligor may (subject to the terms of
this Agreement, in particular Clauses 3.2, 3.3, 9 (Suspension of Permitted
Payments) and 10 (Turnover) hereof) pay the Senior Debt, the Hedging
Liabilities and/or the Junior Debt directly to the Senior Agent, the
relevant Hedging Banks or the Junior Agent respectively, and each such
payment will constitute a pro tanto discharge of the covenant to pay in
favour of the Security Trustee herein set forth.
3.2 RESTRICTIONS IN RELATION TO THE JUNIOR DEBT
Each Obligor undertakes to each of the Senior Creditors, Hedging Banks and
Junior Creditors that, until the Senior Discharge Date, except as the
Majority Senior Creditors have previously consented in writing, such
Obligor will not, and will procure that none of its Subsidiaries will:
(a) pay, prepay or repay, or make any distribution in respect of, or on
account of, or purchase or acquire, any of the Junior Debt in cash or
in kind, except as permitted by Clauses 8 (Permitted Payments) and 14
(Permitted Junior Enforcement), and save as contemplated by Clause
11.3 (Filing of Claims); or
(b) discharge any of the Junior Debt by set-off, any right of combination
of accounts or otherwise except if and to the extent that it is
permitted to be paid by Clauses 8
<PAGE>
(Permitted Payments) and 14 (Permitted Junior Enforcement), and save
as contemplated by Clause 11.3 (Filing of Claims); or
(c) create or permit to subsist, any Security Interest over any of its
assets for any of the Junior Debt except under the Security Documents;
or
(d) give any financial support (including without limitation, the taking
of any participation, the giving of any guarantee, indemnity or other
assurance against loss, or the making of any deposit or payment) to
any person in respect of the Junior Debt or to enable any person to do
any of the things referred to in paragraph (a) above or this paragraph
(d), except under the Security Documents (to the extent excepted under
paragraph (c) above), under Clause 15 of the Junior Facility Agreement
or as required by Clause 27.4 thereof where such member of the Group
gives like support under the Senior Facility Agreement to the Senior
Creditors in relation to the Senior Debt and to the Hedging Banks in
relation to the Hedging Liabilities; or
(e) take or omit to take any action whereby the ranking and/or
subordination of the Junior Debt contemplated by this Agreement may be
impaired except to the extent expressly permitted hereunder.
3.3 RESTRICTIONS IN RELATION TO SUBORDINATED INVESTOR DEBT
Except as the Senior Agent (on the instructions of the Majority Senior
Creditors) until the Senior Discharge Date and also, if prior to the Junior
Discharge Date, the Junior Agent (on the instructions of the Majority
Junior Creditors), have previously consented in writing, no Obligor will,
and each Obligor will procure that none of its Subsidiaries will:
(a) pay, prepay or repay, or make any distribution in respect of, or on
account of, or purchase or acquire, any of the Subordinated Investor
Debt in cash or in kind, except as permitted by Clause 8 (Permitted
Payments), and save as contemplated by Clause 11.3 (Filing of Claims);
or
(b) discharge any of the Subordinated Investor Debt by set-off, any right
of combination of accounts or otherwise except if and to the extent
that it is permitted to be paid by Clause 8 (Permitted Payments), and
save as contemplated by Clause 11.3 (Filing of Claims); or
(c) create or permit to subsist any Security Interest over any of its
assets for any of the Subordinated Investor Debt; or
(d) give any financial support (including, without limitation, the taking
of any participation, the giving of any guarantee, indemnity or other
assurance against loss, or the making of any deposit or payment) to
any person in respect of the Subordinated Investor Debt or to enable
any person to do any of the things otherwise prohibited by paragraph
(a) above or this paragraph (d); or
(e) take or omit to take any action whereby the subordination of the
Subordinated Investor Debt contemplated by this Agreement may be
impaired except to the extent expressly permitted hereunder.
<PAGE>
4. AMENDMENTS
4.1 CHANGES TO SENIOR FINANCE DOCUMENTS
Except as the Majority Junior Creditors and the Hedging Banks have
expressly consented in writing (such consent to be deemed to have been
given if within 20 Business Days of any written request for such consent
being given to the Junior Agent the Senior Agent has not received written
notification from the Junior Agent stating that the Majority Junior
Creditors have refused to give any such consent), no Obligor or Senior
Creditor will amend, vary, supplement or allow to be superseded any
provision of any of the Senior Finance Documents (or give any waiver,
release or consent having the same commercial effect) in a manner or to an
extent which would result in:
(a) the Margin specified in the Senior Facility Agreement being increased
above the rate originally provided for in the Senior Facility
Agreement; or
(b) interest being required to be paid earlier or more frequently than at
the end of each Interest Period as defined in the provisions of the
Senior Facility Agreement in force on the date hereof save as results
from procedural or administrative changes arising in the ordinary
course of the administration of the Senior Facility Agreement which
are not material (but this sub-clause (b) does not restrict or affect
in any way any earlier or more frequent payment of interest arising
pursuant to the provisions of the Senior Facility Agreement in force
on the date hereof); or
(c) any change to the basis upon which interest is calculated in
accordance with the provisions of the Senior Facility Agreement in
force on the date hereof, save as results from procedural or
administrative changes arising in the ordinary course of the
administration of the Senior Facility Agreement which are not material
or any change in the currency of payment of any principal of or
interest on the Senior Debt from that required pursuant to the terms
of the Senior Facility Agreement in force on the date hereof (but this
sub-clause (c) does not restrict or affect in any way any change
effected pursuant to or resulting from the operation in accordance
with their terms of the provisions of the Senior Facility Agreement
related to the calculation or payment of interest in force on the date
hereof); or
(d) any Repayment Instalment or any mandatory prepayment under the Senior
Facility Agreement being required to be made earlier than the date
originally provided for in the Senior Facility Agreement, save as
results from procedural or administrative changes arising in the
ordinary course of the administration of the Senior Facility Agreement
which do not materially alter the due date (but this sub-clause (d)
does not restrict or affect in any way any right of any Senior
Creditor to require prepayment or early repayment upon an acceleration
following an Event of Default or otherwise (or the right or obligation
of the Borrower to prepay any of the Senior Debt) in accordance with
the provisions of the Senior Facility Agreement in force on the date
hereof); or
(e) the deferral of all or part of any Repayment Instalment in an amount
greater than the amount of the Senior Headroom or so as to cause a
breach of the provisions of Clause 19.4 (Limits on Senior Debt) or to
a date beyond the first anniversary of the Final Maturity Date, save
as results from procedural or administrative changes arising in the
ordinary course of the administration of the Senior Facility Agreement
<PAGE>
which do not materially alter the due date or cause it to fall into a
different quarterly accounting period; or
(f) the waiver or release of any mandatory prepayments under Clause 7.6 of
the Senior Facility Agreement, where the amount which, but for that
waiver or release, would have been required to be applied in
prepayment would in aggregate exceed the amount of the Senior Headroom
or such waiver or release would cause a breach of Clause 19.4 (Limits
on Senior Debt); or
(g) any amendment, variation, waiver or release of or supplement to
Clauses 16, 17, 18 and 19 of the Senior Facility Agreement (or any
definition in Clause 1.1 of the Senior Facility Agreement of any term
used therein which is material to the substance of any such clause)
unless the Senior Agent acting reasonably and in good faith certifies
that it considers that such amendment is not material in the context
of this Agreement and the other Finance Documents or that such
amendment, variation, waiver, release or supplement relaxes or makes
those clauses less onerous on the Obligors; or
(h) any Obligor becoming liable to make an additional payment (or increase
an existing payment) under any of the Senior Finance Documents which
liability does not arise from the provisions of the Senior Finance
Documents in force on the date hereof (save as results from procedural
or administrative changes arising in the ordinary course of the
administration of the Senior Facility Agreement which are not
material) other than in respect of any additional advances (or rolled
up interest) and interest thereon (at the same rate (including Margin)
payable under the provisions of the Senior Facility Agreement in force
on the date hereof) to the extent those additional advances or rolled
up interest qualify as Senior Debt taking into account Clause 19.4
(Limits on Senior Debt) (but this sub-clause (h) does not restrict or
affect in any way the right of any Senior Creditor to charge or levy
normal banking charges, fees (excluding refinancing or rescheduling
fees), commissions, costs and expenses and interest (provided the
interest rate does not exceed normal market rates) in relation to any
further services or facilities made available to any Obligor not
constituting Senior Debt and not made available in breach of the
Junior Finance Documents).
4.2 CHANGES TO HEDGING DOCUMENTS
Except as the Majority Creditors (save that, for the purposes of this
Clause 4.2 only, the proviso contained in the definition of Majority Senior
Creditors shall not be taken into account in defining the Majority
Creditors) have previously consented in writing, no Obligor or Hedging Bank
will amend, vary, supplement or allow to be superseded any provision of the
Hedging Documents (or give any waiver, release or consent having the same
commercial effect) to the extent that would result in:
(a) any provision in the Hedging Documents being amended unless the
Hedging Bank concerned acting reasonably and in good faith certifies
that it considers such amendment does not impose restrictions or
obligations or conditions on any Obligor which are more onerous than
those originally provided for in the Hedging Documents; or
(b) any payment under the Hedging Documents being required to be made by
an Obligor earlier than the date originally provided for in the
Hedging Documents, save as results from procedural or administrative
changes arising in the ordinary course of
<PAGE>
the administration of the Hedging Documents which do not materially
alter the due date (but, subject to Clause 5.2(b) (Undertakings of
Hedging Banks) below, this sub-clause (b) does not restrict or affect
in any way any right of the Hedging Bank or an Obligor to require
early payment upon a termination or otherwise in accordance with the
provisions of the Hedging Documents in force on the date hereof); or
(c) any Obligor becoming liable to make an additional payment (or increase
an existing payment) under any of the Hedging Documents which
liability does not arise from the provisions of the Hedging Documents
in force on the date hereof, save as results from procedural or
administrative changes arising in the ordinary course of the
administration of the relevant Hedging Document which are not material
(but this sub-clause (c) does not restrict or affect in any way the
right of any Hedging Bank to charge or levy normal banking charges,
fees (excluding refinancing or rescheduling fees), commissions, costs
and expenses in relation to any further services or facilities made
available to any Obligor as part of day to day banking arrangements
which do not constitute Hedging Liabilities and are not made available
in breach of the Senior Finance Documents or Junior Finance
Documents).
4.3 CHANGES TO JUNIOR FINANCE DOCUMENTS
Until the Senior Discharge Date, except as the Majority Senior Creditors
and the Hedging Banks have expressly consented in writing (such consent to
be deemed to have been given if within 20 Business Days of any written
request for such consent being given to the Senior Agent the Junior Agent
has not received written notification from the Senior Agent stating that
the Majority Senior Creditors have refused to give any such consent), no
Obligor or Junior Creditor will amend, vary or supplement or allow to be
superseded any provision of the Junior Finance Documents (or give any
waiver, release or consent having the same commercial effect) in a manner
or to an extent which would result in:
(a) the Margin as defined and specified in the Junior Facility Agreement
being increased above the rate originally provided for in the Junior
Facility Agreement;
(b) interest being required to be paid earlier or more frequently than on
the last day of an Interest Period selected in accordance with and as
defined in the original provisions of the Junior Facility Agreement,
save as results from procedural or administrative changes arising in
the ordinary course of the administration of the Junior Facility
Agreement which are not material (but this sub-clause (b) does not
restrict or affect in any way any earlier or more frequent payment of
interest arising pursuant to the original provisions of the Junior
Facility Agreement and which is not prohibited by the other terms of
this Agreement);
(c) any change to the basis upon which interest is calculated in
accordance with the original provisions of the Junior Facility
Agreement (save as results from procedural or administrative changes
arising in the ordinary course of the administration of the Junior
Facility Agreement which are not material) or any change in the
currency of payment of any principal of or interest on the Junior Debt
from that required by the original terms of the Junior Facility
Agreement (but this sub-clause (c) does not restrict or affect in any
way any change effected pursuant to or resulting from the operation in
accordance with their terms of the original provisions of the Junior
Facility Agreement related to the calculation or payment of interest
and which is not prohibited by the other terms of this Agreement);
<PAGE>
(d) any repayment of Advances under the Junior Facility Agreement or any
prepayment thereof thereunder being required to be made earlier than
the date originally provided for in the Junior Facility Agreement,
save as results from procedural or administrative changes arising in
the ordinary course of the administration of the Junior Facility
Agreement which do not materially alter the due date (but this sub-
clause (d) does not restrict or affect in any way any right of any
Junior Creditor to require prepayment or early repayment upon an
acceleration following an Event of Default or otherwise (or the right
or obligation of the Borrower party in that capacity to the Junior
Facility Agreement to prepay any of the Junior Debt) in accordance
with the original provisions of the Junior Facility Agreement, in each
case to the extent not prohibited by the other terms of this
Agreement);
(e) any amendment, variation, waiver or release of or supplement to
Clauses 16, 17, 18 or 19 of the Junior Facility Agreement (or any
definition in Clause 1.1 of the Junior Facility Agreement of any term
used therein which is material to the substance of any such clause),
unless the Junior Agent acting reasonably and in good faith certifies
that it considers such amendment or waiver is not material in the
context of this Agreement or relaxes or makes those clauses less
onerous on the Obligors and (in any such case) paragraph (g) below
does not apply in relation to such amendment, variation, waiver,
release or supplement;
(f) any Obligor becoming liable to make an additional payment (or increase
an existing payment) under any of the Junior Finance Documents which
liability does not arise from the provisions of the Junior Finance
Documents as in effect at the date of this Agreement (save as results
from procedural or administrative changes arising in the ordinary
course of the administration of the Junior Facility Agreement which
are not material), other than in respect of rolled up interest and
interest thereon at the same rate (including Margin) payable under the
original provisions of the Junior Facility Agreement and not otherwise
prohibited from being paid by the terms of this Agreement (but this
sub-clause (f) does not restrict or affect in any way the right of any
Junior Creditor to charge or levy reasonable banking charges, fees
(excluding refinancing or rescheduling fees), commissions, costs and
expenses and interest (provided the interest rate does not exceed
normal market rates) in relation to any further services or facilities
made available to any Obligor not constituting Junior Debt and not in
breach of the Senior Finance Documents); or
(g) any amendment, variation, waiver or release of or supplement to any of
the Junior Finance Documents in a manner whereby the ranking and/or
subordination arrangements provided for herein are adversely affected.
4.4 CHANGES TO SUBORDINATED INVESTOR DEBT DOCUMENTS
Except as the Senior Agent (on the instructions of the Majority Senior
Creditors) until the Senior Discharge Date and also, if prior to the Junior
Discharge Date, the Junior Agent (on the instructions of the Majority
Junior Creditors) have previously consented in writing, no Obligor or
Subordinated Investor will amend, vary, waive, supplement or allow to be
superseded any provision of the Subordinated Investor Debt Documents (or
give any waiver, release or consent having the same commercial effect)
except:
<PAGE>
(a) in a manner and to an extent such that the interests of each of the
Senior Creditors and the Junior Creditors and the ranking and/or
subordination arrangements provided for herein are not adversely
affected (as to which a certificate of the Senior Agent (until the
Senior Discharge Date and also, if prior to the Junior Discharge Date,
the Junior Agent), acting reasonably and in good faith, shall be
conclusive); and/or
(b) for any waiver by the Subordinated Investors of any payment by the
Borrower of any amount due under the Subordinated Investor Debt
Documents.
4.5 WHOLE AGREEMENT
The Borrower and the Subordinated Investors warrant and undertake that the
Subordinated Investor Debt Documents contain the whole agreement regarding
the Subordinated Investor Debt and that there are no other agreements or
provisions (whether oral or in writing) amending, varying, supplementing,
superseding or otherwise applicable to the Subordinated Investor Debt.
5. ACCESSION AND UNDERTAKINGS OF HEDGING BANKS
5.1 ACCESSION OF HEDGING BANKS
If there is no Hedging Bank specified in Schedule 4, then the provisions of
this Agreement relating to Hedging Banks will not come into effect until
such time as a bank which is to provide interest rate hedging facilities to
members of the Group executes and delivers to the Security Trustee a deed
of accession substantially in the form of Schedule 8, undertaking to be
bound by all the provisions of this Agreement, together with copies of the
proposed Hedging Documents in relation to such bank. No bank providing
hedging facilities but not party hereto as a Hedging Bank will be entitled
to share in any of the security constituted by the Security Documents in
respect of Hedging Liabilities unless and until it has executed and
delivered to the Security Trustee such a deed of accession. Subject to the
next sentence, forthwith upon delivery of such a deed of accession to the
Security Trustee a Hedging Bank will acquire all its rights and assume all
its obligations under this Agreement. Notwithstanding the foregoing, no
person not specified in Schedule 4 (other than Merrill Lynch Capital
Services, Inc. or any affiliate or associate thereof) may become a Hedging
Bank without the prior written consent of the Senior Agent (on the
instructions of the Majority Senior Creditors) and the Junior Agent (on the
instructions of the Majority Junior Creditors) to such person's identity
and to the documents proposed as Hedging Documents in relation to it, which
consent shall not be unreasonably withheld where that person is a Senior
Creditor or a person whose acceptability to become a Hedging Bank has been
confirmed in writing by the Senior Agent and the Junior Agent prior to the
date hereof and the hedging arrangements concerned are Hedging Agreements
as defined in the Senior Facility Agreement.
5.2 UNDERTAKINGS OF HEDGING BANKS
Until the Senior Discharge Date, except as the Majority Senior Creditors
(save that, for the purposes of this Clause 5.2 only, the proviso contained
in the definition of Majority Senior Creditors shall not apply) have
previously consented in writing, no Hedging Bank will:
(a) demand (other than as may be necessary in order to exercise any right
to terminate or close out any hedging transaction as provided in and
permitted under paragraph (b) below) or receive payment, prepayment or
repayment of, or any distribution in
<PAGE>
respect of, or on account of, any of the Hedging Liabilities in cash
or in kind, or apply any money or property in or towards the discharge
of any Hedging Liabilities except:
(i) for scheduled payments arising under the original terms of the
Hedging Documents (without regard to any amendments made after
the date of those Hedging Documents other than those permitted by
the terms of this Agreement); and/or
(ii) for the proceeds of enforcement of the Security Documents
received and applied in the order permitted by Clause 15
(Proceeds of Enforcement of Security); or
(b) exercise any right to terminate or close out any hedging transaction
under the Hedging Documents prior to its stated maturity (whether by
reason of the Obligor counterparty becoming a Defaulting Party or
Affected Party thereunder (and as defined therein) or otherwise)
unless:
(i) such Obligor has defaulted on a payment due under the Hedging
Documents after allowing for any required notice and any
applicable days of grace and such default continues for more than
three Business Days after notice of such default being given to
the Senior Agent; or
(ii) the Senior Agent has declared all of the Senior Debt due and
payable and/or payable on demand and/or cancelled the Total
Commitments in full under Clause 19.17 of the Senior Facility
Agreement; or
(iii) the termination or close out is within 30 calendar days of a
cancellation in full (on or before 30th June, 1998 and whether
such cancellation is automatic or voluntary by the Borrower) of
the Total Commitments under and as defined in the Senior Facility
Agreement (or, if the 30th calendar day after such cancellation
is not a New York Business Day, on the next succeeding New York
Business Day) and it has given at least five New York Business
Days' prior written notice; or
(iv) a Material Senior Default has occurred and is continuing; or
(c) discharge all or any part of the Hedging Liabilities by set-off, any
right of combination of accounts or otherwise except if and to the
extent that those Hedging Liabilities are permitted to be paid under
paragraph (a) above; or
(d) permit to subsist or receive any Security Interest or any financial
support (including without limitation, the giving of any guarantee,
indemnity or other assurance against loss, or the making of any
deposit or payment) for, or in respect of, any of the Hedging
Liabilities other than under the Security Documents or any guarantee
given by a Subsidiary of the Borrower to a Hedging Bank where a
guarantee has also been given by that Subsidiary to the Senior
Creditors and the Junior Creditors.
<PAGE>
5.3 TWO WAY PAYMENTS
Each Obligor and each Hedging Bank agrees that:
(a) any Hedging Document to which they are party governing the terms of a
hedging transaction will provide for "full two way payments" or
payments under the "Second Method" in the event of a termination of
that hedging transaction entered into under that Hedging Document
whether upon a Termination Event or an Event of Default (as defined
therein), or any other method, the substantive effect of which is,
that the Defaulting Party or Affected Party under (and as defined in)
that Hedging Document will be entitled to receive payment under the
relevant termination provisions if the net replacement value of all
terminated transactions effected under that Hedging Document is in its
favour;
(b) if, on termination of any hedging transaction under a Hedging
Document, a settlement amount or other amount falls due from that
Hedging Bank to any Obligor then, if the security constituted by the
Security Documents has become enforceable, that amount shall be paid
by such Hedging Bank to the Security Trustee and treated as proceeds
of enforcement of the security conferred by the Security Documents for
application in the order prescribed in this Agreement;
(c) unless it has already exercised such rights in accordance with Clause
5.2(b) above, each Hedging Bank will exercise any rights it may have
to terminate the hedging transactions under the Hedging Documents
after the Senior Agent has declared all of the Senior Debt immediately
due and payable and/or payable on demand and/or has cancelled the
Total Commitments in full under Clause 19.17 of the Senior Facility
Agreement, unless the Majority Senior Creditors otherwise agree or
require; and
(d) if the Senior Discharge Date would have occurred but for the fact that
Hedging Liabilities only remain outstanding, the Junior Agent (acting
on the instructions of the Majority Junior Creditors) may (by notice
to the Borrower) direct the Borrower to terminate or procure the
termination of all outstanding hedging transactions under the Hedging
Documents in relation to any Hedging Bank if that Hedging Bank is
requiring any Junior Creditor to refrain from taking any action which,
but for the provisions of this Agreement, it would not have been
prevented from taking; the Borrower will (and as against the Hedging
Banks will be entitled to) if so required:
(i) terminate or procure termination of all such hedging transactions
as though an Additional Termination Event (as defined in the
relevant Hedging Document) had occurred and the Borrower was the
Affected Party (as defined in the relevant Hedging Document) and
Market Quotation (as defined in the relevant Hedging Document)
applied; or
(ii) (at the option of the Borrower) procure the novation of all the
Borrower's rights and obligations under all such hedging
transactions to a third party (not being a member of the Group)
approved by the Hedging Bank(s) concerned and without any
recourse to the Borrower by such third party, whereupon the
Hedging Document(s) concerned will cease to be Hedging
Document(s),
<PAGE>
PROVIDED THAT the Junior Agent will consult in good faith with the
Borrower and the relevant Hedging Banks in relation to the manner and
timing of any such termination or novation with a view to achieving an
orderly termination or, as the case may be, novation of the relevant
transactions.
5.4 HEDGING DOCUMENTS
Each Hedging Bank will provide to the Security Trustee copies of all
documents constituting the Hedging Documents as soon as reasonably
practicable.
5.5 ISDA FORM
The provisions of this Agreement relating to hedging transactions assume
that all Hedging Documents will be based on 1992 ISDA Master Agreements.
If this proves not to be the case, such amendments shall be made to such
provisions as are necessary, in the light of the actual provisions of the
Hedging Documents, in order that this Agreement may have the same effect in
relation to hedging transactions as it would have had if such assumption
had been correct.
6. UNDERTAKINGS OF JUNIOR CREDITORS
Until the Senior Discharge Date, except as the Majority Senior Creditors
have previously consented in writing, no Junior Creditor will:
(a) demand or receive payment, prepayment or repayment of, or any
distribution in respect of, or on account of, any of the Junior Debt
in cash or in kind or apply any money or property in or towards the
discharge of any Junior Debt, except to the extent permitted by Clause
8 (Permitted Payments) or Clause 14 (Permitted Junior Enforcement),
and save as contemplated by Clause 11.3 (Filing of Claims);
(b) discharge or seek to discharge all or any part of the Junior Debt by
set-off, any right of combination of accounts or otherwise except to
the extent that the Junior Debt is permitted to be paid by Clause 8
(Permitted Payments) or Clause 14 (Permitted Junior Enforcement), and
save as contemplated by Clause 11.3 (Filing of Claims); or
(c) permit to subsist or receive any Security Interest or any financial
support, guarantee, indemnity or other assurance against loss, or the
making of any deposit (other than funded or unfunded sub-
participations in the Junior Debt by banks or financial institutions)
for, or in respect of, any of the Junior Debt other than:
(i) under the Security Documents;
(ii) the guarantee contained in Clause 15 of the Junior Facility
Agreement or any other where a guarantee has been given to or in
favour of the Senior Creditors by the same members of the Group;
or
(iii) any other Security Interest or support granted for the full
benefit (save to the extent otherwise required so as to comply
with applicable law) of the Senior Creditors, the Hedging Banks
and the Junior Creditors in accordance with the ranking set out
in this Agreement.
<PAGE>
7. UNDERTAKINGS OF SUBORDINATED INVESTORS
7.1 SUBORDINATED INVESTORS' UNDERTAKINGS
Until the Senior Discharge Date, except as the Senior Agent (on the
instructions of the Majority Senior Creditors), and until the Junior
Discharge Date, except as the Junior Agent (on the instructions of the
Majority Junior Creditors), have previously consented in writing, and
otherwise except to the extent permitted by Clause 8 (Permitted Payments):
(a) no Subordinated Investor will demand payment of, exercise any rights
in respect of, or prosecute or pursue any claims for breach of, any
representation or warranty or undertaking made or under any indemnity
given by any Obligor under or in connection with the Subordinated
Investor Debt Documents (where any such demand, exercise, prosecution
or pursuit would give rise to a claim (whether liquidated or
otherwise) for damages, payments, costs or losses), PROVIDED THAT, to
the extent not inconsistent with the provisions of the Senior Finance
Documents or the Junior Finance Documents, a Subordinated Investor may
seek to enforce any such undertaking given by any Obligor by means of
an injunction or an order for specific performance; and
(b) no Subordinated Investor will demand or receive payment of, exercise
any rights in respect of, or prosecute or pursue any claims for any
Subordinated Investor Debt where any such demand, exercise,
prosecution or pursuit would give rise to a claim (whether liquidated
or otherwise) for damages, payments, costs or losses; and
(c) no Subordinated Investor will claim or rank as a creditor in the
insolvency, winding up, bankruptcy or liquidation of any Obligor, save
as contemplated by Clause 11.3 (Filing of Claims); and
(d) no Subordinated Investor will take or omit to take any action whereby
the ranking and/or subordination arrangements provided for in this
Agreement may be impaired.
7.2 WARRANTIES OF SUBORDINATED INVESTORS
Each Subordinated Investor hereby warrants to each Senior Creditor, each
Hedging Bank and each Junior Creditor that:
(a) it is duly incorporated (if a corporate person) or duly established
(in any other case) and validly existing under the laws of the place
of its incorporation or formation; and
(b) this Agreement constitutes its legal, valid and binding obligations.
7.3 TIME-BARRED CLAIMS
If any Subordinated Investor is unable to take proceedings against any
Obligor because of any restrictions contained herein and is in danger of
being time barred from taking such proceedings it shall be able to make
such a claim to prevent such time bar, provided that the relevant
Subordinated Investor shall only be entitled to pursue any proceedings in
connection with such claim to the extent necessary to prevent such time bar
or to prevent any such proceedings from being struck out. Any amounts
received by a Subordinated Investor in connection with any such claims
shall be subject to turnover and application as provided in Clause 10
(Turnover).
<PAGE>
7.4 SUBORDINATED INVESTORS' AGENT
(a) Each Subordinated Investor authorises BRE/Satellite L.P. to act on its
behalf as its agent in relation to this Agreement and authorises:
(i) BRE/Satellite L.P. on its behalf to receive all notices and
instructions on its behalf without further reference to or the consent
of such Subordinated Investor; and
(ii) each Senior Creditor and Junior Creditor to give any notice, demand or
other communication to be given to or served on such Subordinated
Investor pursuant to this Agreement to BRE/Satellite L.P. on its
behalf,
and in each such case such Subordinated Investor will be bound thereby as
though such Subordinated Investor itself had received such information,
received such notice and instructions, or received any such demand or other
communication. As soon as practicable after receipt thereof BRE/Satellite
L.P. shall deliver to the Subordinated Investors all notices received by it
hereunder.
(b) Every act, omission, notice or other communication given or made by the
Subordinated Investors' Agent under this Agreement, or in connection with
this Agreement (whether or not known to any other Subordinated Investor and
whether occurring before or after such other Subordinated Investor became a
Subordinated Investor under this Agreement), shall be binding for all
purposes on all other Subordinated Investors as if the other Subordinated
Investors had expressly made, given or concurred with the same. In the
event of any conflict between any notices or other communications of the
Subordinated Investors' Agent and any other Subordinated Investor, those of
the Subordinated Investors' Agent shall prevail.
8. PERMITTED PAYMENTS
(a) Prior to the Senior Discharge Date, but subject to Clauses 9 (Suspension of
Permitted Payments) and 10 (Turnover), the Obligors may pay in cash, and
the Junior Creditors may receive and retain payment in cash of, all amounts
the payment of which is provided for in the Junior Facility Agreement
(without regard to any amendment after the date of this Agreement except as
permitted under this Agreement) on or after the dates provided for in the
Junior Facility Agreement and only in accordance with the terms thereof.
For the avoidance of doubt, the Junior Creditors may also receive and
retain any proceeds of any permitted enforcement of the Security Documents
in accordance with Clause 14.7 (Order of application) and Clause 15.1
(Order of Application).
(b) After the Senior Discharge Date any such payments referred to in paragraph
(a) above may be made and received freely in accordance with the terms of
the Junior Facility Agreement.
(c) Prior to the later of the Senior Discharge Date and the Junior Discharge
Date, but subject to Clauses 9 (Suspension of Permitted Payments) and 10
(Turnover), the Borrower may make payments of interest in respect of
Subordinated Investor Debt either in cash or by the issue of further
Subordinated Investor Debt in lieu of cash interest or by redeeming
Subordinated Investor Debt previously issued in lieu of cash interest if,
and to the extent, permitted by Clause 17.20(b) of the Senior Facility
Agreement or (after the Senior Discharge Date) Clause 17.20(b) of the
Junior Facility Agreement.
<PAGE>
9. SUSPENSION OF PERMITTED PAYMENTS
9.1 PAYMENT DEFAULT
Subject to Clauses 11 (Subordination on Insolvency etc.) and 14 (Permitted
Junior Enforcement), no Obligor may make any payment permitted by Clause 8
(Permitted Payments) if a Non-Payment Event has occurred for so long as
such Non-Payment Event remains outstanding.
9.2 OTHER DEFAULTS
Subject to Clauses 11 (Subordination on Insolvency etc.) and 14 (Permitted
Junior Enforcement), no Obligor may make any payments permitted by Clause 8
(Permitted Payments) (other than any expressly excepted and permitted by
the Senior Agent, with the consent of the Majority Senior Creditors, in the
written notice referred to below or otherwise in writing) if, after a
Material Senior Default has occurred and whilst that Material Senior
Default is continuing, the Senior Agent has on the instructions of the
Majority Senior Creditors served a written notice (a "STOP NOTICE") on the
Junior Agent, the Subordinated Investors' Agent and the Borrower specifying
such Material Senior Default and suspending those permitted payments (other
than those so excepted or permitted), until the earlier of:
(a) the date on which the Junior Agent is notified by the Senior Agent
that the Material Senior Default concerned has been cured or waived by
the Majority Senior Creditors in writing (and the Senior Agent shall
provide such notification promptly after the relevant Material Senior
Default has been so cured or waived); or
(b) the date on which the Material Senior Default concerned has ceased to
exist (and, in the case of breach of a financial covenant, the breach
will be treated as having ceased to exist from the time that any
financial statements or accounts are subsequently delivered to the
Senior Agent under Clauses 17.2(b) or (c) of the Senior Facility
Agreement establishing compliance with that financial covenant as at
the end of any subsequent quarter to the reasonable satisfaction of
the Senior Agent); or
(c) the date on which the Senior Agent, acting on the instructions of the
Majority Senior Creditors, by notice in writing to the Borrower, the
Subordinated Investors' Agent and the Junior Agent cancels the Stop
Notice; or
(d) the Senior Discharge Date,
PROVIDED THAT unless otherwise agreed by the Junior Agent (on the
instructions of the Majority Junior Creditors) no Stop Notice may be served
by the Senior Agent in reliance on a particular Material Senior Default
more than six months after the Senior Agent received notice in writing from
any Obligor, Senior Creditor or Junior Creditor specifying the Event of
Default constituting that Material Senior Default and specifying that it
constitutes an Event of Default under the Senior Facility Agreement (or
four months if the notice specifies that the Material Senior Default arises
from breach of a financial or minimum value covenant in Clause 18 of the
Senior Facility Agreement).
<PAGE>
10. TURNOVER
10.1 TURNOVER
If at any time prior to the Senior Discharge Date:
(a) any Hedging Bank receives or recovers a payment or distribution in
cash or in kind of, or on account of, any of the Hedging Liabilities
which is prohibited by Clause 5.2 (Undertakings of Hedging Banks); or
(b) any Junior Creditor or Subordinated Investor receives or recovers a
payment or distribution in cash or in kind of, or on account of, any
of the Junior Debt or Subordinated Investor Debt which is not
permitted by Clause 8 (Permitted Payments) or, in the case of Junior
Debt, made in accordance with the provisions of Clause 15 (Proceeds of
Enforcement of Security); or
(c) any Junior Creditor or any Subordinated Investor receives or recovers:
(i) the proceeds of any enforcement of any security conferred by the
Security Documents otherwise than, in the case of a Junior Creditor,
in the order set out in Clause 15 (Proceeds of Enforcement of
Security), (ii) any amount from any Report Provider in its capacity as
such, or (iii) any amount as a result of taking action permitted under
Clause 7.1 (Subordinated Investors' Undertakings); or
(d) any Obligor or any other member of the Group makes any payment or
distribution in cash or in kind on account of the purchase or other
acquisition of any of the Junior Debt or Subordinated Investor Debt
which is not permitted by Clause 8 (Permitted Payments); or
(e) any of the Junior Debt or Subordinated Investor Debt is discharged by
set-off, combination of accounts or otherwise (save to the extent
permitted by Clause 8 (Permitted Payments)),
the receiving Hedging Bank, Junior Creditor or Subordinated Investor (as
the case may be) will, in the case of a Subordinated Creditor, hold on
trust for the Security Trustee and, in each such case, upon demand pay and
distribute to the Security Trustee for application as provided in Clause 15
(Proceeds of Enforcement of Security) the amount of such payment,
distribution, recovered proceeds, receipt, set-off, combination of accounts
or other discharge, after deducting from the amount recovered, in the case
of the Junior Creditors or Hedging Banks only, the costs, liabilities and
expenses (if any) reasonably incurred by the Junior Creditors or Hedging
Banks in recovering such payment, distribution, recovered proceeds,
receipt, set-off or other discharge or effecting such combination of
accounts. Each Obligor in respect of Junior Debt shall indemnify the
Junior Creditors upon demand (to the extent of its liability for the Junior
Debt) for the amount of such payment, distribution, recovered proceeds,
set-off, combination of accounts or other discharge so paid and distributed
and (if appropriate) costs, liabilities and expenses, and the Junior Debt
and the Subordinated Investor Debt (as the case may be) will not be deemed
to have been reduced or discharged in any way or to any extent by the
relevant payment, distribution, set-off, proceeds, combination of accounts,
costs, liabilities or expenses except pursuant to Clause 15 (Proceeds of
Enforcement of Security).
<PAGE>
10.2 JUNIOR TURNOVER
If at any time after the Senior Discharge Date but prior to the Junior
Discharge Date:
(a) any Subordinated Investor receives or recovers a payment or
distribution in cash or in kind of, or on account of, any of the
Subordinated Investor Debt which is not permitted by Clause 8
(Permitted Payments) or any Subordinated Investor receives or recovers
any amount as a result of taking permitted action under Clause 7.1
(Subordinated Investors' Undertakings); or
(b) any Obligor or any other member of the Group makes any payment or
distribution in cash or in kind on account of the purchase or other
acquisition of any of the Subordinated Investor Debt which is not
permitted by Clause 8 (Permitted Payments); or
(c) any of the Subordinated Investor Debt is discharged by set-off,
combination of accounts or otherwise (otherwise than if and to the
extent permitted by Clause 8 (Permitted Payments)),
the receiving Subordinated Investor will hold on trust for the Security
Trustee and forthwith upon demand pay to the Security Trustee for
application as provided in Clause 15 (Proceeds of Enforcement of Security)
the amount of such payment, distribution, receipt, set-off, combination of
accounts or other discharge.
10.3 OVER-RECEIPT
If at any time after the Senior Discharge Date any Senior Creditor or
Hedging Bank receives any amount which it is (or would, but for the
occurrence of the Senior Discharge Date, have been) obliged to apply in
respect of the Senior Debt or the Hedging Liabilities (as the case may be)
it will forthwith pay such amount to the Security Trustee for application
in accordance with the terms of this Agreement. If at any time after the
Junior Discharge Date any Junior Creditor receives any amount which it is
(or would, but for the occurrence of the Junior Discharge Date, have been)
obliged to apply in respect of the Junior Debt, it will forthwith pay such
amount to the Security Trustee (or, if there is no Security Trustee, the
Borrower) for application in accordance with the terms of this Agreement.
11. SUBORDINATION ON INSOLVENCY ETC.
11.1 SUBORDINATION EVENTS
If (save for the purposes of, and followed by, any amalgamation, merger or
reconstruction while solvent and on terms previously approved in writing by
the Majority Senior Creditors if prior to the Senior Discharge Date and the
Majority Junior Creditors if prior to the Junior Discharge Date):
(a) any resolution is passed or order made for the winding-up, bankruptcy,
liquidation, dissolution, administration or reorganisation of any
Obligor; or
(b) any Obligor becomes subject to any insolvency, bankruptcy,
reorganisation, receivership (whether relating to all or some only of
its assets and whether or not resulting from the enforcement of any of
the Security Documents), liquidation,
<PAGE>
dissolution or other similar proceeding whether voluntary or
involuntary (and whether or not involving insolvency) or
(c) any Obligor assigns its assets for the benefit of its creditors or
enters into any composition or arrangement with its creditors
generally or any arrangement is ordered or declared whereby its
affairs and/or assets are submitted to the control of or are protected
from its creditors; or
(d) any Obligor becomes subject to any distribution of its assets in
consequence of insolvency, bankruptcy, reorganisation, liquidation,
dissolution or administration; or
(e) any event analogous to any of the foregoing shall occur in relation to
any Obligor or its assets in any jurisdiction;
the provisions of Clauses 11.2, 11.3 and 11.4 shall apply.
11.2 SUBORDINATION
In any of the circumstances mentioned in Clause 11.1:
(a) the claims against the relevant Obligor in respect of Junior Debt will
be subordinate in right of payment to the claims against the relevant
Obligor in respect of Senior Debt and Hedging Liabilities; and
(b) the claims against the relevant Obligor in respect of Subordinated
Investor Debt will be subordinate in right of payment to the claims
against the relevant Obligor in respect of Senior Debt, Hedging
Liabilities and Junior Debt.
11.3 FILING OF CLAIMS
In any of the circumstances mentioned in Clause 11.1, until the time when
both the Senior Discharge Date and the Junior Discharge Date have occurred,
the Security Trustee may, and is irrevocably authorised on behalf of the
Junior Creditors and the Subordinated Investors respectively to:
(a) demand, claim, enforce and prove for the Junior Debt and Subordinated
Investor Debt (if any) owed by, or any other claims against, the
relevant Obligor;
(b) file claims and proofs, give receipts and take all such proceedings
and do all such things as the Security Trustee considers reasonably
necessary to recover the Junior Debt and Subordinated Investor Debt
owed by, or any other claims against, the relevant Obligor; and
(c) receive all distributions on or on account of the Junior Debt and
Subordinated Investor Debt owed by, or any other claims against, the
relevant Obligor for application in accordance with Clause 15
(Proceeds of Enforcement of Security).
If, and to the extent that, the Security Trustee is not entitled to demand,
claim, enforce, prove, file, give receipts or take proceedings for the
recovery of the Junior Debt or Subordinated Investor Debt owed by the
relevant Obligor, the Junior Creditors or Subordinated Investors (as the
case may be) will do so in good time as requested by the Security Trustee
from time to
<PAGE>
time after the occurrence of any of the circumstances mentioned in Clause
11.1, and subject, in the case of the Junior Debt only, to the Senior
Creditors and Hedging Banks giving an indemnity for any costs and expenses
which may be reasonably incurred by the Junior Creditors or Subordinated
Investors in respect thereof.
11.4 DISTRIBUTIONS
(a) In any of the circumstances mentioned in Clause 11.1, until the Senior
Discharge Date each Junior Creditor and Subordinated Investor will, in the
case of the Subordinated Investor, hold on trust for the Security Trustee
and, in each such case, will, upon demand by the Security Trustee, pay an
amount equal to the amount of all distributions in cash or in kind received
in consequence of such circumstances by, or by any agent for, such Junior
Creditor or Subordinated Investor (as the case may be) in respect of the
Junior Debt or Subordinated Investor Debt (as the case may be) to the
Security Trustee for application in accordance with Clause 15 (Proceeds of
Enforcement of Security) and pending such application the Security Trustee
will hold such distribution on trust for the beneficiaries entitled thereto
(according to the ranking of entitlements set out in Clause 15 (Proceeds of
Enforcement of Security)).
(b) After the Senior Discharge Date but prior to the Junior Discharge Date, in
any of the circumstances mentioned in Clause 11.1, each Subordinated
Investor will hold on trust for the Security Trustee and will, upon demand
by the Security Trustee, pay an amount equal to the amount of all
distributions in cash or in kind received in consequence of such
circumstances by, or by any agent for, such Subordinated Investor in
respect of the Subordinated Investor Debt to the Security Trustee for
application in accordance with Clause 15 (Proceeds of Enforcement of
Security) and pending such application the Security Trustee will hold such
distributions on trust for the Security Trustee and the beneficiaries
entitled thereto (according to the ranking of their respective entitlements
set out in Clause 15 (Proceeds of Enforcement of Security)).
(c) In any of the circumstances mentioned in Clause 11.1, the trustee in
bankruptcy, liquidator, assignee or other person distributing the assets of
the Obligor concerned or their proceeds shall be directed to pay
distributions on the Junior Debt and Subordinated Investor Debt direct to
the Security Trustee until the Senior Discharge Date are paid or, as the
case may be, the Junior Discharge Date.
(d) Prior to the Senior Discharge Date, the Junior Creditors and the
Subordinated Investors will give all such notices and do all such things as
the Senior Agent or the Security Trustee may reasonably request to give
effect to this Clause 11.4. After the Senior Discharge Date but prior to
the Junior Discharge Date the Subordinated Investors will give all such
notices and do all such things as the Junior Agent or the Security Trustee
may reasonably request to give effect to this Clause 11.4.
12. PRIORITY OF SECURITY
12.1 RANKING OF DEBT
Subject to Clause 14.7 (Order of application), all existing and future
security conferred by the Security Documents on the Senior Creditors and
the Hedging Banks will to the extent that it secures Senior Debt and/or
Hedging Liabilities (subject, in each case, to the provisos to those terms
set out in Clause 1.1 (Definitions and Interpretation)):
<PAGE>
(a) rank in all respects prior to existing and future security conferred
by those or any other Security Documents on the Junior Creditors,
regardless of order of registration, recording, notice, execution or
otherwise; and
(b) secure all the Senior Debt and Hedging Liabilities pari passu between
themselves but in priority to the Junior Debt regardless of the date
upon which the Senior Debt or Hedging Liabilities arise, regardless of
whether a Senior Creditor is obliged to advance moneys included in
Senior Debt and regardless of any fluctuations in the amount of Senior
Debt or Hedging Liabilities outstanding or any intermediate discharge
of the Senior Debt or Hedging Liabilities in whole or in part.
The Subordinated Investor Debt is and will remain unsecured.
12.2 REGISTRATION AND NOTICE
The Junior Agent, the Senior Agent and the Security Trustee will co-operate
with a view to reflecting the priority of the security conferred by the
Security Documents in any register or with any filing or registration
authority and in giving notice to insurers and debtors liable for
receivables covered by the security conferred by the Security Documents and
other persons.
13. RESTRICTIONS ON ENFORCEMENT
Until:
(a) the Senior Discharge Date, subject to Clauses 11 (Subordination on
Insolvency etc.) and, in the case of the Junior Creditors only, 14
(Permitted Junior Enforcement), or unless the Majority Senior
Creditors have previously consented in writing; or
(b) if the Senior Discharge Date has then occurred, the Junior Discharge
Date, subject to Clause 11 (Subordination on Insolvency etc.), or
unless the Majority Junior Creditors have previously consented in
writing,
none of the Junior Creditors (in the case of paragraph (a) only) or the
Subordinated Investors will:
(i) accelerate any of the Junior Debt or the Subordinated Investor Debt or
otherwise declare any of the Junior Debt or the Subordinated Investor
Debt prematurely due or payable on an Event of Default (however
described) unless, in the case of the Junior Creditors only, the
Senior Agent has declared the Senior Debt prematurely due and payable;
(ii) enforce the Junior Debt or the Subordinated Investor Debt by
attachment, set-off, execution or otherwise;
(iii) have any right to crystallise, or require the Security Trustee to
crystallise, any floating charge in the Security Documents (and for
the avoidance of doubt none of the Subordinated Investors will at any
time have such right);
(iv) have any right to enforce, or require the Security Trustee to enforce,
any security conferred by the Security Documents by sale, possession,
appointment of a receiver
<PAGE>
or otherwise (and for the avoidance of doubt none of the Subordinated
Investors will at any time have such right);
(v) petition for (or vote in favour of any resolution for) or initiate or
support or take any steps with a view to any winding up, bankruptcy,
insolvency, liquidation, reorganisation, moratorium, administration,
dissolution or any analogous proceedings (save for the purposes of,
and followed by, any amalgamation, merger or reconstruction while
solvent and on terms previously approved in writing by the Majority
Senior Creditors) or any voluntary arrangement or assignment for the
benefit of creditors or any similar proceedings involving an Obligor
(or any of its Subsidiaries), whether by petition, convening a
meeting, voting for a resolution or otherwise; or
(vi) (except as permitted by Clause 7.3) bring or support any other legal
proceedings against any Obligor (or any of its Subsidiaries) except
that nothing in this sub-clause (vi) will restrict the bringing of
proceedings by the Junior Creditors (or by the Subordinated Investors)
solely for injunctive relief (or analogous proceedings in
jurisdictions outside England and Wales) to restrain any actual or
putative breach of the Junior Finance Documents (or the Subordinated
Investor Debt Documents as the case may be) or for specific
performance not claiming damages, in either case to the extent not
inconsistent with any other provision of this Agreement.
14. PERMITTED JUNIOR ENFORCEMENT
14.1 PERMITTED ENFORCEMENT
The Junior Creditors may take the actions described in Clause 14.2 in
relation to the Junior Share Mortgages only if:
(a) an Event of Default has occurred and is continuing under the Junior
Facility Agreement as a result of:
(i) non-payment when due of:
(A) any principal, interest or fees; or
(B) any other amounts aggregating not less than (Pounds)100,000
(or equivalent in other currencies),
qualifying as Junior Debt; and/or
(ii) any of the other Events of Default has occurred and is continuing
(subject to Clauses 26.15(f) and 26.16(e)) under the Junior
Facility Agreement other than by reason of acceleration of the
Senior Debt pursuant to Clause 19.17 (Acceleration) of the Senior
Facility Agreement; and
(b) the Junior Agent has given notice in writing (an "ENFORCEMENT NOTICE")
to the Senior Agent (who shall promptly notify each Senior Creditor
and each Hedging Bank) of the occurrence of such Event of Default and
specifying the Event of Default concerned; and
<PAGE>
(c) no Non-Payment Event has occurred in respect of any amount which
qualifies as Senior Debt or Hedging Liabilities which has not been
cured under Clause 26.15 (Junior Creditors' cure rights - Non-Payment
Events) or otherwise; and
(d) no Event of Default under Clause 18.2 (Debt Service Coverage Ratio) or
18.3 (Loan to Value Ratio) of the Senior Facility Agreement has
occurred which has not been cured under Clause 26.16 (Junior
Creditors' cure rights - financial and minimum value covenants) or
otherwise; and
(e) no Enforcement Event has occurred.
14.2 JUNIOR ENFORCEMENT RIGHTS
(a) If (and for so long as):
(i) the Junior Creditors are permitted by Clause 14.1 to take action under
this Clause 14.2; and
(ii) the Junior Share Mortgages have become enforceable,
the Junior Agent may by notice to the Security Trustee (copied to the
Senior Agent) require the Security Trustee to enforce the Junior Share
Mortgages by exercising its power of sale in relation to the Specified
Shares in accordance with this Clause 14 without the need for any consent
from the Senior Creditors or the Hedging Banks.
(b) The Junior Agents' notice shall specify whether the sale of the Specified
Shares shall be by way of public auction or private sale to the Junior
Creditors or to any nominee or trustee on their behalf. If the sale is to
be by way of public auction, Clause 14.3 (Public auction) shall apply and
if it is to be by way of private sale, Clause 14.4 (Private sale) shall
apply.
(c) No sale of the Specified Shares pursuant to a public auction or private
sale conducted in accordance with Clause 14.3 (Public auction) or Clause
14.4 (Private sale) (as the case may be) to any person other than the
Junior Creditors or a nominee or trustee acting on their behalf shall be
permitted without the prior written consent of the Senior Agent (acting on
the instructions of the Majority Senior Creditors).
14.3 PUBLIC AUCTION OF SPECIFIED SHARES
(a) Any public auction of the Specified Shares shall be in accordance with, and
subject to, the terms of the Junior Share Mortgages and this Agreement.
(b) The Security Trustee shall consult with the Junior Agent as to the venue
and timing of the public auction and the Junior Agent or any nominee or
trustee acting on behalf of the Junior Creditors may attend and bid at such
auction on behalf of the Junior Creditors.
14.4 PRIVATE SALE
(a) Any private sale to the Junior Creditors or any trustee or nominee on their
behalf shall be at a price and on terms which are negotiated between:
<PAGE>
(i) the Security Trustee and its independent advisors, including valuers
appointed under paragraph (b) below; and
(ii) the Junior Creditors and separate and independent advisors acting on
their behalf.
In connection with any such negotiations the Security Trustee and its
advisors shall act independently of the Junior Creditors and their
advisors.
(b) In determining the price for any private sale of the Specified Shares to
the Junior Creditors or any trustee or nominee on their behalf, independent
valuations of the Specified Shares to be sold shall be obtained by the
Security Trustee from not less than two valuers acting independently of the
Junior Creditors. The Security Trustee and its advisors shall have regard
to these valuations in determining the sale price for the Specified Shares,
together with such other considerations as the Security Trustee and its
advisors see fit.
(c) To the extent any valuation obtained under paragraph (b) above includes any
Initial Property, those aspects of the valuation dealing with that Initial
Property shall be conducted on the same basis as Valuations under the
Senior Facility Agreement and the Junior Facility Agreement, provided that
for the purposes of this Clause 14, the Valuer also shall be instructed to
take into account the value (if any) of all other tangible and intangible
assets of the company which issued the Specified Shares which are being
valued.
14.5 PROTECTION OF THE SECURITY TRUSTEE
In addition to the other protections and indemnities for the Security
Trustee contained in this Agreement and the other Finance Documents, the
Security Trustee shall incur no liability to any person where it has acted
on the advice of its advisors appointed as contemplated by this Clause 14
in connection with any sale of the Specified Shares by way of public
auction or private sale as contemplated by this Clause 14 and, in
particular, the Security Trustee shall not be responsible to any Party in
respect of the price obtained for the Specified Shares if the price is not
less than the minimum price required under Clause 14.6.
14.6 MINIMUM PRICE
Notwithstanding anything in this Clause 14, the price for the Specified
Shares on any enforcement of the Junior Share Mortgages by public auction
or private sale as contemplated by this Clause 14 shall not be less than
the sum of:
(a) (Pounds)100,000 and;
(b) all costs, charges, expenses and liabilities (and all interest thereon
as provided in the Junior Share Mortgages) incurred by or on behalf of
the Security Trustee and any receiver, attorney or agent in connection
with carrying out its duties and exercising its powers and discretions
under the Junior Share Mortgages and the remuneration of the Security
Trustee and every receiver under the Junior Share Mortgages and the
remuneration of all valuers and other advisors appointed by the
Security Trustee or any receiver as contemplated by this Clause 14.
<PAGE>
14.7 ORDER OF APPLICATION
All proceeds of any sale of the Specified Shares pursuant to any public
auction or private sale under the Junior Share Mortgages as contemplated by
this Clause 14 shall be applied in the order specified in the relevant
Junior Share Mortgage(s). The Junior Agent may give a notice under Clause
19.17 (Acceleration) of the Junior Facility Agreement accelerating the
Junior Debt only to the extent necessary to ensure that there is due and
payable an amount of Junior Debt not exceeding the amount available for
application in or towards payment of the Junior Debt out of the proceeds of
the sale of the Specified Shares.
14.8 SENIOR SECURITY
Any sale of the Specified Shares to the Junior Creditors or any nominee or
trustee on their behalf shall be on terms that the Specified Shares shall
remain subject to the security created by the Senior Share Mortgages.
15. PROCEEDS OF ENFORCEMENT OF SECURITY
15.1 ORDER OF APPLICATION
Subject to Clause 14.7 and subject to the rights of any prior or
preferential Security Interests or creditors, the net proceeds of
enforcement of the security conferred by the Security Documents shall be
paid to the Security Trustee and those proceeds and all other amounts paid
to the Security Trustee pursuant to the provisions of this Agreement shall
be applied in the following order (PROVIDED THAT no proceeds will be
applied in payment of any amounts specified in any of the paragraphs below
until all amounts specified in such preceding paragraphs have been paid in
full):
FIRST in payment of all costs, charges, expenses and liabilities (and all
interest thereon as provided in the Security Documents)
reasonably incurred by or on behalf of the Security Trustee and
any receiver, attorney or agent in connection with carrying out
its duties and exercising its powers and discretions under the
Security Documents and the remuneration of the Security Trustee
and every receiver under the Security Documents;
SECOND in payment of all costs and expenses incurred by or on behalf of
any Senior Creditor, any Hedging Bank and (to the extent incurred
in taking action requested by the Security Trustee or the Senior
Agent) any Junior Creditor in connection with such enforcement;
THIRD in payment to the Senior Agent for application towards the balance
of the Senior Debt (in accordance with the provisions of the
Senior Facility Agreement) and the Hedging Liabilities then
outstanding pari passu between themselves (but for the avoidance
of doubt excluding the amount of any Senior Debt or Hedging
Liabilities referred to in the proviso to each such term in
Clause 1.1 (Definitions));
FOURTH in payment of all costs and expenses incurred by or on behalf of
any Junior Creditor in connection with such enforcement, not
otherwise paid pursuant to the Second paragraph above;
<PAGE>
FIFTH in payment to the Junior Agent for application towards the Junior
Debt then outstanding in accordance with the provisions of the
Junior Facility Agreement;
SIXTH in payment to the Senior Agent for application pro rata towards any
amounts then outstanding which, but for the provisos to the
definitions of Senior Debt and Hedging Liabilities in Clause 1.1
(Definitions) and Clauses 19.4 (Limits on Senior Debt) or 19.5
(Limits on Hedging Liabilities) would otherwise qualify as Senior
Debt or Hedging Liabilities (as the case may be); and
SEVENTH the payment of the surplus (if any) to the Obligor concerned or
other person entitled thereto.
15.2 GOOD DISCHARGE
An acknowledgement of receipt signed by the relevant person to whom
payments are to be made under Clause 15.1 shall be a good discharge of the
Security Trustee.
16. ENFORCEMENT OF SECURITY
16.1 ENFORCEMENT INSTRUCTIONS
The Security Trustee may refrain from enforcing the security conferred by
the Security Documents unless and until instructed by the Majority Senior
Creditors (if prior to the Senior Discharge Date) or, if permitted under
Clause 14 (Permitted Junior Enforcement) or if after the Senior Discharge
Date and before the Junior Discharge Date, the Majority Junior Creditors.
Subject to such security having become enforceable in accordance with the
terms of the Security Documents, the Senior Agent or the Majority Senior
Creditors (or if appropriate under Clause 14 (Permitted Junior Enforcement)
or after the Senior Discharge Date, the Junior Agent or the Majority Junior
Creditors) may give or refrain from giving instructions to the Security
Trustee to enforce or refrain from enforcing the security conferred by the
Security Documents as long as it sees (or they see) fit but, in the case of
the Senior Creditors, having regard to the interests of the Junior
Creditors save where to do so could, in the opinion of the Security Trustee
or the Senior Creditors (as the case may be), materially adversely affect
the interests of the Senior Creditors.
16.2 COMPETING INSTRUCTIONS TO SECURITY TRUSTEE
Subject to anything to the contrary expressed in this Agreement (and
subject in particular to Clause 16.1), any instructions which are given to
the Security Trustee by the Majority Senior Creditors (and which are within
the powers of the Majority Senior Creditors having regard to the terms of
the Senior Finance Documents) will, prior to the Senior Discharge Date,
override any conflicting instructions given by or on behalf of any Junior
Creditor (or, to the extent if at all that it is entitled to give any such
instruction, any Subordinated Investor) other than any which it is entitled
by the express terms of this Agreement to give, and the Security Trustee
will be fully protected in complying with such instructions of the Majority
Senior Creditors.
16.3 MANNER OF ENFORCEMENT - INSTRUCTIONS OF MAJORITY SENIOR CREDITORS
Prior to the Senior Discharge Date, if the Majority Senior Creditors (or,
prior to the Junior Discharge Date, the Majority Junior Creditors if
entitled to do so in accordance with the provisions of this Agreement), do
instruct the Security Trustee to enforce the security
<PAGE>
conferred by the Security Documents, it shall do so (assuming the same to
be enforceable) in such manner as the Majority Senior Creditors shall
instruct, having regard to the interests of the Junior Creditors save where
to do so could, in the opinion of the Security Trustee or the Senior
Creditors (as the case may be), materially adversely affect the interests
of the Senior Creditors (PROVIDED THAT the instructions of the Majority
Senior Creditors are not seeking to restrain the Security Trustee from
taking some action in accordance with instructions properly given to it by
the Majority Junior Creditors in accordance with provisions of this
Agreement permitting such instructions to be given) or, in the absence of
such instructions, as it sees fit and, subject as required by applicable
law and by Clause 16.5, solely having regard to the interests of the Senior
Creditors and the interests of the Junior Creditors save where to do so
could, in the opinion of the Security Trustee or the Senior Creditors (as
the case may be), materially adversely affect the interests of the Senior
Creditors. No Senior Creditor shall be responsible to the Junior Creditors
(or any of the Subordinated Investors or Obligors) for any failure to
enforce or (except in the case of the Security Trustee to the extent
specified in Clause 16.5 or required by applicable law) to maximise the
proceeds of any enforcement, and the Security Trustee, subject to any
contrary instructions of the Majority Senior Creditors and without
prejudice to the duties of the Security Trustee and Senior Creditors
arising by operation of law, may cease any such enforcement at any time.
16.4 MANNER OF ENFORCEMENT - INSTRUCTIONS OF MAJORITY JUNIOR CREDITORS
If (after the Senior Discharge Date) the Majority Junior Creditors do
instruct the Security Trustee to enforce the security conferred by the
Security Documents, it shall do so (assuming the same to be enforceable) in
such manner as the Majority Junior Creditors shall instruct or, in the
absence of such instructions, as it sees fit and, subject as required by
applicable law, solely having regard to the interests of the Junior
Creditors. Neither any Junior Creditor nor the Security Trustee shall be
responsible to any of the Subordinated Investors or any of the Obligors for
any failure to enforce or (except in the case of the Security Trustee to
the extent required by applicable law or as specified in Clause 16.5) to
maximise the proceeds of any enforcement, and the Security Trustee, subject
to any contrary instructions from the Majority Junior Creditors, and
without prejudice to the duties of the Security Trustee and Junior
Creditors arising by operation of law, may cease any such enforcement at
any time.
16.5 SALES BY SECURITY TRUSTEE
If:
(a) pursuant to an enforcement of any of the Security Documents, the
Security Trustee on the instructions or with the consent, if prior to
the Senior Discharge Date, of the Majority Senior Creditors or, if
thereafter but prior to the Junior Discharge Date, the Majority Junior
Creditors, sells or otherwise disposes of any asset; or
(b) the Obligor concerned sells or otherwise disposes of such asset at the
request of the Security Trustee on the instructions or with the
consent of the Majority Senior Creditors after an Event of Default
under the Senior Facility Agreement, or, if after the Senior Discharge
Date but before the Junior Discharge Date, of the Majority Junior
Creditors after an Event of Default under the Junior Facility
Agreement,
the Security Trustee is hereby authorised by each of the Senior Creditors,
the Hedging Banks and the Junior Creditors to execute on behalf of itself
and each such Senior Creditor and
<PAGE>
Hedging Bank (if prior to the Senior Discharge Date) and Junior Creditor,
without the need for any further referral to or authority from such Senior
Creditor, Hedging Bank or Junior Creditor, any release of the security
created by the Security Documents over that asset and, if such asset
comprises all of the shares in the capital of any Obligor which is an
Obligor under the Senior Facility Agreement, Hedging Documents or the
Junior Facility Agreement, the Security Trustee is hereby further so
authorised to execute on behalf of each Senior Creditor and Hedging Bank
(if prior to the Senior Discharge Date) and each Junior Creditor, without
the need for any further referral to or authority from such Senior
Creditor, Hedging Bank or Junior Creditor and each other Obligor, a release
of such Obligor from all past, present and future liabilities (both actual
and contingent and including, without limitation, any liability to any
other Obligor under the Senior Facility Agreement, Hedging Documents or the
Junior Facility Agreement by way of contribution or indemnity) in its
capacity as a Guarantor and to release any Security Interests granted by
such Obligor over any of its assets pursuant to any of the Security
Documents (and the Senior Creditors and the Hedging Banks (if prior to the
Senior Discharge Date) and the Junior Creditors each undertake to execute
such releases or other documents as may be necessary to give effect to the
above mentioned releases) PROVIDED THAT in each such case the proceeds are
to be applied in the manner provided for in this Agreement and the sale or
other disposal complies with Clause 16.5 and PROVIDED FURTHER that any such
release of the obligations and liabilities of an Obligor will not affect
the obligations and liabilities of any other Obligor to the Senior
Creditors, the Hedging Banks or the Junior Creditors.
17. SENIOR CREDITOR AND HEDGING BANK LOSS SHARING ARRANGEMENTS
17.1 EQUALISATION PAYMENTS
If any Senior Creditor or any Hedging Bank makes a Recovery in respect of
any sum owed by any Obligor, whether directly or by the enforcement of the
Security Documents or by set-off or by any other means other than by reason
of a receipt by the Security Trustee falling to be dealt with under Clause
15 (Proceeds of Enforcement of Security), then:
(a) such Senior Creditor or Hedging Bank, as the case may be, will notify
details of such Recovery to the Security Trustee within three Business
Days of receipt thereof;
(b) the Security Trustee will then determine in good faith whether such
Recovery is in excess of the amount which such Senior Creditor or
Hedging Bank, as the case may be, would have received had such
Recovery been effected by the Security Trustee pursuant to the
Security Documents and applied as provided in Clause 15 (Proceeds of
Enforcement of Security), and shall notify such Senior Creditor or
Hedging Bank, as the case may be, accordingly;
(c) if any such excess is so determined by the Security Trustee, such
Senior Creditor or Hedging Bank, as the case may be, will pay an
amount equal to the excess to the Security Trustee, retaining the
balance in pro tanto satisfaction of the amount due to it;
(d) the Security Trustee shall treat the excess as if it were a Recovery
by it from the relevant Obligor pursuant to the Security Documents and
shall deal with it in accordance with Clause 15 (Proceeds of
Enforcement of Security) save that, for the avoidance of doubt, the
Senior Creditor or Hedging Bank making the payment
<PAGE>
referred to in paragraph (c) above shall be treated as having already
received its share of the Recovery; and
(e) at the option of the Senior Creditor or Hedging Bank making the
payment referred to in paragraph (c), (i) the liability of the
relevant Obligor to such Senior Creditor or Hedging Bank shall be
increased (or treated as not having been reduced) by the amount of
such payment, or (ii) such Obligor (subject always to the provisions
of this Agreement) shall fully indemnify such Senior Creditor or
Hedging Bank for the amount thereof.
17.2 LOSS SHARING
Without prejudice to Clause 17.1, if it transpires for any reason that any
of the Senior Debt or Hedging Liabilities remain undischarged and for any
reason any resulting losses are not being borne by the Senior Creditors and
the Hedging Banks pro rata to the amount which their respective Commitments
bore to the Total Commitments on the Enforcement Date (PROVIDED THAT for
this purpose the Total Commitments under the Senior Facility Agreement will
be notionally increased by an aggregate amount calculated in accordance
with Schedule 6 with respect to any Bank's interest in the Hedging
Documents and each Hedging Bank shall be deemed to have the aggregate
amount of its Commitments increased by, or if it has no Commitment, to have
a Commitment in, the amount calculated in accordance with Schedule 6 with
respect to the Hedging Documents to which it is a party), the Senior
Creditors and the Hedging Banks shall make such payments between themselves
as the Security Trustee shall direct to ensure that after taking into
account such payments such losses are borne by the Senior Creditors (other
than the Arrangers, the Senior Agent and the Security Trustee in their
capacity as such) and the Hedging Banks pro rata to the amount which their
respective Commitments bore to the Total Commitments on the Enforcement
Date (calculated as set out above).
18. VOTING
In any of the circumstances mentioned in Clause 11.1 (Subordination
Events):
(a) the Security Trustee acting on the instructions of the Majority Senior
Creditors (if prior to the Senior Discharge Date) or the Majority
Junior Creditors (if after the Senior Discharge Date but prior to the
Junior Discharge Date) may (and is hereby irrevocably authorised to)
exercise all powers of convening meetings, voting and representation
in respect of the Subordinated Investor Debt and each Subordinated
Investor will provide all forms of proxy and of representation
requested by the Security Trustee for that purpose; and
(b) if and to the extent that the Security Trustee is not entitled to or
does not wish itself to exercise a power conferred by paragraph (a)
above, each Subordinated Investor (i) will exercise such power as the
Security Trustee, acting in accordance with the instructions of the
Majority Senior Creditors (if prior to the Senior Discharge Date) or
the Majority Junior Creditors (if after the Senior Discharge Date but
prior to the Junior Discharge Date), directs and (ii) will not
exercise any power so as to impair the ranking and/or subordination
effected by this Agreement.
Nothing in this Clause 18, however, will entitle the Security Trustee to
exercise or require the Subordinated Investors to exercise such power of
voting or representation to waive or amend
<PAGE>
any of the provisions of the Subordinated Investor Debt Documents or
otherwise to waive, reduce, discharge, extend the due date for payment of
or reschedule any of the Subordinated Investor Debt.
19. CONSENTS AND LIMITS
19.1 WAIVERS
Save as provided in this Clause 19, any waiver or consent granted by the
Majority Senior Creditors under the Senior Finance Documents after the date
of this Agreement but prior to the Senior Discharge Date will be deemed to
have been given by the Hedging Banks and the Subordinated Investors (in
their capacities as such) (on the same terms and conditions, mutatis
mutandis) if the transaction or circumstance to which that waiver or
consent relates would, in the absence of such waiver or consent by the
Hedging Banks or the Subordinated Investors, violate any of the Hedging
Documents or the Subordinated Investor Debt Documents or constitute a
default under any of the Hedging Documents or the Subordinated Investor
Debt Documents.
19.2 NON-OBJECTION - SENIOR CREDITORS
None of the Junior Creditors or the Subordinated Investors (in their
capacities as such) shall have any remedy against any of the Senior
Creditors by reason of any transaction entered into between the Senior
Creditors (or any of them) or the Senior Agent or Security Trustee on their
behalf and any member of the Group or any requirement or condition imposed
by or on behalf of the Senior Creditors on any member of the Group which
violates or is or causes an Event of Default or Default under any of the
Junior Finance Documents or a default under any of the Subordinated
Investor Debt Documents PROVIDED THAT such transaction, requirement or
condition is not in breach of the terms of this Agreement.
19.3 NON-OBJECTION - JUNIOR CREDITORS
None of the Subordinated Investors shall have any remedy against any of the
Junior Creditors or the Security Trustee by reason of any transaction
entered into between the Junior Creditors (or any of them) or the Junior
Agent or the Security Trustee on their behalf and any member of the Group
or any requirement or condition imposed by or on behalf of the Junior
Creditors on any member of the Group which violates or is or causes a
default under any of the Subordinated Investor Debt Documents PROVIDED THAT
such transaction, requirement or condition is not in breach of the terms of
this Agreement.
19.4 LIMITS ON SENIOR DEBT
Except with the prior written consent of the Majority Junior Creditors and
the Hedging Banks, to the extent the principal amount of the Senior Debt
would, but for this Clause 19.4, exceed (other than by reason of roll up of
interest) the amounts advanced under the terms of the Senior Facility
Agreement in force on the date hereof (less repayments and prepayments of
an Advance actually made in circumstances where a corresponding part of the
Total Commitments is cancelled as provided for in the Senior Facility
Agreement as in force at the date hereof) plus the Senior Headroom then,
for the purposes only of determining rights and priorities between the
Senior Creditors and the Junior Creditors and without prejudice to the
liabilities secured in the Security Documents, the excess will not qualify
as Senior Debt.
<PAGE>
19.5 LIMITS ON HEDGING LIABILITIES
Except for the transactions under the Hedging Documents details of which
are specified in Schedule 4, or for which consent has been given under
Clause 5.1 (Accession of Hedging Banks), any further commitment or contract
under which any Obligor incurs any indebtedness in respect of interest rate
swaps, currency swaps, caps, collars, floors or similar transactions
entered into by reference to interest rates or currency exchange rates or
any guarantee, indemnity or other form of assurance against loss in respect
of any such indebtedness, whether owed to the Hedging Banks or any other
person will not qualify as Hedging Liabilities unless the relevant Hedging
Bank or other person complies with the final sentence of Clause 5.1
(Accession of Hedging Banks) in respect of such indebtedness and the
Majority Creditors agree in writing.
20. INFORMATION
20.1 DEFAULTS
Each of the Senior Agent and the Junior Agent will notify the other of the
occurrence of any Event of Default under the Senior Facility Agreement or
the Junior Facility Agreement respectively but only if the Senior Agent or
the Junior Agent (as the case may be) has received written notice
specifying the event concerned (and expressly identifying it as an Event of
Default under the Senior Facility Agreement or the Junior Facility
Agreement, as the case may be) or if such Event of Default is due to non-
payment of principal or interest or any other amount which is more than
three Business Days overdue, will provide the other with a copy of any
written waiver of such Event of Default given by it pursuant to the Senior
Facility Agreement or the Junior Facility Agreement, as the case may be.
20.2 AMOUNTS OF DEBT
Each of the Senior Agent, the Security Trustee, the Hedging Banks, the
Junior Agent and the Subordinated Investors' Agent will on written request
by any of the others from time to time notify the others in writing of
details of the amount of the Senior Debt, Hedging Liabilities, the Junior
Debt and the Subordinated Investor Debt, respectively, so far as known to
it. The Senior Agent will notify the Junior Agent and the Security Trustee
promptly after it becomes aware that any Senior Creditor has advanced funds
in excess of the limits in Clause 19.4 (Limits on Senior Debt) and promptly
after it becomes aware of the occurrence of the Senior Discharge Date. The
Junior Agent will notify the Subordinated Investors promptly after it
becomes aware of the occurrence of the Junior Discharge Date.
20.3 OTHER INFORMATION
Each Obligor authorises each of the Senior Creditors, the Hedging Banks,
the Junior Creditors and the Subordinated Investors to disclose to each
other and to shareholders in any Obligor and any member of the Group all
information relating to that Obligor, its Subsidiaries or related entities
coming into the possession of any of them in connection with the Senior
Finance Documents, the Hedging Documents, the Junior Finance Documents or
the Subordinated Investor Debt Documents.
20.4 CO-OPERATION
Each of the Obligors, Senior Creditors, Hedging Banks and Junior Creditors
undertakes in good faith to use reasonable endeavours to ensure that any
and all security now or hereafter
<PAGE>
held or obtained from any member of the Group for or in respect of the
Senior Debt, the Hedging Liabilities or the Junior Debt shall be
constituted by the Security Documents and held by the Security Trustee (to
the extent legally possible) for the joint benefit of the Senior Creditors,
the Hedging Banks and the Junior Creditors in accordance with their
respective priority entitlements and subject to the restrictions set out in
this Agreement. If for any reason (including, without limitation, any
reason connected with any overseas security which may at any time be taken)
it is not possible for any such security to be held by the Security Trustee
as above, the Obligors, the Senior Creditors, the Hedging Banks and the
Junior Creditors shall procure that any alternative security holder shall,
as a condition precedent to its accepting any such security, adhere to this
Agreement by accepting obligations identical in all material respects to
those incumbent on the Security Trustee hereunder mutatis mutandis.
20.5 CONSULTATION
The Senior Agent, the Junior Agent and the Security Trustee shall, so far
as practicable in the circumstances, consult (a) before taking any formal
steps to exercise any remedy against any Obligor or to take other
enforcement action (including, without limitation, as to the identity of
any receiver to be appointed by the Security Trustee), (b) before making
any appropriation or application pursuant to Clause 22.3 (Appropriations -
Senior Creditors and Hedging Banks), and (c) generally with regard to
significant matters affecting the rights of the parties as regulated by
this Agreement, but nothing in this Clause 20.5 or elsewhere in this
Agreement will invalidate or otherwise affect any action or step taken
without such consultation.
20.6 NO SECURITY
The Subordinated Investors undertake that until the occurrence of both the
Senior Discharge Date and the Junior Discharge Date they will not hold,
obtain or benefit from any Security Interest, guarantee or other security
whatsoever in respect of the Subordinated Investor Debt, whether given by
an Obligor or otherwise. None of the security conferred by the Security
Documents shall secure any of the Subordinated Investor Debt.
21. SUBROGATION
21.1 SUBROGATION OF JUNIOR CREDITORS
If the Senior Debt or any Hedging Liability is wholly or partially paid out
of any proceeds received in respect of or on account of the Junior Debt
owing to one or more Junior Creditors, those Junior Creditors (pro rata to
their respective interests in such Junior Debt) will to that extent be
subrogated to the Senior Debt or Hedging Liability so paid (and all
securities and guarantees for that Senior Debt or Hedging Liability) but
the rights of subrogation so arising cannot (and shall not) be exercised
before the Senior Discharge Date (ignoring for these purposes that part of
the Senior Debt so paid out), save with the prior written consent of the
Majority Senior Creditors. After the Senior Discharge Date (ignoring for
these purposes that part of the Senior Debt so paid out), to the extent
that the Junior Creditors are entitled to exercise rights of subrogation in
accordance with the foregoing, each Senior Creditor (subject to its being
indemnified, by cash collateral if so requested, to its reasonable
satisfaction against any resulting costs, expenses and liabilities) will
give such assistance to enable such rights so to be exercised as the Junior
Agent and/or the Security Trustee may reasonably request.
<PAGE>
21.2 NON-SUBROGATION
Unless and save to the extent otherwise agreed by the Senior Agent and the
Junior Agent if before the Senior Discharge Date, or by the Junior Agent if
after the Senior Discharge Date but before the Junior Discharge Date, the
Subordinated Investors will not under any circumstances be subrogated to
any of the rights of the Senior Creditors, the Hedging Banks or Junior
Creditors or any security arising under the Senior Finance Documents or
Junior Finance Documents.
22. PROTECTION OF SUBORDINATION
22.1 CONTINUING SUBORDINATION
The subordination provisions in this Agreement constitute a continuing
subordination and benefit to the ultimate balance of the Senior Debt, the
Hedging Liabilities and the Junior Debt respectively regardless of any
intermediate payment or discharge of the Senior Debt, the Hedging
Liabilities or the Junior Debt in whole or in part.
22.2 WAIVER OF DEFENCES
The subordination in this Agreement and the obligations of each Junior
Creditor, Subordinated Investor and Obligor under this Agreement will not
be affected by any act, omission, matter or thing which, but for this
provision, would reduce, release or prejudice the subordination or any of
those obligations in whole or in part, including without limitation:
(a) any time, indulgence or waiver granted to, or composition with, any
Obligor or any other person; or
(b) the taking, variation, compromise, exchange, renewal or release of, or
refusal or neglect to perfect, take up or enforce, any rights or
remedies against, or security over assets of, any Obligor or other
person under the Senior Finance Documents, the Hedging Documents or
the Junior Finance Documents or otherwise or any non-presentment or
non-observance of any formality or other requirement in respect of any
instruments or any failure to realise the full value of any security;
or
(c) any variation (however fundamental) or replacement of any Senior
Finance Document, Hedging Document, Junior Finance Document or other
document; or
(d) any unenforceability, illegality, invalidity or frustration of any
obligation of an Obligor or security under the Senior Finance
Documents, the Hedging Documents or Junior Finance Documents or any
other document or security; or
(e) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of any Obligor under any
Senior Finance Document, Hedging Document or Junior Finance Document
resulting from any insolvency, liquidation or dissolution proceedings
or from any law, regulation or order.
<PAGE>
22.3 APPROPRIATIONS - SENIOR CREDITORS AND HEDGING BANKS
Until the Senior Discharge Date, each Senior Creditor and each Hedging Bank
(or any trustee or agent on their behalf) may (subject to any provision of
the Senior Finance Documents or Hedging Documents, as appropriate):
(a) apply any moneys or property received under this Agreement or from an
Obligor or from any other person against the Senior Debt or Hedging
Liabilities respectively, in such order as it sees fit;
(b) (if it so decides) apply any moneys or property received from an
Obligor or from any other person (other than money or property
received under, or in connection with or in relation to, the Senior
Finance Documents or the Hedging Documents or under this Agreement)
against any liability other than the Senior Debt or Hedging
Liabilities owed to it; and
(c) if an Event of Default has occurred and is continuing (unless and
until such monies or distributions in the aggregate are sufficient to
bring about the Senior Discharge Date if otherwise applied in
accordance with the provisions of this Agreement) hold in a suspense
account (bearing interest at a market rate usual for accounts of that
type) any moneys or distributions received from the Junior Creditors
or the Subordinated Investors or on account of the liability of any
Junior Creditor or Subordinated Investor (as appropriate) under this
Agreement.
22.4 APPROPRIATIONS - JUNIOR CREDITORS
Until the Junior Discharge Date (but subject always to any provision of
this Agreement directing the contrary), each Junior Creditor (or any
trustee or agent on their behalf) may (subject also to any provision of the
Junior Finance Documents):
(a) apply any moneys or property received under this Agreement or from an
Obligor or from any other person against the Junior Debt, in such
order as it sees fit;
(b) (if it so decides) apply any moneys or property received from an
Obligor or from any other person (other than money or property
received under or in connection with or in relation to the Junior
Finance Documents or under this Agreement) against any liability other
than the Junior Debt, owed to it; and
(c) if an Event of Default has occurred and is continuing (unless and
until such monies or distributions in the aggregate are sufficient to
bring about the Junior Discharge Date if otherwise applied in
accordance with the provisions of this Agreement) hold in a suspense
account (bearing interest at a market rate usual for accounts of that
type) any moneys or distributions received from the Subordinated
Investors or on account of the liability of any Subordinated Investor
under this Agreement.
23. PRESERVATION OF DEBT
Notwithstanding any term of this Agreement postponing, subordinating or
preventing the payment of any of the Junior Debt or Subordinated Investor
Debt, the Junior Debt or Subordinated Investor Debt concerned shall solely
as between the Obligors, the Junior Creditors and the Subordinated
Investors be deemed to remain owing or due and payable in
<PAGE>
accordance with the terms of the Junior Finance Documents or the
Subordinated Investor Debt Documents, as the case may be, in order that
interest and default interest and indemnity payments will accrue thereon in
accordance with and to the extent provided for in the Junior Finance
Documents and the Subordinated Investor Debt Documents respectively. No
delay in exercising rights and remedies under any of the Junior Finance
Documents or the Subordinated Investor Debt Documents by reason of any term
of this Agreement postponing, restricting or preventing such exercise shall
operate as a permanent waiver of any of those rights and remedies.
24. POWER OF ATTORNEY
24.1 IN FAVOUR OF SENIOR CREDITORS
By way of security for the obligations of each Junior Creditor and each
Subordinated Investor under this Agreement, each Junior Creditor and each
Subordinated Investor irrevocably appoints (to the extent it is legally
able to do so) the Senior Agent as its attorney to do anything which the
Junior Creditor and each Subordinated Investor (a) has authorised any
Senior Creditor to do under this Agreement and (b) is required and legally
able to do by this Agreement but has failed to do for a period of ten
Business Days after receiving notice from the Senior Agent requiring it to
do so unless such Junior Creditor or Subordinated Investor is disputing in
good faith and by appropriate proceedings that it is required to do the
thing concerned.
24.2 IN FAVOUR OF JUNIOR CREDITORS
By way of security for the obligations of each Subordinated Investor under
this Agreement, each Subordinated Investor irrevocably appoints (to the
extent it is legally able to do so) the Junior Agent as its attorney to do
anything which the Subordinated Investor (a) has authorised any Junior
Creditor to do under this Agreement and (b) is required and legally able to
do by this Agreement but has failed to do for a period of ten Business Days
after receiving notice from the Junior Agent requiring it to do so unless
such Subordinated Investor is disputing in good faith and by appropriate
proceedings that it is required to do the thing concerned, PROVIDED ALWAYS
THAT without the prior written consent of the Majority Senior Creditors no
Junior Creditor shall exercise or purport to exercise such power before the
Senior Discharge Date. Each Junior Creditor may delegate this power
subject to a like condition covering its exercise before the Senior
Discharge Date.
25. EXPENSES
25.1 ENFORCEMENT COSTS
The Borrower shall promptly on demand pay (and procure that the other
Obligors shall pay) to the Security Trustee, each Senior Creditor or each
Hedging Bank (as the case may be) the amount of all costs and expenses
incurred by it in connection with the enforcement against that Obligor, any
Junior Creditor or any Subordinated Investor (as the case may be) of such
person's rights against it under this Agreement. The Borrower shall
promptly on demand pay or procure that the other Obligors pay to each
Junior Creditor or the Security Trustee (as the case may be) the amount of
all costs and expenses incurred by it in connection with the enforcement
against that Obligor or any Subordinated Investor (as the case may be) of
such person's rights against it under this Agreement.
<PAGE>
25.2 LEGAL EXPENSES AND TAXES
The costs and expenses referred to above include, without limitation, the
fees and expenses of legal advisers and any value added tax or similar tax,
and are payable in the currency in which they are incurred.
26. CHANGES TO THE PARTIES
26.1 SUCCESSORS AND ASSIGNS
This Agreement is binding on the successors and assigns of the parties
hereto.
26.2 OBLIGORS
No Obligor may assign or transfer any of its rights (if any) or obligations
under this Agreement.
26.3 NEW OBLIGORS
If any member of the Group (a "NEW OBLIGOR") guarantees or otherwise
becomes liable for any Senior Debt, Hedging Liability or Junior Debt, the
Borrower will procure that (unless such New Obligor has become party hereto
by some other means to the satisfaction of the Senior Agent and the Junior
Agent) such New Obligor will become a party hereto as an Obligor by the
execution of an Obligor deed of accession substantially in the form set out
in Schedule 7.
26.4 HEDGING BANKS
Until the Senior Discharge Date, no Hedging Bank will:
(a) assign, transfer or dispose of any of the Hedging Liabilities owing to
it or its proceeds or any interest in those Hedging Liabilities or
their proceeds, or any security therefor, to or in favour of any
person; or
(b) transfer by novation or otherwise any of its rights or obligations
under any of the Hedging Documents to any person,
unless that person agrees with the parties hereto that it is bound by all
the terms of this Agreement as a Hedging Bank in a manner satisfactory to
the Security Trustee or is already a party to this Agreement as a Hedging
Bank.
26.5 JUNIOR CREDITORS
Until the Senior Discharge Date, no Junior Creditor will (except with the
consent of the Majority Senior Creditors):
(a) assign, transfer or dispose of any of the Junior Debt owing to it or
its proceeds or any interest in that Junior Debt or its proceeds, or
any security therefor, to or in favour of any person or transfer by
novation or otherwise any of its rights or obligations under any
Junior Finance Document to any person; or
<PAGE>
(b) subordinate any of the Junior Debt owing to it or its proceeds to any
sums owing by an Obligor to any person (other than Senior Debt and
Hedging Liabilities owing to the Senior Creditors and the Hedging
Banks respectively),
unless, in the case of (a) above only, that person is not prohibited from
having such involvement by the terms of the Junior Finance Documents and
agrees with the parties hereto that it is bound by all the terms of this
Agreement as a Junior Creditor by executing a deed of accession
substantially in the form set out in Schedule 8 or a Novation Certificate
(as defined in the Junior Facility Agreement).
26.6 SENIOR CREDITORS
No Senior Creditor will (except with the consent of the Majority Junior
Creditors):
(a) assign, transfer or dispose of any of the Senior Debt owing to it or
its proceeds or any interest in that Senior Debt or its proceeds, or
any security therefor, to or in favour of any person, or transfer by
novation or otherwise any of its rights or obligations under any
Senior Finance Document to any person; or
(b) subordinate any of the Senior Debt owing to it or its proceeds to any
sums owing by an Obligor to any person,
unless, in the case of (a) above only, that person is not prohibited from
having such involvement by the terms of the Senior Finance Documents and
agrees with the parties hereto that it is bound by all the terms of this
Agreement as a Senior Creditor by executing a deed of accession
substantially in the form set out in Schedule 8 or a Novation Certificate
(as defined in the Senior Facility Agreement).
26.7 ASSIGNMENT OF RIGHTS
Each Senior Creditor and each Junior Creditor may assign or otherwise
dispose of all or any of its rights under this Agreement but only in
connection with the disposal of corresponding rights under and as permitted
by the Senior Finance Documents or Junior Finance Documents respectively.
26.8 ACCESSION AND RESIGNATION OF AGENTS
(a) Any person acceding to the Senior Facility Agreement as Agent thereunder
(and as defined therein) and/or to the Junior Facility Agreement as Junior
Agent thereunder (and as defined therein) and/or the Senior Facility
Agreement and/or the Junior Facility Agreement as Security Trustee shall at
the same time accede hereto by executing an Agent's deed of accession
substantially in the form set out in Schedule 10, and upon doing so, shall
become and shall be treated hereunder as being the Senior Agent and/or the
Junior Agent and/or the Security Trustee respectively.
(b) Neither the Security Trustee, the Senior Agent nor the Junior Agent may
resign or be removed except as specified in Clause 32 (The Security
Trustee), or in the Senior Finance Documents or in the Junior Finance
Documents (as the case may be) and (save as set out in Clause 32 (The
Security Trustee)) only if a replacement Security Trustee, Senior Agent or
Junior Agent agrees with all other parties hereto to become party to and be
bound by all the terms of this Agreement as the replacement agent by
execution of an Agent's deed of
<PAGE>
accession substantially in the form set out in Schedule 10.
Notwithstanding anything to the contrary contained in any of the Junior
Finance Documents, the Security Trustee may not be removed (or have its
authority terminated) by the Junior Creditors or any of them prior to the
Senior Discharge Date.
26.9 SUBORDINATED INVESTORS
(a) None of the Subordinated Investors will, except with the consent of the
Senior Agent (on the instructions of the Majority Senior Creditors) if
prior to the Senior Discharge Date, and the Junior Agent (on the
instructions of the Majority Junior Creditors) if prior to the Junior
Discharge Date:
(i) create or permit to subsist any Security Interests over any of the
Subordinated Investor Debt owing to it, or its proceeds or any
interest in that Subordinated Investor Debt, or its proceeds or any
security therefor to or in favour of any person, or (except where the
requirements of paragraph (b) below have on or before the effective
time of the transfer been complied with in relation to the proposed
transferee) transfer to any person by novation or otherwise any of its
rights or obligations in respect of the Subordinated Investor Debt
arising under or in respect of the Subordinated Investor Debt
Documents; or
(ii) subordinate any of the Subordinated Investor Debt owing to it or its
proceeds to any sums owing by any Obligor to any person (other than
Senior Debt, Hedging Liabilities and Junior Debt owing to the Senior
Creditors, the Hedging Banks and the Junior Creditors respectively).
(b) The Subordinated Investors will procure (as a condition to any such
transfer or assignment) that any person to whom any of the Subordinated
Investor Debt is at any time transferred or assigned before the Senior
Discharge Date or the Junior Discharge Date will become party hereto as a
Subordinated Investor by executing and delivering to the Senior Agent (or,
after the Senior Discharge Date, the Junior Agent) a deed of accession
substantially in the form set out in Schedule 9.
(c) No Obligor shall incur any indebtedness under a Subordinated Investor Debt
Document and no person may be designated as a Subordinated Investor unless
and until the Senior Agent and the Junior Agent have received legal
opinions in form and substance acceptable to them in relation to the
Subordinated Investor Debt Document and the Subordinated Investors in
relation to it or, as the case may be, the proposed new Subordinated
Investor and the Subordinated Investor Debt Document(s) in relation to it.
Such legal opinions shall be addressed to the Senior Creditors and the
Junior Creditors and shall be from lawyers approved by the Senior Agent and
the Junior Agent in England and in the jurisdiction of the governing law of
the relevant Subordinated Investor Debt Document and the place of
incorporation of the Subordinated Investors in relation to it or, as the
case may be, the place of incorporation of the proposed new Subordinated
Investor and the jurisdiction of the governing law of the Subordinated
Investor Debt Document(s) in relation to it. After the Senior Discharge
Date such legal opinions need only be given to the Junior Agent for the
benefit of the Junior Creditors and such lawyers need only be approved by
the Junior Agent.
<PAGE>
26.10 VARIATION OF FORMS OF DEED OF ACCESSION
The Senior Agent may agree with the Junior Agent (and in the case of
changes to Schedules 7 and 9, the Borrower) changes to the forms of deeds
of accession referred to above. After the Senior Discharge Date only the
agreement of the Junior Agent (and in the case of Schedules 7 and 8, the
Borrower) will be required for such changes.
26.11 NOVATION CERTIFICATES
Each of the other parties hereto hereby appoints each of the Senior Agent
and the Junior Agent as its agent to sign on its behalf, respectively, any
Novation Certificate (as defined in the Senior Facility Agreement) entered
into pursuant to the Senior Facility Agreement and any Novation Certificate
(as defined in the Junior Facility Agreement) entered into pursuant to the
Junior Facility Agreement, as well as in each case any deed of accession to
be entered into pursuant hereto in order that such Novation Certificate or
deed of accession may be supplemental to this Agreement and be binding on
and enure to the benefit of all the parties hereto.
26.12 MEMORANDUM ON DOCUMENTS
Each of the Senior Agent, the Hedging Banks and the Junior Agent will
endorse a memorandum of this Agreement on the Senior Finance Documents, the
Hedging Documents and the Junior Finance Documents respectively.
26.13 OPTION TO PURCHASE
(a) Upon the Junior Agent (acting on the instructions of the Majority Junior
Creditors) giving not less than five Business Days' notice in writing to
the Senior Agent, the Junior Creditors will be entitled (at the expense of
the Junior Creditors) to purchase or to procure the purchase by a person
nominated by them of the Senior Debt, by way of a transfer in accordance
with the Senior Facility Agreement and Clause 26.14 below, of all (but not
part only) of the rights and obligations of the Senior Creditors under the
Senior Finance Documents (if and to the extent that the Senior Creditors
are entitled by the terms of the Senior Finance Documents to effect such
assignment or transfer), but only:
(i) after the Senior Agent has declared all of the Senior Debt immediately
due and payable or payable on demand under Clause 19.17 of the Senior
Facility Agreement or the Majority Senior Creditors have instituted
steps to have the Security Trustee by sale, foreclosure or other like
process enforce any material part of the security constituted by the
Security; or
(ii) if a Material Senior Default or a Non-Payment Event relating to Senior
Debt has occurred and has been continuing, without having been cured
or waived by the Majority Senior Creditors in writing, for a period of
more than 90 days (and the Senior Agent shall notify the Junior Agent
promptly after any such cure or waiver).
(b) Any such assignment shall take effect only against:
(i) payment in full of an amount (the "PURCHASE AMOUNT") determined by the
Senior Agent (acting reasonably) to be equal to the Senior Debt
outstanding as at the date the Purchase Amount is received (including
all accrued interest, fees and other amounts up to but excluding that
date together with such amount as each Senior
<PAGE>
Creditor may certify to be necessary to compensate it for any loss or
expense on account of funds borrowed, contracted for or utilised to
fund any amount included in the Senior Debt resulting from the receipt
of such payment otherwise than on the last day of an Interest Period),
and only if, after such assignment and transfer, no Senior Creditor
will be under any actual or contingent liability to any Obligor or any
other person under this Agreement or any Senior Finance Document for
which it is not holding cash collateral in an amount and established
on terms reasonably satisfactory to it; and
(ii) an indemnity from each Junior Creditor (or from another third party
acceptable to all the Senior Creditors) in a form satisfactory to all
the Senior Creditors (acting reasonably), in respect of any and all
costs, losses and expenses which may be sustained or incurred by the
Senior Creditors or any of them in consequence of any sum received or
recovered by any Senior Creditor from any Obligor or any Junior
Creditor being required (or it being alleged that it is required) to
be paid back by or clawed back from any Senior Creditor for any reason
whatsoever, PROVIDED THAT where it is demonstrated to the reasonable
satisfaction of the Senior Agent that such costs, losses and expenses
could not have been recovered in full by the relevant Senior Creditor
pursuant to the Senior Finance Documents had such assignment not been
made, such indemnity shall not extend to the shortfall.
(c) Such assignment shall be without recourse to, or warranty from, the Senior
Agent and the Senior Creditors, save that on the date of such assignment
each Senior Creditor shall be deemed to have warranted that it is the owner
of the beneficial interest, free from all Security Interests and third
party interests other than any arising under the Senior Finance Documents
or by operation of law, in all rights and interests under the Senior
Finance Documents purporting to be assigned or transferred by it by such
assignment and that it has the corporate power to effect such assignment
and has taken all necessary action to authorise the making by it of such
assignment.
(d) No Junior Creditor shall be obliged to purchase any Senior Debt under this
Clause 26.13 or to provide any funds in connection with any such purchase
unless it was included in the Majority Junior Creditors which gave the
Junior Agent the relevant instructions referred to in paragraph (a) above.
26.14 ASSIGNMENT OF SENIOR DEBT TO JUNIOR CREDITORS
Forthwith upon the earlier of:
(a) the date the Senior Agent confirms in writing actual receipt in full
of the Purchase Amount referred to in Clause 26.13(b)(i) above and the
indemnity referred to in Clause 26.13(b)(ii) has been given in
satisfactory form; and
(b) the Senior Discharge Date,
all the rights and obligations of the Senior Creditors under the Senior
Finance Documents shall (to the extent permitted by the terms of the Senior
Finance Documents) automatically be assigned to and assumed by the Junior
Agent for and on behalf of the Junior Creditors (but without recourse to or
warranty from the Senior Creditors save, in the case of an assignment
pursuant to Clause 26.13 above, as expressly provided therein) and
references in this Agreement:
<PAGE>
(i) to the Senior Agent or the Senior Creditors shall be deemed to be
references to the Junior Agent and the Junior Creditors;
(ii) to the Senior Discharge Date shall be deemed to be references to the
Junior Discharge Date;
(iii) to the Majority Senior Creditors shall be deemed to be references to
the Majority Junior Creditors; and
(iv) to the Senior Debt shall be deemed to be references to the Junior
Debt.
26.15 JUNIOR CREDITORS' CURE RIGHTS - NON-PAYMENT EVENTS
(a) The Senior Agent shall promptly notify the Junior Agent of any Non-Payment
Event relating to Senior Debt or Hedging Liabilities of which the Senior
Agent is actually aware. For the purposes of this Clause 26.15, the
(Pounds)100,000 threshold in the definition of Non-Payment Event shall be
(Pounds)0.
(b) If a Non-Payment Event relating to Senior Debt or Hedging Liabilities
occurs and is continuing the Junior Agent (if so instructed by the Majority
Junior Creditors) shall within five Business Days after the date of the
Senior Agent's notice under paragraph (a) above give the Senior Agent a
notice that it wishes to cure the Non-Payment Event under this Clause
26.15.
(c) If the Junior Agent (on the instructions of the Majority Junior Creditors)
gives a notice under paragraph (b) above, the Non-Payment Event (if it is
continuing at the time of payment by the Junior Agent as described below)
shall be regarded as having been cured if the Junior Agent pays to the
Senior Agent and/or the Hedging Banks concerned an amount equal to all
unpaid amounts giving rise to the Non-Payment Event for immediate
application towards payment of the Senior Debt or, as the case may be,
Hedging Liabilities within five Business Days after the date of the Junior
Agent's notice under paragraph (b) above. For the avoidance of doubt, the
Junior Agent shall not be required to make any such payment unless and
until it has received the requisite funds from the Junior Lenders.
(d) Any other Non-Payment Event which occurs during the period of 90 days
beginning on the date of the Junior Agent's notice under paragraph (b)
above may also be cured by a payment by the Junior Agent in the manner
described in paragraph (c) above within five Business Days after
notification to the Junior Agent of the Non-Payment Event.
(e) If the Junior Agent has given notice under paragraph (b) above, no further
notice under paragraph (b) above may be given by the Junior Agent
thereafter unless there has expired since (i) the date of the previous such
notice or (ii) the date on which any Material Senior Default or Non-Payment
Event related to Senior Debt or Hedging Liabilities which occurred after
the date of such notice has been cured or waived by the Majority Senior
Creditors in writing, a period of 12 months or more during which no
Default has occurred under the Senior Facility Agreement in respect of a
Material Senior Default or a Non-Payment Event related to Senior Debt or
Hedging Liabilities. No Non-Payment Event may be cured by the Junior Agent
other than as provided by this Clause 26.15 or as the Senior Creditors and
the Hedging Banks may agree.
<PAGE>
(f) A cure of a Non-Payment Event relating to Senior Debt or Hedging
Liabilities under this Clause 26.15 shall not cure the breach for the
purposes of Clause 19.5 (Cross default) of the Junior Facility Agreement.
Accordingly, the Junior Agent may exercise all its rights under Clause 14
(Permitted Enforcement) by reason of an Event of Default under Clause 19.5
(Cross Default) of the Junior Facility Agreement caused by that Non-Payment
Event, even if such Non-Payment Event has been cured under this Clause
26.15.
(g) The Senior Creditors shall not take any enforcement action described in
Clause 13(i) to (vi) (both inclusive), treating (for the purposes of this
paragraph (g)) references in Clause 13(i) and (ii) to the Junior Debt as
references to the Senior Debt, in respect of any Non-Payment Event to which
this Clause 26.15 applies:
(i) before the giving of a notice by the Senior Agent under paragraph (a)
above relating to that Non-Payment Event; or
(ii) during the period of five Business Days starting on the date of the
Senior Agent's notice under paragraph (a) above; or
(iii) during the period of five Business Days starting on the date of the
notice (if any) given by the Junior Agent under paragraph (b) above.
(h) No Junior Creditor shall be obliged to participate in the curing of any
Non-Payment Event under this Clause 26.15 unless it was included in the
Majority Junior Creditors which gave the Junior Agent the relevant
instructions referred to in paragraph (c) above.
(i) Each amount paid by the Junior Creditors to cure a Non-Payment Event as
provided in this Clause 26.15 shall be deemed to be an Advance drawn down
by the Borrower under the Junior Facility Agreement from the Junior Lenders
concerned. Such Advance will be repayable on demand.
26.16 JUNIOR CREDITORS' CURE RIGHTS - FINANCIAL AND MINIMUM VALUE COVENANTS
(a) If there is an Event of Default under Clause 18.2 (Debt service coverage
ratio) or 18.3 (Loan to value ratio) of the Senior Facility Agreement (each
a "RELEVANT SENIOR COVENANT"):
(i) the Senior Agent shall promptly notify the Junior Agent upon becoming
actually aware of such Event of Default; and
(ii) while that Event of Default is continuing the Junior Agent (if so
instructed by the Majority Junior Creditors) shall within five
Business Days after the date of the Senior Agent's notice under
paragraph (a)(i) above give the Senior Agent a notice that it wishes
to cure the breach in accordance with this Clause 26.16.
(b) If the relevant breach is continuing at the time of payment by the Junior
Agent as described below, a cure of a breach of a Relevant Senior Covenant
under this Clause 26.16 may be effected by the Junior Agent procuring that
the aggregate principal amount of Advances outstanding under the Senior
Facility Agreement is reduced to an amount which:
(i) if the Advances under the Senior Facility Agreement had been at that
level on the last day of the Ratio Period (as defined in the Senior
Facility Agreement) in respect of which the breach of Clause 18.2
(Debt Service Coverage Ratio) of the Senior Facility
<PAGE>
Agreement occurred, would have resulted in there being no breach of
Clause 18.2 on that date; and/or (as the case may be)
(ii) results in there being no breach of Clause 18.3 (Loan to Value Ratio)
immediately after such reduction of the Advances under the Senior
Facility Agreement occurs.
For the avoidance of doubt, the Junior Agent shall not be required to make
any such payment unless and until it has received the requisite funds from
the Junior Lenders.
(c) A cure of a Relevant Senior Covenant may only be made under this Clause
26.16 within five Business Days after the Junior Agent receives notice of
the relevant Event of Default from the Senior Facility Agent under
paragraph (a)(i) above.
(d) If the Junior Agent cures a Relevant Senior Covenant under this Clause
26.16, no further cure of that Relevant Senior Covenant may be made under
this Clause 26.16 unless there has expired since (i) the date on which the
previous cure of that Relevant Senior Covenant was made or (ii) the date on
which any Material Senior Default or Non-Payment Event related to Senior
Debt or Hedging Liabilities which occurred after the date of such notice
has been cured or waived by the Majority Senior Creditors in writing, a
period of 12 months or more during which no Default has occurred under the
Senior Facility Agreement in respect of a Material Senior Default or a Non-
Payment Event related to Senior Debt or Hedging Liabilities.
(e) A cure of a breach of a Relevant Senior Covenant under this Clause 26.16
shall not cure the breach for the purposes of Clause 19.5 (Cross default)
of the Junior Facility Agreement. Accordingly, the Junior Agent may
exercise all its rights under Clause 14 (Permitted Enforcement) by reason
of an Event of Default under Clause 19.5 (Cross default) of the Junior
Facility Agreement caused by the breach of the Relevant Senior Covenant,
even if the breach of the Relevant Senior Covenant has been cured under
this Clause 26.16.
(f) The Senior Creditors shall not take any enforcement action described in
Clause 13(i) to (vi) (both inclusive), treating (for the purpose of this
paragraph (f)) references in Clause 13(i) and (ii) to the Junior Debt as
references to the Senior Debt, in respect of a breach of any Relevant
Senior Covenant to which this Clause 26.16 applies:
(i) before the giving of a notice by the Senior Agent under paragraph
(a)(i) above relating to such breach; or
(ii) during the period of five Business Days starting on the date of the
Senior Agent's notice under paragraph (a)(i) above; or
(iii) during the period of five Business Days starting on the date of the
notice (if any) given by the Junior Agent under paragraph (a)(ii)
above.
(g) No Junior Creditor shall be obliged to participate in the curing of any
Relevant Senior Covenant under this Clause 26.16 unless it was included in
the Majority Junior Creditors which gave the Junior Agent the relevant
instructions referred to in paragraph (a)(ii) above.
(h) Each amount paid by the Junior Creditors to cure a Relevant Senior Covenant
as provided in this Clause 20.16 shall be deemed to be an Advance drawn
down by the Borrower under the
<PAGE>
Junior Facility Agreement from the Junior Lenders concerned. Such Advance
will be repayable on demand.
26.17 SUBROGATION
Where any Senior Debt or any Hedging Liability is wholly or partly paid by
any Junior Creditor pursuant to Clause 26.15 or Clause 26.16, the
provisions of Clause 21.1 (Subrogation of Junior Creditors) shall apply to
the payment as if it was an amount received in respect of or on account of
the Junior Debt in the circumstances contemplated by Clause 21.1
(Subrogation of Junior Creditors).
27. STATUS OF OBLIGORS
27.1 PRIORITIES
Each of the Obligors joins in this Agreement for the purpose of
acknowledging the priorities, rights and obligations recorded in this
Agreement and undertakes with each of the other parties hereto to observe
the provisions of this Agreement at all times and not in any way to
prejudice or affect the enforcement of such provisions or do or suffer
anything which would be inconsistent with the terms of this Agreement.
27.2 NO RIGHTS OF OBLIGORS
None of the Obligors shall have any rights hereunder and none of the
undertakings herein contained on the part of the Senior Creditors, the
Hedging Banks the Junior Creditors or the Subordinated Investors are given
(or shall be deemed to have been given) to, or for the benefit of, the
Obligors.
28. NOTICES
Every notice, request, demand or other communication under this Agreement
shall be made in writing and shall be delivered personally, by first class
prepaid post or facsimile and shall be sent to the address or facsimile
number of the party, and for the attention of the individual, applying for
the purposes of the Senior Facility Agreement and/or Junior Facility
Agreement (in the case of Obligors, Senior Creditors or Junior Creditors)
or such other address or facsimile number as is notified by it to the
parties to this Agreement.
29. WAIVERS, REMEDIES CUMULATIVE
The rights of each party under this Agreement:
(a) are cumulative and not exclusive of its rights under the general law
to the extent that the latter rights are not inconsistent herewith;
and
(b) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of
that right.
30. GOVERNING LAW
This Agreement is governed by English law.
<PAGE>
31. JURISDICTION
31.1 SUBMISSION
For the benefit of each party, each other party (each a "JURISDICTION
PARTY") hereby irrevocably agrees that the courts of England have
jurisdiction to settle any disputes in connection with this Agreement and
accordingly submits to the jurisdiction of the English courts.
31.2 SERVICE OF PROCESS
Without prejudice to any other mode of service, each Subordinated Investor
(other than a Subordinated Investor incorporated in England and Wales):
(a) irrevocably appoints the Borrower as its agent for service of process
relating to any proceedings before the English Courts in connection
with this Agreement or any judgement in connection therewith;
(b) agrees that failure by a process agent to notify the Obligor of the
process will not invalidate the proceedings concerned; and
(c) consents to the service of process relating to any such proceedings by
prepaid posting of a copy of the process to its address for the time
being applying for the purposes of Clause 28 (Notices).
31.3 FORUM CONVENIENCE AND ENFORCEMENT ABROAD
Each Jurisdiction Party:
(a) waives objection to English courts on grounds of inconvenient forum or
otherwise as regards proceedings in connection with this Agreement;
(b) agrees that a judgement or order of an English court in connection
with this Agreement is (subject to rights of appeal before the English
courts) conclusive and binding on it and may be enforced against it in
the courts of any other jurisdiction; and
(c) hereby to the fullest extent permitted by law waives any right it may
have in any jurisdiction to have any proceedings take the form of a
trial by jury.
31.4 NON-EXCLUSIVITY
Nothing in this Clause 31 limits the rights of a Senior Creditor or Junior
Creditor to bring proceedings against a Jurisdiction Party in connection
with this Agreement:
(a) in any other court of competent jurisdiction; or
(b) concurrently in more than one jurisdiction.
<PAGE>
32. THE SECURITY TRUSTEE
32.1 APPOINTMENT BY HEDGING BANKS
Each Hedging Bank irrevocably appoints the Security Trustee to act as its
agent hereunder and with respect to the Security Documents, and irrevocably
authorises the Security Trustee on its behalf to:
(a) enter into any and each Security Document; and
(b) perform such duties and exercise such rights and powers under this
Agreement and the Security Documents as are specifically delegated to
the Security Trustee by the terms thereof including without limitation
the release of security, together with such rights, powers and
discretions as are reasonably incidental thereto.
The Security Trustee shall have only those duties which are expressly
specified in this Agreement and/or the Security Documents and/or the Senior
Facility Agreement and/or the Junior Facility Agreement. The Security
Trustee's duties under this Agreement and/or the other Finance Documents
are intended to be of a mechanical and administrative nature.
32.2 TERMS
The terms of the appointment of the Security Trustee by the Hedging Banks
are the same as those set out in Clause 20 of the Senior Facility
Agreement, mutatis mutandis.
32.3 DIRECTIONS OF SENIOR CREDITORS AND JUNIOR CREDITORS
Save as expressly set out in this Agreement, in the exercise of any right
or power and as to any matter not expressly provided for by this Agreement
or any of the other Finance Documents to which it is party, the Security
Trustee, prior to the Senior Discharge Date, shall act in accordance with
the instructions of the Majority Senior Creditors and, after the Senior
Discharge Date, shall act in accordance with the instructions of the
Majority Junior Creditors, and shall be fully protected in so doing. In
the absence of any such instructions and/or any relevant contrary
requirement contained in this Agreement or any such other Finance Document,
the Security Trustee may act or refrain from acting with respect to such
right or power and as to any such matter as it shall see fit. Any such
instructions shall be binding on all the Senior Creditors, the Hedging
Banks and the Junior Creditors.
32.4 RELATIONSHIP
(a) The relationship between each Senior Creditor, each Hedging Bank and each
Junior Creditor on the one hand and the Security Trustee on the other is
that of principal and agent save only that the benefits of the Security
Documents are held by it as trustee for itself and (to the extent that the
Senior Debt is or is capable of being secured thereby) the Senior
Creditors, (to the extent that the Hedging Liabilities are or are capable
of being secured thereby) the Hedging Banks and (to the extent that the
Junior Debt is or is capable of being secured thereby) the Junior
Creditors.
(b) The Security Trustee shall not be liable to any person for any breach by
any Senior Creditor, Hedging Bank or Junior Creditor of this Agreement or
be liable to any Senior Creditor, Hedging Bank or Junior Creditor for any
breach by any other person of this Agreement or any Finance Document.
<PAGE>
32.5 RELIANCE
In applying any moneys received by it under this Agreement or any of the
Security Documents, the Security Trustee may rely on any certificate made
or given by the Senior Agent or the Junior Agent, as the case may be, as to
the identity of, and amounts owing to, any Senior Creditor, Hedging Bank or
Junior Creditor under any of the Senior Finance Documents, Hedging
Documents or Junior Finance Documents, as the case may be, and shall be
protected in so relying.
32.6 INFORMATION
(a) Save as expressly set out herein, the Security Trustee shall not have any
duty:
(i) either initially or on a continuing basis to provide any Senior
Creditor, Hedging Bank or Junior Creditor or any other party to this
Agreement with any credit or other information (other than to any
Senior Creditor or Junior Creditor or Hedging Bank, if requested,
information in the Security Trustee's possession specifically
concerning the Security Documents) with respect to the financial
condition or affairs of any member of the Group or any of their
related entities whether coming into its possession or that of any
related entities of the Security Trustee before or upon the entry into
of this Agreement or at any time thereafter; or
(ii) unless specifically requested to do so by the Senior Agent or the
Junior Agent in accordance with this Agreement or any of the Security
Documents, to request any certificates or other documents from any
member of the Group.
(b) The Security Trustee need not disclose any information relating to any
Obligor or any of their related entities or any other person or any matter
if such disclosure would or might in the reasonable opinion of the Security
Trustee constitute a breach of any law or regulation or be otherwise
actionable at the suit of any person.
32.7 INDEMNITY
Each Senior Creditor, each Hedging Bank and each Junior Creditor agrees to
indemnify the Security Trustee on demand (to the extent not reimbursed by
any Obligor and without prejudice to the liability of any Obligor under any
Finance Document) for any and all liabilities, losses, damages, penalties,
actions, judgements, costs, expenses or disbursements of any kind
whatsoever (including legal fees) which may be imposed on, incurred by or
asserted against the Security Trustee in any way relating to or arising out
of its acting as the Security Trustee for the Senior Creditors or Hedging
Banks or Junior Creditors or any of them under this Agreement and/or the
Security Documents or performing its duties and functions in such capacity
under any of the Finance Documents or any action taken or omitted by the
Security Trustee thereunder, except to the extent that the liability or
loss arises directly from the Security Trustee's gross negligence or wilful
misconduct. Such indemnification by each Senior Creditor, Hedging Bank and
Junior Creditor shall be pro rata to its entitlement in the Senior Debt,
Hedging Liabilities or the Junior Debt (as the case may be). The liability
shall be divided between the Senior Creditors, the Hedging Banks and the
Junior Creditors pro rata according to the respective amounts of the Senior
Debt, Hedging Liabilities and Junior Debt outstanding and/or available
(subject to satisfaction of conditions precedent) for drawing under the
relevant Finance Documents from time to time or, if after
<PAGE>
enforcement, to the extent of their respective Recoveries or, in the case
of the Junior Creditors, any sum of money received or recovered by the
Junior Creditors or any of them on or at any time after the occurrence of a
Junior Enforcement Event on account of any amount outstanding under any
Junior Finance Document.
32.8 RESIGNATION
(a) The Security Trustee may resign by giving notice thereof to the Senior
Creditors, the Hedging Banks, the Junior Creditors and the Borrower. In
such event the Majority Senior Creditors (if prior to the Senior Discharge
Date) or the Majority Junior Creditors (if after the Senior Discharge
Date), after consultation with the Borrower (and, if prior to the Senior
Discharge Date, the Junior Agent) may appoint a successor Security Trustee
which shall be a reputable and experienced bank, incorporated in or having
a branch in England and, if appointed prior to the Senior Discharge Date,
approved by the Junior Agent (such approval not to be unreasonably withheld
or delayed). The Security Trustee may also be removed by notice from the
Majority Senior Creditors and the Majority Junior Creditors (or, after the
Senior Discharge Date, the Majority Junior Creditors) in which event a
successor shall be appointed in accordance with the preceding sentence of
this paragraph (a).
(b) If such a notice of resignation or removal has been given and, within 30
days after such notice of resignation or removal, no successor Security
Trustee shall have been appointed by the Majority Senior Creditors or (if
after the Senior Discharge Date) the Majority Junior Creditors and shall
have accepted such appointment, the retiring Security Trustee, after
consultation with the Borrower, the Senior Creditors and the Junior
Creditors, shall have the right to appoint a successor Security Trustee
which shall be a reputable and experienced bank incorporated or having a
branch in England.
(c) Subject as otherwise provided in Clauses 32.8(c), (e) and (g), the
resignation or removal of the retiring Security Trustee and the appointment
of any successor Security Trustee shall both become effective upon the
successor Security Trustee notifying the Senior Agent, the Hedging Banks,
the Junior Agent and the Borrower in writing that it accepts such
appointment and executing an Agent's deed of accession substantially in the
form set out in Schedule 10 (a copy of which shall be delivered to each of
the Senior Agent, the Hedging Banks, the Junior Agent and the Borrower),
whereupon the successor Security Trustee shall succeed to the position of
the retiring Security Trustee and the term "SECURITY TRUSTEE" in all of the
Finance Documents shall include such successor Security Trustee where
appropriate. This Clause 32 shall continue to benefit a retiring Security
Trustee in respect of any action taken or omitted by it under this
Agreement, the Senior Finance Documents or the Junior Finance Documents
while it was the Security Trustee.
(d) Notwithstanding paragraph (d) above, the resignation or removal of a
retiring Security Trustee before the Junior Discharge Date shall not become
effective until the Senior Agent (if before the Senior Discharge Date) or
the Junior Agent (thereafter but before the Junior Discharge Date) is
satisfied (acting reasonably) that all things required to be done in order
that the Security Documents or replacements therefor shall provide for
perfected and enforceable security in favour of the replacement Security
Trustee have been done.
(e) The Obligors shall take such action as may be necessary and the Security
Trustee at the request (and cost) of the Borrower shall take such action as
may be practicable in order that the Security Documents or replacements
therefor shall provide for perfected and enforceable security in favour of
any replacement Security Trustee including making available to the
<PAGE>
replacement Security Trustee such documents and records as the successor
Security Trustee shall reasonably request.
(f) The Junior Creditors undertake to appoint a replacement Security Trustee in
order that the resignation after the Senior Discharge Date but before the
Junior Discharge Date of a retiring Security Trustee may take effect
promptly after the Senior Discharge Date in accordance with the provisions
of this Clause 32.8.
32.9 ASSIGNMENTS
The Security Trustee may treat each Senior Creditor, Hedging Bank and
Junior Creditor named as a party hereto as continuing to be such a party,
as entitled to payments hereunder and as acting hereunder through its
address notified by it to the Security Trustee as being its address
hereunder for the service of notices and other communications until it has
received notice from such Senior Creditor, Hedging Bank and Junior Creditor
or from the Senior Agent (with respect to Senior Creditors) or Junior Agent
(with respect to Junior Creditors) to the contrary.
32.10 SECURITY DOCUMENTS
(a) The Security Trustee in its capacity as trustee under any of the Security
Documents or otherwise shall not be liable for any failure, omission, or
defect in perfecting the security constituted by any Security Document or
any security created thereby including, without limitation, any failure to
(i) register the same in accordance with the provisions of any of the
documents of title of the relevant Obligor to any of the property thereby
charged, (ii) make any recordings or filings in connection therewith, (iii)
effect or procure registration of or otherwise protect the floating charge
or any other such security created by or pursuant to the Security Documents
under the Land Registration Act 1925 or any other registration laws in any
jurisdiction, (iv) give notice to any person of the execution of any of the
Security Documents or (v) to obtain any licence, consent, or other
authority for the creation of any security.
(b) The Security Trustee in its capacity as trustee or otherwise may accept
without enquiry such title as any Obligor may have to the property over
which security is intended to be created by any Security Document.
(c) Save where the Security Trustee holds a legal mortgage over, or over an
interest in, real property or shares, the Security Trustee in its capacity
as trustee or otherwise shall not be under any obligation to hold any title
deeds, Security Documents or any other documents in connection with the
property charged by any Security Document or any other such security in its
own possession or by another person on its behalf or to take any steps to
protect or preserve the same. The Security Trustee may permit the relevant
Obligor to retain all such title deeds and other documents in its
possession if it reasonably considers that it is appropriate in all the
circumstances.
(d) Save as otherwise provided in the Security Documents, all moneys which
under the trusts herein or therein contained are received by the Security
Trustee in its capacity as trustee or otherwise may be invested in the name
of or under the control of the Security Trustee in any investment for the
time being authorised by English law for the investment by trustees of
trust money or in any other investments which may be selected by the
Security Trustee with the consent of the Majority Senior Creditors or,
following the Senior Discharge Date, the
<PAGE>
Majority Junior Creditors. Additionally, the same may be placed on deposit
in the name of or under the control of the Security Trustee at such bank or
institution (including any agent) and upon such terms as the Security
Trustee may think fit.
(e) Each Senior Creditor, Hedging Bank and Junior Creditor hereby confirms its
approval of the Security Documents (subject to any consents required under
the Senior Facility Agreement or the Junior Facility Agreement) and any
security created or to be created pursuant thereto and hereby authorises,
empowers and directs the Security Trustee (by itself or by such person(s)
as it may nominate) to execute and enforce the same as trustee or as
otherwise provided (and whether or not expressly in the Senior Creditor's,
Hedging Bank's or Junior Creditor's names) on its behalf, subject always to
the terms of this Agreement and the Security Documents.
32.11 CO-SECURITY TRUSTEES
(a) The Security Trustee may appoint any person established or resident in any
jurisdiction (whether a trust corporation or not) to act either as a
separate Security Trustee or a co-Security Trustee jointly with the
Security Trustee (i) if the Security Trustee reasonably considers that
without such appointment the interests of the Senior Creditors, the Hedging
Banks or the Junior Creditors under the Finance Documents would be
materially and adversely affected or (ii) for the purposes of conforming to
any legal requirements, restrictions or conditions in any jurisdiction in
which any particular act or acts is or are to be performed or (iii) for the
purposes of obtaining a judgement in any jurisdiction or the enforcement in
any jurisdiction of either a judgement already obtained or any of the
provisions of the Senior Finance Documents or the Junior Finance Documents,
PROVIDED THAT in each case such separate Security Trustee or co-Security
Trustee becomes bound by the terms of this Agreement as if it were the
Security Trustee.
(b) Each separate Security Trustee or co-Security Trustee shall (subject always
to the provisions of this Agreement) have such trusts, powers, authorities
and discretions (not exceeding those conferred on the Security Trustee by
this Agreement) and such duties and obligations as shall be conferred or
imposed by the instrument of appointment.
(c) The Security Trustee shall have power in like manner to remove any such
person. Such reasonable remuneration as the Security Trustee may pay to
any such person, together with any attributable costs, charges and expenses
properly incurred by it in performing its function as such separate
Security Trustee or co-Security Trustee shall for the purpose of this
Agreement be treated as costs, charges and expenses incurred by the
Security Trustee.
32.12 RELEASE OF SECURITY
The Security Trustee shall and is hereby authorised by each of the Senior
Creditors, Hedging Banks and Junior Creditors (and to the extent it may
have any interest therein, every other party hereto) to execute on behalf
of itself and each Senior Creditor, Hedging Bank, Junior Creditor and other
party hereto where relevant without the need for any further referral to,
or authority from, any Senior Creditor, Hedging Bank, Junior Creditor or
other person all necessary releases of any security or guarantees given by
any Obligor under any Senior Finance Document or Junior Finance Document in
relation to the disposal of any asset which is permitted under or consented
to in accordance with the Senior Finance Documents and the Junior Finance
Documents including, without limitation:
<PAGE>
(a) any formal release of any asset which the Security Trustee in its
absolute discretion considers necessary or desirable in connection
with that disposal; and
(b) any release of any guarantee given under any Senior Finance Document
or Junior Finance Document or any other document referred to therein
where all the shares in the capital of the party giving such guarantee
are so disposed of in accordance with the terms of and without any
breach of the Senior Finance Documents and the Junior Finance
Documents; and
(c) any release of any security given by any Obligor which is or is a
subsidiary of a company which is sold in accordance with the terms of
and without any breach of the Senior Finance Documents and the Junior
Finance Documents.
32.13 CONFLICT WITH SECURITY DOCUMENTS
If there is any conflict between the provisions of this Agreement and any
Security Documents with regard to instructions to or other matters
affecting the Security Trustee, this Agreement will prevail.
33. SEVERABILITY
If any provision of this Agreement is prohibited or unenforceable in any
jurisdiction in relation to any party hereto, such prohibition or
unenforceability shall not invalidate the remaining provisions hereof or
affect the validity or enforceability of such provision in any other
jurisdiction or in relation to any of the other parties hereto.
34. COUNTERPARTS
This Agreement may be executed in any number of counterparts and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.
This Agreement has been entered into on the date stated at the beginning of this
Agreement.
<PAGE>
SCHEDULE 1
GUARANTORS
None at the date of this Agreement
<PAGE>
SCHEDULE 2
JUNIOR CREDITORS
Merrill Lynch Mortgage Capital, Inc.
<PAGE>
SCHEDULE 3
SENIOR CREDITORS
Merrill Lynch Mortgage Capital, Inc.
<PAGE>
SCHEDULE 4
HEDGING BANKS AND HEDGING DOCUMENTS
NAME OF HEDGING BANK DETAILS OF HEDGING DOCUMENT AND INITIAL
TRADE (IF KNOWN AT THE DATE OF THIS
AGREEMENT).
Merrill Lynch Capital Services, Inc. ISDA Master Agreement dated as of 7th
April, 1998 between the Borrower and
Merrill Lynch Capital Services, Inc. in
respect of the hedging transactions
contemplated by Clause 17.9 (Hedging
Agreements) of the Senior Facility
Agreement.
<PAGE>
SCHEDULE 5
SUBORDINATED INVESTORS
BRE/Satellite L.P. (a Delaware limited partnership)
<PAGE>
SCHEDULE 6
CALCULATION OF HEDGING LIABILITIES
On any date, the amount certified to the Senior Agent by the relevant Hedging
Bank at the request of the Senior Agent as the amount which would be payable to
that Hedging Bank by the Borrower under the terms of the relevant Hedging
Document(s) if an Additional Early Termination Event (as defined in the relevant
Hedging Document) occurred and was declared on that date and the Borrower was
the Affected Party (as defined in the relevant Hedging Document).
<PAGE>
SCHEDULE 7
DEED OF ACCESSION FOR NEW OBLIGORS
THIS AGREEMENT dated [ ], [ ] is supplemental to an
intercreditor agreement (the "INTERCREDITOR AGREEMENT") dated [ ],
[ ] between Blackstone Hotel Acquisitions Company, the Junior Creditors, the
Hedging Banks, the Senior Creditors and Bankers Trust Company as Senior Agent,
Junior Agent and Security Trustee.
Words and expressions defined in the Intercreditor Agreement have the same
meaning when used in this Agreement.
[NAME OF NEW OBLIGOR] hereby agrees with each other person who is or who becomes
a party to the Intercreditor Agreement that with effect on and from the date
hereof it will be bound by the Intercreditor Agreement as a
*[Borrower/Guarantor] as if it had been party originally to the Intercreditor
Agreement in that capacity.
The address for notices of [name of new Obligor] for the purposes of Clause 28
(Notices) of the Intercreditor Agreement is:
[
].
This Agreement is governed by English law.
THE COMMON SEAL )
of [ ] )
was affixed in the )
presence of: )
Director
Director/Secretary.
*[ ] Delete as applicable
<PAGE>
SCHEDULE 8
CREDITOR'S DEED OF ACCESSION
THIS AGREEMENT dated [ ], [ ] is supplemental to an
intercreditor agreement (the "INTERCREDITOR AGREEMENT") dated [ ],
[ ] between Blackstone Hotel Acquisitions Company, the Junior Creditors, the
Hedging Banks, the Senior Creditors and Bankers Trust Company as Senior Agent,
Junior Agent and Security Trustee.
Words and expressions defined in the Intercreditor Agreement have the same
meaning when used in this Agreement.
[NAME OF NEW SENIOR CREDITOR OR JUNIOR CREDITOR OR HEDGING BANK] hereby agrees
with each other person who is or who becomes a party to the Intercreditor
Agreement that with effect on and from the date hereof it will be bound by the
Intercreditor Agreement as a *[Senior Creditor/Junior Creditor/Hedging Bank] as
if it had been party originally to the Intercreditor Agreement in that capacity.
+[The following are the Hedging Documents to which such Hedging Bank is a party
with the Obligors referred to, and such Hedging Documents provide for facilities
a brief description of which is also set out:
[Describe hedging facilities and identify Hedging Documents]
The address for notices of [the new Creditor] for the purposes of Clause 28
(Notices) of the Intercreditor Agreement is:
[
].
This Agreement is governed by English law.
[EXECUTED UNDER SEAL]
*[ ] Delete as applicable.
+[ ] Include only for new Hedging Banks
<PAGE>
SCHEDULE 9
DEED OF ACCESSION
FOR SUBORDINATED INVESTORS
THIS AGREEMENT dated [ ], [ ] is supplemental to an
intercreditor agreement (the "INTERCREDITOR AGREEMENT") dated [ ],
[ ] between Blackstone Hotel Acquisitions Company, the Junior Creditors, the
Hedging Banks, the Senior Creditors and Bankers Trust Company as Senior Agent,
Junior Agent and Security Trustee.
Words and expressions defined in the Intercreditor Agreement have the same
meaning when used in this Agreement.
[NAME OF NEW SUBORDINATED INVESTOR] hereby agrees with each other person who is
or who becomes a party to the Intercreditor Agreement that with effect on and
from the date hereof it will be bound by the Intercreditor Agreement as a
Subordinated Investor as if it had been party originally to the Intercreditor
Agreement that in capacity.
The Subordinated Investor Debt Documents in respect of [new Subordinated
Investor] are:
[list Subordinated Investor Debt Documents].
The address for notices of [new Subordinated Investor] for the purposes of
Clause 28 (Notices) of the Intercreditor Agreement is:
[
].
This Agreement is governed by English law.
[Execution under seal]
<PAGE>
SCHEDULE 10
AGENT'S DEED OF ACCESSION
THIS AGREEMENT dated [ ], [ ] is supplemental to an
intercreditor agreement (the "INTERCREDITOR AGREEMENT") dated [ ],
[ ] between Blackstone Hotel Acquisitions Company, the Junior Creditors, the
Hedging Banks, the Senior Creditors and Bankers Trust Company as Senior Agent,
Junior Agent and Security Trustee.
Words and expressions defined in the Intercreditor Agreement have the same
meaning when used in this Agreement.
[NAME OF NEW AGENT] hereby agrees with each other person who is or who becomes a
party to the Intercreditor Agreement that with effect on and from the date
hereof it will be bound by the Intercreditor Agreement as the *[Senior
Agent/Security Trustee/Junior Agent] as if it had been party originally to the
Intercreditor Agreement in that capacity.
The address for notices of [new agent] for the purposes of Clause 28 (Notices)
of the Intercreditor Agreement is:
[
]
This Agreement is governed by English law.
[Execution under seal].
*[ ]Delete as applicable
<PAGE>
SIGNATORIES
THE BORROWER
BLACKSTONE HOTEL ACQUISITIONS COMPANY
By: JONATHAN GRAY
THE SENIOR CREDITORS
MERRILL LYNCH MORTGAGE CAPITAL, INC.
By: GORDON PEARCE
THE HEDGING BANK
MERRILL LYNCH CAPITAL SERVICES, INC.
By: EDITH DE CASTRO
THE SUBORDINATED INVESTORS' AGENT
BRE/SATELLITE L.P., a Delaware limited partnership
By: BRE/SATELLITE GENERAL PARTNER
L.L.C., a Delaware limited liability company
By: JONATHAN GRAY
THE SUBORDINATED INVESTORS
BRE/SATELLITE L.P, a Delaware limited partnership.
By: BRE/SATELLITE GENERAL PARTNER
L.L.C., a Delaware limited liability company
By: JONATHAN GRAY
<PAGE>
THE JUNIOR CREDITORS
MERRILL LYNCH MORTGAGE CAPITAL, INC.
By: GORDON PEARCE
THE SENIOR AGENT
BANKERS TRUST COMPANY
By: DERMOT MURPHY
THE JUNIOR AGENT
BANKERS TRUST COMPANY
By: DERMOT MURPHY
THE SECURITY TRUSTEE
BANKERS TRUST COMPANY
By: DERMOT MURPHY
<PAGE>
EXHIBIT 10.3
CONFORMED COPY
(INCORPORATING AMENDMENTS
TO 30TH APRIL, 1998)
DATED 7TH APRIL, 1998
BETWEEN
BLACKSTONE HOTEL ACQUISITIONS COMPANY
- and -
BANKERS TRUST COMPANY
-----------------
DEBENTURE
-----------------
ALLEN & OVERY
London
<PAGE>
TABLE OF CONTENTS
CLAUSE Page
1. Interpretation...........................................................1
2. Fixed Security...........................................................5
3. Floating Charge..........................................................6
4. Covenants for Title......................................................7
5. Representations and Warranties...........................................7
6. General Undertakings.....................................................8
7. Property Undertakings...................................................11
8. Security Accounts.......................................................15
9. When Security Becomes Enforceable.......................................16
10. Enforcement of Security.................................................16
11. Receiver................................................................17
12. Powers of Receiver......................................................18
13. Application of Proceeds.................................................20
14. Expenses and Indemnity..................................................20
15. Delegation..............................................................21
16. Further Assurances......................................................21
17. Power of Attorney.......................................................21
18. Miscellaneous...........................................................23
19. Release.................................................................23
20. Governing Law...........................................................23
SCHEDULES
1. Real Property...........................................................24
2. Specific Patents and Trademarks.........................................24
3. Relevant Agreements.....................................................24
4. Form of Letters to the Account Bank.....................................25
Part I - Form of Notice to the Account Bank.............................25
Part II - Form of Acknowledgement of the Account Bank...................27
Signatories..................................................................28
<PAGE>
THIS DEED is dated 7th April, 1998 between:
(1) BLACKSTONE HOTEL ACQUISITIONS COMPANY (Registered number 3543429) (the
"CHARGOR"); and
(2) BANKERS TRUST COMPANY (the "SECURITY TRUSTEE") as agent and trustee for the
Finance Parties (as defined below).
BACKGROUND:
(A) The Chargor enters into this Deed in connection with the Senior Credit
Agreement and the Junior Credit Agreement (each as defined below).
(B) It is intended that this document takes effect as a deed notwithstanding
the fact that a party may only execute this document under hand.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Deed:
"Act"
means the Law of Property Act 1925.
"Charged Shares"
means
(a) the Group Shares, the Target Shares and any other stocks, shares,
debentures, bonds or other securities and investments;
(b) all rights of whatever nature which the Chargor may now have or
hereafter acquire as against CREST in respect of any Group Shares or
Target Shares including (but without limitation) any rights which the
Chargor may have (i) under any agreement with CREST or CRESTCo
Limited and/or (ii) to require delivery by CREST of any Group Shares
or Target Shares to, or to the order of, the Chargor; and
(c) all rights of whatever nature which the Chargor may now have or
hereafter acquire as against a custodian in respect of any Group
Shares or Target Shares held in such custodian's account with CREST
including (but without limitation) any rights which the Chargor may
have (i) under any agreement with such custodian relating to the use
of such account and/or (ii) to require delivery by such custodian of
any Group Shares or Target Shares to, or to the order of, the
Chargor.
"CREST"
means the clearance system operated by CRESTCo Limited.
<PAGE>
"EnvironmentaL Law"
means any law, regulation, code of practice, circular, guidance notice or
the like (whether in the United Kingdom or elsewhere) concerning the
protection of human health or the environment or the conditions of the work
place or the generation, transportation, storage, treatment or disposal of
Dangerous Substances.
"Finance Document"
means:
(a) each Finance Document as defined in the Senior Credit Agreement;
(b) each Finance Document as defined in the Junior Credit Agreement;
(c) each Hedging Document as defined in the Intercreditor Agreement;
(d) each document designated in writing as such by the Chargor and the
Security Trustee.
"Finance Party"
means:
(a) each person defined as a Finance Party in the Senior Credit Agreement;
(b) each Hedging Bank under, and as defined in, the Intercreditor
Agreement;
(c) each person defined as a Junior Finance Party in the Junior Credit
Agreement; and
(d) any other party designated in writing as such by the Chargor and the
Security Trustee.
"Fixtures"
means all fixtures and fittings (including trade fixtures and fittings) and
fixed plant and machinery on the Mortgaged Property.
"Group Shares"
means any stocks, shares, debentures, bonds or other securities and
investments in any member of the Group other than the Chargor in which the
Chargor has any interest.
"Insurances"
means all contracts and policies of insurance taken out by or on behalf of
the Chargor or (to the extent of its interest) in which the Chargor has an
interest.
"Intellectual Property Rights"
means all know-how, patents, trade marks, service marks, designs, business
names, topographical or similar rights, copyrights and other intellectual
property monopoly rights
<PAGE>
and any interests (including by way of licence) in any of the foregoing (in
each case whether registered or not and including all applications for the
same).
"Junior CrediT Agreement"
means the (Pounds)100,600,000 Junior Mortgage Loan Facility Agreement dated
on or about 30th April, 1998 between (among others) the parties to this
Deed.
"Mortgaged Property"
means all freehold or leasehold property the subject of any security
created by this Deed.
"Premises"
means all buildings and erections included in the definition of "Security
Assets".
"Receiver"
means a receiver and manager or (if the Security Trustee so specifies in
the relevant appointment) a receiver, in either case, appointed under this
Deed.
"Related Rights"
means any dividend or interest paid or payable in relation to any Charged
Share and any rights, moneys or property accruing or offered at any time in
relation to any Charged Shares by way of redemption, substitution,
exchange, bonus or preference, under option rights or otherwise.
"Relevant Agreements"
means the agreements listed in Schedule 3.
"Report on Title"
means any certificate of title or report on title in relation to the
Mortgaged Property provided by or on behalf of the Chargor to the Security
Trustee and accepted by the Security Trustee in writing as a Report on
Title for the purposes of this Deed.
"Secured Liabilities"
means all present and future obligations and liabilities (whether actual or
contingent and whether owed jointly or severally or in any other capacity
whatsoever) of the Chargor to any Finance Party under each Finance Document
to which the Chargor is a party except for any obligation which, if it were
so included, would result in this Deed contravening Section 151 of the
Companies Act 1985. The term "Finance Document" includes all amendments and
supplements including supplements providing for further advances.
"Security Account"
means the FF&E Account, the Savoy Debenture Stock Reserve Account and any
other account established under Clause 8 (Security Accounts).
<PAGE>
"Security Assets"
means all assets of the Chargor the subject of any security created by this
Deed.
"Security Period"
means the period beginning on the date of this Deed and ending on the date
on which the Security Trustee is satisfied (acting on the instructions of
the Finance Parties) that all the Secured Liabilities have been
unconditionally and irrevocably paid and discharged in full.
"Senior Credit AgreemenT"
means the (Pounds)275,000,000 senior mortgage loan facility agreement dated
7th April, 1998 and amended by a deed of amendment and restatement dated
on or about 30th April, 1998 between (among others) the parties to this
Deed.
"Senior Discharge Date"
has the meaning given to it in the Intercreditor Agreement.
"Target Shares"
means the Shares in the Target acquired or to be acquired by the Chargor
pursuant to the Offer.
1.2 Construction
(a) Unless the context otherwise requires, capitalised terms defined in the
Senior Credit Agreement or (if not defined in the Senior Credit Agreement)
the Junior Credit Agreement have, unless expressly defined in this Deed,
the same meaning in this Deed.
(b) The provisions of Clause 1.2 (Construction) of the Senior Credit Agreement
apply to this Deed as though they were set out in full in this Deed except
that references to the Senior Credit Agreement are to be construed as
references to this Deed.
(c) The terms of the other Finance Documents and of any side letters between
any Parties in relation to any Finance Document are incorporated in this
Deed to the extent required to ensure that any purported disposition of the
Mortgaged Property contained in this Deed is a valid disposition in
accordance with Section 2(1) of the Law of Property (Miscellaneous
Provisions) Act 1989.
(d) If the Security Trustee (acting on legal advice) considers that an amount
paid by any Obligor to a Finance Party under a Finance Document is capable
of being avoided or otherwise set aside on the liquidation or
administration of that Obligor or otherwise, then that amount shall not be
considered to have been irrevocably paid for the purposes of this Deed.
2. Fixed Security
2.1 Creation of fixed security
The Chargor, as security for the payment of all the Secured Liabilities,
charges in favour of the Security Trustee:-
<PAGE>
(a) by way of a first legal mortgage:
(i) any property specified in Schedule 1; and
(ii) all estates or interests in any freehold or leasehold property
(except any Security Assets specified in sub-paragraph (i) above)
now belonging to it; and
(b) by way of first fixed charge:
(i) (to the extent that they are not the subject of a mortgage
under paragraph (a) above) all estates or interests in any
freehold or leasehold property belonging to it;
(ii) all plant and machinery owned by the Chargor and its interest
in any plant or machinery in its possession;
(iii) all moneys standing to the credit of any account (including the
Security Accounts) with any person and the debts represented by
them;
(iv) all benefits in respect of the Insurances and all claims and
returns of premiums in respect of them;
(v) all of the Chargor's book and other debts, the proceeds of the
same and all other moneys due and owing to the Chargor and the
benefit of all rights, securities and guarantees of any nature
enjoyed or held by it in relation to any of the foregoing;
(vi) (to the extent that they do not fall within any other sub-
paragraph of this paragraph (b)) all of the Chargor's rights
and benefits under the Relevant Agreements, any distributorship
or similar agreements entered into by it, any letters of credit
issued in its favour and all bills of exchange and other
negotiable instruments held by it;
(vii) any beneficial interest, claim or entitlement of the Chargor in
any pension fund;
(viii) its goodwill;
(ix) to the extent that they are capable of being the subject of
security, the benefit of all authorizations (statutory or
otherwise) held in connection with its business or the use of
any Security Asset specified in any other sub-paragraph in this
Clause and the right to recover and receive all compensation
which may be payable to it in respect of them;
(x) its uncalled capital; and
(xi) its Intellectual Property Rights (including any patents and
trademarks specified in Schedule 2); and
<PAGE>
(c) by way of first fixed charge and first mortgage, its interest in all
the Charged Shares and their Related Rights.
2.2 MISCELLANEOUS
(a) A reference in this Deed to a charge or mortgage of any freehold or
leasehold property includes:-
(i) all buildings and Fixtures on that property;
(ii) the proceeds of sale of any part of that property; and
(iii) the benefit of any covenants for title given or entered into by any
predecessor in title of the Chargor in respect of that property or
any moneys paid or payable in respect of those covenants.
(b) The fact that no details of properties or patents and trademarks or
agreements are included in the relevant Schedule does not affect the
validity or enforceability of any security created by this Deed.
(c) Without prejudice to Clause 2.1(b)(v) (Creation of fixed security), if,
pursuant to Clause 8.4 (Withdrawals), the Chargor is entitled to withdraw
the proceeds of any book and other debts standing to the credit of a
Security Account and, as a result, those proceeds are released from the
fixed charge created pursuant to Clause 2.1(b)(v) (Creation of fixed
security) and stand subject to the fixed charge created pursuant to Clause
2.1(b)(iii) (Creation of fixed security) or the floating charge created
pursuant to Clause 3.1 (Creation of floating charge), the release will in
no way derogate from the subsistence and continuance of the fixed charge on
all other outstanding book and other debts of the Chargor and the proceeds
of those debts.
3. FLOATING CHARGE
3.1 Creation of Floating Charge
The Chargor, as security for the payment of all of the Secured Liabilities,
charges in favour of the Security Trustee by way of a first floating charge
all its assets not otherwise effectively mortgaged, charged or assigned by
way of fixed mortgage or charge by Clause 2 (Fixed Security).
3.2 Conversion
The Security Trustee may by notice to the Chargor convert the floating
charge created by this Deed into a fixed charge as regards all or any of
the Chargor's assets specified in the notice if:
(a) an Event of Default is outstanding; or
(b) the Security Trustee considers in good faith those assets to be in
danger of being seized or sold under any form of distress, attachment,
execution or other legal process or to be otherwise in jeopardy.
<PAGE>
4. COVENANTS FOR TITLE
Each mortgage and charge created under this Deed is made by the Chargor
with full title guarantee in accordance with the Law of Property
(Miscellaneous Provisions) Act 1994.
5. REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties
The Chargor makes the representations and warranties set out in this Clause
5 to each Finance Party.
5.2 REPORT ON TITLE
(a) The information provided to the lawyers who prepared any Report on Title
for the purpose of that Report was true in all material respects at the
date it was expressed to be given;
(b) the information referred to in paragraph (a) above was at the date it was
expressed to be given complete and did not omit any information which, if
disclosed, might adversely affect the decision of a person considering
whether to enter into the Credit Agreement; and
(c) since the date of any information referred to in paragraph (a) above
nothing has occurred which renders that information untrue or misleading in
any respect and which, if disclosed, might adversely affect the decision of
a person considering whether to enter into the Senior Credit Agreement or,
as the case may be, the Junior Credit Agreement.
5.3 The Mortgaged Property
Save as disclosed in any Report on Title or otherwise in writing to the
Security Trustee:-
(a) the Chargor is the legal and beneficial owner of the Mortgaged
Property;
(b) to the best of the Chargor's knowledge, information and belief, there
subsists no breach of any law or regulation which affects or might
affect materially the value of the Mortgaged Property;
(c) there are no covenants, agreements, stipulations, reservations,
conditions, interest, rights or other matters whatsoever affecting the
Mortgaged Property;
(d) nothing has arisen or has been created or is subsisting which would be
an overriding interest over the Mortgaged Property;
(e) to the best of the Chargor's knowledge, information and belief, no
facilities necessary for the enjoyment and use of the Mortgaged
Property are enjoyed by the Mortgaged Property on terms entitling any
person to terminate or curtail its use;
(f) the Chargor has received no notice of any adverse claims by any person
in respect of the ownership of the Mortgaged Property or any interest
in it, nor has any acknowledgement been given to any person in respect
of the Mortgaged Property; and
<PAGE>
(g) the Mortgaged Property is free from any Security Interest or any
tenancies or licences, except as permitted by both the Senior Credit
Agreement and the Junior Credit Agreement.
5.4 Intellectual Property Rights
(a) The Intellectual Property Rights owned by the Chargor are all of the
Intellectual Property Rights required by it in order for it to carry on its
business as it is now being conducted and the Chargor does not, insofar as
it is aware, in carrying on its business, infringe any Intellectual
Property Rights of any third party.
(b) The Intellectual Property Rights owned by the Chargor are free of any
Security Interests (save for those created by or pursuant to this Deed)
and, insofar as it is aware, any other rights or interests (including any
licences) in favour of third parties.
(c) To its knowledge, no Intellectual Property Right owned by the Chargor is
being infringed, nor is there any threatened infringement of any
Intellectual Property Right.
5.5 Times for making representations and warranties
The representations and warranties set out in this Clause 5 are made on the
date of this Deed and are deemed to be repeated by the Chargor on each date
on which representations and warranties are repeated under Clause 16.20 (c)
of the Senior Credit Agreement or Clause 16.20(c) of the Junior Credit
Agreement.
6. GENERAL UNDERTAKINGS
6.1 Duration
The undertakings in this Clause 6 remain in force throughout the Security
Period.
6.2 Restrictions on dealing
The Chargor shall not:-
(a) create or permit to subsist any Security Interest on any Security
Asset other than any Security Interest created by this Deed or as
permitted by the Senior Credit Agreement and (after the Senior
Discharge Date) the Junior Credit Agreement; or
(b) sell, transfer, grant any rights relating to, or lease or otherwise
dispose of any Security Asset (or any interest in any Security Asset),
except as permitted by the Senior Credit Agreement and (after the
Senior Discharge Date) the Junior Credit Agreement.
6.3 Book debts and receipts
The Chargor shall get in and realise the Chargor's:
(a) securities to the extent held by way of temporary investment;
(b) book and other debts and other moneys; and
<PAGE>
(c) royalties, fees and income of like nature in relation to any
Intellectual Property Right owned by it,
in the ordinary course of its business and hold the proceeds of the getting
in and realisation upon trust for the Security Trustee.
6.4 Relevant Agreements
The Chargor shall not amend or waive any provision of or terminate any
Relevant Agreement (except for amendments to Hedging Agreements permitted
by the Senior Credit Agreement and (after the Senior Discharge Date) the
Junior Credit Agreement) and shall duly and promptly perform its
obligations and diligently pursue its rights under any Relevant Agreement.
6.5 Deposit of Non-CREST Charged Shares
Subject (where relevant) to Clause 6.6 (CREST Charged Shares), the Chargor
shall forthwith:
(a) deposit with the Security Trustee, or as the Security Trustee may
direct, all certificates and other documents of title or evidence of
ownership in relation to the Charged Shares and their Related Rights;
and
(b) execute and deliver to the Security Trustee all share transfers and
other documents and take all other steps which may be requested by the
Security Trustee in order to enable the Security Trustee or its
nominees to be registered as the owner or otherwise obtain a legal
title to the Charged Shares and their Related Rights.
6.6 CREST Charged Shares
(a) On or before the Unconditional Date the Chargor shall give the following
irrevocable instructions, each in a form previously agreed by the Security
Trustee:
(i) an instruction to the Chargor's receiving agent in respect of any
Target Shares held within CREST to transfer such shares (A) to an
escrow account of the Chargor with CREST (the "Designated Escrow
Account") or (B) (if the Security Trustee requires) to an account of
the Security Trustee or its nominee with CREST nominated by the
Security Trustee; and
(ii) (if any Target Shares held within CREST are to be transferred to an
escrow account in accordance with paragraph (a)(i)(A) above) an
instruction to CREST identifying the Security Trustee (or, if the
Security Trustee requires, its nominee) as the Chargor's escrow agent
in respect of the Designated Escrow Account.
(b) Promptly after the acquisition by the Chargor of any Target Shares held
within CREST, the Chargor shall procure the conversion of such Target
Shares into certificated form and shall procure the deposit of all
certificates and other documents of title in respect of such Target Shares
in accordance with Clause 6.5(a) (Deposit of Non-CREST Charged Shares) and
shall take all the steps required by Clause 6.5(b) (Deposit of Non-CREST
Charged Shares) in relation to those Target Shares.
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(c) The Chargor shall promptly give such instructions to CREST or any other
relevant person and provide such documents as the Security Trustee may
require for perfecting the security intended to be created by this Deed
over Charged Shares held within CREST or to enable the Security Trustee or
its nominee to comply with all its obligations in respect of any such
Charged Shares and their Related Rights.
(d) The Chargor hereby provides to CREST the authorisations in relation to the
Charged Securities required by CREST under its standard terms of business
from time to time, acknowledges that the Security Trustee holds the
Chargor's rights in respect of the Charged Shares as trustee on behalf of
the Finance Parties and agrees that the Security Trustee may enforce such
rights as trustee for the Finance Parties.
6.7 Rights in Respect of the Charged Shares
Unless an Event of Default is subsisting:-
(a) the voting rights, powers and other rights in respect of the Charged
Shares:
(i) shall (if the Charged Shares are registered in the name of the
Security Trustee or its nominee) be exercised by it in any
manner (not being inconsistent with the provisions of the
Finance Documents) which the Chargor directs in writing; or
(ii) in any other case, shall be exercisable by the Chargor in any
manner (not being inconsistent with the Finance Documents); and
(b) all dividends, distributions, interest and other monies paid in
respect of the Charged Shares:
(i) which are received by the Security Trustee, shall be paid to the
Chargor as soon as is reasonably practicable; or
(ii) which are received by the Chargor, may be retained by the
Chargor.
If an Event of Default is subsisting, the Security Trustee may exercise all
voting rights, powers and other rights in respect of the Charged Shares to
the exclusion of the Chargor and the Security Trustee, may receive and
retain all dividends, distributions, interest and other moneys paid in
respect of the Charged Shares for application in or towards the Secured
Liabilities (and if the Chargor receives any of such dividends,
distributions, interest or other moneys, it shall hold them in trust for
the Security Trustee and forthwith pay them to the Security Trustee).
6.8 Intellectual PROPERTY RIGHTS
The Chargor shall:-
(a) make such registrations and pay such fees, registration taxes and
similar amounts as are necessary to keep its Intellectual Property
Rights in force;
(b) if requested to do so by the Security Trustee, make entries in any
public register of its Intellectual Property Rights which either
record the existence of this Deed or the restrictions on disposal
effected by this Deed;
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(c) take such steps as are necessary (including the institution of legal
proceedings) to prevent third parties infringing those Intellectual
Property Rights and (without prejudice to paragraph (a) above) take
all other steps which are reasonably practicable to maintain and
preserve its interests in them; and
(d) not, without the prior consent of the Security Trustee:-
(i) sell, transfer, license or otherwise dispose of all or any part
of those Intellectual Property Rights; or
(ii) permit any Intellectual Property Right which is registered to be
abandoned or cancelled, to lapse or to be liable to any claim of
abandonment for non-use or otherwise.
7. PROPERTY UNDERTAKINGS
7.1 Duration
The undertakings in this Clause 7 remain in force throughout the Security
Period.
7.2 Repair
The Chargor shall keep:-
(a) the Premises in good and substantial repair and condition and
adequately and properly painted and decorated; and
(b) the Fixtures and all plant, machinery, implements and other effects
owned by it and which are in or upon the Premises or elsewhere in a
good state of repair and in good working order and condition.
7.3 Insurance
(a) Except where the landlord of any leasehold property has actually insured
the property in accordance with the relevant lease, the Chargor shall
insure the Premises and all its other assets of an insurable nature in the
Premises against:-
(i) loss or damage by fire;
(ii) other risks normally insured against by persons carrying on the same
class of business as that carried on by it; and
(iii) any other risks which the Security Trustee may reasonably require.
Any such insurance must be in a sum or sums not less than the replacement
value of the Premises or other assets (meaning the total cost of entirely
rebuilding, reinstating or replacing the Premises and those other assets in
the event of their being completely destroyed together with architects' and
surveyors' fees). Any such insurance must be with an insurance company or
underwriters acceptable to the Security Trustee.
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(b) All moneys received or receivable under any insurance in respect of the
Premises or any other assets of an insurable nature in the Premises shall
be applied:-
(i) in replacing, restoring or reinstating the Premises or assets
destroyed or damaged or in any other manner which the Security
Trustee may agree; or
(ii) after an Event of Default has occurred, if the Security Trustee so
directs and the terms of the relevant insurances so permit, in or
towards satisfaction of the Secured Liabilities.
(c) The Chargor shall procure that a note of each Finance Party's interest is
endorsed upon all policies of insurance maintained by the Chargor or any
person on its behalf in accordance with paragraph (a) above and shall
obtain an undertaking in favour of the Security Trustee from the relevant
insurers not to cancel the policies or allow the policies to lapse without
giving 30 days prior written notice to the Security Trustee of its
intention to do so.
(d) The Chargor shall not do or permit anything to be done which may make void
or voidable any Insurance in connection with any part of the Mortgaged
Property.
(e) The Chargor shall promptly pay all premiums and do all other things
necessary to keep all of the Insurances in force.
(f) The Chargor shall, on demand by the Security Trustee, produce to the
Security Trustee the policy, certificate or cover note relating to any
Insurance and the receipt for the payment of any premium for an Insurance
as the Security Trustee may request.
7.4 Compliance with leases
The Chargor shall:-
(a) perform all the terms on its part contained in any lease or leases
comprised within the Mortgaged Property; and
(b) not do or permit to be done any act as a result of which any such
lease or leases may become liable to forfeiture or otherwise be
determined.
7.5 Acquisitions and legal mortgage
(a) The Chargor shall:-
(i) notify the Security Trustee forthwith upon the acquisition by the
Chargor of any freehold or leasehold property;
(ii) on demand made to the Chargor by the Security Trustee and at the cost
of the Chargor, execute and deliver to the Security Trustee a legal
mortgage in favour of the Security Trustee of any freehold or
leasehold property which becomes vested in it after the date of this
Deed in any form which the Security Trustee may require.
(b) In the case of any leasehold property in relation to which the consent of
the landlord in whom the reversion of that lease is vested is required in
order for the Chargor to perform its obligation under paragraph (a)(ii)
above, the Chargor shall not be required to perform that
<PAGE>
obligation unless and until it has obtained the landlord's consent (which
it shall use its reasonable endeavours to do).
7.6 Compliance with applicable laws and regulations
The Chargor shall perform all its obligations under any law or regulation
in any way related to or affecting any Security Asset.
7.7 Notices
The Chargor shall, within 14 days after the receipt by the Chargor of any
application, requirement, order or notice served or given by any public or
local or any other authority with respect to the Security Assets (or any
part of them):-
(a) give notice to the Security Trustee within seven days after demand;
(b) deliver a copy to the Security Trustee; and
(c) inform the Security Trustee of the steps taken or proposed to be taken
to comply with the relevant requirement.
7.8 Leases
Except as otherwise permitted by the Senior Credit Agreement and (after the
Senior Discharge Date) the Junior Credit Agreement, the Chargor shall not,
without the prior consent of the Security Trustee, grant or agree to grant
(whether in exercise or independently of any statutory power) any lease or
tenancy of the Mortgaged Property or any part of it or accept a surrender
of any lease or tenancy or confer upon any person any contractual licence
or right to occupy the Mortgaged Property.
7.9 H.M. Land Registry
The Chargor shall in respect of any freehold or leasehold property which is
acquired after the date of this Deed by the Chargor, the title to which is
registered at H.M. Land Registry or the title to which is required to be so
registered, give H.M. Land Registry written notice of this Deed and procure
that notice of this Deed is duly noted in the Register to each such title.
7.10 Deposit of title deeds
The Chargor shall deposit with the Security Trustee all deeds and documents
of title relating to the Mortgaged Property and all Local Land Charges,
Land Charges and Land Registry Search Certificates and similar documents
received by or on behalf of the Chargor not more than three months prior to
the date of this Deed. The Security Trustee is entitled to hold the above
deeds and documents during the Security Period.
7.11 Access
The Chargor shall permit the Security Trustee and any person nominated by
it at all reasonable times to enter upon any part of the Mortgaged Property
and view the state of it.
<PAGE>
7.12 Investigation of title
The Chargor shall grant the Security Trustee or its lawyers on request all
facilities within the power of the Chargor to enable the Security Trustee
or its lawyers to carry out investigations of title to the Mortgaged
Property and other property which is or may be subject to this security
and enquiries into matters in connection with the Mortgaged Property or
that other property as may be carried out by a prudent mortgagee. Any such
investigations and enquiries shall be at the expense of the Chargor.
7.13 Licensed Business
The Chargor shall:
(i) continue the licensed business (if any) carried on from the Mortgaged
Property in a proper and businesslike manner;
(ii) not suffer to be done anything whereby any material licenses held in
connection with the said business may be forfeited or revoked;
(iii) as and when the said material licences shall become renewable, apply
for renewal thereof, and use its reasonable endeavours to have the
same renewed; and
(iv) in the event of the Security Trustee entering into possession of, or
selling the Mortgaged Property, or any part thereof, by virtue of the
powers herein contained or in any other Security Document, assist the
Security Trustee or its nominees, or the purchaser in applying for a
protection order, transfer or renewal of the said licences in respect
of the Mortgaged Property or appropriate part thereof.
7.14 Report on title
The Chargor shall, forthwith on demand by the Security Trustee, provide the
Security Trustee with a report as to the title of the Chargor to the
Mortgaged Property and other property which is or may be subject to this
security and related matters concerning those items which may properly be
sought to be covered by a prudent mortgagee in a lawyer's report of this
nature and, where applicable, in a similar format to the agreed form of
Certificate of Title.
7.15 Power to remedy
In case of default by the Chargor in performing any term affecting the
Mortgaged Property, the Chargor shall permit the Security Trustee or its
agents and contractors:-
(a) to enter on the Mortgaged Property; and
(b) to comply with or object to any notice served on the Chargor in
respect of the Mortgaged Property; and
(c) to take any action as the Security Trustee may reasonably consider
necessary or desirable to prevent or remedy any breach of any such
term or to comply with or object to any such notice.
<PAGE>
8. SECURITY ACCOUNTS
8.1 Accounts
All Security Accounts must be maintained at a branch of the Account Bank
approved by the Security Trustee.
8.2 Change of Account Bank
(a) The Account Bank may be changed to another bank or financial institution,
with the prior written consent of the Security Trustee.
(b) A change only becomes effective upon the proposed new Account Bank agreeing
with the Security Trustee and the Chargor, in a manner satisfactory to the
Security Trustee, to fulfil the role of the Account Bank under this Deed.
(c) In the event of a change of Account Bank, the amount (if any) standing to
the credit of the Security Accounts maintained with the old Account Bank
shall be transferred to the corresponding Security Accounts maintained with
the new Account Bank forthwith upon the appointment taking effect. The
Chargor shall take any action which the Security Trustee may require to
facilitate a change of Account Bank and any transfer of credit balances
(including the execution of bank mandate forms).
8.3 Notices to Account Bank
(a) Forthwith upon the FF&E Account being opened, the Chargor shall give the
Account Bank a notice in the form of Part I of Schedule 4 and shall use all
reasonable endeavours to ensure that the Account Bank acknowledges that
notice in the form set out in Part II of Schedule 4.
(b) Forthwith upon the Savoy Debenture Stock Reserve Account being opened, the
Chargor shall give the Account Bank a notice in the form of Part I of
Schedule 4 and shall use all reasonable endeavours to ensure that the
Account Bank acknowledges that notice in the form set out in Part II of
Schedule 4.
(c) The Chargor shall notify the Security Trustee forthwith when the FF&E
Account and the Savoy Debenture Stock Reserve Account are opened.
8.4 WITHDRAWALS
(a) Subject to paragraph (b) below, except with the prior consent of the
Security Trustee, the Chargor shall not withdraw any moneys standing to the
credit of a Security Account.
(b) The Charger may withdraw amounts from the FF&E Account as permitted under
Clause 17.24 (b) (Accounts) of the Senior Credit Agreement or (after the
Senior Discharge Date) Clause 17.24(b) (Accounts) of the Junior Credit
Agreement. If an Event of Default is subsisting, the Security Trustee may
give notice to the Account Bank terminating the Chargor's withdrawal rights
on the FF&E Account.
(c) The Security Trustee (or a Receiver) may (subject to the payment of any
claims having priority to this security) withdraw amounts standing to the
credit of a Security Account to meet an amount due and payable under the
Finance Documents when it is due and payable.
<PAGE>
9. WHEN SECURITY BECOMES ENFORCEABLE
The security constituted by this Deed shall become immediately enforceable
upon the occurrence of an Event of Default and the power of sale and other
powers conferred by Section 101 of the Act, as varied or amended by this
Deed, shall be immediately exercisable upon and at any time after the
occurrence of any Event of Default. After the security constituted by this
Deed has become enforceable, the Security Trustee may in its absolute
discretion enforce all or any part of the security in any manner it sees
fit or as the Majority Banks direct.
10. ENFORCEMENT OF SECURITY
10.1 General
For the purposes of all powers implied by statute, the Secured Liabilities
are deemed to have become due and payable on the date of this Deed and
Section 103 of the Act (restricting the power of sale) and Section 93 of
the Act (restricting the right of consolidation) do not apply to the
security constituted by this Deed. The statutory powers of leasing
conferred on the Security Trustee are extended so as to authorise the
Security Trustee to lease, make agreements for leases, accept surrenders
of leases and grant options as the Security Trustee may think fit and
without the need to comply with any provision of section 99 or 100 of the
Act.
10.2 Charged Shares
After the security constituted by this Deed has become enforceable, the
Security Trustee may exercise (in the name of the Chargor and without any
further consent or authority on the part of the Chargor) any voting rights
and any powers or rights which may be exercised by the person or persons
in whose name any Charged Share and its Related Rights are registered or
who is the holder of any of them or otherwise (including all the powers
given to trustees by Section 10(3) and (4) of the Trustee Act, 1925 as
amended by Section 9 of the Trustee Investment Act, 1961 in respect of
securities or property subject to a trust).
10.3 Contingencies
If the Security Trustee enforces the security constituted by this Deed at
a time when no amounts are due under the Finance Documents but at a time
when amounts may or will become so due, the Security Trustee (or the
Receiver) may pay the proceeds of any recoveries effected by it into a
Security Account.
10.4 No liability as mortgagee in possession
Neither the Security Trustee nor any Receiver will be liable, by reason of
entering into possession of a Security Asset, to account as mortgagee in
possession or for any loss on realisation or for any default or omission
for which a mortgagee in possession might be liable.
10.5 Agent of the Chargor
Each Receiver is deemed to be the agent of the Chargor for all purposes
and accordingly is deemed to be in the same position as a Receiver duly
appointed by a mortgagee under the Act. The Chargor alone shall be
responsible for his contracts, engagements, acts, omissions,
<PAGE>
defaults and losses and for liabilities incurred by him and no Finance
Party shall incur any liability (either to the Chargor or to any other
person) by reason of the Security Trustee making his appointment as a
Receiver or for any other reason.
10.6 Privileges
Each Receiver and the Security Trustee is entitled to all the rights,
powers, privileges and immunities conferred by the Act on mortgagees and
receivers when such receivers have been duly appointed under the Act,
except that Section 103 of the Act does not apply.
10.7 Protection of third parties
No person (including a purchaser) dealing with the Security Trustee or a
Receiver or its or his agents will be concerned to enquire:-
(a) whether the Secured Liabilities have become payable; or
(b) whether any power which the Security Trustee or the Receiver is
purporting to exercise has become exercisable; or
(c) whether any money remains due under the Finance Documents; or
(d) how any money paid to the Security Trustee or to the Receiver is to
be applied.
10.8 Redemption of prior Mortgages
At any time after the security constituted by this Deed has become
enforceable, the Security Trustee may:-
(a) redeem any prior Security Interest against any Security Asset; and/or
(b) procure the transfer of that Security Interest to itself; and/or
(c) settle and pass the accounts of the prior mortgagee, chargee or
encumbrancer; any accounts so settled and passed shall be conclusive
and binding on the Chargor.
All principal moneys, interest, costs, charges and expenses of and
incidental to any such redemption and/or transfer shall be paid by the
Chargor to the Security Trustee on demand.
11. RECEIVER
11.1 Appointment of Receiver
At any time after the security constituted by this Deed becomes
enforceable or, if the Chargor so requests the Security Trustee in
writing, at any time, the Security Trustee may without further notice
appoint by deed, under seal or in writing under its hand any one or more
persons to be a Receiver of all or any part of the Security Assets in like
manner in every respect as if the Security Trustee had become entitled
under the Act to exercise the power of sale conferred under the Act.
<PAGE>
11.2 Removal
The Security Trustee may by writing under its hand (subject to any
requirement for an order of the court in the case of an administrative
receiver) remove any Receiver appointed by it and may, whenever it deems
it expedient, appoint a new Receiver in the place of any Receiver whose
appointment may for any reason have terminated.
11.3 Remuneration
The Security Trustee may fix the remuneration of any Receiver appointed by
it.
11.4 Relationship with security Trustee
To the fullest extent permitted by law, any right, power or discretion
conferred by this Deed (either expressly or impliedly) upon a Receiver of
the Security Assets may after the security created by this Deed becomes
enforceable be exercised by the Security Trustee in relation to any
Security Asset without first appointing a Receiver or notwithstanding the
appointment of a Receiver.
12. POWERS OF RECEIVER
12.1 GENERAL
(a) Each Receiver has, and is entitled to exercise, all of the rights, powers
and discretions set out below in this Clause 12 in addition to those
conferred by the Act on any receiver appointed under the Act.
(b) If there is more than one Receiver holding office at the same time, each
Receiver may (unless the document appointing him states otherwise)
exercise all of the powers conferred on a Receiver under this Deed
individually and to the exclusion of any other Receivers.
(c) Each Receiver has all the rights, powers and discretions set out in
Schedule 1 to the Insolvency Act, 1986.
(d) A Receiver who is an administrative receiver of the Chargor has all the
rights, powers and discretions of an administrative receiver under the
Insolvency Act 1986.
12.2 Possession
A Receiver may take immediate possession of, get in and collect any
Security Assets.
12.3 Carry on business
A Receiver may carry on the business of the Chargor as he thinks fit.
12.4 Protection of assets
A Receiver may:-
(a) make and effect all repairs and insurances and do all other acts
which the Chargor might do in the ordinary conduct of its business as
well for the protection as for the improvement of the Security
Assets;
<PAGE>
(b) commence and/or complete any building operations on the Mortgaged
Property; and
(c) apply for and maintain any planning permission, building regulation
approval or any other permission, consent or licence,
in each case as he may think fit.
12.5 Employees
A Receiver may appoint and discharge managers, officers, agents,
accountants, servants, workmen and others for the purposes of this Deed
upon such terms as to remuneration or otherwise as he may think proper and
discharge any such persons appointed by the Chargor.
12.6 Borrow money
A Receiver may raise and borrow money either unsecured or on the security
of any Security Asset either in priority to the security constituted by
this Deed or otherwise and generally on any terms and for whatever purpose
which he thinks fit. No person lending that money is concerned to enquire
as to the propriety or purpose of the exercise of that power or to check
the application of any money so raised or borrowed.
12.7 Sale of assets
A Receiver may sell, exchange, convert into money and realise any Security
Asset by public auction or private contract and generally in any manner
and on any terms which he thinks proper. The consideration for any such
transaction may consist of cash, debentures or other obligations, shares,
stock or other valuable consideration and any such consideration may be
payable in a lump sum or by instalments spread over such period as he
thinks fit. Fixtures, other than landlords fixtures, may be severed and
sold separately from the property containing them without the consent of
the Chargor.
12.8 Leases
A Receiver may let any Security Asset for any term and at any rent (with
or without a premium) which he thinks proper and may accept a surrender of
any lease or tenancy of any Security Asset on any terms which he thinks
fit (including the payment of money to a lessee or tenant on a surrender).
12.9 Compromise
A Receiver may settle, adjust, refer to arbitration, compromise and
arrange any claims, accounts, disputes, questions and demands with or by
any person who is or claims to be a creditor of the Chargor or relating in
any way to any Security Asset.
12.10 Legal Actions
A Receiver may bring, prosecute, enforce, defend and abandon all actions,
suits and proceedings in relation to any Security Asset which may seem to
him to be expedient.
<PAGE>
12.11 Receipts
A Receiver may give valid receipts for all moneys and execute all
assurances and things which may be proper or desirable for realising any
Security Asset.
12.12 Subsidiaries
A Receiver may form a Subsidiary of the Chargor and transfer to that
Subsidiary any Security Asset.
12.13 Delegation
A Receiver may delegate his powers in accordance with Clause 15
(Delegation).
12.14 Other powers
A Receiver may:-
(a) do all other acts and things which he may consider desirable or
necessary for realising any Security Asset or incidental or
conducive to any of the rights, powers or discretions conferred on a
Receiver under or by virtue of this Deed; and
(b) exercise in relation to any Security Asset all the powers,
authorities and things which he would be capable of exercising if he
were the absolute beneficial owner of the same,
and may use the name of the Chargor for any of the above purposes.
13. APPLICATION OF PROCEEDS
Any moneys received by the Security Trustee or any Receiver after the
security constituted by this Deed has become enforceable shall be applied
in the following order of priority (but without prejudice to the right of
any Finance Party to recover any shortfall from the Chargor):
(a) in satisfaction of or provision for all costs and expenses incurred by
the Security Trustee or any Receiver and of all remuneration due to
the Receiver under this Deed;
(b) in or towards payment of the Secured Liabilities or such part of them
as is then due and payable; and
(c) in payment of the surplus (if any) to the Chargor or other person
entitled to it.
14. EXPENSES AND INDEMNITY
The Chargor shall forthwith on demand pay all costs and expenses (including
legal fees) properly incurred in connection with this Deed by any Finance
Party, Receiver, attorney, manager, agent or other person appointed by the
Security Trustee under this Deed, and keep each of them indemnified against
any failure or delay in paying the same (including any arising from any
actual or alleged breach by any person of any Environmental Law).
<PAGE>
15. DELEGATION
The Security Trustee and any Receiver may delegate by power of attorney or
in any other manner to any person any right, power or discretion
exercisable by them under this Deed. Any such delegation may be made upon
the terms (including power to sub-delegate) and subject to any regulations
which the Security Trustee or such Receiver (as the case may be) may think
fit. Neither the Security Trustee nor any Receiver will be in any way
liable or responsible to the Chargor for any loss or liability arising from
any act, default, omission or misconduct on the part of any such delegate
or sub-delegate which is selected by the Security Trustee with reasonable
care.
16. FURTHER ASSURANCES
The Chargor shall, at its own expense, take whatever action the Security
Trustee or a Receiver may require for:-
(a) perfecting or protecting the security intended to be created by this
Deed over any Security Asset;
(b) facilitating the realisation of any Security Asset or the exercise of
any right, power or discretion exercisable, by the Security Trustee or
any Receiver or any of its or their delegates or sub-delegates in
respect of any Security Asset,
including the execution of any transfer, conveyance, assignment or
assurance of any property whether to the Security Trustee or to its
nominees, and the giving of any notice, order or direction and the making
of any registration, which in any such case, the Security Trustee may
think expedient.
17. POWER OF ATTORNEY
The Chargor, by way of security, irrevocably and severally appoints the
Security Trustee, each Receiver and any of their delegates or sub-
delegates to be its attorney to take any action at any time that the
Chargor is in default of its obligations to take any such action which the
Chargor is obliged to take under this Deed, including under Clause 16
(Further Assurances). The Chargor ratifies and confirms whatever any
attorney does or purports to do pursuant to its appointment under this
Clause.
18. MISCELLANEOUS
18.1 Covenant to pay
The Chargor shall pay or discharge the Secured Liabilities in the manner
provided for in the Finance Documents.
18.2 Continuing security
The security constituted by this Deed is continuing and will extend to the
ultimate balance of all the Secured Liabilities, regardless of any
intermediate payment or discharge in whole or in part.
<PAGE>
18.3 ADDITIONAL SECURITY
The security constituted by this Deed is in addition to and is not in any
way prejudiced by any other security now or subsequently held by any
Finance Party for any Secured Liability.
18.4 Tacking
Each Bank shall perform its obligations under the Senior Credit Agreement
or, as the case may be, the Junior Credit Agreement (including any
obligation to make available further advances).
18.5 New Accounts
If a Finance Party receives, or is deemed to be affected by, notice,
whether actual or constructive, of any subsequent charge or other interest
affecting any Security Asset and/or the proceeds of sale of any Security
Asset, the Finance Party may open a new account with the Chargor. If the
Finance Party does not open a new account, it shall nevertheless be
treated as if it had done so at the time when it received or was deemed to
have received notice. As from that time all payments made to the Finance
Party will be credited or be treated as having been credited to the new
account and will not operate to reduce any amount for which this Deed is
security.
18.6 Time deposits
Without prejudice to any right of set-off any Finance Party may have under
any other Finance Document or otherwise, if any time deposit matures on
any account the Chargor has with any Finance Party at a time within the
Security Period when:
(a) this security has become enforceable; and
(b) no amount of the Secured Liabilities is due and payable,
that time deposit shall automatically be renewed for any further maturity
which that Finance Party considers appropriate.
18.7 Notice of assignment
This Deed constitutes notice in writing to the Chargor of any charge or
assignment of a debt owed by the Chargor to any other member of the Group
contained in any other Security Document.
18.8 H.M. LAND REGISTRY
The Chargor applies to the Chief Land Registrar for the following to be
entered on the Register of Title relating to any property registered at HM
Land Registry and against which this Deed may be noted:-
(a) A restriction in the following terms:
"Except under an order of the Registrar, no disposition or dealing by
the proprietor of the land is to be registered without the consent of
the proprietor for the time being of
<PAGE>
the Deed dated 7th April, 1998 between Blackstone Hotel Acquisitions
Company and Bankers Trust Company".
(b) A note in the following terms:
"The Banks under a senior mortgage loan facility agreement dated 7th
April, 1998 between Blackstone Hotel Acquisitions Company (1) Merrill
Lynch International (2) the Banks as therein defined (3) and the
Agent and Security Agent as therein defined (4) (as amended by an
agreement dated 30th, April, 1998) and the Banks under a Junior
Credit Facility Agreement dated 30th April, 1998 between Blackstone
Hotel Acquisitions Company (1) Merrill Lynch International (2) the
Banks as therein defined (3) and the Agent and Security Trustee as
therein defined (4) are under an obligation to the Chargor to make
further advances and this Deed secures those further advances."
19. RELEASE
Upon the expiry of the Security Period (but not otherwise), the Finance
Parties shall, at the request and cost of the Chargor, take whatever action
is necessary to release the Security Assets from the security constituted
by this Deed.
20. GOVERNING LAW
This Deed is governed by English law.
This Deed has been entered into as a deed on the date stated at the beginning of
this Deed.
<PAGE>
SCHEDULE 1
REAL PROPERTY
None known at the date of this Deed
SCHEDULE 2
SPECIFIC PATENTS AND TRADEMARKS
None known at the date of this Deed
SCHEDULE 3
RELEVANT AGREEMENTS
1. Each Hedging Agreement
2. Each undertaking provided to the Chargor by a shareholder in the Target
agreeing to accept an Offer.
<PAGE>
SCHEDULE 4
FORM OF LETTCERS TO THE ACCOUNT BANK
PART I
FORM OF NOTICE TO THE ACCOUNT BANK
[On the letterhead of the Chargor]
To: [ Account Bank ]
[DATE]
Dear Sirs,
DEBENTURE ("DEBENTURE") DATED 7TH APRIL, 1998 BETWEEN BLACKSTONE HOTEL
ACQUISITIONS COMPANY AND BANKERS TRUST COMPANY
This letter constitutes notice to you that, by the Debenture (a copy of which is
attached), we have charged (by way of a first fixed charge) to Bankers Trust
Company (the "SECURITY TRUSTEE") all moneys standing to the credit of Account
number [ ] with us designated [ ] (the "ACCOUNT") and the debts
represented by it.
We irrevocably instruct and authorise you to:
(a) (i) disclose to the Security Trustee on request to you by the Security
Trustee any information relating to the Account; and
(ii) comply with the terms of any written notice or instructions relating
to the Debenture or moneys standing to the credit of any Account and
the debts represented by it, received by you from the Security
Trustee,
without any reference to or further authority from us and without any
enquiry by you as to the justification for the disclosure or, as the case
may be, validity of the notice or instructions;
(b) hold all sums from time to time standing to the credit of the Account to
the order of the Security Trustee; and
(c) pay or release all or any part of the moneys standing to the credit of the
Account in accordance with the written instructions of the Security
Trustee.
We are not permitted to withdraw any amount from any of the Accounts maintained
with you without the prior written consent of the Security Trustee [if the
Security Trustee notifies you that our withdrawal rights on the Account have
been terminated./1/]
The instructions in this letter may not be revoked or amended without the prior
written consent of the Security Trustee.
This letter is governed by English law.
___________________________
/1/ Only for FF&E Account.
<PAGE>
Please confirm your agreement to the above by sending the attached
acknowledgement to the Security Trustee with a copy to ourselves.
Yours faithfully,
.................................................
(Authorised Signatory)
Blackstone Hotel Acquisitions Company
<PAGE>
PART II
FORM OF ACKNOWLEDGEMENT OF THE ACCOUNT BANK
[ON THE LETTERHEAD OF THE ACCOUNT BANK]
To: Bankers Trust Company
as Security Trustee
[DATE]
Dear Sirs,
DEBENTURE ("DEBENTURE") DATED 7TH APRIL, 1998 BETWEEN BLACKSTONE HOTEL
ACQUISITIONS COMPANY AND BANKERS TRUST COMPANY
We confirm receipt from Blackstone Hotel Acquisitions Company (the "COMPANY") of
a notice dated [ ] of a charge upon the terms of the Debenture
over all moneys standing to the credit of the Company's account number [ ]
with us designated [ ] (the "ACCOUNT") and the debts represented by
it.
We confirm that we:
(a) accept the instructions contained in the notice and undertake to comply
with the notice;
(b) have not received notice of the interest of any third party in the Account;
(c) have neither claimed or exercised nor will claim or exercise any security
interest, set-off, counter-claim or other right in respect of the Account,
the moneys in the Account or the debts represented by it; and
(d) shall not permit any amount to be withdrawn from the Account without your
prior written consent [if you have notified us that the Company's
withdrawal rights on the Account have been terminated./1/]
This letter is governed by English law.
Yours faithfully,
.................................................
(Authorised signatory)
[Account Bank
_____________________________
/1/ Only for FF&E Account.
<PAGE>
SIGNATORIES
EXECUTED as a deed by )
BLACKSTONE HOTEL )
ACQUISITIONS COMPANY )
acting by: )
)
Director JONATHAN GRAY
Director/Secretary JOHN B. CERIALE
The Security Trustee
BANKERS TRUST COMPANY DERMOT MURPHY
By:
<PAGE>
EXHIBIT 10.4
NOVATION CERTIFICATE
BLACKSTONE HOTEL ACQUISITIONS COMPANY
(Pounds)100,600,000
JUNIOR MORTGAGE LOAN FACILITY
DATED 30TH APRIL, 1998 (AS AMENDED)
ALLEN & OVERY
LONDON
<PAGE>
NOVATION CERTIFICATE
To: Bankers Trust Company as Junior Agent
From: The banks and financial institutions
listed in the Schedule
18th August, 1998
BLACKSTONE HOTEL ACQUISITIONS COMPANY: (Pounds)100,600,000 JUNIOR MORTGAGE LOAN
FACILITY DATED 30TH APRIL, 1998 (AS AMENDED) (THE "FACILITY AGREEMENT")
We refer to Clause 27.3 (Procedure for novations). Terms defined in the
Facility Agreement have the same meaning in this Novation Certificate.
1. We, Merrill Lynch Mortgage Capital Inc. (the "EXISTING JUNIOR LENDER") and
each bank and financial institution (other than the Existing Junior Lender)
listed in the Schedule (each a "NEW JUNIOR LENDER") agree to:
(a) the Existing Junior Lender and each New Junior Lender novating certain
of the Existing Junior Lender's rights and obligations in accordance
with Clause 27.3 (Procedure for novations) so that (for the purposes
of Clause 27.3(c)) with effect on and after 18th August, 1998, the
Commitments of the Existing Junior Lender and each New Junior Lender
will be as set out in the Schedule and a corresponding portion of each
outstanding Advance will be novated to each New Junior Lender; and
(b) each New Junior Lender becoming a party to the Intercreditor Agreement
as a Junior Creditor,
all in accordance with Clause 27.3 (Procedure for novations).
2. The specified date for the purposes of Clause 27.3(c) (Procedure for
novations) is 19th August, 1998.
3. The Facility Office and address for notices of each New Junior Lender for
the purposes of Clause 33 (Notices) are as set out herein.
4. The Junior Agent confirms its approval of the form of this certificate for
the purposes of Clause 27.3(a)(i) of the Facility Agreement.
5. This Novation Certificate 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 this Novation Certificate.
<PAGE>
6. This Novation Certificate is governed by English law.
SCHEDULE
JUNIOR LENDER COMMITMENT
Existing Junior Lender
Merrill Lynch Mortgage Capital Inc. (Pounds) 42,590,000
NEW JUNIOR LENDERS
Anthracite Capital, Inc. (Pounds) 21,470,000
Chastain Capital Corporation (Pounds) 11,980,000
BankBoston, N.A. (Pounds) 7,780,000
ING Bank (London Branch) (Pounds) 8,390,000
Bank of America National Trust & Savings Association (Pounds) 8,390,000
-------------------
TOTAL (Pounds)100,600,000
===================
<PAGE>
SIGNATORIES
AGENT
BANKERS TRUST COMPANY
By:
EXISTING JUNIOR LENDER
MERRILL LYNCH MORTGAGE CAPITAL INC
By:
NEW JUNIOR LENDER
ANTHRACITE CAPITAL, INC.
By:
Address for notices: 345 Park Avenue
New York
NY 10154
Attention: Richard Shea
Fax number: 001 212 754 5397
CHASTAIN CAPITAL CORPORATION
By:
Address for notices: 3424 Peachtree Road
Suite 800
Atlanta
GA 30326
Attention: Robert Stammers
Fax number: 001 212 808 3632
BANKBOSTON, N.A.
By:
Address for notices: 100 Federal Street
Mailstop: 01-32-05
Boston
MA 02110
<PAGE>
Attention: Debra Johnston
Fax number: 001 617 434 1337
ING BANK (LONDON BRANCH)
By:
Address for notices: ING Barings
60 London Wall
London EC2M 5TQ
Attention: Michaela Edmonds/Philip Large
Fax number: 0171 767 7318
BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION
By:
Address for notices: 231 LaSalle Street
Suite 19J
Chicago
IL 60697
Attention: Katherine Gnapp
Fax number: 001 312 974 0871
