SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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MAY 21, 1999
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
NIAGARA CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-22206 59-3182820
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(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
667 MADISON AVENUE
NEW YORK, NEW YORK
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
10021
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(ZIP CODE)
(212) 317-1000
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED
SINCE LAST REPORT)
ITEM 5. ACQUISITION OR DISPOSITION OF ASSETS.
On May 21, 1999, pursuant to a Sale of Business Agreement dated
April 16, 1999 among Niagara Corporation, a Delaware corporation
("Niagara"), Niagara LaSalle (UK) Limited, an English company and a wholly
owned subsidiary of Niagara ("Niagara UK"), Glynwed International Plc, an
English company ("Glynwed"), and Glynwed Steels Limited, an English
company and a subsidiary of Glynwed ("Glynwed Steels"), Niagara UK
purchased from Glynwed Steels the equipment, inventory and certain other
assets of Glynwed's steel bar division (the "Division") for pound
sterling21,202,000 (approximately $34 million), subject to a post closing
adjustment based upon the value of the net assets transferred. A copy of
the press release announcing the consummation of this acquisition is
attached hereto as Exhibit 99.1.
The purchase of the Division was financed in part pursuant to a
bank facilities agreement (the "Facilities Agreement") entered into on May
21, 1999 between National Westminster Bank Plc ("National Westminster")
and Niagara UK. The Facilities Agreement provides for a pound sterling10
million (approximately $16 million) seven-year term loan and a pound
sterling9.8 million (approximately $15.7 million) three-year revolving
credit facility. A copy of the Facilities Agreement is attached hereto as
Exhibit 4.1. The obligations of Niagara UK under the Facilities Agreement
are secured by standby letters of credit issued by Manufacturers and
Traders Trust Company ("M&T") to National Westminster (the "Letters of
Credit") and substantially all of the assets of Niagara UK (for the
benefit of M&T). Niagara UK's agreement to reimburse M&T for drawdowns
under the Letters of Credit is guaranteed by Niagara and its subsidiaries,
Niagara LaSalle Corporation ("Niagara LaSalle") and LaSalle Steel Company
("LaSalle"), which guarantys are secured by substantially all of the
assets of Niagara LaSalle and LaSalle.
Principal of the term loan under the Facilities Agreement
amortizes in monthly installments commencing on May 31, 2000 and ending on
April 30, 2006. The principal repayment installments on the term loan
escalate throughout its term. Revolving credit loans made pursuant to the
Facilities Agreement are based upon a percentage of eligible accounts
receivable and inventory and will mature on May 21, 2002. Interest on the
term and revolving credit loans accrue at the LIBOR rate (for periods
specified by Niagara UK from time to time) plus 15 basis points and is
payable at the conclusion of such interest periods.
The Facilities Agreement carries restrictions on, among other
things, security interests, borrowed money, asset dispositions, dividends,
transactions with affiliates, capital expenditures, changes in control and
mergers and acquisitions. Also included in this agreement are requirements
regarding tangible net worth, the ratio of profit before interest and
taxes to interest and the ratio of current assets to current liabilities.
The purchase of the Division was also financed pursuant to (i) a
pound sterling3.75 million (approximately $6 million) equity investment
(the "Equity Investment") by Niagara in Niagara UK in the form of a
subscription for 3,750,000 ordinary shares of Niagara UK, par value pound
sterling1 per share (the "Niagara UK Shares"), (ii) a pound sterling3.75
million (approximately $6 million) subordinated loan from Niagara to
Niagara UK which accrues interest at 7.5% (the "Subordinated Loan") and
(iii) a pound sterling2.5 million (approximately $4 million) non-interest
bearing short-term loan from Niagara to Niagara UK (the "Short-Term
Loan").
In connection with the execution of the Facilities Agreement,
Niagara, Niagara UK and National Westminster entered into an intercreditor
agreement dated May 21, 1999 (the "Intercreditor Agreement") which, among
other things (i) restricts the payment of dividends in respect of the
Niagara UK Shares, (ii) prohibits the repayment of the Subordinated Loan
until after the discharge of all of Niagara UK's liabilities under the
Facilities Agreement and (iii) permits the repayment of the Short-Term
Loan upon demand unless payments of principal or interest under the
Facilities Agreement are owing, certain financial covenants in the
Facilities Agreement have not been met or an event of default under the
Facilities Agreement has occurred and is continuing. A copy of the
Intercreditor Agreement is attached hereto as Exhibit 4.2.
The Equity Investment, the Subordinated Loan and the Short-Term
Loan were financed by borrowings under a revolving credit and term loan
agreement dated April 18, 1997, as amended, among Niagara LaSalle,
LaSalle, M&T, CIBC Inc., National City Bank, National Bank of Canada and
the Prudential Insurance Company of America (the "US Credit Agreement").
In connection with the purchase of the Division, the US Credit Agreement
was amended, among other things, to permit Niagara LaSalle and LaSalle to
guaranty Niagara UK's obligations to reimburse M&T for drawdowns under the
Letters of Credit secured by substantially all of the assets of Niagara
LaSalle and LaSalle on a second priority basis. In addition, Niagara UK
guaranteed the obligations of Niagara LaSalle and LaSalle under the US
Credit Agreement. A copy of this amendement to the US Credit Agreement is
attached hereto as Exhibit 4.3.
Proceeds of the loans under the Facilities Agreement, the
Subordinated Loan and the Short-Term Loan, together with the Equity
Investment, were used to consummate the acquisition of the Division
(including costs) and will also be available for working capital purposes
of Niagara UK.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The required financial statements are not yet available and will
be filed as an amendment to this Form 8-K not later than August 4, 1999.
(b) Pro Forma Financial Information.
The required pro forma financial information is not yet
available and will be filed as an amendment to this Form 8-K not later
than August 4, 1999.
(c) Exhibits.
4.1 Bank Facilities Agreement, dated May 21, 1999, between National
Westminster Bank Plc and Niagara LaSalle (UK) Limited.
4.2 Intercreditor Agreement, dated May 21, 1999, between National
Westminster Bank Plc, Niagara Corporation and Niagara LaSalle
(UK) Limited.
4.3 Fifth Amendment to Revolving Credit and Term Loan Agreement,
dated as of April 18, 1997, by and among Niagara LaSalle
Corporation, LaSalle Steel Company, Manufacturers and Traders
Trust Company (individually and as agent), CIBC Inc. and
National City Bank, effective as of May 21, 1999.
99.1 Press Release dated May 21, 1999.
SIGNATURE
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.
NIAGARA CORPORATION
By:/s/ Marc J. Segalman
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Name: Marc J. Segalman
Title: Vice President
Date: June 4, 1999
EXHIBIT INDEX
Exhibit No. Description Page No.
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4.1 Bank Facilities Agreement, dated May 21,
1999, between National Westminster Bank
Plc and Niagara LaSalle (UK) Limited.
4.2 Intercreditor Agreement, dated May 21,
1999, between National Westminster Bank
Plc, Niagara Corporation and Niagara
LaSalle (UK) Limited.
4.3 Fifth Amendment to Revolving Credit and
Term Loan Agreement, dated as of April 18,
1997, by and among Niagara LaSalle
Corporation, LaSalle Steel Company,
Manufacturers and Traders Trust Company
(individually and as agent), CIBC Inc. and
National City Bank, effective as of May
21, 1999.
99.1 Press Release dated May 21, 1999.
EXHIBIT 4.1
Dated 21 May 1999
NATIONAL WESTMINSTER BANK PLC (1)
NIAGARA LASALLE (UK) LIMITED (2)
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BANK FACILITIES AGREEMENT
=========================================
Eversheds
115 Colmore Row
Birmingham
B3 3AL
BIRCORP/::ODMA\PCDOCS\NYCSRO2A\286231\1
Ref : PAJ/RHH/B01507-03067
CONTENTS
CLAUSE PAGE
1. Definition 1
2. Facilities 30
3. Purpose 31
4. Conditions Precedent 34
5. Time for Drawdown 37
6. Interest Periods & Interest 38
7. Repayments and Prepayments 40
8. Warranties 43
9. Undertakings 49
10. Events of Default 63
11. Payments 69
12. Fees and Costs 70
13. Indemnities 71
14. Taxes 72
15. Increased Costs 72
16. Illegality 73
17. Set-off 73
18. Assignment 74
19. Severance 75
20. Counterparts 75
21. Market Disruption 75
22. European Economic and Monetary Union 76
23. Law & Jurisdiction 76
24. Notices 77
25. Waivers 78
SCHEDULES
First Drawdown Notices
Second Certificate of Compliance
Third Eligible Receivables & Eligible Stock Certificate
Fourth Additional Costs Rate
Fifth Environmental Matters
A FACILITIES AGREEMENT made the 21st day of May 1999
BETWEEN
(1) NATIONAL WESTMINSTER BANK PLC acting through its office at PO Box
4641, 103 Colmore Row, Birmingham B3 3NR ("the Bank"); and
(2) NIAGARA LASALLE (UK) LIMITED (registered in England under number
3725308 and whose registered office is situate at Victoria Steel
Works, Bull Lane, Moxley, Wednesbury, West Midlands, WS10 8RS (the
"Borrower");
WHEREAS the Bank has agreed to make available to the Borrower the
Facilities upon and subject to the terms and conditions of this Agreement.
NOW IT IS AGREED as follows:-
1. DEFINITIONS
1.1 In this Agreement the following words and expressions shall,
unless stated otherwise, have the meanings set opposite them:-
"Account Debtor" means a debtor of the Borrower in respect of a
Receivable;
"Accounting Quarter" means in respect of each accounting reference
period of the Borrower each of the periods
(comprising 3 consecutive months) ending on or
about 31st March, 30th June, 30th September and
31st December in each accounting reference
period provided always that the first
Accounting Quarter shall commence on the
Completion Date and shall end on or about 30
June 1999 notwithstanding that it is less than
3 months;
"Acquisition" means the acquisition by the Borrower of
certain business and assets of Glynwed Steels
Limited pursuant to the terms of the Sale of
Business Agreement;
"Act" means the Companies Act 1985 as amended or
substituted by the Companies Act 1989;
"Additional Costs Rate" means, in relation to any period, the
percentage rate per annum as calculated
pursuant to the Fourth Schedule;
"Adjusted Tangible Net means (on a consolidated basis) the aggregate
Worth" amount of the share capital of the Borrower
paid up or credited as paid up (including, but
not limited to, amounts standing to the credit
of any share premium account or capital
redemption reserve plus or minus the aggregate
amount standing in the Borrower's capital and
revenue reserves (on a consolidated basis)):-
(a) adjusted to take account of any variation
in the amount of such paid up share
capital, share premium account or capital
redemption reserve since the date to
which such accounts have been made up;
(b) excluding any capital accounts or
reserves derived from any writing up of
the book value of any assets of the
Borrower above historic costs less
accumulated depreciation at any time
after the Completion Date;
(c) excluding any provisions for deferred
Taxation or deferred charges;
(d) making such adjustments as may in the
opinion of the Auditors be appropriate to
reflect any variations which have
occurred since the date of the Audited
Accounts and to reflect any changes in
GAAP since such date;
(e) excluding exchange gains and losses
arising on consolidation accounted for
through reserves in accordance with
SSAP20;
(f) deducting any amounts attributable to any
intangible asset (including but not
limited to goodwill arising out of the
Acquisition, trade marks or similar
property) included as an asset in the
Borrower's consolidated balance sheet;
(g) excluding any profit or loss arising on
the disposal of fixed assets;
(h) excluding any minority interests arising
on consolidation;
(i) excluding Extraordinary Items since the
Completion Date; and
(j) adding back the amount of the
Subordinated Loan and any accrued but
unpaid interest arising thereon to the
extent that such interest has been
charged to the profit and loss account of
the Borrower;
(k) excluding adequate provision for any
pension contributions made (or to be
made) by the Borrower relating to Mr A
Bagshawe's pension;
and in each case the relevant calculations,
addition, deduction, exclusion or adjustment
shall be made by reference to the then latest
Audited Accounts;
"Advance" means an advance made by the Bank under all or
any of the Facilities pursuant to the terms
hereof;
"Affiliate" means, in relation to any body corporate, all
associated companies, directors and relatives
and companies in which such persons are
interested;
"Agreed Terms" means a document agreed by the Bank's
Solicitors and the Borrowers' Solicitors and
initialled by them for identification purposes;
"Ancillaries Facility" means the availability of terminable
indemnities and forward foreign exchange
contracts under the Revolving Facility as
detailed in clause 3.2;
"Audited Accounts" means the audited accounts of the Borrower to
be delivered under clause 9.1.6(a);
"Auditors" means BDO Stoy Hayward or such other firm or
person as the Bank may agree provided that
reference to a particular person shall include
reference to any person arising from any merger
or amalgamation of any kind whatsoever
involving such original person;
"Bank's Solicitors" means Eversheds of 115 Colmore Row, Birmingham,
B3 3AL;
"Borrowed Money" means, in relation to the Borrower (or the
Holding Company or any of its Subsidiaries, as
the context may require), any obligation for
the payment or repayment of money (whether as
principal or as surety and whether present or
future, actual or contingent) incurred in
respect of the following (but without double
counting):
(a) the principal amount of money borrowed or
raised,
(b) any bond, note, loan stock, debenture or
similar instrument,
(c) acceptance credit, documentary credit,
bill discounting, factoring or note or
purchase facilities,
(d) deferred payments for assets or services
acquired (other than on normal trade
credit terms) where payment is due more
than 4 months after the date of the
acquisition of the goods or services in
question,
(e) rental payments under leases (whether in
respect of land, machinery, equipment or
otherwise) which are defined as Finance
Leases but excluding rental payments
under a lease of property which would not
be treated as a Finance Lease
(f) counter indemnity obligations in respect
of guarantees, bonds, standby letters of
credit, or other instruments issued in
connection with the performance of
contracts by banks or other financial
institutions,
(g) payments under any hire, hire purchase,
conditional, sale or instalment sale and
purchase agreements but, for the
avoidance of doubt, excluding any
obligations under any operating lease;
(h) guarantees or other assurances against
financial loss in respect of indebtedness
of any person falling within any of (a)
to (g) above; and
(i) any other transaction having
substantially the same commercial effect
as any of the above;
"Borrowers' Solicitors" means Paisner & Co of Bouverie House, 154 Fleet
Street, London EC4A 2JD;
"Breakage Costs" means the amounts payable to the Bank by way of
compensation as specified as such in clause 7.4;
"Business" means the business now or hereafter to be
conducted by the Borrower;
"Business Day" means a day (other than a Saturday or Sunday)
on which banks are open for a full range of
banking transactions in London;
"Capital Expenditure" means expenditure incurred (or as the case may
be) to be incurred by the Borrower in the
acquisition of buildings, plant, machinery or
other fixed assets, businesses, shares in new
subsidiaries and/or associated companies and
any other investment or expenditure treated as
capital expenditure in accordance with
GAAP;
"Completion Date" means the date on which the Acquisition is
completed and becomes unconditional in all
respects;
"Current Assets" means at any time, the aggregate value of its
assets which are treated as current assets in
accordance with GAAP;
"Current Account" means such account or accounts of the Borrower
at the Bank as the Bank shall, at the date of
the opening of such account, so designate;
"Current Liabilities" means, at any time, the aggregate value of its
liabilities which are treated as current
liabilities in accordance with GAAP;
"Drawdown Notice" means a notice in the form set out in the First
Schedule in respect of the Term Facility and/or
the Revolving Facility in either case signed by
the Borrower;
"Eligible Stock" means, at any time, all Stock of the Borrower
at such time but will in no event include any
Stock of the Borrower if:
(a) it is obsolete, slow-moving, not in good
condition or not currently useable or
saleable in the ordinary course of the
Borrower's business;
(b) it constitutes damaged or defective
materials;
(c) it is held by the Borrower as consignee
for a third party;
(d) it is subject to retention of title or
Romalpa provisions in favour of any
person other than the Borrower;
(e) it is spare parts, scrap or only
semi-finished or otherwise constitutes
work-in-progress;
(f) it is in transit outside such property as
is owned or occupied by the Borrower ;
(g) it is determined by the Bank as being
unsuitable for forming the basis of a
lending decision;
"Eligible Receivables" means, at any time, all Receivables of the
Borrower at such time, but will in no event
include any Receivable of the Borrower if it is:
(a) a Receivable which does not arise from the
actual and bona fide sale and delivery of goods
by the Borrower or rendition of services by the
Borrower in the ordinary course of its business
which transactions are completed in accordance
with the terms and provisions contained in any
documents related thereto;
(b) a Receivable which :-
(i) does not fall under sub-clause (b)
(iii) below; and
(ii) remains fully or partly unpaid 90
days after the date of the original invoice; or
(iii) in the case of an extended term
customer, remains fully or partly unpaid 120
days from the date of the original invoice;
(c) a Receivable that arose other than in the
ordinary course of business of the Borrower in
respect of an actual and bona fide sale;
(d) a Receivable with respect to which the
Account Debtor is a director, officer,
employee, Subsidiary of the Borrower or
Affiliate of the Borrower (including, for the
avoidance of doubt, the Holding Company or any
Subsidiaries of the Holding Company);
(e) a Receivable with respect to which the Account
Debtor has asserted a counterclaim or has (or
has asserted) a right of set off, to the extent
of such counterclaim or set off;
(f) a Receivable with respect to which the Bank
(as agent for MTT) does not have a valid,
equitable assignment under the Security
Documents;
(g) a Receivable as to which all goods in
connection therewith have not been shipped to
the Account Debtor;
(h) a Receivable with respect to which the
Account Debtor is the subject of any bankruptcy
or insolvency proceeding in any jurisdiction or
has made an assignment for the benefit of
creditors or whose assets have been conveyed to
a receiver, administrator, trustee or other
insolvency official;
(i) a Receivable with respect to which the
Account Debtor's obligation to pay the
Receivable is conditional upon the Account
Debtor's approval or is otherwise subject to
any repurchase obligation or right of return,
as with sales made on a bill- and-hold,
guaranteed sale, sale-and-return, sale on
approval or consignment basis;
(j) a Receivable where there are facts, events
or occurrences which would impair the validity,
enforceability or collectability of that
Receivable or of reducing the amount payable or
delaying payment thereunder;
Provided, however, a Receivable described in
subclauses (a) to (j) above may be treated as
an Eligible Receivable if such Receivable is,
at the Bank's sole discretion, determined to be
Insurable (as defined below) or comes within
such categories other than as stated in (a) to
(j) above as the Bank may determine in its sole
discretion to be accepted for inclusion as an
Eligible Receivable from time to time solely on
the basis of an event, condition or
circumstances arising after the date of this
Agreement.
For the purposes of this definition,
"Insurable" shall mean where the Bank has
received evidence, in form and substance
satisfactory to it, that notwithstanding the
circumstances or facts otherwise rendering such
Receivable to be ineligible, credit insurance
in respect of such Receivable would be
available to the Borrower in the usual credit
insurance market;
"Eligible Receivables means 85% (eighty five per cent) of the
Limit" aggregate value of Eligible Receivables as at
the date of calculation;
"Eligible Receivables means, as of a particular period of time, the
and Eligible Stock certificate executed by a duly authorized
Certificate" officer of the Borrower (other than in the case
of fraudulent misrepresentation given
without personal liability on his part),
certifying as to the amount of the Eligible
Receivables and Eligible Stock at such time,
the form of which is attached as the Third
Schedule;
"Eligible Stock Limit" means 60% (sixty per cent) of the value of
Eligible Stock as at the date of calculation;
"Environmental Consents" means all or any permits, licences, approvals,
consents, certificates or other authorizations,
including any conditions which attach to any of
the same and the filing of all notifications,
reports and assessments required at any time by
any Environmental Law for the operation of the
Business and/or in relation to the occupation,
use or holding of the Existing Property and any
other premises or property of the Borrower from
time to time after the date of this Agreement;
"Environmental Law" means all or any statutes, directives,
regulations, codes of practice or conduct,
circulars and guidance notes and rules of law
relating to or concerning:-
(a) pollution or protection of the environment
or the health of humans, animals or plants; or
(b) workers' health and safety; or
(c) the manufacture, processing, distribution,
use, treatment, storage, disposal, emission,
release or discharge into the environment of
any hazardous substance;
"Exceptional Items" are as defined in FRS3, but shall exclude those
items listed in Paragraph 20 of FRS3;
"Extraordinary Items" are as defined in FRS3, but in addition shall
include those items listed in Paragraph 20 of
FRS3 and for the avoidance of doubt, shall
include reorganization costs charged to profit
relating to the closure of Ductile Hot Mill and
the partial closure of Dudley Port Rolling Mill
limited to a maximum amount of
(pound)1,500,000;
"Existing Properties" means the properties the subject of the Leases;
"Event of Default" means any one or more of the events set out in
clause 10;
"Facilities" means together the Term Facility, the Revolving
Facility and the Settlement Risk Facilities;
"Finance Lease" means any lease, hire agreement, credit sale
agreement, purchase agreement, conditional sale
agreement or instalment sale and purchase
agreement which should be treated in accordance
with SSAP 21 (or any successor thereto) as a
finance lease or in the same way as a finance
lease;
"FRS" means a financial reporting standard issued by
the Accounting Standards Board for application
in England and Wales and, where referenced by a
number, means that particular financial
reporting standard;
"GAAP" means accounting principles and bases
(including FRS and SSAPs from time to time)
which are recommended by the Institute of
Chartered Accountants in England and Wales and
which are generally adopted and accepted in
England and Wales;
"Holding Company" means Niagara Corporation, a Delaware
corporation having its principal office at 667
Madison Avenue, New York, New York 10021,
United States of America;
"Inter Bank Agreement" means the agreement dated as of today between
the Bank (1) MTT (2) and the Borrower (3)
regulating the relationships between MTT and
the Bank under both this Agreement and the
Standby Letters of Credit;
"Intercreditor Agreement" means an agreement dated as of today between
(1) the Bank, (2) the Holding Company and (3)
the Borrower pursuant to which the Borrower and
the Holding Company have agreed in favour of
the Bank to subordinate the repayment of the
Subordinated Loan to repayment of the
Facilities;
"Interest" means in respect of the Borrower in relation to
a period of time, the aggregate of:-
(a) interest from time to time charged by the
Bank under and in respect of the Facilities or
any other facility made available by the Bank
from time to time to the Borrower;
(b) interest, commissions, periodic fees and
other financing charges on any other
indebtedness payable (on an accrued basis) by
the Borrower during that period including the
interest element of hire purchase and Finance
Leases but excluding any amounts amortized on
finance costs arising from completion of the
Acquisition;
(c) the consideration given by the Borrower
during that period whether by way of discount
or otherwise in connection with finance for the
Holding Company or any of its Subsidiaries
(other than the Borrower) by way of acceptance
credit bill discounting debt factoring or other
like arrangement;
(d) excluding any interest received or
receivable;
(e) less any sums receivable or plus any sum
paid or due, owing or incurred by the Borrower
under any interest rate protection agreement of
whatever description during such period; and
(f) less any interest accrued (to the extent
not paid) in respect of the Subordinated Loan;
(but so that there will be no double counting
of any of the above items);
"Interest Payment Dates" means the last day of an Interest Period and,
in addition, in the case of an Interest Period
of more than six months, the date falling on
the last day of each successive six month
period after the first day of such Interest
Period;
"Interest Period" means a period by reference to which interest
is calculated and payable on an Advance or an
overdue sum in accordance with clause 6 hereof;
"Intra Group Loan means the loan agreement dated (as of today)
Agreement" between (1) the Borrower and (2) the Holding
Company in the Agreed Terms pursuant to which the
Holding Company has made available the Subordinated
Loan to the Borrower;
"Leases" means the various leasehold interests acquired
by the Borrower pursuant to:
(a) a property agreement dated 16 April 1999
and made between (1) Glynwed Property
Management Limited (2) Glynwed Properties
Limited, (3) the Borrower, (4) the Holding
Company and (5) Glynwed International plc; and
(b) an agreement for lease dated 16 April 1999
and made between (1) Glynwed Property
Management Limited, (2) Glynwed Properties
Limited, (3) the Borrower and (4) the Holding
Company;
"Lending Documents" this Agreement, the Security Agency Deed, the
Security Documents, the Inter Bank Agreement,
the Intra Group Loan Agreement and the Inter
creditor Agreement;
"LIBOR" means in respect of any Interest Period or
other period and in relation to an Advance or
unpaid sum the rate per cent per annum
determined by the Bank to be the rate at which
sterling deposits for the relevant Interest
Period or other period and in an amount
comparable to such Advance or other such sum
(as the case may be) were being offered by the
Bank to prime banks in the London Interbank
Market at or about 11:00am on the first day of
such Interest Period or other period;
"Loan Default Rate" such rate per annum as the Bank may determine
to be the aggregate of:-
(a) 3%; and
(b) the Loan Interest Rate in each case for
such successive periods not exceeding 3 months
as the Bank may determine from time to time in
respect of amounts comparable with the sum or
sums not paid provided that if any unpaid sum
is of principal repayable prior to the last day
of an Interest Period relating thereto LIBOR
applicable to such unpaid sum for the remaining
period up to the last day of that Interest
Period shall remain LIBOR applicable to it at
the beginning of such Interest Period;
"Loan Interest Rate" means the aggregate of:-
(a) the Loan Margin;
(b) LIBOR relative to the Interest Period in
question; and
(c) the Additional Costs Rate;
"Loan Margin" means 0.15% (fifteen basis points) per annum;
"Loans" means the respective principal amounts
drawndown by the Borrower under the Facilities
or, as the context may require the principal
amount for the time being outstanding under the
Facilities ;
"Long Form Report" means the report prepared by
PricewaterhouseCoopers on the business and
assets to be acquired by the Borrower pursuant
to the Sale of Business Agreement and dated 12
May 1999;
"Management" means Michael Scharf, Raymond Rozanski, Jane
Withers and Tony Bagshawe or any of them, as
the context may require;
"Management Accounts" means the monthly management accounts of the
Borrower to be delivered under clause 9.1.6(b);
"Material Adverse Change" means any change which is, in the reasonable
opinion of the Bank, likely to be adverse to
the ability of the Borrower to perform its
material obligations under this Agreement or
under any of the other Lending Documents as and
when such obligations fall due;
"MTT" means Manufacturers and Traders Trust Company
having its principal office at One Fountain
Plaza, Buffalo, NY 14203 - 1495, United States
of America;
"Permitted Disposal" means any sale, transfer, lease, loan or
disposal of any Asset (excluding any Current
Assets) of the Borrower or any of its
Subsidiaries on terms whereby :-
(i) the proceeds of such sale, transfer, lease
loan or disposal are re-invested in the
Business within 3 months of the date of such
transaction; or
(ii) the proceeds of such sale, transfer,
lease, loan or disposal are used to prepay the
Term Loan on the next Interest Payment Date
following such transactions; or
(iii) the proceeds of such sale, transfer, loan
or disposal do not exceed (pound)100,000 in
aggregate in any one financial year;
"PBIT" means in relation to the Borrower and period
for which the calculation is made, profit on
ordinary trading activities (including but not
limited to Exceptional Items and credit
interest receivable in respect of positive cash
balances) before Tax and Interest excluding:
(a) amounts written off the value of
investments;
(b) profit attributable to minority interests;
(c) amounts written off the value attributed to
goodwill arising out of the Acquisition;
(d) any Extraordinary Items;
(e) any profit or loss arising on the disposal
of fixed assets;
(f) income from participating interests in
associated undertakings and income from any
other fixed asset investments;
(g) acquisition expenses required to be
capitalized in accordance with Paragraph 85 of
FRS7;
(h) any realized or unrealized exchange gains
and losses;
(i) any costs associated with the Acquisition
PROVIDED ALWAYS THAT no item should be counted
more than once and Interest shall be excluded;
"Potential Default" means any event which, with the giving of
notice or the lapse of time (or any combination
thereof) would in the reasonable opinion of the
Bank constitute an Event of Default;
"Purchase Price" means the aggregate consideration for the
acquisition of certain business and assets of
Glynwed Steels Limited pursuant to the terms of
the Sale of Business Agreement;
"Qualifying Bank" means a person which is a bank within the
meaning of s.840A of the Income and Corporation
Taxes Act 1988 and which is within the charge
to corporation tax as respects interest
received by it and to which it is beneficially
entitled (as provided by s.349(3)(a) of the
Income and Corporation Taxes Act 1988) or, if
that section is amended, repealed or
re-enacted, such other category of person as
may at any time and from time to time be
appropriate for the purpose of this definition
in the light of such amendment repeal or
re-enactment;
"Receivables" means, at any time, the aggregate present and
future obligations of an Account Debtor of the
Borrower for the payment of money to the
Borrower at such time together with all
connected rights, claims, deposits and
payments;
"Reimbursement Agreement" means an agreement dated as of today between
(1) MTT and (2) the Borrower pursuant to which
the Borrower has agreed to counter indemnify
MTT in respect of any monies paid by MTT to the
Bank under the Standby Letters of Credit;
"Repayment Date(s)" means the dates set out in clause 7.1 by which
dates the Loans are to be repaid or reduced by
the required amounts (and in the case of any
amounts outstanding under the Settlement Risk
Facilities, on the date demand is made by the
Bank for repayment thereof) and each of which
is referred to as a "Repayment Date" and the
last of which is referred to as the "Final
Repayment Date";
"Revolving Advance" means each advance under the Revolving Facility
or, as the context requires, the principal
amount of that advance (or those advances)
outstanding from time to time;
"Revolving Facility" means (subject to the proviso below) the
revolving credit facility in a principal amount
of up to (pound)9,800,000 (nine million eight
hundred thousand pounds Sterling) to be made
available by the Bank and to be advanced to the
Borrower on the terms of this Agreement to the
extent that the same is not otherwise cancelled
reduced or terminated in accordance with the
terms of this Agreement (which amount shall
include, for the avoidance of doubt, the
Ancillaries Facility) provided, however, that
the maximum principal amount available under
the Revolving Facility at all times shall never
exceed the principal amount of the Revolving
Standby Letter of Credit less 2% (the "Interest
and Fees Headroom") which is designed to cover
interest and fees payable under the Revolving
Facility which is not covered by the principal
amount of the Revolving Standby Letter of
Credit;
"Revolving Facility means the period commencing on Completion Date
Availability Period" and ending on the earlier of :-
(a) the date on which the Borrower cancels in
accordance with this Agreement the whole of the
aggregate Revolving Advances; and
(b) the date on which the Borrower repays the
whole of the Revolving Facility Available
Amount; and
(c) the third anniversary of Completion Date;
"Revolving Facility means (pound)9,800,000 (nine million eight
Available Amount" hundred thousand pounds Sterling) (subject to
the proviso below) less the aggregate of :-
(a) the aggregate of all outstanding Advances
under the Revolving Facility or amounts
attributable to the Ancillaries Facility as
calculated in accordance with Clause 3.2;
(b) after cancellation of any undrawn portion
of the Revolving Facility pursuant to clause
7.2.5, the amount so cancelled;
(c) 2% (the "Interest and Fees Headroom") which
is designed to cover interest and fees payable
under the Revolving Facility which is not the
subject of the principal amount outstanding
under the Revolving Standby Letter of Credit;
Provided, however, that the maximum principal
amount available under the Revolving Facility
shall at all times never exceed the principal
amount of the Revolving Standby Letter of
Credit;
"Revolving Standby Letter means a Standby Letter of Credit (drawn in
of Credit" accordance with the Uniform Customs and
Practice for Documentary Credits ICC
Publication No. 500) for the principal amount
of the Revolving Facility to be issued by MTT
to the Bank;
"Sale of Business means the agreement dated 16 April 1999
Agreement" (together with its schedules) made between
Glynwed Steels Limited (1), Glynwed
International Limited (2), the Borrower (3) and
the Holding Company (4) whereby the Borrower
agreed to acquire certain business and assets
of Glynwed Steels Limited;
"Security Agency Deed" means the agency deed of today's date between
(1) the Bank, (2) MTT and (3) the Borrower
pursuant to which the Bank will be holding the
security entered into by the Borrower (and
referred to in clause 4.2.1) for the
obligations of the Borrower under the
Reimbursement Agreement as agent for MTT;
"Security Documents" means the documents executed or to be executed
by the Borrower in accordance with clause 4.2.1
and any other documents at any time after the
date of this Agreement given or delivered to
the Bank as agent for MTT and as security for
the performance by the Borrower of its
obligations under the Reimbursement Agreement;
"Security Interest" means any mortgage, charge (whether fixed or
floating), pledge, hypothecation, lien (other
than liens arising in the ordinary course of
business by operation of law), encumbrance,
trust arrangement, preferential creditor's
right (other than such a right arising under
the general law for the protection of certain
classes of creditors) or other agreement or
arrangement, the effect of any of which is the
creation of security or any other security
interest, however created or arising;
"Settlement Risk means the interest set off, group and
Facilities" settlement risk facilities in a maximum
principal amount in aggregate of(pound)3,000,000
(three million pounds Sterling) as the same are
detailed by an Advice of Borrowing Terms dated
10 May 1999 addressed by the Bank to the Borrower;
"Standby Letters of means the Revolving Standby Letter of Credit
Credit" and the Term Standby Letter of Credit or either
of them, as the case may be;
"Stock" means, at any time, any finished goods, raw
materials and unfinished goods (but excluding
work-in- progress) of the Borrower at such time
which are located in the United Kingdom or the
United States of America (or elsewhere as the
Bank may, in its sole discretion, specify to
the Borrower);
"Subsidiaries" means subsidiary companies from time to time
(having the meaning given to such expression by
Section 736 of the Act (as amended by the
Companies Act 1989)) and "Subsidiary" shall be
construed accordingly;
"Subordinated Loan" means a loan of (pound)3,750,000 (three million
seven hundred and fifty thousand pounds
Sterling) to be made by the Holding Company to
the Borrower on or before the date of this
Agreement pursuant to the terms of the Intra
Group Loan Agreement and subject to the terms
of the Intercreditor Agreement;
"Surplus Cash" means, in relation to a period of time, the
PBIT for the Borrower for that period:-
(a) after adding back any amount written off in
respect of depreciation;
(b) less the aggregate of any Taxes paid by the
Borrower during such period;
(c) less the amount of Capital Expenditure
incurred by the Borrower during such period but
net of the amount of payments received during
such period in respect of finance raised by way
of Finance Leases;
(d) plus the proceeds of disposal of fixed
assets during such period;
(e) plus income received from participating
interests in associated undertakings to the
extent received in cash and less any payments
made to associated undertakings;
(f) plus dividends received from other fixed
asset investments;
(g) plus or minus the movement in provisions
for liabilities to the extent that this has
been debited or credited to PBIT;
(h) plus any receipts by way of Extraordinary
Items and deducting payments by way of
Extraordinary Items in each case made during
such period;
(i) plus realized exchange gains and minus
realized exchange losses charged during such
period; and
(j) excluding any costs (whether by way of
share purchase or other payments) associated
with the Acquisition;
less :-
(k) Interest paid or payable by the Borrower;
(l) the principal amounts paid or scheduled to
be paid in respect of the Term Facility during
such period but excluding any prepayments made
by the Borrower out of Surplus Cash generated
during a previous financial year;
(m) all repayments of principal required under
any Finance Lease; and
(n) all dividends paid to shareholders of the
Borrower in the period to the extent that they
are paid in respect of distributable profits
earned in that period; and all dividends paid
or proposed to be paid after the end of that
period which are in respect of profit earned in
that or any earlier period (for the avoidance
of doubt, no dividend payment shall be counted
more than once);
PROVIDED ALWAYS THAT no items have been counted
more than once
"SSAP" means a Standard Statement of Accounting
Practice issued by the Institute of Chartered
Accountants;
"Taxation" includes all present and future governmental
taxes, levies, import duties, fees, charges or
withholdings of whatever nature and whenever
levied, charged or assessed together with any
interest thereon and any penalties in respect
thereof and "Tax" and "Taxes" shall be
construed accordingly;
"Term Facility" means the term loan facility in a principal
amount of (pound)10,000,000 (ten million pounds
Sterling) less the 2% in respect of interest
and fees accruing under the Term Facility (the
"Interest and Fees Headroom") not covered by
the principal amount of the Term Standby Letter
of Credit to be made available by the Bank and
to be advanced to the Borrower hereunder to the
extent that the same is not otherwise cancelled
reduced or terminated in accordance with the
terms of this Agreement;
"Term Standby Letter of means a standby letter of credit (drawn in
Credit" accordance with the Uniform Customs and
Practice for Documentary Credits ICC
Publication No. 500) for the principal amount
of the Term Facility to be issued by MTT to the
Bank including any substitute or replacement
Standby Letter of Credit(s) issued by MTT
pursuant to clause 4.1.2 of the Inter Bank
Agreement;
"Trading Period" means each successive period of one month (or
four or five weeks as the case may be) within
an accounting reference period into which the
Borrower is to divide its trading accounts for
the purpose of management accounting and
budgeting;
"UK Guarantee" means the guarantee in the Agreed Terms entered
into by the Borrower in favour of MTT;
1.2 References to this Agreement or to any other document include
references to this Agreement or such other documents as varied
supplemented replaced and/or restated in any manner from time
to time as agreed in accordance with the terms hereof or
thereof as the case may be or between the parties hereto or
thereto as the case may be from time to time.
1.3 References to clauses, sub-clauses, paragraphs, schedules and
annexures are to be construed as references to clauses,
sub-clauses, paragraphs, schedules and annexures of this
Agreement unless otherwise stated.
1.4 References to any enactment shall be deemed to include
references to such enactment as re-enacted, amended or
extended.
1.5 References to any party hereto shall where relevant be deemed
to be references to or to include as appropriate their
respective successors or assigns permitted in accordance with
the terms hereof.
1.6 Unless the context otherwise requires words denoting the
singular number shall include the plural and vice versa.
1.7 All references in this Agreement to sums or amounts due, owing
or payable "hereunder" or "under this Agreement" shall include,
where the context permits, reference to sums payable under any
of the Lending Documents.
1.8 References to the "Assets" of any person or company shall be
construed as reference to the whole or any part of its
business, undertaking, property, assets and revenues (including
any right to receive revenues and uncalled capital).
1.9 "Accounting reference date" and "accounting reference period"
shall have the meanings given to those expressions in Part VII
of the Companies Act 1985.
1.10 "Sterling" or "(pound)" shall mean the lawful currency for the
time being of the United Kingdom.
1.11 In the event of any inconsistency between the provisions of
this Agreement and the provisions of any of the Inter Bank
Agreement, the Inter Bank Agreement will prevail.
1.12 Any determination, calculation, opinion or consent to be
provided by the Bank under the terms of this Agreement shall be
given or made pursuant to the terms of the Inter Bank
Agreement.
2. FACILITIES
2.1 Subject to the terms and conditions of this Agreement
(including without prejudice to the generality of the foregoing
the provisions of clause 4), the Bank agrees to make available
the Facilities as follows:-
2.1.1 the Term Facility for a term of seven years ending on
the seventh anniversary of drawdown of the Term
Facility;
2.1.2 (subject to the prior or simultaneous drawing of the
Term Facility) the Revolving Facility for a term of
three years starting on Completion Date.
2.2 In respect of the Advances under the Term Facility and/or the
Revolving Facility the Borrower respectively shall lodge with
the Bank in the case of the Term Facility not later than 10
a.m. (London time) on the Business Day preceding the proposed
date of drawdown of the Advance and in the case of the
Revolving Facility not later than 10 a.m. (London time) on the
proposed date of drawdown of the Advance or, in both cases, at
such later time as the Bank shall agree, a Drawdown Notice
specifying:-
2.2.1 the proposed date of the Advance;
2.2.2 the amount of the Advance;
2.2.3 the duration of the first Interest Period in accordance
with the terms of this Agreement;
2.2.4 (in the case of the Revolving Facility only, the amount
(if any) required to be allocated under the Ancillaries
Facility and) the purpose for which such funds are to be
used; and
2.2.5 (in the case of the first Advance requested under the
Revolving Facility only), a certificate as to the value
of the Eligible Stock at that time
Provided always, for the avoidance of doubt, that no
request for an Advance shall be made in respect of the
Revolving Facility which would result in the Revolving
Facility Available Amount being exceeded, the aggregate
amount of Advances outstanding under the Revolving
Facility exceeding the amount of the Revolving Facility
Available Amount or the amount of the Eligible
Receivables Limit and/or Eligible Stock Limit being
exceeded.
2.3 The Borrower and the Bank have agreed that, for the
purposes of the first drawdown under the Revolving
Facility, the amount available for drawdown shall
be(pound)2,700,000, being an amount not in excess of 60%
(sixty per cent) of the Eligible Stock certified by the
Borrower pursuant to clause 2.2.5 above.
2.4 The making of an Advance under this clause 2 in
circumstances where any of the above conditions were not
met shall not constitute a waiver by the Bank of any
such conditions in relation to any subsequent Advance.
3. PURPOSE
3.1 The Borrower undertakes to the Bank as follows:-
3.1.1 the Term Facility shall be applied and utilized in full
towards payment of the Purchase Price;
3.1.2 the initial drawdown of the Revolving Facility shall be
applied and utilized towards payment of the Purchase Price and
any subsequent drawdowns shall be used in and towards the
working capital requirements of the Borrower (or as the case
may be, the Ancillaries Facility);
3.2 Within the availability of the Revolving Facility (and subject at all
times to the Revolving Facility Available Amount and clause 3.4),
upon notification to the Bank pursuant to a Drawdown Notice, the
Borrower may utilize part of the Revolving Facility by means of:-
(i) the issue by the Bank of terminable indemnities on behalf of
the Borrower (the amount of terminable indemnities not to
exceed (pound)500,000 (five hundred thousand pounds Sterling in
aggregate) to third parties upon receipt by the Bank of a
suitable counter-indemnity in its standard form in respect of
such terminable indemnities; and
(ii) (subject to the following paragraphs) forward foreign exchange
contracts for the forward purchase and sale of freely
convertible currencies up to a notional limit of
(pound)2,000,000 (two million pounds Sterling) (the "Notional
Limit").
(iii) credit extended to the Borrower in respect of obligations or
liabilities incurred under the corporate credit cards to be
issued by the Borrower to the employees of the Borrower agreed
with the Bank subject to a maximum credit limit of
(pound)150,000 (one hundred and fiFTY thousand pounds
Sterling).
The gross amounts of foreign exchange contracts available under the
Notional Limit will be calculated by the Bank in line with the term
of the forward foreign exchange contract(s) and the currencies to be
traded, as set out in the following table:
IF THE CONTRACT TERMS ARE:- Then utilization of the
Notional Limit is calculated
at:-
1. 6 months or less and for 10% (the percentage amount
sterling against: being referred to as the
US Dollar euro "Relevant Percentage" of the
Austrian Schilling gross sterling equivalent)
Belgian Franc Dutch Guilder
Finnish Mark French Franc
German Mark Italian Lire
Irish Punt Luxembourg Franc
Portugese Escudo Spanish Pesata
2. 6 months or less for any currency 20% of the gross sterling
except the above equivalent
3. between 7 and 12 months 20% of the gross sterling
equivalent
4. between 13 and 24 months 25% of the gross sterling
equivalent
5. between 25 and 36 months 30% of the gross sterling
equivalent
6. between 37 and 48 months 35% of the gross sterling
equivalent
7. greater than 48 months 40% of the gross sterling
equivalent
Using the above table the Bank will calculate the gross amounts
available to the Borrower in each of the above categories using the
following formula:
The Notional Limit (in Sterling) = Sterling gross contractual amount
--------------------------------
the Relevant Percentage
The table above details the Bank's current weightings which are
correct as at the date of this Agreement. The Bank may vary the
weightings from time to time and will notify the Borrower of any such
changes.
The Borrower acknowledges that there is no commitment on the part of
the Bank to enter into any particular foreign exchange contract with
the Borrower, (and the Bank has the right to refuse to enter into any
particular foreign exchange contract with the Borrower without giving
any reasons) and the Notional Limit is subject to this.
3.3 Failure by the Borrower to comply with clauses 3.1 or 3.2 shall
not prejudice any rights of the Bank which shall not be
responsible for monitoring or ensuring the use or application
by the Borrower of the Facilities.
3.4 If the Borrower cancels the Revolving Credit Facility (or
repays or prepays all Revolving Advances and cancels the
Revolving Facility Available Amount), the Borrower shall
simultaneously with such cancellation or repayment or
prepayment, lodge in an account (the "Cash Account") in its
name with the Bank, an equivalent amount of cash in pounds
Sterling so as to cover any amounts at that time being utilized
under the Ancillary Facility which account (and any credit
balance including accrued interest) shall be charged in favour
of the Bank. After the date of such cancellation repayment or
prepayment of the Revolving Advances (and Revolving Facility
Available Amount), the Borrower shall only be entitled to
utilize the Ancillaries Facility to the extent of the credit
balance in the Cash Account.
4. CONDITIONS PRECEDENT
4.1 This Agreement shall be conditional and shall be of no force
and effect until the Bank shall have received, in each case in
a form and substance satisfactory to the Bank:-
4.1.1 a certificate signed by a director of the Borrower to
the effect that all requisite resolutions have been duly
and properly passed at duly convened and constituted
meetings of the Borrower or its Board of Directors
authorizing the execution, delivery and performance by
the Borrower of each of the Lending Documents to which
the Borrower is a party and authorizing a named person
or persons specified therein whose specimen signature(s)
appear thereon to sign on behalf of the Borrower and/or
to deliver the same as a deed or to witness the
affixation of the Borrower's seal to each of the Lending
Documents to which the Borrower is party;
4.1.2 a copy certified by a director of the Borrower as a true
and complete copy of the minutes and of the resolutions
of the Board of Directors or members of the Borrower
referred to in clause 4.1.1 above;
4.1.3 this Agreement duly executed by all of the parties
hereto;
4.1.4 a copy of the Sale of Business Agreement and all related
transaction documents and confirmation that they have
been executed in terms and form satisfactory to the Bank
and evidence that the Sale of Business Agreement and all
related transaction documents have become unconditional
in all respects (save only as regards the payment of the
Purchase Price);
4.1.5 a copy, certified as a true, complete and up-to-date
copy by a director or the secretary of the Borrower of
the Certificate of Incorporation, the Certificate of
Incorporation on Change of Name and the Memorandum and
Articles of Association of the Borrower;
4.1.6 a letter from the Borrower, signed by a director of the
Borrower, listing the directors of the Borrower and
confirming that those persons are all of its existing
directors together with specimen signatures of such
directors;
4.1.7 the executed Inter Bank Agreement and Security Agency
Deed;
4.1.8 the Standby Letters of Credit executed by MTT together
with a certificate signed by a duly authorized officer
of MTT to the effect that all requisite resolutions
required under any applicable law to authorize the
execution, delivery and performance by MTT of the
Standby Letters of Credit have been duly and properly
passed at duly convened and constituted meetings of MTT;
4.1.9 a certificate from a duly authorized officer of MTT
(attaching a list of specimen signatures of officials of
MTT and limits of their authority) confirming that the
signatories to the Standby Letter of Credit have the
authority of MTT to bind it to its obligations under the
Standby Letters of Credit;
4.1.10 evidence that the Holding Company or one of its
Subsidiaries has subscribed at par value for (and paid
for in full and without conditions) 3,750,000 ordinary
shares of (pound)1 each in the share capital of the
Borrower and that the subscription monies for such
shares have been credited to the Current Account;
4.1.11 valuations indicating the open market and liquidation
value(s) of the plant and machinery and equipment being
acquired by the Borrower pursuant to the Sale of
Business Agreement;
4.1.12 financial forecast/projections of the Borrower to
include profit and loss, cash flow statements and
balance sheets for the period of two years starting from
1 January 1999;
4.1.13 a full, complete and up to date schedule of all
insurances maintained by the Borrower (including
insurance in respect of its Receivables and against
terrorism risks) having attached thereto copies of
relevant policies, together with written confirmation
from each relevant insurance broker that such policies
are in full force and effect with all premiums paid up
to date and confirming that the Banks name (as security
agent for MTT) has been endorsed upon such policies as
regards the assets of the Borrower except for the Leases
where evidence satisfactory to the Bank that the
Borrower's interest under such Leases have been insured,
to the extent that the Borrower is required to insure,
will be required);
4.1.14 the Intra Group Loan Agreement duly executed by all the
parties thereto and the Intercreditor Agreement duly
executed by all the parties thereto;
4.1.15 evidence that the Holding Company has lent the principal
amount of the Subordinated Loan to the Borrower and that
the amount of the Subordinated Loan has been credited to
the Current Account;
4.1.16 a letter from MTT and MTT's solicitors Messrs Arnold &
Porter both addressed to the Bank confirming that they
each approve of the terms and conditions of this
Agreement and the other Lending Documents.
4.1.17 cheques made payable to the Bank in respect of (i) the
Bank's fee referred to in clauses 12.1.1 and 12.1.2 and (ii)
the fees of the Bank's Solicitors (including any value
added tax payable thereon and third party
disbursements);
4.1.18 a charge (on the Bank's standard form) over the Cash
Account and the credit balance (if any) relating
thereto.
4.2 The obligation of the Bank under this Agreement to make any
Advance to the Borrower is subject to the further conditions
precedent that the Agent (as defined in the Security Agency
Deed) shall have received (in its capacity as agent for MTT
under the Security Agency Deed) in each case in a form and
substance satisfactory to the Bank:-
4.2.1 a duly executed debenture in the Agreed Terms creating
first fixed and floating charges over all the assets
both present and future of the Borrower;
4.2.2 a written undertaking addressed to the Bank's solicitors
from the Borrower's solicitors undertaking to hold the
Leases and any ancillary related documentation to the
order of the Bank in its capacity as security agent for
MTT;
4.2.3 pursuant to clause 2.2 the relevant Drawdown Notice(s)
duly executed by the Borrower.
5. TIME FOR DRAWDOWN
5.1 The Term Facility will be drawn in one instalment on the
Completion Date and will be paid in Sterling to the Current
Account of the Borrower or as it may otherwise direct pursuant
to the relevant Drawdown Notice.
5.2 Subject to the provisions of clause 2.2.5 and clause 5.3, the
Revolving Facility shall be available for drawdown in whole or
in multiples of (pound)100,000 at any time during the Revolving
Facility Availability Period and will be paid in Sterling to
the Current Account of the Borrower.
5.3 Once the Bank has received a drawdown notice from the Borrower
requesting a drawdown under the Revolving Facility it shall
only be obliged to make such Advance if:-
(i) the amount of the requested Advance (when aggregated with
all other Revolving Advances outstanding at that time)
will not cause the Eligible Receivables Limit and the
Eligible Stock Limit to be exceeded; and
(ii) the amount of the requested Advance (when aggregated with
all other Revolving Advances outstanding at that time)
will not exceed the amount of the Revolving Facility
Available Amount.
5.4 The Eligible Receivables Limit and the Eligible Stock Limit
shall be calculated by the Bank at the beginning of every
Trading Period by reference to the Eligible Receivables and
Eligible Stock Certificate provided by the Borrower pursuant to
clause 9.1.6 (c) in respect of the previous Trading Period.
5.5 The Bank shall notify the Borrower of its calculation of the
Eligible Stock Limit and the Eligible Receivables Limit after
receipt of the relevant Eligible Receivables and Eligible Stock
Certificate (but no later than the fifteenth day following
receipt of such certificate).
5.6 If, following the notification by the Bank to the Borrower of
its calculation of the Eligible Receivables Limit and Eligible
Stock Limit, the Borrower has Revolving Advances outstanding at
that time which (in aggregate) exceed the Eligible Receivables
Limit and the Eligible Stock Limit, the Borrower shall be
obliged to prepay to the Bank such amount of Revolving Advances
within 2 Business Days as shall result in the aggregate amount
of Revolving Advances outstanding not exceeding such limits.
5.7 The Borrower shall not be entitled to have outstanding more
than six Advances under the Revolving Facility at any time.
5.8 If the Borrower cancels the undrawn amount of the Revolving
Facility and repays (or prepays) all outstanding Revolving
Advances, it may apply to the Bank for a new revolving credit
line provided that:-
5.8.1 a new Standby Letter of Credit on terms satisfactory to
the Bank has been issued by MTT to the Bank for an
amount equivalent to the amount of new revolving credit
applied for;
5.8.2 no Event of Default or Potential Default has occurred
under the Term Facility;
5.8.3 assuming that (i) and (ii) are satisfied, such revolving
credit line shall be made available by the Bank to the
Borrower on exactly the same terms as the Revolving
Facility.
6. INTEREST PERIODS AND INTEREST
6.1 The Borrower may select the duration (being 1, 3 or 6 months)
of Interest Periods for the Loans. Such selection shall be made
by way of the first Drawdown Notice (in respect of the Term
Facility and the first Revolving Advance) and each subsequent
Drawdown Notice (in respect of the Revolving Facility). If the
Borrower has not previously selected an Interest Period in
accordance with this clause 6.1, Interest Periods shall be of
the duration of three months provided that :-
6.1.1 each Interest Period shall commence on the expiry of the
preceding Interest Period provided the first Interest
Period shall commence on the date of first drawdown and
expire 3 months thereafter or such other date as the
Bank may agree;
6.1.2 if any Interest Period would end on a day which is not a
Business Day such Interest Period shall be extended to
the next Business Day unless doing so would extend that
Interest Period into the next following calendar month
in which event that Interest Period shall be shortened
so as to end on the immediately preceding Business Day;
6.1.3 if any Interest Period commences on the last Business
Day in a calendar month or if there is no corresponding
date in the calendar month in which an Interest Period
is due to end then such Interest Period shall end on the
last Business Day in the relevant later month;
6.1.4 the final Interest Period relative to the Loans shall
end on their Final Repayment Date.
6.2 The rate of interest applicable to the Facilities during each
Interest Period shall be the rate per annum calculated by the
Bank to be the Loan Interest Rate for that Interest Period.
6.3 In the event of default by the Borrower in the payment of any
sum due and payable pursuant to this Agreement on the date due
for payment and without prejudice to the Bank's other remedies
under this Agreement or by virtue of the general law the
Borrower shall pay interest on that overdue sum for the period
from the date when such payment was due and payable until
actual payment (as well after as before judgement) at the Loan
Default Rate.
6.4 All interest payable under the terms of this Agreement shall
accrue from day to day and shall be calculated on the basis of
365 days per annum and shall be paid in arrears on the relevant
Interest Payment Dates. The Bank shall be entitled in its
discretion to debit the amount of any interest due under this
clause 6 to the Current Account.
6.5 The statement of the Bank as to the rate or amount of interest
payable pursuant to this clause 6 shall in the absence of
manifest error be conclusive and binding on the Borrower in all
respects.
7. REPAYMENTS AND PREPAYMENTS
7.1 Repayment
Subject to the provisions of this clause 7 and clause 10 below the
Borrower shall repay to the Bank:-
7.1.1 the principal amount of the Term Facility in the
following manner:
starting on 31 May 2000 and then at the end of every
month thereafter, the amounts set out in column (1) each
month in arrears so as to reduce the Term Facility each
year by a maximum amount shown in column (2) by each of
the dates shown in column (3):-
(1) (2) (3)
Monthly Annual Date
Payments Payments
(pound)50,000.00 (pound)600,000.00 30 April 2001
(pound)85,000.00 (pound)1,020,000.00 30 April 2002
(pound)125,000.00 (pound)1,500,000.00 30 April 2003
(pound)160,000.00 (pound)1,920,000.00 30 April 2004
(pound)200,000.00 (pound)2,400,000.00 30 April 2005
(pound)213,333.33 (pound)2,560,000.00 30 April 2006
7.1.2 a Revolving Advance on the Interest Payment Date
relative thereto. Subject to the requirements of clause
5.3, if a Revolving Advance (the "new Revolving
Advance") is to be made to the Borrower on a day on
which another Revolving Advance (the "maturing Revolving
Advance") is due to be repaid by the Borrower then,
subject to the terms of this Agreement:-
(a) the maturing Revolving Advance shall be deemed to
have been repaid on the Interest Payment Date
relative thereto either in whole (if the new
Revolving Advance is equal to or greater than the
maturing Revolving Advance) or in part (if the new
Revolving Advance is less than the maturing
Revolving Advance) and
(b) to the extent that the maturing Revolving Advance
is so deemed to have been repaid, the principal
amount of the new Revolving Advance to be made on
such date shall be deemed to have been credited to
the account of the Borrower by the Bank in
accordance with the terms of this Agreement and the
Bank shall (subject to the requirements of clause
5.3) only be obliged to make available to the
Borrower a principal amount equal to the amount by
which the new Revolving Advance exceeds the
maturing Revolving Advance. On the last day of the
Revolving Facility Availability Period all
outstanding Revolving Advances shall be repaid in
full.
7.2 PREPAYMENT AND CANCELLATION
7.2.1 The Borrower may, having given not less than 7 days
prior written notice to the Bank (such notice specifying
the date and the intended amount of the prepayment),
prepay on any Interest Payment Date all or any part of
the Term Facility then outstanding such prepayment, if
in part, to be of a minimum amount of (pound)100,000 or
a multiple of (pound)100,000.
7.2.2 Prepayments under (i) the Term Loan (or the Revolving
Loan under clause 5.6) shall be made together with
accrued interest thereon and (ii) in the case of
prepayment of the whole of the Loans, all other amounts
payable in respect of the Facilities under this
Agreement.
7.2.3 No amount prepaid under clause 7.2.1 or clause 7.2.6 or
cancelled under clause 7.2.5 of this Agreement may be
redrawn and the Term Facility (or Revolving Facility, as
the case may be) shall be reduced by the amount of any
such prepayment or cancellation. Any such prepayment
shall be applied against and shall reduce or extinguish
the repayment amounts specified in clause 7.1.1 in
inverse order of maturity.
7.2.4 Unless agreed by the Bank any notice of prepayment given
by the Borrower under this Agreement shall be
irrevocable and the Borrower shall be bound to prepay
the relevant amount in accordance with such notice.
Unless agreed by the Bank the Borrower may not prepay
all or any part of the Loans except in accordance with
the express terms of this Agreement.
7.2.5 The Borrower may, without penalty, having given not less
than 7 days prior written notice to the Bank (such
notice specifying the date and intended amount to be
cancelled), cancel all or part of any undrawn portion of
the Revolving Facility such cancellation, if in part, to
be of a minimum amount of (pound)100,000 or a multiple
of (pound)100,000.
7.2.6 If the Audited Accounts delivered pursuant to clause
9.1.6(a) show (in respect of the Borrower) the existence
of Surplus Cash as determined by the Bank), the Borrower
shall be obliged to utilize 50% (fifty per cent) of such
Surplus Cash to prepay amounts of principal outstanding
under the Term Facility. Such prepayment(s) shall be
made annually, commencing 31 December 2000 and shall be
applied in inverse order of maturity to the repayment
schedule set out in clause 7.1.1. above.
7.3 Notwithstanding any other provision of this Agreement in the
event that the business of the Borrower or any of its
Subsidiaries or any material part thereof shall (without the
prior written consent of the Bank) be sold or transferred to
any third party the Borrower shall forthwith on written demand
by the Bank repay the Loans.
7.4 The Bank in its discretion may debit any sums due to it in
accordance with this clause 7 whether by way of repayment,
prepayment or otherwise by debiting the relevant amount from
such account or accounts of the Borrower at the Bank as the
Bank may from time to time determine and Breakage Costs will
(if applicable) be payable by the Borrower in all cases.
Breakage Costs will apply whenever the Bank receives or
recovers all or any part of an Advance otherwise than on the
last day of its then current Interest Period or, where the Bank
has agreed to fix the interest rate applicable, otherwise than
at the end of that fixed period or in accordance with the terms
of any such agreement or contract and the Borrower shall pay to
the Bank on demand such additional amount as the Bank shall
certify to be necessary to compensate it for losses if any or
expenses sustained or incurred in liquidating or re-deploying
funds acquired or committed to make, fund or maintain such
Advances for such Interest Period or fixed period (such
certification to be conclusive and binding on the Borrower in
the absence of manifest error).
7.5 In the event of the Revolving Facility and/or the Term Facility
becoming immediately due and payable in accordance with clause
10.2 or clause 7.3 at any time during an Interest Period or
other fixed period agreed by the Bank the Bank may break the
Interest Period or other fixed period on the date upon which
the Revolving Facility and/or the Term Facility shall become
immediately due and payable and will debit such account or
accounts of the Borrower at the Bank as the Bank may from time
to time determine with any additional amount as will be
certified in writing by the Bank to the Borrower to compensate
the Bank for any loss it incurs by reason of the Revolving
Facility and/or Term Facility having become immediately due and
payable (including, for the avoidance of doubt, any Breakage
Costs). From the date of the demand interest will be calculated
in accordance with the provisions of clause 6.
8. WARRANTIES
8.1 The Borrower hereby warrants and represents to the Bank as
follows:-
8.1.1 it is duly incorporated and validly existing under the
laws of England as a limited liability company and has
the power to carry on its business as it is now being
(or will immediately after the Completion Date be)
conducted and to own its property and other assets;
8.1.2 it has the power to execute, deliver and perform its
obligations under this Agreement and to drawdown under
the Facilities; all necessary corporate, shareholder and
other action has been taken to authorize the execution,
delivery and performance of the same and no limitation
on its powers to borrow will be exceeded as a result of
the drawing of any Advance;
8.1.3 it has power to execute, deliver and perform its
obligations under the Lending Documents (other than this
Agreement) to which it is, or (as the case may be) is to
be, party and all necessary corporate, shareholder and
other action has been or will be taken to authorize the
execution, delivery and performance of the same and no
limitation on its powers to give guarantees and/or to
create security will be exceeded as a result of the
execution and delivery of any of the Lending Documents
(other than this Agreement);
8.1.4 this Agreement constitutes, and each of the other
Lending Documents when executed and delivered by the
Borrower will constitute, valid and legally binding
obligations of it enforceable in accordance with their
respective terms;
8.1.5 the execution and delivery of, the performance of its
obligations under, and compliance with the provisions
of, this Agreement and the Security Documents will not:-
(a) contravene any existing applicable law, statute,
rule or regulation or any judgement, decree or
permit to which it is subject;
(b) conflict with, or result in any breach of any of
the terms of, or constitute a default under, any
material agreement or other material instrument to
which it is a party or is subject or by which it or
any of its property is bound; or
(c) contravene or conflict with any provision of its
memorandum or articles of association.
(d) result, other than pursuant to the provisions of
this Agreement or any of the other Lending
Documents, in the creation or imposition of, or
oblige it to create any Security Interest on any of
its assets, rights or revenues;
8.1.6 no litigation, arbitration or administrative proceeding
is taking place, pending or, threatened against the
Borrower which could have a material adverse effect on
its business, assets or financial condition;
8.1.7 no Event of Default nor any Potential Default has
occurred and is continuing; and
8.1.8 (a) to the best of the Borrower's knowledge (knowledge
for this purpose shall be based on the actual knowledge
of the Management of the Borrower and the knowledge that
a prudent purchaser in the Borrower's position would
seek in assessing whether to purchase the Business) that
the information contained in the Long Form Report is
based upon reasonable assumptions and does not contain
any information which is misleading in any way and (b)
the audited accounts of the Business for the year ended
31 December 1998 give a true and fair view of the
financial position of the Business for the relevant
periods and (b) the financial projections for the
Borrower for the two years ended 31/12/2000 are the best
estimate of the Management of the Borrower as to the
future performance of the Borrower based upon historical
financial information and reasonable assumptions of the
Borrower.
8.2 The Borrower further represents and warrants to the Bank
that:-
8.2.1 it is not (nor could with the giving of notice or lapse
of time or any combination thereof be) in breach of or
in default under any agreement to which it is a party or
by which it may be bound which agreement is material to
the carrying on of its business as that business is
being carried on as at the date of this Agreement (or
will be being carried out as of and immediately
following the Completion Date);
8.2.2 the copies of the Sale of Business Agreement and its
memorandum and articles of association delivered to the
Bank or the Bank's Solicitors prior to the date hereof
are true, complete and accurate in all respects and have
not been amended, varied or supplemented in any way and
no other agreements, arrangements or understandings
exist or are contemplated between all or any of the
parties to those agreements and instruments which would
affect the transactions or arrangements contemplated by
the Sale of Business Agreement;
8.2.3 every consent, authorization, licence or approval of, or
registration with or declaration to, governmental or
public bodies or authorities or courts required by it to
authorize, or required by it in connection with, the
execution, delivery, validity, enforceability or
admissibility in evidence of this Agreement or any of
the other Lending Documents or the performance by it of
its obligations under this Agreement and/or any of the
other Lending Documents has been obtained or made and is
in full force and effect and there has been no default
in the observance of the conditions or restrictions (if
any) imposed in, or in connection with, any of the same;
8.2.4 the Borrower is not aware of any claim or potential
claim for any breach available under the Sale of
Business Agreement;
8.2.5 as at the date of this Agreement, the Borrower has no
interest in the share capital of any body corporate;
8.2.6 prior to the date of this Agreement, the Borrower has
not undertaken any trading or incurred any liabilities
of any nature whatsoever whether actual or contingent
except for its obligations under the Sale of Business
Agreement and the agreements in respect of the Existing
Properties and any costs incurred solely in relation to
the Acquisition;
8.2.7 as at the Completion Date, the Borrower will not have
any liabilities in respect of Borrowed Money other than
as permitted under clause 9.2.2 and other than in
respect of the security created by the Security
Documents no Security Interest will exist over the
assets and undertaking of the Borrower;
8.2.8 no order has been made or petition presented or
resolution passed for the winding up of the Borrower or
the Holding Company or any of its Subsidiaries or for an
administration order in respect of the Borrower or the
Holding Company or any of its Subsidiaries and no
distress execution or other process has been levied on
any material part of their respective assets, none of
such companies has stopped payment or is insolvent or
unable to pay its debts for the purposes of Section
123(1) or (2) of the Insolvency Act 1986, no
administrative receiver or receiver or receiver and
manager has been appointed by any person to any part of
its business or assets of such companies and there is no
judgement or court order outstanding against it and such
company;
8.2.9 there are no agreements in force which call for the
present or future issue or allotment of, or grant to any
person the right (whether conditional or otherwise) to
call for the issue or allotment of any share or loan
capital of the Borrower (including any option or right
of pre-emption or conversion);
8.2.10 the obligations of the Borrower under this Agreement and
the other Lending Documents are (or, in the case of the
other Lending Documents, upon the same being executed
and delivered by the Borrower will be) direct, general
and unconditional obligations of the Borrower and rank
or, as the case may be, will rank at least pari passu
with all other present and future unsecured and
unsubordinated Indebtedness of the Borrower with the
exception of any obligations which are mandatorily
preferred by law and not by contract;
8.2.11 save as fully and fairly disclosed to the Bank and MTT
in writing and contained in the Fifth Schedule prior to
the date hereof the Borrower:-
(a) complies and has at all times complied in all
material respects with all Environmental Laws and
Environmental Consents which may cause a Material
Adverse Change except where any breach is a matter
the subject of indemnification in favour of the
Borrower under the Sale of Business Agreement and
the Borrower has taken all steps to enforce such
rights of indemnification;
(b) has obtained and maintained in full force and
effect all material Environmental Consents and,
there are no conditions, facts or circumstances
entitling any such material Environmental Consents
to be revoked, suspended, amended, varied,
withdrawn or not renewed or which would prevent
compliance with any Environmental Consents;
(c) is not required by any Environmental Consent or any
Environmental Law or as a result of any claim in
respect of a breach of any Environmental Law or
Consent to make any investment or to incur any
expenditure or to take or desist from taking any
action which is likely to have a material adverse
effect on its financial condition;
8.2.12 no claim in respect of a breach of any Environmental Law
or Consent is pending or has been made or threatened
against the Borrower or any occupier of any property
owned or leased by the Borrower;
8.2.13 the Borrower has not prior to the Completion Date or
upon the Completion Date entered into any transaction or
series of transactions requiring approval under sections
320-322 of the Companies Act 1985 or which, if the share
capital were then listed on the London Stock Exchange,
would constitute "a transaction with a related party"
(as defined in the London Stock Exchange's Listing
Rules); and
8.2.14 no claims are being or are likely to be asserted against
the Borrower with respect to Taxes which are likely to
be determined adversely to the Borrower and which, if so
adversely determined, would cause a Material Adverse
Change, and that it is not overdue in the filing of any
Tax returns.
8.3 The representations and warranties in clause 8.1 and 8.2 shall
be deemed to be repeated by the Borrower on and as of the date
of each Advance and each Interest Payment Date and at the end
of each Accounting Quarter as if made with reference to the
facts and circumstances existing on each such date.
Additionally the Borrower shall be deemed to represent and
warrant as at each such date in respect of the then latest
Audited Accounts and Management Accounts delivered to the Bank
under clauses 9.1.6 (a) and (b) respectively that:-
8.3.1 in the case of the Audited Accounts, such Audited
Accounts have been prepared in accordance with GAAP
which have been consistently applied and present a true
and fair view of the financial position of the Borrower
(and any of its Subsidiaries) as at the date to which
such Audited Accounts were made up and the results of
the operations of the Borrower (and of its Subsidiaries)
for the accounting reference period to which they relate
and that as at such date, neither the Borrower nor any
of its Subsidiaries had any significant liabilities
(contingent or otherwise) which are required to be
disclosed or reserved in accordance with GAAP and are
not disclosed by or reserved against in, such financial
statements (or the notes thereto) and neither the
Borrower nor any of its Subsidiaries had any unrealized
or anticipated losses which should, in accordance with
GAAP be included in such Audited Accounts by way of note
or provision; and
8.3.2 in the case of the Management
Accounts, such Management Accounts have been properly
prepared in accordance with good accounting practice on
a basis consistent with that adopted in the Audited
Accounts, that such Management Accounts are not
considered misleading in any material respects, that the
profit and loss accounts contained in the Management
Accounts give a fair view of the results of the Borrower
for the trading period to which they relate and the
statement of net trading assets contained in the
Management Accounts gives a fair view of the financial
position of the business of the Borrower on that date.
9. UNDERTAKINGS
9.1 The Borrower undertakes with the Bank, from the date of this
Agreement that so long as any moneys are owing under this
Agreement or the other Lending Documents it:-
9.1.1 will promptly inform the Bank in writing (and with a
copy sent to MTT simultaneously) of any occurrence which
is likely to affect its ability to perform its
respective obligations under this Agreement or the other
Lending Documents and of any Potential Default promptly
upon becoming aware thereof and will from time to time,
if so requested by the Bank confirm to the Bank (with a
copy sent to MTT simultaneously) in writing that, save
as otherwise stated in such confirmation:-
(a) no Event of Default has occurred and is continuing;
and
(b) no Potential Default has occurred and is
continuing;
Any such notice(s) under this clause 9.1.1 shall be accompanied
by a statement of a duly authorized officer of the Borrower
(without personal liability on his part, other than in respect
of fraudulent misrepresentation) providing such notice, setting
forth details of the occurrence referred to and stating what
action the Borrower proposes to take with respect thereto.
9.1.2 will obtain or cause to be obtained, maintain in full
force and effect and comply in all material respects
with the conditions and restrictions (if any) imposed
in, or in connection with, every consent, authorization,
licence or approval of governmental or public bodies or
authorities or courts and do, or cause to be done, all
other acts and things, which may from time to time be
necessary under applicable law for the continued due
performance of all its respective obligations under this
Agreement and the other Lending Documents;
9.1.3 will use the Facilities exclusively for the respective
purposes specified in clause 3;
9.1.4 will:-
(a) maintain such insurance policies as are normally
maintained by prudent companies carrying on
businesses similar to those carried on by the
Borrower or any of its Subsidiaries and will ensure
that the Agent (as defined in the Security Agency
Deed) (in its capacity as security agent for MTT)
has its interest noted on the policies;
(b) (without prejudice to the provisions of any Lending
Document) procure that the proceeds of any policy
of insurance maintained by the Borrower or any of
its Subsidiaries in respect of assets other than
the Leases shall, if required by the Bank, be
applied in or towards prepayment of the whole or
such part of the Facilities as the Bank shall
direct, unless the Bank agrees and provided no
Event of Default has occurred and is continuing and
has not been waived in writing by the Bank, that
all or part of such proceeds may be used by the
Borrower or any such company to reinstate the asset
the subject of the claim;
9.1.5 will (in relation to the Borrower and the Subsidiaries
of the Borrower):-
(a) prepare financial statements and consolidated
financial statements in accordance with GAAP
consistently applied in respect of each accounting
reference period and cause the same to be reported
on by the Auditors;
(b) prepare unaudited management accounts in respect of
each successive Trading Period consisting of a
consolidated cashflow statement, profit and loss
account for such Trading Period and a consolidated
balance sheet as at the end of such Trading Period
on the same basis as the latest preceding annual
statements;
9.1.6 will deliver to the Bank (with copies to MTT
simultaneously) copies of each of the following
documents:-
(a) as soon as available but in any event not later
than 120 days after the end of the financial period
to which they relate, the audited balance sheet and
profit and loss account of the Borrower and its
Subsidiaries and the audited consolidated balance
sheet and consolidated profit and loss account of
the Borrower and any of its Subsidiaries for each
financial year and a cashflow statement for the
Borrower and any of its Subsidiaries for such
financial year together with the unqualified report
of the Auditors thereon, the notes thereto and the
directors' report thereon and, as soon as available
but in any event not later than 120 days after the
end of the financial period to which it relates, a
copy of Form 10 - K (with all attachments) filed by
the Holding Company with the Securities and
Exchange Commission in the United States of
America;
(b) within 30 days after the end of each Trading Period
the Management Accounts in respect of the Borrower
for such Trading Period and which shall (in respect
of each relevant period) be accompanied by a brief
reconciliation of any major divergencies from the
financial forecasts provided to the Bank and MTT;
(c) as soon as available, but in any event not later
than 10 days after the end of every Trading Period,
will deliver to the Bank (with a copy to MTT
simultaneously) the Eligible Receivables and
Eligible Stock Certificate and a certificate as of
the end of each such Trading Period signed by a
director of the Borrower (without personal
liability on his part, except in the case of
fraudulent misrepresentation) containing a list of
Receivables detailing the amount of each
Receivable, the Account Debtor and date of the
invoice (set out on an aged basis) and a stock
report showing the value and categories of Stock
and held by the Borrower as at such date for such
period;
(d) at the time of issue thereof every circular, notice
or like document issued by the Borrower to its
creditors;
(e) at the time of the delivery of the Audited Accounts
for each accounting reference period, and at the
time of delivery of the Management Accounts at the
end of each Accounting Quarter, a certificate in
the form of the Second Schedule signed by a
director of the Borrower (without personal
liability on his part, except in the case of
fraudulent misrepresentation), stating:-
(A) the respective amounts of PBIT, Interest,
Surplus Cash, Adjusted Tangible Net Worth,
Current Assets, Current Liabilities and
Eligible Receivables and Eligible Stock (such
certificate to be prepared in each case in
respect of or, as the case may be, as at the
end of the accounting reference period or end
of the Accounting Quarter to which such
Audited Accounts or Management Accounts
respectively relate and to indicate the
manner in which such amounts have been
calculated);
(B) the application of such amounts to the ratios
and limits specified in clause 9.3, and
confirming that, as at the date at or to
which the relevant Audited Accounts or, as
the case may be Management Accounts are made
up, the Borrower was in compliance with the
covenants and undertakings set out in clause
9.3 (or, if it was not in such compliance,
indicating the extent of the breach and the
steps intended to be taken to remedy the
same) and that, as at a date not more than 7
days prior to the delivery of the
certificate:-
(1) no Event of Default has occurred and is
continuing (or, if such is not the
case, specifying the same); and
(2) the Borrower is not aware that any
Potential Default has occurred and is
continuing;
(C) that there has been no Material Adverse
Change in the business, assets or financial
condition of the Borrower or any of its
Subsidiaries since the date as at, or to
which, such Audited Accounts or, as the case
may be Management Accounts are made up (or,
if such is not the case, specifying the
same);
(D) that the representations warranties contained
in clauses 8.1, and 8.2 were true (other than
as previously advised in writing to the Bank)
as at the date of or to which such Audited
Accounts or as the case may be Management
Accounts are made up as if made with
reference to the facts and circumstances
existing at such dates;
(f) no later than 30 days prior to the beginning of
each financial year a budget for such financial
year in a form previously approved by the Bank
(without prejudice to any other provision of this
clause 9 and including specifically, but without
limitation, profit and loss and cashflow forecasts
and balance sheet for such financial year) and a
certificate signed by a director of the Borrower
(without personal liability on his part, except in
the case of fraudulent misrepresentation) to the
effect that implementation of such budget would not
give rise to:-
(i) an Event of Default; or
(ii) a Potential Default, at any time during or
following such financial year;
9.1.7 will provide to the Bank (with a copy to MTT
simultaneously) such financial and other information in
its possession concerning the Borrower as the Bank may
from time to time reasonably require;
9.1.8 to the extent that it is lawful to do so (and if and to
the extent it is unlawful to do so, the Borrower will,
and will procure that any Subsidiary will comply with
all applicable legislation in ensuring that it is lawful
to do so) will procure, that a deed or other
documentation, in form and substance satisfactory to the
Bank incorporating provisions substantially the same as
those in the guarantees and debentures (comprised in the
Security Documents) and/or such other Security Documents
as the Bank may require shall be executed and delivered
to the Agent (as defined in the Security Agency Deed)
(as security agent for MTT) by any Subsidiary of the
Borrower, promptly upon its becoming such a Subsidiary,
unless otherwise agreed by the Bank;
9.1.9 will cause to be paid and discharged all Borrowed Money
when due (except to the extent that they are the subject
of a bona fide dispute as determined in the reasonable
opinion of the Bank and that the Borrower is taking all
steps available to it to contest such claim) and all
Taxes imposed upon the Borrower, and will file or cause
to be filed all tax returns required to be filed in all
jurisdictions in which it is situated or carries on
business or is otherwise subject to Taxation and pay all
Taxes agreed with the Inland Revenue or relevant
authority shown to be due and payable on such returns or
any assessments made against it;
9.1.10 will, upon the same being threatened or pending and in
any case immediately after the commencement thereof,
give to the Bank notice in writing (with a copy to MTT
simultaneously) of any litigation, arbitration or
administrative proceedings or any dispute affecting the
Borrower or any of its Subsidiaries or any of their
respective assets, rights or revenues in an amount in
excess of (pound)100,000 which if determined agaiNST
such company could be expected to have an adverse effect
on the ability of the Borrower or any of its
Subsidiaries duly to perform and observe their
respective obligations under this Agreement or any of
the other Lending Documents;
Any such notice under this clause 9.1.10 shall be
accompanied by a statement of a duly authorized officer
of the Borrower (without personal liability on his part,
except in the case of fraudulent misrepresentation)
providing such notice, setting forth details of the
occurrence referred to and stating what action the
Borrower proposes to take with respect thereto.
9.1.11 will comply, and shall procure that its Subsidiaries
comply, in all material respects with the terms and
conditions of all agreements, licences and concessions
material to the carrying on of its/or their business;
9.1.12 will if requested by the Bank at any time during the
period of the Facility procure that there be prepared at
the cost of the Borrower a quarterly independent review
of the Stock and Receivables such review to be addressed
to the Bank and MTT. The Bank shall have the right to
decide as to which firm of accountants (or other
investigating professionals) shall conduct such review
and the Borrower undertakes that it will, and will
procure that any of its Subsidiaries will, provide
access (upon reasonable notice) to such books, records
and management of the Borrower (or any of its
Subsidiaries) as such accountants (or other
investigating professionals) may require in order to
conduct such review;
9.1.13 will procure that its business is carried on in
accordance in all material respects with all applicable
Environmental Law and that all requisite Environmental
Consents are maintained in full force and effect at all
times (other than in each case where any breach is the
subject of indemnification in favour of the Borrower
under the Sale of Business Agreement provided that the
Borrower has taken all steps to promptly enforce such
rights);
9.1.14 will keep proper books of record and accounts in which
true and correct entries (which are complete in all
material respects) which conform with GAAP shall be made
of all dealings and transactions in relation to the
Borrower's business and will procure that the Bank (or
its agent) is given access upon reasonable notice during
normal business hours for itself and/or its agents to
all premises owned or occupied by the Borrower or any of
its Subsidiaries for the purpose of enabling the Bank
and/or its agents to
(i) inspect the buildings, machinery, plant,
fixtures, vehicles, computers, office
equipment and records of the Borrower;
(ii) gain access to the management and officers of
the Borrower and the Auditors in order to
discuss the business, operations, properties
and financial and other condition of the
Borrower;
9.1.15 will notify the Bank (with a copy to MTT simultaneously)
expeditiously of any material notice or correspondence
relating to either alleged planning breaches or claims
for nuisance or claims of excessive noise in respect of
the Leases and any future property to be acquired by the
Borrower;
9.1.16 will, within 30 days of Completion, transfer all its
banks accounts from its existing bankers and thereafter
will carry out all its normal banking transactions (i.e.
BACS, CHAPS payments and other cash management
activities and foreign exchange requirements) through
the Bank;
9.1.17 immediately upon any change in the employment status,
duties or responsibilities of Michael J Scharf and/or
Raymond Rozanski with respect to their employment with
the Holding Company or the Borrower, the Borrower will
provide the Bank (with a copy to MTT simultaneously)
with a certificate executed by a duly authorized officer
specifying such changes.
9.1.18 will, on request by the Bank, enter into such additional
documents (in a form and substance satisfactory to the
Agent (as defined in the Security Agency Deed)) required
by the Agent (as so defined) to take security over any
freehold (or leasehold interest capable of registration
at HM Land Registry) in respect of any properties owned
or leased to the Borrower.
9.2 The Borrower undertakes with the Bank that so long as any
moneys are owing under this Agreement or the other Lending
Documents without the prior written consent of the Bank:-
9.2.1 it will not permit:-
(a) (save pursuant to the Security Documents) any
Security Interest to subsist, arise or be created
or extended over all or any part of its present or
future undertakings, assets, rights or revenues to
secure or prefer any present or future indebtedness
of the Borrower or any of its Subsidiaries or any
other person; or
(b) save pursuant to the Security Documents, any
indebtedness of the Borrower for Borrowed Money to
be guaranteed or otherwise assured against
financial loss by any person except for
indebtedness of the Borrower for Borrowed Money
incurred in the ordinary course of trading and so
guaranteed or assured by the Bank; or
(c) save pursuant to the Security Documents any
indebtedness of any of its Subsidiaries to be
guaranteed or otherwise assured against financial
loss by any person;
9.2.2 it will not, and will procure that no Subsidiary of the
Borrower will, incur or permit to exist any obligations
in respect of Borrowed Money to, or assume any liability
under any guarantee, indemnity or other assurance
against financial loss in respect of Borrowed Money in
excess of (pound)100,000 in favour of any person
except:-
(a) the Facilities and the Lending Documents;
(b) Borrowed Money specifically approved by the Bank
in the budgets approved by the Bank;
(c) as permitted with the prior written consent of the
Bank;
(d) Borrowed Money under any Finance Lease s where the
aggregate amount of such obligations in any one
financial year does not exceed (pound)400,000;
(e) Borrowed Money under the Subordinated Loan;
(f) Borrowed Money of (i) the Borrower to a Subsidiary
of the Borrower or (ii) of a Subsidiary of the
Borrower to the Borrower or (iii) of a Subsidiary
of the Borrower to another Subsidiary of the
Borrower, provided that in all cases the Bank has
received security from such Subsidiaries pursuant
to clause 9.1.8; or
(g) Borrowed Money in respect of non-interest bearing
loans (which are, subject to the terms of the Inter
creditor Agreement, repayable on demand) made on an
unsecured basis by the Holding Company to the
Borrower provided that:-
(i) such loans shall not exceed, at any time, a
principal amount in excess of (pound)2,500,000
in aggregate;
(ii) the Borrower shall be entitled to repay any
amounts outstanding under such loans unless
at such time (i) any payment of principal or
interest payable under this Agreement has not
been paid on its due date; or (ii) the
financial covenants contained in clause 9.3
have not been met or (iii) an Event of
Default or Potential Default has occurred and
is continuing;
(h) the UK Guarantee and the Reimbursement Agreement;
9.2.3 it will not, and will procure that no Subsidiary of the
Borrower will:-
(a) sell or otherwise dispose of any of its assets on
terms whereby such asset is or may be leased to, or
reacquired or acquired by, the Borrower or any of
its Subsidiaries; or
(b) sell or dispose of any of its Receivables or Stock
otherwise than in the ordinary course of its
business or Stock that is obsolete or worn out;
9.2.4 other than the "lockbox" account held by the Borrower in
the United States of America for the clearance of cheque
drawn on US banks, it will not enter into any banking or
financial transactions or maintain any current or
deposit account with a bank or financial institution
other than the Bank under this Agreement;
9.2.5 it will not declare or pay any dividend or make any
other distribution (whether in cash or in specie) in
respect of all or any of its share capital other than
management fees or charges in an amount not in excess of
(pound)300,000 in aggregate in any one financial year
payable to the Holding Company
Provided that where, in respect of any financial year, PBIT
exceeds (pound)5,000,000 for the whole of such financial year
the Borrower shall be entitled (following the end of the
financial year in question with reference to that year's
Audited Accounts) to increase such management fees to
(pound)500,000 in aggregate for the following financial year.
If at a later date, PBIT falls below (pound)5,000,000 at any
time with reference to that year's Audited Accounts, the level
of permitted management fees shall reduce to (pound)300,000 in
aggregate in any one financial year;
9.2.6 other than a Permitted Disposal it will not, and will
procure that no Subsidiary of the Borrower will, sell,
transfer, lease, lend or otherwise dispose of or cease
to exercise direct control over the whole or any part of
the present or future undertakings, assets or revenues
of the Borrower or any of its Subsidiaries whether by
one or a series of transactions related or not other;
9.2.7 it will not, and will procure that no Subsidiary of the
Borrower will:-
(a) enter into any arrangement or contract with or
transfer the whole or any part of its business or
undertaking to any of its Affiliates unless such
arrangement or contract is entered into on an arm's
length basis and is fair and equitable to the
Borrower or the relevant Subsidiary; or
(b) enter into any other transaction, arrangement or
contract with any of its Affiliates which is on
terms which are less favorable than those
obtainable from any person who is not an Affiliate
of the Borrower or the relevant Subsidiary;
9.2.8 it will not terminate, amend or vary, or acquiesce in
any termination, or amendment or variation, of the Sale
of Business Agreement or any of the Lending Documents
and will comply with the respective terms thereof and
will, in the event that any such termination, amendment
or variation is made (with the requisite consent),
forthwith inform the Bank (with a copy to MTT
simultaneously) of the nature and substance thereof;
9.2.9 it will not waive any condition precedent under the Sale
of Business Agreement;
9.2.10 it will not alter or vary any provision of its
memorandum and articles of association or convene any
meeting with a view either to the alteration of any
provision of its Memorandum of Association or Articles
of Association or to the passing of a resolution that it
be wound up (except for the purpose of a reconstruction
or amalgamation whilst solvent on terms previously
approved in writing by the Bank (such approval not to be
unreasonably withheld or delayed));
9.2.11 it will not, and will procure that no Subsidiary of the
Borrower will, amalgamate or merge with or acquire any
other undertaking company or person including the
acquisition of shares in any other company;
9.2.12 it will not change its accounting reference date (or
that of any of its Subsidiaries) or cease to be resident
for tax purposes in the United Kingdom;
9.2.13 it will not change its Auditors;
9.2.14 it will not, and will procure that no Subsidiary of the
Borrower will, make any material change to the nature of
its business which would constitute a change in the
nature of the business of the Borrower from that carried
on immediately following the Completion Date;
9.2.15 it will not, and will procure that no Subsidiary of the
Borrower will make or commit to make, any advance, loan,
extension of credit or capital contribution to, or
purchase of, any shares, bonds, notes, debentures or
other securities of, or make any other investment in (by
way of transfers of property, acquisitions of evidences
of indebtedness or otherwise), any person except:
(a) advance payments or deposits against purchases made
in the ordinary course of the Borrower's business;
(b) advances to employees which do not exceed at
any time, in the aggregate, (pound)50,000;
(c) advances by the Borrower to a Subsidiary of the
Borrower who has executed security in favour of the
Agent (as defined in the Security Agency Deed) (as
security agent for MTT) pursuant to clause 9.1.8;
(d) Receivables owing to the Borrower or its
Subsidiaries or acquired in the ordinary course of
business and payable or dischargeable in accordance
with customary trade terms; and
(e) investments received or arising in connection with
the bankruptcy or reorganization of any supplier or
customer of the Borrower or any Subsidiary of the
Borrower in settlement of any obligations to the
Borrower or any Subsidiary of the Borrower;
(f) any adequate provision for any pension
contributions made (or to be made) by the Borrower
relating to Mr A Bagshawe's pension
9.2.16 it will not repay or prepay or cancel the Subordinated
Loan or any interest accrued thereon or vary or alter in
any way any of the terms of the Intra Group Loan
Agreement or create any Security Interest to secure the
Subordinated Loan.
9.3 The Borrower undertakes with the Bank that from the Completion
Date and as long as any monies are owing under this Agreement
or any of the Lending Documents the financial position of the
Borrower shall be such that:-
9.3.1 the ratio of PBIT to Interest of the Borrower in respect
of each period referred to in Column A below shall not
be less than the ratio set out in Column B below
opposite such period;
COLUMN A Column B
Completion to 30/9/99 1.5:1
Completion to 31/12/99 1.75:1
Completion to 31/3/00 2:1
1/7/99 to 30/6/00 2.25:1
1/10/99 to 30/9/00 2.5:1
1/1/00 to 31/12/00 and thereafter 2.75:1
9.3.2 The Adjusted Tangible Net Worth shall not at any time in
relation to each period from the date set out in Column
A below to the date set out in Column B below opposite
such first mentioned date be less than the amount set
out in Column C below opposite both such dates:
COLUMN A Column B Column C
Completion Date 30/12/99 (pound)6,250,000
31/12/99 30/3/00 (pound)7,250,000
31/3/00 29/6/00 (pound)7,450,000
30/6/00 29/9/00 (pound)7,950,000
30/9/00 30/12/00 (pound)8,650,000
31/12/00 30/12/01 (pound)9,350,000
31/12/01 and (pound)10,000,000
thereafter
9.3.3 the Capital Expenditure in respect of each period
referred to in Column A below shall not exceed the
amount set out in Column B below opposite such period;
COLUMN A Column B
Completion to 31/12/99 (pound)1,600,000
1/1/00 to 31/12/00 and (pound)2,100,000
thereafter
Provided that, for the avoidance of doubt:-
(i) the amount of Capital Expenditure in Column B
for the period from Completion Date to
31/12/00 shall exclude the costs associated
with the closure of Ductile Hot Mill or the
partial closure of Dudley Port Steel Mill
(which costs shall be limited to a maximum of
(pound)1,500,000); and
(ii) the amounts set out in Column B shall exclude
any amounts re-invested by the Borrower in
the Business.
9.3.4 the ratio of Current Assets to Current Liabilities shall
at all times not be less than the ratio of 1.5:1.
9.4 The covenants contained in clause 9.3.1 and 9.3.4 shall be
tested on the last day of each Accounting Quarter, the covenant
contained in clause 9.3.2 shall be tested on a continuous basis
by reference to the monthly Management Accounts and
certificates produced in accordance with Clause 9.1.6(c) and
the covenant contained in clauses 9.3.3 shall be tested monthly
in each case by reference to:
9.4.1 the Audited Accounts for the relevant accounting
reference period and prior to the publication thereof;
9.4.2 the Management Accounts.
If and to the extent that the Audited Accounts differ from the
monthly Management Accounts the Borrower shall itself and (if
required by the Bank) procure that the Auditors shall provide a clear
written explanation as to how such difference(s) arise. In such
circumstances the Borrower shall make such adjustments to the
Management Accounts compiled after such Audited Accounts as the Bank
may consider to be appropriate to ensure that the Management Accounts
are prepared in accordance with policies and bases consistent with
the Audited Accounts.
9.5 The Bank may require the Auditors at the cost of the Borrower
to verify such figures provided to it in relation to the
financial covenants in clause 9.3 and give a certificate in a
form and content satisfactory to the Bank] certifying the
amounts of PBIT, Interest, Surplus Cash, Adjusted Tangible Net
Worth, Current Assets and Current Liabilities and Eligible
Stock and Eligible Receivables for the relevant period with the
intent that the covenants contained in clause 9.3 shall require
to be satisfied by the figures so certified even if the Audited
Accounts for the relevant accounting period have not yet been
published.
9.6 In the event of any change after the date hereof in GAAP which
would lead to the covenants in clause 9.3 having a different
effect to that which would have arisen prior to such change the
Bank may in its absolute discretion after consultation with the
Bank and the Borrower vary or amend by notice in writing to the
Borrower any of such covenants so as to achieve an effect the
same or similar to that which was originally intended.
9.7 If there is any dispute as to any computation under clauses
9.3.1 to 9.3.4 inclusive or as to the interpretation of any of
the terms used in such clauses the decision of the Auditors
shall in the absence of manifest error be conclusive and
binding for the purposes of this Agreement.
10. EVENTS OF DEFAULT
10.1 Each of the events set out below is an Event of Default
(whether or not caused by any reason whatsoever outside the
control of the Borrower or any Subsidiary of the Borrower or
any other person) namely if:-
10.1.1 Non-payment: the Borrower fails to pay any sum due from
it under this Agreement or any of the other Lending
Documents in Sterling, at the time (or within 2
Business Days thereafter where the failure to pay is
due to an error arising in the transmission of funds)
and in the manner stipulated in this Agreement or the
relevant Lending Document; or
10.1.2 Breach of other obligations: the Borrower commits any
breach of or omits to observe any of the obligations or
undertakings expressed to be assumed by it under this
Agreement or any of the other Lending Documents (other
than those referred to in clause 10.1.1) and, in
respect of any such breach or omission which, in the
opinion of the Bank, is capable of remedy, such action
as the Bank may require to remedy the same shall not
have been taken within 5 Business Days after the Bank
shall have given written notice to the Borrower of such
breach or omission and of the action required by the
Bank to remedy the same; or
10.1.3 Misrepresentation: any representation, warranty or
statement made or deemed to be made or repeated by or
on behalf of the Borrower in, or in connection with,
this Agreement or any of the other Lending Documents or
in any notice, accounts, certificate or statement
referred to in or delivered under this Agreement or any
of the other Lending Documents is or proves to have
been materially incorrect at the time it is made or
deemed to be made in any respect, unless the underlying
circumstances (if, in the Bank's opinion, capable of
remedy) are remedied within 3 Business Days after the
Bank shall have given notice to the Borrower of such
incorrect representation, warranty or statement and of
the action required by the Bank to remedy the same; or
10.1.4 Cross-default:
(a) any Borrowed Money of the Holding Company or any of
its Subsidiaries at any time becomes prematurely
due and payable or any creditor of the Holding
Company or any of its Subsidiaries becomes entitled
to declare any such Borrowed Money due and payable
prior to the date when they would otherwise have
become due or any guarantee or indemnity given by
the Holding Company or any of its Subsidiaries in
respect of any such indebtedness is not honored
when due and called upon provided that such sums
exceed (pound)100,000; or
(b) any Borrowed Money of the Holding Company or any of
its Subsidiaries is not paid as and when the same
is or becomes due and payable; or
(c) any Security Interest over any assets of the
Holding Company or any Subsidiary securing Borrowed
Money or any guarantee or indemnity given by the
Holding Company or any Subsidiary in respect of
such Borrowed Money becomes enforceable and steps
are taken to enforce the same;
10.1.5 Material Litigation: the Borrower or any of its
Subsidiaries becomes involved in or is threatened with
any litigation, arbitration or administration
proceedings which in the opinion of the Bank will
constitute a Material Adverse Change; or
10.1.6 Consents and Authorizations: any consent,
authorization, licence or approval of, or registration
with or declaration to, any governmental or public body
or authority or court required by the Borrower to
authorize, or required by the Borrower in connection
with, the execution, delivery, validity, enforceability
or admissibility in evidence of this Agreement or any
of the other Lending Documents or the performance by
the Borrower of any of its obligations under this
Agreement or the other Lending Documents is modified in
a manner unacceptable to the Bank, or is not granted or
is revoked or terminated or expires and is not renewed,
or otherwise ceases to be in full force and effect; or
10.1.7 Attachment or Process: a creditor attaches or takes
possession of, or a distress, execution, sequestration
or other process is levied or enforced upon any of the
undertakings, assets, rights or revenues of the
Borrower or any of its Subsidiaries and is not
discharged within 7 days; or
10.1.8 Insolvency:
(a) the Borrower or any of its Subsidiaries is deemed
unable to pay its debts in accordance with Section
123(1) or (2) of the Insolvency Act 1986 (as that
Section may be amended by order under Section 416
of the Insolvency Act 1986 or otherwise); or
(b) the Borrower or any of its Subsidiaries becomes, or
admits to being, unable to pay its debts as they
fall due; or
(c) the Borrower or any of its Subsidiaries otherwise
becomes insolvent or stops or suspends making
payments (whether of principal or interest) with
respect to all or any class of its debts or
announces an intention to do so; or
10.1.9 Administration:
(a) any meeting of the Borrower or any of its
Subsidiaries is convened for the purpose of
considering any resolution to present an
application for an administration order; or
(b) a petition for an administration order in relation
to the Borrower or any of its Subsidiaries is
presented to the court; or
(c) the Borrower or any of its Subsidiaries passes a
resolution to present an application for an
administration order; or
(d) an administration order is made in relation to the
Borrower or any of its Subsidiaries; or
10.1.10 Compositions etc: any steps are taken or negotiations
commenced, by the Borrower or any of its Subsidiaries
or by the creditors generally of the Borrower or any of
its Subsidiaries (or any class of them) with a view to
proposing (under any enactment or otherwise) any kind
of composition, scheme of arrangement, compromise or
arrangement, in each case involving the Borrower or any
of its Subsidiaries and any of its creditors generally
(or any class of them); or
10.1.11 Appointment of receivers and managers:
(a) any administrative or other receiver or any manager
is appointed of the Borrower or any of its
Subsidiaries or any part of its assets and/or
undertaking; or
(b) the directors of the Borrower or any of its
Subsidiaries request any person to appoint such a
receiver or manager; or
(c) any other steps are taken to enforce any Security
Interest over all or any part of the assets and/or
undertaking of the Borrower or any of its
Subsidiaries ; or
10.1.12 Winding up:
(a) any meeting of the Borrower or any of its
Subsidiaries is convened for the purpose of
considering any resolution for (or to petition for)
its winding up; or
(b) the Borrower or any of its Subsidiaries passes such
a resolution; or
(c) any person presents any petition for the winding up
of the Borrower or any of its Subsidiaries which is
not withdrawn or discharged within 6 Business Days
of service; or
(d) an order for the winding up of the Borrower or any
of its Subsidiaries is made not being a winding-up
or dissolution of the Borrower or any such company
involving an amalgamation or reorganization on a
solvent basis to which the Bank has given its prior
written consent (such consent not to be
unreasonably withheld or delayed); or
10.1.13 Striking Off: any corporate, legal or administrative
proceedings are commenced with a view to the striking
off of the Borrower or any of its Subsidiaries not
being a striking off involving an amalgamation or
reorganization on a solvent basis to which the Bank has
given its prior written consent (such consent not to be
unreasonably withheld or delayed); or
10.1.14 Analogous Proceedings: there occurs, in relation to the
Borrower or any of its Subsidiaries in any country or
territory in which any of them carries on business or
to the jurisdiction of whose courts any part of their
assets is subject, any event which, in the opinion of
the Bank, appears in that country or territory to
correspond with, or have an effect equivalent or
similar to, any of those mentioned in clauses 10.1.7 to
10.1.13 (inclusive) or the Borrower or any of its
Subsidiaries otherwise becomes subject, in any such
country or territory, to the operation of any law
relating to insolvency, bankruptcy or liquidation; or
10.1.15 Cessation of business: the Borrower or any of its
Subsidiaries suspends or ceases or threatens
immediately to suspend or cease to carry on the whole
or a substantial part of its business; or
10.1.16 Seizure: all, or any part, of the undertaking, assets,
rights or revenues of, or shares or other ownership
interests in the Borrower or any of its subsidiaries
are seized, sequestrated, attached, nationalized,
expropriated or compulsorily acquired by or under the
authority of any government or any third party; or
10.1.17 Security: any Lending Document is not or ceases to be
effective or is alleged by the Borrower to be
ineffective at any time for any reason; or
10.1.18 Change of Shareholders: any person or persons (not
being a member of the Borrower at the Completion Date)
acquires or agrees to acquire or has an option to
acquire any interest in the equity share capital (as
defined by Section 744 of the Companies Act 1985) of
the Borrower; or
10.1.19 Unlawfulness: it becomes unlawful at any time for the
Borrower to perform all or any of its obligations under
this Agreement or for the Borrower to perform all or
any of its obligations under the other Lending
Documents; or
10.1.20 Repudiation: the Borrower repudiates this Agreement or
does or causes or permits to be done any act or thing
evidencing an intention to repudiate this Agreement
and/or the Borrower repudiates any of the other Lending
Documents to which it is party or does or causes or
permits to be done any act or thing evidencing an
intention to repudiate any such Lending Document; or
10.1.21 Qualification of Accounts: the Auditors qualify their
report on the Audited Accounts of the Borrower in any
way whatsoever; or
10.1.22 Material Adverse Change: there occurs a Material
Adverse Change; or
10.1.23 Swap Default: the Borrower or any of its Subsidiaries
commits any breach of or omits to observe any of its
obligations or undertakings expressed to be assumed by
it under any interest rate and/or currency swap
transactions or other hedging arrangements to which it
is a party for the time being and in respect of any
such breach or omission which in the opinion of the
Bank is capable of remedy such action as the Bank may
require to remedy the same shall not have been taken
within 7 days after the Bank shall have given notice to
the Borrower of such breach or omission and of the
action required by the Bank to remedy the same; or
10.1.24 Rescission/Repudiation of the Sale of Business
Agreement: any party rescinds or repudiates the Sale of
Business Agreement.
10.2 The Bank may, without prejudice to any other rights of the
Bank, at any time after the happening of an Event of Default by
notice to the Borrower declare that:
10.2.1 the obligation of the Bank to make available the
Facilities shall be terminated, and shall be reduced to
zero forthwith; and/or
10.2.2 the Term Facility and the Revolving Facility and all
interest and commitment commission accrued and all
other sums payable under this Agreement have become due
and payable, whereupon the same shall, immediately or
in accordance with the terms of such notice, become due
and payable; and/or the Security Documents (or any of
them) have become enforceable.
On or at any time after the making of any such declaration, the
Bank shall be entitled, to the exclusion of the Borrower (and
without prejudice to clause 6.1), to select the duration of
Interest Periods.
11. PAYMENTS
11.1 All payments to be made under this Agreement shall be made in
Sterling in immediately available funds during normal business
hours. If any sum falls due for payment on a day which is not a
Business Day it shall be made on the next succeeding Business
Day.
11.2 All payments to be made by the Borrower under this Agreement
shall be made to the Bank at such office as the Bank may notify
to the Borrower from time to time.
11.3 All sums payable by the Borrower under this Agreement shall be
paid in full without any set-off or counterclaim and free and
clear of and without any deduction or withholding whatsoever.
12. FEES AND COSTS
12.1 The Borrower shall pay the Bank:-
12.1.1 an arrangement fee of (pound)250,000 (two hundred aND
fifty thousand pounds Sterling) which shall be paid on
the date that this Agreement is signed; and
12.1.2 a monitoring fee in respect of the Facilities of
(pound)12,000 (twelve thousand pounds Sterling) per
annum payable monthly in advance the first such payment
being due and payable on Completion Date and monthly
thereafter; and
12.1.3 a non-utilization fee of 0.125% per annum of the
amounts undrawn of the Revolving Facility Available
Amount which fee shall be charged daily and payable
quarterly in arrears the first such payment being due
and payable on 30 June 1999;
12.1.4 a guarantee fee of 0.15% per annum charged on that
portion of the Revolving Facility used by way of
terminable indemnities, such fee to be payable
quarterly in advance the first such payment being due
and payable on the first date that the Borrower elects
to require part of the Revolving Facility to be drawn
by way of terminable indemnities; and
12.1.5 the Bank's professional fees (including legal and
investigating accountants' fees and out of pocket
expenses together with value added tax if any thereon)
incurred by the Bank in connection with the
negotiation, preparation and execution of the Lending
Documents and the fulfilment of all conditions of the
Facilities such fees shall be paid on the Completion
Date.
12.2 The Borrower shall pay to the Bank on demand all reasonable
expenses (including legal and out-of-pocket expenses and
together with value added tax if any thereon) on a full
indemnity basis incurred by the Bank in connection with any
amendment or extension of and the granting of any waiver or
consent under and the discharge of the Lending Documents and/or
in contemplation of or otherwise in connection with the
enforcement of or preservation of any rights under the Lending
Documents or otherwise in respect of the moneys owing under or
in respect of the Facilities.
12.3 The Borrower will pay all stamp documentary registration and
other similar duties (including any payable by the Bank) in
connection with the Lending Documents.
12.4 The Bank may effect payment of all fees expenses and other sums
due and payable by the Borrower under this clause 12 out of and
by deduction from the Advance or by debiting the same to the
Current Account.
12.5 Any sums payable to the Bank hereunder shall if appropriate
have value added tax added thereto which shall be payable by
the Borrower in addition.
13. INDEMNITIES ETC.
13.1 The Borrower shall on demand indemnify the Bank against any
liability loss or expense which the Bank shall incur as a
consequence of:-
13.1.1 any default in payment by the Borrower of any sum
under this Agreement when due;
13.1.2 the occurrence of any Event of Default;
13.1.3 any repayment or prepayment of the Loans or part
thereof being received otherwise than in accordance
with the terms of this Agreement
including in any such case, but not limited to any loss or
expense incurred in maintaining or funding the Facilities under
this Agreement or in liquidating or re-employing deposits from
third parties acquired or contracted for in order to effect or
maintain the same and any Breakage Costs.
13.2 If circumstances arise which would or would upon the giving of
notice result in :-
13.2.1 the Borrower being required to make a payment to the
Bank under clause 13.1;
13.2.2 the Borrower being required to make a payment to the
Bank under clause 15;
13.2.3 the Borrower being obliged to pay additional amounts
under clause 14;
13.2.4 any amount becoming payable under clause 21;
then without in any way limiting reducing or otherwise
qualifying the obligations of the Borrower under this Agreement
the Bank shall endeavor to take such steps as may be open to it
to mitigate or remove such circumstances including without
limitation the transfer of its rights and obligations under
this Agreement to another bank or financial institution unless
to do so might (in the opinion of the Bank which opinion shall
be conclusive and binding and may be given without reason) be
in any respect prejudicial to the Bank or be in any respect in
conflict with the Bank's general banking policies or involve
the Bank in excessive expense or an increased administrative
burden.
14. TAXES
14.1 All payments to be made by the Borrower under this Agreement
shall be made free and clear of and without deduction for or on
account of Taxation unless the Borrower is required to make
such a payment subject to the deduction or withholding of
Taxation in which case the amount payable by the Borrower in
respect of which such deduction or withholding is required to
be made shall be increased to the extent necessary to ensure
that after the making of such deduction or withholding the Bank
receives and retains (free from any liability in respect of any
such deduction or withholding) a net amount equal to the sum
which it would have received and so retained had no such
deduction or withholding been made or required to be made.
14.2 If the Bank obtains a refund of tax, or credit against tax on
its overall net income, by reason of the Borrower paying an
additional amount under Clause 14.1 (a "Tax Credit"), and the
Bank is able to identify the Tax Credit as being attributable,
wholly or partly to such additional amount, then the Bank shall
reimburse such amounts as it shall reasonably determine to be
the proportion of the Tax Credit as will leave the Bank (after
that reimbursement) in no better or worse position that it
would have been in if the additional payment had not been
required. The Bank shall not be obliged to disclose any
confidential information regarding its business, tax affairs or
computations to the Borrower.
15. INCREASED COSTS
If by reason of any change in or introduction of any law regulation
treaty or official directive or any change in its interpretation
application or administration and/or compliance with any request from
or agreement with or requirement of any central bank or other fiscal
monetary or other authority (whether or not having the force of
law):-
15.1 the Bank incurs a cost as a result of its having entered into
and/or performing any of its respective obligations under this
Agreement; or
15.2 there is any increase in the cost to the Bank of funding or
maintaining the Facilities under this Agreement; or
15.3 there is any reduction in any amount payable to the Bank or the
Bank suffers any reduction in the rate of return on its overall
capital as the result of a change in the manner in which its
capital resources are allocated to its obligations under this
Agreement; or
15.4 the Bank becomes liable to make any payment on or calculated by
reference to an Advance
the Borrower shall from time to time on demand by the Bank promptly
pay to the Bank amounts sufficient to indemnify the Bank against, as
the case may be, such cost increased cost reduction or liability.
16. ILLEGALITY
If at any time it is or becomes unlawful or contrary to any request
from or requirement of any central bank or other fiscal monetary or
other authority (whether or not having the force of law) for the Bank
to make fund or allow to remain outstanding the whole or any part of
the Facilities under this Agreement then the Bank shall promptly
after becoming aware of the same deliver to the Borrower a
certificate to the effect that if the Bank so requires, the Borrower
shall not later than such date as the Bank shall have specified (such
date not being earlier than 3 Business Days prior to the latest
permitted date) repay the Loans together with accrued interest
thereon and any other amounts then due to the Bank hereunder.
17. SET OFF
17.1 The Bank may, following the occurrence of an Event of Default
which is continuing (but so that such qualification shall not
apply to any rights of set off available to it in respect of
the Cash Account which rights shall be unfettered) without
further notice to the Borrower, apply any credit balance
(whether or not then due and in whatever currency) which is at
any time held by any office or branch of the Bank for the
account of the Borrower in or towards satisfaction of any sum
then due and payable from the Borrower under this Agreement and
in respect of which a default in payment has occurred.
17.2 For the purposes of exercising any rights under this clause or
any rights under general law, the Bank may convert or translate
all or any part of such a credit balance into another currency
applying its spot rate of exchange for the relevant currency.
17.3 The Bank is not obliged to exercise any of its rights under
this clause which shall be without prejudice and in addition to
any rights under the general law.
17.4 In this clause 'rights under the general law' means any right
of set off combination or consolidation of accounts, lien or
similar right which the Bank has under any applicable law.
18. ASSIGNMENT
18.1 This Agreement shall be binding upon and enure for the benefit
of each of the parties hereto and their respective successors
and permitted assigns (and any person to whom the Bank shall in
accordance with the provisions of this Agreement transfer or
novate any rights and/or obligations under the Lending
Documents).
18.2 The Borrower may not assign or transfer any of its rights
benefits or obligations under the Lending Documents.
18.3 The Bank may assign all or any part of its rights or benefits
or transfer all or any part of its obligations under the
Lending Documents to MTT or its nominee or any Qualifying Bank.
The Bank will assign all of its rights, title and interest in
and to the Lending Documents to MTT or as MTT may direct upon
receipt in full of all monies owing to it under this Agreement
from MTT under the Standby Letters of Credit and the Borrower
will enter into such documentation as is required to perfect
such assignment.
Nothing in this clause 18.3 shall restrict in any way the
proposed refinancing of that element of the Revolving Facility
which is attributable to the Eligible Receivables by Lombard
Nat West Discounting Limited.
18.4 The Bank may disclose on a confidential basis to any actual
or potential assignee or transferee of any rights benefits or
obligations under the Lending Documents such information about
the Borrower, the Holding Company and the Business and
financial condition as the Bank shall consider appropriate.
18.5 The Bank may at any time and from time to time change its
facility office (being the office out of which it will make
available and maintain the Facilities under this Agreement) in
which event it will promptly give the Borrower written notice
thereof.
19. SEVERANCE
If at any time any of the provisions of this Agreement is or becomes
illegal invalid or unenforceable in any respect under any law or
regulation of any jurisdiction neither the legality validity or
enforceability of the remaining provisions of this Agreement nor the
legality validity or enforceability of such provision under the law
of any other jurisdiction shall be in any way affected or impaired
thereby.
20. COUNTERPARTS
This Agreement may be executed in any number of counterparts in which
case this Agreement will be as effective as if all signatures on the
counterparts were on a single copy of this Agreement.
21. MARKET DISRUPTION
If in respect of any Interest Period the Bank determines that:-
21.1 adequate and fair means do not exist for ascertaining the
interest rate for any Interest Period; or
21.2 by reason of circumstances affecting the London Interbank
Market generally it is impracticable for the Bank to fund or
continue to fund the Loans or the Advance during any Interest
Period
the Bank shall notify the Borrower accordingly. The Borrower
and the Bank shall negotiate in good faith with a view to
arriving within a period of 30 days from such notification at
an acceptable alternative arrangement failing which the
Borrower shall, if requested by the Bank promptly prepay the
Loans together with accrued interest thereon to the date of
prepayment (calculated at the rate or rates most lately
applicable) and all other sums payable by the Borrower under
this Agreement and the Bank's obligations hereunder shall
terminate. In such case the Borrower shall also reimburse to
the Bank such amount as may be determined by the Bank to be
necessary to compensate it for the increased cost (if any) of
maintaining the Advance during the period of negotiation
referred to in this clause until such prepayment.
22. EUROPEAN ECONOMIC AND MONETARY UNION
22.1 Monetary union
If, as a result of the implementation of European economic and
monetary union ("MONETARY UNION"):-
22.1.1 the currency in which an Advance (or any other
obligation under this Agreement or the Lending
Documents) is denominated ceases to be the lawful
currency of the country of that currency and is replaced
by a European single currency; or
22.1.2 that currency and a European single currency are at the
same time recognized by the central bank of the country
of that currency as the lawful currency of that country;
and the Bank so requires, then each amount which would
otherwise have been payable by the Borrower under this
Agreement or the Lending Documents in that currency
shall be paid by the Borrower in the European single
currency and the amount so payable shall be such amount
of the European single currency as equals the amount of
that currency translated at the rate of exchange
recognized by the European Central Bank for the
conversion of the relevant currency into the European
single currency for the purposes of implementation of
monetary union.
22.2 NECESSARY AMENDMENTS
If, following the implementation of monetary union, the Bank so
requires, this Agreement will be amended to the extent the Bank
specifies to be necessary to reflect the implementation of
monetary union and the redenomination of the Facilities (or
part thereof) and to put the parties to this Agreement in the
same position, so far as possible, that they would have been in
had monetary union not occurred and the Borrower agrees to pay
the costs of the Bank incurred in respect thereof.
23. LAW AND JURISDICTION
23.1 This Agreement shall be governed by and construed in accordance
with English Law.
23.2 The Borrower irrevocably agrees for the exclusive benefit of
the Bank that the courts of England shall have jurisdiction to
hear and determine any suit action or proceeding and to settle
any dispute which may arise out of or in connection with this
Agreement and for such purposes hereby irrevocably submits to
the jurisdiction of such courts.
23.3 Nothing contained in this clause shall limit the right of the
Bank to take proceedings against the Borrower in any other
court of competent jurisdiction nor shall the taking of any
such proceedings in one or more jurisdictions preclude the
taking of proceedings in any other jurisdiction whether
concurrently or not (unless precluded by applicable law).
24. NOTICES
24.1 All communications made hereunder shall be made in writing.
24.2 Any notice, proceedings or other documents to be served on the
Borrower pursuant to this Agreement shall be addressed to it at
Victoria Steel Works, Bull Lane, Moxley, Wednesbury, West
Midlands, WS10 8RS (Marked for the attention of Tony Bagshawe)
simultaneously with a copy to the Holding Company at 667
Madison Avenue, New York, New York 10021, United States of
America (Attention Michael Scharf) or such address as the
Borrower may or the Holding Company (as the case may be)
hereafter advise the Bank in writing or sent to it by facsimile
at the latest number notified to the Bank by the Borrower.
Notices sent by facsimile shall be deemed to be given on the
date telephone confirmation of receipt is received and notices
sent by post first class pre-paid shall be deemed to be served
3 Business Days after despatch provided that if such date of
despatch is not a Business Day in the country of the addressee
or if the time of despatch of a facsimile is after the close of
business for the relevant date in the country of the addressee
this shall be deemed to have been received at the opening of
business on the next Business Day.
24.3 Any communication required to be given by the Borrower
to the Bank shall be addressed as follows:-
Addressee: the Corporate Director
Address: National Westminster Bank Plc
P O Box 4641
103 Colmore Row
Birmingham
B3 3NR
Facsimile No: 0121 234 2504
and the Borrower shall also be obliged to also provide copies of any
written communication and details of any verbal communication at the
same time to MTT as follows :-
Addressee: Bob Kush Esq
Address: MTT
One Fountain Plaza
Buffalo
New York
United States of America
Facsimile No: [ ]
or to such other persons the Bank may advise the Borrower in writing
prior to despatch. Notices sent by facsimile shall be deemed to be
given on the date telephone confirmation of receipt is received and
notices sent by post first class prepaid shall be deemed to be
received two days after posting and notices served personally shall
be deemed to be served immediately provided that if the date of
despatch is not a Business Day in the country of the addressee or if
the time of despatch of a facsimile is after the close of business
for the relevant date in the country of the addressee, they shall be
deemed to have been received at the opening of business on the next
Business Day.
25. WAIVERS
No failure or delay by the Bank in exercising any right power or
privilege under this Agreement or any of the other Lending Documents
shall impair the same or operate as a waiver of the same nor shall
any single or partial exercise of any right power or privilege
preclude any further exercise of the same or the exercise of any
other right power or privilege. The rights and remedies provided in
this Agreement or any of the other Lending Documents are cumulative
and not exclusive or any rights or remedies provided by law.
IN WITNESS whereof the parties have executed this Agreement the
day and year first before written.
Signed by Alun Lewis
duly authorized for and on behalf of
NATIONAL WESTMINSTER BANK PLC
in the presence of:-
Richard Lawley
(Banker)
Signed by Raymond Rozanski
duly authorized for and on behalf of
NIAGARA LASALLE (UK) LIMITED
in the presence of:-
Stephen Nelson
(solicitor of Bouverie House, City of London)
Exhibit 4.2
DATED 21 MAY 1999
(1) NATIONAL WESTMINSTER BANK PLC
(2) NIAGARA CORPORATION
(3) NIAGARA LASALLE (UK) LIMITED
INTERCREDITOR AGREEMENT
Ref : RHH/PAJ/Bircorp176916
Eversheds
115 Colmore Row
Birmingham
B3 3AL
THIS AGREEMENT is made on 21 May 1999
BETWEEN:-
(1) NATIONAL WESTMINSTER BANK PLC (registered number 929027), acting
through its office at PO Box 4641, 103 Colmore Row, Birmingham B3 3NR
(the "Bank") as lender under a facilities agreement of today's date
made between the Bank (1) and the Borrower (2) (the "Facilities
Agreement"), which expression shall be deemed to include any
amendments, supplements, accessions, variations or additions made in
accordance with the terms of the Facilities Agreement;
(2) NIAGARA CORPORATION, a Delaware Corporation whose principal place of
business is at 667 Madison Avenue, New York, New York 10021, United
States of America ("Niagara"); and
(3) NIAGARA LASALLE (UK) LIMITED (registered number 3725308) whose
registered office is at Victoria Steel Works, Bull Lane, Moxley,
Wednesbury, WS10 8RS (the "Borrower") (together the "Parties")
NOW IT IS HEREBY AGREED AS FOLLOWS:-
1. Except where expressly stated to the contrary, or where the context
otherwise requires, terms defined in the Facilities Agreement shall
have the same meanings when used in this Agreement. In this
Agreement, the following terms have the following meanings:
"Bank's Liabilities" means all moneys and liabilities, whatsoever
and wherever, actual or contingent, and
whether as principal or surety, presently or
in the future due, owing or incurred by the
Borrower to the Bank under the Facilities
Agreement and the other Lending Documents;
"Discharge Date" means the date on which the Bank's
Liabilities under the Facilities Agreement
have been irrevocably paid or discharged in
full;
"Shares" means any share capital in the Borrower
whether issued now or in the future;
"Subordinated Liabilities" means all moneys and liabilities, whatsoever
and wherever, actual or contingent, and
whether as principal or surety, presently or
in the future due, owing or incurred by the
Borrower to Niagara under the Intra Group
Loan Agreement including, without
limitation, all interest, fees and related
costs.
2. In consideration of the Bank entering into the Facilities Agreement
and making available the Facilities to the Borrower, until the
Discharge Date, Niagara and the Borrower jointly and severally agree
and undertake with the Bank in the terms set out in this Agreement.
3. The Borrower shall ensure that, until the Discharge Date and other
than as permitted by the terms of the Facilities Agreement, it shall
not pay (or make) any dividend (or other distribution) in respect of
the Shares without the prior written consent of the Bank, or make any
repayments or prepayments of principal (or interest) to Niagara in
respect of the Subordinated Liabilities, but the parties acknowledge
that the provision of this clause 3 and clauses 6.3, 6.5 and 6.9 of
this Agreement will not restrict the repayment of loans made to the
Borrower by the Holding Company pursuant to clause 9.2.2(g) of the
Facilities Agreement unless at that time (i) any payment of principal
or interest due owing or incurred under the Facilities Agreement
remains unpaid or (ii) the financial covenants contained in clause
9.3 of the Facilities Agreement have not been met or (iii) an Event
of Default or Potential Default has occurred and is continuing.
4. Any moneys received by Niagara from the Borrower in breach of the
undertaking in clause 3 shall be deemed never to have been paid by
the Borrower to Niagara.
5. Niagara acknowledges and undertakes to the Bank that any repayments,
prepayments, dividends or distributions received by it from the
Borrower in breach of clause 3 are deemed to be held on trust by
Niagara for and on behalf of the Bank and shall be paid to the Bank,
together with interest accrued at 2 per cent above the Bank's base
rate starting from the date of receipt by Niagara, within 3 Business
Days of receipt.
6. Until the Discharge Date:-
6.1 Niagara undertakes to the Bank that Niagara shall not transfer
any part of the Subordinated Liabilities or the benefit of the
Intra Group Loan Agreement nor transfer any Shares held by
Niagara (or its interest and entitlement thereto) to any
person, and the Borrower undertakes that it shall not register
any transfer of any Shares;
6.2 other than the Shares being issued to Niagara pursuant to
Clause 4.1.10 of the Facilities Agreement, the Borrower
undertakes to the Bank that it shall not issue any further
Shares in the Borrower to any other person;
6.3 the rights of Niagara in respect of the Subordinated
Liabilities (and the obligations of the Borrower in respect of
the Subordinated Liabilities) are subordinated (and postponed
in all respects) to the rights of the Bank (and the obligations
of the Borrower) under the Facilities Agreement and the other
Lending Documents and accordingly repayments of any amount
(whether of principal or interest) under the Subordinated
Liabilities shall only be made to Niagara after the Discharge
Date;
6.4 if the Subordinated Liabilities or any part thereof are
converted into Shares, the Borrower undertakes not to declare
any dividends in respect of such Shares, or make any
distributions, without the written consent of the Bank;
6.5 Niagara and the Borrower undertake that the Subordinated
Liabilities shall not be paid by the Borrower until after the
point in time that the Bank has received repayment of the
Facilities or any other monies or liabilities due, owing or
incurred under the Facilities Agreement;
6.6 Niagara undertakes not to demand, claim, sue or prove for or
receive payment of any of the Subordinated Liabilities or
continue with any demand, claim, proof or suit in respect
thereof which it may previously have made or commenced;
6.7 the Borrower undertakes not to create any kind of Security
Interest under which the Subordinated Liabilities or any part
or parts thereof are to be secured in favour of Niagara;
6.8 Niagara and the Borrower undertake not to vary, alter or amend
in any way the Intra Group Loan Agreement or the terms upon
which the Subordinated Liabilities have been made available
without obtaining the Bank's prior written consent; and
6.9 the Bank's Liabilities shall always rank above and in priority
to the Subordinated Liabilities in all respects.
7. Other than under the Bank's rights to assign the benefit of the
Facilities Agreement in the circumstances envisaged by Clause 18.3 of
the Facilities Agreement, the rights and obligations under this
Agreement may not be assigned or transferred by any Party to any
other person, without the prior written consent of each of the
others.
8. This Agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be an original, but all of
which when taken together shall constitute a single instrument.
9. Every notice made under this Agreement shall be given in writing and
shall be sent:
9.1 in the case of the Borrower, to its address at:
Victoria Steel Works,
Bull Lane,
Moxley,
Wednesbury
West Midlands WS10 8RS
Facsimile : 0121 556 7623
Attention : Tony Bagshawe;
with a copy to Niagara at the address and to the addressee
set out below
9.2 in the case of the Bank, to its address at:
PO Box 4641
103 Colmore Row
Birmingham
B3 3NR
Facsimile : 0121 234 2504
Attention : The Corporate Director; and
9.3 in the case of Niagara, to its address at:
667 Madison Avenue,
New York 10021
United States of America
Facsimile : 001 212 317 1001
Attention : Michael Scharf; or
9.4 to such other address or facsimile number as any of the above
Parties may from time to time notify to each of the other
Parties in writing.
10. Every notice sent pursuant to this Agreement:
10.1 personally, shall be deemed to have been received on delivery;
10.2 by facsimile shall be confirmed by posting first class post,
and shall be deemed to have been received three Business Days
after posting and not, for the avoidance of doubt, on
transmission of the facsimile; and
10.3 by first class post, shall be deemed to have been received
three Business Days after posting.
11. This Agreement shall be governed by, and construed in accordance
with, English law and the Parties hereto submit to the exclusive
jurisdiction of the English Courts in respect of any dispute arising
out of it.
EXECUTED as a Deed Signed : Alun Lewis
by NATIONAL WESTMINSTER BANK PLC
acting by its authorised signatory
in the presence of: Witnessed: Richard Lawley
EXECUTED as a Deed Signed: Michael Scharf
by NIAGARA CORPORATION
acting by its duly authorised officers:- Signed: Raymond Rozanski
Director
Director/Company Secretary
EXECUTED as a Deed Signed: Michael Scharf
by NIAGARA LASALLE (UK) LIMITED
acting by its duly authorised officers:- Signed: Raymond Rozanski
Director
Director/Secretary
Exhibit 4.3
- ------------------------------------------------------------------------------
FIFTH AMENDMENT
TO
REVOLVING CREDIT AND TERM LOAN AGREEMENT
DATED AS OF APRIL 18, 1997
BY AND AMONG
NIAGARA LASALLE CORPORATION
(FORMERLY NIAGARA COLD DRAWN CORP.),
LASALLE STEEL COMPANY
AND
MANUFACTURERS AND TRADERS TRUST COMPANY,
CIBC INC.
AND
NATIONAL CITY BANK
AND
MANUFACTURERS AND TRADERS TRUST COMPANY, AS AGENT
------------------------------------------
Effective as of May 21, 1999
- -----------------------------------------------------------------------------
WHEREAS, NIAGARA LASALLE CORPORATION (formerly NIAGARA COLD
DRAWN CORP.), a Delaware corporation, having its principal office at 110
Hopkins Street, Buffalo, New York ("NCDC"), LASALLE STEEL COMPANY, a
Delaware corporation, having its principal office at 1412 150th Street,
Hammond, Indiana ("LaSalle") (NCDC and LaSalle being collectively referred
to as the "Borrowers", and individually as a "Borrower"), MANUFACTURERS AND
TRADERS TRUST COMPANY, a New York banking corporation having its principal
office at One M&T Plaza, Buffalo, New York ("M&T"), CIBC INC., a Delaware
banking corporation having its principal office at 425 Lexington Avenue,
New York, New York ("CIBC") and NATIONAL CITY BANK, a national banking
association having its principal office at National City Center, 1900 East
Ninth Street, Cleveland, Ohio ("National"), and M&T, as administrative,
collateral and documentation agent (M&T to be referred to in such capacity
as "Agent"), are parties to a Revolving Credit and Term Loan Agreement
dated as of April 18, 1997 (the "Original Agreement"); and
WHEREAS, THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New
Jersey mutual insurance company having an office at One Gateway Center,
Newark, New Jersey ("Prudential") and THE NATIONAL BANK OF CANADA, a
Canadian chartered bank having a domestic branch at 125 West 55th Street,
New York, New York ("NBC"), became parties to the Original Agreement by
assignment of portions of the credit commitments of various parties thereto
(M&T, CIBC, National, Prudential and NBC being collectively referred to
herein as the "Banks", and individually as a "Bank"); and
WHEREAS, the Borrowers, the Banks and the Agent amended the
Original Agreement with a First Amendment dated as of September 4, 1997
(the "First Amendment") for the purpose, among other things, of providing
"Swingline Loans" (as described in the First Amendment) under the credit
facilities provided in the Original Agreement; and
WHEREAS, the Borrowers, the Banks and the Agent amended the
Original Agreement with a Second Amendment dated as of December 31, 1997
(the "Second Amendment") for the purpose, among other things, of permitting
the Borrowers to apply the "1993 Warrant Forced Exercise Net Proceeds
Amount" to the repayment of the outstanding and unpaid principal amount of
the "Revolving Credit Note" (as such terms are defined in the Original
Agreement), and to revise the terms of the Original Agreement with respect
to dividends; and
WHEREAS, the Borrowers, the Banks and the Agent amended the
Original Agreement with a Third Amendment effective as of May 15, 1998 (the
"Third Amendment") for the purpose, among other things, of reducing the
interest payable with respect to "LIBOR Rate Loans" (as defined in the
Original Agreement), and to provide for the further reduction of the
interest payable with respect to LIBOR Rate Loans upon the conclusion of a
new collective bargaining agreement with LaSalle's hourly employees in
Hammond, Indiana; and
WHEREAS, the Borrowers, the Banks and the Agent amended the
Original Agreement with a Fourth Amendment effective as of December 1, 1998
(the "Fourth Amendment") (the Original Agreement together with the First
Amendment, the Second Amendment, the Third Amendment and the Fourth
Amendment to be collectively referred to as the "Credit Agreement") for the
purpose, among other things, of increasing by One Million Dollars
($1,000,000) the amount of permitted "Capital Expenditures" (as defined in
the Credit Agreement) that may be made by the Borrowers in any "Fiscal
Year" (as defined in the Credit Agreement); and
WHEREAS, the Borrowers have requested the Agents and the Banks
to amend certain provisions of the Credit Agreement to, among other things,
(a) waive the requirement for mandatory repayment of principal from "Excess
Cash Flow" (as defined in the Credit Agreement) for the Fiscal Year ended
December 31, 1998, and (b) in connection with a proposed business
acquisition by a UK subsidiary of Niagara Corporation, permit the Borrowers
to provide guarantys to certain banks providing standby letters of credit
to support acquisition financing to such UK subsidiary.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Notwithstanding the provisions of Subsection 2.2(c) of the
Credit Agreement, the Borrowers shall not be required to pay to the Agent,
and the Borrowers shall be permitted to retain, the amount required
pursuant to the terms of Subsection 2.2(c) of the Credit Agreement to be
applied as a mandatory principal repayment from Excess Cash Flow for the
Fiscal Year ended December 31, 1998, and the non-payment of such amount to
the Agent shall not be deemed to be an Event or Default under the terms of
the Credit Agreement; provided, however, the foregoing shall not serve to
amend, alter or otherwise change any other provision of the Credit
Agreement, nor shall it be deemed to act as a waiver or abridgment by Agent
or any Bank of any of its or their respective rights or powers under the
terms of the Credit Agreement.
2. A new item 11 shall be added to Schedule 3.9 to the Credit
Agreement to read as follows:
"11. Pursuant to general security agreements by and between
each of the Borrowers and M&T, the Borrowers shall permit a Lien on
the respective assets of the Borrowers as described therein (the "2d
Lien"), which 2d Lien shall secure the respective guarantys of the
Borrowers to M&T described in item 6 of Schedule 6.7 of the Credit
Agreement. The 2d Lien shall be subject to, and subordinate in
priority to, the Liens granted to the Agent pursuant to the Security
Agreements."
3. The last sentence of Subsection 5.14 shall be deleted in
its entirety and replaced with the following:
"Additionally, the Borrowers represent and covenant that the
proceeds of the Revolving Credit Loan not used pursuant to the
preceding sentence shall be used (i) to fund the general working
capital purposes of the Borrowers and their Subsidiaries, (ii) to the
extent permitted by the terms of Subsection 6.10(h) hereof, fund the
amount of any loan made by the Borrowers to Niagara", or (iii) to the
extent permitted by the terms of Subsection 6.12(b) hereof, to fund
repayment to Niagara of amounts applied by Niagara as Excess Warrant
Proceeds to repay the outstanding and unpaid principal amount of the
Revolving Credit Note or to prepay the outstanding and unpaid
principal amount of the Term Loan Note pursuant to Subsection 2.11
hereof.
4. A new item 6 shall be added to Schedule 6.7 of the Credit
to read as follows:
"6. Pursuant to unconditional continuing guaranty agreements by
and between each of the Borrowers and M&T, the Borrowers shall
guaranty the obligations of Niagara LaSalle (UK) Limited to M&T under
one or more Letter of Credit Applications and Letter of Credit
Reimbursement Agreements providing for the issuance of one or more
standby letters of credit by M&T for the account of Niagara LaSalle
(UK) Limited and for the benefit of National Westminster Bank PLC in
a maximum aggregate principal amount equal to Thirty Million pounds
sterling ((pound)30,000,000), plus interest, costs and expenses
(collectively, the "UK Standby Letters of Credit")."
5. The conjunction "and" ending Subsection 6.10(f) shall be
deleted, and the period ending Subsection 6.10(g) shall be deleted and
shall be replaced with the ending "; and".
6. A new Subsection 6.10(h) shall be added as follows:
"(h) one or more unsecured demand loans to Niagara in an
aggregate amount on any date not to exceed an amount (in U.S.
Dollars) equal to Five Million British Pounds Sterling ((pound)
5,000,000) based on the Agent's selling rate of exchange for
British Pounds Sterling on such date.
7. The conjunction "or" at the end of Subsection 7.1(j) shall
be deleted and the period ending Subsection 7.1(k) shall be deleted and
shall be replaced with the ending "; or".
8. A new Subsection 7.1(l) shall be added to Subsection 7.1 as
follows:
"l. Any UK Standby Letter of Credit shall be drawn against
by the beneficiary thereof in any amount."
9. A new sentence shall be added to the end of Subsection 8.1
as follows:
"Notwithstanding the foregoing, the Agent shall not be required
or authorized to execute, deliver or consent to any amendment, change
or modification of the provisions of Section 6.12 hereof effective
after May 21, 1999 without the unanimous prior consent and
instruction of the Banks."
10. This Fifth Amendment shall be effective as of May 21, 1999.
11. All capitalized terms used herein, unless otherwise defined
herein, have the same meaning provided therefor in the Credit Agreement.
12. The amendments set forth herein are limited precisely as
written and shall not be deemed to (a) be a consent to or a waiver of any
other term or condition of the Credit Agreement or any of the documents
referred to therein, or (b) prejudice any right or rights which the Agent
or any Bank may now have or may have in the future under or in connection
with the Credit Agreement or any documents referred to therein. Whenever
the Credit Agreement is referred to in the Credit Agreement or in any of
the instruments, agreements or other documents or papers executed and
delivered in connection therewith, it shall be deemed to mean the Credit
Agreement as modified by this Fifth Amendment.
13. The Borrowers hereby represent and warrant, jointly and
severally, that upon giving effect to the terms and provisions of this
Fifth Amendment no default or Event of Default shall have occurred and be
continuing under the terms of the Credit Agreement.
14. This Fifth Amendment may be executed by one or more of the
parties to this Fifth Amendment on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Fifth
Amendment to be duly executed and delivered by their respective duly
authorized officers.
NIAGARA LASALLE CORPORATION
By: /s/ Raymond Rozanski
----------------------------
Name: Raymond Rozanski
Title: Executive Vice President
LASALLE STEEL COMPANY
By: /s/ Raymond Rozanski
----------------------------
Name: Raymond Rozanski
Title: Executive Vice President
MANUFACTURERS AND TRADERS
TRUST COMPANY
By: /s/ Robert S. Kush
----------------------------
Name: Robert S. Kush
Title: Vice President
CIBC INC.
By: /s/ William Koslow Jr.
----------------------------
Name: William Koslow Jr.
Title: Executive Director
NATIONAL CITY BANK
By:________________________________
Name:
Title:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:________________________________
Name:
Title:
THE NATIONAL BANK OF CANADA
By: /s/ Robert Uhrig
------------------------------
Name: Robert Uhrig
Title: Vice President and Manager
By: /s/ Michael S. Woodard
------------------------------
Name: Michael S. Woodard
Title: Vice President
MANUFACTURERS AND TRADERS TRUST
COMPANY, AS AGENT
By: /s/ Robert S. Kush
-------------------------------
Name: Robert S. Kush
Title: Vice President
ACKNOWLEDGMENT
By executing below, Niagara Corporation hereby consents and
agrees to the terms and conditions contained herein and hereby reaffirms
its obligations and liabilities pursuant to the terms of the Unconditional
and Continuing Guaranty Agreement by and between Niagara Corporation and
Manufacturers and Traders Trust Company, as Agent dated as of April 18,
1997:
NIAGARA CORPORATION
By: /s/ Marc J. Segalman
-----------------------------
Name: Marc J. Segalman
Title: Vice President
[LOGO] Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact: Niagara Corporation
Michael Scharf, President & CEO
(212) 317-1000
NIAGARA COMPLETES ACQUISITION OF GLYNWED INTERNATIONAL PLC'S
STEEL BAR DIVISION FOR APPROXIMATELY $34 MILLION
ACQUIRED OPERATIONS HAD 1998 SALES OF $185 MILLION
AND EARNINGS BEFORE TAXES OF $3.6 MILLION
New York, May 21, 1999 - Niagara Corporation (Nasdaq:NIAG) announced today
that it completed its acquisition of the steel bar division of Glynwed
International plc. The purchase was financed entirely by borrowed funds
from both Niagara's existing credit facilities and a new UK credit facility
provided by NatWest Acquisition Finance.
With 1998 sales in excess of approximately 325,000 tons, the businesses
being acquired by Niagara LaSalle (U.K.) Limited, a newly-formed subsidiary
of Niagara, is a major U.K. producer of both hot rolled and cold finished
steel bars and is also a leading bar products steel stockholder (service
center). As a bar producer, Niagara LaSalle (U.K.) will offer one of the
most comprehensive ranges of shapes, sizes, and finishes in Europe and one
of the largest ranges of hot rolled and cold rolled flat bars in the world.
In commenting on Niagara LaSalle (U.K.)'s capabilities, Michael Scharf,
President and CEO of Niagara, stated, "The hot rolled and cold finished bar
producer we are acquiring has a unique ability to provide non-standard
sizes and specifications, often in small quantities, linked to the capacity
to produce high volume standard sizes and specifications as well. The steel
service centers provide the widest range of engineering steel bars in the
U.K. The acquisition will also have the effect of almost doubling Niagara's
size while providing Niagara with the unique ability to serve customers on
a world-wide just-in-time basis."
The operations being acquired are Ductile Hot Mill, Dudley Port Rolling
Mills, GB Steel Bar, George Gadd & Company, Longmore Brothers, Macreadys,
Midland Engineering Steels and W Wesson. Mr. Tony Bagshawe, formerly the
Chief Executive of Glynwed Metals Processing, will assume the same position
at Niagara LaSalle (U.K.) Limited. Michael Scharf, in commenting on this,
stated, "We are extremely gratified that Tony Bagshawe will be joining us.
He has wide experience in the U.K. metals industry, and we believe he can
maximize the potential of our U.K. operations by improving their
profitability and by coordinating sales efforts with our U.S. operations."
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