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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 1999
COMMISSION FILE NO. 1-11570
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TRANSWORLD HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 13-3098275
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
555 MADISON AVENUE
NEW YORK, NEW YORK (212) 750-0064 10022
(Address of principal (Registrant's telephone number, (Zip Code)
executive offices) including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, $.01 par value
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock ("Common Stock") held by
non-affiliates of the registrant as of January 3, 2000 was approximately
$11,559,655 based on the closing sale price of $1.75 on such date, as reported
by the American Stock Exchange.
The number of shares outstanding of the registrant's Common Stock, as
of January 3, 2000, was 17,551,076.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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TRANSWORLD HEALTHCARE, INC.
ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended September 30, 1999
TABLE OF CONTENTS
PART I
Item 1. Business..............................................................1
General...............................................................1
Strategy .............................................................2
U.K. Operations.......................................................2
U.K. Services and Products............................................2
Patient Services......................................................3
Specialty Pharmaceutical and Medical Supplies Operations
and Respiratory Therapy.............................................3
U.K. Quality Assurance; Department of Health Licenses.................3
U.K. Sales and Marketing Activities...................................3
U.K. Recruiting and Training of Personnel.............................4
U.K. Third-Party Reimbursement........................................4
U.K. Suppliers........................................................5
U.K. Competition......................................................5
U.K. Patents and Trademarks...........................................5
U.K. Employees........................................................5
U.S. Operations.......................................................5
U.S. Services and Products............................................6
Mail-Order Operations.................................................6
Hi-Tech Operations....................................................6
U.S. Quality Assurance; JCAHO Accreditations..........................7
U.S. Sales and Marketing Activities...................................7
U.S. Third-Party Reimbursement........................................7
U.S. Suppliers........................................................8
U.S. Competition......................................................8
U.S. Patents and Trademarks...........................................8
U.S. Employees........................................................9
Government Regulation.................................................9
U.K. Government Regulation............................................9
U.S. Government Regulation...........................................10
Insurance............................................................13
Item 2. Properties...........................................................13
Item 3. Legal Proceedings....................................................14
The Company..........................................................14
HMI..................................................................14
Item 4. Submission of Matters to a Vote of Security Holders..................16
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PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters...............................................18
Item 6. Selected Financial Data.............................................19
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.........................................21
General ............................................................21
Results of Operations...............................................23
Year Ended September 30, 1999 vs. Year Ended September 30, 1998.....23
Year Ended September 30, 1998 vs. Eleven Months Ended
September 30, 1997................................................25
Liquidity and Capital Resources.....................................28
General.............................................................28
Accounts Receivable.................................................28
Credit Facility.....................................................29
Refinancing ........................................................29
TNI Sale............................................................33
Acquisition of HMI/Sale to Counsel..................................34
Year 2000...........................................................34
Litigation..........................................................36
Impact of Recent Accounting Standards...............................36
Inflation...........................................................36
Item 7A. Quantitative and Qualitative Disclosures about Market Risk..........36
Foreign Currency Exchange...........................................36
Interest Rate Risk..................................................36
Item 8. Financial Statements and Supplementary Data.........................37
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure..........................................37
PART III
Item 10. Directors and Executive Officers of the Registrant..................38
Board Committees....................................................40
Audit Committee.....................................................40
Compensation Committee..............................................40
Compliance With Section 16(a) of the Securities
Exchange Act of 1934..............................................40
Item 11. Executive Compensation..............................................41
Summary Compensation Table..........................................41
Aggregate Option Exercises in Fiscal 1999 and 1999
Fiscal Year-End Option Values.....................................42
Compensation of Directors...........................................42
Employment Agreements; Termination of Employment and
Change-in-Control Arrangements....................................42
Compensation Committee Interlocks and Insider Participation.........42
Stock Option Plans..................................................42
1992 Stock Option Plan..............................................42
1997 Non-Employee Director Plan.....................................43
Indemnification.....................................................44
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Item 12. Security Ownership of Certain Beneficial Owners and Management......45
Item 13. Certain Relationships and Related Transactions......................46
Transactions with Principal Shareholders............................46
Transactions with Directors and Executive Officers..................47
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K....49
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. This Annual Report contains certain
forward-looking statements and information that are based on the beliefs of
management as well as assumptions made by and information currently available to
management. The statements contained in this Annual Report relating to matters
that are not historical facts are forward-looking statements that involve risks
and uncertainties, including, but not limited to, future demand for the
Company's products and services, general economic conditions, government
regulation, competition and customer strategies, capital deployment, the impact
of pricing and reimbursement and other risks and uncertainties. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated or expected.
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PART I
ITEM 1. BUSINESS.
GENERAL
Transworld Healthcare, Inc. (the "Company") is a provider of a broad range
of health care services and products with operations in the United Kingdom
("U.K.") and the United States ("U.S."). The Company provides the following
services and products: (i) patient services, including nursing and
para-professional services; (ii) specialty mail-order pharmaceuticals, medical
supplies, respiratory therapy and home medical equipment; and (iii) infusion
therapy. The Company provides these services and products from the following
reportable business segments: (i) U.K. operations ("U.K. Operations"); (ii) U.S.
specialty mail-order pharmaceuticals and medical supplies operations
("Mail-Order Operations"); and (iii) U.S. hi-tech operations ("Hi-Tech
Operations"). The Company's U.K. Operations include the U.K.'s second largest
commercial provider of nursing and para-professional care to the community and
U.K. healthcare institutions, the U.K.'s second largest home respiratory
supplier as well as a leading value-added medical supplies distributor, all with
operations located throughout the U.K. The Company's Mail-Order Operations
provide products to patients in their home nationwide and in Puerto Rico while
its Hi-Tech Operations are concentrated in New Jersey and New York.
The Company changed its fiscal year end from October 31 to September 30
effective for fiscal 1997. This resulted in an eleven month reporting period
ended September 30, 1997 (sometimes referred to herein as the "Eleven Month
Period") included in this Annual Report on Form 10-K.
The Company took a number of significant steps during the fiscal year ended
September 30, 1998 and the Eleven Month Period to realign its business as a
focused regional home health care provider and specialty pharmacy and medical
supply distributor in the U.S. and as an integrated national provider of health
care products and services in the U.K. These steps included: (i) selling
non-core assets such as the Company's Radamerica, Inc. ("Radamerica") business,
which provided radiation therapy in the Baltimore, Maryland area and the sale of
the assets of the Company's Transworld Home HealthCare - Nursing Division, Inc.
("TNI") operations (the "TNI Sale"), which provided nursing and
para-professional services in New Jersey and Florida; (ii) exiting businesses
that were deemed not to have the potential to earn an adequate return on capital
over the long term (such as wound care and orthotic product lines in the
continental U.S., as well as the Company's pulmonary rehabilitation center in
Cherry Hill, New Jersey); (iii) completing the sale of substantially all of the
assets of Health Management, Inc. ("HMI") to Counsel Corporation (the "HMI Asset
Sale"); and (iv) terminating the agreements to purchase Kwik Care, Ltd. and VIP
Health Services, Inc. (the "VIP Companies"), nursing service companies serving
New York City and the surrounding areas. The Company also completed the
acquisitions of Omnicare plc ("Omnicare") and Allied Medicare Ltd ("Allied") in
July 1997 for an aggregate purchase price of approximately $91,000,000. Omnicare
provides respiratory equipment and services and supplies a range of medical and
surgical products to patients at home throughout the U.K. through its network of
seven regional facilities. Allied is a national provider of nursing and other
care-giving services to the community and U.K. healthcare institutions with
seventy-five locations throughout the U.K.
The Company's principal executive offices are located at 555 Madison
Avenue, New York, New York 10022, and the Company's telephone number at that
location is (212) 750-0064.
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STRATEGY
The Company's strategic focus is to become the leading health care staffing
and services company in the U.K. The Company's growth strategy is to take
advantage of recent major policy moves by the government funded National Health
Service ("NHS") and by private payors seeking to treat a much larger number of
patients than in the past and to shorten waiting lists for access to care, as
well as the general trend of local government toward outsourcing its home care
requirements to private industry.
It is the Company's intention to focus on internal growth, as well as to
acquire additional nursing and other care giving operations to expand and
complement its Allied operations. The Company believes that the health care
staffing and services industry in the U.K. is highly fragmented and that
additional acquisition opportunities will continue to arise in a general trend
toward industry consolidation. Consistent with this strategy, the Company
acquired a total of 17 nursing and carer operations during fiscal 1997, 1998 and
1999 in the U.K.
The Company believes that valuations for health care staffing and services
companies in the U.K. market are significantly more attractive than in the U.S.
Therefore, the Company has executed a program to establish its U.K. Operations
as a stand-alone entity with its own financing in order to enable it to execute
an aggressive expansion program. To that end, on December 20, 1999, the
Company's U.K. subsidiaries completed a $124,500,000 refinancing which repaid
the Company's existing senior indebtedness of $55,755,000 and provided
approximately $46,000,000 for additional acquisitions in the U.K. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources."
The Company believes that by structuring its U.K. Operations in such a
manner, it enables the U.K. subsidiaries to raise capital on more favorable
terms than may be available currently in the U.S., as well as positions the
Company to maximize the value of its ownership interest in the U.K. Operations
in the future, whether it be by way of a public offering of the U.K. Operation's
shares, through a strategic business combination, or other alternative means.
In addition, the Company's strategy for its U.S. operations is to expand
its Mail-Order Operations through increasing the number of patients serviced,
with a primary focus on its respiratory medication and diabetic supply product
lines. The Company also seeks to expand its Hi-Tech Operations through marketing
its services to physicians, managed care organizations, hospitals, and other
referral sources in its market area.
U.K. OPERATIONS
U.K. SERVICES AND PRODUCTS
The Company provides the following services and products in the U.K.: (i)
patient services, principally nursing and para-professional services, and (ii)
specialty pharmaceutical and medical supplies and respiratory therapy. The
Company's U.K. Operations' products and services are provided to patients
throughout the U.K.
During fiscal 1999, the Company derived 67.6% of its revenues from U.K.
Operations, with the following contributions by product line: 76.7% of its U.K.
revenues from patient services, 19.1% from specialty pharmaceutical and medical
supplies and 4.2% from respiratory therapy.
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PATIENT SERVICES.
The Company offers its U.K. patient services through Allied, a commercially
oriented provider of nursing and care staff services to a broad range of
clients, particularly NHS trusts, nursing homes, private clients and local
authority social services departments. Allied was founded in 1972 as a home
nursing service and has expanded through the establishment and acquisition of
branch offices throughout the U.K. The branch network has expanded substantially
in recent years, through both organic growth and an on-going nursing and care
agency acquisition program. Allied is now represented by 75 branches spread
across the U.K.
The Company believes that the demand for most forms of nursing and other
health care services is expected to increase during the next twenty years as the
U.K. population grows older in line with demographic trends. Consequently, it is
anticipated that requirements for temporary nursing services will increase in
the future, benefiting Allied.
SPECIALTY PHARMACEUTICAL AND MEDICAL SUPPLIES OPERATIONS AND RESPIRATORY
THERAPY.
The Company offers its U.K. specialty pharmaceutical and medical supplies
and respiratory therapy through the following Omnicare subsidiaries: (i) Amcare
Ltd ("Amcare"); (ii) Allied Oxycare Ltd ("Oxycare"); and (iii) Medigas Ltd
("Medigas").
Specialty Pharmaceutical and Medical Supplies Operations. Amcare supplies
ostomy, continence care and wound care products directly to patients at home
under a prescription written by the patients' family doctor. Amcare also
receives reimbursement and remuneration fees from the U.K. Department of Health
for providing dispensing services as defined by the terms of service for
contractors to the NHS and the "Drug Tariff" (a booklet listing all current
prescribable goods) for prescribable goods. These services are offered
throughout the mainland of the U.K.
Respiratory Therapy. Medigas and its parent Oxycare service patients with
chronic respiratory diseases either directly at home or via the community
pharmacist. Medigas supplies filled oxygen cylinders to pharmacies for patients
at home who require lower volumes of oxygen per day or who may have temporary
respiratory conditions. These services are offered throughout the U.K. Oxycare
provides oxygen concentrators, which filter room air to provide a 95% oxygen
gas, to patients in their homes.
U.K. QUALITY ASSURANCE; DEPARTMENT OF HEALTH LICENSES
The Company's U.K. Operations maintain quality assurance policies and
procedures and closely monitor operations to provide quality care and services
to patients and health care professionals in the U.K. Where appropriate, the
Company's U.K. Operations operate under license of the U.K. Department of Health
and Medicines Control Agency ("MCA"), adhering to the terms and conditions of
service demanded by such licensing authority.
The European Quality Standards BS EN ISO 9002 have been awarded to both
Amcare and Oxycare. The awarding authority checks the continued adherence to
these standards on a six month basis with procedure manuals being available for
review at any time.
U.K. SALES AND MARKETING ACTIVITIES
The Company's U.K. Operations primarily market their products and services
to health care professionals who act as referral sources to patients. These
health care professionals include medics, nurses, pharmacists, administrators,
the NHS and private health care providers. Other important targets for
promotional activity include
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patient associations and community social services organizations. Fundamental to
Allied's ability to obtain and retain referral sources is the ability to
establish and maintain a reputation for quality service and responsiveness to
the needs of referral sources and their patients and clients.
Allied markets its nursing agency service via superintendents and their
staff within each of its seventy-five independent locations. These branch
locations are supported by small teams of sales and marketing professionals
based centrally to coordinate and support the sales activity.
Amcare employs representatives to promote the dispensing and delivery
services of the Company in the U.K. and supports this with marketing and
managerial staff centrally based for coordination and customer support
activities.
Medigas and Oxycare are marketed directly to the pharmacist for oxygen
cylinders and the NHS Supplies for oxygen concentrator services, by a senior
manager. In addition to primary sales activity, delivery drivers play a key role
as secondary sales staff.
In general, the sales representatives and managers of the Company's U.K.
Operations market the Company's U.K. products and services through direct
contact with referral sources in the form of meetings, telephone calls and
solicitations. Contact is maintained with these sources to strengthen their
relationships. While representatives strive to develop the strongest provider
relationship possible, referral sources often choose to use several service and
product providers.
As in many European and U.S. markets, the escalating pressures to reduce
the cost of health care has, for some lines of business (prescribed products and
services, including cylinder oxygen, concentrators and medical supplies) in the
Company's U.K. Operations, resulted in reductions in reimbursement rates.
However, the focus towards offering integrated home health care can result in an
overall cost saving leading to, the Company believes, substantial sales
opportunities for the Company's U.K. Operations.
U.K. RECRUITING AND TRAINING OF PERSONNEL
The Company's U.K. Operations recruit, train, provide on-going education,
offer benefits and other programs to its staff appropriate to their needs and
the requirements of the business. Recruiting of staff is conducted primarily
through advertising, direct contact with employment and governmental
organizations and through the use of competitive salary and benefit packages.
The U.K. health care industry continues to face shortages of certain
qualified personnel. In particular, Allied's nursing business experiences
significant competition in recruiting qualified health care personnel for its
operations. Most of the registered and licensed health care professionals
employed by Allied are also registered with and accept placements from
competitors.
U.K. THIRD-PARTY REIMBURSEMENT
For the years ended September 30, 1999 and 1998, the Company's U.K.
Operations received approximately 54.0% and 53.8%, respectively of revenues from
U.K. governmental payors (primarily the NHS). The remaining 46.0% and 46.2%,
respectively of revenues were derived from products and services provided to the
private health care sector and other commercial organizations, such as privately
owned nursing homes.
In general, reimbursement is received regularly and reliably from all
governmental department payors and
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this is also the case for most of the remaining customer base. The Company's
U.K. Operations generally collects payments from all third-party payors within
two months after products are supplied or services are rendered but pays its
accounts payable and employees currently.
The billing and reimbursement process includes the rendering of invoices
for products and services rendered, as well as prescriptions and other support
documentation for reimbursement of drugs and medical supplies.
U.K. SUPPLIERS
The Company's U.K. Operations purchase their equipment and supplies
required in connection with the provision of its services from various approved
suppliers. The Company believes that there are a number of alternative sources
for these items at prices comparable to its current sources.
U.K. COMPETITION
The Company believes that there are no major integrated service providers
and few multi-regional or national providers of any individual product or
service in the U.K. The Company also believes that home health care providers
who possess the infrastructure to provide an integrated network of products and
service will have significant growth opportunities.
The Company believes that the principal competitive factors in the U.K.
are: quality of care; breadth of services; reputation and professional
presentation; innovation; and value for services. The Company believes that the
success of its U.K. Operations is related to all of the above factors.
The Company's U.K. Operations' nursing, medical supplies and respiratory
therapy services compete with local, national and international companies. The
nursing agency business of Allied is the second largest in the U.K.; however,
the leading competitor is approximately four times larger in sales revenue.
U.K. PATENTS AND TRADEMARKS
The Company's U.K. Operations own no patents. The Company's U.K. Operations
operate under the following trade names: "Allied Medicare Ltd," "Medicare,"
"Medigas Ltd," "Allied Oxycare Ltd," "Omnicare Ltd," "Transworld Healthcare (UK)
Ltd," "Amcare Ltd," "Allied Medicare Services Ltd" and "Allied Medical Nursing
Services." The Company does not believe that its business in the U.K. is
dependent upon the use of any patent or trademark or similar property.
U.K. EMPLOYEES
As of December 31, 1999, the Company's U.K. Operations employed
approximately 179 full-time employees and 42 part-time employees.
In addition, the Company's U.K. Operations maintain registers of
approximately 4,020 registered nurses, carers and aides available to staff home
and health service nursing arrangements on a temporary basis. The Company
considers its relationships with its U.K. employees to be satisfactory.
U.S. OPERATIONS
During fiscal 1999, the Company derived 32.4% of its revenues from U.S.
operations, with the following
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contributions by reportable business segments: 73.8% of its U.S. revenues from
Mail-Order Operations and 26.2% from Hi-Tech Operations.
U.S. SERVICES AND PRODUCTS
MAIL-ORDER OPERATIONS.
The Company's Mail-Order Operations provide specialty mail-order
pharmaceuticals and medical supplies to patients in their home nationwide and in
Puerto Rico. The Company operates its Mail-Order Operations in Jacksonville,
Florida and Puerto Rico, which specialize in supplying diabetic patients with
glucose monitors and test strips, as well as respiratory, diabetic, maintenance
and other commonly prescribed medications. The Company also provides ostomy
products nationwide. As part of its service to patients, the Company provides
direct billing to Medicare, Medicaid and private insurance companies, thereby
reducing or eliminating up-front cash outlays for the patient. In addition, the
Company provides free routine home delivery, eliminating trips to the pharmacy.
The Company believes that its patients elect to receive their prescription drugs
and supplies via mail-order primarily because of convenience and the cash
savings. During 1997, the Company exited its wound care and orthotic product
lines in the continental U.S. As a result of this action, the Company recorded
special charges of $12,079,000 for the write-off of goodwill and intangible
assets and additional bad debt reserves of $6,060,000 related to the wound care
and orthotic product lines. In addition, during fiscal 1999, the remaining
accounts receivable associated with the wound care and orthotic product lines
were reserved for, as the Company became aware of deterioration in their
collectibility. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources."
HI-TECH OPERATIONS.
The Company's Hi-Tech Operations provide the following services and
products in the U.S.: (i) infusion therapy; (ii) respiratory therapy; and (iii)
home medical equipment. The Company's Hi-Tech Operations are concentrated in New
Jersey and New York. During fiscal 1999, the Company's Hi-Tech Operations
derived 70.6% of its revenues from infusion therapy, 22.0% from respiratory
therapy and 7.4% from home medical equipment.
Infusion Therapy. Infusion therapy involves the intravenous administration
of antibiotics, nutrients or other medications to patients in their homes
usually as a continuation of treatment initiated in the hospital. The Company's
related support services include patient training in the self-administration of
infusion therapies, nursing support, pharmacy operations and related delivery
services and insurance reimbursement assistance. The Company offers these
therapies and services to patients in the New York metropolitan area and in New
Jersey from its facility located in Clark, New Jersey.
Respiratory Therapy. The Company provides home respiratory services to
patients with a variety of conditions, primarily chronic obstructive pulmonary
disease (e.g., emphysema, chronic bronchitis and asthma). The Company employs a
clinical staff of respiratory care professionals to provide support to its home
respiratory therapy patients. These professionals manage the needs of the
Company's patients according to physician-directed plans of care. The Company's
respiratory therapy revenues are derived primarily from the provision of oxygen
systems, nebulizers (devices to aerosolize medication), home ventilators and
respiratory medication on a unit dose basis. The Company offers its respiratory
therapy services principally in New Jersey and the New York metropolitan area.
Home Medical Equipment. The Company's U.S. product offerings in home
medical equipment consist of patient room equipment (such as hospital beds,
patient lifts and commodes), ambulatory aids (such as walkers and canes) and
bathroom safety items. The Company generally purchases this equipment from
manufacturers and rents it to patients. Accordingly, the Company generally
promotes its home medical equipment and services business as a
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complementary product line in each of the markets where it also provides
respiratory therapy and infusion therapy.
U.S. QUALITY ASSURANCE; JCAHO ACCREDITATIONS
The Company maintains quality assurance policies and procedures and closely
monitors operations in order to provide high quality care with respect to the
services it offers. The Joint Commission on Accreditation of Healthcare
Organizations ("JCAHO"), a not-for-profit private organization that has
established standards for health care organizations, has granted accreditation
status to all of the Company's Hi-Tech Operations. JCAHO does not accredit
mail-order pharmacy operations and as such, the Company's U.S. Mail-Order
Operations are not eligible for such accreditation. The Company believes that
accreditations of its eligible facilities by JCAHO is a prerequisite for
entering into contracts with managed care providers and other intermediaries and
for obtaining and maintaining required licensure or certification.
U.S. SALES AND MARKETING ACTIVITIES
The Company primarily markets its services and products to referral sources
such as physicians, hospital discharge planners and social service workers,
insurance companies, prepaid health plans, health maintenance organizations
("HMOs"), county medical services and private charitable organizations.
Fundamental to the Company's ability to obtain and retain referral sources is
establishing and maintaining a reputation for quality service and responsiveness
to the requirements of the referral sources.
The Company currently employs full-time sales representatives for its
Hi-Tech Operations. The Company uses primarily the same sales force to
cross-market its products and services. The Company uses full-time and part-time
sales employees for its Mail-Order Operations.
In general, the sales representatives market the Company's services through
direct contact with referral sources in the form of meetings, telephone calls
and sales presentations. The representatives maintain contact with these sources
in order to strengthen their relationships. While the sales representatives
strive to develop exclusive provider relationships, referral sources frequently
utilize the services of several home health care companies. The sales
representatives are trained by the Company to provide information to referral
sources concerning the quality and convenience of the Company's home health care
services and the potential cost-saving advantages of such services. Primarily
due to escalating pressures to contain health care costs, third-party payors are
participating to a greater extent in decisions regarding health care
alternatives and are consequently becoming more important in the referral and
case management process.
During the latter part of 1996 and thereafter, there continued to be a
changing regulatory environment with respect to certain of the Company's product
lines, including, for example, developments affecting the respiratory
medications and the diabetic supplies segments of the Company's business. The
Company has increased its internal and external sales and marketing staff, as
well as developed new marketing programs in order to address these developments.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- General."
U.S. THIRD-PARTY REIMBURSEMENT
Substantially all of the Company's U.S. revenues are attributable to
third-party payors, including Medicare and Medicaid, private insurers, managed
care plans and HMOs. The amounts received from government programs and private
third-party payors are dependent upon the specific benefits included under the
program or the patient's insurance policies. Like other medical service
providers, the Company is subject to lengthy reimbursement delays as
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a result of third-party payment procedures. The Company generally collects
payments from third-party payors within three months after products are supplied
or services are rendered, but pays its accounts payable and employees currently.
The billing and reimbursement process involves the collection, review and
approval of a significant number of required documents. Certain payors such as
Medicare, Medicaid and managed care plans require very specific procedures and
documentation prior to approving any request for reimbursement. Reimbursement
specialists of the Company work together to assess patient coverage, review the
adequacy of documentation, submit documentation and claims to the third-party
payors and expedite payment. The Company accepts assignment of insurance
benefits from the patient, and in most instances the third-party payors pay the
Company directly.
For the year ended September 30, 1999, 64.5% and 6.9%, respectively, of the
Company's U.S. revenues were directly attributable to the Medicare and Medicaid
programs. For the year ended September 30, 1998, 60.6% and 12.9%, respectively,
of the Company's U.S. revenues were directly attributable to the Medicare and
Medicaid programs. The increase in the percentage of revenues directly
attributable to Medicare during the year ended September 30, 1999 versus 1998
was primarily the result of a decrease in revenues attributable to the sale of
the Company's nursing operations which did not derive any revenue from Medicare.
U.S. SUPPLIERS
The Company purchases its equipment and supplies, including drugs, home
medical equipment, nutritional solutions and other materials required in
connection with its therapies and specialty mail-order pharmacy and medical
supplies operations, from various suppliers. The Company believes that there are
a number of available sources of supply for the Company's products. The Company
has, from time to time, experienced difficulties in obtaining generic equivalent
diabetic testing strips due to shipping suspensions or product shortages from
its supplier. Historically, in these instances the Company has been able to
obtain equivalent product from alternate suppliers at similar cost. In the
future, any lengthy shortages or suspensions of their shipments, coupled with
the inability to secure product from alternate suppliers at similar cost, could
have a material adverse effect on the Company's results of operations and cash
flows.
U.S. COMPETITION
The home health care market is highly fragmented and consists of numerous
providers, relatively few of which are national or regional in scope. The
Company competes with a large number of companies in all areas in which it
conducts business. The Company believes that the principal competitive factors
in the U.S. are quality of care, including responsiveness of services and
quality of professional personnel; breadth of services offered; referrals from
physicians, hospitals and HMOs; general reputation with physicians, other
referral sources and potential patients; and for certain payors, price.
The Company's Mail-Order and Hi-Tech Operations, compete with numerous
local, regional and national companies. The Company believes that there are no
dominant competitors in the diabetic and respiratory generic drug market. The
Company's primary competition for its mail-order sales of diabetic and
respiratory drugs is generated from retail pharmacies.
U.S. PATENTS AND TRADEMARKS
The Company owns no patents in the U.S. The Company owns the following
service marks in the U.S.: "Steri-Pharm," "Transworld Nurses, Inc.," "Advocate
Home Care" and "Respiflow." The Company does not believe that its business is
dependent upon the use of any patent or trademark or similar property.
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U.S. EMPLOYEES
As of December 31, 1999, the Company had approximately 279 full-time
employees and approximately 44 part-time employees in the U.S. The Company
considers its relationship with its U.S. employees to be satisfactory.
GOVERNMENT REGULATION
U.K. GOVERNMENT REGULATION.
General. The Company's U.K. Operations are subject to regulations by the
government of the U.K. via acts of Parliament related to health care provision.
These acts generally fall under the Department of Health and relate to services
provided to the general public under the NHS.
Approximately 85% of health care in the U.K. is provided under the NHS with
the remaining 15% being provided by private health care organizations. However,
all care provision is regulated under the general health regulations of the
Department of Health.
Health Care Reform. The NHS has released a green paper "Towards a Healthier
Future" and two white papers, one concerned with community care and the second
with primary care reforms.
The current Labour government has continued to develop the previous Tory
government's plans of devolving decisions on patient care down to the family
doctor. Primary Care Groups, based on local communities are now in operation,
which will increasingly mean that decisions related to patient care and the
funding required, will be decided by a group representing general practitioners,
nurses, pharmacists and community care workers operating in conjunction with the
District Health Authorities and Local Authorities.
In addition to this top-level development change, the NHS continues to seek
ways in which it can reduce costs. The Company believes that contractors to the
NHS will continue to come under pressure over the next 5 years, until the next
election, with the current government's determination to fund changes in the NHS
without increasing direct taxation.
Licenses for Contractors and Suppliers. The Company's U.K. Operations are
subject to licensing and approval regulations from both governmental and
non-governmental bodies according to terms of service and operating procedures
decided by the U.K. government.
Allied operates under the Nurses Act (England and Wales) 1957 and 1961
Amendment and the Nurses Agency Act (Scotland) 1957. In addition, Allied is
accredited by various U.K. social services agencies for the supply of carers to
the Community Services, within that specific area. The MCA has granted licenses
to Oxycare and Medigas for the production and distribution of medical grade
oxygen to the network of 12,000 pharmacies throughout the U.K. Amcare operates
as a dispensing appliance contractor and as such holds nine licenses for
premises which provide dispensing services to patients on the mainland of the
U.K. The Company operates under terms of service for pharmacy contractors
outlined in the National Service Act 1977(a) and the NHS (Pharmaceutical
Services) Regulations 1992. Levels of reimbursement and remuneration are
published monthly in the NHS's Drug Tariff.
Fraud and Abuse. In late 1997, the Prescription Pricing Authority released
a report on "Prescription Fraud in the NHS" and certain recommendations have
been introduced to reduce the level of fraud by patients and contractors to the
NHS since April 1998. New prescription forms have been issued which are more
"secure" for the prescriber
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while patients have to make signed undertakings that they are entitled to
receive the prescribed drugs. Regarding contractor fraud with prescriptions, a
number of practices were identified and challenged as to their legality.
The Company believes that its practices regarding claim for reimbursement
and remuneration are in substantial compliance with applicable law and it has
recently amended, while continuing to review its practices in light of recent
recommendations to ensure they are in line with governmental regulations.
The Company believes that it is in substantial compliance in all material
respects with U.K. health care laws and regulations applicable to its U.K.
Operations.
U.S. GOVERNMENT REGULATION.
General. The Company's business is subject to extensive Federal and state
regulation. Federal regulation covers, among other things, Medicare and Medicaid
billing and reimbursement, reporting requirements, supplier standards,
limitations on ownership and other financial relationships between a provider
and its referral sources and approval by the Food and Drug Administration of the
safety and efficacy of pharmaceuticals and medical devices. In addition, the
requirements that the Company must satisfy to conduct its businesses vary from
state to state. The Company believes that its operations are in substantial
compliance with applicable Federal and state laws and regulations in all
material respects. However, changes in the law or new interpretations of
existing laws could have a material effect on permissible activities of the
Company, the relative costs associated with doing business and the amount of
reimbursement for the Company's products and services paid by government and
other third-party payors.
Health Care Reform. Political, economic and regulatory influences are
subjecting the health care industry in the U.S. to fundamental change. Although
Congress has failed to pass comprehensive health care reform legislation, the
Balanced Budget Act of 1997 (the "Balanced Budget Act") made several changes to
the Medicare reimbursement system that affect payment for the products provided
by the Company. Some of these provisions include an expansion of coverage of
diabetic testing supplies to non-insulin-treated Medicare diabetics, a 10%
reduction of Medicare payment rates for diabetic testing strips, as of January
1, 1998, a 5% reduction of Medicare payment rates for respiratory drugs, as of
January 1, 1998, a requirement that skilled nursing facilities provide directly
and bundle into their payment certain items, including medical supplies, which
may have been previously provided by outside suppliers, a freeze on the update
factor for durable medical equipment and supplies, and parenteral and enteral
equipment and supplies, a provision regarding billing for upgraded medical
equipment, and authorization for a competitive pricing demonstration program.
Under the Social Security Act's authority to the Health Care Financing
Administration ("HCFA") to alter certain reimbursement rates that are not
inherently reasonable, Medicare is proposing additional inherent reasonableness
cuts to Medicare payment rates as follows: (i) up to a 3.38% (depending on the
state) reduction for diabetic testing strips; (ii) a 15% reduction in Medicare
payment rates for diabetic lancets, and an additional 15% and 2.32% in
subsequent years; and (iii) a 10.5% reduction for albuterol sulfate (a
respiratory drug). On November 29, 1999, President Clinton signed into law the
Medicare, Medicaid and S-CHIP Balanced Budget Refinement Act of 1999, better
known as the Provider Relief Act. The Provider Relief Act provides that HCFA may
not use or permit its contractors to use the inherent reasonableness process
until after (i) the Comptroller General of the United States issues a report
regarding the impact of HCFA's and/or its contractor's use of such authority;
and (ii) HCFA has published final regulations implementing the agency's inherent
reasonableness authority. Consequently, it is unclear if or when HCFA will be
able to implement any of its previously proposed inherent reasonableness
reductions for diabetic testing strips, diabetic lancets or albuterol sulfate or
any other items and services supplied by the Company to Medicare beneficiaries.
The Company anticipates that Congress and state legislatures will continue
to review and assess alternative health care delivery and payment systems and
may in the future propose and adopt legislation effecting fundamental
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changes in the health care delivery system. The Company cannot predict the
ultimate timing, scope or effect of any legislation concerning health care
reform. Any proposed Federal legislation, if adopted, could result in
significant changes in the availability, delivery, pricing and payment for
health care services and products. Various state agencies also have undertaken
or are considering significant health care reform initiatives. Although it is
not possible to predict whether any health care reform legislation will be
adopted or, if adopted, the exact manner and the extent to which the Company
will be affected, it is likely that the Company will be affected in some
fashion, and there can be no assurance that any health care reform legislation,
if and when adopted, will not have a material adverse effect on the Company's
consolidated business, financial position, cash flows or results of operations.
Permits and Licensure. Certain of the Company's facilities are subject to
state licensure laws, including licensing from state boards of pharmacy. Federal
laws require certain of the Company's facilities to comply with rules applicable
to controlled substances. These rules include an obligation to register with the
Drug Enforcement Administration of the United States Department of Justice and
to meet certain requirements concerning security, record keeping, inventory
controls, prescription and order forms and labeling. The Company's pharmacists
and nurses also are subject to state licensing requirements. The Company
believes that it is in substantial compliance with all applicable licensure
requirements.
Fraud and Abuse Laws. The Company is subject to Federal and state laws
prohibiting direct or indirect payments for patient referrals for items and
services reimbursed under Medicare, Medicaid and state programs, as well as in
relation to private payors. The Company also is subject to Federal and state
laws governing certain financial relationships with physicians and other fraud
and abuse laws prohibiting the submission of false claims.
The Federal Medicare and Medicaid "Anti-kickback Statute" prohibits certain
conduct involving improper payments in connection with the delivery of items or
services covered by a number of Federal and state health care programs. Among
other things, these prohibitions apply to anyone who knowingly and willfully
solicits, receives, offers, or pays any remuneration in return for referring an
individual to another person for the furnishing, or arranging for the
furnishing, of any item or service that may be paid, in whole or in part, by the
Medicare, Medicaid or other Federal health care programs. To date, courts have
interpreted the Anti-kickback Statute to apply to a broad range of financial
relationships between providers and referral sources, including physicians and
other direct health care providers, as well as persons who do not have a direct
role in the provision of health care services. Violations of the statute may
result in criminal penalties, including fines of up to $25,000 and imprisonment
for up to five years for each violation, exclusion from participation in the
Medicare and Medicaid programs, and civil penalties of up to $50,000 and treble
the amount of remuneration for each violation. The Balanced Budget Act increases
accountability and strengthens program integrity through additional fraud and
abuse penalties.
The U.S. Department of Health and Human Services' ("HHS") Office of
Inspector General ("OIG") has adopted regulations creating "safe harbors" from
Federal criminal and civil penalties under the Anti-kickback Statute by
identifying certain types of ownership interests and other financial
arrangements that do not appear to pose a threat of Medicare and Medicaid
program abuse. Additional safe harbors have also been proposed, and OIG has
recently solicited proposals for developing new and modifying existing safe
harbors. Transactions covered by the Anti-kickback Statute that do not conform
to an applicable safe harbor are not necessarily in violation of the
Anti-kickback Statute, but such arrangements would risk scrutiny and may be
subject to civil sanctions or criminal enforcement action.
The Federal self-referral or "Stark Law" provides that where a physician
has a "financial relationship" with a provider of "designated health services"
(including, among other things, parenteral and enteral nutrients, equipment and
supplies, outpatient prescription drugs and home medical equipment, which are
products and services provided by the Company), the physician is prohibited from
referring a Medicare patient to the health care provider, and that
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provider is prohibited from billing Medicare, for the designated health service.
The Stark Law has certain statutory exceptions. In August 1995, regulations were
issued pursuant to the Stark Law as it existed prior to significant amendments
enacted in 1993. The preamble to these regulations states that HCFA intends to
rely on the language and interpretations in the regulations when reviewing
compliance under the Stark Law, as amended (the "Amended Stark Law"). Certain
exceptions from the referral prohibitions are available under the Amended Stark
Law, including the referral of patients to providers owned by certain qualifying
publicly-traded companies in which a referring physician owns an investment
security. At this time, the Company believes that its investments will qualify
for the publicly-traded securities exception because it has shareholder equity
of at least $75,000,000. Submission of a claim that a provider knows or should
know is for services for which payment is prohibited under the Amended Stark
Law, and which does not meet an exception could result in refunds of any amounts
billed, civil money penalties of not more than $15,000 for each such service
billed, and possible exclusion from the Medicare program. In addition a state
cannot receive Federal financial participation payments under the Medicaid
program for designated health services furnished to an individual on the basis
of a physician referral that would result in a denial of payment under Medicare
if Medicare covered the services to the same extent as under a state Medicaid
plan.
A number of Federal laws impose civil and criminal liability for knowingly
presenting or causing to be presented a false or fraudulent claim, or knowingly
making a false statement to get a false claim paid or approved by the
government. Under one such law, the "False Claims Act," civil damages may
include an amount that is three times the amount of claims falsely made or the
government's actual damages, and up to $10,000 per false claim. In addition, a
civil penalty of up to $15,000 may be assessed for engaging in other activities
prohibited by this statute. Actions to enforce the False Claims Act may be
commenced by a private citizen on behalf of the Federal government, and such
private citizens receive between 15 and 30 percent of the recovery. Recent
government efforts have been made (with mixed success) to assert that any claim
resulting from a relationship in violation of the Anti-kickback Statute or the
Amended Stark Law is false or fraudulent under the False Claims Act. The Company
carefully monitors its submissions of Medicare and Medicaid claims and all other
claims for reimbursement to assure that they are not false or fraudulent, and as
noted above, believes that it is in substantial compliance with the
Anti-kickback Statute or the Amended Stark Law.
The OIG of HHS instituted "Operation Restore Trust" in May 1995 in the five
states with the highest Medicare expenditures (California, Florida, New York,
Texas and Illinois). Operation Restore Trust is intended to counter health care
fraud, waste and abuse in targeted areas that HHS believes to be particularly
vulnerable to fraud and abuse, including home health care, nursing homes and
home medical equipment. The OIG also has issued "Fraud Alerts" relating to
improper business practices in the provision of medical supplies to nursing
homes, and is expected to issue additional Fraud Alerts in the future as a means
of advising the public of suspect business arrangements and practices in the
health care industry. In addition, providers of home medical equipment, wound
care supplies and other products and services are expected to be subject to
increased scrutiny for practices involving fraud and abuse.
Many states, including the states in which the Company operates, have
adopted statutes and regulations prohibiting payments for patient referrals and
other types of financial arrangements with health care providers, which, while
similar in certain respects to the Federal legislation, vary from state to
state. Sanctions for violating these state restrictions may include loss of
licensure and civil and criminal penalties. Certain states also have begun
requiring health care practitioners and/or other providers to disclose to
patients any financial relationship with a provider, including advising patients
of the availability of alternative providers.
The Company continues to review all aspects of its operations and believes
that it is in substantial compliance with all material respects with applicable
provisions of the Anti-kickback Statute, the Amended Stark Law, False Claims and
applicable state laws, although because of the broad and sometimes vague nature
of these laws, there can be no assurance that an enforcement action will not be
brought against the Company or that the Company will not be
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found to be in violation of one or more of these provisions. The Company intends
to monitor developments under these Federal and state fraud and abuse laws. At
this time, the Company cannot anticipate what impact, if any, subsequent
administrative or judicial interpretation of the applicable Federal and state
fraud and abuse laws may have on the Company's consolidated business, financial
position, cash flows or results of operations.
On July 11 and July 22, 1997, the Company's RespiFlow, Inc. ("RespiFlow")
and MK Diabetic Support Services, Inc. ("MK") subsidiaries, respectively, each
received a letter (the "Audit Letters") from the HHS' Office of Audit Services,
a division of the OIG. The Company was subsequently informed that the Audit
Letters cover its DermaQuest, Inc. ("DermaQuest") subsidiary. The Company has
produced certain documents and provided related information to the OIG and to
the U.S. Attorney for the Eastern District of Texas regarding these
subsidiaries' financial relationships with suppliers of durable medical
equipment and various other practices including the subsidiaries' practices
regarding the collection of coinsurance and deductible amounts due from Medicare
beneficiaries. Additionally, on November 19, 1997, the Company was notified by
the U.S. Attorney for the Eastern District of Texas that the Company, RespiFlow,
MK, and various other non-affiliated entities had been named defendants in a qui
tam action under the Federal False Claims Act. The qui tam action was recently
unsealed and a copy the complaint was provided to the Company. The relator is a
private party who has brought action on behalf of the Federal government. At
present, the Company has entered into settlement discussions with the Department
of Justice ("DOJ") and the OIG in an effort to bring closure to this matter and
to avoid the expense, disruption and uncertainty of litigation. The counsel for
the relator has been involved in these settlement discussions as well. At
present, the Company is not able to determine when a final settlement will be
reached with the DOJ, the OIG and the relator or whether any proposed settlement
can be concluded on terms acceptable to the Company. Accordingly, the Company is
unable to estimate what the appropriate loss might be at this time. In the event
that these settlement discussions are unsuccessful the Company will defend
vigorously its interest in these matters. As such, the Company cannot predict
whether the outcome of these actions will have a material adverse effect on the
Company's consolidated financial position, cash flows or results of
operations.
INSURANCE
Participants in both the U.K. and U.S. health care markets are subject to
lawsuits alleging negligence, product liability or other similar legal theories,
many of which involve large claims and significant defense costs. The Company,
from time to time, is subject to such suits as a result of the nature of its
business. The Company maintains general liability insurance, professional
liability insurance and excess liability coverage, as appropriate. Each of these
policies provides coverage on an "occurrence" basis and has certain exclusions
from coverage. The Company's insurance policies must be renewed annually. While
the Company has been able to obtain liability insurance in the past, such
insurance varies in cost, is difficult to obtain and may not be available in the
future on terms acceptable to the Company, if it is available at all. The
failure to maintain insurance coverage or a successful claim not covered by or
in excess of the Company's insurance coverage could have a material adverse
effect on the Company's consolidated business, financial position, cash flows
or results of operations. In addition, claims, regardless of their merit or
eventual outcome, may have a material adverse effect on the Company's
reputation. There can be no assurance that the Company's insurance will be
sufficient to cover liabilities that it may incur in the future.
ITEM 2. PROPERTIES.
The Company owns three and leases forty-nine facilities in the U.K. (of
which sixteen are for a period of three months or less) and leases a total of
six facilities in three states and Puerto Rico. In addition, there are
thirty-nine facilities in the U.K. which are owned or leased by branch
representatives. Management believes that its existing leases will be
renegotiated as they expire or that alternative properties can be leased on
acceptable terms. The Company also believes that its present facilities are well
maintained and are suitable for it to continue its existing
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operations. See Note 12 of the Notes to Consolidated Financial Statements.
ITEM 3. LEGAL PROCEEDINGS.
THE COMPANY
On February 4, 1997, Patient Care Systems, Inc. ("PCS") filed a lawsuit
against DermaQuest and the Company in the Court of Common Pleas of Chester
County, Pennsylvania, for breach of contract, conversion, unjust enrichment and
misrepresentation. Subsequently, PCS withdrew all claims except for its breach
of contract claim. On April 22, 1997, DermaQuest filed a counterclaim against
PCS for breach of contract. The action related to a contract initially entered
into between DermaQuest and PCS to market alternating pressure mattresses. A
jury trial in this matter began on June 28, 1999. On July 2, 1999, the jury
reached their verdict finding in favor of PCS on its breach of contract claim
and finding in favor of DermaQuest on its breach of contract counterclaim. Post
verdict, the parties settled the litigation whereby DermaQuest and the Company
agreed to pay a total of $180,000, as a full, final and complete resolution of
the dispute.
On August 20, 1999, TNI was named a defendant in a suit brought by Teresa
Crutcher, in New Jersey state court, as administrator of the estate of Aaron
Pernell, who was an infant and Teresa Crutcher's son. The claim is for wrongful
death of Aaron Pernell alleged to have been caused by the negligent manner in
which a TNI home care nurse placed him in an infant car seat. TNI has answered
the complaint. The claim is insured. As the case is in a preliminary stage, the
Company is not able to estimate any potential exposure and has not recorded any
amounts in its financial statements. It is possible that irrespective of
insurance coverage, the ultimate outcome of this action could be materially
unfavorable to the Company's consolidated financial condition, cash flows, or
results of operations. However, the Company intends to defend the proceedings
vigorously and believes that the ultimate liability, if any, will be within the
policy limits of its insurance, and will not have a material adverse effect on
the Company's consolidated financial position, cash flows, or results of
operations.
On April 13, 1998, a shareholder of the Company, purporting to sue
derivatively on behalf of the Company, commenced a derivative suit in the
Supreme Court of the State of New York, County of New York, entitled Kevin Mak,
derivatively and on behalf of Transworld Healthcare, Inc., Plaintiff, vs.
Timothy Aitken, Scott A. Shay, Lewis S. Ranieri, Wayne Palladino and Hyperion
Partners II L.P., Defendants, and Transworld Healthcare, Inc., Nominal
Defendant, Index No. 98-106401. The suit alleges that certain officers and
directors of the Company, and Hyperion Partners II L.P. ("HPII"), breached
fiduciary duties to the Company and its shareholders, in connection with a
transaction, approved by a vote of the Company's shareholders on March 17, 1998,
in which the Company was to issue certain shares of stock to HPII in exchange
for the HMI Receivables (as defined and described in "Certain Relationships and
Related Transactions - Transactions with Principal Shareholders"). The action
seeks injunctive relief against this transaction, damages and costs and
attorneys' fees in unspecified amounts. The transaction subsequently closed and
the plaintiff has, on numerous occasions, stipulated to extend the defendants'
time to respond to this suit. The most recent stipulation provides for an
extension to March 3, 2000.
HMI
Effective October 1, 1997, the Company owned 100% of the stock of HMI.
HMI and certain of its current and former officers have been named as
defendants in a class action lawsuit filed on April 3, 1997 in the United States
District Court for the Eastern District of New York formerly entitled Nicholas
Volonnino et al. v. Health Management, Inc., W. James Nicol, Paul S. Jurewicz
and James Mieszala, 97 Civ.
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1646. The action was amended on September 12, 1997, and is now entitled Dennis
Baker et al. v. Health Management, Inc., BDO Seidman, LLP, Transworld
HealthCare, Inc., W. James Nicol, Paul S. Jurewicz and James Mieszala. The
plaintiffs asserted claims under Sections 10(b) and 20 (a) of the Securities
Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, arising out of
alleged misrepresentations and omissions by HMI in connection with certain of
its previous securities filings and press releases. The Company was sued as an
alleged control entity of HMI, based upon its acquisition of 49% of HMI's
outstanding common stock on January 13, 1997. The plaintiffs purport to be a
class of persons who purchased shares of HMI common stock between April 26, 1996
and March 17, 1997, the date that HMI announced that it would have to restate
certain of its financial statements and that it was renegotiating its deal with
the Company. Plaintiffs sought unspecified compensatory damages from the harm
that allegedly resulted from the alleged wrongdoing. Following the filing of
several motions by the parties and the filings of an amended complaint by the
plaintiffs, to which defendants responded, a memorandum of understanding, dated
March 16, 1999, setting forth the terms of a settlement of this litigation, was
executed by the plaintiffs, the Company, W. James Nicol, Paul S. Jurewicz, James
Mieszala, and HMI (the "HMI Defendants") and National Union Fire Insurance
Company of Pittsburgh, Pennsylvania ("National"). The total settlement to be
paid by the HMI Defendants is $2,375,000. The Company is directly responsible to
pay $325,000 of the settlement amount and National (as a separate party to the
settlement) is directly responsible to pay the remaining $2,050,000. Of the
$325,000 to be paid by the Company, $50,000 will be reimbursed by the Company's
directors' and officers' insurance policy carrier. On July 26, 1999, the
plaintiffs and BDO Seidman LLP entered into a preliminary agreement to settle
the claims against BDO Seidman LLP for $100,000. The Court subsequently
certified the class of plaintiffs to include all persons or entities who
purchased or otherwise acquired the common stock of HMI between April 26, 1996
and March 17, 1997 inclusive, except the defendants and related parties. In
November 1999, the Court gave final approval to the settlement.
On July 2, 1998, a former shareholder of HMI purporting to sue on behalf of
a class of shareholders of HMI as of June 6, 1997, commenced a suit in the
Delaware Chancery Court, New Castle County, entitled Kathleen S. O'Reilly v.
Transworld HealthCare, Inc., W. James Nicol, Andre C. Dimitriadis, Dr. Timothy
J. Triche and D. Mark Weinberg, Civil Action No. 16507-NC. Plaintiff alleged
that the Company, as majority shareholder of HMI, and the then directors of HMI,
breached fiduciary duties to the minority shareholders of HMI by approving a
merger between HMI and a subsidiary of the Company for inadequate consideration.
Plaintiff demands an accounting, damages, attorney's fees and other payment for
other expenses for unspecified amounts. The defendants filed a motion to dismiss
this action on September 18, 1998. The Court denied defendants' motion in part
and granted the motion in part, leaving intact certain claims. Plaintiff has
propounded discovery requests. The claims are insured.
HMI was named as a defendant in a lawsuit filed on November 25, 1997, in
the Chancery Court for the State of Delaware for New Castle County, entitled
Clifford E. Hotte v. Health Management, Inc., CA No. 1606-NC. The plaintiff
sought reimbursement and advancement of legal fees and expenses in the amount of
$1,000,000 incurred or anticipated in connection with his defense of certain
claims against him, a director and officer of HMI, in various litigation. The
Court granted plaintiff a preliminary injunction requiring HMI to pay $824,000
for plaintiff's legal expenses. As part of the settlement of a class action
litigation in which Clifford Hotte was still a defendant, but to which the
Company was not a party (although it had been previously), HMI's insurer,
National agreed to pay $1,000,000 to settle all of the class action plaintiffs'
claims against Clifford Hotte and his wife, who was a co-defendant, in exchange
for mutual releases of the parties and a release from Clifford Hotte of his
judgement and any further claims against HMI, including the $824,000 legal
expenses.
By letter dated December 20, 1999, the Company received formal written
notification of the intent of two plaintiffs to file a civil action in the Court
of Common Pleas of Allegheny County, Pennsylvania against Transworld Healthcare,
Inc., Transworld Home Healthcare, Inc., Health Management, Inc. and HMI
Pennsylvania, Inc. The two plaintiffs, Irwin Hirsch and Lloyd Myers, formerly
were employees of HMI Pennsylvania, Inc.
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a subsidiary of the Company, and had written employment agreements. Myers also
served as an officer of HMI. In their capacities as employees and as officers,
both had some contractual indemnification rights against HMI and HMI
Pennsylvania, Inc. for defense and indemnification. In 1994, Hirsch and Myers
also sold two retail pharmacies they owned to HMI.
Hirsch and Myers were named as defendants in an action filed in the United
States District Court for the Eastern District of New York entitled In re Health
Management, Inc. Securities Litigation, Master File No. 96 Civ. 0889 (ADS),
which was a class action by shareholders of HMI alleging, among other claims
against the defendants, fraud in connection with the valuation of certain
securities. Hirsch and Myers incurred non-reimbursed legal expenses of $100,000
in defending that litigation and, ultimately, settled their liability jointly
for $1,325,000, which was non-reimbursed. They demand that defendants reimburse
to them their non-reimbursed legal fees and the settlement amount pursuant to
the indemnification provisions of their employee contracts.
In addition to their indemnification claims, Hirsch and Myers also claim
damages in the amount of $7,000,000 for losses in connection with the pharmacies
sale transaction they entered into with HMI under which they sold their retail
pharmacies to HMI. Hirsch and Myers claim that the pharmacies sale transaction
was based upon fraudulent misrepresentations by HMI.
The Company and HMI entities will vigorously defend against these claims.
The Company believes that Hirsch and Myers' indemnification claims should not
have any real merit because of testimony given by Hirsch and Myers under oath in
connection with a criminal trial against Clifford Hotte, a director and former
officer of HMI. In their testimony, Hirsch and Myers acknowledged malfeasance
and nonfeasance, which should render their contractual entitlement to
indemnification void. Even if they are entitled to indemnification despite their
acknowledgements, they are liable to defendants for the economic losses and
damages suffered by defendants as a result of the malfeasance and nonfeasance.
Therefore if the civil actions are filed, the Company and HMI entities will
aggressively pursue counterclaims against Hirsch and Myers for damages which,
conservatively, are far in excess of their claims, including the claims
associated with the pharmacies sale transaction.
The enforcement division of the Securities and Exchange Commission (the
"Commission") has issued a formal order of investigation relating to matters
arising out of HMI's public announcement on February 27, 1996 that HMI would
have to restate its financial statements for prior periods as a result of
certain accounting irregularities. HMI is fully cooperating with this
investigation and has responded to the requests of the Commission for
documentary evidence.
The outcomes of certain of the foregoing lawsuits and the investigation
with respect to HMI are uncertain and the ultimate outcomes could have a
material adverse affect on the Company.
The Company is involved in various other legal proceedings and claims
incidental to its normal business activities. The Company is vigorously
defending its position in all such proceedings. Management believes these
matters should not have a material adverse impact on the consolidated financial
position, cash flows, or results of operations of the Company.
See also "Business Government Regulation."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held its annual meeting of shareholders on September 14, 1999
(the "Annual Meeting"). The proposals voted upon at the Annual Meeting were (1)
to elect five directors to serve for a term of one year and
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<PAGE>
until their respective successors are duly elected and qualified and (2) to
ratify the appointment by the Company's Board of Directors of
PricewaterhouseCoopers LLP, as independent accountants of the Company for the
fiscal year ending September 30, 1999.
The voting results with respect to each proposal are set forth below:
<TABLE>
<CAPTION>
ABSTAIN/
PROPOSAL FOR AGAINST NON-VOTING
-------- --- ------- ----------
<S> <C> <C> <C>
No. 1 (election of Directors) -
Messrs. Timothy M. Aitken 16,121,603 85,014 -
Lewis S. Ranieri 16,121,603 85,014 -
Scott A. Shay 16,121,603 85,014 -
Jeffery S. Peris 16,121,603 85,014 -
G. Richard Green 16,121,603 85,014 -
No. 2 16,136,000 63,067 7,550
</TABLE>
-17-
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Common Stock is quoted on the American Stock Exchange ("Amex") and is
traded under the symbol "TWH." Prior to April 30, 1999, the Common Stock was
quoted on the Nasdaq National Market (the "NASDAQ/NM") under the symbol "TWHH."
The following table sets forth, for the periods indicated, the high and low
sales price of the Common Stock on the NASDAQ/NM through April 29, 1999, and
thereafter on Amex.
<TABLE>
<CAPTION>
PERIOD HIGH LOW
------ ---- ---
<S> <C> <C>
Year Ended September 30, 1998:
First Quarter................................ $ 9-7/8 $ 6-13/16
Second Quarter............................... 7-13/16 5-1/2
Third Quarter................................ 7-1/8 5-7/16
Fourth Quarter............................... 6 2-1/8
Year Ended September 30, 1999:
First Quarter................................ 5-13/32 2-1/8
Second Quarter............................... 5 2-5/8
Third Quarter................................ 4-7/8 2-5/16
Fourth Quarter............................... 3-15/16 1-1/2
Year Ended September 30, 2000:
First Quarter................................ 3-1/8 1-1/2
Second Quarter (through January 7, 2000)..... 2-5/8 1-5/8
</TABLE>
As of January 3, 2000, there were approximately 168 stockholders of record
of the Common Stock.
The Company has neither declared nor paid any dividends on its Common Stock
and does not anticipate paying dividends in respect of its Common Stock in the
foreseeable future. Any payment of future dividends will be at the discretion of
the Company's Board of Directors and will depend upon, among other things, the
Company's earnings, financial position, cash flows, capital requirements and
other relevant considerations, including the extent of its indebtedness and any
contractual restrictions with respect to the payment of dividends. Under the
terms of the Company's former senior secured revolving credit facility (the
"Credit Facility), the Company was prohibited from paying dividends or making
other cash distributions. Under the terms of the Refinancing (as defined and
described in "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources"), the Company's U.K.
subsidiaries are prohibited from paying dividends or making other cash
distributions. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources." See also
"Executive Compensation -- Stock option Plans."
-18-
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
The financial data for the years ended September 30, 1999 and 1998 and
the eleven months ended September 30, 1997 and balance sheet data as of
September 30, 1999 and 1998 as set forth below have been derived from the
consolidated financial statements of the Company for the periods indicated and
should be read in conjunction with those consolidated financial statements and
notes thereto included elsewhere in this Annual Report on Form 10-K. In
addition, the selected financial data should be read in conjunction with
"Business -- General" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
<TABLE>
<CAPTION>
ELEVEN MONTHS
ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,(1) YEAR ENDED OCTOBER 31,
------------------------- ------------- --------------------------
1999 1998 1997(2) 1996(3) 1995(4)
------------------------- ------------- --------------------------
<S> <C> <C> <C> <C> <C>
FINANCIAL DATA:
Net patient services....................... $ 80,169 $ 68,887 $ 29,844 $ 19,164 $ 18,870
Net respiratory, medical equipment
and supplies sales ...................... 65,277 76,185 52,562 47,170 42,782
Net infusion services...................... 9,282 10,237 11,038 9,970 9,935
-------- -------- --------- ----------- --------
Total revenues............................. 154,728 155,309 93,444 76,304 71,587
Cost of revenues........................... 99,410 97,192 51,387 34,680 32,730
-------- -------- --------- ----------- --------
Gross profit............................... 55,318 58,117 42,057 41,624 38,857
Selling, general and administrative
expenses ................................ 57,946(5) 51,980(6) 42,931 33,552 29,774
Gain on sale of assets..................... (2,511)(7) (606)(8)
Special charges, primarily goodwill
impairment.............................. 16,677(9) 3,898(10)
Equity in loss of HMI, net................. 18,076
-------- -------- --------- ----------- --------
Operating (loss) income.................... (2,628) 8,648 (35,021) 8,072 5,185
Interest income............................ (227) (635) (2,271) (75) (68)
Interest expense........................... 5,445 6,286 5,063 4,427 3,767
(Benefit) provision for income taxes ...... (500) 1,844 (5,078) 1,702 627
-------- -------- --------- ----------- --------
(Loss) income before extraordinary item ... (7,346) 1,153 (32,735) 2,018 859
Extraordinary item......................... (1,435)(11)
-------- -------- --------- ----------- --------
Net (loss) income.......................... $ (7,346) $ 1,153 $(32,735) $ 583 $ 859
======== ======== ========= =========== ========
(Loss) income per share of common
stock before extraordinary item(12):
Basic...................................... $ (0.42) $ 0.07 $ (2.56) $ 0.29 $ 0.15
======== ======== ========= =========== ========
Diluted.................................... $ (0.42) $ 0.07 $ (2.56) $ 0.26 $ 0.13
======== ======== ========= =========== ========
Net (loss) income per share of
common stock(12):
Basic...................................... $ (0.42) $ 0.07 $ (2.56) $ 0.08 $ 0.15
======== ======== ========= =========== ========
Diluted.................................... $ (0.42) $ 0.07 $ (2.56) $ 0.07 $ 0.13
======== ======== ========= =========== ========
Weighted average number of
common shares outstanding(12):
Basic...................................... 17,547 17,327 12,794 7,035 5,637
======== ======== ========= =========== ========
Diluted.................................... 17,547 17,488 12,794 7,833 6,868
======== ======== ========= =========== ========
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
SEPTEMBER 30, OCTOBER 31,
------------------------------------------- ----------------------
1999 1998 1997 1996 1995
-------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............ $ 26,005 $ 39,148 $ 26,411 $26,201 $ (4,706)(13)
Accounts receivable, net... 30,814 32,223 31,475 24,414 18,906
Total assets............... 172,121 179,708 201,281 90,727 74,912
Long-term debt............. 54,407 57,307 61,400 12,505 20,264
Total shareholders' equity. 91,274 101,905 81,905 67,225 24,086
</TABLE>
- ---------
(1) The Company changed its fiscal year from October 31 to September 30
effective for fiscal 1997. This resulted in an eleven month reporting
period for the period ended September 30, 1997.
(2) The financial data for the eleven months ended September 30, 1997 includes
the results of operations of Omnicare and Allied from their dates of
acquisition (effective July 1, 1997 and June 23, 1997, respectively).
(3) The financial data for the year ended October 31, 1996 includes the results
of operations of Health Meds, Inc. ("Health Meds") and U.S. Home Care
Infusion Therapy Services Corporation of New Jersey ("USNJ") from their
dates of acquisition (effective October 1, 1996).
(4) The financial data for the year ended October 31, 1995 includes the results
of operations of DermaQuest (effective November 1, 1994), The Pulmonary
Division of Delaware Valley Lung Center, P.C. (effective January 1, 1995)
and Precision Health Care, Inc. (effective March 1, 1995) from their
respective dates of acquisition.
(5) Includes charges totaling $1,392,000 in the fiscal year ended September 30,
1999, primarily as a result of the attempted acquisitions of Sinclair
Montrose Healthcare PLC ("Sinclair") and Gateway HomeCare, Inc. ("Gateway")
and additional legal reserves.
(6) Includes charges totaling $554,000 in the fiscal year ended September 30,
1998 resulting from a write-off of expenses related to its attempted
acquisitions of Healthcall Group plc ("Healthcall") and Apria Healthcare
Group, Inc. ("Apria").
(7) The Company recorded a gain of $2,511,000 on the TNI Sale in the fiscal
year ended September 30, 1998.
(8) The Company recorded a gain of $606,000 on the sale of Radamerica in the
eleven months ended September 30, 1997.
(9) The Company reported special charges totaling $16,677,000 in the eleven
months ended September 30, 1997 resulting from a $1,841,000 non-cash charge
related to impairment of the investment in HMI, as well as to record
estimated costs, fees and other expenses related to completion of the HMI
Asset Sale, a $12,079,000 non-cash charge for the write-off of goodwill and
other intangible assets related to exiting the wound care and orthotic
product lines of DermaQuest, a $1,622,000 non-cash charge for the
termination of the agreements to purchase the VIP Companies, a $437,000
charge for closure of the Company's pulmonary rehabilitation center in
Cherry Hill, New Jersey, and $698,000 of other charges.
(10) The Company reported special charges totaling $3,898,000 in the fiscal year
ended October 31, 1995 resulting from a write-off of expenses related to an
abandoned public offering ($2,808,000), a write-off of expenses related to
abandoned acquisitions ($605,000) and expenses related to the consolidation
of certain of the Company's facilities ($485,000).
(11) The Company recorded a non-cash, after-tax, extraordinary charge of
$1,435,000 (net of tax benefit of $879,000) in the fiscal year ended
October 31, 1996 in connection with the repayment of the Company's former
credit agreement.
(12) Weighted average shares have been restated for the eleven months ended
September 30, 1997 and the fiscal years ended October 31, 1996 and 1995 to
reflect the provisions of Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share"("EPS"). SFAS No. 128 replaced
primary EPS with basic EPS and fully diluted EPS with diluted EPS. The
effects of this restatement were to increase basic from primary income per
share before extraordinary item by $0.03 and diluted from fully diluted
income per share before extraordinary item by $0.01 for the year ended
October 31, 1996, to increase basic from primary income per share before
extraordinary item and net income by $0.02 and diluted from fully diluted
income per share before extraordinary item and net income by $0.01 for the
year ended October 31, 1995.
<PAGE>
(13) Includes a $5,973,000 acquisition payable in connection with the
acquisition of RespiFlow and MK and an $8,832,000 acquisition payable in
connection with the acquisition of DermaQuest.
-20-
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL
The Company changed its fiscal year to end on September 30 from October 31
effective for fiscal 1997. This resulted in an eleven month reporting period for
the period ended September 30, 1997.
The Company is a provider of a broad range of health care services and
products with operations in the U.K. and the U.S. The Company provides the
following services and products: (i) patient services, including nursing and
para-professional services; (ii) specialty mail-order pharmaceuticals, medical
supplies, respiratory therapy and home medical equipment; and (iii) infusion
therapy. The Company provides these services and products from the following
reportable business segments: (i) U.K. Operations; (ii) U.S. Mail-Order
Operations; and (iii) U.S. Hi-Tech Operations. The Company's U.K. Operations
include the U.K.'s second largest commercial provider of nursing and
para-professional care to the community and U.K. healthcare institutions, the
U.K.'s second largest home respiratory supplier as well as a leading value-added
medical supplies distributor, all with operations located throughout the U.K.
The Company's Mail-Order Operations provide specialty mail-order pharmaceutical
and medical supplies (including respiratory and diabetic medications and
supplies, as well as ostomy and orthotic products) to patients in their home
nationwide and in Puerto Rico while its U.S. Hi-Tech Operations provide infusion
and respiratory therapy services and home medical equipment and are concentrated
in New Jersey and New York.
The Company took a number of significant steps during the fiscal year ended
September 30, 1998 and the Eleven Month Period to realign its business as a
focused regional home health care provider and specialty pharmacy and medical
supply distributor in the U.S. and as an integrated national provider of home
and alternate site health care products and services in the U.K. These steps
included (i) selling non-core assets such as the Company's Radamerica business
which provided radiation therapy in the Baltimore, Maryland area and the
Company's TNI operations, which provided nursing and para-professional services
in New Jersey and Florida; (ii) exiting businesses that were deemed not to have
the potential to earn an adequate return on capital over the long term (such as
wound care and orthotic product lines in the continental U.S., as well as the
Company's pulmonary rehabilitation center in Cherry Hill, New Jersey); (iii)
completing the HMI Asset Sale; and (iv) terminating the agreements to purchase
the VIP Companies. The Company also completed the acquisitions of Omnicare and
Allied in July 1997 for an aggregate purchase price of approximately
$91,000,000. Omnicare provides respiratory equipment and services and supplies a
range of medical and surgical products to patients at home throughout the U.K.
through its network of seven regional facilities. Allied is a national provider
of nursing and other care-giving services to the community and U.K. healthcare
institutions with seventy-five locations throughout the U.K.
The Company's revenue mix and payor mix will be influenced to a significant
degree by the relative
-21-
<PAGE>
contribution of acquired businesses and their respective payor profiles. The
following table shows the percentage of historical net revenues represented by
each of the Company's product lines:
<TABLE>
<CAPTION>
Eleven Months
Year Ended Year Ended Ended
September 30, September 30, September 30,
1999 1998 1997
------ ----- -----
Product Line
- ------------
<S> <C> <C> <C>
Net patient services................... 51.8% 44.4% 31.9%
Net respiratory, medical
equipment and supplies sales ......... 42.2 49.0 56.3
Net infusion services.................. 6.0 6.6 11.8
------ ----- -----
Total revenues....... 100.0% 100.0% 100.0%
====== ===== =====
</TABLE>
The increase in net patient services as a percentage of total revenues for
the year ended September 30, 1999 as compared to 1998 is primarily due to growth
in Allied's branch network (both organically and through the on-going nursing
and care agency acquisition program). The decrease in net respiratory medical
equipment and supplies sales as a percentage of revenues for the year ended
September 30, 1999 as compared to 1998 is due primarily to a decrease in
revenues in the Company's U.S. Mail-Order and Hi-Tech Operations due principally
to a reduction in the number of patients serviced. Acquisitions, when completed,
will continue to impact the relative mix of revenues. On a pro forma basis,
assuming the Company owned 100% of Omnicare and Allied on November 1, 1996, the
percentage of total revenues for the eleven months ended September 30, 1997
would have been as follows: net respiratory, medical equipment and supplies
sales 47.3%; net patient services 44.9%; and net infusion services 7.8%.
The following table shows the historical payor mix for the Company's total
revenues for the periods presented:
<TABLE>
<CAPTION>
Eleven Months
Year Ended Year Ended Ended
September 30, September 30, September 30,
1999 1998 1997
------ ----- -----
Payor
- -----
<S> <C> <C> <C>
U.K. NHS and other U.K.
governmental payors............. 36.5% 29.7% 12.9%
Medicare......................... 20.9 27.2 42.0
Medicaid......................... 2.2 5.8 11.2
Private payors................... 40.4 37.3 33.9
------ ----- -----
Total revenues.......... 100.0% 100.0% 100.0%
====== ===== =====
</TABLE>
The increase in U.K. NHS and other U.K. governmental payors and private
payors as a percentage of total revenues for the year ended September 30, 1999
as compared to 1998 is primarily due to the growth in Allied's branch network,
as described above. The decrease in Medicare and Medicaid as a percentage of
total revenues for the year ended September 30, 1999 as compared to 1998 is
primarily due to the decrease in revenues in the Company's U.S. Mail-Order and
Hi-Tech Operations, as described above. The decrease in Medicare as a percentage
of total revenues for the year ended September 30, 1998 as compared to the
Eleven Month Period is primarily a result of the Omnicare and Allied
acquisitions. The Company believes that its payor mix in the future will be
determined primarily by the payor profile of completed acquisitions and, to a
lesser extent, from shifts in existing business among payors. On a pro forma
basis, assuming the Company owned 100% of
-22-
<PAGE>
Omnicare and Allied on November 1, 1996, the payor mix for the Eleven Month
Period would have been as follows: U.K. NHS and other U.K. governmental payors
30.4%; Medicare 27.8%; Medicaid 7.4%; and private payors (including managed care
payors) 34.4%.
The Company believes that a substantial portion of its revenues derived
from private payors in the U.S. was subject to case management and managed care
and that this relationship will continue in the future. The Company maintains a
diversified offering of home services and products in an attempt to mitigate the
impact of potential reimbursement reductions for any individual product or
service.
The Company's gross margins will be influenced by the revenue mix of its
product lines and by changes in reimbursement rates. The Company historically
has recognized higher gross margins from its specialized mail-order and medical
supplies pharmacy and respiratory therapy operations than from its nursing and
infusion therapy operations. On a pro forma basis, assuming the Company owned
100% of Omnicare and Allied on November 1, 1996, the gross profit margin for the
Eleven Month Period would have been 38.8% versus the actual 45.1% for the same
period. Subsequent acquisitions, when completed, will continue to impact the
relative mix of revenues and overall gross margin.
At September 30, 1999 and 1998, the Company had $103,248,000 and
$105,784,000, respectively of intangible assets (primarily goodwill) on its
balance sheet. This represented 60.0% of total assets and 113.1% of total
stockholders' equity at September 30, 1999 and 58.9% of total assets and 103.8%
of total stockholders' equity at September 30, 1998. Amortization of intangibles
for the years ended September 30, 1999 and 1998 and the eleven months ended
September 30, 1997 was $3,459,000, $3,147,000 and $1,866,000, respectively.
Subsequent acquisitions, when completed, will continue to increase the amount of
intangible assets on the balance sheet and amortization of intangibles on the
statement of operations.
The Company amortizes goodwill over a period of 40 years. The Company has
selected the forty-year amortization convention based on the likely period of
time over which related economic benefits will be realized. The Company believes
its estimated goodwill life is reasonable given, among other factors, the
continuing movement of patient care to non-institutional settings, expanding
demand due to demographic trends, the emphasis of the Company on establishing
coverage in each of its local and regional markets and the consistent practice
of other home health care companies. At each balance sheet date, or if a
significant adverse change occurs in the Company's business, management assesses
the carrying amount of enterprise goodwill. The Company measures impairment of
goodwill by comparing the future undiscounted cash flows (without interest) to
the carrying amount of goodwill. This evaluation is done at the reportable
business segment level (primarily by subsidiary). If the carrying amount of
goodwill exceeds the future cash flows, the excess carrying amount of goodwill
is written off. The factors considered by management in estimating future cash
flows include current operating results, the effects of any current or proposed
changes in third-party reimbursement or other governmental regulations, trends
and prospects of acquired businesses, as well as the effect of demand,
competition, market and other economic factors. If permanent impairment of
goodwill were to be recognized in future period it could have a material adverse
effect on the Company's consolidated financial position or results of
operations.
RESULTS OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1999 VS. YEAR ENDED SEPTEMBER 30, 1998.
Revenues. Total revenues decreased by $581,000 or .4% to $154,728,000 for
the year ended September 30, 1999 from $155,309,000 for the year ended September
30, 1998. This decrease was primarily attributable to a reduction in the number
of patients serviced by the Company's U.S. Mail-Order Operations ($9,514,000)
and
-23-
<PAGE>
Hi-Tech Operations ($1,666,000) and the incremental impact of the Balanced
Budget Act, which reduced revenue in the Company's U.S. Mail-Order Operations by
$611,000. In addition, the sale of TNI accounted for a decrease of $7,661,000.
These decreases were substantially offset by increases in the Company's U.K.
Operations, specifically, patient services ($18,934,000). The U.K. Operations
increased principally due to continued expansion, increased billing rates and an
increase in the number of patients serviced.
Pursuant to the Balanced Budget Act, a 10% reduction in Medicare
reimbursement of diabetic testing strips and a 5% reduction in Medicare
reimbursement of respiratory drugs became effective January 1, 1998. These
reductions reduced revenue, increased cost of revenues as a percentage of
revenues and decreased gross profit for respiratory, medical equipment and
supplies sales effective with the reimbursement reduction (as discussed herein).
In addition, pursuant to the Social Security Act, which gives HCFA
authority to alter certain reimbursement rates that are not inherently
reasonable, Medicare is proposing further inherent reasonableness reductions in
Medicare reimbursement rates. See "Business -- Government Regulation." These
reductions, if implemented, are expected to increase cost of revenues as a
percentage of revenues, decrease gross profit and decrease operating income for
respiratory, medical equipment and supplies sales effective with the
reimbursement reduction. The amount of the impact will be dependent upon product
mix, the amount of product cost concessions that the Company is able to obtain
from its suppliers and the number of patients serviced whose primary insurance
coverage is Medicare.
Cost of Revenues. Cost of revenues increased by $2,218,000 to $99,410,000
for the year ended September 30, 1999 from $97,192,000 for the year ended
September 30, 1998. As a percentage of total revenues, cost of revenues for the
year ended September 30, 1999 increased to 64.2% in comparison to 62.6% for the
year ended September 30, 1998. Cost of revenues as a percentage of revenues
declined for patient services (68.1% for the year ended September 30, 1999
versus 69.4% for the year ended September 30, 1998), increased for respiratory,
medical equipment and supplies sales (57.7% for the year ended September 30,
1999 versus 55.0% for the year ended September 30, 1998) and increased for
infusion services (76.9% for the year ended September 30, 1999 versus 73.4% for
the year ended September 30, 1998). The decrease in patient services is
primarily due to increased billing rates. The increase in respiratory, medical
equipment and supplies sales is due to an increase in respiratory, medical
equipment and supplies sales in the U.S. Mail-Order Operations with higher
product costs. The increase in infusion services is due to an increase in
infusion therapies in the Hi-Tech Operations with higher product costs.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $5,966,000 or 11.5% to $57,946,000 for the
year ended September 30, 1999 from $51,980,000 for the year ended September 30,
1998. This increase was due to additional bad debt expense ($3,605,000)
principally as a result of fully reserving for DermaQuest's accounts receivables
(see Liquidity and Capital Resources - Accounts Receivable). In addition, there
were higher levels of overhead in the U.K. Operations ($3,585,000) due to its
continued expansion and the U.S. Mail-Order Operations incurred additional costs
for overhead related to sales and collection efforts in the U.S. operations
during the first half of fiscal 1999 ($1,942,000). Year ended September 30, 1999
included $1,392,000 of charges primarily related to the attempted acquisitions
of Sinclair and Gateway and additional legal reserves versus $554,000 of charges
included in fiscal 1998 primarily relating to costs incurred from its attempted
acquisitions of Healthcall and Apria. These increases were offset by an overhead
reduction program in the Mail-Order Operations ($2,642,000). The sale of TNI
accounted for an additional decreases of $1,871,000.
Gain on Sale of Assets. For the year ended September 30, 1998, the Company
recorded a $2,511,000
-24-
<PAGE>
gain on the TNI Sale.
Operating (Loss) Income. The Company incurred an operating loss of
$2,628,000 for the year ended September 30, 1999 compared to operating income of
$8,648,000 for the year ended September 30, 1998. Excluding the $1,392,000 of
charges related to attempted acquisitions and additional legal reserves and
$3,605,000 of additional bad debt expenses in the year ended September 30, 1999,
the Company would have recorded operating income of $2,369,000.
Interest Income. Interest income decreased by $408,000 to $227,000 for the
year ended September 30, 1999 from $635,000 for the year ended September 30,
1998. This decrease was attributable to lower interest income earned on a lower
level of funds invested.
Interest Expense. Interest expense decreased by $841,000 to $5,445,000 for
the year ended September 30, 1999 from $6,286,000 for the year ended September
30, 1998. This favorable variance was primarily attributable to a lower level of
borrowings under the Company's Credit Facility combined with a reduced borrowing
rate.
(Benefit) Provision for Income Taxes. (Benefit) provision for income taxes
as a percentage of income before income taxes was a benefit of 6.4% for the year
ended September 30, 1999 and a provision of 61.5% for the year ended September
30, 1998. The difference between the 6.4% effective tax rate for fiscal 1999 and
the statutory tax rate resulted from non-deductible expenses, primarily
amortization of intangible assets.
Management believes that it is more likely than not that the Company will
generate sufficient levels of taxable income in the future to realize the
$11,369,000 net deferred tax assets comprised of the tax benefit associated with
future deductible temporary differences and net operating loss carryforwards,
prior to their expiration (primarily 13 years or more). This belief is based
upon, among other factors, changes in operations over the last few years,
management's focus on its business realignment activities and current business
strategies primarily with respect to its U.K. Operations. Failure to achieve
sufficient levels of taxable income might affect the ultimate realization of the
net deferred tax assets. If this were to occur, management is committed to
implementing tax planning strategies, such as the sale of net appreciated assets
of the Company to the extent required (if any) to generate sufficient taxable
income prior to the expiration of these benefits. Should such strategies be
required, they could potentially result in the sale of a portion of the
Company's interest in the U.K. Operations and repatriation of such proceeds to
the U.S.
Net Loss (Income). As a result of the foregoing, the Company incurred a net
loss of $7,346,000 for the year ended September 30, 1999 compared to net income
of $1,153,000 for the year ended September 30, 1998.
YEAR ENDED SEPTEMBER 30, 1998 VS. ELEVEN MONTHS ENDED SEPTEMBER 30, 1997.
Revenues. Total revenues increased by $61,865,000 or 66.2% to $155,309,000
for the year ended September 30, 1998 from $93,444,000 for the eleven months
ended September 30, 1997 with $13,153,000 accounting for the one additional
month's revenue in fiscal 1998. The remaining increase was primarily
attributable to the inclusion of eleven months of results for the year ended
September 30, 1998 versus three months in the comparable prior period for Allied
($42,322,000 in patient services) and Omnicare ($16,735,000 in respiratory,
medical equipment and supplies sales), as well as an increase in respiratory,
medical equipment and supplies sales due primarily to an increase in the number
of patients serviced in the Company's Mail-Order Operations ($5,395,000). These
increases were partly offset by a decrease in patient services revenue
attributable to the sale of Radamerica and the TNI Sale ($8,830,000), decreases
in respiratory, medical
-25-
<PAGE>
equipment and supplies sales due to exiting certain product lines of DermaQuest
beginning in the fourth quarter of fiscal 1997 ($2,719,000) as well as a
reduction in revenue in the Mail-Order Operations due to the Balanced Budget Act
($1,846,000) and lower infusion services revenue ($1,836,000) due to a decline
in number of patients serviced in the Hi-Tech Operations.
Pursuant to the Balanced Budget Act, a 10% reduction in Medicare
reimbursement of diabetic testing strips and a 5% reduction in Medicare
reimbursement of respiratory drugs became effective January 1, 1998. These
reductions reduced revenue, increased cost of revenues as a percentage of
revenues and decreased gross profit for respiratory, medical equipment and
supplies sales effective with the reimbursement reduction (as discussed herein).
Cost of Revenues. Cost of revenues increased by $45,805,000 to $97,192,000
for the year ended September 30, 1998 from $51,387,000 for the eleven months
ended September 30, 1997 with $7,920,000 accounting for the one additional
month's cost of revenues in fiscal 1999. As a percentage of total revenues, cost
of revenues increased to 62.6% from 55.0% for the year ended September 30, 1998
and eleven months ended September 30, 1997, respectively. Cost of revenues as a
percentage of sales increased for respiratory, medical equipment and supplies
sales (55.0% for the year ended September 30, 1998 versus 48.9% for the eleven
months ended September 30, 1997) increased for patient services (69.4% for the
year ended September 30, 1998 versus 60.8% for the eleven months ended September
30, 1997) and increased for infusion services (73.4% for the year ended
September 30, 1998 versus 68.6% for the eleven months ended September 30, 1997).
The increase in cost of revenues of respiratory, medical equipment and supplies
sales as a percentage of revenues for fiscal 1998 are primarily attributable to
the impact of the Balanced Budget Act, which reduced revenues for diabetic
testing strips by 10% and respiratory drugs by 5% effective January 1, 1998 for
Medicare patients and the inclusion of a full year of Omnicare's results (versus
three months in the comparable period) which carry a higher cost of revenues
(70.7%) than the U.S. respiratory, medical equipment and supplies sales
operations (47.6%). The increase in patient services costs as a percentage of
revenues for fiscal 1998 are due to the inclusion of Allied's results for a full
year (versus three months in the comparable prior period) which carry a cost of
revenues of 69.4% and the sale of Radamerica in July 1997 which carried a lower
cost of service (26.4%). The increase in infusion services is a result of an
increase in therapies with higher product costs, as well as the effects of
reduced reimbursement rates for certain payors.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $9,049,000 or 21.1% to $51,980,000 for the
year ended September 30, 1998 from $42,931,000 for the eleven months ended
September 30, 1997 with $4,217,000 accounting for the one additional month's
expenses in fiscal 1998. The remaining increase was primarily attributable to
the inclusion of eleven months of results for fiscal 1998 versus three months in
the comparable prior period for the U.K. Operations ($12,952,000) and additional
costs incurred for overhead related to sales efforts, collections and additional
bad debt expense based upon a higher level of revenue. The increases were offset
by the sale of Radamerica in July 1997 ($2,922,000). In addition, the Company
recorded $554,000 of charges in fiscal 1998, primarily relating to costs
incurred from its attempted acquisitions of Healthcall and Apria and $7,023,000
of additional bad debt expense in the eleven months ended September 30, 1997
primarily related to the Company's DermaQuest product lines ($6,060,000) and
pulmonary rehabilitation center ($663,000).
Gain on Sale of Assets. For the year ended September 30, 1998, the Company
recorded a $2,511,000 gain on the TNI Sale. For the eleven months ended
September 30, 1997, the Company recorded a $606,000 gain on the sale of
Radamerica.
Special Charges. The Company recorded special charges of $16,677,000 during
the eleven months
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ended September 30, 1997 related to the following items: (i) $1,841,000 non-cash
charge related to impairment of the investment in HMI as well as to record
estimated costs, fees and other expenses related to completion of the HMI Asset
Sale (see Note 3 of the Notes to Consolidated Financial Statements); (ii)
$12,079,000 non-cash charge for the write-off of goodwill and other intangible
assets related to exiting the wound care and orthotic product lines of the
Company's DermaQuest subsidiary; (iii) $1,622,000 non-cash charge for the
termination of the agreements to purchase the VIP Companies; (iv) $437,000
charge for closure of the Company's pulmonary rehabilitation center in Cherry
Hill, New Jersey; and (v) $698,000 of other charges.
Equity in Loss of HMI, Net. Equity in loss of HMI was $18,076,000 for the
eleven months ended September 30, 1997. This represented 49% of HMI's loss for
the six months ended July 31, 1997 after adjustments to book the Company's
adjustment to historical goodwill amortization based on its fair value
adjustments ($132,000) and to eliminate intercompany interest ($720,000). The
49% interest in HMI was acquired in mid January 1997 and was included in the
results of operations effective February 1, 1997. Due to the Company's decision,
during the third quarter of fiscal 1997, to sell HMI and the recording of HMI's
obligations that the Company was required to fund, in connection with the sale
to Counsel Corporation ("Counsel"), no equity in loss of HMI has been recorded
subsequent to July 31, 1997.
Interest Income. Interest income decreased by $1,636,000 to $635,000 for
the year ended September 30, 1998 from $2,271,000 for the eleven months ended
September 30, 1997 with $65,000 attributable to the one additional month's
interest income in fiscal 1998. The gross decrease was primarily attributable to
interest income earned (after elimination of intercompany interest) under a
credit agreement with HMI ($1,417,000) for the eleven months of 1997 and lower
interest income earned on a lower level of funds invested in fiscal 1998 as
compared to fiscal 1997.
Interest Expense. Interest expense, increased by $1,223,000 to $6,286,000
for the year ended September 30, 1998 from $5,063,000 for the eleven months
ended September 30, 1997 with $585,000 accounting for the one additional month's
interest expense in fiscal 1998. The remaining increase was primarily
attributable to an increased level of borrowings under the Credit Facility in
the early part of fiscal 1998.
Provision (Benefit) for Income Taxes. Provision (benefit) for income taxes
as a percentage of income before income taxes was a provision of 61.5% for the
year ended September 30, 1998 and a benefit of 13.4% for the eleven months ended
September 30, 1997. The difference between the 61.5% effective tax rate for
fiscal 1998 and the statutory tax rate resulted from non-deductible expenses,
primarily amortization of intangible assets.
Net deferred tax assets, net of valuation allowance, were $8,674,000 at
September 30, 1998, an increase of $970,000 from net deferred tax assets of
$7,704,000 at September 30, 1997, primarily as a result of an increase in the
provision for doubtful accounts and federal net operating loss carryforwards. A
valuation allowance, was provided for deferred tax assets where it was not
likely that such assets would be realized through future income levels nor
future or prior tax liabilities. During fiscal 1998, the Company decreased the
valuation allowance by $114,000 primarily due to utilization of state net
operating loss carryforwards.
Net Income (Loss). As a result of the foregoing, the Company produced net
income of $1,153,000 for the year ended September 30, 1998 compared to net loss
of $32,735,000 for the eleven months ended September 30, 1997.
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LIQUIDITY AND CAPITAL RESOURCES
GENERAL.
During the year ended September 30, 1999, the Company generated $3,258,000
from its operating activities. Cash flow from operating activities, combined
with the use of existing cash, funded a $1,500,000 payment to further reduce the
Company's Credit Facility and the following investing activities: $3,824,000 for
further expansion of the Company's U.K. Operations and $2,642,000 for capital
expenditures.
During the year ended September 30, 1998, the Company received $22,241,000
from investing activities as follows: $32,328,000 received from the HMI Asset
Sale partly offset by $11,122,000 paid to complete the merger with HMI as well
as for fees and expenses incurred in connection with the merger and to satisfy
existing HMI obligations which were retained by the Company; $6,029,000 received
from asset sales net of utilization of $3,346,000 for capital expenditures and
$1,648,000 for acquisitions and purchases of other intangibles. Funds generated
by investing activities along with net proceeds of $6,492,000 from the exercise
of the Company's warrants were used to reduce the Company's borrowings under the
Credit Facility by $29,100,000 and to fund operating activities.
During the eleven months ended September 30, 1997, the Company utilized
$130,302,000 ($117,138,000 net of proceeds from asset sales and other
miscellaneous transactions) in investing activities as follows: $93,586,000 for
the acquisition of the U.K. Operations (Omnicare and Allied); $32,189,000 for
the purchase of 49% of HMI and HMI's senior debt and related advances;
$2,694,000 for capital expenditures and $1,833,000 for acquisitions payable. In
addition, the Company utilized $1,089,000 for operating activities.
Substantially all of the financing for the operating and investing activities
was provided by net borrowings under the Company's Credit Facility of
$73,864,000, the equity investment by HPII and Hyperion TW Fund L.P. (the
"Fund") aggregating $50,650,000 and proceeds of $12,100,000 from the sale of
Radamerica.
The Company believes it has adequate capital resources to conduct its
operations for the next twelve months. On December 20, 1999, the Company's U.K.
subsidiaries completed a $124,500,000 refinancing which repaid the Company's
existing senior indebtedness of $55,755,000 and provided funds for additional
acquisitions in the U.K., subject to the terms of the refinancing agreements.
See "-Refinancing."
ACCOUNTS RECEIVABLE.
The Company maintains a cash management program that focuses on the
reimbursement function, as growth in accounts receivable has been the main
operating use of cash historically. At September 30, 1999 and 1998, $30,814,000
(17.9%) and $32,223,000 (17.9%), respectively, of the Company's total assets
consisted of accounts receivable substantially from third-party payors. Such
payors generally required substantial documentation in order to process claims.
The collection time for accounts receivable is typically the longest for
services that relate to new patients or additional services requiring medical
review for existing patients.
Accounts receivable decreased by $1,409,000 from September 30, 1998 to
September 30, 1999 primarily due to the decision to fully reserve for the
remaining DermaQuest accounts receivable ($2,205,000) (see below).
During fiscal 1996 and the eleven months ended September 30, 1997, the
Company experienced a significant increase in accounts receivable at its
DermaQuest operation whose main product lines include wound care and orthotic
products. Medicare, to whom substantially all DermaQuest claims are initially
submitted for payment, has subjected these claims to an extensive review process
and, in many cases, has required DermaQuest to pursue payment through the fair
hearing process of the Medicare intermediary. This has created significant
delays in payments, in many cases extending beyond twelve months, leading to the
significant buildup in accounts receivable and corresponding negative impact on
cash flow. The Company conducted an extensive review of the DermaQuest
receivables in connection with the decision to discontinue these product lines
in the continental U.S.
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and, as a result, established additional reserves of $6,060,000 based on the
potential inability to secure required documentation in a timely manner for
reimbursement as a result of no longer being in these business lines. In
establishing the net realizable value of its accounts receivable for DermaQuest,
the Company had relied on its historical and anticipated payment experience.
During fiscal 1999, the decision to fully reserve for the remaining DermaQuest
accounts receivable was made in light of the Company's payment history over the
first three quarters of fiscal 1999. During fiscal 1998 it appeared that
collections of $1,013,000 on the remaining receivables during the fiscal year
justified the carrying value at September 30, 1998 ($2,253,467). However,
payments slowed dramatically during fiscal 1999. It only became apparent that
this slow down was permanent in nature (and not a temporary issue) during the
third quarter of fiscal 1999, as the total collected on the receivables year to
date was $168,000, with only $37,000 collected during the third quarter. The
decision was made to reserve the remaining receivables based on this evidence.
Management's goal is to maintain accounts receivable levels equal to or
less than industry averages, which will tend to mitigate the risk of recurrence
of negative cash flows from operations by reducing the required investment in
accounts receivable and thereby increasing cash flows from operations. Days
sales outstanding ("DSOs") is a measure of the average number of days taken by
the Company to collect its accounts receivable, calculated from the date
services are rendered. For the years ended September 30, 1999 and 1998 and the
Eleven Month Period, the Company's average DSOs were 73, 72 and 73,
respectively.
CREDIT FACILITY.
The Credit Facility contained affirmative and negative financial covenants
customarily found in agreements of this kind, including the maintenance of
certain financial ratios, such as interest coverage, debt to earnings before
interest, taxes, depreciation and amortization ("EBITDA") and minimum EBITDA. As
of September 30, 1999, the Company was in technical default of the Credit
Facility due to non-compliance with certain financial covenants (debt to EBITDA,
interest coverage and minimum EBITDA). On December 20, 1999, the Company
refinanced and repaid the Credit Facility with funds obtained in the
Refinancing.
During the year ended September 30, 1999, the Company amended the Credit
Facility to allow for further expansion of its U.K. Operations.
REFINANCING.
General. As described more fully below, on December 20, 1999, the Company's
UK subsidiaries, Transworld Holdings (UK) Limited ("UK Parent") and its
subsidiary Transworld Healthcare (UK) Limited ("TW UK") obtained an aggregate of
$124,500,000 in new financing consisting of a $73,000,000 senior secured term
and revolving credit facility (the "Senior Credit Facility"), $16,000,000 in
mezzanine indebtedness (the "Mezzanine Loan") and $36,000,000 principal amount
of senior subordinated notes (the "Notes") (each of the foregoing are sometimes
referred to collectively herein as the "Refinancing"). $55,755,000 of the net
proceeds of the Refinancing were used to repay the Company's existing Credit
Facility, $11,000,000 was provided to the Company for general corporate
purposes, with the balance to be used for acquisitions and working capital in
the U.K., subject to the terms of the documents governing the Refinancing. In
connection with the repayment of the Company's existing Credit Facility, the
Company will record a non-cash, pre-tax, extraordinary charge of approximately
$1,200,000 in its first quarter of fiscal 2000 relating to the write-off of the
deferred financing costs associated with the Credit Facility.
Senior Credit Facility. The Senior Credit Facility consists of a (i)
$44,800,000 term loan A, maturing December 17, 2005, (ii) $20,000,000
acquisition term loan B, maturing December 17, 2006 which may be drawn upon
during the first three years following closing, and (iii) $8,000,000 revolving
facility, maturing
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December 17, 2005. Repayment of the loans commences on July 30, 2000 and
continues until final maturity. The loans bear interest at rates equal to LIBOR
plus 2% to 2.75% per annum. As of January 3, 2000, TW UK had outstanding
borrowings of $50,700,000 under the Senior Credit Facility. As of January 3,
2000, borrowings under the Senior Credit Facility bore interest at a rate of
7.7241% to 8.4741%.
Subject to certain exceptions, the Senior Credit Facility prohibits or
restricts, among other things, the incurrence of liens, the incurrence of
indebtedness, certain fundamental corporate changes, dividends (including
distributions to the Company), the making of specified investments and certain
transactions with affiliates. In addition, the Senior Credit Facility contains
affirmative and negative financial covenants customarily found in agreements of
this kind, including the maintenance of certain financial ratios, such as senior
interest coverage, debt to EBITDA, fixed charge coverage and minimum net worth.
The loans under the Senior Credit Facility are collateralized by, among
other things, a lien on substantially all of TW UK's and its subsidiaries'
assets, a pledge of TW UK's ownership interest in its subsidiaries and
guaranties by TW UK's subsidiaries.
Mezzanine Loan. The Mezzanine Loan is a term loan maturing December 17,
2007 and bears interest at the rate of LIBOR plus 7% per annum, where LIBOR plus
3.5% will be payable in cash, with the remaining interest being added to the
principal amount of the loan. The Mezzanine Loan contains other terms and
conditions substantially similar to those contained in the Senior Credit
Facility. The lenders of the Mezzanine Loan also received warrants to purchase
2% of the fully diluted ordinary shares of TW UK. As of January 3, 2000,
borrowings under the Mezzanine Loan bore interest at a rate of 12.7204%.
Senior Subordinated Notes and Warrants. Notes. The Notes consist of
$36,000,000 principal amount of senior subordinated notes of UK Parent purchased
by several institutional investors and certain members of management
(collectively, the "Investors"), plus equity warrants issued by TW UK
concurrently with the sale of the Notes (the "Warrants") exercisable for
ordinary shares of TW UK ("Warrant Shares") representing in the aggregate 27% of
the fully diluted ordinary shares of TW UK. See "Certain Relationships and
Related Transactions--Transactions with Directors and Executive Officers."
The Notes bear interest at the rate of 9.375% per annum payable quarterly
in cash subject to restrictions contained in the Senior Credit Facility
requiring UK Parent to pay interest in-kind through the issuance of additional
notes ("PIK Notes") for the first 18 months, with payment of interest in cash
thereafter subject to a fixed charge coverage test (provided that whenever
interest cannot be paid in cash, additional PIK Notes shall be issued as payment
in-kind of such interest). The Notes mature nine years from issuance.
UK Parent will not have the right to redeem the Notes and the PIK Notes
except as provided in, and in accordance with the documents governing the
issuance of the Notes and Warrants (herein the "Securities Purchase Documents").
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The redemption price of the Notes and the PIK Notes will equal the principal
amount of the Notes and the PIK Notes plus all accrued and unpaid interest on
each.
The Investors have the right, at their option, to require UK Parent to
redeem all or any portion of the Notes and the PIK Notes under certain
circumstances and in accordance with the terms of the Securities Purchase
Documents. The redemption price of the Notes and the PIK Notes shall be equal to
the principal amount of the Notes and the PIK Notes, plus all accrued and unpaid
interest on each.
UK Parent's redemption obligation of the Notes and the PIK Notes is
guaranteed by TW UK, which guarantee is subordinated to the existing senior
indebtedness of TW UK to the same extent as the Notes and the PIK Notes are
subordinated to senior indebtedness of UK Parent. If UK Parent fails to perform
in full its obligations following exercise of the Investors put of Notes and TW
UK fails to perform its obligations as a guarantor of such obligations, the
Investors shall have the right to among other things exercise directly (through
the voting trust described below) the drag-along rights described without the
requirement that the Board of Directors of TW UK first take any action.
Warrants. The Warrants may be exercised, in whole or in part, at any time,
unless previously purchased or cancelled upon a redemption of the Notes, at the
option of the holders prior to the time of maturity of the Notes for Warrant
Shares representing approximately 27% of TW UK's fully diluted ordinary share
capital, subject to antidilution adjustment as contained in the Securities
Purchase Documents.
The exercise price of the Warrants shall equal the entire principal amount
of the Notes (other than PIK Notes and excluding any accrued unpaid interest)
for all Warrants in the aggregate and must be paid through the tender of Notes
(other than PIK Notes) to TW UK, whereby TW UK shall issue to the Investors the
appropriate number of Warrant Shares and pay to the Investors in cash an amount
equal to the principal amount of the PIK Notes and all accrued unpaid interest
on the Notes and the PIK Notes.
The Warrants will automatically be exercised for Warrant Shares in the
event that TW UK consummates
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a public offering of shares valuing the Investors ordinary shares of TW UK
issuable upon a voluntary exercise of the Warrants at or above 2.5x the initial
investment.
The Investors will have the right, at their option, to require UK Parent to
purchase all or any portion of the Warrants or the Warrant Shares under certain
circumstances and in accordance with the terms of the Securities Purchase
Documents. The purchase price of the Warrants shall be equal to the difference,
if a positive number, between (i) the fair market value of the Warrant Shares
which the Investors have the right to acquire upon exercise of such Warrants and
(ii) the exercise price of such Warrants. The purchase price of the Warrant
Shares shall be equal to the fair market value of such Warrant Shares.
UK Parent's purchase obligation of the Warrants is guaranteed by TW UK,
which guarantee is subordinated to existing senior indebtedness of TW UK. If UK
Parent fails to perform in full its obligations following exercise of the
Investors put of Warrants and TW UK fails to perform its obligations as a
guarantor of such obligations, the Investors shall have the right to among other
things exercise directly through the voting trust the drag-along rights without
the requirement that the Board of Directors of TW UK first take any action.
If UK Parent fails to perform in full its obligations following exercise of
the Investors put of Warrant Shares, the Investors shall have the right to among
other things exercise directly through the voting trust the drag-along rights
without the requirement that the Board of Directors of TW UK first take any
action.
Following an initial public offering and upon exchange of the Warrants the
Investors shall be entitled to two demand and unlimited piggyback registrations
with respect to the Warrant Shares. The Warrant Shares shall be listed for
trading on any securities exchange on which the ordinary shares of TW UK are
listed for trading.
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All ordinary shares of UK Parent owned by the Company and all
ordinary shares of TW UK owned by UK Parent are held in a voting trust for
the benefit of the holders of ordinary shares of TW UK and the holders of the
Warrants, with the trustee of the trust being obligated to vote the shares held
in trust as follows: (i) to elect to the Board of Directors of TW UK individuals
designated in accordance with the Securities Purchase Documents and on any other
matter, pursuant to instructions approved by the required majority of the Board
of Directors of TW UK as contemplated by the Securities Purchase Documents; and
(ii) following the breach by UK Parent and TW UK of their obligations to honor
an Investor put of Notes, an Investor put of Warrants or an Investor put of
Warrant Shares, the Investors have the right to exercise drag-along rights
directly without any action of the Board of Directors of TW UK on a transaction
to which such drag-along rights apply pursuant to instructions from the
Investors. G. Richard Green, a Director of the Company, is the trustee of the
voting trust. The voting trust includes provisions to the effect that under
certain circumstances the shares held in trust shall thereafter be voted on all
matters, including the election of directors, pursuant to instructions from a
majority of those members of the Board of Directors of TW UK who are not
affiliated or associated with the Company, HPII, or any of their successors.
The Company is currently in the process of evaluating the effect of the
provisions of the voting trust and other aspects of the Refinancing on its
ability to continue to consolidate the operations of TW UK in its fiscal 2000
financial statements.
The Articles of Association of TW UK and the Securities Purchase Documents
provide that neither UK Parent nor TW UK will enter into any transaction with or
make contributions to the Company or UK Parent (except as required by the terms
of the Notes, the Warrants or the Warrant Shares) in the form of dividends,
fees, re-charges, loans, guarantees or any other benefit, in any form, unless
they have been previously agreed upon by all shareholders.
The Securities Purchase Documents also provide that the Investors will have
the benefit of customary shareholder rights for a transaction of this type
including, without limitation: (i) pre-emptive rights with respect to new
securities; (ii) rights of first refusal with respect to proposed transfers of
ordinary shares of TW UK; (iii) drag-along rights; (iv) tag-along rights; and
(v) the exercise of voting rights by the holders of the Warrants as therein
described including the right to elect one director to the TW UK Board of
Directors. The Securities Purchase Documents also include limitations on TW UK's
ability to do the following, among others, without the consent of the Investors:
(i) issue additional equity securities of TW UK; (ii) pay dividends or make
other restricted payments, except as required by the terms of the Notes, the
Warrants or the Warrant Shares; (iii) sell, lease or otherwise dispose of assets
exceeding specified values; (iv) enter into any transactions with affiliates;
(v) amend the Memorandum or Articles of Association; or (vi) merge or
consolidate with another entity.
TNI SALE.
On July 15, 1998, the Company sold substantially all of the assets of its
domestic home nursing
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subsidiary for $5,300,000 which was paid in cash at closing. Subject to the
terms of the agreement, $300,000 of such amount was placed into escrow for a
period of one year following the closing to secure TNI's obligations under the
agreement. Proceeds from the sale were used to reduce borrowings under the
Credit Facility ($4,100,000) and to satisfy transaction costs and liabilities
that were retained by the Company.
ACQUISITION OF HMI/SALE TO COUNSEL.
On October 1, 1997, the Company, through a wholly-owned subsidiary,
completed the merger with HMI. Under the terms of a merger agreement, HMI
stockholders received $.30 in cash for each outstanding share of HMI common
stock not already owned by the Company. Concurrently with the closing of the
merger, the Company completed the HMI Asset Sale to Counsel for $40,000,000 at
which time substantially all of the businesses and operations of HMI were sold
to Counsel. Of the $40,000,000 proceeds, $30,000,000 was received in cash with
$7,500,000 to be paid to the Company as HMI's accounts receivable, existing at
date of sale, were collected, with the remaining $2,500,000 held in escrow for
post-closing adjustments. As of September 30, 1999 an aggregate (including
interest earned on such escrow funds) of $37,648,000 was received (including the
$7,500,000 escrow that was held for accounts receivable collection) of which,
$25,000,000 was used to reduce the senior secured debt owed by the Company under
the Credit Facility, $2,800,000 was used to complete the merger and the
remainder was used for costs, fees and other expenses to complete the HMI Asset
Sale as well as to satisfy liabilities not assumed by Counsel. The remaining
$2,500,000 escrow was fully utilized for post-closing adjustments.
Pursuant to the HMI Asset Sale, Counsel did not assume any liabilities of
HMI other than certain liabilities arising after the closing under assumed
contracts and certain employee-related liabilities. Liabilities not assumed by
Counsel, as well as certain wind-down and contingent obligations of HMI
(including litigation - see "Legal Proceedings" with respect to certain legal
proceedings concerning HMI), were recorded in the Company's consolidated
financial statements in accordance with purchase accounting.
YEAR 2000.
General. The Year 2000 computer issue refers to potential conditions in
computer programs whereby a two-digit field rather than a four-digit field is
used to define the applicable year. Unless corrected, some computer programs may
not appropriately function as of January 1, 2000 because these programs will
read the "00" in the year 2000 as January 1, 1900. If uncorrected, the problem
could have resulted in computer system failures or equipment and medical device
malfunctions (affecting patient diagnosis and treatment) thereby disrupting the
Company's business operations and subjecting the Company to potentially
significant legal liabilities.
During the early part of 1998, the Company formed a task force consisting
of members of senior management, in-house legal counsel, representatives from
each of the Company's operating subsidiaries (in both the U.K. and the U.S.),
and other Company personnel. The task force also consulted with the Company's
insurance carrier and risk management advisors. The task force developed an
action plan to address the potential problems of the Year 2000, which considered
the following critical phases: (i) the Company's state of readiness; (ii) risks
of the Company's Year 2000 issues; (iii) costs to address Year 2000 compliance;
and (iv) the Company's contingency plans.
Company's State of Readiness. The information technology ("IT") and IT
infrastructure portions of the Company's Year 2000 project, addressed the
inventory, assessment, necessary corrective actions, testing and implementation
of external vendor products, mission critical third-party software and
internally developed
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software. In that regard, the Company believes it has identified (in both the
U.K. and the U.S.), the various software applications that may have been
potentially impacted. The Company's assessment of all IT related components has
been completed and any remediation of external vendor products, mission critical
third-party software and internally developed software has been completed. The
Company has also implemented and tested all remediation.
With respect to the non-IT portion of the Company's Year 2000 project, the
Company had undertaken a program to inventory, assess and correct or replace
(where necessary) impacted mission critical as well as non-mission critical
vendor and supplier products (including but not limited to drugs, medical
supplies and specialty mail-order pharmaceutical products), medical equipment,
telephone systems, postage machines and other related equipment with Year 2000
risk. These types of supplies and equipment play a vital role in the day to day
operations of the Company. The Company had implemented (in both the U.K. and the
U.S.), a program of contacting vendors and suppliers, analyzing and acting upon
information provided to replace or otherwise amend any devices or equipment that
pose a Year 2000 impact. The Company had prioritized its non-IT efforts by
allocating resources to equipment and medical devices that would have a direct
impact on patient safety and health with a goal of minimizing and/or eliminating
the associated risks. The Company recognizes, to a certain degree, that it has
relied upon information that was being provided by equipment and medical device
manufacturers regarding the Year 2000 status of their respective products. While
the Company has attempted to evaluate information provided by its present
vendors and suppliers, there can be no assurance that in all instances accurate
information was provided. The Company's assessment of potentially non-IT
affected components has been completed and any required corrective actions have
been completed. The Company has also implemented and tested all remediation.
Lastly, the Company relies heavily upon third party payors, including to a
large extent governmental payors such as the NHS in the U.K. and Medicare and
Medicaid in the U.S. for accurate and timely reimbursement of claims, often
through the use of electronic data interfaces. Although much has been published
publicly stating that the government was working to solve its own Year 2000
issues in a timely manner, the Company has received no assurance that their
systems and interfaces were converted timely. Failure of any of the Company's
third party payors, especially governmental payors, to solve their Year 2000
issues could have a material adverse effect on the Company's consolidated
financial condition, cash flows, or results of operations.
Risks of the Company's Year 2000 Issues. Failure from any of the
aforementioned IT and/or non-IT equipment and components, including the support
from third parties, could have a material adverse impact on the Company's
operations (in both the U.K. and the U.S.) resulting in the potential inability
to provide health care services to its patients. This inability could result in
the loss of revenue (which at the present time is unable to be quantified) and
give rise to litigation. Failure of the third party payor's systems also could
have a material adverse affect on the Company's consolidated financial
position, cash flows or results of operations.
Costs to Address Year 2000 Compliance. As of January 3, 2000, costs
incurred for all efforts of the Company's Year 2000 action plan amounted to
$245,000 and have not been material to the Company. These costs have been
expensed as incurred and have been funded by operating cash flows. Based upon
the best estimate by the Company's management and the Year 2000 task force, the
Company does not expect any additional costs associated with the Company's Year
2000 action plan. If additional costs are incurred they will also be expensed as
incurred and be funded by operating cash flow.
The Company's Contingency Plans. Each operating subsidiary (both in the
U.K. and the U.S.) has been asked to develop a contingency plan to restore the
material functions of each of its systems or activities in the case of a Year
2000 failure. To date, there have been no material malfunctions of the Company's
systems or
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<PAGE>
activities due to Year 2000 issues.
However, there can be no assurance that unanticipated events still will not
occur or that the Company was able to identify all Year 2000 issues before
problems arise. In addition, the Company has no assurance that third party
payors and vendors have or had the ability to identify and solve all or
substantially all their Year 2000 issues. Therefore, there can be no assurance
that the Year 2000 issue still will not have a material adverse effect on the
Company's consolidated financial position, cash flows or results of operations.
LITIGATION.
See "Legal Proceedings" with respect to certain legal proceedings
concerning the Company and HMI.
IMPACT OF RECENT ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities."
SFAS No. 133 addresses the accounting for derivative instruments including
certain derivative instruments embedded in other contracts and for hedging
activities. As the Company currently does not enter into transactions involving
derivative instruments, the Company does not believe that the adoption of SFAS
No. 133 will have a material effect on the Company's financial statements. As
issued, SFAS No. 133 is effective for all fiscal quarters of all fiscal years
beginning after June 15, 1999, with earlier application encouraged. In June
1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of SFAS No. 133," which
amended the effective date of SFAS No. 133 for all fiscal quarters of all fiscal
years beginning after June 15, 2000.
INFLATION
Inflation has not had a significant impact on the Company's operations to
date.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
FOREIGN CURRENCY EXCHANGE
The Company faces exposure to adverse movements in foreign currency
exchange rates. These exposures may change over time as business practices
evolve and could have a material adverse impact on the Company's consolidated
financial results. The Company's primary exposure relates to non-U.S. dollar
denominated sales in the U.K. where the principal currency is Pounds Sterling.
Currently, the Company does not hedge foreign currency exchange rate exposures.
INTEREST RATE RISK
The Company's exposure to market risk for changes in interest rates relate
primarily to the Company's cash equivalents, Senior Credit Facility and
Mezzanine Loan. The Company's cash equivalents include highly liquid short-term
investments purchased with initial maturities of 90 days or less. The Company is
subject to fluctuating interest rates that may impact, adversely or otherwise,
its consolidated results of operations or cash flows for its variable rate
Senior Credit Facility, Mezzanine Loan and cash equivalents. The Company has
agreed as part of the Refinancing to hedge 66 2/3% of its floating rate debt
within 90 days of the completion of the Refinancing.
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<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements and required financial statements
schedule of the Company are located beginning on page F-i of this Annual Report
on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
Not applicable.
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<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth certain information concerning the
Company's directors and officers:
NAME AGE POSITIONS WITH THE COMPANY
- ---- --- --------------------------
Timothy M. Aitken.... 55 Chairman of the Board and Chief Executive Officer
Sarah L. Eames....... 41 President
Wayne A. Palladino... 41 Senior Vice President and Chief Financial Officer
Leslie J. Levinson... 44 Secretary
Lewis S. Ranieri..... 52 Director
Scott A. Shay........ 42 Director
Jeffrey S. Peris..... 53 Director
G. Richard Green..... 60 Director
- ---------------
Certain biographical information regarding each director and officer of the
Company is set forth below:
Timothy M. Aitken has served as Chairman of the Board and Chief Executive
Officer of the Company since January 15, 1997. Prior to joining the Company, Mr.
Aitken served as an independent consultant to the health care industry from
November 1995 until January 1997. From June 1995 until November 1995, Mr. Aitken
served as the vice chairman and president of Apria Healthcare Group, Inc., a
California based home health care company. He has also served as chairman of the
board of Omnicare plc from September 1995 until its acquisition by the Company.
From 1990 until June 1995, Mr. Aitken served as chairman of the board, president
and chief executive officer of Abbey Healthcare Group Inc., a California based
home health care company.
Sarah L. Eames has served as President since May 1998 and Executive Vice
President, Business Development and Marketing of the Company from June 1997 to
May 1998. Prior to joining the Company, Ms. Eames was employed by Johnson &
Johnson Professional, Inc. as a business development consultant from 1996 to
1997. From June 1995 until November 1995, Ms. Eames served as Vice President,
Marketing for Apria Healthcare Group, Inc. From 1980 until June 1995 Ms. Eames
held various marketing and business development positions at Abbey Healthcare
Group Inc., a predecessor company of Apria Healthcare Group, Inc.
Wayne A. Palladino has been a Vice President and Chief Financial Officer of
the Company since February 1991 and Senior Vice President of the Company since
September 1996. From September 1989 until joining the Company, he served as the
vice president-finance and chief financial officer of ESC Electronics Corp., an
electronics manufacturer. From December 1985 until January 1991, he was a
principal in Pennwood Capital Corporation, a private investment concern. From
January 1984 through December 1985, Mr. Palladino was a senior associate in the
business development unit of W.R. Grace & Co., Inc.
Leslie J. Levinson has served as Secretary of the Company since September
1999 and had previously served in such capacity from October 1990 to July 1997.
Since June 1991, he has been a partner in the law firm of Baer Marks & Upham
LLP, which firm serves as counsel to the Company. From January 1988 until June
1991, he was a
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<PAGE>
partner in the law firm of Dow, Lohnes & Albertson, which firm served as counsel
to the Company.
Lewis S. Ranieri has been a Director of the Company since May 1997. Since
1988 he has been the chairman of Bank United Corp. He was also the president and
chief executive of the predecessors of Bank United Corp. and the chairman of
Bank United, the subsidiary of Bank United Corp., from 1988 until July 15, 1996.
Mr. Ranieri is also the chairman and president of Ranieri & Co., Inc., positions
he has held since founding Ranieri & Co., Inc., in 1988. Mr. Ranieri is a
founder of Hyperion Partners L.P. and of Hyperion Partners II L.P. He is also
vice chairman of Hyperion Capital Management, Inc., a registered investment
advisor. Mr. Ranieri is a director of The Hyperion Total Return Fund, Inc.; The
Hyperion 1999 Term Trust, Inc.; The Hyperion 2002 Term Trust, Inc. and Hyperion
2005 Investment Grade Opportunity Trust, Inc. Mr. Ranieri is also chairman and
president of various other indirect subsidiaries of Hyperion Partners L.P. and
Hyperion Partners II L.P. He is also a director of American Marine Holdings,
Inc. and Delphi Financial Group, Inc. Mr. Ranieri is a former vice chairman of
Salomon Brothers Inc. where he was employed from 1968 to 1987, and was one of
the principal developers of the secondary mortgage market. He is a member of the
National Association of Home Builders Mortgage Roundtable.
Scott A. Shay has been a Director of the Company since January 1996 and
served as Acting Chairman of the Board of the Company from September 1996 until
January 1997. Mr. Shay has been a managing director of Ranieri & Co., Inc. since
its formation in 1988. Mr. Shay is currently a director of Bank United Corp.,
and Bank United, the subsidiary of Bank United Corp. Bank Hapoalim B.M., in Tel
Aviv, Israel, iOwn Holding, Inc. and Hyperion Capital Management, Inc., as well
as an officer or director of other direct and indirect subsidiaries of Hyperion
Partners L.P. and Hyperion Partners II L.P. Mr. Shay is also a director of the
general partner of Cardholder Management Services, L.P. Prior to joining Ranieri
& Co., Inc., Mr. Shay was a director of Salomon Brothers Inc. where he was
employed from 1980 to 1988.
Jeffrey S. Peris has been a Director of the Company since May 1998. Mr.
Peris has been the vice president of business operation of Knoll Pharmaceutical
(BASF Pharma) where he is responsible for human resources and corporate
communications since April 1998. Mr. Peris had been a management consultant to
various Fortune 100 companies from May 1997 until April 1998. From 1972 until
May 1997, Mr. Peris was employed by Merck & Co., Inc., where he served as the
executive director of human resources from 1985 until May 1997, the executive
director of marketing from 1976 until 1985, and the director of clinical
biostatistics and research data systems from 1972 until 1976.
G. Richard Green has been a Director of the Company since August 1998. Mr.
Green has been the chairman since 1987 and a director since 1960 of J.H. & F.W.
Green Ltd a U.K. based conglomerate. From 1960 Mr. Green has held various
positions at J.H. & F.W. Green Ltd. and several of its subsidiaries. Mr. Green
was also a director of Abbey Healthcare Group, Inc. from 1991 to 1995. He also
held directorships of Omnicare plc and Medigas Ltd from 1993 to 1996.
All directors of the Company are elected by the shareholders for a one-year
term and hold office until the next annual meeting of shareholders of the
Company and until their successors are elected and qualified. There are no
family relationships among the directors and officers of the Company. All
directors who are not employees of the Company are entitled to receive a fee of
$10,000 per annum. In addition, all directors are reimbursed for all reasonable
expenses incurred by them in acting as a director or as a member of any
committee of the Board of Directors. Officers are chosen by and serve at the
discretion of the Board of Directors. See "Certain Relationships and Related
Transactions - Transactions with Principal Shareholders."
Other than Timothy M. Aitken and Sarah L. Eames, none of the Company's
executive officers have employment agreements or letters with the Company. See
"Executive Compensation -- Employment Agreements;
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<PAGE>
Termination of Employment and Change-in-Control Arrangements."
BOARD COMMITTEES
The Company's Board of Directors has an Audit Committee and a Compensation
Committee but does not have a nominating committee. The members of each
committee are appointed by the Board of Directors.
AUDIT COMMITTEE.
The Audit Committee recommends to the Board of Directors the auditing firm
to be selected each year as independent auditors of the Company's consolidated
financial statements and to perform services related to the completion of such
audit. The Audit Committee also has responsibility for: (i) reviewing the scope
and results of the audit; (ii) reviewing the Company's financial condition and
results of operations with management; (iii) considering the adequacy of the
internal accounting and control procedures of the Company; and (iv) reviewing
any non-audit services and special engagements to be performed by the
independent auditors and considering the effect of such performance on the
auditors' independence. Messrs. Shay, Green and Peris constitute the Audit
Committee.
COMPENSATION COMMITTEE.
The Compensation Committee reviews and approves overall policy with respect
to compensation matters, including such matters as compensation plans for
employees and employment agreements and compensation for executive officers. The
Compensation Committee consists of Messrs. Ranieri and Shay.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The Commission has comprehensive rules relating to the reporting of
securities transactions by directors, officers and shareholders who beneficially
own more than 10% of the Company's Common Stock (collectively, the "Reporting
Persons"). These rules are complex and difficult to interpret. Based solely on a
review of Section 16 reports received by the Company from Reporting Persons, the
Company believes that no Reporting Person has failed to file a Section 16 report
on a timely basis during the most recent fiscal year other than G. Richard
Green, a director of the Company, who filed one Form 4 late with respect to one
transaction which occurred in December 1998 and Jeffery S. Peris, a director of
the Company, who did not timely file his Form 3 and one Form 4 with respect to
one transaction which occurred in December 1998.
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<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
The following table summarizes all compensation earned by or paid to the
Company's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company whose annual salary and bonus
exceeded $100,000 (collectively, the "Named Officers") for services rendered in
all capacities to the Company for the fiscal years ended September 30, 1999 and
1998 and the Eleven Month Period.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION AWARDS
-------------------------
ANNUAL
COMPENSATION RESTRICTED SECURITIES
NAME AND FISCAL --------------- STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS OPTIONS COMPENSATION
- ------------------ ---- ------ ----- ------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Timothy M. Aitken(1) ...... 1999 $250,000 $100,000 $ -- -- $39,228(4)
Chairman of the Board 1998 243,423 -- -- 150,000 52,742(4)
and Chief Executive Eleven Month
Officer Period 138,461 -- -- 500,000 53,428(4)
Sarah L. Eames(2) ......... 1999 $240,000 $100,000 $ -- -- $ 5,200(4)
President 1998 187,404 -- -- 100,000 --
Eleven Month
Period 47,115 -- -- 60,000 --
Wayne A. Palladino ........ 1999 $225,000 $100,000 $ -- -- $91,866(5)
Senior Vice President and 1998 181,731 -- -- 100,000 --
Chief Financial Officer Eleven Month
Period 154,807 -- -- 45,000 --
Gregory E. Marsella(3) .... 1999 $120,192 $ -- $ -- -- $ 4,500(4)
Vice President, General 1998 121,154 -- -- -- --
Counsel and Secretary Eleven Month
Period 26,923 -- -- 48,000 --
</TABLE>
- ----------
(1) Mr. Aitken became Chief Executive Officer and Chairman of the Company
effective January 1997.
(2) Ms. Eames became Executive Vice President, Business Development and
Marketing of the Company in June 1997 and President of the Company in May
1998.
(3) Mr. Marsella became Vice President, General Counsel and Secretary of the
Company in July 1997 and resigned September 3, 1999.
(4) Reflects reimbursement for certain travel expenses.
(5) Reflects forgiveness of a loan and reimbursement of certain travel
expenses.
In fiscal 1999, there were no options granted to any of the Named Officers
pursuant to the Company's 1992 Stock Option Plan.
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<PAGE>
AGGREGATE OPTION EXERCISES IN FISCAL 1999
AND 1999 FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED VALUE AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Timothy M. Aitken......... -- -- 516,666 / 133,334 $0 / $0
Sarah L. Eames............ -- -- 146,667 / 13,333 0 / 0
Wayne A. Palladino........ -- -- 135,000 / 15,000 0 / 0
</TABLE>
- ----------
(1) Calculated on the basis of $2.00 per share, the closing sale price of the
Common Stock as reported on Amex on September 30, 1999, minus the exercise
price.
COMPENSATION OF DIRECTORS
See "Directors and Executive Officers of the Registrant" with respect to
compensation of non-employee directors.
EMPLOYMENT AGREEMENTS; TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
In January 1997, the Company entered into an employment agreement with Mr.
Aitken, which expired in January 1998. The agreement renewed for a one-year term
in January 1998 and will renew for one-year terms absent notice of non-renewal
from either party. This agreement provided for a base salary of $250,000,
increasing to $300,000 when the agreement was renewed in January 1998. The
agreement contains, among other things, customary confidentiality and
termination provisions and provides that in the event of the termination of the
executive following a "change of control" of the Company (as defined therein),
Mr. Aitken will be entitled to receive a cash payment of up to 2.9 times his
average annual base salary during the preceding five years.
In connection with Ms. Eames' employment with the Company, the Company has
agreed that if Ms. Eames' employment is terminated (other than for cause) she
will be entitled to one year's salary (currently $240,000 per year) plus
relocation expenses to California.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Messrs.
Ranieri and Shay. Messrs. Ranieri and Shay among others, control the general
partner of HPII and the Fund, each of which are principal shareholders of the
Company, which principal shareholders engaged in certain transactions with the
Company described under Item 13 of this Report under the heading "Certain
Relationships and Related Transactions -- Transactions with Principal
Shareholders." See also "Directors and Officers of the Registrant -- Board
Committees."
STOCK OPTION PLANS
1992 STOCK OPTION PLAN.
In July 1992, the Company's Board of Directors and shareholders approved
the Company's 1992 Stock Option
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<PAGE>
Plan (the "Option Plan"). The Option Plan provides for the grant of options to
key employees, officers, directors and non-employee independent contractors of
the Company. The Option Plan is administered by the Compensation Committee of
the Board of Directors. The number of shares of Common Stock available for
issuance thereunder is 3,175,361 shares as of September 30, 1999. Beginning in
fiscal 1999 and ending in July 2002, the number of shares available for issuance
under the Option Plan, as amended, increases by one percent of the number of
shares of Common Stock outstanding as of the first day of each fiscal year. As
of January 3, 2000, the number of shares of Common Stock available for issuance
thereunder is 3,350,872 shares.
Options granted under the Option Plan may be either incentive stock options
("Incentive Options"), which are intended to meet the requirements of Section
422 of the Internal Revenue Code of 1986, as amended, or options that do not
qualify as Incentive Options ("Non-Qualified Options"). Under the Option Plan,
the Compensation Committee may grant (i) Incentive Options at an exercise price
per share which is not less than the fair market value of a share of Common
Stock on the date on which such Incentive Options are granted (and not less than
110% of the fair market value in the case of any optionee who beneficially owns
more than 10% of the total combined voting power of the Company) and (ii)
Non-Qualified Options at an exercise price per share which is determined by the
Compensation Committee (and which may be less than the fair market value of a
share of Common Stock on the date on which such Non-Qualified Options are
granted). The Option Plan further provides that the maximum period in which
options may be exercised will be determined by the Compensation Committee,
except that Incentive Options may not be exercised after the expiration of ten
years from the date the Incentive Option was initially granted (and five years
in the case of any optionee who beneficially owns more than 10% of the total
combined voting power of the Company). Under the Option Plan, if an optionee's
employment is terminated, generally the unexercised Incentive Options must be
exercised within three months after termination. However, if the termination is
due to the optionee's death or permanent disability, the option must be
exercised within one year of the termination of employment. If the optionee's
employment is terminated for cause by the Company, or if the optionee
voluntarily terminates his employment, his options will expire as of the
termination date. Any option granted under the Option Plan will be
nontransferable, except by will or by the laws of descent and distribution, and
generally may be exercised upon payment of the option price in cash or by
delivery of shares of Common Stock with a fair market value equal to the option
price.
Shares delivered under the Option Plan will be available from authorized
but unissued shares of Common Stock or from shares of Common Stock reacquired by
the Company. Shares of Common Stock that are subject to options under the Option
Plan which have terminated or expired unexercised will return to the pool of
shares available for issuance under the Option Plan.
On December 15, 1998, the Company granted options to purchase shares of
Common Stock at $4.31 per share under the Option Plan as follows: (i) 5,000 to
Mr. Peris and (ii) 5,000 to Mr. Green.
1997 NON-EMPLOYEE DIRECTOR PLAN.
In May 1997, the Company adopted the Company's 1997 Option Plan for
Non-Employee Directors (the "Director Plan") pursuant to which 100,000 shares of
Common Stock of the Company were reserved for issuance upon the exercise of
options granted to non-employee directors of the Company. The purpose of the
Director Plan is to encourage ownership of Common Stock by non-employee
directors of the Company whose continued services are considered essential to
the Company's future progress and to provide them with a further incentive to
remain as directors of the Company. The Director Plan is administered by the
Board of Directors. Directors of the Company who are not employees of the
Company or any subsidiary or affiliate of the Company are eligible to
participate in the Director Plan. The term of the Director Plan is ten years
from the date of approval by the
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<PAGE>
stockholders; however, options outstanding on the expiration of the term shall
continue to have full force and effect in accordance with the provisions of the
instruments evidencing such options. The Board of Directors may suspend,
terminate, revise or amend the Director Plan, subject to certain limitations.
Under the Director Plan, the Board of Directors may from time to time at
its discretion determine which of the eligible directors should receive options,
the number of shares subject to such options and the dates on which such options
are to be granted. Each such option is immediately exercisable for a period of
ten years from the date of grant generally, but may not be exercised more than
90 days after the date an optionee ceases to serve as a director of the Company.
Options granted under the Director Plan are not transferable by the optionee
other than by will, laws of descent and distribution, or as required by law.
Common Stock may be purchased from the Company upon the exercise of an
option by payment in cash or cash equivalent, through the delivery of shares of
Common Stock having a fair market value equal to the cash exercise price of the
option or any combination of the above, subject to the discretion of the Board
of Directors.
INDEMNIFICATION
As permitted under the Business Corporation Law of the State of New York,
the Company's Restated Certificate of Incorporation provides that a director of
the Company will not be personally liable to the Company or its shareholders for
monetary damages for breach of a fiduciary duty owed to the Company or its
shareholders. By its terms and in accordance with the law of the State of New
York, however, this provision does not eliminate or otherwise limit the
liability of a director of the Company for any breach of duty based upon (i) an
act or omission (A) resulting from acts committed in bad faith or involving
intentional misconduct or involving a knowing violation of law or (B) from which
the director personally derived a financial benefit to which he was not legally
entitled, or (ii) an improper declaration of dividends or purchases of the
Company's securities.
The Company's Restated Certificate of Incorporation and By-Laws provide
that the Company shall indemnify its directors and officers to the fullest
extent permitted by New York state law. The Company also has entered into
indemnification agreements with each of its directors and officers.
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<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth the number and percentage of shares of
Common Stock beneficially owned, as of January 3, 2000, by (i) all persons known
by the Company to be the beneficial owner of more than 5% of the outstanding
Common Stock; (ii) each director of the Company; (iii) each of the "named
executive officers" as defined under the rules and regulations of the Securities
Act of 1933, as amended; and (iv) all executive officers and directors of the
Company as a group (7 persons).
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
NAME BENEFICIALLY OWNED BENEFICIALLY OWNED
- ---- ------------------ ------------------
<S> <C> <C>
Timothy M. Aitken(1)........................ 670,000 3.7%
Sarah L. Eames(2)........................... 150,667 *
Wayne A. Palladino(3)....................... 224,190 1.3%
Gregory E. Marsella(4)...................... -- --
Lewis S. Ranieri(5)......................... 13,818,021 67.2%
Scott A. Shay(5)............................ 13,818,021 67.2%
Jeffrey S. Peris(6)......................... 3,667 *
G. Richard Green(6)......................... 4,667 *
Hyperion Partners II L.P.(7)................ 13,818,021 67.2%
Hyperion TW Fund L.P.(8).................... 13,818,021 67.2%
All executive officers and directors
as a group (7 persons)(9) ................ 14,871,212 69.2%
</TABLE>
- ----------
* Less than one percent.
(1) Includes 650,000 shares subject to options exercisable within 60 days from
January 3, 2000.
(2) Includes 146,667 shares subject to options exercisable within 60 days from
January 3, 2000.
(3) Includes 135,000 shares subject to options exercisable within 60 days from
January 3, 2000.
(4) Mr. Marsella resigned as Vice President, General Counsel and Secretary
effective September 3, 1999.
(5) Includes 6,669,565 shares of Common Stock and 3,000,000 shares of Common
Stock underlying the warrants exercisable within 60 days from January 3,
2000 (the "Warrants") acquired pursuant to the HPII Purchase Agreement (as
defined herein) which HPII has purchased and 4,148,456 shares of Common
Stock which the Fund (each of which are affiliates of Messrs. Ranieri and
Shay) has purchased and as to which Messrs. Ranieri and Shay disclaim
beneficial ownership. See "Certain Relationships and Related Transactions
-- Transactions with Principal Shareholders."
(6) Includes 1,667 shares subject to options exercisable within 60 days from
January 3, 2000.
(7) Includes 4,148,456 shares of Common Stock which the Fund (an affiliate of
HPII) has purchased and as to which HPII disclaims beneficial ownership and
3,000,000 shares of Common Stock subject to the Warrants exercisable within
60 days from January 3, 2000. The address of HPII is 50 Charles Lindbergh
Parkway, Uniondale, New York 11553. See "Certain Relationships and Related
Transactions -- Transactions with Principal Shareholders."
(8) Includes 6,669,565 shares of Common Stock and 3,000,000 shares subject to
the Warrants exercisable within 60 days from January 3, 2000 which HPII (an
affiliate of the Fund) has purchased and as to which the Fund disclaims
beneficial ownership. The address of the Fund is 50 Charles Lindbergh
Parkway, Uniondale, New York 11553.
(9) Includes all shares held by Messrs. Aitken, Palladino, Ranieri, Shay,
Peris, Green and Ms. Eames, and those shares subject to options and
Warrants held by such individuals exercisable within 60 days from January
3, 2000.
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<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
TRANSACTIONS WITH PRINCIPAL SHAREHOLDERS
Under a unit purchase agreement dated November 20, 1995, as amended (the
"HPII Purchase Agreement") pursuant to which HPII acquired its initial equity
interest in the Company, until July 31, 2001, HPII has the right to designate to
the Board of Directors of the Company the greater of three directors or 40% of
the number of directors constituting the entire Board of Directors. Messrs.
Ranieri and Shay are the HPII designees presently serving on the Board of
Directors.
The HPII Purchase Agreement also provides that for a period of five (5)
years commencing on May 30, 1996, all shares of Common Stock held by HPII will
be voted by HPII on any matter submitted to the shareholders in the same
proportion as the votes cast by the other holders of Common Stock.
Notwithstanding the foregoing, HPII retains its right to vote its shares of
Common Stock in any manner it chooses with respect to the following specified
matters: (i) the election to the Board of Directors of HPII's designees; (ii)
amendments to the Company's By-Laws or Certificate of Incorporation; (iii)
mergers and the sale, lease or exchange of the Company's assets; (iv) the
authorization or issuance of Company securities; (v) a reclassification of
securities or reorganization of the Company; (vi) the liquidation or dissolution
of the Company; and (vii) any affiliated party transaction. The HPII Purchase
Agreement provides that the requirement that HPII votes its shares in proportion
with all other shareholders shall terminate in the event that the aggregate
number of shares of Common Stock owned by Mr. Palladino and certain former
officers of the Company shall be less than 415,000 shares or on the date when
any person or group unaffiliated with HPII becomes the beneficial owner of 25%
or more of the then-outstanding shares of the Company's capital stock.
Mr. Palladino in his individual capacity, has agreed to take all steps
necessary, including voting his shares for the election of HPII's designees to
the Board of Directors, and to utilize his best efforts, to secure the election
by the Company's shareholders of HPII's designees to the Board of Directors. The
Company has also agreed to such provisions (other than the voting of shares).
The HPII Purchase Agreement further provides that commencing July 31, 1996,
all actions to be taken by the Board of Directors will require the affirmative
vote of a majority of the directors present at a duly constituted meeting (which
is the status currently), except that it shall require the affirmative vote of
66-2/3% of the entire Board of Directors to authorize any action taken with
respect to a proposed acquisition, whether by purchase of stock or assets, of
another company and any action to increase above seven (7) the number of
directors constituting the entire Board of Directors.
In November and December, 1996, HPII purchased from various unrelated third
parties certain trade receivables due from HMI (the "HMI Receivables") at
various discounts. The aggregate face amount of these receivables was
approximately $18,300,000. On March 26, 1997, HPII and the Company entered into
the a stock purchase agreement (the "AP Stock Purchase Agreement"), as amended,
pursuant to which HPII and the Company agreed, subject to the conditions stated
in the AP Stock Purchase Agreement, that the Company would issue shares of its
Common Stock (the "HPII Shares") equal to the Agreed Value (as defined herein)
divided by the Agreed Price (as defined herein) in consideration of the
assignment by HPII to the Company of the HMI Receivables. For the purposes of
the AP Stock Purchase Agreement, (A) "Agreed Value" means the sum of the
following amounts: (i) $4,000,000, plus (ii) 10% of the first $20,000,000 of Net
Recovery (as defined herein), plus (iii) 30% of the next $10,000,000 of Net
Recovery, plus (iv) 50% of any amount of Net Recovery in excess of $30,000,000;
(B) "Net Recovery" means the amount realized or recovered by the Company on or
after September 1, 1997 on or in respect of (i) any indebtedness owed by HMI
and/or its subsidiaries to the Company;
-46-
<PAGE>
(ii) any investment made by the Company in HMI and/or its subsidiaries; and
(iii) the HMI Receivables (including, without limitation, by reason of any
claims against third parties relating to the purchase of any of the foregoing),
net of (x) the merger consideration paid by the Company to acquire HMI and (y)
all reasonable out-of-pocket costs and expenses incurred by the Company in
connection with such realization or recovery. Net Recovery does not include any
tax benefit to the Company from the net loss on its equity and debt investments
in HMI; and (C) "Agreed Price" means the lesser of $7-5/8 and the closing price
of the Common Stock of the Company on the last trading day prior to the closing
of the AP Stock Purchase Agreement. This transaction was approved at a special
meeting of the shareholders held on March 17, 1998 and subsequently during April
1998, HPII contributed the HMI Receivables to the Company in exchange for
1,159,288 shares of the Company's Common Stock with a value per share of $6.00.
The aggregate value of the HPII Shares was $6,956,000. The shares of Common
Stock issued pursuant to this agreement are also covered by a registration
agreement entered into with HPII in connection with the HPII Purchase Agreement.
The Company will bear all expenses, other than underwriting discounts and
commissions, in connection with any such registration.
On April 13, 1998, a shareholder derivative action was filed against
certain officers and directors of the Company, alleging that consummation of the
AP Stock Purchase Agreement was against the best interests of the Company's
shareholders (see "Legal Proceedings").
During the summer of 1999 the Company's U.K. Operations were in the process
of acquiring three nursing and carer agencies when the Company was informed by
its senior lenders that they would not consent to these pending acquisitions.
The Company then requested that HPII complete these acquisitions on the
Company's behalf. Affiliates of HPII (the "HP Affiliates") completed these
acquisitions in August and September, 1999. Effective December 17, 1999, the
Company acquired all three businesses from the HPII Affiliates for the aggregate
amount of $2,992,000 representing HPII's acquisition cost plus, interest at a
rate of 12% per annum and reimbursement of transaction costs. Messrs. Ranieri
and Shay did not participate in any action by the Board of Directors with
respect to these acquisitions.
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
On December 14, 1992, a former principal shareholder and a former director
and officer of the Company, each sold 6,666 shares of Common Stock at a price of
$5.00 per share to Mr. Palladino. On such date, the Company loaned Mr. Palladino
the funds necessary to consummate such purchases. On April 8, 1998, the Company
forgave the $66,666 loan provided that Mr. Palladino remain employed by the
Company as follows: one-third as of April 9, 1998, one-third on January 1, 1999
and one-third on September 30, 1999.
Mr. Palladino among others, (collectively, the "Restricted Transferees")
has entered into a stock restriction agreement (the "Restriction Agreement"),
pursuant to which he agreed to limit the transferability of his shares of Common
Stock, as well as other "Common Equivalents" to the extent described therein.
Unless otherwise consented to in writing by HPII, none of the Restricted
Transferees may transfer any of his shares of Common Stock or other Common
Equivalents owned by him if, at the time of such transfer or after giving effect
thereto, the Restricted Transferee's "Shareholder Percentage" would be less than
the lesser of 0.75 and the "HPII Percentage." For purposes of the Restriction
Agreement, the term "Shareholder Percentage" means a fraction, the denominator
of which is the number of Common Equivalents that such shareholder and his
related persons owned or had the right to acquire on the date of the HPII
Purchase Agreement, and the numerator of which is the numerical amount of the
denominator less the number of Common Equivalents transferred by such Restricted
-47-
<PAGE>
Transferee; and the term "HPII Percentage" means a fraction, the denominator of
which is the number of Common Equivalents purchased by HPII or which HPII has
the right to purchase pursuant to the HPII Purchase Agreement, and the numerator
of which is the numerical amount of the denominator less the number of Common
Equivalents transferred by HPII. The effect of the Restriction Agreement, in
general, is to limit a Restricted Transferee's ability to sell his shares of
Common Stock to the extent that his shareholdings would be less than 75% of his
current holdings or, if less, the HPII Percentage.
In connection with the Refinancing, Mr. Aitken (the Company's Chairman and
Chief Executive Officer), Ms. Eames (the Company's President), Mr. Palladino
(the Company's Chief Financial Officer), Mr. Green (a director of the Company)
and certain other directors and officers of TW UK and its subsidiaries
co-invested, alongside the other Investors, $800,000, $100,000, $25,000 and
$1,100,000, respectively, in senior subordinated notes and also received
warrants exercisable into approximately 2% in the aggregate of the fully diluted
ordinary shares of TW UK. The terms of the senior subordinated notes and
warrants acquired by the foregoing persons are identical to the senior
subordinated notes and warrants acquired by the other Investors. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
Certain directors of the Company have been granted options to purchase
shares of Common Stock under the Company's stock option plans. See "Executive
Compensation-Stock Option Plans."
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<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) Index to Consolidated Financial Statements Page
Report of Independent Accountants F-1
Consolidated Balance Sheets - September 30, 1999 and 1998 F-2
Consolidated Statement of Operations - For the Years Ended
September 30, 1999 and 1998 and the Eleven Months Ended
September 30, 1997 F-3
Consolidated Statement of Changes in Stockholders' Equity-
For the Years Ended September 30, 1999 and 1998 and the
Eleven Months Ended September 30, 1997 F-4
Consolidated Statement of Cash Flows - For the Years Ended
September 30, 1999 and 1998 and the Eleven Months Ended
September 30, 1997 F-5
Notes to Consolidated Financial Statements F-7
Quarterly Financial Information (Unaudited) F-37
(a)(2) Index to Consolidated Financial Statements Schedule
Schedule II Valuation and Qualifying Accounts S-1
Schedules other than those listed above are omitted because
they are not required or are not applicable or the
information is shown in the audited consolidated financial
statements or related notes.
(b) Reports on Form 8-K
None
(c) Exhibits
The exhibits listed in the Exhibit Index below are filed as
part of this Annual Report on Form 10-K.
-49-
<PAGE>
EXHIBIT INDEX
Exhibit
Number Title
- ------ -----
3.1 Restated Certificate of Incorporation of the Company filed on December
12, 1990, as amended on August 7, 1992 (incorporated herein by
reference to Exhibit 3.1 to the Company's Quarterly Report on Form
10-Q for the quarter ended April 30, 1997).
3.2 Certificate of Amendment to the Restated Certificate of Incorporation
of the Company filed on June 28, 1995 (incorporated herein by
reference to Exhibit 3.2 to the Company's Quarterly Report on Form
10-Q for the quarter ended April 30, 1997).
3.3 Certificate of Amendment to the Restated Certificate of Incorporation
of the Company filed on October 9, 1996 (incorporated herein by
reference to Exhibit 3.3 to the Company's Quarterly Report on Form
10-Q for the quarter ended April 30, 1997).
3.4 Certificate of Amendment to the Restated Certificate of Incorporation
of the Company filed on May 6, 1997 (incorporated herein by reference
to Exhibit 3.4 to the Company's Quarterly Report on Form 10-Q for the
quarter ended April 30, 1997).
3.5 Certificate of Amendment to the Restated Certificate of Incorporation
of the Company filed on April 16, 1998.
3.6 Restated By-laws of the Company, as amended (incorporated herein by
reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K
for the year ended October 31, 1996).
4.1 Specimen Certificate of Common Stock (incorporated herein by reference
to Exhibit 4.1 to the Company's Registration Statement (No. 33-50876)
on Form S-1).
10.1 Transworld Home HealthCare, Inc. 1992 Stock Option Plan, as amended
(incorporated herein by reference to Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998).
10.2 Agreement, dated June 5, 1992, among Kinder Investments L.P., Richard
Elkin, Joseph J. Raymond, Elliott H. Vernon and United States Home
Health Care Corp. regarding Buy-Out and Registration Rights, as
amended (incorporated herein by reference to Exhibit 10.14 to the
Company's Registration Statement (No. 33-50876) on Form S-1).
10.3 Form of Indemnification Agreement with the Company (incorporated
herein by reference to Exhibit 10.31 to the Company's Annual Report on
Form 10-K for the year ended October 31, 1994).
-50-
<PAGE>
Exhibit
Number Title
- ------ -----
10.4 Amendment Agreement, effective as of May 5, 1995, to the Stock
Purchase Agreement, dated as of April 1, 1995, as amended, among the
Company, Edward Mashek, Walter Kraemer and Lorraine Andrews
(incorporated herein by reference to Exhibit 10.36 to the Company's
Annual Report on Form 10-K for the year ended October 31, 1995).
10.5 Amended and Restated Asset Purchase Agreement, dated as of March 1,
1995, among DermaQuest, Precision Health Care, Inc., and Les Capella
(incorporated herein by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended April 30, 1995).
10.6 Asset Purchase Agreement between The PromptCare Companies, Inc. and
The Pulmonary Division of Delaware Valley Lung Center, P.C. effective
as of January 1, 1995 (incorporated herein by reference to Exhibit 2
to the Company's Current Report on Form 8-K filed on or about February
15, 1995).
10.7 DermaQuest Amendment Agreement, dated as of March 1, 1995, among the
Company, Edward Mashek, Walter Kraemer, Lorraine Andrews and E/L
Associates (incorporated herein by reference to Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q for the quarter ended January
31, 1995).
10.8 Asset Purchase Agreement, dated as of May 28, 1993, among TNI,
Complete Health Care Services, Inc. and others (incorporated herein by
reference to Exhibit 2 to the Company's Quarterly Report on Form 10-Q
for the quarter ended April 30, 1993).
10.9 Exchange Offer and Confidential Investment Summary, dated August 23,
1993, (incorporated herein by reference to Exhibit 1 to the Company's
Current Report on Form 8-K dated September 30, 1993).
10.10 Stock Purchase Agreement, dated as of April 1, 1994, among the
Company, Edward Mashek, Walter Kraemer and Lorraine Andrews
(incorporated herein by reference to Exhibit 1 to the Company's
Current Report on Form 8-K dated May 3, 1994).
10.11 Amendment, dated July 29, 1994, to the Stock Purchase Agreement among
the Company, Edward Mashek, Walter Kraemer and Lorraine Andrews
(incorporated herein by reference to Exhibit 2 to the Company's
Current Report on Form 8-K dated August 5, 1994).
10.12 Amendment among the Company, Edward Mashek, Walter Kraemer and
Lorraine Andrews, dated November 28, 1994, to the Stock Purchase
Agreement, as amended (incorporated herein by reference to Exhibit 1
to Amendment No. 2 to the Company's Current Report on Form 8-K,
originally filed on May 3, 1994).
-51-
<PAGE>
Exhibit
Number Title
- ------ -----
10.13 Stock Purchase Agreement, dated as of November 1, 1994, by and among
the Company, Edward Mashek, Walter Kraemer and Lorraine Andrews
(incorporated herein by reference to Exhibit 1 to the Company's
Current Report on Form 8-K dated December 28, 1994).
10.14 DermaQuest Amendment Agreement, dated as of November 1, 1995, which
amended a Stock Purchase Agreement, dated as of November 1, 1994,
among the Company and Edward Mashek, Walter Kraemer and Lorraine
Andrews (incorporated herein by reference to Exhibit 10.55 to the
Company's Annual Report on Form 10-K for the year ended October 31,
1995).
10.15 Unit Purchase Agreement, dated as of November 20, 1995, as amended, by
and between the Company and HPII (incorporated herein by reference to
Exhibit 10.56 to the Company's Annual Report on Form 10-K for the year
ended October 31, 1995).
10.16 Subordinated Note Purchase Agreement, dated as of January 10, 1996,
between the Company and HPII (incorporated herein by reference to
Exhibit 10.57 to the Company's Annual Report on Form 10-K for the year
ended October 31, 1995).
10.17 Amendment dated February 16, 1996 to Subordinated Note Purchase
Agreement between the Company and HPII (incorporated herein by
reference to Exhibit 10.4 to the Company's Quarterly Report on Form
10-Q for the quarter ended April 30, 1996).
10.18 Amendment dated May 30, 1996 to Subordinated Note Purchase Agreement,
dated as of January 10, 1996, as amended on February 16, 1996, between
the Company and HPII (incorporated herein by reference to Exhibit 10.5
to the Company's Quarterly Report on Form 10-Q for the quarter ended
April 30, 1996).
10.19 Credit Agreement among the Company, Various Lending Institutions and
Bankers Trust Company, as Agent dated as of July 31, 1996
(incorporated herein by reference to Exhibit 1 to the Company's
Current Report on Form 8-K dated July 31, 1996).
10.20 Pledge Agreement dated as of July 31, 1996 in favor of Bankers Trust
Company, as Collateral Agent (incorporated herein by reference to
Exhibit 10.59 to the Company's Annual Report on Form 10-K for the year
ended October 31, 1996).
10.21 Security Agreement among the Company, Various Subsidiaries and Bankers
Trust Company, as Collateral Agent dated as of July 31, 1996
(incorporated herein by reference to Exhibit 10.60 to the Company's
Annual Report on Form 10-K for the year ended October 31, 1996).
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<PAGE>
Exhibit
Number Title
- ------ -----
10.22 Subsidiaries Guaranty dated as of July 31, 1996 (incorporated herein
by reference to Exhibit 10.61 to the Company's Annual Report on Form
10-K for the year ended October 31, 1996).
10.23 First Amendment to Credit Agreement and to Pledge Agreement, dated as
of November 13, 1996, between the Company and Bankers Trust Company
(incorporated herein by reference to Exhibit 3 to the Schedule 13D
filed by the Company, HPII, Hyperion Ventures II L.P., Hyperion
Funding II Corp., Lewis S. Ranieri and Scott A. Shay on or about
November 22, 1996).
10.24 Second Amendment to Credit Agreement, dated as of January 13, 1997,
between the Company and Bankers Trust Company (incorporated herein by
reference to Exhibit 2 to the Company's Current Report on Form 8-K
dated January 22, 1997).
10.25 Third Amendment to Credit Agreement, dated as of April 17, 1997,
between the Company and Bankers Trust Company (incorporated herein by
reference to Exhibit 10.1 to the Company's Quarterly Report on Form
10-Q for the quarter ended April 30, 1997).
10.26 Fourth Amendment to Credit Agreement, dated as of May 30, 1997 between
the Company and Bankers Trust Company (incorporated herein by
reference to Exhibit 19.1 to the Company's Quarterly Report on Form
10-Q for the quarter ended July 31, 1997).
10.27 Fifth Amendment to Credit Agreement, dated as of June 30, 1997 between
the Company and Bankers Trust Company (incorporated herein by
reference to Exhibit 19.2 to the Company's Quarterly Report on Form
10-Q for the quarter ended July 31, 1997).
10.28 Sixth Amendment to Credit Agreement, dated as of September 15, 1997
between the Company and Bankers Trust Company (incorporated herein by
reference to Exhibit 10.32 to the Company's Transition Report on Form
10-K for transition period from November 1, 1996 to September 30,
1997).
10.29 Seventh Amendment to Credit Agreement, dated as of October 1, 1997
between the Company and Bankers Trust Company (incorporated herein by
reference to Exhibit 1 to the Company's Current Report on Form 8-K
dated October 10, 1997).
10.30 Eighth Amendment to Credit Agreement, dated as of November 12, 1997
between the Company and Bankers Trust Company (incorporated herein by
reference to Exhibit 10.34 to the Company's Transition Report on Form
10-K for transition period from November 1, 1996 to September 30,
1997).
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<PAGE>
Exhibit
Number Title
- ------ -----
10.31 Ninth Amendment to Credit Agreement, dated as of February 5, 1998
between the Company and Bankers Trust Company (incorporated herein by
reference to Exhibit 10.1 to the Company's Quarterly Report on Form
10-Q for the quarter ended December 31, 1997.
10.32 Tenth Amendment to Credit Agreement, dated as of April 7, 1998 between
the Company and Bankers Trust Company (incorporated herein by
reference to Exhibit 10.1 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1998).
10.33 Eleventh Amendment to Credit Agreement, dated as of July 15, 1998
between the Company and Bankers Trust Company (incorporated herein by
reference to Exhibit 10.2 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1998).
10.34 Twelfth Amendment to Credit Agreement, dated as of August 12, 1998
between the Company and Bankers Trust Company (incorporated herein by
reference to Exhibit 10.35 to the Company's Annual Report on Form 10-K
for the year ended September 30, 1998).
10.35 Thirteenth Amendment to Credit Agreement, dated as of October 1, 1998
between the Company and Bankers Trust Company (incorporated herein by
reference to Exhibit 10.36 to the Company's Annual Report on Form 10-K
for the year ended September 30, 1998).
10.36 Fourteenth Amendment to Credit Agreement, dated as of January 8, 1999
between the Company and Bankers Trust Company (incorporated herein by
reference to Exhibit 10.1 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1999).
10.37 Fifteenth Amendment to Credit Agreement, dated as of March 1, 1999
between the Company and Bankers Trust Company (incorporated herein by
reference to Exhibit 10.2 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1999).
10.38 Agreement dated May 14, 1996 between the Company and Joseph J. Raymond
relating to resignation (incorporated herein by reference to Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the quarter
ended April 30, 1996).
10.39 Agreement dated May 14, 1996 between the Company and Joseph J. Raymond
relating to consulting services (incorporated herein by reference to
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended April 30, 1996).
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<PAGE>
Exhibit
Number Title
- ------ -----
10.40 Purchase and Sale Agreement, dated as of November 12, 1996, between
the Company and European American Bank (incorporated herein by
reference to Exhibit 6 to the Schedule 13D filed by the Company, HPII,
Hyperion Ventures II L.P., Hyperion Funding II Corp., Lewis S. Ranieri
and Scott A. Shay on or about November 22, 1996).
10.41 Purchase and Sale Agreement, dated of November 12, 1996, between the
Company and the Chase Manhattan Bank (incorporated herein by reference
to Exhibit 7 to the Schedule 13D filed by the Company, HPII, Hyperion
Ventures II L.P., Hyperion Funding II Corp., Lewis S. Ranieri and
Scott A. Shay on or about November 22, 1996).
10.42 Agreement, dated as of November 13, 1996, between the Company, HMI,
Home Care Management, Inc., HMI Illinois, Inc., HMI Pennsylvania,
Inc., Health Reimbursement Corporation, HMI Retail Corp., Inc., HMI
PMA, Inc. and HMI Maryland, Inc. (incorporated herein by reference to
Exhibit 8 to the Schedule 13D filed by the Company, HPII, Hyperion
Ventures II L.P., Hyperion Funding II Corp., Lewis S. Ranieri and
Scott A. Shay on or about November 22, 1996).
10.43 Subsidiary Assumption Agreement, dated as of November 13, 1996, among
Transworld Acquisition Corp., IMH Acquisition Corp. and Bankers Trust
Company, as Agent and as Collateral Agent (incorporated herein by
reference to Exhibit 10.71 to the Company's Annual Report on Form 10-K
for the year ended October 31, 1996).
10.44 Agreement and Plan of Merger, dated as of November 13, 1996, among the
Company, IMH Acquisition Corp. and HMI (incorporated herein by
reference to Exhibit 4 to the Schedule 13D filed by the Company, HPII,
Hyperion Ventures II L.P., Hyperion Funding II Corp., Lewis S. Ranieri
and Scott A. Shay on or about November 22, 1996).
10.45 Stock Purchase Agreement, dated as of November 13, 1996, between HMI
and the Company (incorporated herein by reference to Exhibit 5 to the
Schedule 13D filed by the Company, HPII, Hyperion Ventures II L.P.,
Hyperion Funding II Corp., Lewis S. Ranieri and Scott A. Shay on or
about November 22, 1996).
10.46 Asset Purchase Agreement, dated as of October 14, 1996, between
RespiFlow, Health Meds, O.W. Edwards and Rick Hedrick (incorporated
herein by reference to Exhibit A to the Company's Current Report on
Form 8-K dated October 28, 1996).
10.47 Asset Purchase Agreement, dated as of October 31, 1996, between
Transworld Acquisition Corp., the Company, USNJ and U.S. HomeCare
Corporation (incorporated herein by reference to Exhibit B to the
Company's Current Report on Form 8-K dated October 28, 1996).
-55-
<PAGE>
Exhibit
Number Title
- ------ -----
10.48 DermaQuest Amendment Agreement, dated as of February 1, 1996, among
the Company, DermaQuest, Edward Mashek, Walter Kraemer and Lorraine
Andrews (incorporated herein by reference to Exhibit 10 to the
Company's Quarterly Report on Form 10-Q for the quarter ended January
31, 1996).
10.49 Stock Purchase Agreement, dated January 8, 1997, by and between the
Company and HPII (incorporated herein by reference to Exhibit 10.79 to
the Company's Annual Report on Form 10-K for the year ended October
31, 1996).
10.50 Employment Agreement, dated as of January 13, 1997, between the
Company and Timothy M. Aitken (incorporated herein by reference to
Exhibit 10.80 to the Company's Annual Report on Form 10-K for the year
ended October 31, 1996).
10.51 Letter Agreement amending Agreement and Plan of Merger, dated January
13, 1997, between the Company and HMI (incorporated herein by
reference to Exhibit 1 to the Company's Current Report on Form 8-K
dated January 22, 1997).
10.52 Letter Agreement dated March 26, 1997, amending Agreement and Plan of
Merger between the Company and HMI (incorporated herein by reference
to Exhibit 1 to the Company's Current Report on Form 8-K dated March
27, 1997).
10.53 Stock Purchase Agreement between the Company and HPII dated as of
March 26, 1997 (incorporated herein by reference to Exhibit 1 to the
Company's Current Report on Form 8-K dated as of April 16, 1997).
10.54 Stock Purchase Agreement between the Company and the Fund dated as of
March 26, 1997 (incorporated herein by reference to Exhibit 2 to the
Company's Current Report on Form 8-K dated as of April 16, 1997).
10.55 Recommended Cash Offer by Henry Cooke Corporate Finance Ltd. on behalf
of Transworld Healthcare (UK) Limited, a subsidiary of the Company for
Omnicare (incorporated herein by reference to Exhibit 2.1 to the
Company's Current Report on Form 8-K/A Amendment No. 1 dated as of
July 2, 1997).
10.56 Letter Agreement dated July 7, 1997 amending Agreement and Plan of
Merger between the Company and HMI (incorporated herein by reference
to Exhibit 10.53 to the Company's Transition Report on Form 10-K for
transition period from November 1, 1996 to September 30, 1997).
-56-
<PAGE>
Exhibit
Number Title
- ------ -----
10.57 Asset Purchase Agreement dated as of October 1, 1997 among HMI, Health
Reimbursement Corporation, HMI Illinois, Inc., HMI Maryland, Inc., HMI
Pennsylvania, Inc., HMI PMA, Inc., HMI Retail Corp., Inc., Home Care
Management, Inc., the Company, Stadtlander Drug Distribution Co., Inc.
and Counsel (incorporated herein by reference to Exhibit 2 to the
Company's Current Report on Form 8-K dated October 10, 1997).
10.58 Amendment dated as of August 14, 1997 to Stock Purchase Agreement
dated March 26, 1997 between HPII and the Company (incorporated herein
by reference to Exhibit 3 to the Company's Current Report on Form 8-K
dated October 10, 1997).
10.59 Stock Purchase Agreement between the Company, Parkway Ventures, Inc.
and Radamerica dated as of July 31, 1997 (incorporated herein by
reference to Exhibit (c) to the Company's Current Report on Form 8-K
dated July 31, 1997).
10.60 Agreement for Sale and Purchase of Allied between Transworld
Healthcare (UK) Limited and Vanessa Rosamunde Wynn Griffiths and David
Wynn Griffiths dated July 1, 1997 (incorporated herein by reference to
Exhibit 2.1 to the Company's Current Report on Form 8-K dated July 3,
1997).
10.61 Transworld Home HealthCare, Inc. 1997 Option Plan for Non-Employee
Directors (incorporated herein by reference to Exhibit A to the
Company's Proxy Statement for its Annual Meeting held on May 28,
1997).
10.62 Transition Agreement dated October 1, 1997, by and among HMI, Health
Reimbursement Corporation, HMI Illinois, Inc., HMI Maryland, Inc., HMI
Pennsylvania, Inc., HMI PMA, Inc., HMI Retail Corp., Inc., Home Care
Management, Inc. and Stadlander Drug Distribution Co., Inc.
(incorporated herein by reference to Exhibit 10.59 to the Company's
Transition Report on Form 10-K for transition period from November 1,
1996 to September 30, 1997).
10.63 Letter Agreement dated June 12, 1997 amending Agreement and Plan of
Merger between the Company and HMI (incorporated herein by reference
to Exhibit 10.60 to the Company's Transition Report on Form 10-K for
transition period from November 1, 1996 to September 30, 1997).
10.64 Asset Purchase Agreement dated as of June 5, 1998 between the Company,
TNI and Pediatric Services of America, Inc. (incorporated herein by
reference to Exhibit 99.1 to the Company's Current Report on Form 8-K
dated July 15, 1998).
10.65* Voting Trust Agreement dated December 17, 1999 by and among UK Parent,
TW UK, the Company, Triumph and the Trustee.
10.66* Securities Purchase Agreement of UK Parent and TW UK , dated December
17, 1999.
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<PAGE>
Exhibit
Number Title
- ------ -----
10.67* Senior Credit Agreement among UK Parent, TW UK, Paribas as Arranger,
Paribas and Barclays Bank PLC as Underwriters, Barclays Bank PLC as
Agent and Security Agent and Others, dated as of December 17, 1999.
10.68* Mezzanine Agreement among UK Parent, TW UK, Paribas as Arranger,
Underwriter and Agent, Barclays Bank PLC as Security Agent and
Others, dated as of December 17, 1999.
10.69* Warrant Instrument to subscribe for Shares in TW UK in favor of the
mezzanine lenders, dated as of December 17, 1999.
11 Statement re: computation of earnings per share (computation can be
determined clearly from the material contained in this Annual Report
on Form 10-K).
21.1* Subsidiaries of the Company.
23.1* Consent of PricewaterhouseCoopers LLP, independent accountants of the
Company.
27* Financial Data Schedule.
- ----------
*Filed herewith.
-58-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TRANSWORLD HEALTHCARE, INC.
By: /s/ Timothy M. Aitken
--------------------------
Timothy M. Aitken
Chairman of the Board and
Chief Executive Officer
Date: January 13, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Timothy M. Aitken Chairman of the Board and Chief January 13, 2000
- ---------------------- Executive Officer (Principal Executive
Timothy M. Aitken Officer)
/s/ Wayne A. Palladino Senior Vice President and Chief January 13, 2000
- ---------------------- Financial Officer (Principal Financial
Wayne A. Palladino and Accounting Officer)
/s/ Lewis S. Ranieri Director January 13, 2000
- ----------------------
Lewis S. Ranieri
/s/ Scott A. Shay Director January 13, 2000
- ----------------------
Scott A. Shay
/s/ Jeffrey S. Peris Director January 13, 2000
- ----------------------
Jeffrey S. Peris
/s/ G. Richard Green Director January 13, 2000
- ----------------------
G. Richard Green
</TABLE>
-59-
<PAGE>
TRANSWORLD HEALTHCARE, INC.
<TABLE>
<CAPTION>
Index to Consolidated Financial Statements Page
- ------------------------------------------ ----
<S> <C>
Report of Independent Accountants F-1
Consolidated Balance Sheets - September 30, 1999
and 1998 F-2
Consolidated Statement of Operations - For the Years Ended September 30, 1999
and 1998 and the Eleven Months Ended September 30, 1997 F-3
Consolidated Statement of Changes in Stockholders' Equity - For the Years Ended
September 30, 1999 and 1998 and the Eleven Months Ended September 30, 1997 F-4
Consolidated Statement of Cash Flows - For the
Years Ended September 30, 1999 and 1998 and
the Eleven Months Ended September 30, 1997 F-5
Notes to Consolidated Financial Statements F-7
Quarterly Financial Information (Unaudited) F-37
Index to Consolidated Financial Statements Schedule
Schedule II - Valuation and Qualifying Accounts S-1
</TABLE>
F-i
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of Transworld Healthcare, Inc.:
In our opinion, the consolidated financial statements listed in the accompanying
index on page F-i present fairly, in all material respects, the financial
position of Transworld Healthcare, Inc. and its subsidiaries (the "Company") at
September 30, 1999 and 1998, and the results of their operations and their cash
flows for the years ended September 30, 1999 and 1998, and the eleven months
ended September 30, 1997 in conformity with accounting principles generally
accepted in the United States. In addition, in our opinion, the financial
statement schedule listed in the accompanying index on page F-i present fairly,
in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
New York, New York
January 5, 2000
F-1
<PAGE>
TRANSWORLD HEALTHCARE, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
--------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,158 $ 10,413
Accounts receivable, less allowance for doubtful
accounts of $19,870 and $15,367, respectively 30,814 32,223
Inventories 2,929 4,188
Deferred income taxes 6,930 6,732
Prepaid expenses and other assets 4,735 4,382
--------- ---------
Total current assets 50,566 57,938
Property & equipment, net 9,929 9,888
Intangible assets, net 103,248 105,784
Deferred income taxes 6,173 3,483
Other assets 2,205 2,615
--------- ---------
Total assets $ 172,121 $ 179,708
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt, including
obligations under capital leases $ 1,364 $ 40
Accounts payable 5,058 2,728
Accrued expenses 14,899 12,901
Income taxes payable 3,240 3,022
Acquisitions payable 99
--------- ---------
Total current liabilities 24,561 18,790
Long-term debt, including obligations under
capital leases, less current portion 54,407 57,307
Deferred income taxes and other 1,879 1,706
--------- ---------
Total liabilities 80,847 77,803
--------- ---------
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock, $.01 par value; authorized
2,000 shares, issued and outstanding - none
Common stock, $.01 par value; authorized
40,000 shares, issued and outstanding
17,551 and 17,536 shares, repectively 176 175
Additional paid-in capital 125,526 125,461
Accumulated other comprehensive (loss) income (405) 2,946
Retained deficit (34,023) (26,677)
--------- ---------
Total stockholders' equity 91,274 101,905
--------- ---------
Total liabilities and stockholders' equity $ 172,121 $ 179,708
========= =========
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
TRANSWORLD HEALTHCARE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ELEVEN
YEAR ENDED YEAR ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Net patient services $ 80,169 $ 68,887 $ 29,844
Net respiratory, medical equipment and supplies sales 65,277 76,185 52,562
Net infusion services 9,282 10,237 11,038
--------- --------- ---------
Total revenues 154,728 155,309 93,444
--------- --------- ---------
Cost of revenues:
Patient services 54,620 47,779 18,132
Respiratory, medical equipment and supplies sales 37,650 41,898 25,687
Infusion services 7,140 7,515 7,568
--------- --------- ---------
Total cost of revenues 99,410 97,192 51,387
--------- --------- ---------
Gross profit 55,318 58,117 42,057
Selling, general and administrative expenses 57,946 51,980 42,931
Gain on sale of assets (2,511) (606)
Special charges, primarily goodwill impairment (Note 8) 16,677
Equity in loss of HMI, net (Note 3) 18,076
--------- --------- ---------
Operating (loss) income (2,628) 8,648 (35,021)
Interest income (227) (635) (2,271)
Interest expense 5,445 6,286 5,063
--------- --------- ---------
(Loss) income before income taxes (7,846) 2,997 (37,813)
(Benefit) provision for income taxes (500) 1,844 (5,078)
--------- --------- ---------
Net (loss) income $ (7,346) $ 1,153 $ (32,735)
========= ========= =========
Net (loss) income per share of common stock:
Basic and diluted $ (0.42) $ 0.07 $ (2.56)
========= ========= =========
Weighted average number of common shares outstanding:
Basic 17,547 17,327 12,794
========= ========= =========
Diluted 17,547 17,488 12,794
========= ========= =========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
TRANSWORLD HEALTHCARE, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER RETAINED
------------------------- PAID-IN COMPREHENSIVE (DEFICIT)
SHARES AMOUNT CAPITAL (LOSS) INCOME EARNINGS TOTAL
----------- ----------- ---------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, October 31, 1996 9,940 $ 99 $ 62,221 $ 4,905 $ 67,225
Net loss (32,735) (32,735)
Translation adjustment $ (2,192) (2,192)
Issuance of common stock for:
Private offering 5,015 50 50,465 50,515
Radamerica per share price
guarantee (Note 3) 321 3 (3)
Exercise of stock options and
warrants, including tax benefit 210 2 703 705
Cancellation of common stock from:
Termination of VIP agreement
(Note 3) (40) (354) (354)
Repayment of Radamerica notes
receivable (146) (1) (1,258) (1,259)
--------- --------- --------- --------- --------- ---------
Balance, September 30, 1997 15,300 153 111,774 (2,192) (27,830) 81,905
Net income 1,153 1,153
Translation adjustment 5,138 5,138
Issuance of common stock for:
HMI Receivables transaction (Note 7) 1,159 12 6,944 6,956
Exercise of stock options and
warrants 1,090 11 6,483 6,494
Cancellation of common stock from:
Repayment of related party
notes receivable (13) (1) (80) (81)
Issuance of options for services rendered 340 340
--------- --------- --------- --------- --------- ---------
Balance, September 30, 1998 17,536 175 125,461 2,946 (26,677) 101,905
Net loss (7,346) (7,346)
Translation adjustment (3,351) (3,351)
Issuance of common stock for:
Exercise of stock options 15 1 65 66
--------- --------- --------- --------- --------- ---------
Balance, September 30, 1999 17,551 $ 176 $ 125,526 $ (405) $ (34,023) $ 91,274
========= ========= ========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
TRANSWORLD HEALTHCARE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
ELEVEN
YEAR ENDED YEAR ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1997
------------ ------------- -------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net (loss) income $ (7,346) $ 1,153 $ (32,735)
Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activities:
Depreciation and amortization 2,312 1,981 1,324
Amortization of goodwill 3,168 2,841 1,458
Amortization of other intangible assets 291 306 408
Amortization of debt issuance costs 1,086 1,151 830
Provision for doubtful accounts 12,272 8,318 12,973
Gain on sale of assets (2,511) (606)
Special charges, primarily goodwill impairment 16,677
Equity in loss of HMI 18,796
Deferred income taxes (2,684) (988) (5,574)
Changes in assets and liabilities, excluding
the effect of businesses acquired and sold:
Increase in accounts receivable (11,173) (7,372) (11,351)
Decrease (increase) in inventories 1,208 (897) (102)
Increase in prepaid expenses and other assets (491) (246) (4,457)
Increase (decrease) in accounts payable 2,359 (5,270) 1,910
Increase (decrease) in accrued expenses
and other liabilities 2,256 1,396 (640)
--------- --------- ---------
Net cash provided by (used in) operating activities 3,258 (138) (1,089)
--------- --------- ---------
Cash flows from investing activities:
Capital expenditures (2,642) (3,346) (2,694)
Notes receivable - payments received 58 4,683
Proceeds from termination of VIP agreement 500
Proceeds from sale of property and equipment 90 60 550
Proceeds from sale of Radamerica, net of cash
overdraft when sold 1,204 12,114
Proceeds from sale of TNI's assets 4,765
Proceeds from sale of HMI's assets 32,328
Advances to and investment in HMI (11,122) (36,872)
Acquisitions - net of cash acquired (3,694) (846) (93,586)
Payments on acquisitions payable (130) (406) (1,833)
Purchases of other intangible assets (16) (396)
--------- --------- ---------
Net cash (used in) provided by investing activities (6,334) 22,241 (117,138)
--------- --------- ---------
(Continued)
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
TRANSWORLD HEALTHCARE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
(In thousands)
<TABLE>
<CAPTION>
ELEVEN
YEAR ENDED YEAR ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1997
------------ ------------- -------------
Cash flows from operating activities:
<S> <C> <C> <C>
Proceeds from issuance of common stock $ 50,650
Payment of costs associated with
issuance of common stock (175)
Payments on notes payable (11)
Borrowing under revolving loan 96,847
Payments on revolving loan $ (1,500) $ (29,100) (22,983)
Proceeds from long-term debt 55 47
Principal payments on long-term debt (73) (58) (340)
Payments for debt issuance costs (346) (17) (1,564)
Stock options and warrants exercised, net,
including tax benefit 66 6,492 939
--------- --------- ---------
Net cash (used in) provided by financing activities (1,853) (22,628) 123,410
--------- --------- ---------
Effect of exchange rate on cash (326) 312 845
--------- --------- ---------
(Decrease) increase in cash (5,255) (213) 6,028
Cash and cash equivalents,
beginning of period 10,413 10,626 4,598
--------- --------- ---------
Cash and cash equivalents,
end of period $ 5,158 $ 10,413 $ 10,626
========= ========= =========
Supplemental cash flow information:
Cash paid for interest $ 4,192 $ 5,330 $ 3,993
========= ========= =========
Cash paid (refunded) for income taxes, net $ 1,948 $ (506) $ 2,312
========= ========= =========
Supplemental disclosure of non-cash
investing and financing activities:
Details of business acquired in
purchase transactions:
Fair value of assets acquired $ 3,730 $ 1,151 $ 106,402
========= ========= =========
Liabilities assumed or incurred $ 36 $ 305 $ 11,951
========= ========= =========
Cash paid for acquisitions (including
related expenses) $ 3,694 $ 846 $ 94,451
Cash acquired 865
--------- --------- ---------
Net cash paid for acquisitions $ 3,694 $ 846 $ 93,586
========= ========= =========
Additional non-cash activities are disclosed in the
notes to the consolidated financial statements.
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1. BASIS OF PRESENTATION:
Transworld Healthcare, Inc. (the "Company") is a provider of a broad range
of health care services and products with operations in the United Kingdom
("U.K.") and the United States ("U.S."). The Company provides the following
services and products: (i) patient services, including nursing and
para-professional services; (ii) specialty mail-order pharmaceuticals,
medical supplies, respiratory therapy and home medical equipment; and (iii)
infusion therapy.
During July 1997, the Company completed the following significant
acquisitions:
COMPANY NATURE OF BUSINESS
------- ------------------
Omnicare plc ("Omnicare") Respiratory equipment and services
and medical and surgical products
Allied Medicare Limited ("Allied") Nursing and para-professional
services
The consolidated financial statements presented herein are those of the
Company and include the results of the aforementioned acquired companies
from their respective dates of acquisition (Note 3).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF ACCOUNTING:
The accompanying consolidated financial statements are prepared on the
accrual basis of accounting in accordance with U.S. generally accepted
accounting standards.
FISCAL YEAR CHANGE:
The Company changed its fiscal year end from October 31 to September 30
effective for fiscal 1997.
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.
Investments in entities that are 20% to 50% owned are accounted for under
the equity method of accounting.
REVENUE RECOGNITION:
Patient services and infusion and respiratory therapy revenues are
recognized when services are performed and are recorded net of estimated
contractual adjustments based on agreements with third-party payors, where
applicable. Revenues from home medical equipment (including respiratory
equipment) are recognized over the period the equipment is rented
(typically on a month-to-month basis) and approximated $5,884, $6,711 and
$5,402 in fiscal 1999, 1998 and 1997, respectively.
F-7
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Revenues from the sale of pharmaceuticals and supplies are recognized when
products are shipped and are recorded at amounts expected to be paid by
third-party payors.
The Company receives a majority of its revenue from third-party insurance
companies, the National Health Services (the "NHS") and other U.K.
governmental payors, Medicare and Medicaid. The amount paid by third-party
payors is dependent upon the benefits included in the patient's policy or
as allowable amounts set by third-party payors. Certain revenues are
subject to review by third-party payors, and adjustments, if any, are
recorded when determined. For the years ended September 30, 1999 and 1998
and the eleven months ended September 30, 1997, 36%, 30% and 13%,
respectively of the Companies net revenues were attributable to the NHS and
other U.K. governmental payors programs. For the years ended September 30,
1999 and 1998 and the eleven months ended September 30, 1997, the Company's
net revenues attributable to the Medicare and Medicaid programs were
approximately 23%, 33% and 53%, respectively, of the Company's total
revenues.
INCOME TAXES:
The Company accounts for income taxes using the liability method in
accordance with Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes." Under this method, deferred income tax
assets and liabilities reflect tax carryforwards and the net effects of
temporary differences between the carrying amounts of assets and
liabilities for financial reporting and income tax purposes, as determined
under currently enacted tax rates. Deferred tax assets are recorded if
future realization is more likely than not.
Deferred taxes are provided primarily for bad debts, Federal and state net
operating losses, acquisition liabilities, depreciation and amortization of
intangibles, which are reported for Federal income tax purposes in
different periods than for financial reporting purposes. Valuation
allowances are established, when necessary, to reduce deferred taxes to the
amounts expected to be realized.
EARNINGS PER SHARE:
Effective October 1, 1997, the Company adopted the provisions SFAS No. 128,
"Earnings per Share" ("EPS"). SFAS No. 128 replaced primary EPS with basic
EPS and fully diluted EPS with diluted EPS. Basic EPS is computed using the
weighted average number of common shares outstanding, after giving effect
to issuable shares per agreements. Diluted EPS is computed using the
weighted average number of common shares outstanding, after giving effect
to contingently issuable shares per agreements and dilutive stock options
and warrants using the treasury stock method. At September 30, 1999, 1998
and 1997, the Company had outstanding stock options and warrants to
purchase 3,683, 3,965 and 3,809 shares, respectively of common stock
ranging in price from $4.31 to $12.45, $4.38 to $12.45 and $7.88 to $12.45
per share, respectively, that were not included in the computation of
diluted EPS because the exercise price was greater than the average market
price of the common shares. In addition, for the year ended September 30,
1999 and for the eleven months ended September 30, 1997, the Company had an
incremental weighted average of 128 and 699 shares, respectively, of stock
options and warrants which were not included in the diluted computation as
the effect of such inclusion would have been anti-dilutive due to a net
loss position.
F-8
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
The weighted average number of common shares outstanding have been restated
for the eleven months ended September 30, 1997 to reflect the provisions of
SFAS No. 128. This restatement had no effect on EPS.
The weighted average number of shares used in the basic and diluted
earnings per share computations for the years ended September 30, 1999 and
1998 and eleven months ended September 30, 1997 are as follows:
<TABLE>
<CAPTION>
ELEVEN MONTHS
YEAR ENDED YEAR ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1997
--------------- --------------- ----------------
<S> <C> <C> <C>
Weighted average number of common
shares outstanding 17,547 16,663 12,517
Weighted average number of contingently
issuable shares per agreements 664 277
------ ------ ------
Shares used in computation of basic net
(loss) income per share of common stock 17,547 17,327 12,794
Incremental shares after application
of treasury stock method, of stock
options and warrants 161
------ ------ ------
Shares used in computation of diluted net
(loss) income per share of common stock 17,547 17,488 12,794
====== ====== ======
</TABLE>
IMPAIRMENT OF LONG-LIVED ASSETS:
Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. If
the sum of the undiscounted future cash flows is less than the carrying
amount of the asset, a loss is recognized for the difference between the
fair value (discounted future cash flows) and carrying value of the asset.
Impairment loss on assets to be sold, if any, is based on the estimated
proceeds to be received, less estimated costs to sell.
STOCK-BASED COMPENSATION:
The accompanying Consolidated Balance Sheets and Statement of Operations of
the Company have been prepared in accordance with the Accounting Principles
Board's Opinion No. 25, Accounting for Stock Issued to Employees ("APB No.
25"). Under APB No. 25, generally, no compensation expense is recognized in
the accompanying consolidated financial statements in connection with the
awarding of stock option grants to employees provided that, as of the
grant date, all terms associated with the award are fixed and the quoted
market price of the Company's stock is equal to or less than the amount an
employee must pay to acquire the stock as defined. The Company only issues
fixed term stock option grants at the quoted market price on the date of
the grant.
F-9
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Effective November 1, 1996, the Company adopted the disclosures required by
SFAS No. 123, "Accounting for Stock-Based Compensation," including pro
forma operating results had the Company prepared it consolidated financial
statements in accordance with the fair value based method of accounting for
stock-based compensation, and they have been included in Note 11.
COMPREHENSIVE INCOME:
Effective October 1, 1998, the Company adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income." This statement established standards
for the reporting and display of comprehensive income and its components in
a full set of general purpose financial statements. Components of
comprehensive income include net income and all other non-owner changes in
equity, such as the change in the cumulative translation adjustment,
unrealized gains and losses on investments available for sale and minimum
pension liability. Currency translation is the only item of other
comprehensive income impacting the Company. The following table displays
comprehensive (loss) income for the years ended September 30, 1999 and 1998
and the eleven months ended September 30, 1997:
<TABLE>
<CAPTION>
ELEVEN MONTHS
YEAR ENDED YEAR ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1997
-------------- -------------- ----------------
<S> <C> <C> <C>
Net (loss) income $ (7,346) $ 1,153 $ (32,735)
Change in cumulative
translation adjustment (3,351) 5,138 (2,192)
----------- --------- -----------
Comprehensive (loss) income $ (10,697) $ 6,291 $ (34,927)
=========== ========= ===========
</TABLE>
SEGMENT INFORMATION:
Effective October 1, 1998, the Company adopted the provisions of SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information."
SFAS No. 131 supercedes SFAS No. 14, "Financial Reporting for Segments of a
Business Enterprise," replacing the "industry segment" approach with the
"management" approach. The management approach designates the internal
organization that is used by management for making operating decisions and
assessing performance as the source of the Company's reportable segments.
SFAS No. 131 also requires disclosures about products and services,
geographic areas and major customers. The adoption of SFAS No. 131 had no
impact on the Company's consolidated financial statements for the periods
presented.
CONTINGENCIES:
Contingent liabilities, including any material claims, disputes, or
unsettled matters with third-party
F-10
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
payors, are disclosed where management believes they are material to the
Company's financial position.
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents include highly liquid short-term investments
purchased with initial maturities of 90 days or less.
INVENTORIES:
Inventories are valued at the lower of cost (determined using a first-in,
first-out method) or market. Inventories, which consists primarily of
finished goods, include pharmaceuticals, ancillary medical supplies and
certain medical equipment.
PROPERTY AND EQUIPMENT:
Property and equipment, including revenue producing equipment, is carried
at cost, net of accumulated depreciation and amortization. Revenue
producing equipment in the U.K. consists of oxygen cylinders and oxygen
concentrators. Depreciation for these oxygen cylinders and oxygen
concentrators is provided on the straight-line method over their estimated
useful lives of twenty and seven years, respectively. Revenue producing
equipment in the U.S. consists of home medical equipment (e.g., respiratory
equipment, beds and wheelchairs). Depreciation for this home medical
equipment is provided primarily on the straight-line method over their
estimated useful lives of three to seven years. Buildings are being
depreciated over their useful lives of twenty-five to fifty years and
leasehold improvements are amortized over the related lease terms or
estimated useful lives, whichever is shorter. Routine maintenance and
repairs that do not extend the useful life of property and equipment are
charged against results of operations as incurred. When assets are retired
or otherwise disposed of, the cost and related accumulated depreciation are
reversed from the accounts, and any resulting gain or loss is reflected in
the accompanying Consolidated Statement of Operations.
INTANGIBLE ASSETS:
Intangible assets, consisting principally of goodwill and covenants
not-to-compete, are carried at cost, net of accumulated amortization. All
goodwill is enterprise goodwill and is amortized on a straight-line basis
primarily over forty years. Amortization of other intangible assets
(primarily covenants not-to-compete) is provided on a straight-line basis
over three to fifteen years.
The Company selected the forty-year amortization period based on the likely
period of time over which the related economical benefit will be realized.
The Company believes that the estimated goodwill life is reasonable given
the continuing movement of patient care to non-institutional settings,
expanding demand due to demographic trends, the emphasis of the Company on
establishing significant coverage in its local and regional markets, the
consistent practice with other alternate site health care
F-11
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
companies and other factors.
At each balance sheet date, or if a significant adverse change occurs in
the Company's business, management assesses the carrying amount of
enterprise goodwill. The Company measures impairment of goodwill by
comparing the future undiscounted cash flows (without interest) to the
carrying amount of goodwill. This evaluation is done at the reportable
business segment level (primarily by subsidiary). If the carrying amount of
goodwill exceeds the future cash flows, the excess carrying amount of
goodwill is written off. Factors considered by management in estimating
future cash flows include current operating results, the effects of any
current or proposed changes in third-party reimbursement or other
governmental regulations, trends and prospects of acquired businesses, as
well as the effect of demand, competition, market and other economic
factors.
DEFERRED FINANCING COSTS:
Costs incurred in obtaining long-term financing are amortized over the
terms of the long-term financing agreements using the interest method. At
September 30, 1999 and September 30, 1998, other assets included $1,357 and
$2,425, respectively of deferred financing costs associated with the Credit
Facility (as defined and described in Note 6), net of accumulated
amortization of $3,242 and $2,156, respectively. In addition, at September
30, 1999, other assets included $655 of deferred financing costs associated
with the Refinancing (as defined and described in Note 15). Amortization of
deferred financing costs is included in interest expense in the
accompanying Consolidated Statement of Operations.
FOREIGN CURRENCY TRANSLATION:
Assets and liabilities of foreign subsidiaries whose functional currency is
other than the U.S. dollar are translated to U.S. dollars using the
exchange rates in effect at the balance sheet date. Results of operations
are translated using weighted average exchange rates during the period.
Adjustments resulting from the translation process are included as a
separate component of stockholders' equity.
CONCENTRATIONS OF CREDIT RISK:
Financial instruments which potentially subject the Company to
concentrations of credit risk are cash equivalents and accounts receivable.
The Company places its cash equivalents with high credit quality financial
institutions. The Company believes no significant concentration of credit
risk exists with respect to these cash equivalents.
The Company grants credit without collateral to its patients, who are
primarily insured under third-party agreements. The Company maintains an
allowance for doubtful accounts based on the expected collectibility of
accounts receivable. Accounts receivable at September 30, 1999 is comprised
of amounts due from the NHS and other U.K. governmental payors, Medicare
and Medicaid (40.3%, 10.9% and 3.8%, respectively) and various other
third-party payors and self-pay patients (none of which comprise greater
than 10% of the balance). At September 30, 1998, 22.8%, 27.8% and 4.1% of
F-12
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
accounts receivable was due from the NHS and other U.K. governmental
payors, Medicare and Medicaid, respectively with the balance due from
various other third-party payors and self-pay patients (none of which
comprise greater than 10% of the balance).
FAIR VALUE OF FINANCIAL INSTRUMENTS:
Cash, accounts receivable, intangible assets, other assets, accounts
payable and accrued expenses and other liabilities approximate fair value
due to the short-term maturity of those instruments. The estimated fair
value of the Company's borrowing under the Credit Facility approximates the
carrying value at September 30, 1999 and 1998 due to interest rates which
fluctuate with market rates.
IMPACT OF RECENT ACCOUNTING STANDARDS:
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 addresses the accounting for derivative
instruments including certain derivative instruments embedded in other
contracts and for hedging activities. As the Company currently does not
enter into transactions involving derivative instruments, the Company does
not believe that the adoption of SFAS No. 133 will have a material effect
on the Company's financial statements. As issued, SFAS No. 133 is effective
for all fiscal quarters of all fiscal years beginning after June 15, 1999,
with earlier application encouraged. In June 1999, the FASB issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of SFAS No. 133," which amended the
effective date of SFAS No. 133 for all fiscal quarters of all fiscal years
beginning after June 15, 2000.
USE OF MANAGEMENT'S ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates. Estimates are used for, but not limited to, the accounting for
allowance for doubtful accounts, valuation of inventories, accrued
expenses, depreciation and amortization.
RECLASSIFICATIONS:
Certain prior year balances have been reclassified to conform to the
current year presentation.
F-13
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
3. BUSINESS COMBINATIONS AND DISPOSALS:
COMBINATIONS:
During the eleven months ended September 30, 1997, the Company acquired the
entities described below, which were accounted for by the purchase method
of accounting. The results of operations of the acquired companies are
included in the accompanying Consolidated Statement of Operations from
their respective dates of acquisition.
OMNICARE
At the end of June 1997, Transworld Healthcare (UK) Limited ("TW UK"), a
wholly-owned subsidiary of the Company, acquired Omnicare pursuant to a
recommended cash offer to acquire all the issued and to be issued shares of
Omnicare not already owned by TW UK for approximately $29,028, which was
paid during July 1997. In addition, 1,765 shares had previously been
purchased from Hyperion Partners II L.P. ("HPII"), a related party, on May
30, 1997 for $2,857. Accordingly, the Company has included the results of
operations, financial position and cash flows of Omnicare in its
consolidated results effective July 1, 1997.
Omnicare provides respiratory equipment and services to patients at home in
the U.K. under the terms of contracts and licenses with various NHS
agencies. The Company also dispenses and supplies a range of medical and
surgical products, principally ostomy products, to patients at home, as
well as providing those patients with advisory and other services through
its network of regional care centers.
The total cost of the acquisition was allocated on the basis of the fair
value of the assets acquired and liabilities assumed and incurred.
Accordingly, assets and liabilities were assigned values of approximately
$9,669 and $6,016, respectively, with the excess of $28,232 allocated to
goodwill which is being amortized on a straight-line basis over forty
years.
ALLIED
Effective June 23, 1997, TW UK acquired all of the issued and outstanding
capital stock of Allied, a privately held provider of nursing and other
care-giving services to home care patients throughout the U.K., for
approximately $60,042. Accordingly, the Company has included the results of
operations, financial position and cash flows of Allied in its consolidated
results effective June 23, 1997.
The total cost of the acquisition was allocated on the basis of the fair
value of the assets acquired and liabilities assumed and incurred.
Accordingly, assets and liabilities were assigned values of approximately
$10,062 and $7,667, respectively, with the excess allocated to covenants
not-to-compete of $734 and goodwill of $56,913. The covenants and goodwill
are being amortized on a straight-line basis over three and forty years,
respectively.
F-14
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
COMBINED PRO FORMAS
The following represents the unaudited pro forma results of operations and
related per share information assuming the Company acquired Omnicare and
Allied on November 1, 1996. The pro forma results for the eleven months
ended September 30, 1997 are based on the historical consolidated financial
statements of the Company for the eleven months ended September 30, 1997
(including Omnicare and Allied from the dates of acquisition), Omnicare for
the eight months ended June 30, 1997 and Allied for the thirty-six weeks
ended June 22, 1997.
The unaudited pro forma information is not necessarily indicative either of
the results of operations that would have occurred had the acquisitions
been made on the dates indicated or that may occur in the future.
<TABLE>
<CAPTION>
PRO FORMA
ELEVEN MONTHS ENDED
SEPTEMBER 30,
1997
-------------------
(unaudited)
<S> <C>
Net revenues $141,231
Net loss (32,695)
Net loss per share of common stock:
Basic and diluted (2.56)
</TABLE>
DISPOSITIONS:
RADAMERICA
Effective July 31, 1997, the Company sold Radamerica, Inc. ("Radamerica")
for $13,304 and received $12,100 in fiscal 1997 with the remaining $1,204
subsequently received on November 10, 1997. As part of the consideration
for the acquisition of Radamerica, the Company had issued 250 shares of its
common stock valued at $5,000 based on a $20 per share market price
guarantee to the selling shareholders of Radamerica. Per the agreement, the
incremental per share amount due under the market price guarantee of $10.60
was paid to the selling shareholders through issuance of 321 shares of
common stock of the Company ($8.25 per share fair market value) during
August 1997, resulting in a reclassification of $3 from additional paid-in
capital to common stock.
Results for Radamerica through July 31, 1997 have been included in the
overall Company's results for the eleven months ended September 30, 1997.
Accordingly, for purposes of earnings per share computations, the weighted
average actual shares issued of the Company's common stock under the per
share market price guarantee have been included in both basic and diluted
earnings per share computations.
F-15
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
3. BUSINESS COMBINATIONS AND DISPOSALS (CONTINUED):
The Company recognized a pre-tax gain on the sale of Radamerica of
approximately $606.
TNI
Effective July 12, 1998, the Company sold substantially all of the assets
of Transworld Home HealthCare-Nursing Division, Inc. ("TNI") for $5,300,
which was paid in cash at closing with $300 of such amount placed into
escrow and released one year following the closing (the "TNI Sale").
Results for TNI through July 12, 1998 have been included in the overall
Company's results for the year ended September 30, 1998. The Company
recognized a pre-tax gain on the TNI Sale of approximately $2,511.
TERMINATION OF PENDING ACQUISITIONS:
VIP COMPANIES
On June 30, 1994, the Company entered into stock purchase agreements, as
amended, to acquire all of the issued and outstanding capital stock of VIP
Health Services, Inc. and Kwik Care, Ltd. (collectively, the "VIP
Companies"). On July 23, 1997, the Company and the VIP Companies terminated
the stock purchase agreements principally due to delays in completing the
transaction.
As a result of the termination of the agreements, the Company has taken a
pre-tax non-cash charge of approximately $1,622 during its third quarter of
fiscal 1997 relating to the termination of the transaction, a contract
deposit and other acquisition-related expenses. This charge has been
recorded in special charges (Note 8).
HMI
During fiscal 1997, the Company acquired 100% of the issued and outstanding
stock of Health Management, Inc. ("HMI") and disposed of all of HMI's
assets and businesses in a series of transactions. HMI is a Buffalo Grove,
Illinois based provider of integrated pharmacy management services to
patients with chronic medical conditions and to health care professionals,
drug manufacturers and third-party payors involved in such patients' care.
On November 13, 1996, the Company acquired HMI's senior secured
indebtedness under the credit agreement between HMI and its senior lenders
for $21,263 directly from such lenders. In mid January 1997, the Company
acquired 8,964 newly issued shares of HMI common stock, representing
approximately 49% of HMI's outstanding common stock for $1 per share or
$8,964.
The $9,714 investment in HMI was recorded as of January 31, 1997 and
represents 49% of HMI's equity in net tangible assets and after fair value
adjustments, $15,835 was preliminarily allocated to goodwill, which was
being amortized on a straight-line basis over thirty years. The acquisition
of
F-16
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
3. BUSINESS COMBINATIONS AND DISPOSALS (CONTINUED):
49% of the outstanding shares of HMI common stock was accounted for by the
Company under the equity method of accounting (effective as of January 31,
1997). During the eleven months ended September 30, 1997, the Company
recorded $18,076 of equity in loss of HMI which represented 49% of HMI's
loss for the six months ended July 31, 1997, after adjustments to book the
Company's adjustment to historical goodwill amortization based on its fair
value adjustments ($132) and to eliminate intercompany interest ($720). Due
to the Company's decision, during the third quarter of fiscal 1997, to sell
HMI and the recording of HMI's obligations that the Company was required to
fund, in connection with the sale to Counsel Corporation ("Counsel"), no
equity in loss of HMI has been booked subsequent to July 31, 1997.
On August 14, 1997, the Company entered into an agreement (the "Asset Sale
Agreement") with Counsel, an unrelated party, relating to the sale of
substantially all of the businesses and operations of HMI (the "Asset
Sale") for approximately $40,000. The Asset Sale Agreement required the
Company to acquire the remaining 51% of HMI prior to the sale to Counsel.
As a result of the Asset Sale Agreement, the Company recorded an impairment
charge of $1,841 for its investment in HMI at July 31, 1997. The carrying
amount of the investment was adjusted for costs and obligations to sell HMI
(including contractually obligated costs to be incurred) compared with the
gross proceeds on the Asset Sale. Such adjustments included the cost to
purchase the remaining 51% of HMI ($2,800), transaction costs (principally
legal expenses) associated with the sale to Counsel ($1,000), purchase
price adjustments (primarily working capital adjustments) ($4,470), the
acquisition of the HMI Receivables (as defined and described in Note 7)
from HPII ($6,956) and the retained liabilities of HMI ($10,774). These
retained liabilities consisted principally of legal expenses and settlement
costs associated with the shareholder and class action litigation,
settlement of accounts payable, severance and employee related costs and
lease termination costs.
On October 1, 1997, the Company, through a wholly-owned subsidiary,
purchased the remaining 51% of the outstanding shares of HMI's common stock
for $.30 per common share. Concurrently, the Company completed the Asset
Sale to Counsel for $40,000. Of the $40,000 proceeds, $30,000 was received
in cash with $7,500 being paid to the Company as HMI's accounts receivable,
existing at date of sale, were collected, with the remaining $2,500 held in
escrow for post-closing adjustments. As of September 30, 1999 an aggregate
(including interest earned on such escrow funds) of $37,648 was received
(including the $7,500 that was held for accounts receivable collection) of
which, $25,000 was used to reduce the senior secured debt owed by the
Company under the Credit Facility, $2,800 was used to acquire the remaining
51% of HMI and the remainder was used for costs, fees and other expenses to
complete the HMI Asset Sale as well as to satisfy liabilities not assumed
by Counsel. The remaining $2,500 escrow was fully utilized for post-closing
adjustments.
The Company also amended its Credit Facility on October 1, 1997 to
accommodate the acquisition of the remaining 51% of HMI and the concurrent
Asset Sale to Counsel.
Pursuant to the Asset Sale, Counsel did not assume any liabilities of HMI
other than certain liabilities arising after the closing under assumed
contracts and certain employee-related liabilities.
F-17
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
4. PROPERTY AND EQUIPMENT:
Major classes of property and equipment, net consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
------------- ------------
<S> <C> <C>
Revenue producing equipment $10,892 $10,076
Furniture, fixtures and equipment 7,971 7,257
Land, buildings and leasehold improvements 1,473 1,470
------- -------
20,336 18,803
Less, accumulated depreciation and amortization 10,407 8,915
------- -------
$ 9,929 $ 9,888
======= =======
</TABLE>
Depreciation and amortization of property and equipment for the years ended
September 30, 1999 and 1998 and the eleven months ended September 30, 1997
was $2,312, $1,981 and $1,324, respectively. The net book value of revenue
producing equipment was $6,151 and $5,542 at September 30, 1999 and
September 30, 1998, respectively.
5. INTANGIBLE ASSETS:
Intangible assets, net consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
------------- ------------
<S> <C> <C>
Goodwill $111,039 $110,165
Covenants not-to-compete 1,541 1,565
Other intangible assets 466 462
-------- --------
113,046 112,192
Less accumulated amortization 9,798 6,408
-------- --------
$103,248 $105,784
======== ========
</TABLE>
Amortization of intangibles for the years ended September 30, 1999 and 1998
and the eleven months ended September 30, 1997 was $3,459, $3,147 and
$1,866, respectively.
6. DEBT:
On July 31, 1996, the Company completed a $100,000 senior secured revolving
credit facility, underwritten by a commercial bank who is also acting as
Agent Bank (the "Credit Facility"). During the year ended September 30,
1999, the Company amended the Credit Facility to allow for further
expansion of its U.K. operations. In addition, the Company reduced its
borrowings under the Credit Facility by $1,500.
The Company amended the Credit Facility during the year ended September 30,
1998 to accommodate
F-18
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
6. DEBT (CONTINUED):
the TNI Sale. On July 15, 1998, the Company reduced outstanding borrowings
under the Credit Facility by $4,100 with proceeds from the TNI Sale.
The Company amended the Credit Facility during the eleven months ended
September 30, 1997 to accommodate the sale of the Shares (as defined in
Note 7) and issuance of the HPII Shares (as defined in Note 7), the
purchase of HMI's senior debt and 100% of HMI's common stock, certain
working capital advances to HMI, the sale of substantially all of HMI's
assets, the purchases of Omnicare and Allied and to amend certain financial
covenants.
The Credit Facility provides that subject to the terms thereof, the Company
may make borrowings either at the Base Rate (as defined in the Credit
Facility), plus 1% or the Eurodollar Rate (ranging from 5.375% to 5.4375%
at September 30, 1999 and from 5.375% to 5.5625% at September 30, 1998),
plus 2%. In addition, 0.5% is charged on the unused portion of the Credit
Facility. As of September 30, 1999, the Company had $55,755 outstanding
under the Credit Facility and the unused portion under the Credit Facility
was $23,645. Additional borrowings require the approval of the required
banks under the Credit Facility.
The loans under the Credit Facility are collateralized by, among other
things, a lien on substantially all of the Company's and its domestic
subsidiaries' assets, a pledge of the Company's ownership interest in its
subsidiaries and guaranties by the Company's domestic subsidiaries. The
loans mature on July 31, 2001 with quarterly reductions in availability
which commenced July 31, 1998 and continue through maturity. The
availability at September 30, 1999 was $79,400.
Subject to certain exceptions, the Credit Facility prohibits or restricts,
among other things, the incurrence of liens, the incurrence of
indebtedness, certain fundamental corporate changes, dividends, the making
of specified investments and certain transactions with affiliates. In
addition, the Credit Facility contains affirmative and negative financial
covenants customarily found in agreements of this kind including the
maintenance of certain financial ratios, such as interest coverage, debt to
earnings before interest, taxes, depreciation and amortization ("EBITDA")
and minimum EBITDA. At September 30, 1999, the Company was in technical
default of the Credit Facility due to non-compliance with certain financial
covenants (i.e.: interest coverage, debt to EBITDA and minimum EBITDA). On
December 20, 1999, the Company refinanced and repaid the Credit Facility
with funds obtained in the Refinancing (Note 15).
F-19
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
6. DEBT (CONTINUED):
Long-term debt consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
--------- ----------
<S> <C> <C>
Credit Facility, due July 21, 2001, with monthly interest at Euro-
dollar Rate (ranging from 5.375% to 5.4375% at September 30,
1999 and from 5.375% to 5.5625% at September 30, 1998),
plus 2% collateralized by a lien on all the Company's and
it's domestic subsidiaries' assets $ 55,755 $ 57,255
Equipment leases with monthly principal plus interest ranging from
6.9% to 12.5% through 2002, collateralized by related equipment 16 92
--------- ----------
55,771 57,347
Less, current maturities 1,364 40
--------- ----------
$ 54,407 $ 57,307
========= ==========
</TABLE>
Annual maturities of long-term debt for each of the next three years are:
<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30,
-------------------------
<S> <C>
2000 $ 1,364
2001 54,405
2002 2
---------
$ 55,771
=========
</TABLE>
7. STOCKHOLDERS' EQUITY:
On April 21, 1997, HPII purchased 899 shares of the Company's common stock
at $11.125 per share and Hyperion TW Fund L.P. ( the "Fund") purchased
4,116 shares of the Company's common stock at $9.875 per share for an
aggregate purchase price of $50,650 (collectively, the "Shares").
Collectively, HPII and the Fund are the Company's principal shareholders.
In November and December, 1996, HPII purchased from various unrelated third
parties certain receivables (the "HMI Receivables") due from HMI at various
discounts. The aggregate face amount of these receivables was approximately
$18,300. On March 26, 1997, the Company entered into a stock purchase
agreement, with HPII, as amended, to purchase these receivables from HPII
for a number of shares of common stock (the "HPII Shares") as determined by
a formula geared to the net cash proceeds ultimately realized by the
Company upon sale of the HMI assets. The value per share of the HPII Shares
was determined by the market value of the Company's common stock on the
date of issuance. This transaction was approved at a special meeting of the
shareholders held on March 17, 1998 and subsequently during April 1998,
HPII was issued 1,159 shares of the Company's common stock with a value per
share of $6.00. The aggregate value of the HPII Shares was $6,956 (Note
12).
F-20
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
7. STOCKHOLDERS' EQUITY (CONTINUED):
No gain or loss was directly recorded as a result of this transaction, as
it was considered a cost of acquiring HMI (Note 3).
8. BUSINESS REALIGNMENT:
The Company took a number of significant steps during the year ended
September 30, 1998 and the eleven months ended September 30, 1997 to
realign its business as a focused regional home health care provider and
specialty pharmacy and medical supply distributor in the U.S. and an
integrated national provider of health care products and services in the
U.K. These steps included: (i) selling non-core assets (i.e.: Radamerica
and TNI); (ii) exiting businesses that were deemed not to have the
potential to earn an adequate return on capital over the long term (such as
wound care and orthotic product lines in the continental U.S., as well as
the Company's pulmonary rehabilitation center in Cherry Hill, New Jersey);
(iii) completing the Asset Sale; and (iv) terminating the agreements to
purchase the VIP Companies. In addition, during fiscal 1998, the Company
attempted the acquisitions of Healthcall Group plc ("Healthcall") and Apria
Healthcare Group, Inc. ("Apria"). During fiscal 1999, the Company attempted
the acquisitions of Sinclair Montrose Healthcare PLC ("Sinclair") and
Gateway HomeCare, Inc. ("Gateway").
For the eleven months ended September 30, 1997, the Company incurred
pre-tax special charges in relation to these actions of $16,677, comprised
of the following items: (i) $1,841 related to the impairment of the
investment in HMI upon the sale to Counsel (Note 3); (ii) $12,079 for the
write-off of goodwill and other intangible assets related to the decisions
to exit substantially all of DermaQuest, Inc.'s ("DermaQuest") product
lines in the continental U.S. (principally wound care and orthotics); (iii)
$1,622 for the termination of the agreements to purchase the VIP Companies
(Note 3); (iv) $437 principally for the write-off of goodwill and other
intangible assets and estimated costs associated with the closure of the
Company's pulmonary rehabilitation center in Cherry Hill, New Jersey (Note
3); and (v) $698 of other charges. In addition, the Company recorded
$18,076 of equity in loss of HMI and a gain of $606 on the sale of
Radamerica in the eleven months ended September 30, 1997 (Note 3).
In addition to these special charges, during the eleven months ended
September 30, 1997, the Company recognized additional bad debt expenses of
$7,023 principally related to its DermaQuest product lines ($6,060) and
pulmonary rehabilitation center ($663), which is reflected in selling,
general and administrative expenses. The Company established $3,986 of
these reserves as a result of the decision to discontinue these product
lines, and the associated impact on the ability to secure required
documentation in a timely manner for reimbursement. The additional $2,737
was reserved as the Company became aware of deterioration in the collection
of DermaQuest receivables.
For the year ended September 30, 1998, the Company recorded in selling,
general and administrative expenses $554 of charges primarily related to
costs incurred from its attempted acquisitions of Healthcall and Apria and
recorded a gain of $2,511 on the TNI Sale (Note 3).
F-21
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
8. BUSINESS REALIGNMENT (CONTINUED):
For the year ended September 30, 1999, the Company recorded in selling,
general and administrative expenses $1,392 of charges primarily related to
costs incurred from its attempted acquisitions of Sinclair and Gateway and
legal reserves and recognized additional bad debt expenses of $3,605
principally as a result of fully reserving for DermaQuest's accounts
receivable, as the Company became aware of additional deterioration in
their collectiblity, based upon the Company's payment history over the
first nine months of fiscal 1999.
9. RELATED PARTY TRANSACTION:
On April 8, 1998, the Company forgave a $67 note receivable due from an
officer of the Company. The debt was forgiven over a two year period
(one-third in fiscal 1998 and two-thirds in fiscal 1999). The compensation
expense recorded on the forgiveness of debt was $45 and $22 in fiscal 1999
and 1998, respectively.
10. INCOME TAXES:
The (benefit) provision for income taxes from continuing operations is
summarized as follows:
<TABLE>
<CAPTION>
ELEVEN MONTHS
YEAR ENDED YEAR ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1997
------------- -------------- -------------
<S> <C> <C> <C>
Current:
Federal $ 68 $ (200) $ (243)
State 52 150 213
Foreign 2,063 924 55
Deferred:
Federal (3,136) 769 (4,443)
State 328 85 (763)
Foreign 125 116 103
------ ------ -------
(Benefit) provision for
income taxes $ (500) $1,844 $(5,078)
====== ====== =======
</TABLE>
F-22
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
10. INCOME TAXES (CONTINUED):
For 1999, 1998 and 1997, deferred income taxes reflect the net tax effects
of temporary differences between the carrying amounts of assets and
liabilities recorded for financial reporting purposes and the amounts used
for income tax purposes. Significant components of the Company's deferred
tax assets and liabilities as of September 30, 1999, 1998 and 1997 are as
follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1997
---------- ------------ -----------
<S> <C> <C> <C>
Deferred tax assets:
Current:
Provision for doubtful accounts $ 5,991 $ 4,930 $ 4,396
Inventory capitalization 22 20 33
Accrued expenses 917 1,557 1,882
Other, net 225 219
---------- -------- ---------
Current deferred tax assets 6,930 6,732 6,530
---------- -------- ---------
Non-current:
Federal net operating loss 5,128 1,810 1,695
State net operating losses 2,073 2,050 2,186
Capital losses 768 991
Other, net 82 507 464
Valuation allowance (1,878) (1,875) (1,989)
---------- -------- ---------
Non-current deferred tax assets 6,173 3,483 2,356
---------- -------- ---------
Deferred tax liabilities:
Non-current:
Depreciation and amortization 1,170 1,089 865
Other, net 564 452 317
---------- -------- ---------
Deferred tax liabilities 1,734 1,541 1,182
---------- -------- ---------
Net deferred tax assets $ 11,369 $ 8,674 $ 7,704
========== ======== =========
</TABLE>
The valuation allowance at September 30, 1999 relates to deferred tax
assets established for certain state net operating loss carryforwards and
deferred tax assets which are not expected to be realized based on
historical or future earnings. The increase in the valuation allowance of
$3 is primarily due to the net increase in state net operating loss
carryforwards.
Management believes that it is more likely than not that the Company will
generate sufficient levels of taxable income in the future to realize the
$11,369 net deferred tax assets comprised of the tax benefit associated
with future deductible temporary differences and net operating loss
carryforwards, prior to their expiration (primarily 13 years or more). This
belief is based upon, among other factors,
F-23
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
10. INCOME TAXES (CONTINUED):
changes in operations over the last few years, management's focus on its
business realignment activities and current business strategies primarily
with respect to its U.K. operations. Failure to achieve sufficient levels
of taxable income might affect the ultimate realization of the net deferred
tax assets. If this were to occur, management is committed to implementing
tax planning strategies, such as the sale of net appreciated assets of the
Company to the extent required (if any) to generate sufficient taxable
income prior to the expiration of these benefits. Should such strategies be
required, they could potentially result in the sale of a portion of the
Company's interest in the U.K. operations and repatriation of such proceeds
to the U.S.
As of September 30, 1999, the Company has state net operating loss
carryforwards of $23,058 which, if unused, will expire in the years 2000
through 2014, and has a Federal net operating loss carryforward of $16,037
which if unused, will expire in the years 2013 through 2019. The Company
has a capital loss carryforward of $2,528 which if unused, will expire in
2002.
Reconciliations of the differences between income taxes computed at Federal
statutory tax rates and consolidated provisions for income taxes are as
follows:
<TABLE>
<CAPTION>
ELEVEN MONTHS
YEAR ENDED YEAR ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1997
------------ -------------- ----------------
<S> <C> <C> <C>
Income taxes computed at Federal
statutory tax rate $ (2,668) $ 1,019 $ (12,856)
State income taxes, net of
Federal benefits 560 268 (2,222)
Nondeductible expenses, primarily
amortization of intangible assets 1,076 711 4,291
Valuation allowance, state taxes 3 (114) 1,859
Tax contingency 416
Market write-down on investment in
subsidiary 3,200
Other, net 113 (40) 650
--------- --------- -----------
(Benefit) provision for income taxes $ (500) $ 1,844 $ (5,078)
========= ========= ===========
</TABLE>
Income (loss) before income taxes generated from the U.K. operations for
the years ended September 30, 1999 and 1998 and the eleven months ended
September 30, 1997 was $3,416, $1,332, and ($868), respectively.
F-24
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
11. STOCK OPTION PLAN AND WARRANTS:
The Company has a stock option plan which provides for either incentive
stock options or nonqualified stock options (the "Option Plan"). The
Option Plan gives eligible employees, officers, directors and non-employee
independent contractors options to purchase up to 3,175 shares of common
stock of which options to purchase 1,130 shares of common stock were
outstanding as of September 30, 1999. Options under the Option Plan may be
granted by the Compensation Committee of the Board of Directors which
determines the exercise price, vesting provisions and term of such grants.
The vesting provisions provided for vesting of options over a period of
between two and three years.
Following is a summary of transactions under the Option Plan during the
years ended September 30, 1999 and 1998 and the eleven months ended
September 30, 1997:
<TABLE>
<CAPTION>
WEIGHTED
NUMBER AVERAGE
OF STOCK EXERCISE
OPTIONS PRICE ($)
------- ---------
<S> <C> <C>
Outstanding - October 31, 1996 ($1.25 to $10.00 per share) 749 5.29
Granted during 1997 ($7.25 to $12.00 per share) 893 7.38
Exercised during 1997 ($2.78 to $10.00 per share) (282) 4.34
Cancelled during 1997 ($5.50 to $12.00 per share) (76) 9.63
-----
Outstanding - September 30, 1997 ($3.18 to $10.00 per share) 1,284 6.70
Granted during 1998 ($2.63 per share) 515 2.63
Exercised during 1998 ($3.18 to $7.88 per share) (126) 4.21
Cancelled during 1998 ($4.38 to $7.88 per share) (283) 6.32
-----
Outstanding - September 30, 1998 ($2.63 to $10.00 per share) 1,390 5.49
Granted during 1999 ($4.31 per share) 10 4.31
Exercised during 1999 ($4.38 per share) (15) 4.38
Cancelled during 1999 ($2.63 to $10.00 per share) (255) 6.04
-----
Outstanding - September 30, 1999 ($2.63 to $7.88 per share) 1,130 5.37
=====
Available for future grants 1,387
=====
</TABLE>
On May 28, 1997, the Company adopted a stock option plan for non-employee
directors (the "Directors Plan") which gives non-employee directors options
to purchase up to 100 shares of common stock. As of September 30, 1999, no
options have been granted under the Directors Plan. Options under the
Directors Plan may be granted by the Board of Directors which determines
the exercise price, vesting provisions and term of such grants. All options
granted under the Directors Plan are immediately exercisable.
F-25
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
11. STOCK OPTION PLAN AND WARRANTS (CONTINUED):
A summary of the 1,130 options outstanding as of September 30, 1999 is as
follows:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED WEIGHTED
RANGE AVERAGE AVERAGE AVERAGE
OF EXERCISE PRICE REMAINING EXERCISE PRICE
EXERCISE NUMBER OF OPTIONS CONTRACTUAL LIFE NUMBER OF OPTIONS
PRICE ($) OUTSTANDING OUTSTANDING ($) IN YEARS EXERCISABLE EXERCISABLE ($)
--------- ----------- --------------- -------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
2.63 457 2.63 4.0 386 2.63
4.31 10 4.31 9.2
7.25 633 7.25 2.4 462 7.25
7.88 30 7.88 1.0 29 7.88
----- ---
2.63 to 7.88 1,130 5.37 3.1 877 5.24
===== ===
</TABLE>
Of the 1,390 options outstanding as of September 30, 1998, 645 were
exercisable (with a weighted average exercise price of $5.88) as of that
date. Of the 1,284 options outstanding as of September 30, 1997, 472 were
exercisable (with a weighted average exercise price of $5.61) as of that
date.
The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." In accordance with SFAS No. 123,
the Company continues to apply APB No. 25 and related Interpretations to
account for stock-based compensation using the intrinsic value method for
its stock option plans and, accordingly, does not recognize compensation
expense. If the Company had elected to recognize compensation expense based
on the fair value of the options at grant date as prescribed by SFAS No.
123, net (loss) income and net (loss) earnings per share would have been
adjusted to the pro forma amounts indicated in the table below:
<TABLE>
<CAPTION>
ELEVEN MONTHS
YEAR ENDED YEAR ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1997
------------ -------------- ----------------
<S> <C> <C> <C>
Net (loss) income - as reported $(7,346) $ 1,153 $ (32,735)
Net (loss) income - pro forma (8,155) 113 (33,731)
Basic and diluted (loss) earnings per
share - as reported (0.42) 0.07 (2.56)
Basic and diluted (loss) earnings per
share - pro forma (0.46) 0.01 (2.64)
</TABLE>
F-26
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
11. STOCK OPTION PLAN AND WARRANTS (CONTINUED):
The fair value of each option granted is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
assumptions:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Expected life (years) 4 4 4
Risk-free interest rate 5.5% 5.5% 6.0%
Volatility 55.7% 55.9% 52.5%
Expected dividend yield 0% 0% 0%
</TABLE>
The compensation cost as generated by the Black-Scholes option-pricing
model, may not be indicative of the future benefit, if any, that may be
received by the option holder.
Effective January 15, 1997, the Company granted Mr. Aitken (the Company's
Chairman of the Board and Chief Executive Officer) options under the
Option Plan to purchase 500 shares of common stock at an exercise price of
$11.375 per share. Such options were repriced on August 13, 1997 to an
exercise price of $7.25 per share which represented the fair value at that
date.
In connection with the initial public offering, the Company issued
warrants to purchase 1,600 common shares. The warrants were exercisable at
$6.294 (reduced from $6.50 in accordance with an anti-dilution clause in
the agreement) per share and expired on December 8, 1997. During 1994, the
Company repurchased 500 of the public warrants, 250 for $1.25 per warrant
and 250 at $1.3125 per warrant in open market purchases. During the eleven
months ended September 30, 1997, 7 warrants were exercised for $44 and
prior to their expiration an additional 960 warrants were exercised for an
aggregate of $6,041 in fiscal 1998.
12. COMMITMENTS AND CONTINGENCIES:
EMPLOYMENT AGREEMENTS:
The Company has two employment agreements with certain of its executive
officers which provide for minimum aggregate annual compensation of $325
in fiscal 2000. One expires January 2000 and amounts to $85 of the fiscal
2000 minimum aggregate compensation. The agreement contains customary
termination and non-compete provisions and a change in control provision
that would entitle the individual up to 2.9 times of his salary then in
effect, plus any unpaid bonus and unreimbursed expense upon a change of
control of the Company (as defined) or significant change in the
responsibilities of such person. The other agreement entitles the employee
to a severance payment equal to one year's salary (currently $240 per
year) plus relocation expenses.
In fiscal 1996, the Company entered into a consulting agreement with its
former Chairman, which expires on April 30, 2000, which provides for
annual compensation of $150 less the amount by which certain amounts paid
to or on his behalf exceed $60.
F-27
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
12. COMMITMENTS AND CONTINGENCIES (CONTINUED):
The Company has a performance based bonus plan for the Company's executive
officers and certain other employees. Under this plan, amounts may be
granted up to 50% of their base salaries at the sole discretion of the
Compensation Committee. Bonuses may be paid in whole or in part, in cash
or shares of common stock.
OPERATING LEASES:
The Company has entered into various operating lease agreements for office
space and equipment. Certain of these leases provide for renewal options
with extension dates in fiscal 2008 and 2013.
Future minimum rental commitments required under operating leases that
have non-cancelable lease terms in excess of one year as of September 30,
1999 are as follows:
2000 $1,827
2001 1,468
2002 1,079
2003 701
2004 521
Thereafter 2,108
------
$7,704
======
Rent expense under non-capitalized, non-cancelable lease agreements for
the years ended September 30, 1999 and 1998 and the eleven months ended
September 30, 1997 amounted to $2,431, $2,320 and $1,848, respectively.
CONTINGENCIES:
On February 4, 1997, Patient Care Systems, Inc. ("PCS") filed a lawsuit
against DermaQuest and the Company in the Court of Common Pleas of Chester
County, Pennsylvania, for breach of contract, conversion, unjust
enrichment and misrepresentation. Subsequently, PCS withdrew all claims
except for its breach of contract claim. On April 22, 1997, DermaQuest
filed a counterclaim against PCS for breach of contract. The action
related to a contract initially entered into between DermaQuest and PCS to
market alternating pressure mattresses. A jury trial in this matter began
on June 28, 1999. On July 2, 1999, the jury reached their verdict finding
in favor of PCS on its breach of contract claim and finding in favor of
DermaQuest on its breach of contract counterclaim. Post verdict, the
parties settled the litigation whereby DermaQuest and the Company agreed
to pay a total of $180, as a full, final and complete resolution of the
dispute.
On August 20, 1999, TNI was named a defendant in a suit brought by Teresa
Crutcher, in New Jersey state court, as administrator of the estate of
Aaron Pernell, who was an infant and Teresa Crutcher's son. The claim is
for wrongful death of Aaron Pernell alleged to have been caused by the
negligent manner in which a TNI home care nurse placed him in an infant
car seat. TNI has answered the
F-28
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
12. COMMITMENTS AND CONTINGENCIES (CONTINUED):
complaint. The claim is insured. As the case is in a preliminary stage,
the Company is not able to estimate any potential exposure and has not
recorded any amounts in its financial statements. It is possible that
irrespective of insurance coverage, the ultimate outcome of this action
could be materially unfavorable to the Company's consolidated financial
condition, cash flows, or results of operations. However, the Company
intends to defend the proceedings vigorously and believes that the
ultimate liability, if any, will be within the policy limits of its
insurance, and will not have a material adverse effect on the Company's
consolidated financial position, cash flows, or results of operations.
On April 13, 1998, a shareholder of the Company, purporting to sue
derivatively on behalf of the Company, commenced a derivative suit in the
Supreme Court of the State of New York, County of New York, entitled Kevin
Mak, derivatively and on behalf of Transworld Healthcare, Inc., Plaintiff,
vs. Timothy Aitken, Scott A. Shay, Lewis S. Ranieri, Wayne Palladino and
Hyperion Partners II L.P., Defendants, and Transworld Healthcare, Inc.,
Nominal Defendant, Index No. 98-106401. The suit alleges that certain
officers and directors of the Company, and HPII, breached fiduciary duties
to the Company and its shareholders, in connection with a transaction,
approved by a vote of the Company's shareholders on March 17, 1998, in
which the Company was to issue certain shares of stock to HPII in exchange
for the HMI Receivables (Note 7). The action seeks injunctive relief
against this transaction, and damages, costs and attorneys' fees in
unspecified amounts. The transaction subsequently closed and the plaintiff
has, on numerous occasions, stipulated to extend the defendants' time to
respond to this suit. The most recent stipulation provides for an
extension to March 3, 2000.
On July 11 and July 22, 1997, the Company's RespiFlow, Inc. ("RespiFlow")
and MK Diabetic Support Services, Inc. ("MK") subsidiaries, respectively,
each received a letter (the "Audit Letters") from the U.S. Department of
Health and Human Services' Office of Audit Services, a division of the
Office of Inspector General ("OIG"). The Company was subsequently informed
that the Audit Letters cover its DermaQuest subsidiary. The Company has
produced certain documents and provided related information to the OIG and
to the U.S. Attorney for the Eastern District of Texas regarding these
subsidiaries' financial relationships with suppliers of durable medical
equipment and various other practices including the subsidiaries'
practices regarding the collection of coinsurance and deductible amounts
due from Medicare beneficiaries. Additionally, on November 19, 1997, the
Company was notified by the U.S. Attorney for the Eastern District of
Texas that the Company, RespiFlow, MK, and various other non-affiliated
entities had been named defendants in a qui tam action under the Federal
False Claims Act. The qui tam action was recently unsealed and a copy of
the complaint was provided to the Company. The relator is a private party
who has brought action on behalf of the Federal government. At present,
the Company has entered into settlement discussions with the Department of
Justice ("DOJ") and the OIG in an effort to bring closure to this matter
and to avoid the expense, disruption and uncertainty of litigation. The
counsel for the relator has been involved in these settlement discussions
as well. At present, we are not able to determine when a final settlement
will be reached with the DOJ, the OIG and the relator or whether any
proposed settlement can be concluded on terms acceptable to the Company.
Accordingly, the Company is unable to estimate what the appropriate loss
might be at this time. In the event that these settlement discussions are
unsuccessful
F-29
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
12. COMMITMENTS AND CONTINGENCIES (CONTINUED):
the Company will defend vigorously its interest in these matters. As such,
the Company cannot predict whether the outcome of these actions will have
a material adverse effect on the Company's consolidated financial
position, cash flows or results of operations.
In addition to the above allegations, during the normal course of
business, the Company continues to carefully monitor and review its
submission of Medicare, Medicaid and all other claims for reimbursement.
The Company believes that it is substantially in compliance, in all
material respects, with the applicable provisions of the Federal statutes,
regulations and laws and applicable state laws. Because of the broad and
sometimes vague nature of these laws, there can be no assurance that an
enforcement action will not be brought against the Company, or that the
Company will not be found to be in violation of one or more of these
provisions. At present, the Company cannot anticipate what impact, if any,
subsequent administrative or judicial interpretation of the applicable
Federal and state laws may have on the Company's consolidated financial
position, cash flows or results of operations.
Effective October 1, 1997, the Company owned 100% of the stock of HMI.
HMI and certain of its current and former officers have been named as
defendants in a class action lawsuit filed on April 3, 1997 in the United
States District Court for the Eastern District of New York formerly
entitled Nicholas Volonnino et al. v. Health Management, Inc., W. James
Nicol, Paul S. Jurewicz and James Mieszala, 97 Civ. 1646. The action was
amended on September 12, 1997, and is now entitled Dennis Baker et al. v.
Health Management, Inc., BDO Seidman, LLP, Transworld HealthCare, Inc.,
W. James Nicol, Paul S. Jurewicz and James Mieszala. The plaintiffs
asserted claims under Sections 10(b) and 20 (a) of the Securities
Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, arising out
of alleged misrepresentations and omissions by HMI in connection with
certain of its previous securities filings and press releases. The
Company was sued as an alleged control entity of HMI, based upon its
acquisition of 49% of HMI's outstanding common stock on January 13, 1997.
The plaintiffs purport to be a class of persons who purchased shares of
HMI common stock between April 26, 1996 and March 17, 1997, the date that
HMI announced that it would have to restate certain of its financial
statements and that it was renegotiating its deal with the Company.
Plaintiffs sought unspecified compensatory damages from the harm that
allegedly resulted from the alleged wrongdoing. Following the filing of
several motions by the parties and the filings of an amended complaint by
the plaintiffs, to which defendants responded, a memorandum of
understanding, dated March 16, 1999, setting forth the terms of a
settlement of this litigation, was executed by the plaintiffs, the
Company, W. James Nicol, Paul S. Jurewicz, James Mieszala, and HMI (the
"HMI Defendants") and National Union Fire Insurance Company of
Pittsburgh, Pennsylvania ("National"). The total settlement to be paid by
the HMI Defendants is $2,375. The Company is directly responsible to pay
$325 of the settlement amount and National (as a separate party to the
settlement) is directly responsible to pay the remaining $2,050. Of the
$325 to be paid by the Company, $50 will be reimbursed by the Company's
directors' and officers' insurance policy carrier. On July 26, 1999, the
plaintiffs and BDO Seidman LLP entered into a preliminary agreement to
settle the claims against BDO Seidman LLP for $100. The Court
subsequently certified the class of plaintiffs to include all persons or
entities who purchased or otherwise acquired the common stock of
F-30
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
12. COMMITMENTS AND CONTINGENCIES (CONTINUED):
HMI between April 26, 1996 and March 17, 1997 inclusive, except the
defendants and related parties. In November 1999, the Court gave final
approval to the settlement.
On July 2, 1998, a former shareholder of HMI purporting to sue on behalf
of a class of shareholders of HMI as of June 6, 1997, commenced a suit in
the Delaware Chancery Court, New Castle County, entitled Kathleen S.
O'Reilly v. Transworld HealthCare, Inc., W. James Nicol, Andre C.
Dimitriadis, Dr. Timothy J. Triche and D. Mark Weinberg, Civil Action No.
16507-NC. Plaintiff alleged that the Company, as majority shareholder of
HMI, and the then directors of HMI, breached fiduciary duties to the
minority shareholders of HMI by approving a merger between HMI and a
subsidiary of the Company for inadequate consideration. Plaintiff demands
an accounting, damages, attorney's fees and other payment for other
expenses for unspecified amounts. The defendants filed a motion to dismiss
this action on September 18, 1998. The Court denied defendants' motion in
part and granted the motion in part, leaving intact certain claims.
Plaintiff has propounded discovery requests. The claims are insured
HMI was named as a defendant in a lawsuit filed on November 25, 1997, in
the Chancery Court for the State of Delaware for New Castle County,
entitled Clifford E. Hotte v. Health Management, Inc., CA No. 1606-NC. The
plaintiff sought reimbursement and advancement of legal fees and expenses
in the amount of $1,000 incurred or anticipated in connection with his
defense of certain claims against him, a director and officer of HMI, in
various litigation. The Court granted plaintiff a preliminary injunction
requiring HMI to pay $824 for plaintiff's legal expenses. As part of the
settlement of a class action litigation in which Clifford Hotte was still
a defendant, but to which the Company was not a party (although it had
been previously), HMI's insurer, National agreed to pay $1,000 to settle
all of the class action plaintiffs' claims against Clifford Hotte and his
wife, who was a co-defendant, in exchange for mutual releases of the
parties and a release from Clifford Hotte of his judgement and any further
claims against HMI, including the $824 legal expenses.
By letter dated December 20, 1999, the Company received formal written
notification of the intent of two plaintiffs to file a civil action in the
Court of Common Pleas of Allegheny County, Pennsylvania against Transworld
Healthcare, Inc., Transworld Home Healthcare, Inc., Health Management,
Inc. and HMI Pennsylvania, Inc. The two plaintiffs, Irwin Hirsch and Lloyd
Myers, formerly were employees of HMI Pennsylvania, Inc. a subsidiary of
the Company, and had written employment agreements. Myers also served as
an officer of HMI. In their capacities as employees and as officers, both
had some contractual indemnification rights against HMI and HMI
Pennsylvania, Inc. for defense and indemnification. In 1994, Hirsch and
Myers also sold two retail pharmacies they owned to HMI.
Hirsch and Myers were named as defendants in an action filed in the United
States District Court for the Eastern District of New York entitled In re
Health Management, Inc. Securities Litigation, Master File No. 96 Civ.
0889 (ADS), which was a class action by shareholders of HMI alleging,
among other claims against the defendants, fraud in connection with the
valuation of certain securities. Hirsch and Myers incurred non-reimbursed
legal expenses of $100 in defending that litigation and, ultimately,
F-31
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
12. COMMITMENTS AND CONTINGENCIES (CONTINUED):
settled their liability jointly for $1,325, which was non-reimbursed. They
demand that defendants reimburse to them their non-reimbursed legal fees
and the settlement amount pursuant to the indemnification provisions of
their employee contracts.
In addition to their indemnification claims, Hirsch and Myers also claim
damages in the amount of $7,000 for losses in connection with the
pharmacies sale transaction they entered into with HMI under which they
sold their retail pharmacies to HMI. Hirsch and Myers claim that the
pharmacies sale transaction was based upon fraudulent misrepresentations by
HMI.
The Company and HMI entities will vigorously defend against these claims.
The Company believes that Hirsch and Myers' indemnification claims should
not have any real merit because of testimony given by Hirsch and Myers
under oath in connection with a criminal trial against Clifford Hotte, a
director and former officer of HMI. In their testimony, Hirsch and Myers
acknowledged malfeasance and nonfeasance, which should render their
contractual entitlement to indemnification void. Even if they are entitled
to indemnification despite their acknowledgements, they are liable to
defendants for the economic losses and damages suffered by defendants as a
result of the malfeasance and nonfeasance. Therefore if the civil actions
are filed, the Company and HMI entities will aggressively pursue
counterclaims against Hirsch and Myers for damages which, conservatively,
are far in excess of their claims, including the claims associated with the
pharmacies sale transaction.
The enforcement division of the Securities and Exchange Commission (the
"Commission") has issued a formal order of investigation relating to
matters arising out of HMI's public announcement on February 27, 1996 that
HMI would have to restate its financial statements for prior periods as a
result of certain accounting irregularities. HMI is fully cooperating with
this investigation and has responded to the requests of the Commission for
documentary evidence.
The outcomes of certain of the foregoing lawsuits and the investigation
with respect to HMI are uncertain and the ultimate outcomes could have a
material adverse affect on the Company.
The Company is involved in various other legal proceedings and claims
incidental to its normal business activities. The Company is vigorously
defending its position in all such proceedings. Management believes these
matters should not have a material adverse impact on the consolidated
financial position, cash flows or results of operations.
13. OPERATIONS BY BUSINESS SEGMENTS AND GEOGRAPHIC AREAS:
During the years ended September 30, 1999 and 1998 and the eleven months
ended September 30, 1997, the Company operated in the following reportable
business segments: (i) U.K. operations; (ii) U.S. specialty mail-order
pharmaceuticals and medical supplies operations ("Mail-Order"); and (iii)
U.S. hi-tech operations ("Hi-Tech"). The U.K. operations derives its
revenues from nursing and para-professional services, mail-order of ostomy,
continence and wound care products and oxygen concentrators and cylinders
throughout the U.K. The Mail-Order operations derives its revenues from
F-32
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
13. OPERATIONS BY BUSINESS SEGMENTS AND GEOGRAPHIC AREAS (CONTINUED):
mail-order of diabetic test strips and glucose monitors, respiratory,
diabetic, maintenance and other commonly prescribed medications, as well
as ostomy and orthotic products. The Mail-Order operations provides
products to patients in their home nationwide and Puerto Rico. The
Hi-Tech operations derives its revenues from infusion and respiratory
therapy services and home medical equipment operations concentrated in
New Jersey and New York.
During the year ended September 30, 1998 and the eleven months ended
September 30, 1997, the Company also operated a U.S. nursing operation,
TNI ("Nursing") which provided professional nursing and para-professional
services in New Jersey and Florida. This operation was sold in July 1998.
During the eleven months ended September 30, 1997, the Company also
operated a U.S. radiation therapy operation, Radamerica ("Radiation")
which provided radiation therapy services in the Baltimore, Maryland
metropolitan area. This operation was sold in July 1997.
The Company uses differences in geographic areas, as well as in products
and services to identify the reportable segments. The Company evaluates
performance and allocates resources based on profit and loss from
operations before corporate expenses, interest and income taxes. The
accounting policies of the business segments are the same as those
described in the summary of significant accounting policies. Inter segment
sales are not material. The following tables presents certain financial
information by reportable business segments and geographic areas of
operations for the years ended September 30, 1999 and 1998 and the eleven
months ended September 30, 1997.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1999
---------------------------------------------------------
U.K. U.S. U.S. U.S.
OPERATIONS MAIL-ORDER HI-TECH TOTAL TOTAL
---------- ---------- ------- ----- -----
<S> <C> <C> <C> <C> <C>
Revenues to unaffiliated $ 104,550 $ 37,030 $ 13,148 $ 50,178 $ 154,728
========= ======== ======== ======== =========
Segment operating (loss) profit $ 9,809 $ (5,268) $ (1,232) $ (6,500) $ 3,309
========= ======== ======== ========
Corporate expenses (5,937)
Interest expense, net (5,218)
---------
Loss before income taxes $ (7,846)
=========
Depreciation and amortization $ 4,149 $ 815 $ 758 $ 1,573 $ 5,722
========= ======== ======== ========
Corporate depreciation and
amortization 49
---------
Total depreciation and
amortization $ 5,771
=========
Identifiable assets,
September 30, 1999 $ 118,845 $ 25,812 $ 10,972 $ 36,784 $ 155,629
========= ======== ======== ========
Corporate assets 16,492
---------
Total assets, September 30, 1999 $ 172,121
=========
Capital expenditures $ 1,889 $ 150 $ 596 $ 746 $ 2,635
========= ======== ======== ========
Corporate capital expenditures 7
---------
Total capital expenditures $ 2,642
=========
</TABLE>
F-33
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
13. OPERATIONS BY BUSINESS SEGMENTS AND GEOGRAPHIC AREAS (CONTINUED):
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1998
---------------------------------------------------------------------------
U.K. U.S. U.S. U.S. U.S.
OPERATIONS MAIL-ORDER HI-TECH NURSING TOTAL TOTAL
---------- ---------- ------- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Revenues to unaffiliated customers $ 85,679 $ 47,155 $ 14,814 $ 7,661 $ 69,630 $155,309
--------- --------- -------- -------- --------- --------
Segment operating profit $ 6,986 $ 2,777 $ 422 $ 3,038 $ 6,237 $ 13,223
========= ========= ======== ======== =========
Corporate expenses (4,575)
Interest expense, net (5,651)
--------
Income before income taxes $ 2,997
========
Depreciation and amortization $ 3,579 $ 772 $ 691 $ 42 $ 1,505 $ 5,084
========= ========= ======== ======== =========
Corporate depreciation and
amortization 44
--------
Total depreciation and
amortization $ 5,128
========
Identifiable assets,
September 30, 1998 $ 115,441 $ 35,916 $ 10,463 $ 291 $ 46,670 $162,111
========= ========= ======== ======== =========
Corporate assets 17,597
--------
Total assets, September 30, 1998 $179,708
========
Capital expenditures $ 2,061 $ 650 $ 588 $ 22 $ 1,260 $ 3,321
========= ========= ======== ======== =========
Corporate capital expenditures 25
--------
Total capital expenditures $ 3,346
========
</TABLE>
<TABLE>
<CAPTION>
ELEVEN MONTHS ENDED SEPTEMBER 30, 1997
---------------------------------------------------------------------------------------
U.K. U.S. U.S. U.S. U.S. U.S.
OPERATIONS MAIL-ORDER HI-TECH NURSING RADIATION TOTAL TOTAL
---------- ---------- ------- ------- --------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues to unaffiliated customers $ 19,847 $ 42,348 $ 15,549 $ 10,065 $ 5,635 $ 73,597 $ 93,444
========= ========= ======== ======== ========= ======== ==========
Segment operating (loss) profit $ 1,775 $ (13,971) $ (754) $ 1,007 $ 1,223 $ (12,495) $ (10,720)
========= ========= ======== ======== ========= =========
Equity in loss of HMI (18,076)
Corporate expenses (6,605)
Interest income 2,651
Interest expense (5,063)
----------
Loss before income taxes $ (37,813)
==========
Depreciation and amortization $ 802 $ 949 $ 653 $ 53 $ 704 $ 2,359 $ 3,161
========= ========= ======== ======== ========= =========
Corporate depreciation and
amortization 29
----------
Total depreciation and amortization $ 3,190
==========
Identifiable assets,
September 30, 1997 $ 108,324 $ 35,748 $ 13,535 $ 2,376 $ $ 51,659 $ 159,983
========= ========= ======== ======== ========= =========
Corporate assets 41,298
----------
Total assets, September 30, 1997 $ 201,281
==========
Capital expenditures $ 1,118 $ 512 $ 670 $ 15 $ 323 $ 1,520 $ 2,638
========= ========= ======== ======== ========= =========
Corporate capital expenditures 56
----------
Total capital expenditures $ 2,694
==========
</TABLE>
F-34
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
14. PROFIT SHARING PLAN:
The Company has a profit sharing plan pursuant to Section 401(k) of the
Internal Revenue Code, concerning all U.S. employees who meet certain
requirements. These requirements include, among other things, at least one
year of service and attainment of the age of 21.
The plan operates as a salary reduction plan whereby participants
contribute anywhere from 1% to 15% of their compensation, not to exceed
the maximum available under the Code.
The Company may make an additional matching contribution at its discretion
which had been and will be in the form of its common stock through
December 31, 1998 and will be in cash thereafter. The Company's
contributions to the plan were approximately $28, $28 and $27 for the
years ended September 30, 1999 and 1998 and the eleven months ended
September 30, 1997, respectively.
In addition to the U.S. plan described above, the Company also sponsors
personal pension plans at selected U.K. subsidiaries. The plans operate as
salary reduction plans, which also allows for lump sum contributions,
whereby participants contribute anywhere from 1% to 40% of their
compensation, not to exceed the maximum available under the U.K. tax laws.
The Company may make an additional contribution (which varies according to
employee contracts and contribution elections) which is in the form of
cash. The Company's contributions to the U.K. plans were $91 and $71 for
the years ended September 30, 1999 and 1998, respectively and $13 for the
eleven months ended September 30, 1997.
15. SUBSEQUENT EVENT (Unaudited):
On December 20, 1999 the Company's U.K. subsidiaries obtained an aggregate
of $124,500 in new financing (the "Refinancing") as follows:
<TABLE>
<CAPTION>
TOTAL OUTSTANDING
FACILITY FACILITY JAN. 3, 2000 INTEREST RATE MATURITY
- -------- -------- ------------ ------------- --------
<S> <C> <C> <C> <C>
SENIOR CREDIT FACILITIES:
Term loan $44,800 $44,800 LIBOR + 2% Dec. 17, 2005
Acquisition loan 20,000 1,500 LIBOR + 2.75% Dec. 17, 2006
Working capital facility 8,000 4,400 LIBOR + 2% Dec. 17, 2005
-------- ----------
Total senior credit facilities 72,800 50,700
MEZZANINE TERM LOAN 16,000 16,000 LIBOR + 7% Dec. 17, 2007
SENIOR SUBORDINATED NOTES
WITH WARRANTS (THE "NOTES") 35,700 35,700 9.375% Dec. 17, 2008
======== ==========
TOTAL REFINANCING $124,500 $102,400
======== ==========
</TABLE>
F-35
<PAGE>
TRANSWORLD HEALTHCARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
15. SUBSEQUENT EVENT (Unaudited) (CONTINUED):
The mezzanine lenders and the purchasers of the Notes were also issued
warrants to purchase approximately 2% and 27%, respectively, of the fully
diluted shares of TW UK. $55,755 of the net proceeds of the Refinancing
were used to repay the Company's existing Credit Facility, $11,000 was
provided to the Company for general corporate purposes in the U.S., with
the balance to be used for acquisitions and working capital in the U.K.
Repayment of the loans under the senior credit facility commences on July
30, 2000 and continues until final maturity. The acquisition loan may be
drawn upon through December 17, 2002. As of January 3, 2000, borrowings
under the senior credit facilities bore interest at a rates of 7.72% to
8.47%. Subject to certain exceptions, the senior credit facilities
contains restrictions, prohibitions and affirmative and negative financial
covenants customarily found in agreements of this kind.
The loans under the senior credit facilities are collateralized by, among
other things, a lien on substantially all of TW UK's assets, a pledge of
TW UK's ownership interest in its subsidiaries and guaranties by TW UK's
subsidiaries.
With respect to the mezzanine term loan interest, LIBOR + 3.5% will be
payable in cash, with the remaining interest being added to the principal
amount of the loan. The mezzanine term loan contains terms and conditions
substantially similar to those contained in the senior credit facility. As
of January 3, 2000, borrowings under the mezzanine term loan bore interest
at a rate of 12.72%.
Interest payments on the Notes are subject to restrictions contained in
the senior credit facilities which require interest on the Notes to be
paid in-kind through the issuance of additional notes for the first 18
months, with payment of interest in cash thereafter subject to meeting
certain financial tests. The documents covering the Notes provide for
customary shareholder rights for a transaction of this type, including:
(i) pre-emptive rights with respect to new securities; (ii) rights of
first refusal with respect to proposed transfers of shares of TW UK; (iii)
drag-along rights; (iv) tag-along rights; (v) put and call provisions; and
(vi) certain corporate actions which require the consent of the holder of
the Notes.
Concurrent with the Refinancing, the Company placed 100% of its ownership
interest in TW UK into a voting trust (the "Voting Trust"). The trustee of
the Voting Trust is generally obligated to vote the shares held in trust
pursuant to the instructions of the Board of Directors of TW UK, as well
as to elect to the board of directors of TW UK, individuals designated in
accordance with the documents governing the Notes. G. Richard Green, a
director of the Company, is the trustee of the Voting Trust.
In connection with the repayment of the Company's existing Credit
Facility, the Company will record a non-cash, pre-tax, extraordinary
charge of approximately $1,200 in its first quarter of fiscal 2000,
relating to the write-off of the deferred financing costs associated with
the Credit Facility.
F-36
<PAGE>
TRANSWORLD HEALTHCARE, INC.
QUARTERLY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
The following table presents the comparative quarterly results for the
years ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
1999 QUARTER ENDED DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, TOTAL
----------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Total revenues $ 40,054 $ 38,951 $ 37,534 $ 38,189 $ 154,728
========== ========== =========== ========== ===========
Gross profit $ 14,946 $ 13,731 $ 13,351 $ 13,290 $ 55,318
========== ========== =========== ========== ===========
Net income (loss) $ 4 $ (954) $ (4,467) $ (1,929) $ (7,346)
========== ========== =========== ========== ===========
Basic and diluted
income (loss) per share
of common stock (1) $ -- $ (0.05) $ (0.25) $ (0.11) $ (0.42)
========== ========== =========== ========== ===========
<CAPTION>
1998 QUARTER ENDED DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, TOTAL
----------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Total revenues $ 37,805 $ 37,323 $ 39,861 $ 40,320 $ 155,309
========== ========== =========== ========== ===========
Gross profit $ 14,279 $ 13,225 $ 15,078 $ 15,535 $ 58,117
========== ========== =========== ========== ===========
Net income (loss) $ 347 $ (595) $ 271 $ 1,130 $ 1,153
========== ========== =========== ========== ===========
Basic and diluted
income (loss) per share
of common stock (1) $ 0.02 $ (0.03) $ 0.02 $ 0.06 $ 0.07
========== ========== =========== ========== ===========
</TABLE>
(1) The sum of the per share amounts for the quarters does not necessarily
equal that of the year because computations are made independently.
F-37
<PAGE>
TRANSWORLD HEALTHCARE, INC.
(IN THOUSANDS)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions Charged to
---------------------
Balance at Balance at
Beginning of Cost and Other End of
Description Period Expenses Accounts Deductions Period
- ----------- ------ -------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended September 30, 1999 $15,367 $12,272 $ (5)(B) $ 7,764(A) $ 19,870
Year ended September 30, 1998 11,909 8,318 23(B) 4,883(A) 15,367
Eleven months ended September 30, 1997 5,471 13,071 155(B) 6,788(A) 11,909
</TABLE>
(A) Doubtful accounts written off, net of recoveries and sold.
(B) Assumed in acquisitions and adjustments arising from translation of
foreign financial statements to U.S. dollars.
S-1
<PAGE>
EXECUTION COPY
================================================================================
VOTING TRUST AGREEMENT
BY AND AMONG
TRANSWORLD HOLDINGS (UK) LIMITED
TRANSWORLD HEALTHCARE (UK) LIMITED
TRANSWORLD HEALTHCARE, INC.
TRIUMPH PARTNERS III, L.P.
AND
THE TRUSTEE
December 17, 1999
<PAGE>
VOTING TRUST AGREEMENT
VOTING TRUST AGREEMENT (this "Agreement") made the 17th day of December
1999, by and among Transworld Holdings (UK) Limited, a company incorporated in
England and Wales with registered number 3370146, ("UK Parent"), Transworld
Healthcare (UK) Limited, a company incorporated in England and Wales with
registered number 3370146 ("TW UK"), Transworld Healthcare, Inc., a New York
corporation ("US Parent"), Triumph Partners III, L.P., a Delaware limited
partnership ("Triumph"), and Richard Green (hereinafter sometimes referred to,
together with his successor in trust, as the "Trustee"). UK Parent and US Parent
are hereinafter referred to collectively as the "Initial Shareholders."
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed thereto in the Securities Purchase Agreement (the "Purchase
Agreement"), dated as of the date hereof, among UK Parent, TW UK, the Purchasers
and US Parent (solely for the purposes of certain Sections of the Purchase
Agreement).
W I T N E S S E T H
WHEREAS, as of the date hereof, TW UK, the Initial Shareholders, Triumph
and the other Purchasers have entered into the Purchase Agreement, which, as a
condition precedent to the investment by the Purchasers in the securities of UK
Parent and TW UK, requires the Initial Shareholders and the other parties to
this Agreement to enter into this Agreement for the benefit of the Purchasers as
beneficial holders of up to 22,600,000 warrants (the "Warrants") to acquire in
the aggregate up to 22,600,000 ordinary shares of 5p each of TW UK (the "Warrant
Shares");
WHEREAS, the Purchasers have on the date hereof agreed to subscribe for
the Warrants and Triumph, as the majority Investor, has been issued one special
share of 5p of TW UK (the "Special Share") for the purpose of exercising the
voting rights that would be exercisable by the Warrant Shares if all of the
Warrants were exercised prior to the vote being taken in the manner set forth in
the Memorandum and Articles of Association of TW UK (as in effect from time to
time, the "TW UK Charter");
WHEREAS, as of the date hereof, US Parent is the holder of 100 ordinary
shares of (pounds sterling)1 each of UK Parent, representing all of the issued
shares of UK Parent as of such date, and UK Parent is the holder of 48,000,000
ordinary shares of 5p each of TW UK respectively of all of the issued shares of
TW UK as of such date (collectively the "Issued Shares");
WHEREAS, it is the intention of the parties that for so long as the
Warrants are exercisable but have not been exercised, the Special Shareholder
(as defined in the TW UK Charter) is to be afforded the right to vote on an as
exercised basis on matters submitted to a vote of the holders of ordinary shares
of TW UK for all purposes on the basis of one vote per Warrant Share;
2
<PAGE>
WHEREAS, the Purchasers have required as a condition of their investment
in UK Parent and TW UK that the voting rights attributable to the Special Share
and the Warrant Shares be coupled with and supplemented by the mechanisms
provided in this Agreement for exercising the voting rights attributable to the
Issued Shares, so as to give effect to the commercial understanding between the
Purchasers, on the one hand, and the Initial Shareholders, on the other hand,
with respect to the exercise of control over the business and policies of TW UK
and UK Parent and other matters of corporate governance as between majority and
minority shareholders;
WHEREAS, it has been agreed between the Purchasers and TW US that
Triumph on behalf of the Purchasers will be entitled to select one member of
each of the Boards of Directors of UK Parent and TW UK and the Initial
Shareholders will be entitled to select one member of each of the Boards of
Directors of UK Parent and TW UK, with the total number of members of each such
Board of Directors being fixed at five and the remaining members of such Boards
of Directors to be selected as provided in this Agreement, provided that the
size of such Boards of Directors is subject to increase upon the occurrence of a
Covenant Breach and Triumph on behalf of the Purchasers will be entitled to
select the additional director or directors as provided herein;
WHEREAS, pursuant to the Purchase Agreement, Triumph has been appointed
as the representative of the Purchasers for the purposes of exercising the
rights of the Purchasers under the Transaction Documents, including this
Agreement, and as such representative, Triumph is a party hereto;
WHEREAS, this Agreement, together with the Purchase Agreement and
various provisions of the Charter Documents of UK Parent and TW UK are designed
to protect the Purchasers from the risk of, among other things, UK Parent or TW
UK (i) entering into any transaction with or contributions to US Parent in the
form of dividends, fees, re-charges, loans, guarantees or any other benefit, in
any form, unless they have been previously agreed upon by the Purchasers and
(ii) being exposed to any liabilities of US Parent or claims of creditors of US
Parent of a security interest or other right to any assets of UK Parent or TW
UK;
WHEREAS, in consideration of the foregoing, the Initial Shareholders
desire to grant the voting power with respect to the Issued Shares legally and
beneficially owned by them as of this date, as well as any other ordinary shares
of UK Parent or TW UK hereafter legally and beneficially hereafter acquired or
held by them, to the Trustee in all matters on the terms and conditions set
forth herein; and
WHEREAS, the Trustee has consented to act under this Agreement for the
purposes hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good, valuable and sufficient consideration, the receipt
of which is hereby acknowledged, the parties hereto promise, covenant, undertake
and agree as follows:
1. Transfer of Shares to the Trustee. Immediately upon executing this
Agreement, each of the Initial Shareholders shall deposit with the Trustee one
or more certificates
3
<PAGE>
representing the number of Issued Shares listed opposite its name on Schedule 1
hereto, and shall also deposit with the Trustee immediately upon receipt
certificates representing any other shares of any class or series of TW UK and
UK Parent having voting powers which they acquire, legally or beneficially,
during the term of this Agreement, including any such shares acquired through
the exercise of any rights, warrants, options, conversion rights, as dividends,
on a consolidation, reorganization, by way of bonus issue or otherwise (the
Issued Shares and such other shares collectively the "Shares"). All such share
certificates shall be accompanied by such instruments of transfer duly executed
and stamped by or on behalf of the Initial Shareholders depositing such
certificates and such other documents as may be required so as to enable the
Trustee to cause such shares to be transferred into the name of the Trustee.
Subject to stamping, each of UK Parent and TW UK (as appropriate) shall
immediately register the transfer of the Shares in the register of members. All
certificates for the Shares transferred and delivered to the Trustee pursuant
hereto shall be canceled and new certificates therefor shall promptly be issued
to and held by the Trustee in its own name in its capacity as Trustee hereunder
and shall bear a legend indicating that the Shares represented by such
certificate are subject to this Agreement. Upon receipt by the Trustee of the
certificates for any such Shares and the transfer of such Shares into the name
of the Trustee, the Trustee shall hold such Shares, and any dividends and other
distributions in respect thereof on trust for US Parent and UK Parent,
respectively, absolutely, subject to the terms of this Agreement and shall issue
and deliver to each Initial Shareholder voting trust certificates representing
its interest in such Shares deposited pursuant to this Agreement ("Voting Trust
Certificates"). Each Voting Trust Certificate to be issued and delivered by the
Trustee in respect of the Shares shall state the number of Shares which it
represents, shall identify the company in which such Shares represent an
interest in shall be signed by the Trustee and shall be in substantially the
same form as Exhibit A attached hereto and bear the restrictive legends set
forth thereon. The Trustee shall at all times keep, or cause to be kept,
complete and accurate records of all Shares or other securities deposited with
it hereunder, the identity, addresses and ownership of the depositing Initial
Shareholders, and all certificates of beneficial interest issued by the Trustee.
Such records shall be open to inspection by any depositing Initial Shareholder
or holder of Voting Trust Certificates at all reasonable times. If any Initial
Shareholder shall fail to transfer, or procure the transfer of, any Shares held
or acquired by it or any of its Affiliates in accordance with the provisions of
this Section 1 within 2 days of first becoming bound so to do, such Initial
Shareholder (for itself and (as the case may be) as trustee on behalf of its
Affiliates) shall be deemed to have irrevocably appointed hereunder the Trustee
as its true and lawful attorney for and in its name and on its behalf to do all
such things and execute as a deed or under hand (as the case may be) all such
documents as may be necessary to transfer the entire legal interest in any such
Shares to the Trustee in accordance with, and for the purposes of, this
Agreement. The Trustee shall be obliged and hereby undertakes to take such
action as may be necessary as true and lawful attorney for that shareholder and
for its Affiliates to effect any transfer of shares pursuant to this Section 1
and the power of attorney granted hereunder.
2. Dividends. If any dividend in respect of the Shares deposited with or
acquired by the Trustee hereunder is paid, in whole or in part, in shares of TW
UK or UK Parent having voting powers, the Trustee shall likewise hold on trust
for the registered holders of the Voting Trust Certificates, absolutely, subject
to the terms of this Agreement, the shares and the related
4
<PAGE>
share certificates which are received by TW UK or UK Parent on account of such
dividend, and the holder of each outstanding Voting Trust Certificate
representing shares on which such dividend has been paid shall be entitled to
receive a further Voting Trust Certificate issued under this Agreement for the
number and class of shares received as such dividend with respect to the shares
represented by such outstanding Voting Trust Certificate. Holders entitled to
receive the Voting Trust Certificates issued in respect of the shares received
as such dividends shall be those registered as such on the books of the Trustee
at the close of business on the record date for such dividend.
The Trustee shall at all times direct TW UK and UK Parent, and they are
hereby directed, with respect to the Shares of which the Trustee is the
registered member to pay all cash dividends or other cash distributions whether
of income or capital paid in respect of or in relation to the Shares (other than
any dividends or distributions paid in shares of TW UK or of UK Parent having
voting powers) to the registered holders of the Voting Trust Certificates or
such other person(s) as they may direct. If the Trustee shall receive any such
cash dividends or distributions or other monies, it shall account to UK Parent
or US Parent, as the case may be, for such monies.
3. Transfer of Securities. No Initial Shareholder shall, directly or
indirectly, Transfer any Voting Trust Certificates except in circumstances where
an identical Transfer of Shares would be permitted by the Purchase Agreement,
subject to the condition precedent that the transferee shall have entered into
an enforceable written agreement satisfactory to the Board of Directors of TW UK
agreeing to be bound by all of the provisions of this Agreement to the same
extent as the transferring Initial Shareholder as if such Voting Trust
Certificates were still owned by the Initial Shareholders.
Subject to the preceding paragraph, the provisions of the Charter
Documents of UK Parent and TW UK shall apply to any transfer or purported
transfer of any Voting Trust Certificates as they shall to any transfer or
purported transfer of any Shares represented thereby. Any Transfer in violation
of such restrictions shall cause the transferring holder to lose its rights and
privileges with respect to (but shall continue to be bound by), as applicable,
(i) Articles 7, 8, 9, 10, 11 and 12 of the TW UK Charter, (ii) the corresponding
provisions of the Articles and Memorandum of Association of UK Parent, (iii)
Articles 10, 11, 12, 13 and 14 of the Purchase Agreement and (iv) all rights to
vote or direct the voting of Shares held by the Trustee hereunder pursuant to
Section 6 hereof. The Trustee shall not register such transfer or recognize the
intended transferee as the holder of the Voting Trust Certificate for any
purpose. To the extent permitted by law, Voting Trust Certificates shall not be
subject to attachment, garnishment, judicial order, levy, execution or similar
process, however instituted, for satisfaction of a judgment or otherwise.
Subject to the provisions of the foregoing paragraphs, the Voting Trust
Certificates shall be transferable on the books of the Trustee, at such office
as the Trustee may designate, by the registered owner thereof, either in person
or by attorney duly authorized, upon surrender thereof, according to the rules
established for that purpose by the Trustee, and the Trustee may treat the
registered holder as owner thereof for all purposes whatsoever, but it shall not
be required to deliver new Voting Trust Certificates hereunder without the
surrender of such existing Voting Trust Certificates.
5
<PAGE>
If a Voting Trust Certificate is lost, stolen, mutilated or destroyed,
the Trustee, in its discretion, may issue a duplicate of such certificate upon
receipt of (a) evidence of such fact satisfactory to it; (b) indemnity
satisfactory to it, including, without limitation, an indemnity bond, sufficient
in the judgment of the Trustee, to protect the Trustee, or any agent, from any
loss which any of them may suffer if a Voting Trust Certificate is replaced; (c)
the existing certificate, if mutilated; and (d) its reasonable fees and expenses
in connection with the issuance of a new trust certificate.
4. Withdrawal of Shares from Voting Trust. Any registered holder of
Voting Trust Certificates hereunder may from time to time withdraw Shares
represented thereby from the voting trust arrangements created hereby only upon
the occurrence of any of the following circumstances:
(a) at any time after the fifteenth anniversary of the date
hereof, provided that all Obligations of UK Parent and TW UK arising from (i) an
exercise of Warrants for Warrant Shares, (ii) an exercise of a Purchasers'
Warrant Put or (iii) an exercise of a Purchasers' Warrant Shares Put, shall have
been duly and fully satisfied; or
(b) at any time after a Qualified Public Offering in connection
with and immediately prior to any bona fide sale of the Shares to be so
withdrawn which are represented by a Voting Trust Certificate to any Person who
is not an Affiliate of any of the Initial Shareholders, subject to such sale
being in compliance with all applicable provisions of the Charter Documents;
provided, however, that only the portion of the Shares represented by a Voting
Trust Certificate which are actually sold to such Person shall be so withdrawn.
Any Shares withdrawn from the voting trust arrangements created pursuant
to this Agreement, when so withdrawn in compliance with this Section 4, shall be
free of any restrictions imposed by this Agreement, but shall remain subject to
any and all other restrictions imposed by the Charter Documents of TW UK and UK
Parent, as the case may be, the Transaction Documents or other agreements or by
law. Such withdrawal shall be effected only by a written amendment to this
Agreement in the form of Exhibit B hereto executed by the Trustee. Upon the
surrender by such holder to the Trustee of the Voting Trust Certificate or
Certificates designated in such amendment, the Trustee is authorized to deliver
or cause to be delivered to such holder a certificate or certificates for the
Shares so withdrawn, with any appropriate restrictive legends, accompanied by
such instruments of transfer duly executed by or on behalf of the Trustee and
such other documents of title as may be required so as to enable such holder to
cause such shares to be transferred into its, his or her own name, and a Voting
Trust Certificate in respect of the remaining shares, if any. Nothing in this
Section 4 or in any such amendment shall modify, amend, limit or terminate any
other restrictions contained in, or be construed as a consent to any transfer of
Shares subject to, this Agreement under the Charter Documents of TW UK and UK
Parent, the other Transaction Documents or any other agreement or instrument,
unless such amendment specifically refers to such other agreement or instrument
and satisfies all requirements for amendment or waiver thereof (including
execution and delivery by appropriate parties).
6
<PAGE>
5. Rights, Powers and Duties of the Trustee; Obligations of Initial
Shareholders.
(a) Until the actual delivery to the holders of Voting Trust
Certificates of share certificates in exchange therefor, and until the surrender
of the Voting Trust Certificates representing such shares for cancellation, in
each case in accordance with the terms of this Agreement, title to all Shares
deposited hereunder shall be vested in the Trustee, and the Trustee shall have
the sole and exclusive right, acting as hereinafter provided, to exercise, in
person or by its nominees or proxies, all voting rights and powers of the
Initial Shareholders in respect of all Shares deposited with or acquired by the
Trustee hereunder, including the right to take part in or consent to any
shareholders action of any kind whatsoever, whether ordinary or extraordinary,
subject to the provisions hereinafter set forth; provided that the Trustee shall
only exercise such rights with respect to the Shares deposited or acquired
hereunder in accordance with the provisions of Section 6 hereof. Any exercise or
purported exercise by the Trustee of any rights or powers attaching to the
Shares shall be void ab initio unless the same is strictly in accordance with
Section 6 hereof.
The Trustee shall act only in accordance with the terms of this
Agreement and the Charter Documents of TW UK and UK Parent. A certificate signed
by the Trustee shall be conclusive evidence to all persons of any action taken
by the Trustee.
(b) The right to vote shall include, without limitation, the
right to vote for the election of directors and in favor of or against any
resolution or proposed action of any character whatsoever, which may be
presented at any meeting or require the consent of shareholders of TW UK or UK
Parent. It is expressly understood and agreed that except as otherwise expressly
provided in Section 6 hereof, the holders of Voting Trust Certificates shall not
have any right, either under said Voting Trust Certificates or under this
Agreement, or under any agreement express or implied, or otherwise, with respect
to any Shares held by the Trustee hereunder, to vote such Shares or to take part
in or consent to any corporate action, or to do or perform any other act or
thing which the holders of TW UK's or UK Parent's shares are now or may
hereafter become entitled to do or perform by virtue of their being
shareholders.
(c) The Trustee shall not incur any responsibility in its
capacity as trustee, or individually or otherwise, in voting the Shares held
hereunder or in any matter or act committed or omitted to be done under or in
connection with this Agreement, or for any vote or act committed or omitted to
be done by any predecessor or successor Trustee, except for such Trustee's
willful misconduct or fraud.
(d) The Trustee shall maintain, or cause to be maintained,
complete and accurate records of all the Shares deposited with it hereunder, the
identity, addresses and ownership of the depositing shareholders, and all Voting
Trust Certificates issued by the Trustee. Such records shall be open to
inspection by any depositing shareholder or other party to or beneficiary under
this Agreement on reasonable notice during business hours.
(e) The Trustee shall forward to the registered holders of the
Voting Trust Certificates all notices, resolutions and other documents delivered
by TW UK and UK Parent,
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respectively, to the Trustee as the registered holder of the Shares. The
Trustee, at the request of US Parent, shall forward to UK Parent or TW UK, as
reasonably directed by US Parent, any requests for information provided to the
Trustee by US Parent and, subject to the requirements of Applicable Law, shall
take all such actions as the registered holders of the Trust Certificates may
reasonably require to obtain information on matters relating to the Companies or
the Shares.
(f) Subject to the requirements of Applicable Law, each of the
Initial Shareholders shall instruct the Trustee to vote their Shares (whether at
a general or extraordinary meeting of shareholders or by consent in lieu of a
meeting of shareholders) and where appropriate to give effect to such matters,
shall convene any necessary shareholders meeting for the purpose of passing
(and, unless pursuant to an amending resolution required for the purpose of
authorizing and giving effect to the Purchasers' Share Put against TW UK
pursuant to Article VIII of the Purchase Agreement, not revoking) such
resolutions as may be required by Applicable Law to approve or authorize any
purchase of Securities pursuant to Articles VII and VIII of the Purchase
Agreement, including without limitation, any special resolutions required under
Sections 165 and/or 171 of the Companies Act 1985 in connection with a purchase
by TW UK of its shares (whether out of distributable profits or out of the
proceeds of a new issue of shares).
6. Voting by the Trustee.
(a) The Trustee shall, subject to the provisions of this
Agreement, have the sole and exclusive right and power to, and shall be obliged
and hereby undertakes to, vote all of the Shares held under the voting trust
arrangements created hereby, whether at a general or extraordinary meeting of
shareholders or by consent in lieu of a meeting of shareholders and where
appropriate to give effect to such matters, shall convene all necessary
shareholder meetings, with such voting being strictly in accordance with this
Section 6(a) as follows:
(i) With respect to the election of members of the Board of
Directors of TW UK, the Trustee shall vote the Shares so as to
elect, and to continue in office until their resignation or
removal, the persons designated in the manner set forth in
Section 6(c) below (including without limitation, votes required
to increase the size of the Board of Directors of TW UK and to
elect Additional Investor Directors following the occurrence of
a Covenant Breach, the registered holders of the Voting Trust
Certificates if applicable), unless an "Extraordinary Event" or
"Put Breach" (each as defined below) shall have occurred and be
continuing, in which case clauses (v) or (vi) of this Section
6(a), as the case may be, shall apply. With respect to the
election of members of the Board of Directors of UK Parent, the
Trustee shall vote the Shares so as to elect, and to continue in
office until their resignation or removal, the same directors as
serve on the Board of Directors of TW UK from time to time
(including Additional Investor Directors following the
occurrence of a Covenant Breach);
(ii) With respect to any proposal to amend the Charter Documents
or approve actions contemplated by Article 20 of the TW UK
Charter, the Trustee shall vote the Shares as follows:
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(A) subject to clause (C) below, if the proposed
amendment has been proposed and approved and
recommended by the Board of Directors of UK Parent or
TW UK, as applicable, as evidenced by a Board
Resolution, then strictly in accordance with the
instructions of the registered holders of the Voting
Trust Certificates;
(B) subject to clause (C) below, if the proposed
amendment has not been proposed, approved or
recommended by the Board of Directors of UK Parent or
TW UK, as applicable, then against the approval
thereof;
(C) notwithstanding clauses (A) and (B) above, if an
"Extraordinary Event" or "Put Breach" (each as defined
below) shall have occurred and be continuing, then in
accordance with clauses (v) or (vi) of this Section
6(a), as the case may be; and
(D) notwithstanding clauses (A) and (B) above, if a
Covenant Breach shall have occurred and be continuing,
then to increase the size of the Boards of Directors of
UK Parent and TW UK as provided in Section 6(c) below
to allow for the appointment of Additional Investor
Directors.
The Trustee shall be required to accept as evidence of the
instructions of the US Parent pursuant to clause (A) above a
letter or notice duly signed by an authorized representative of
US Parent, a copy of which the Trustee shall deliver to Triumph.
The Trustee shall be required to accept as evidence of the
instructions of the Board of Directors of TW UK or UK Parent (as
the case may be) a copy (duly certified by the Secretary of TW
UK or UK Parent or other duly authorized person as being a true
copy of the original) of a board resolution of TW UK or UK
Parent (as the case may be). The Trustee shall not be allowed or
bound to call for further evidence nor to verify the accuracy of
the contents of such letter, notice or certified copy nor be
responsible for any losses, liabilities, costs, damages,
actions, demand or expenses or for any breach of any of the
provisions of this Agreement that may be occasioned by
accepting, acting or relying on such letter, notice or certified
copy;
(iii) With respect to any proposal relating to the creation,
allotment or issue of any additional Capital Shares or other
securities of TW UK, or the grant of any right to require the
allotment or issue of such Capital Shares or securities (an
"Equity Issuance"), including in connection with a Flotation (as
defined in the TW UK Charter), but excluding any allotment or
issuance of options to be granted to employees of TW UK or its
subsidiaries as provided in Section 9.2(c) of the Purchase
Agreement at an exercise price that is equal to or greater than
the Warrant Exercise Price (as defined in the Warrant
Instrument) of the Warrants as in effect at the time, up to the
maximum number of options set forth therein, and the issue of
shares upon the exercise of such options, the Trustee shall vote
the Shares as follows:
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(A) subject to clause (C) below, if the proposed Equity
Issuance is at a subscription price below the Warrant
Exercise Price (as defined in the Warrant Instrument)
of the Warrants as in effect at the time immediately
prior to such Equity Issuance and no "Extraordinary
Event" or "Put Breach" has occurred and is continuing,
then strictly in accordance with the instructions of
the registered holders of the Voting Trust
Certificates;
(B) subject to clause (C) below, if the proposed Equity
Issuance is at a subscription price equal to or in
excess of the Warrant Exercise Price (as defined in the
Warrant Instrument) of the Warrants as in effect at the
time immediately prior to such Equity Issuance and no
"Extraordinary Event" or "Put Breach" has occurred and
is continuing, then strictly in accordance with the
instructions of the Board of Directors of TW UK; and
(C) notwithstanding clauses (A) and (B) above, if an
"Extraordinary Event" or "Put Breach" shall have
occurred and be continuing, then in accordance with
clauses (v) or (vi) of this Section 6(a), as the case
may be.
The Trustee shall be required to accept as evidence of the
instructions of the registered holders of the Voting Trust
Certificates US Parent pursuant to clause (A) above a letter or
notice duly signed by an authorized representative of the
registered holders of the Voting Trust Certificates, a copy of
which the Trustee shall deliver to Triumph. The Trustee shall be
required to accept as evidence of the instructions of the Board
of Directors of TW UK a copy (duly certified by the secretary of
TW UK or other authorized person as being a true copy of the
original) of a Board Resolution. The Trustee shall not be
allowed or bound to call for further evidence nor to verify the
accuracy of the contents of such letter, notice or certified
copy nor be responsible for any losses, liabilities, costs,
damages, actions, demand or expenses or for any breach of any of
the provisions of this Agreement that may be occasioned by
accepting, acting or relying on such letter, notice or certified
copy;
(iv) With respect to all other matters, the Trustee shall vote
the Shares strictly in accordance with the instructions of the
Board of Directors of TW UK, unless an Extraordinary Event or
Put Breach shall have occurred and be continuing, in which case
clauses (v) or (vi), as the case may be, shall apply. The
Trustee shall be required to accept as evidence of the
instructions of the Board of Directors of TW UK a copy (duly
certified by the secretary of TW UK or other authorized person
as being a true copy of the original) of a Board Resolution. The
Trustee shall not be allowed or bound to call for further
evidence nor to verify the accuracy of the contents of such
certified copy nor be responsible for any losses, liabilities,
costs, damages, actions, demand or expenses or for any breach of
any of the provisions of this Agreement that may be occasioned
by accepting, acting or relying on such certified copy;
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(v) If an Extraordinary Event shall have occurred and be
continuing, with respect to all matters, including, without
limitation, the matters described in clauses (i), (ii) and (iii)
of this Section 6(a), the Trustee shall vote the Shares strictly
in accordance with the instructions of a majority of those
members of the Board of Directors of TW UK who, at the time of
the Extraordinary Event, are neither employees of US Parent, UK
Parent, TW UK or any of their Subsidiaries, nor Affiliates of US
Parent or Hyperion Capital (the "Designated Directors"). The
occurrence of an Extraordinary Event shall be determined by a
majority of the Designated Directors. The Trustee shall be
required to accept as evidence of the determination and
instructions of the Designated Directors a copy (duly certified
by the secretary of TW UK, any Designated Director or other
authorized person as being a true copy of the original) of a
resolution of the Designated Directors duly signed, or
purporting to be signed, by a majority of the Designated
Directors, a copy of which the Trustee shall deliver to US
Parent promptly. The Trustee shall not be allowed or bound to
call for further evidence nor to verify the accuracy of the
contents of such certified copy nor be responsible for any
losses, liabilities, costs, damages, actions, demand or expenses
or for any breach of any of the provisions of this Agreement
that may be occasioned by accepting, acting or relying on such
certified copy.
If the registered holders of the Voting Trust
Certificates dispute the determination of a majority of the
Designated Directors that an Extraordinary Event has occurred,
it shall have the right to take such action as it may determine,
including seeking injunctive relief, instituting an action for
damages or an appropriate judicial declaration. Pending
resolution of any dispute or legal proceeding initiated by the
registered holders of the Voting Trust Certificates, the Trustee
shall be required to act in accordance with the instructions of
the Designated Directors except in the case that an injunction
to the contrary is issued by a court of competent jurisdiction.
The Designated Directors shall respond promptly to any request
by the registered holders of the Voting Trust Certificates for a
statement of the grounds upon which they based their
determination that an Extraordinary Event has occurred and shall
afford the registered holders of the Voting Trust Certificates
an opportunity to address the Designated Directors and
illustrate any objections or other matters relevant to such
determination.
(vi) If a Put Breach shall have occurred and be continuing, with
respect to any matters relating to, or required by the Purchase
Agreement or the Charter Documents of UK Parent or TW UK to be
acted upon in connection with a Liquidity Event, a Qualifying
Liquidity Event, a Qualifying Offer, an Exit Offer, an Asset
Disposition, a Disposition or any of the matters set forth in
Articles 8.1 through 8.4 of the TW UK Charter, or in connection
with the exercise of the "Drag-Along Rights" provided in Article
XII of the Purchase Agreement, the Trustee (A) shall vote, sell
and transfer the Shares strictly in accordance with the
instructions of Triumph without any requirement as to action by
the Board of Directors of UK Parent or TW UK and (B) shall
execute and deliver as the registered holder of the
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Shares such agreements, documents or instruments as may be
reasonably required by Triumph to carry out the same
consistently with the Purchase Agreement and the TW UK Charter.
The Trustee shall be required to accept as evidence of the
occurrence of a Put Breach and of the instructions of Triumph a
letter or notice duly signed by an authorized representative of
Triumph stating that a Put Breach has occurred and setting forth
any other actions to which such instructions shall apply. The
Trustee shall not be allowed or bound to call for further
evidence nor to verify the accuracy of the contents of such
letter or notice nor be responsible for any losses, liabilities,
costs, damages, actions, demand or expenses or for any breach of
any of the provisions of this Agreement that may be occasioned
by accepting, acting or relying on such letter or notice.
If US Parent disputes the determination of Triumph that
a Put Breach has occurred, it shall have the right to take such
action as it may determine, including seeking injunctive relief,
instituting an action for damages or an appropriate judicial
declaration. Pending resolution of any dispute or legal
proceeding initiated by US Parent, the Trustee shall be required
to act in accordance with the instructions of Triumph except in
the case that an injunction to the contrary is issued by a court
of competent jurisdiction. Triumph shall respond promptly to any
request by US Parent for a statement of the grounds upon which
Triumph based its determination that a Put Breach has occurred
and shall afford US Parent an opportunity to address Triumph and
illustrate any obligations or other matters relevant to such
determination.
(vii) If any resolutions are required to be passed by the
shareholders to approve or authorize any purchase of Securities
pursuant to Articles VI, VII or VIII of the Purchase Agreement,
including, without limitation, any special resolutions required
under Sections 164, 165 and/or 171 of the Companies Act 1985
(whether out of distributable profits or out of the proceeds of
any new issuance of shares or otherwise), then, subject to the
requirements of Applicable Laws, the Trustee shall vote the
Shares strictly in accordance with the instructions of Triumph.
The Trustee shall be required to accept as evidence of the
instructions of Triumph a letter or notice duly signed by an
authorized representative of Triumph stating that a resolution
is required and setting forth any other actions to which such
instructions shall apply. The Trustee shall not be allowed or
bound to call for further evidence nor to verify the accuracy of
the contents of such letter or notice nor be responsible for any
losses, liabilities, costs, damages, actions, demand or expenses
or for any breach of any of the provisions of this Agreement
that may be occasioned by accepting, acting or relying on such
letter or notice.
(b) The following terms shall have the following meaning for
purposes of this Section 6:
"Transworld Change of Control" means any of the following: (i) any
person or group of connected persons which does not at the date hereof have
control (as defined in the Credit
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Agreements) of UK Parent, US Parent or any holding company of UK Parent acquires
such control, (ii) a transfer or series of Transfers (including, without
limitation, the distribution, by dividend or otherwise), whether related or
unrelated, by Hyperion Capital of Capital Shares of US Parent such that after
giving effect thereto Hyperion Capital would no longer own beneficially and of
record 50.1% or more of all Voting Securities of US Parent, or (iii) any
transfer by US Parent of any Capital Shares of UK Parent or by UK Parent of any
Capital Shares of TW UK in violation of the Purchase Agreement of the Charter
Documents of UK Parent or TW UK. Notwithstanding the foregoing, no Transworld
Change of Control shall be deemed to have occurred by virtue of (i) the purchase
by one or more underwriters of Capital Shares of TW UK pursuant to a firm
commitment underwriting in connection with a public offering of such Capital
Shares or (ii) following a Qualified Public Offering, the purchase by any Person
of Capital Shares of TW UK in a transaction which allows such Shares to be
withdrawn from the voting trust arrangements created hereby pursuant to Section
4 hereof.
"Extraordinary Event" means any of the following:
(i) The filing by any Person other than Triumph or any
Purchaser, whether at law or in equity, of any suit or complaint
(or, in the case of derivative or other actions, on behalf of
the Initial Shareholders or their successors or assigns by any
representative, trustee, agent, court, or administrative agency,
receiver or administrator preliminary proceedings seeking
permission or authority for the filing of any suit or complaint)
with any court of competent jurisdiction, or the commencement of
any other legal proceeding or administrative process seeking in
any manner whatsoever to (i) have the creation of the voting
trust pursuant to this Agreement or the transfer to such voting
trust of the Shares declared void or invalid or rescinded, (ii)
challenge the validity, enforceability or effectiveness of this
Agreement or the voting trust created hereby, or (iii) direct
the Trustee to vote or refrain from voting or to transfer or
refrain from transferring the Shares held in the voting trust in
any manner inconsistent in any respect with this Section 6,
including injunctive or similar equitable relief seeking to
prevent the taking of any action that requires the approval of
the shareholders of UK Parent or TW UK pending resolution of any
legal challenge involving the voting trust created by this
Agreement, the TW UK Charter or the rights of the Purchasers
under the Purchase Agreement or any agreement or instrument
contemplated thereby;
(ii) A "Transworld Change of Control," unless the event or
occurrence giving rise thereto is (A) approved by the Board of
Directors of TW UK, as evidenced by a Board Resolution and (B)
does not constitute and would not become (with the passage of
time, the giving of notice or otherwise) a default or event of
default under the Credit Agreements; or
(iii) Any insolvency or bankruptcy or similar case or proceeding
involving US Parent, any reorganization, receivership,
liquidation, dissolution or winding up of US Parent, whether
voluntary or involuntary, or any assignment for the benefit of
creditors or any other marshaling of assets and liabilities of
US Parent.
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"Put Breach" means, with respect to any of (i) a Purchasers' Put, (ii) a
Purchasers' Warrant Put or (iii) a Purchasers' Share Put (each a "Put"), the
failure of UK Parent and/or TW UK to fulfill their respective Obligations in all
material respects in the manner and at the time provided in the Purchase
Agreement provided that a failure by UK Parent so to fulfill its obligations
shall not be deemed to be a Put Breach unless TW UK shall also have failed to
fulfill its obligations on the corresponding Put.
(c) Subject to the last paragraph of this Section 6(c), US
Parent, UK Parent and Triumph (in their capacities as shareholders of UK Parent
and TW UK, respectively) hereby undertake to each other that they will use all
reasonable endeavors to procure (subject to the requirements of Applicable Law),
that the Boards of Directors of each of UK Parent and TW UK shall consist of the
following:
(i) The chief executive officer of TW UK (the "Management
Director"), provided that the initial Management Director shall
be Timothy Aitken;
(ii) One person designated by Triumph (the "Investor Director"),
provided, that the initial Investor Director shall be Frederick
S. Moseley IV;
(iii) One person designated by the registered holders of the
Voting Trust Certificates (the "Parent Director"), provided,
that the initial Parent Director shall be L. Ranieri;
(iv) Up to two additional persons who are neither partners,
directors, agents, Affiliates, officers or employees of any of
US Parent, Triumph or their Affiliates, nor officers or
employees of UK Parent or TW UK or any of its Subsidiaries (the
"Independent Directors"), who will be nominated with the
affirmative vote of a majority of the directors then in office
following the nomination procedure set forth below, provided,
that one of the initial Independent Directors shall be H. J.
Mark Tompkins.
If at any time, (i) any of Triumph or the registered holders of the
Voting Trust Certificates shall notify the Trustee and the other parties hereto
of its desire to remove, with or without cause (as defined below), any director
of TW UK or UK Parent previously designated by it pursuant to this Section 6(c),
(ii) the Management Director ceases to be employed as the chief executive
officer of TW UK, or (iii) the directors (other than the director who is
proposed to be removed) then in office unanimously agree to request the removal
of an Independent Director, then the Trustee agrees to vote all of the Shares so
as to remove such director. If at any time, any of the Investor Director or the
Parent Director ceases to serve on the Board of Directors of TW UK or UK Parent
(whether by reason of death, resignation, removal or otherwise), the party who
designated such director shall be entitled to designate a successor director to
fill the vacancy created thereby on the terms and subject to the conditions of
this Section 6(c) and the Trustee shall vote all of the Shares so as to elect
any such director. If at any time an Independent Director ceases to serve on the
Board of Directors of TW UK or UK Parent (whether by reason
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of death, resignation, removal or otherwise), a successor director shall be
designated and elected on the terms and subject to the conditions provided in
this Section 6(c).
US Parent, UK Parent and Triumph (in their capacity as shareholders of
UK Parent and TW UK, respectively) hereby undertake to each other that they will
use all reasonable endeavors to procure (subject to the requirements of
Applicable Law) that the directors nominated by them to the Board of Directors
of UK Parent and TW UK exercise their respective powers under the Articles and
Memorandum of Association of UK Parent and the TW UK Charter to give effect to
the provisions of this Section 6(c).
Whenever a Covenant Breach occurs, Triumph will be entitled to nominate
one additional director to be appointed to the Board of Directors of each of UK
Parent and TW UK (an "Additional Investor Director") and thereafter on each six
month anniversary of the occurrence of such Covenant Breach, so long as such
Covenant Breach continues, Triumph will be entitled to nominate one Additional
Investor Director to be appointed to the Board of Directors of each of UK Parent
and TW UK. Each appointment of an Additional Investor Director shall take place
at an extraordinary meeting of shareholders called for such purpose by the Board
of Directors or requisitioned by the Trustee at the request of Triumph. The
Trustee, US Parent, UK Parent and TW UK hereby undertake to take all such action
and exercise all their powers (including voting powers) to procure the
appointment of all such Additional Directors as may be nominated by Triumph
pursuant to this Section 6(c). If and when the original Covenant Breach and all
other Covenant Breaches that may have arisen while such original Covenant Breach
was continuing have been eliminated or waived in writing by Triumph and are no
longer continuing, the right of Triumph to nominate Additional Investor
Directors shall lapse and all Additional Investor Directors shall resign or, in
the absence of such resignation, be removed, subject to the rights set forth in
this paragraph revesting in the event of each and every Covenant Breach. The
provisions of this Section 6(c) applicable to the Investor Director shall apply
equally to all Additional Investor Directors.
7. Compensation and Reimbursement of the Trustee. The Trustee shall have
the right to incur and pay such reasonable expenses and charges and, provided it
shall have acted reasonably in its selection of any such person, to employ and
pay such agents, attorneys and counsel as it may deem necessary and proper in
the performance of its obligations and exercise of its powers under this
Agreement. Any such expenses or charges incurred by and due to the Trustee shall
be reimbursed by TW UK. Nothing herein contained shall disqualify the Trustee or
any successor Trustee, from serving TW UK, UK Parent or any of their respective
Subsidiaries in any other capacity, holding any class of securities in TW UK or
UK Parent, becoming a creditor of TW UK or UK Parent or otherwise dealing with
it in good faith, or taking any other action in connection with any matter in
which such Trustee has any direct or indirect interest. Notwithstanding the
foregoing, the Trustee shall be entitled to be fully indemnified by TW UK
against all costs, charges, expenses, loss, liability and damage properly
incurred by the Trustee in the administration of this trust or in the proper
exercise of any power conferred upon the Trustee by this Agreement. Nothing
contained in this Agreement shall, in any case where the Trustee or, as the case
may be, any attorney, agent, delegate or other person appointed by the Trustee
under this Agreement, has been guilty of fraud or wilful default in the
performance of any of its duties
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hereunder exempt the Trustee or, as the case may be, such attorney, agent,
delegate or other person appointed by the Trustee under this Agreement from, or
indemnify it, him or her against any liability for breach of contract or any
liability which by virtue of any rule of law would otherwise attach to it, him
or her in respect of any such fraud or default of which it, he or she may be
guilty in relation to its, his or her duties under this Agreement.
8. Additional and Successor Trustee. The power of appointing new and
additional trustees shall be vested in the Board of Directors of TW UK, subject
to the consent of US Parent and Triumph, which consent shall not be unreasonably
withheld or delayed to the appointment of any professional trust company. The
Trustee may retire at any time upon giving at least 30 days' written notice to
each of the registered holders of the Voting Trust Certificates and the Board of
Directors of TW UK without giving any reason provided that the retirement of the
Trustee (if it is the sole trustee) will not be effective until another trustee
is appointed as successor trustee. The Trustee shall be required, upon receipt
of written notice from the Board of Directors of TW UK, to retire with immediate
effect or within the time specified in such notice. If a sole Trustee gives or
is given notice of retirement, the Board of Directors of TW UK will use all
reasonable endeavors to procure that another trustee is appointed as Trustee.
The rights, powers and privileges of the successor Trustee named hereunder shall
be possessed by the successor Trustee with the same effect as though such
successor had originally been a party to this Agreement.
The Trustee shall affix its signatures to this Agreement and each
successor Trustee appointed pursuant to this Section 8 shall accept appointment
or election hereunder by affixing its signature to this Agreement at the time it
becomes a Trustee hereunder. By affixing its signature to this Agreement, the
Trustee and each successor Trustee agree to be bound by the terms hereof.
9. Sale and Transfer of Shares. Except as otherwise provided in this
Agreement, the Trustee shall not sell, hypothecate, pledge, assign or otherwise
transfer or deal in any way with the Shares held in the voting trust pursuant to
this Agreement.
10. Rights of Company with Respect to Shares Hereafter Acquired. With
respect to any shares of either TW UK or UK Parent acquired by any of the
Initial Shareholders and their Affiliates subsequent to the date hereof which,
pursuant to the provisions of Section 1, were required to have been properly
transferred into the voting trust (unless such shares shall have been
subsequently withdrawn pursuant to Section 4), the Trustee shall be entitled and
obliged (and hereby undertakes) to exercise the power of attorney granted under
Section 1 hereof to transfer such shares into the voting trust and the Board of
Directors of TW UK or UK Parent, as the case may be, and the Trustee shall have
the right to consider such shares to be properly transferred into the voting
trust and governed by the terms of this Agreement for any and all purposes,
including, without limitation, the right to refuse to enter the Initial
Shareholders or their Affiliates (or any subsequent transfer by them or such
shares, other than into the voting trust) in the register of members of TW UK or
UK Parent, recognize any purported exercise of voting rights by the Initial
Shareholders with respect to such shares or to consider any such shares to be
issued or outstanding for purposes of any shareholder vote or for purposes of
determining a quorum for such vote. This Section 10 shall apply regardless of
the identity of the
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holder of such shares and whether or not the certificates evidencing ownership
of such shares were ever actually surrendered for deposit into the voting trust,
as contemplated hereby.
11. Amendment and Termination. This Agreement may be amended or
terminated only by a deed executed by the Trustee and with the prior consent of
the Board of Directors of TW UK, evidenced by a Board Resolution, US Parent and
Triumph. Notwithstanding the foregoing, the voting trust automatically shall
terminate (a) following the withdrawal, in a single transaction or a series of
transactions, of all of the Shares held in the voting trust in accordance with
the provisions of Section 4 hereof or (b) as soon as both of the following
conditions are satisfied: (i) a Qualified Public Offering has occurred and (ii)
UK Parent ceases to have beneficial ownership of 29.9% or more of the ordinary
share capital of TW UK.
12. Termination Procedure. Upon the termination of the voting trust at
any time, in accordance with Section 11 of this Agreement, the Trustee shall
mail written notice of such termination to the registered owners of the
outstanding Voting Trust Certificates, at the addresses appearing on the
transfer books of the Trustee. From the date specified in any such notice (which
date shall be fixed by the Trustee) the Voting Trust Certificates shall cease to
have any effect, and the holders of such Voting Trust Certificates shall have no
further rights under this voting trust other than to receive certificates for
Shares or other property distributable under the terms hereof upon the surrender
of such Voting Trust Certificates.
Forthwith following the termination of this voting trust, the Trustee
shall deliver to the registered holders of all Voting Trust Certificates
outstanding as of the date of such termination, share certificates for the
number of Shares of such class or classes of TW UK's Shares represented thereby
as to which they shall be entitled upon the surrender for cancellation of such
Voting Trust Certificates, accompanied by properly endorsed and executed
instruments of transfer, as appropriate, at the place designated by the Trustee,
and after payment, if the Trustee so requires, by the persons entitled to
receive such share certificates, of a sum sufficient to cover any stamp tax or
governmental charge in respect of the transfer or delivery of such share
certificates. Such certificates shall bear such legend referring to the
restrictions on transfer of such Shares as may be required by this Agreement, by
law or otherwise. Thereupon, all liability of the Trustee for delivery of such
certificates, instruments of transfer or Shares shall terminate, and the Voting
Trust Certificates representing the beneficial interest in the Shares so
delivered by the Trustee shall be null and void.
If upon such termination, one or more registered holders of outstanding
Voting Trust Certificates shall fail to surrender such Voting Trust
Certificates, or the Trustee for any reason shall be unable to comply with the
provisions of the preceding paragraph, the Trustee may, at any time subsequent
to 30 days after the termination of this Agreement, deposit with TW UK or UK
Parent ordinary share certificates representing the number of Shares represented
by such Voting Trust Certificates, together with duly executed instruments of
transfer and written instructions authorizing TW UK or UK Parent to deliver such
Share certificates in exchange for Voting Trust Certificates representing a like
interest in the Shares of TW UK or UK Parent, as the case may be; and upon such
deposit, all further liability of the Trustee for the delivery of such shares,
Share certificates and instruments of transfer and the delivery or payment of
dividends upon
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surrender of the Voting Trust Certificates shall cease, and the Trustee shall
not be required to take any further action hereunder.
13. Notices, Etc. Except as otherwise provided in this Agreement,
notices and other communications under this Agreement shall be in writing and
shall be delivered by courier, or mailed by a nationally recognized overnight
courier, postage prepaid, addressed, (a) if to TW UK, at its address set forth
on the signature page attached hereto, to the attention of the chief executive
officer, or at such other address, or to the attention of such other officer, as
TW UK shall have furnished to the other parties hereto in writing, or (b) if to
the Trustee, at the address specified on the signature pages attached hereto or
such other address as the Trustee shall have furnished to the other parties
hereto in writing, (c) if to any of the Initial Shareholders, at the address
specified on Schedule 1 attached hereto, or at such other address as the Initial
Shareholder shall have furnished to the other parties hereto in writing, and (d)
if to Triumph, to Triumph Partners III, L.P., 28 State Street, 37th Floor,
Boston, Massachusetts 02109, Attn: Frederick S. Moseley IV - fax: (617)
557-6014, tel: (617) 557-6000, with a copy to: Goodwin, Procter & Hoar LLP,
Exchange Place, Boston, Massachusetts 02109, Attn: Ettore Santucci, P.C. - fax:
(617) 570-8150, tel: (617) 570-1000, or at such other address as Triumph shall
have furnished to the other parties hereto in writing. This Agreement and any
and all other agreements or documents delivered in connection herewith or
therewith embody the entire agreement and understanding between TW UK, the
Trustee and the Initial Shareholders and supersede all prior agreements and
understandings relating to the subject matter hereof.
14. Headings. The descriptive headings of the articles and sections of
this Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
15. Construction. This Agreement and the documents to be entered into
pursuant to it, except as expressly referred to herein, shall be governed by,
and constructed in accordance with, the laws of England and the parties
irrevocably agree that the courts of England are to have exclusive jurisdiction
to settle any disputes which may arise out of or in connection with this
Agreement and such documents. This Agreement shall take effect as a deed, and is
binding upon and inures to the benefit of the parties hereto and their
successors and assigns. If any provision in this Agreement or of any Voting
Trust Certificate shall be held to be illegal, invalid or unenforceable, in
whole or in part, under any enactment or rule of law, such provision or part
shall to that extent be deemed not to form part of this Agreement or of any
Voting Trust Certificate but the legality, validity and enforceability of the
remainder hereof or thereof shall not be affected. If there is a conflict
between the provisions of (i) this Agreement and the Charter of TW UK or (ii)
this Agreement and the Purchase Agreement during the continuance of this
Agreement, the Charter of TW UK or the Purchase Agreement (as the case may be),
it is the intention of the parties (other than the Trustee) in their capacity as
beneficial shareholders of TW UK and UK Parent (as the case may be) that the
provisions of this Agreement shall prevail over the Charter of TW UK and the
Purchase Agreement during such period and accordingly the parties (other than
the Trustee) shall exercise or direct the Trustee to exercise all voting and
other rights and powers available to them so as to give effect to the provisions
of this Agreement and shall further if necessary procure any required amendment
to the Charter Documents.
18
<PAGE>
16. Damages Not Adequate Remedy. Each of the parties to this Agreement
hereby acknowledges and agrees with each other that damages would not be an
adequate remedy for the breach of any provision of this Agreement and,
accordingly, each shall be entitled (to the extent entitled to institute
proceedings in relation to the breach) to the remedies of injunction, specific
performance and other equitable remedy for any such threatened or actual breach.
17. No Assignment. Accept as expressly otherwise provided herein, none
of the parties may assign any of its rights or obligations under this Agreement,
in whole or in part, without the approval of each of the others.
18. No Waiver. No waiver by a party of a failure or failures of any of
the other parties to perform any provision of this Agreement shall operate or be
construed as a waiver in respect of any other or further failure whether of a
like or different character.
19. No Partnership or Agency. Nothing in this Agreement (or any of the
arrangements contemplated hereby) shall be deemed to constitute a partnership
between any of the parties to this Agreement, nor constitute any party as agent
of any other party for any purpose.
20. Rights of Enforcement
20.1 Nothing in this Voting Trust shall entitle any Purchaser other than
Triumph to exercise any right under this Voting Trust directly against any party
or otherwise. Triumph has been irrevocably and unconditionally authorized by the
Purchasers to exercise in their name and on their behalf, or to refrain from
exercising, all rights and discretions which they may have under, and agree to
such amendments or variations as it may deem appropriate of, this Agreement in
its absolute discretion. The terms of this Agreement shall apply accordingly.
20.2 The operation of The Contracts (Rights of Third Parties) Act of
1999 is hereby excluded in relation to this Agreement and no Person other than
parties to this Agreement shall have the right to enforce any rights or benefits
that may expressly or impliedly be granted to such party under the terms of this
Agreement.
20.3 The holders of the Voting Trust Certificates representing a
majority of the Shares in UK Parent then held by the Trustee shall be entitled
to, and shall be deemed to have been irrevocably and unconditionally authorized
by all holders of Voting Trust Certificates to, exercise in their name and on
their behalf, or to refrain from exercising, all rights and discretions which
they may have under, and agree to such amendments or variations as it may deem
appropriate of, this Agreement in its absolute discretion. The terms of this
Agreement shall apply accordingly.
21. Term. Subject to Section 4 hereof, the term of this Agreement shall
be the period of 20 years from the date hereof.
22. Appointment of Process Agents. US Parent irrevocably appoints UK
Parent as its agent for the service of process in England in relation to any
matter arising out of this Agreement, service upon whom shall be deemed
completed whether or not forwarded to or
19
<PAGE>
received by US Parent. US Parent shall inform the other parties hereto, in
writing, of any change in the address of its process agent within 28 days. If
such process agent ceases to have an address in England, US Parent irrevocably
agrees to appoint a new process agent with an address in England and to deliver
to the other parties hereto within 14 days a copy of written acceptance of
appointment by its new process agent. Nothing contained in this Agreement shall
affect the right to serve process in any other manner permitted by law or the
right to bring proceedings in any other jurisdiction for the purposes of the
enforcement or execution of any judgment or other settlement in any other
courts.
23. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute but one and the same instruments.
[END OF TEXT]
20
<PAGE>
VOTING TRUST AGREEMENT
COMPANY SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as a deed
as of the date first above written.
Signed as a DEED by
TRANSWORLD HEALTHCARE UK LIMITED
Acting by its duly authorized
attorney:
By: /s/ Wayne A. Palladino
---------------------------------
<PAGE>
VOTING TRUST AGREEMENT
UK PARENT SIGNATURE PAGE
Signed as a DEED by
TRANSWORLD HOLDINGS UK LIMITED
Acting by its duly authorized
attorney:
By: /s/ Wayne A. Palladino
---------------------------------
<PAGE>
VOTING TRUST AGREEMENT
TRUSTEE' SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as a deed
as of the date first above written.
RICHARD GREEN
Address:
----------------------------
----------------------------
Telephone:
--------------------------
In the presence of:
Name:
Address:
Occupation:
<PAGE>
VOTING TRUST AGREEMENT
TRIUMPH SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as a deed
as of the date first above written.
Signed as a deed for and on behalf of
TRIUMPH PARTNERS III, L.P.
By: Triumph III Advisors, L.P.,
its general partner
By: Triumph III Advisors, Inc.,
its general partner
By: /s/ Frederick S. Moseley IV
----------------------------------
Name: Frederick S. Moseley IV
Title: President
By: /s/ John H. Turner
----------------------------------
Name: John H. Turner
Title: Principal
<PAGE>
VOTING TRUST AGREEMENT
US PARENT SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Signed as a DEED by
TRANSWORLD HEALTHCARE, INC.
Acting by its duly authorized
attorney:
By: /s/ Wayne A. Palladino
---------------------------------
<PAGE>
- ------------------------------------------------------------------------------
-------------------------------------
SECURITIES PURCHASE AGREEMENT
-------------------------------------
up to (pounds sterling)22.6 Million Aggregate Principal Amount of Senior
Subordinated Notes
Due December 15, 2008
of
TRANSWORLD HOLDINGS (UK) LIMITED
up to 22,600,000 Warrants to Purchase Ordinary Shares,
and
up to (pounds sterling)22.6 Million Aggregate Principal Amount of
Senior Subordinated Notes
Due December 15, 2008
of
TRANSWORLD HEALTHCARE (UK) LIMITED
Dated December 17, 1999
- -----------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS..................................................................................2
1.1 Definitions........................................................................................2
1.2 Accounting Terms..................................................................................21
ARTICLE II
SUBSCRIPTION FOR AND ISSUANCE OF THE SECURITIES..................................................................21
2.1 Issuance of Subordinated Notes, Mirror Notes, Warrants and Special Share..........................21
2.2 Issuance of and Subscription for Purchasers' Securities...........................................23
2.3 Issuance of and Subscription for Mirror Note......................................................23
2.4 Issuance of and Subscription for Special Share....................................................23
2.5 Closing of Subscription for the Securities and Special Share......................................23
2.6 Option to Subscribe...............................................................................24
2.7 No Set-Off; Taxes.................................................................................25
2.8 Closing Expenses..................................................................................26
2.9 Purchasers' Representative........................................................................26
ARTICLE III
CONDITIONS TO CLOSING OF THE SECURITIES..........................................................................27
3.1 Conditions Precedent to Obligations of Purchasers on the Closing Date.............................27
3.2 Conditions Precedent to Obligations of the Companies Regarding the
Purchasers' Securities on the Closing Date........................................................31
3.3 Conditions Precedent to Obligations of TW UK Regarding the Mirror Notes
on the Closing Date...............................................................................31
ARTICLE IV
WARRANTIES OF TW UK..............................................................................................32
4.1 Organization and Qualification; Authority.........................................................32
4.2 Subsidiaries......................................................................................32
4.3 Licenses..........................................................................................33
4.4 Organizational and Governmental Authorization; Contravention......................................34
4.5 Validity and Binding Effect.......................................................................34
4.6 Capitalization....................................................................................34
4.7 Litigation; Compliance with Laws; Breaches........................................................35
4.8 Outstanding Debt..................................................................................35
4.9 No Material Adverse Change........................................................................35
4.10 Benefit and Pension Plans.........................................................................35
4.11 Brokers' Fees.....................................................................................36
<PAGE>
4.12 Disclosure........................................................................................36
4.13 Environmental Regulation, Etc.....................................................................36
4.14 Properties and Assets.............................................................................37
4.15 Insurance.........................................................................................37
4.16 Employment Practices..............................................................................37
4.17 Financial Statements..............................................................................39
4.18 Intellectual Property.............................................................................39
4.19 Taxes.............................................................................................40
4.20 Transactions with Affiliates......................................................................41
4.21 Solvency..........................................................................................41
4.22 Limitations.......................................................................................41
ARTICLE V
WARRANTIES OF THE PURCHASERS.....................................................................................43
5.1 Authority.........................................................................................43
5.2 Organization and Qualification....................................................................43
ARTICLE VI
REDEMPTION OF NOTES..............................................................................................44
6.1 Optional Redemption of Subordinated Notes by UK Parent............................................44
6.2 Mandatory Redemption of Mirror Notes..............................................................44
6.3 Optional Redemption of PIK Notes by UK Parent.....................................................45
6.4 Mandatory Redemption of PIK Notes.................................................................45
6.5 Mandatory Redemption of Mirror PIK Notes..........................................................45
6.6 Redemption Procedures for Subordinated Notes and PIK Notes........................................45
6.7 Deposit of Subordinated Note and PIK Note Redemption Price........................................46
6.8 Redemption Securities Payable on Redemption Date..................................................46
6.9 Payment of Mirror Note and Mirror PIK Note Redemption Price.......................................46
ARTICLE VII
PUT OF NOTES.....................................................................................................47
7.1 Put of Subordinated Notes and PIK Notes Pursuant to Purchasers' Election..........................47
7.2 Put Offer Procedures..............................................................................47
7.3 Mandatory Redemption of Mirror Notes and Mirror PIK Notes........................................48
7.4 Obligations of UK Parent and TW UK Upon Purchasers' Put...........................................48
7.5 Redemption Prohibited.............................................................................48
7.6 Failure of UK Parent and TW UK to Honor Purchasers' Put...........................................49
7.7 TW UK Guaranty....................................................................................50
ARTICLE VIII
PUT OF WARRANTS AND WARRANT SHARES...............................................................................51
8.1 Put of Warrants...................................................................................51
8.2 Warrant Put Offer Procedures......................................................................52
<PAGE>
8.3 Put of Ordinary Shares; Share Put Offer Procedures................................................53
8.4 Mandatory Redemption of Mirror Notes..............................................................54
8.5 Obligations of UK Parent and TW UK Upon Purchasers' Put...........................................55
8.6 Warrant Put or Share Put Prohibited...............................................................55
8.7 Failure of UK Parent and TW UK to Honor Purchasers' Warrant Put or
Share Put.........................................................................................56
8.8 TW UK Guaranty....................................................................................56
8.9 Further Action....................................................................................58
ARTICLE IX
COVENANTS........................................................................................................59
9.1 General Covenants of the Companies................................................................59
9.2 Covenants of the Companies Applicable to the Purchasers' Securities...............................60
ARTICLE X
PROVISION OF INFORMATION.........................................................................................73
10.1 Provision of Information. .......................................................................73
10.2 Communication of Information......................................................................73
ARTICLE XI
CONDUCT OF THE GROUP AND MANAGEMENT..............................................................................74
11.1 Conduct of the Group Companies Following Closing. ...............................................74
11.2 Management of the Companies.......................................................................75
ARTICLE XII
DRAG ALONG RIGHTS................................................................................................75
12.1 Drag Along Rights.................................................................................75
12.2 Notification......................................................................................76
12.3 Appointment of Agent.......................................................................76
ARTICLE XIII
CO-SALE RIGHTS...................................................................................................76
13.1 Co-Sale Rights....................................................................................76
13.2 Sale Notice.......................................................................................77
13.3 Co-Sale Notice....................................................................................78
13.4 Procedures........................................................................................79
13.5 Adjustments.......................................................................................79
13.6 Registration Rights...............................................................................80
13.7 Termination..................................................................................80
<PAGE>
ARTICLE XIV
PRE-EMPTION......................................................................................................80
14.2 Notice............................................................................................81
14.3 Offer.............................................................................................81
14.4 Additional Offer..................................................................................82
ARTICLE XV
TRANSFERS........................................................................................................83
15.1 Limitations. ....................................................................................83
15.2 Transfer Instrument...............................................................................85
15.3 Transfers in Violation of this Agreement..........................................................85
ARTICLE XVI
SUCCESSORS.......................................................................................................86
16.1 Merger or Consolidation...........................................................................86
16.2 Surviving Person Substituted......................................................................88
ARTICLE XVII
BREACHES AND REMEDIES............................................................................................88
17.1 Covenant Breaches.................................................................................88
17.2 Defaults on Insolvency............................................................................90
17.3 Remedies..........................................................................................90
17.4 Rights and Remedies of the Purchaser, its Securities and Assigns..................................91
17.5 Waiver of Breach..................................................................................92
17.6 Other Remedies....................................................................................92
ARTICLE XVIII
AMENDMENTS.......................................................................................................92
18.1 Amendments and Supplements Requiring Consent of Purchasers; Other
Consents.................................................................................................92
18.2 Revocation and Effect of Consents.................................................................93
18.3 Notation on or Exchange of Securities.............................................................94
18.4 Board Approval....................................................................................94
ARTICLE XIX
THE SECURITIES...................................................................................................94
19.1 Restrictive Legends...............................................................................94
ARTICLE XX
INDEMNIFICATION..................................................................................................95
20.1 Indemnification; Expenses, Etc....................................................................95
<PAGE>
ARTICLE XXI
MISCELLANEOUS....................................................................................................96
21.1 Survival of Warranties; Severability..............................................................96
21.2 Notices, Etc......................................................................................97
21.3 Successors and Assigns............................................................................98
21.4 Descriptive Headings..............................................................................98
21.5 Satisfaction Requirement..........................................................................98
21.6 Governing Law and Jurisdiction....................................................................99
21.7 Agent for Service of Process......................................................................99
21.8 Counterparts......................................................................................99
21.9 No Adverse Interpretation of Other Agreements.....................................................99
21.10 Merger............................................................................................99
21.11 Expenses..........................................................................................99
21.12 Conflict.........................................................................................100
21.13 Parties in Interest..............................................................................100
</TABLE>
<PAGE>
EXHIBITS
Exhibit A -- Form of Joinder Agreement
Exhibit B -- Form of Warrant Instrument
Exhibit C -- Form of Subordinated Note
Exhibit D -- Form of PIK Note
Exhibit E -- Form of Mirror Note
Exhibit F -- Form of Mirror PIK Note
Exhibit G -- Form of Voting Trust Agreement
Exhibit H -- Form of Registration Rights Agreement
Exhibit I -- Form of Intercreditor Agreement
Exhibit J -- Form of Purchaser's Rights Letter
Exhibit K -- Form of Transworld Rights Letter
Exhibit L -- Form of Articles of Association of TW UK
Exhibit M -- Form of Articles of Association of UK Parent
Exhibit N -- Form of Expenses Sharing Letter Agreement
<PAGE>
TRANSWORLD HOLDINGS (UK) LIMITED
TRANSWORLD HEALTHCARE (UK) LIMITED
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated December 17,
1999, is entered into by and among Transworld Holdings (UK) Limited, a company
incorporated in England and Wales with registered number 3890177 ("UK Parent"),
Transworld Healthcare (UK) Limited, a company incorporated in England and Wales
with registered number 3370146 and a wholly-owned subsidiary of UK Parent ("TW
UK"), each of the purchasers listed on Schedule 1.2 hereto who executed a
signature page hereto and any other purchaser who becomes a party to this
Agreement by execution of a Joinder Agreement in substantially the form attached
hereto as Exhibit A (each, a "Purchaser," and collectively, the "Purchasers")
and Transworld Healthcare, Inc., a New York corporation and sole shareholder of
UK Parent ("Transworld"), who is a party to this Agreement solely for the
purposes of Articles X, XI, XII, XIII, XIV, XV and XXI and Sections 8.9 and
18.1(c) hereof. For purposes of the definitions, conditions and warranties, and
covenants set forth in this Agreement, UK Parent and TW UK, collectively are
referred to herein as the "Companies." Unless otherwise defined, capitalized
terms used in this Agreement are defined in Article I hereof; references to a
"Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an
Exhibit attached to this Agreement; references to a "section," a "subsection" or
a "clause" are, unless otherwise specified, to a section, a subsection or a
clause of this Agreement.
W I T N E S S E T H
WHEREAS, UK Parent wishes to issue and the Purchasers wish to subscribe
for senior subordinated promissory notes in an aggregate principal amount of up
to (pounds sterling)22.6 million due December 15, 2008, as amended or
supplemented from time to time in accordance with the terms hereof, that are
issued pursuant to this Agreement, and each note delivered in substitution or
exchange for any such note pursuant to and in accordance with the terms hereof
("Subordinated Notes");
WHEREAS, TW UK wishes to issue and the Purchasers wish to subscribe for
warrants (the "Warrants") representing the right to subscribe for up to
22,600,000 Ordinary Shares of TW UK at the exercise price set forth in, and in
accordance with the terms of, and having the rights and being subject to the
obligations in, the warrant instrument (the "Warrant Instrument") set forth as
Exhibit B hereto;
WHEREAS, TW UK wishes to issue and UK Parent wishes to subscribe for
senior subordinated promissory notes in an aggregate principal amount of up to
(pounds sterling)22.6 million due December 15, 2008, as amended or supplemented
from time to time in accordance with the terms hereof, that are issued pursuant
to this Agreement, and each note delivered in
1
<PAGE>
substitution or exchange for any such note pursuant to and in accordance with
the terms hereof ("Mirror Notes"); and
WHEREAS, TW UK wishes to issue and the Purchasers' Representative wishes
to subscribe for a Special Share of TW UK.
NOW, THEREFORE, each of UK Parent and TW UK, in consideration of the
mutual covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
agrees with the Purchasers as follows and vice versa:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions. In addition to any terms defined elsewhere in this
Agreement, unless otherwise specifically provided herein, the following terms
shall have the following meanings for all purposes when used in this Agreement,
and in any note, agreement, certificate, report or other document made or
delivered in connection with this Agreement:
"Acceleration" has the meaning ascribed thereto in Section 17.3 hereof.
"Accountants' Report" means the long form report by
PricewaterhouseCoopers dated December 17, 1999 in relating to the business and
operations of the Group Companies in the form provided to the Purchasers.
"Accrued Earnout" means, as of any date and with respect to any Earnout,
an amount equal to the greater of (a) the product of (1) the Maximum Earnout
with respect to such Earnout and (2)(A) the Actual Measure (as defined below)
minus the Base Measure (as defined below) divided by (B) the Target Measure (as
defined below) minus the Base Measure and (b) zero. "Actual Measure" means, with
respect to any Earnout, the amount of the financial performance measure of the
acquired business or assets on which such Earnout is based as of the end of TW
UK's most recently ended fiscal quarter. "Base Measure" means, with respect to
any Earnout, the amount of the financial performance measure of the acquired
business or assets on which such Earnout is based on the date of the acquisition
in connection with which such Earnout was created. "Target Measure" means, with
respect to any Earnout, the minimum amount of the financial performance measure
of the acquired business or assets that, if attained, would result in the
Maximum Earnout becoming due.
"Acquired Person" means, with respect to any specified Person, any other
Person, or the assets of any other Person, acquired by such specified Person,
whether by acquisition, merger, consolidation, other business combination or
otherwise.
2
<PAGE>
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling (including, but not limited to, each
director and executive officer of such Person), controlled by or under direct or
indirect common control with such specified Person. A Person shall be deemed to
control a company if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such company
whether through the ownership of voting securities, by contract or otherwise.
Notwithstanding the foregoing, in no event shall the initial Purchasers be
considered Affiliates of the Companies for purposes of this Agreement.
"Affiliate Transaction" has the meaning ascribed thereto in Section
9.2(c) hereof.
"Agreement" means this Agreement, as amended, modified or supplemented
from time to time, together with any exhibits and schedules hereto.
"Applicable Laws" means, with respect to any Person, property,
transaction or event, all applicable laws (including, without, limitation,
Environmental Laws), statutes, legislation, regulations, treaties, judgments and
decrees and (whether or not having the force of law) all applicable official
directives, rules, consents, licenses, recognitions, grants, confirmations,
permissions, determinations, certifications, approvals, authorizations,
guidelines, orders and policies of any Governmental Entity having authority over
such Person.
"Approvals" means each and every approval, clearance or consent of, or
filing or registration by or with, any Governmental Entity or any third party
with whom any of the Group Companies have entered into contractual arrangements
or any creditor or shareholder of any of the Group Companies necessary (a) to
authorize or permit the execution, delivery or performance by either of the
Companies of the Transaction Documents, and (b) for the validity or
enforceability of any of such Transaction Documents against either of the
Companies.
"Asset Disposition" means any sale, lease, transfer, conveyance or other
disposition (in one or a series of related transactions), including any such
disposition by means of a merger, consolidation or similar transaction, of
Capital Shares of a Subsidiary (other than directors' qualifying shares),
Property or other assets (each referred to for the purposes of this definition
as a "disposal") by any Group Company, but excluding the following: (a) a
disposition by a Subsidiary of TW UK to TW UK or by TW UK or a Subsidiary of TW
UK to a Wholly- Owned Subsidiary of TW UK, as the case may be, (b) a disposition
of tangible Property or assets in the ordinary course of business, and (c) a
disposition of Property or other assets in the ordinary course of business, in
each case so long as not effected in violation of any applicable provisions of
this Agreement.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, at
the time of determination, the present value (discounted at the average interest
rate borne by the Credit Agreements, compounded annually) of the total
obligations of the lessee for rental payments
3
<PAGE>
during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended).
"Bank Indebtedness" means any and all amounts payable by TW UK under or
in respect of the Credit Facility and any Refinancing Indebtedness of TW UK with
respect thereto, as amended from time to time, including principal, premium (if
any), interest (including interest accruing on or after the filing of any
Insolvency Proceedings relating to TW UK whether or not a claim for post-filing
interest is allowed in such proceedings), fees, charges, expenses, reimbursement
obligations, guarantees and all other amounts payable thereunder or in respect
thereof.
"Banks" means Paribas, as arranger of the Credit Facilities, and
Barclays Bank, as agent.
"Board of Directors" means, with respect to any Person, the Board of
Directors or other governing body of such Person or any committee thereof duly
authorized, with respect to any particular matter, to exercise the power of the
Board of Directors or other governing body of such Person. When used without any
reference to a specific Person, the term "Board of Directors" shall be deemed to
mean the Board of Directors of TW UK.
"Board Resolution" means a resolution of the Board of Directors of TW UK
which has been (i) duly passed at a meeting duly convened and held with the
affirmative vote of not less than a majority of all members of the Board of
Directors then serving as such, whether or not all such directors are present
and voting at the meeting, or (ii) adopted by written consent in lieu of a
meeting of the Board of Directors signed by each of the members of the Board of
Directors then serving as such.
"Breach" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Budget" means the annual operating budget referred to in Section 10.1
hereof.
"Business Day" means any day other than a Legal Holiday.
"Capital Shares" of any Person means any and all shares, interests,
participations, and/or other equivalents of or in (however designated) shares or
equity securities of such Person, including each class of ordinary shares and
preferred shares of such Person, and partnership or limited liability company
interests, whether general or limited, of such Person, and including any
securities convertible into or exercisable or exchangeable for rights to
subscribe for, and any options, warrants or other rights to acquire, any such
shares or equity securities of such Person, including for the avoidance of
doubt, the Warrants. When used without any reference to a specific Person, the
term "Capital Shares" shall be deemed to mean the Capital Shares of TW UK.
4
<PAGE>
"Charter Documents" has the meaning ascribed thereto in Section 4.1
hereof.
"Closing" has the meaning ascribed thereto in Section 2.5 hereof.
"Closing Date" has the meaning ascribed thereto in Section 2.5 hereof.
"Closing Price" means the last sale price or the closing mid-price
(whichever shall be the usual method of reporting for the relevant market)
reported for the publicly traded Ordinary Shares on the NYSE, the NASDAQ
National Market or a Designated Offshore Securities Market, or if the context so
requires, any other established securities market including over-the-counter
markets.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor thereto, and any regulations promulgated thereunder.
"Companies" means collectively, UK Parent and TW UK considered as a
single enterprise, until a successor replaces UK Parent or TW UK and thereafter
includes the successor or successors, as the case may be.
"Consolidated" or "consolidated", when used with reference to any
accounting term, means the amount described by such accounting term, determined
on a consolidated basis in accordance with Applicable Law and in accordance with
accounting principles, standards and practices generally accepted at the
relevant date in the United Kingdom consistently applied, after elimination of
intercompany items
"Covenant Breach" has the meaning ascribed thereto in Section 17.1
hereof.
"Credit Agreements" means the Credit Facility and the Mezzanine
Facility.
"Credit Facility" means the credit agreement dated as of the date of
this Agreement among the Group Companies named therein, the Banks and the other
lenders, if any, parties thereto from time to time, as amended, restated,
supplemented, waived, replaced (whether or not upon termination, and whether
with the original lenders or otherwise), refinanced, restructured, or otherwise
modified from time to time (except to the extent that any such amendment,
restatement, supplement, waiver, replacement, refinancing, restructuring, or
other modification thereto would be prohibited by Section 9.2(h) of this
Agreement unless otherwise agreed by a Majority in Interest of the Purchasers).
"Designated Indebtedness" means: (a) Bank Indebtedness so long as such
Indebtedness was not Incurred in violation of Section 9.2(h) of this Agreement;
(b) Mezzanine Indebtedness so long as such Indebtedness was not Incurred in
violation of Section 9.2(h) of this Agreement;
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or (c) Refinancing Indebtedness with respect thereto, so long as in each case
such Indebtedness was not Incurred in violation of Section 9.2(h) of this
Agreement.
"Designated Offshore Securities Market" means the London Stock Exchange,
the New Market of the Frankfurt Stock Exchange or, if approved in writing by a
Majority in Interest of the Purchasers, any other recognized investment exchange
(as such term is used in the Financial Services Act of 1986).
"Disclosure Letter" means the letter of today's date from TW UK to the
Purchasers.
"Disposition" means, with respect to any Person, any disposal, merger,
consolidation or other business combination involving such Person (whether or
not such Person is the Surviving Person) or the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of such
Person's assets in one transaction or a series of related transactions.
"Disqualified Capital Shares" means, with respect to any Person, any
Capital Shares of such Person that, by their terms, by the terms of any
agreement related thereto or by the terms of any security into which they are
convertible or exchangeable, are, or upon the happening of an event or the
passage of time would be, required to be redeemed or repurchased by such Person
or its Subsidiaries, including at the option of the holder, in whole or in part,
or have, or upon the happening of an event or passage of time would have, a
sinking fund or similar payment due, on or prior to the Stated Maturity of the
Subordinated Notes (but excluding for this purpose, the Warrants and the
Ordinary Shares issued upon exercise of the Warrants.
"Due Diligence Report" means the legal due diligence report prepared by
Ashurst, Morris & Crisp dated December 17, 1999, relating to the business and
operations of the Group Companies in the form provided to the Purchasers.
"Earnout" means, with respect to any acquisition, any arrangement
pursuant to which any of the Group Companies is, or may become, obligated to
make one or more payments to the seller of an Acquired Person or acquired
Property or assets based upon the financial performance of the company, business
or assets being acquired by any of the Group Companies.
"Employee Representative" means any and all appropriate representatives,
trade union, association of trade unions, European Works Council, works council,
staff association, staff council, shop steward committees or other organization
or body of employees.
"Environment" means soil, surface waters, groundwater, land, sediments,
surface or subsurface strata, air or any environmental medium.
"Environmental Consent" means any statutory, municipal, governmental or
other consent (excluding any planning consent), approval, permit, certificate,
qualification,
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specification, authorization, license, order, permission, filing, reporting or
notice requirement, exemption, recording or registration, whether in each case,
national, supra-national, federal, state, municipal, regional or local (and
references to obtaining Consents shall be constructed accordingly and shall
include the giving or making of notices, reports or filings).
"Environmental Law(s)" means and includes any federal, state, local,
municipal or foreign statute, law (including, without limitation, common law),
ordinance, rule, regulation, code, order, writ, judgment, permit, authorization,
approval, consent, concession, grant, franchise, license, agreement, injunction,
decree or other government restriction or judicial or agency interpretation,
policy or guidance, in each case having the force of law, relating to the
Environment, pollution, chemical use, health, occupational health, health
protection, safety or natural resources.
"Event of Default" has the meaning ascribed thereto in Section 17.2
hereof.
"Exercise Price" means the exercise price of the Warrants, as adjusted
from time to time in accordance with the terms of the Warrant Instrument.
"Expense Sharing Letter Agreement" means the letter, dated as of the
date hereof, to be issued by Transworld Healthcare, Inc. to TW UK in the form
set forth in Exhibit N.
"Fair Market Value" or "fair market value" means the per share value of
the Ordinary Shares, determined as follows: (i) if the Ordinary Shares are
listed on any recognized investment exchange (as such term is defined in the
Financial Services Act of 1986) as of the date as of which the Fair Market Value
shall be determined (the "Determination Date"), the Fair Market Value per
Ordinary Share shall be deemed to be the average of the Closing Prices per
Ordinary Share thereon over the 30 calendar-day period ending on the Business
Day immediately preceding the Determination Date (provided that if no Closing
Prices are reported during such period, the Fair Market Value per Ordinary Share
shall be determined pursuant to clause (ii)); (ii) if the Ordinary Shares are
not so listed as of the Determination Date: (A) the Board of Directors of TW UK
(with neither the Purchasers' Director nor any director who is a Purchaser or an
Affiliate of a Purchaser taking any part in, or being given any information
relating to, such determination) and a Majority in Interest of the Purchasers
shall independently determine the Fair Market Value per Ordinary Share in good
faith on the basis of an assumed sale of TW UK as a whole based on the following
assumptions: (1) the Ordinary Shares are fully distributed as a single
homogeneous class; (2) no difference in value per share derives from any
difference in the voting or other rights among the various classes of Ordinary
Shares, if any; (3) there is no discount due to lack of marketability,
illiquidity, minority interest or the lack of control; and (4) all "in the
money" warrants, options, or other rights to subscribe for Capital Shares are
exercised as of the Determination Date, and all "in the money" convertible or
exchangeable securities are converted or exchanged as of the Determination Date
and the full exercise, conversion or exchange price, if any, is received; (B)
each of the Board of Directors of TW UK (with neither the Purchasers' Director
nor any director who is a
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Purchaser or an Affiliate of a Purchaser taking any part in, or being given any
information relating to, such determination) and a Majority in Interest of the
Purchasers shall deliver to the other simultaneously a sealed report stating
their determination of Fair Market Value as of the Determination Date and
setting forth a brief statement as to the nature and scope of the examination or
investigation upon which the determination was made; (C) in the event that the
two reports set forth values which are within 10% of the lower value, the Fair
Market Value shall be the average of the two values; (D) in the event that
either the Board of Directors or the Purchasers are not prepared or refuse to
deliver a report on or before the tenth (10th) day following the Determination
Date, or the two reports set forth values which are outside 10% of the lower
value, the Board of Directors of TW UK (with the representative of the
Purchasers abstaining) and a Majority in Interest of the Purchasers shall
promptly choose an Independent Financial Advisor which shall determine Fair
Market Value and shall deliver to each party not later than ninety (90) days
following the Determination Date a valuation report with respect to such
determination. All costs and expenses of such Independent Financial Advisor
shall be borne by TW UK.
"Finance Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of (or other Indebtedness
arrangements conveying the right to use) real or personal property owned by or
used by such Person which is required to be classified and accounted for as a
finance lease or a liability on the face of a balance sheet of such Person
prepared in accordance with Applicable Law and in accordance with accounting
principles, standards and practices generally accepted at the date of this
Agreement in the United Kingdom consistently applied. The stated maturity of
such obligation shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
"Financial Statements" has the meaning ascribed thereto in Section 4.17
hereof.
"Flotation" means a successful application being made for any part of
the Capital Shares of one of the Companies to be listed on any stock exchange or
the grant of permission to deal in any such Capital Shares on any recognized
exchange.
"Former Employee" means any employee who was employed by any of the
Group Companies at any time within the period of 12 months preceding the date of
this Agreement, but who is not employed by any of the Group Companies as of the
date of this Agreement.
"Governmental Entity" means any governmental or quasi-governmental
authority or regulatory authority including, without limitation, the National
Health Service, any federal, state, provincial, territorial, county, municipal
or other governmental or quasi-governmental agency, board, parliament,
legislature, regulatory authority, local health authority, agency, tribunal,
commission, branch, bureau, commission, court, arbitrator, department or other
law, regulation or rule-making entity or other instrumentality or political unit
or subdivision having
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or purporting to have jurisdiction on behalf of any nation, state, province,
municipality, district or any subdivision thereof.
"Group Assets" means the Consolidated assets of the Group Companies.
"Group Companies" means UK Parent, TW UK and their respective
Subsidiaries.
"Group Revenues" means the Consolidated revenues (turnover) of the Group
Companies.
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person guaranteeing any Indebtedness of any other Person (the "Primary
Obligor") in any manner, whether directly or indirectly, and including, without
limitation, any obligation of such Person, (a) to purchase or pay (or advance or
supply funds, for the purchase or payment of) such Indebtedness or to purchase
(or to advance or supply funds for the purchase of) any security for the payment
of such Indebtedness, (b) to purchase property, securities or services for the
purpose of assuring the holder of such Indebtedness of the payment of such
Indebtedness, or (c) to maintain working capital, equity capital or other
financial statement, condition or liquidity of the Primary Obligor so as to
enable the Primary Obligor to pay such Indebtedness (and "Guaranteed,"
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); provided, however, that the Guarantee by any Person shall not
include endorsements by such Person for collection or deposit, in either case,
in the ordinary course of business.
"Hazardous Materials" means oil, petroleum or petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas, and any other chemicals,
materials, substances, or waste of any description whatsoever designated,
classified or regulated in any way or in any manner whatsoever as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.
"Hedging Obligations" means, with respect to any Person, any interest
rate option agreement, interest rate collar agreement, interest rate swap
agreement, interest rate cap agreement, cross currency rate swap agreement,
currency swap agreement, interest rate protection agreement or other financial
agreement or arrangement designed to protect any of the Group Companies against
fluctuations in interest rates or currency exchange rates and which shall have a
notional amount no greater than the payments due with respect to Indebtedness
being hedged thereby.
"holding company" bears the meaning set out in Section 736 of the
Companies Act 1985.
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"Incur" or "incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, Guarantee, including by way of merger with, or acquisition
of, another Person (and "Incurrence," "Incurred," "Incurrable" and "Incurring"
shall have meanings correlative to the foregoing).
"Indebtedness" means, with respect to any Person on any date of
determination, (a) all liabilities, contingent or otherwise, of such Person (i)
for borrowed money (whether or not the recourse of the lender is to the whole of
the assets of such Person or only to a portion thereof and whether short-term or
long-term, secured or unsecured), (ii) evidenced by bonds, notes, debentures,
drafts accepted or other similar instruments or letters of credit (including (A)
liabilities representing the deferred or contingent purchase price of, or the
balance deferred and unpaid of the purchase price of any Property, except for
trade accounts payable in the ordinary course of business, and (B) Earnouts in
an amount equal to the Accrued Earnout), (iii) for the payment of money relating
to Finance Lease Obligations; (iv) for payment of money relating to all
Attributable Debt with respect to Sale/Leaseback Transactions or (v) under the
terms of any amendment, renewal, extension or refunding of any liability of the
types referred to in the preceding clauses (i), (ii), (iii) or (iv); (b) the
maximum fixed repurchase price of all Disqualified Capital Shares of such Person
or, if there is no such maximum fixed repurchase price, the liquidation
preference of such Disqualified Capital Shares, plus accrued but unpaid
dividends; (c) reimbursement obligations of such Person with respect to letters
of credit or bankers' acceptances issued for the benefit of such Person; (d)
Hedging Obligations, on a net basis, of such Person; (e) all liabilities of
others of the kind described in the preceding clauses (a), (b), (c) and (d) that
such Person has Guaranteed or that is otherwise such Person's legal liability;
and (f) all obligations of others secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person; provided, however,
that if the obligations so secured have not been assumed by such Person or are
not otherwise such Person's legal liability, the amount of Indebtedness of such
Person shall be deemed to be the lesser of: (1) the fair market value of such
asset at such date of determination, as determined in good faith by the Board of
Directors of such Person, which determination shall be evidenced by a Board
Resolution and (2) the amount of such Indebtedness of such other Persons. For
purposes of the preceding sentence, the "maximum fixed repurchase price" of any
Disqualified Capital Shares that does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Shares as
if such Disqualified Capital Shares were purchased on any date on which
Indebtedness shall be required to be determined pursuant to this Agreement, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Capital Shares (or any equity security for or into which it may be
exchanged or converted), such fair market value shall be determined in good
faith by the Board of Directors of such Person.
"Indemnified Party" or "Indemnified Parties" has the meaning ascribed
thereto in Section 20.1(a) hereof.
"Independent Financial Advisor" means a reputable accounting, appraisal
or a nationally recognized investment banking firm that is, in the reasonable
judgment of the Board of
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Directors of TW UK (evidenced by a certified copy of a Board Resolution of TW UK
in this regard), qualified to perform the task for which such firm has been
engaged hereunder and disinterested and independent with respect to TW UK and
its Affiliates.
"Insolvency Event" means, with respect to any Person, the commencement
of proceedings taken with a view to liquidation, bankruptcy, winding-up,
administration, administrative receivership, dissolution or any other insolvency
proceedings of that Person or analogous proceedings under the laws of any other
jurisdiction (other than for purposes of a solvent reorganization).
"Insolvency Proceedings" means, with respect to any Person, any
corporate action or other steps are taken or formal insolvency proceedings are
started (whether by way of voluntary arrangement, scheme of arrangement or
otherwise, save for any solvent reorganization previously approved in writing by
the Purchasers) for the enforcement of a Lien over all or any of such Person's
revenues or assets or for the appointment of a liquidator, receiver,
administrator, administrative receiver, conservator, custodian, trustee or
similar officer of it or of any or all of its revenues or assets (or any event
occurs or proceedings are taken with respect to any such Person which has a
similar or equivalent effect to any of the foregoing).
"Insolvent" shall mean (i) with respect to Transworld, if all the
liabilities of Transworld, as of the Closing Date, exceed the fair market value
of all the assets of Transworld and (ii) with respect to any of the Group
Companies or any other Person unable to pay its debts as they fall due and/or
that the value of the relevant Person's assets is less than its liabilities
(taking into account contingent and prospective liabilities).
"Intellectual Property" has the meaning ascribed thereto in Section 4.18
hereof.
"Intercreditor Agreement" means the Intercreditor Agreement, dated as of
the date hereof, among the Banks and the Purchasers and any other Intercreditor
Agreement as contemplated by Section 3.1 thereof.
"Investment" means any investment by any Person in any other Person,
whether by a purchase of assets, in any transaction or series of related
transactions, individually or in the aggregate, subscription for Capital Shares,
capital contribution, loan, advance (other than reasonable loans and advances to
employees for moving and travel expenses, as salary advances, and other similar
expenses incurred, in each case in the ordinary course of business consistent
with past practice) and any Guarantee of Indebtedness of such other Person.
"Joinder Agreement" means the Joinder Agreement to be executed by the
Persons who become Purchasers as a result of subscribing for Subordinated Notes
and Warrants during the Option Period, in the form set forth as Exhibit A.
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"License" or "Licenses" has the meaning ascribed thereto in Section 4.3
hereof.
"Lien" means any mortgage, pledge, lien, encumbrance, option, charge or
adverse claim affecting title or resulting in an encumbrance against real or
personal property, or right of preemption, right of first refusal, retention of
title or a security interest of any kind, whether or not filed, recorded or
otherwise perfected under applicable law; provided that in no event shall an
operating lease (as opposed to a Finance Lease Obligation) be deemed to
constitute a Lien hereunder.
"Legal Holiday" means a Saturday, Sunday or a day on which banking
institutions in London, England, are not required to be open.
"Liquidity Event" means (i) a sale, assignment, transfer, lease,
conveyance or other disposal of 90% or more of the Capital Shares of either UK
Parent or TW UK to a Person who is not a Purchaser or an Affiliate of a
Purchaser, including by way of scheme of arrangement or other business
combination (whether or not UK Parent or TW UK is the Surviving Person), whether
in one transaction or a series of related transactions, (ii) a sale, assignment,
transfer, lease, conveyance or disposal of Property or assets of the Group
Companies representing in the aggregate 90% or more of the total value of all
Group Assets or generating in the aggregate 90% or more of all Group Revenues,
whether voluntary or involuntary, in one transaction or a series of related
transactions, or (iii) the insolvency, winding-up, liquidation or dissolution of
UK Parent or TW UK, other than by reason of action taken by or on behalf of the
Purchasers' Representative or the Purchasers as a group.
"Losses" has the meaning ascribed thereto in Section 20.1(a) hereof.
"Majority in Interest of the Purchasers" means the holders of greater
than 50% of the sum of (i) all Ordinary Shares issuable upon exercise of all
Warrants that remain outstanding as of the time of determination and (ii)
Ordinary Shares issued as of the time of determination pursuant to the exercise
of the Warrants.
"Material Adverse Effect" means a material adverse effect on the
business, Property, operations or condition (financial or otherwise) of the
Group Companies taken as a whole.
"Maximum Earnout" means, with respect to any Earnout, the maximum amount
that may (without regard to the likelihood of such an occurrence) become payable
under such Earnout.
"Mezzanine Facility" means the credit agreement dated as of the date of
this Agreement among TW UK, the Subsidiaries of TW UK named therein, the lenders
named therein, as amended, restated, supplemented, waived, replaced (whether or
not upon termination, and whether with the original lenders or otherwise),
refinanced, restructured or otherwise modified from time to time (except to the
extent that any such amendment, restatement, supplement,
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waiver, replacement, refinancing, restructuring or other modification thereto
would be prohibited by Section 9.2(h) of this Agreement unless otherwise agreed
by a Majority in Interest of the Purchasers)
"Mezzanine Indebtedness" means any and all amounts payable by TW UK
under or in respect of the Mezzanine Facility, as amended from time to time,
including principal, premium (if any), interest (including interest accruing on
or after the filing of any Insolvency Proceedings relating to TW UK whether or
not a claim for post-filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, guarantees and all other amounts
payable thereunder or in respect thereof.
"Mezzanine Warrants" means the warrants representing the right to
subscribe for Ordinary Shares of TW UK at the exercise price set forth in, and
in accordance with the terms of, the warrant instrument to be issued to the
lenders in connection with the Mezzanine Facility.
"Mirror Notes" has the meaning ascribed thereto in the recitals hereof.
"Mirror PIK Notes" means senior subordinated promissory notes issued by
TW UK to UK Parent in lieu of the interest due on the Mirror Notes in the manner
provided in the Mirror Notes.
"Obligations" with respect to any instrument or agreement means any and
all principal, interest, penalties, premiums, fees, indemnifications,
reimbursements, damages and other charges, obligations and liabilities existing
from time to time under such instrument or agreement, whether direct or
indirect, joint or several, actual, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured, arising by
contract, operation of law or otherwise, including any obligations or
liabilities to repay, redeem, repurchase, retire, acquire or defease any
Indebtedness under such instrument or agreement, or any obligation to establish
a sinking fund for any such purpose.
"Officer" means, with respect to either of the Companies, the chief
executive officer, the president, the chief financial officer, or group managing
director of such Company.
"Officers' Certificate" means a certificate executed on behalf of TW UK
by two Officers of TW UK.
"Ordinary Shares" means (i) the ordinary shares of TW UK, (ii) any other
Capital Shares of any class or classes (however designated) of TW UK, authorized
on or after the date hereof, the holders of which shall have the right, without
limitation as to amount per share, either to all or to a share of the balance of
current dividends and liquidating distributions after the payment of dividends
and distributions on any shares entitled to preference in the payment thereof,
and (iii) any other securities of TW UK into which or for which any of the
securities described in (i)-(ii)
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above may be converted or exchanged pursuant to a plan of recapitalization,
consolidation, reorganization, merger, sale of assets or otherwise.
"Payment Restriction" means, with respect to a Subsidiary of any Person,
any encumbrance, restriction or limitation or operation of the terms of its
memorandum and articles of association, on the ability of (a) such Subsidiary to
(i) pay dividends or make other distributions on its Capital Shares or make
payments on any obligation, liability or Indebtedness owed to such Person or any
other Subsidiary or holding company of such Person, (ii) make loans or advances
to such Person or any other Subsidiary or holding company of such Person, or
(iii) transfer any of its properties or assets to such Person or any other
Subsidiary or holding company of such Person, or (b) such Person or any other
Subsidiary or holding company of such Person to receive or retain any such (i)
dividends, distributions or payments, (ii) loans or advances, or (iii) transfers
of properties or assets.
"Permitted Liens" shall mean (a) Liens for Taxes, assessments, and
similar governmental charges to the extent (1) not delinquent or (2) being
contested in good faith by appropriate proceedings and as to which reserves have
been set aside on the books of the Companies to the extent required by
Applicable Law and in accordance with accounting principles, standards and
practices generally accepted in the United Kingdom consistently applied; (b)
statutory Liens of landlords and carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen, or other similar voluntary or involuntary (whether
statutory or non-statutory) Liens arising in the ordinary course of business;
(c) pledges or deposits in the ordinary course of business to secure lease
obligations or nondelinquent obligations under workers' compensation,
unemployment or other social security benefits; (d) Liens to secure the
performance of public statutory obligations that are not delinquent, appeal
bonds, performance bonds or other obligations of a like nature; (e) zoning
restrictions, easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of the Group Companies as
a whole incurred in the ordinary course of business; (f) Liens in respect of
purchase money Indebtedness or Finance Lease Obligations Incurred to acquire
furniture, fixtures, equipment or other operating assets, provided that such
Indebtedness was not Incurred in violation of this Agreement and the principal
amount of the Indebtedness secured by such Lien does not exceed the acquisition
cost of such assets.
"Permitted Transfer" has the meaning ascribed thereto in Section 15.1
hereof.
"Person" means any individual, corporation, limited or general
partnership, company, business trust, firm, or other association or business
entity created and/or recognized under Applicable Law, or any Governmental
Entity.
"PIK Notes" means senior subordinated promissory notes issued by UK
Parent to the Purchasers in lieu of interest due on the Subordinated Notes in
the manner provided in the Subordinated Notes.
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"Principal" of a debt security means the principal of the security
including the premium, if any, on the security.
"Property" or "property" means any assets or property of any kind or
nature whatsoever, real, personal, or mixed (including fixtures), whether
tangible or intangible.
"Purchase Date" has the meaning ascribed thereto in Section 7.2 hereof.
"Purchasers" has the meaning ascribed thereto in the introduction
hereof.
"Purchasers' Director" means the person who the Majority in Interest of
the Purchaser is entitled to appoint to the Board of Directors of TW UK in
accordance with the Voting Trust Agreement.
"Purchaser's Rights Letter" means the letter, dated as of the date
hereof, to be issued by each of UK Parent and TW UK to the Purchasers'
Representative in the form set forth in Exhibit J.
"Purchasers' Representative" means Triumph Partners III, L.P.
"Purchasers' Securities" has the meaning ascribed thereto in Section 2.2
hereof.
"Purchasers' Special Counsel" means Goodwin, Procter & Hoar LLP, a
partnership including professional corporations, and/or Linklaters, acting as
special counsel to the Purchasers in connection with the transactions
contemplated hereunder, or such other counsel as a Majority in Interest of the
Purchasers shall select and as is reasonably acceptable to TW UK.
"Qualified Average Price" means the Closing Price per Ordinary Share as
reported by the principal securities exchange on which the Ordinary Shares are
listed for trading, so long as such exchange is the NYSE, the NASDAQ National
Market, or a Designated Offshore Securities Market, for 30 consecutive Trading
Days, provided that (i) on each one of such Trading Days the Closing Price is
equal to or higher than the minimum price required to achieve the Qualified
Public Value and (ii) throughout such 30-day period at least 20% of the Ordinary
Shares outstanding are held by Persons who are not Affiliates of Transworld, any
Group Company or any Purchaser and are freely transferable in the public trading
market.
"Qualifying Liquidity Event" means a Liquidity Event if the following
condition is satisfied (with the applicable condition being the greater of (a)
or (b) as at the time of such Liquidity Event): (a) the gross proceeds to be
received on account of the Purchasers' Securities with respect to the Liquidity
Event exceed 2.5 times the Total Investment or (b) the disposal of the
Purchasers' Securities in the Liquidity Event would realize or exceed the Target
IRR.
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"Qualified Public Offering" means TW UK's first flotation or
underwritten offering to the public of the Ordinary Shares pursuant to an
effective application to be listed, application for grant of permission to deal
or registration statement, as the case may be, in accordance with Applicable Law
and/or the rules of any applicable securities or investment exchange, provided
that (i) immediately after such flotation or offering at least 20% of the
Ordinary Shares outstanding are held by Persons who are not Affiliates of
Transworld, any Group Company or any Purchaser and are freely transferable in
the public trading markets (ii) after such flotation or offering the Ordinary
Shares are listed for trading on the NYSE, the NASDAQ National Market or a
Designated Offshore Securities Market, and (iii) the initial public offering
price of the Ordinary Shares offered to the public in such flotation or
offering, gross of any selling or underwriting commissions, is such that the
product of such price times the aggregate number of Ordinary Shares issued
pursuant to or issuable upon exercise of the Warrants is equal to or greater
than 2.5 times the Total Investment.
"Qualified Public Value" means a Qualified Average Price such that the
product of such Qualified Average Price times the aggregate number of Ordinary
Shares issued pursuant to or issuable upon exercise of the Warrants is equal to
or greater than 2.5 times the Total Investment.
"Redemption Date" means, when used with respect to any Security to be
redeemed, the date fixed for such redemption pursuant to this Agreement and such
Security.
"Redemption Security" has the meaning ascribed thereto in Section 6.6
hereof.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness exchange or replacement for, such Indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) any Indebtedness of the Group Companies
existing on the Closing Date or Incurred in compliance with this Agreement
(including Indebtedness of the Group Companies that Refinances Refinancing
Indebtedness); provided, however, that: such Refinancing Indebtedness is
Incurred in an aggregate principal amount (or if issued with original issue
discount, an aggregate issue price) that is equal to or less than the aggregate
principal amount (or if issued with original issue discount, the aggregate
accredited value) then outstanding of the Indebtedness, plus accrued and unpaid,
interest thereon (if any) being Refinanced.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the date hereof, by and between the Purchasers and TW UK.
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"Related Business" means the businesses conducted (or proposed to be
conducted) by TW UK and its Subsidiaries as of the date hereof, as disclosed to
the Purchasers, and any and all businesses that in good faith judgment of the
Board of Directors of TW UK are materially related businesses.
"Release" means any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, contaminating, discharging, injecting, escaping, leaching,
migrating, depositing, exhausting, disposing, or dumping into the Environment in
breach of Environmental Laws.
"Relevant Employees" means those individuals who are employed by or
otherwise work for any of the Group Companies as of the date of this Agreement
under a contract of employment.
"Sale" means any sale, lease, conveyance, exchange, transfer,
assignment, pledge, hypothecation or other disposition of any Property.
"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired by the Group Companies whereby a Group Company
transfers such property to a Person and such Group Company leases it from such
Person, other than leases between the Companies and a Wholly- Owned Subsidiary
or between Wholly-Owned Subsidiaries.
"Securities" mean, collectively, the Subordinated Notes, the PIK Notes,
the Warrants, the Ordinary Shares issuable upon exercise of the Warrants, the
Mirror Notes and the Mirror PIK Notes.
"Special Share" means the special share of TW UK having the rights set
out in the articles of association of TW UK to be issued to the Purchasers'
Representative at the Closing.
"Stated Maturity" means, with respect to any Indebtedness, the date
specified in the instrument governing such Indebtedness as the fixed date on
which the final payment of principal of such Indebtedness is due and payable,
including pursuant to any mandatory redemption provision (but excluding any
provision providing for the repayment of such Indebtedness at the option of the
holder thereof upon the happening of any contingency beyond the control of the
issuer, unless such contingency has occurred).
"Subordinated Note Redemption Price" has the meaning ascribed thereto in
Section 6.1 hereof.
"Subordinated Notes" has the meaning ascribed thereto in the recitals
hereof.
"Subsidiary" of any Person means any other Person with respect to which
either (i) more than 50% of the interests having voting power (a) generally
exercisable at a general meeting of shareholders or (b) to elect a majority of
the directors or individuals having similar functions
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of such other Person (irrespective of whether at the time interests of any other
class or classes of such Person shall or might have voting power upon the
occurrence of any contingency), or (ii) more than 50% of the equity interests of
such other Person, is at the time directly or indirectly owned or controlled by
such Person, by such Person and/or one or more of its other Subsidiaries and/or
any holding company of such Person or of any of its Subsidiaries or by one or
more of such Person's other Subsidiaries. When used herein without reference to
any Person, Subsidiary means a Subsidiary of TW UK.
"Surviving Person" means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or the
Person to which such Disposition is made.
"Target IRR" means a 35% cash-on-cash internal rate on return to the
Purchasers calculated using the following methodology:
(a) determine the date and amount of the following (i) the Total
Investment made by the Purchasers pursuant to this Agreement in
Purchasers' Securities plus (ii) all other monies subsequently
invested, subscribed or paid in cash by the Purchasers or their
successors and assigns in respect of the Purchasers' Securities
("Cash Inflows") plus (iii) all unpaid or unreimbursed amounts
due pursuant to Articles IV and XIX of the Purchase Agreement;
and
(b) determine the date and amount of all cash receipts by the
Purchasers or their successors and assigns with respect to the
Purchasers' Securities, in each case on a gross receipt basis
before any deduction or withholding therefrom on account of taxes
payable by the Purchasers or their successors and assigns, from
the following: (i) cash interest payments on Subordinated Notes
or PIK Notes from time to time outstanding (excluding, for the
avoidance of doubt, interest paid through the issuance of PIK
Notes rather than in cash unless such PIK Notes has been or in
connection with a Liquidity Event are to be repaid); plus (ii)
repayments of principal of Subordinated Notes or PIK Notes,
whether at maturity or by way of redemption or repurchase by TW
UK or UK Parent; plus (iii) cash dividends and other cash
distributions in respect of Ordinary Shares issued upon exercise
of the Warrants; plus (iv) any other dividends or other
distributions that are actually paid in cash from the Group
Companies with respect to any put of the Securities; plus (v)
cash payments on account of repurchases of Warrants or Ordinary
Shares issued upon the exercise of the Warrants by TW UK or UK
Parent; plus (vi) as applicable either: (A) in the case of a
determination of Target IRR in respect of an impending Liquidity
Event, the aggregate cash consideration to be received on account
of the sale or disposition of Subordinated Notes, PIK Notes,
Warrants or Ordinary Shares issuable upon exercise of the
Warrants upon completion of such Liquidity Event (assuming that
all outstanding Warrants have been exercised in full immediately
prior to the date of completion of such Liquidity Event); or (B)
in the
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case of a determination of Target IRR in respect of a Qualified
Public Offering, the initial public offering price of the
Ordinary Shares offered to the public in such flotation or
offering, gross of any selling or underwriting commissions, times
the aggregate number of Ordinary Shares issued pursuant to or
issuable upon exercise of the Warrants; or (C) in the case of a
determination of Target IRR in respect of a calculation of
Qualified Public Value, the product of the Qualified Average
Price times the aggregate number of Ordinary Shares issued
pursuant to or issuable upon exercise of the Warrants ("Cash
Outflows").
Then, the Purchasers shall be deemed to have realized the Target IRR when (x)
the present value of the Cash Outflows, based on the date of each individual
Cash Outflow, equals (y) the present value of the Cash Inflows, based on the
date of each individual Cash Inflow, using a discount rate in determining
present value equal to 35%. The present value of (a) and (b) above shall each be
determined as of December 17, 1999 (the "Calculation Date") and discounting such
Cash Inflows and Cash Outflow, as the case may be, on a monthly convention basis
(compounded monthly).
"Tax" and "Taxes" means all present and future taxes, surtaxes, duties,
levies, imposts, rates, fees, assessments, withholdings and other charges of any
nature (including income, corporate, capital (including large corporations), net
worth, sales, consumption, use, transfer, goods and services, value-added,
stamp, registration, franchise, withholding, payroll, employment, health,
education, excise, business, school, property, occupation, customs, anti-
dumping and countervail taxes, surtaxes, duties, levies, imports, rates, fees,
assessments, withholdings and other charges) imposed by any Governmental Entity,
including without limitation any ad valorem, property, production, excise,
severance, windfall profit and similar taxes and assessments payable with
respect to the Properties and based on or measured by the ownership of property
or the receipt of proceeds therefrom, together with any fines, interest,
penalties or other additions on, to, in lieu, for non-collection of or in
respect of those taxes, surtaxes, duties, levies, imposts, rates, fees,
assessments, withholdings and other charges.
"Tax Legislation" means, collectively, where applicable, the Code and
the statutes, laws, rules, regulations, interpretation bulletins and releases,
orders and decrees of any Governmental Entity which may impose a Tax.
"Tax Returns" means all reports, estimates, information statements,
forms and returns relating to, or required to be filed in connection with, any
Taxes pursuant to or under the provisions of any applicable Tax Legislation and
any tax forms required to be filed, whether in connection with a Tax Return or
not, pursuant to or under any provisions of any applicable Tax Legislation, and
"Tax Return" shall mean any one thereof.
"Threat of Release" means a substantial likelihood of a Release which
requires action to prevent or mitigate damage to the Environment which may
result from such Release in breach of Environmental Laws.
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"Total Investment" shall mean the sum of (pounds sterling)19.0 million
plus the total of any additional amounts paid to UK Parent by those Persons who
execute a Joinder Agreement within ten calendar days of the date hereof, but not
to exceed (pounds sterling)22,600,000 in the aggregate.
"Trading Day" means with respect to the Ordinary Shares listed on NYSE,
NASDAQ National Market or a Designated Offshore Securities Market, days on which
trades may be made on such system and on which a trade occurs.
"Transaction Documents" means, collectively, this Agreement, the
Subordinated Notes, the PIK Notes, the Warrant Instrument, the Warrants, the
Mirror Notes, the Mirror PIK Notes, the Registration Rights Agreement, the
Voting Trust Agreement, the Intercreditor Agreement, the Transworld Rights
Letter, the Purchaser's Rights Letter, the Joinder Agreement, the Expenses
Sharing Letter Agreement, the Charter Documents of UK Parent and TW UK and any
and all agreements, certificates, instruments and other documents contemplated
hereby or thereby or executed and delivered in connection herewith or therewith.
"Transfer" means any sale, gift, transfer (whether voluntary or
otherwise) or other disposition of (including the granting of any security
encumbrance over) any security (including, for the avoidance of doubt, any
Subordinated Notes or Warrants) or any option, right, beneficial interest,
derivative interest or other interest (legal or equitable) therein.
"Transworld Director" means the person who UK Parent is entitled to
appoint to the Board of the Directors of TW UK in accordance with the Voting
Trust Agreement.
"Transworld Rights Letter" means the letter, dated as of the date
hereof, to be issued by each of UK Parent and TW UK to Transworld in the form
set forth as Exhibit K.
"Trustee" shall mean Richard Green under the Voting Trust Agreement.
"Voting Securities" means those securities issued by a corporation,
company or other business entity, that carry a right to vote, (i) either under
all circumstances or under certain circumstances that have occurred and are
continuing, for the election of such corporation's Board of Directors or (ii)
generally at the general meeting of the Company or other Person in question.
References in this Agreement to voting power of securities and other like
expressions shall be construed accordingly.
"Voting Trust Agreement" means the Voting Trust Agreement, dated as of
the date hereof, by and among TW UK, UK Parent, Transworld, the Purchasers'
Representative and the Trustee.
"Voting Trust Certificate" shall have the meaning set forth in the
Voting Trust Agreement.
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"Warrant" has the meaning ascribed thereto in the recitals hereof.
"Warranties" means the warranties set forth in Section 4 hereof.
"Warrant Instrument" has the meaning ascribed in the recitals hereof.
"Wholly-Owned Subsidiary" means, with respect to any Person, a
Subsidiary, 100% of the equity interests in which (however measured) are owned
by such Person or a Wholly-Owned Subsidiary of such Person or such Person and
one or more Wholly-Owned Subsidiaries of such Person taken together.
1.2 Accounting Terms. All accounting terms used and not defined in this
Agreement shall be construed in accordance with Applicable Law and in accordance
with accounting principles, standards and practices generally accepted at the
relevant date in the United Kingdom, consistently applied, and all financial
data required to be delivered hereunder shall be prepared in accordance with
such principles, standards and practices.
1.3 Interest in Shares. References in this Agreement to an interest in
Ordinary Shares shall include any interest within the meaning given to such term
in Section 208 of the Companies Act 1985 (ignoring for these purposes the
provisions of Section 209 thereof).
ARTICLE II
SUBSCRIPTION FOR AND ISSUANCE OF THE SECURITIES
2.1 Issuance of Subordinated Notes, Mirror Notes, Warrants and Special
Share.
(a) UK Parent, by a resolution of its Board of Directors passed
on December 17, 1999, has constituted up to (pounds sterling)22.6 million
aggregate principal amount of Subordinated Notes of UK Parent, to be issued to
the Purchasers, subject to Section 2.6 hereof, pursuant to and in accordance
with the terms of the Subordinated Note and this Agreement. Each Subordinated
Note will be in the form set forth in Exhibit C hereto and subject to the rights
and obligations set forth therein.
(b) UK Parent, by a resolution of its Board of Directors passed
on December 17, 1999, has authorized the issue of such amount of PIK Notes of UK
Parent, to be issued to the Purchasers on each Interest Payment Date pursuant to
and in accordance with the terms of the Subordinated Notes and this Agreement,
as is required for UK Parent to satisfy its maximum liability to make interest
payments on the Subordinated Notes whenever the payment of interest in cash on
the Subordinated Notes is prohibited under the Intercreditor Agreement. Each PIK
Note will be in the form set forth in Exhibit D hereto and subject to the rights
and obligations set forth therein and in this Agreement. Each PIK Note shall be
designated by reference to the specific quarterly interest payment with respect
to which it is issued (for example, PIK Notes
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issued on the first Interest Payment Date in the year 2000 shall be designated
as PIK Notes 2000-1 plus an appropriate certificate number).
(c) TW UK, by a resolution of its Board of Directors passed on
December 17, 1999, has created and authorized the issuance of up to 22,600,000
Warrants of TW UK, each exercisable for the subscription of one (1) Ordinary
Share of TW UK (subject to adjustment in accordance with the terms and
conditions of the Warrant Instrument), to be subscribed for by the Purchasers,
subject to Section 2.6 hereof, pursuant to and in accordance with the terms of
this Agreement and the Warrant Instrument. The Warrants will be in the form of
the Warrant set forth in Appendix 1 to the Warrant Instrument and subject to the
rights and obligations set forth in the Warrant Instrument.
(d) TW UK, by a resolution of its Board of Directors passed on
December 17, 1999, has constituted up to (pounds sterling)22.6 million aggregate
principal amount of Mirror Notes of TW UK, to be issued to UK Parent, subject to
Section 2.6 hereof, pursuant to and in accordance with the terms of this
Agreement and the Mirror Notes. Each Mirror Note will be in the form set forth
in Exhibit E hereto and subject to the rights and obligations set forth therein.
(e) TW UK, by a resolution of its Board of Directors passed on
December 17, 1999, has authorized the issue of such amount of Mirror PIK Notes
of TW UK, to be issued to UK Parent on each Interest Payment Date pursuant to
and in accordance with the terms of the Mirror Notes and this Agreement, as is
required for TW UK to satisfy its maximum liability to make interest payments on
the Mirror Notes, and TW UK agrees that it shall issue Mirror PIK Notes whenever
PIK Notes are issued to satisfy the amount of interest outstanding on the Mirror
Notes at that time. Each Mirror PIK Note will be in the form set forth in
Exhibit F hereto and subject to the rights and obligations set forth therein.
Each Mirror PIK Note shall bear a matching designation as the PIK Notes as
provided in Section 2.1(b) above.
(f) TW UK, by a resolution of its shareholders and a resolution
of its Board of Directors, each passed on December 17, 1999, has created and
authorized the allotment and issuance of one (1) Special Share of TW UK, to the
Purchasers' Representative. The rights attaching to the Special Share are set
forth in the Charter Documents of TW UK.
(g) Transworld, the Companies and the Purchasers hereby agree
that for U.S. income tax purposes, including for purposes of determining
original issue discount and the issue price of the Subordinated Notes under each
(pounds sterling)1,000 of issue price of the Purchasers' Securities issued to
the Purchasers shall be allocated (pounds sterling)990 to each (pounds
sterling)1,000 of principal amount of the Subordinated Notes and (pounds
sterling)10 to each 1,000 Warrants. In addition, (pounds sterling)1.0 of the
investment of the Purchasers' Representative will be allocated to the Special
Share. Each of Transworld, UK Parent, TW UK and the Purchasers hereby further
agree (i) that the allocation of the issue price pursuant to the preceding
sentence shall be binding on Transworld, UK Parent and TW UK for purposes of any
determination of the Subordinated Notes under Section 1271-1275 of the Code and
the regulations issued thereunder and (ii) to treat for all U.S.
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income tax purposes the Subordinated Notes and PIK Notes as debt issued by UK
Parent and the Warrants as options issued by TW UK.
2.2 Issuance of and Subscription for Purchasers' Securities. Upon the
terms and subject to the conditions herein, at the Closing, subject to Section
2.6 hereof, (i) UK Parent will issue to the Purchasers and the Purchasers will
subscribe for from UK Parent, the Subordinated Notes set forth opposite the name
of such Purchaser in Schedule 2.2 or the Joinder Agreement, as the case may be,
credited as fully paid and (ii) TW UK will issue to the Purchasers and the
Purchasers will subscribe for from TW UK, the Warrants (the Subordinated Notes
together with the Warrants are referred to herein as the "Purchasers'
Securities") set forth opposite the name of such Purchaser in Schedule 2.2 or
the Joinder Agreement, as the case may be, credited as fully paid, for a
subscription price equal to (pounds sterling)1 for each (pounds sterling)1 of
principal amount of Subordinated Notes and one Warrant subscribed for, payable
in cash by wire transfer of immediately available funds.
2.3 Issuance of and Subscription for Mirror Note. Upon the terms and
subject to the conditions herein, at the Closing, immediately after the
consummation of the issuance of and subscription for the Purchasers' Securities,
TW UK will issue credited as fully paid to UK Parent and UK Parent will
subscribe for from TW UK, the Mirror Notes at par payable in cash by wire
transfer of immediately available funds.
2.4 Issuance of and Subscription for Special Share. Upon the terms and
subject to the conditions herein, at the Closing, TW UK will allot and issue to
the Purchasers' Representative, and the Purchasers' Representative will
subscribe for, credited as fully paid the Special Share for (pounds sterling)1.
2.5 Closing of Subscription for the Securities and Special Share. The
subscription for and delivery of the Securities and the Special Share to be
subscribed for by the Purchasers, the Purchasers' Representative and UK Parent,
as applicable, shall take place at the offices of Ashurst Morris Crisp, 5 Appold
Street, London, at a closing (the "Closing") on the date hereof or at such other
place or on such other date as the Purchasers' Representative and the Companies
may agree upon (such date on which the Closing shall have actually occurred, the
"Closing Date"). At the Closing, subject to Section 2.6 hereof, (i) UK Parent
and TW UK will deliver or cause to be delivered to the Purchasers certificates
in respect of the Purchasers' Securities to be subscribed for by it against
payment of the subscription price therefor, (ii) TW UK will deliver or cause to
be delivered to UK Parent certificates in respect of the Mirror Notes to be
subscribed for by it against payment of the subscription price therefor and
(iii) TW UK shall deliver or cause to be delivered to the Purchasers'
Representative a certificate in respect of the Special Share to be subscribed
for by it. If at the Closing either of TW UK or UK Parent shall fail to tender
to the Purchasers any or all of the Purchasers' Securities to be subscribed for
by them as provided in this Article II, TW UK shall fail to tender to the
Purchasers' Representative the Special Share, TW UK shall fail to tender to UK
Parent the Mirror Notes or any of the conditions specified in Article III for
the benefit of the Purchasers
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or each of UK Parent and TW UK, as the case may be, shall not have been
satisfied or waived in writing by the Purchasers' Representative or each of UK
Parent and TW UK, as applicable, the Purchasers or each of UK Parent and TW UK,
as the case may be, shall, at their or its election, be relieved of all further
obligations to the other under this Agreement, without thereby waiving any other
rights they or it may have by reason of such failure or such non- fulfillment.
2.6 Option to Subscribe.
(a) Each of the Purchasers whose names are set forth in Schedule
2.2 shall subscribe for the Warrants and the Subordinated Notes in accordance
with the provisions of this Article 2. Any remaining Warrants and Subordinated
Notes shall be open for subscription (the "Option") by an Affiliate of Paribas
or any director or employee of any member of the Group Companies or any other
Person acceptable to the Board of Directors of TW UK (as evidenced by a Board
Resolution), who shall be entitled to subscribe for such Warrants and
Subordinated Notes by delivering to Transworld, the Board of Directors of TW UK
and the Purchasers' Representative (i) a written notice to that effect on or by
Friday, January 7, 2000 (the "Option Period") agreeing to be bound by the
provisions of this Agreement as if their names were set out in Schedule 2.2 as a
Purchaser and (ii) an executed Joinder Agreement setting forth the number of
Warrants and amount of Subordinated Notes subscribed for.
(b) In the event that any Person subscribes for Warrants and
Subordinated Notes as provided in clause (a) above, TW UK shall issue to UK
Parent an aggregate principal amount of Mirror Notes of TW UK equal to the total
amount of Subordinated Notes subscribed for pursuant to such clause (a).
(c) The delivery of the Subordinated Notes and Warrants
subscribed for pursuant to clause (a) above shall take place at the offices of
Ashurst Morris Crisp, 5 Appold Street, London at a closing (the "Option
Closing") on the close of business on the last day of the Option Period. At the
Option Closing, (i) UK Parent and TW UK will deliver or cause to be delivered to
those Persons who elect to subscribe for Subordinated Notes and Warrants
pursuant to the Option certificates in respect of the Subordinated Notes and
Warrants so subscribed for by them against payment of the subscription price
therefor and (ii) TW UK will deliver or cause to be delivered to UK Parent
certificates in respect of the Mirror Notes to be subscribed for by it pursuant
to clause (b) above against payment of the subscription price therefor. Upon
such subscription, such Persons shall be deemed, for all purposes, to be a
Purchaser who had subscribed in full for their Warrants and Subordinated Notes
at the Closing.
(d) At the Option Closing, TW UK shall have delivered to the
Purchasers a capitalization table that sets forth the number of shares of each
of the Group Companies outstanding as of the date of the Option Closing (after
giving effect to the transactions contemplated by the Option), and identifies
the legal and beneficial owner thereof.
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2.7 No Set-Off; Taxes
(a) Any and all payments by the Companies under this Agreement,
the Subordinated Notes, the PIK Notes, the Warrants, the Mirror Notes, and the
Mirror PIK Notes, shall be made in full, without set-off or counterclaim and,
except as may be required by Applicable Laws, free and clear of and without
withholding or deduction for any present or future Taxes (excluding Taxes
imposed on or measured by the net income of the Purchasers by the jurisdictions
under the laws of which it is organized or in which it is residing or any
political subdivision thereof). If the Companies shall be required by Applicable
Law to deduct or withhold any Taxes from or in respect of any sum payable
hereunder or under the Subordinated Notes, the PIK Notes, the Warrants, the
Mirror Notes or the Mirror PIK Notes, to the Purchasers or UK Parent, as the
case may be, (1) to the extent that the same would not have arisen but for a
change in any Applicable Law (including, without limitation, an interpretation
or classification thereof) after the date of this Agreement, the sum payable
shall be increased, as may be necessary, so that after making all required
deductions or withholdings (including deductions or withholdings applicable to
additional sums payable under this Section 2.7 and taking into account all Taxes
on and arising by reason of the payment of additional sums payable under this
Section 2.7), the Purchasers or UK Parent, as the case may be, receives an
amount equal to the sum that it would have received had no such deductions or
withholdings been made, (2) the Companies shall make such deductions or
withholdings, and (3) the Companies shall pay the full amount deducted or
withheld to the relevant taxing or other authority in accordance with Applicable
Law.
(b) In addition, the Companies agree to pay, to the extent that
the same would not have arisen but for a change in any Applicable Law
(including, without limitation, an interpretation or classification thereof)
after the date of this Agreement, any present or future Taxes that arise from
any payment made under this Agreement, the Subordinated Notes, the PIK Notes,
the Warrants, the Mirror Notes or the Mirror PIK Notes, or from the execution,
sale, transfer, delivery or registration of, or otherwise with respect to, this
Agreement, the Subordinated Notes, the Warrants, the Mirror Notes, the other
Transaction Documents and any other agreements and instruments contemplated
hereby or thereby (except for Taxes on the overall net income of the
Purchasers).
(c) The Companies shall indemnify and hold harmless the
Purchasers for the full amount of the Taxes referred to in this Section 2.7 paid
by the Purchasers and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally asserted. This indemnification shall be made within 30 days
after the date the applicable Purchaser makes written demand therefor. Such
demand shall be accompanied by the original or a certified copy of a receipt or
other reasonably satisfactory document evidencing payment therefor.
(d) Within 30 days after the date of any payment of Taxes
referred to in this Section 2.7, the Companies shall furnish to the Purchasers,
at its address referred to in Section
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15.2, the original or a certified copy of a receipt or other reasonably
satisfactory document evidencing payment thereof.
(e) Without prejudice to the survival of any Transaction Document
or of any other agreement of the Companies under this Agreement, the agreements
and obligations of the Companies contained in this Section 2.7 shall survive the
payment and satisfaction in full of the Obligations hereunder or under each of
the Securities.
(f) The Companies undertake to cooperate fully with the
Purchasers and to provide promptly upon request any documentation required in
connection with any claim to any Tax authority by or on behalf of any Purchaser
in respect of any Taxes withheld (whether in kind, in currency or otherwise)
from any amount payable to such Purchaser in accordance with this Section 2.7.
(g) If TW UK shall be required by Applicable Law to deduct or
withhold any Taxes from or in respect of any sum payable to UK Parent under the
Mirror Notes or the Mirror PIK Notes, the sum payable shall be increased, as may
be necessary, so that after making all required deductions or withholdings
(including deductions or withholdings applicable to additional sums payable
under this Section 2.7(g) and taking into account all Taxes on and arising by
reason of the payment of additional sums payable under this Section 2.7(g)), UK
Parent receives an amount equal to the sum that it would have received had no
such deductions or withholdings been made.
2.8 Closing Expenses. The Companies agree to pay, prior to or on the
Closing Date, to the Purchasers an amount equal to all reasonable documented
fees, expenses and disbursements of the Purchasers and the Purchasers' Special
Counsel reflected in statements of the Purchasers and such counsel rendered
prior to or on the Closing Date; provided, however, that such statements
provided prior to or on the Closing Date may be a good faith estimate of such
expenses and the Purchasers and their Special Counsel reserve the right to
balance such statements within thirty (30) days following the Closing Date.
2.9 Purchasers' Representative. Each of the Purchasers hereby
irrevocably designates Triumph Partners III, L.P. as their representative (the
"Purchasers' Representative") and authorize it (i) to take all action necessary
in connection with the transactions contemplated hereby and in any of the other
Transaction Documents and the rights hereunder, or the settlement of any dispute
related thereto and (ii) to give and receive all notices required to be given
under this Agreement. All decisions and actions by the Purchasers'
Representative shall be binding upon all of the Purchasers, and no Purchaser
shall have the right to object, dissent, protest or otherwise contest the same.
The Companies shall be able to rely conclusively on the instructions and
decisions of the Purchasers' Representative as to any actions required or
permitted to be taken by the Purchasers or the Purchasers' Representative
hereunder, and no Purchaser shall have any cause of action against the Companies
for any action taken by the Companies in reliance upon the instructions or
decisions of the Purchasers' Representative.
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No Purchaser shall have any cause of action against the Purchasers'
Representative for any action taken, decision made or instruction given by the
Purchasers' Representative under this Agreement, except for fraud or willful
breach of this Agreement by the Purchasers' Representative.
ARTICLE III
CONDITIONS TO CLOSING OF THE SECURITIES
3.1 Conditions Precedent to Obligations of Purchasers on the Closing
Date. Each of the Purchasers' obligation to subscribe for and pay for the
Purchasers' Securities to be issued to it at the Closing is subject to the
fulfillment to its satisfaction, prior to or at the Closing, of the following
conditions, provided that any or all of the following conditions may be waived,
in whole or in part, in writing by a Majority in Interest of the Purchasers in
its or their sole and absolute discretion:
(a) Warranties. The warranties of TW UK contained in this
Agreement shall be true and correct in all material respects at the time of the
Closing, after giving effect to the issuance of the Purchasers' Securities to
the Purchasers and the other transactions contemplated to be consummated at the
Closing by this Agreement, except that any warranties that relate to a
particular date or period shall be true and correct in all respects only as of
such date or for such period.
(b) Performance; No Breach. Each of UK Parent and TW UK shall
have performed and complied in all material respects with all agreements and
conditions contained in this Agreement and the other Transaction Documents
required to be performed or complied with prior to or at the Closing.
(c) Authorization. The Board of Directors and, to the extent
required by law (including, without limitation, the approval of the shareholders
of TW UK required under Sections 164 and 165 of the Companies Act 1985 to the
Purchasers' Put to TW UK of the Ordinary Shares issuable upon exercise of the
Warrants as provided for in this Agreement) or the terms of each of the
Companies' governing documents, the shareholders of each of the Companies shall
have duly adopted resolutions in form reasonably satisfactory to the Purchasers
authorizing, and shall have taken all action necessary for the purpose of,
consummating the transactions contemplated hereby and in the other Transaction
Documents in accordance with the terms hereof and thereof, respectively.
(d) Compliance Certificate. Each of UK Parent and TW UK shall
have delivered to the Purchasers an Officers' Certificate, dated the Closing
Date, certifying on behalf of each of UK Parent and TW UK that the conditions
specified in Sections 3.1(a), (b) and (c) hereof have been fulfilled together
with any such other certificates, instruments and other documents as the
Purchasers may reasonably require.
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(e) Compliance With Applicable Laws. The issuance of the
Purchasers' Securities under this Agreement and the terms of the Purchasers'
Securities shall have complied with all Applicable Laws, including, without
limitation, compliance with the financial assistance procedures set out in
Chapter VI of the Companies Act 1985 of the guarantees by TW UK of the puts of
the Purchasers' Securities as set forth in Article VII and VIII of this
Agreement and the payment by TW UK of outstanding interest on the Subordinated
Notes upon an exercise of the Warrants in accordance with Section 6.1 hereof and
the Purchasers shall have received evidence, if, requested in writing, of such
compliance in form and substance reasonably satisfactory to the Purchasers.
(f) Proceedings and Documents. All corporate, organizational and
other proceedings taken prior to or at the Closing in connection with the
transactions contemplated by this Agreement, the other Transaction Documents,
and all of the other documents and instruments incident hereto and thereto,
shall be reasonably satisfactory in form and substance to the Purchasers, and
the Purchasers shall have received all such counterpart originals or certified
or other copies of such documents as the Purchasers may reasonably request.
(g) Delivery of Certain Documents. UK Parent and TW UK (as
relevant) shall have executed and delivered to the Purchasers the Subordinated
Notes and the Warrant Certificates against payment thereof at the Closing. TW UK
shall have executed and delivered to UK Parent the Mirror Notes against payment
thereof at the Closing.
(h) Completion of Other Transactions. Simultaneously with or
prior to the issuance to the Purchasers of the Purchasers' Securities to be
subscribed for by the Purchasers at the Closing:
(1) each of UK Parent, TW UK, Transworld and the Trustee
shall have duly entered into and delivered the Voting Trust Agreement
substantially in the form of Exhibit G hereto, UK Parent and Transworld
shall have duly transferred all of their shares in TW UK and UK Parent,
respectively, to the Trustee in accordance with Section 1 of the Voting
Trust Agreement and the Trustee shall have been entered in the register
of members of each of UK Parent and TW UK as the legal owner of the
shares so transferred;
(2) each of TW UK and the Purchasers shall have duly
entered into and delivered the Registration Rights Agreement
substantially in the form of Exhibit H hereto;
(3) each of UK Parent, TW UK, the Purchasers, and the
Banks shall have duly entered into and delivered the Intercreditor
Agreement substantially in the form of Exhibit I hereto;
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(4) TW UK shall have issued and delivered the Special
Share to the Purchasers' Representative against payment thereof and
shall have entered the Purchasers' Representative in the register of
members of TW UK as the legal owner of the Special Share;
(5) each of UK Parent, TW UK and the Purchasers'
Representative shall have duly entered into and delivered the
Purchaser's Rights Letter in the form of Exhibit J attached hereto;
(6) each of the UK Parent, TW UK and the Transworld shall
have duly entered into and delivered the Transworld Rights Letter in the
form of Exhibit K attached hereto; and
(7) each of Transworld and TW UK shall have duly entered
into and delivered the Expenses Sharing Letter Agreement in the form of
Exhibit N attached hereto.
(i) Fairness Opinion. Transworld shall have received, on or
before the Closing Date, an opinion from Houlihan Lokey Howard & Zukin Financial
Advisors, Inc., an Independent Financial Advisor, that the consideration to be
received by the Companies pursuant to the terms of this Agreement and the Credit
Agreements is fair to the shareholders of Transworld from a financial point of
view, which opinion has been addressed to the Purchasers, among others.
(j) Related Matters. As of the Closing, new Articles of
Association of TW UK shall have been adopted in substantially the form of
Exhibit L and the Articles of Association of UK Parent shall have been adopted
in substantially the form of Exhibit M.
(k) Governmental and Third Party Permits, Consents, Etc. The
Companies shall have duly applied for and obtained all Approvals from each
Governmental Entity, or pursuant to any agreement to which the Companies are a
party or to which they or any of their assets is subject, which are required in
connection with this Agreement, the other Transaction Documents or any other
agreements and documents contemplated thereby and in connection therewith and
any other necessary consents; and such Approvals shall remain in effect upon
consummation of the transactions contemplated by this Agreement and the other
Transaction Documents and no law or regulation shall be applicable which, in the
judgment of the Purchasers, restrains, prevents, or imposes adverse conditions
upon, such contemplated transactions.
(l) Secretary's Certificate. The Purchasers shall have received a
certificate, dated the Closing Date, of the Secretary of each of UK Parent and
TW UK, on behalf of UK Parent and TW UK, respectively, (i) certifying as true,
complete and correct its Charter Documents and resolutions relating to the
transactions contemplated hereby attached thereto,
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(ii) as to the absence of proceedings or other action in relation to Insolvency
Proceedings relating to UK Parent or TW UK, as the case may be, (iii) as to the
incumbency and specimen signatures of officers who shall have executed
instruments, agreements and other documents in connection with the transactions
contemplated hereby, (iv) as to the effect that certain agreements, instruments
and other documents are in the form approved in the resolutions referred to in
clause (i) above, and (v) covering such other matters, and with such other
attachments thereto, as the Purchasers' Special Counsel may reasonably request
at least one (1) Business Day before the Closing Date, which certificates and
attachments thereto shall be reasonably satisfactory in form and substance to
the Purchasers.
(m) Payment of Out-of Pocket Expenses and Arrangement Fee. TW UK
shall have paid contemporaneously with the Closing, the fees and expenses
actually incurred by the Purchasers in connection with the transactions and
other matters contemplated by this Agreement and the other Transaction Documents
(including without limitation the fees, expenses and disbursements of
Purchasers' Special Counsel, accountants and other advisors and professional
consultants) and shall have paid the arrangement fee ("Arrangement Fee") to
Triumph Corporate Finance Group, Inc. in the amount of (pounds sterling)555,000,
which is equal to 1% of the maximum total amount available for borrowings under
the Credit Agreements.
(n) Credit Agreements. TW UK shall have entered into the Credit
Agreements, all on terms reasonably satisfactory to the Purchasers.
(o) Solvency Certificate. The Purchasers shall have received
certificates, dated as of the Closing Date, of the Chief Financial Officer of
each of Transworld, UK Parent and TW UK certifying that each of Transworld, UK
Parent and TW UK, respectively, is not, and will not be as a result of the
consummation of the transactions contemplated by this Agreement or the other
Transaction Documents, Insolvent.
(p) Use of Proceeds. UK Parent shall use all of the proceeds from
issuance of the Purchasers' Securities to subscribe for the Mirror Notes from TW
UK. TW UK shall use the proceeds from the issuance of the Mirror Notes as
provided in the funds flow statement described in the Intercreditor Agreement.
(q) Capitalization Table. TW UK shall have delivered to the
Purchasers a capitalization table that sets forth the number of shares of each
of the Group Companies outstanding as of the date hereof (after giving effect to
the transactions contemplated hereby) and identifies the legal and beneficial
owner thereof.
3.2 Conditions Precedent to Obligations of the Companies Regarding the
Purchasers' Securities on the Closing Date. The Companies' obligation to issue
to the Purchasers the Purchasers' Securities at the Closing is subject to the
fulfillment to their satisfaction, prior to or at the Closing, of the following
conditions, provided that any or all of the following
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conditions may be waived, in whole or in part, in writing by the Companies in
their sole and absolute discretion:
(a) Warranties. The warranties of the Purchasers contained in
this Agreement shall be true and correct in all material respects at the time of
the Closing, after giving effect to the issuance of the Purchasers' Securities
to the Purchasers and the other transactions contemplated to be consummated at
the Closing by this Agreement, except that any warranties that relate to a
particular date or period shall be true and correct in all respects only as of
such date or for such period.
(b) Performance; No Breach. The Purchasers shall have performed
and complied in all material respects with all agreements and conditions
contained in this Agreement and the other Transaction Documents required to be
performed or complied with prior to or at the Closing.
(c) Authorization. The Purchasers shall deliver to the Companies
evidence satisfactory to the Companies that the Purchasers duly authorized, and
took all action necessary for the purpose of, consummating the transactions
contemplated hereby and in the other Transaction Documents in accordance with
the terms hereof and thereof, respectively.
(d) Compliance Certificate. The Purchasers shall have delivered
to the Companies a General Partner's Certificate, dated the date of the Closing,
certifying on behalf of the Purchasers that the conditions specified in Sections
3.2(a), (b) and (c) hereof have been fulfilled together with any such other
certificates, instruments and other documents as the Companies may reasonably
require.
(e) Related Matters. At the Closing, the Purchasers shall procure
that UK Parent and TW UK shall have received payment in full for the Purchasers'
Securities to be issued to the Purchasers pursuant to this Agreement.
(f) Governmental and Third Party Permits, Consents, Etc. The
Purchasers shall have duly applied for and obtained all Approvals from each
Governmental Entity, or pursuant to any agreement to which the Purchasers is a
party or to which its assets are subject, which may be required in connection
with this Agreement, the other Transaction Documents or any other agreements and
documents contemplated thereby and in connection therewith.
3.3 Conditions Precedent to Obligations of TW UK Regarding the Mirror
Notes on the Closing Date. TW UK's obligation to issue to UK Parent the Mirror
Notes at the Closing is subject to the fulfillment to its satisfaction, prior to
or at the Closing, of the following conditions, provided that any or all of the
following conditions may be waived, in whole or in part, in writing by TW UK in
its sole and absolute discretion:
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(a) Consummation of the Purchase and Sale of the Purchasers'
Securities. The Companies shall have issued and the Purchasers shall have
subscribed for the Purchasers' Securities as provided for in this Agreement at
the Closing.
(b) Related Matters. Contemporaneously with the Closing, TW UK
shall have received payment in full for the Mirror Notes to be issued to UK
Parent pursuant to this Agreement.
ARTICLE IV
WARRANTIES OF TW UK
As a material inducement for the Purchasers to enter into this Agreement
and subscribe for the Purchasers' Securities, TW UK hereby warrants to the
Purchasers that the statements contained in this Article IV are correct and
complete as of the date of this Agreement. In this Article IV, where any
statement is qualified by the awareness or knowledge of TW UK or other similar
expression, TW UK shall be deemed to have the knowledge it would have had if it
had made reasonable inquiries to ascertain whether the Warranties in question
were correct in all material respects and not misleading in any material
respect, including reasonable inquiry of the Officers of and such management
personnel of each of the Group Companies as they deemed appropriate.
4.1 Organization and Qualification; Authority. Each of the Group
Companies is a limited liability company duly incorporated and validly existing
under the laws of England and Wales, has the legal right, full power and
authority to own and lease its properties and carry on its business as presently
conducted, is duly qualified, registered or licensed to do business in each
jurisdiction in which the ownership or leasing of its properties or the
character of its present operations makes such qualification, registration or
licensing necessary, except where the failure so to qualify would not have a
Material Adverse Effect. TW UK has heretofore delivered to the Purchasers
complete and correct copies of the Memorandum and Articles of Association and
any other applicable constitutional documents of the Companies, each as amended
to date and as presently in effect (collectively, with respect to particular
Company, the "Charter Documents").
4.2 Subsidiaries. UK Parent has no Subsidiaries other than TW UK. Except
as referred to in the Disclosure Letter, TW UK has no Subsidiaries.
4.3 Licenses.
(a) Each of the Group Companies has such licenses, franchises,
authorizations, permits, consents, registrations, certificates, approvals,
orders, authorities, exemptions and other rights and privileges as are necessary
to permit it to own its properties and to conduct its business and operations as
presently conducted (individually, a "License" and collectively,
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"Licenses"), except where the failure to have such Licenses would not have a
Material Adverse Effect. To the knowledge of TW UK, each License was duly and
validly issued by the issuer thereof pursuant to procedures which complied in
all material respects with the requirements of Applicable Law. Each License is
valid and current and each of the Group Companies is, and has been, in
compliance with the terms thereof, with no known conflict with the valid rights
of others, except where non-compliance or the existence of such conflict would
not have a Material Adverse Effect. No event has occurred which permits, or
after notice or lapse of time or both would permit, the revocation, suspension,
material modification or termination of any License, except where such event
would not have a Material Adverse Effect. There is no investigation, inquiry or
proceeding which has been notified to any of the Group Companies or, to the
knowledge of TW UK, threatened which is likely to result in the suspension,
cancellation, material modification, or revocation of any such License. To the
extent necessary, each of the Group Companies has filed all applications for
renewal or extension of the Licenses and any required renewal or extensions have
been granted, except where such non-renewals or non-extensions would not have a
Material Adverse Effect. TW UK does not know of any fact that is likely to
result in the revocation, material modification, non-renewal, cancellation or
suspension of any of the Licenses which would have a Material Adverse Effect.
(b) The statements set forth in Schedule 4.3(b) with respect to
the Licenses and regulatory consents required by each of the Group Companies
(the "Regulatory Information") are true, correct and complete in all material
respects and not misleading in any material respect, and no fact or matter with
respect to the Group Companies has been omitted from the Regulatory Information
which renders the statements set forth in Schedule 4.3(b) untrue, inaccurate or
misleading in any material respect.
(c) To the knowledge of TW UK, each of the Relevant Employees and
Contractors has obtained all licenses, authorizations, permits, consents,
registrations, certificates, approvals, exemptions and other rights and
privileges necessary to permit him or her to perform his or her duties as
presently performed (individually, a "Personal License" and collectively,
"Personal Licenses"), except where the failure to have such Personal License
would not have a Material Adverse Effect. To TW UK's knowledge, each Personal
License is valid and current and each of such Persons is in compliance in all
material respects with the terms thereof, with no known conflict with the valid
rights of others, except where non-compliance or the existence of such conflict
would not have a Material Adverse Effect. To TW UK's knowledge, no event has
occurred which is likely to result in the denial of an application or renewal,
or the revocation, material modification, non-renewal or suspension of any of
the Personal Licenses.
4.4 Organizational and Governmental Authorization; Contravention. The
execution, delivery and performance by each of the Companies of the Transaction
Documents and their obligations thereunder and all other instruments or
agreements to be executed at the Closing in connection therewith, the issuance
to the Purchasers of the Purchasers' Securities (including
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the PIK Notes), the issuance to the Purchasers' Representative of the Special
Share and the issuance to UK Parent of the Mirror Notes and the Mirror PIK Notes
pursuant to this Agreement, the authorization, issuance and delivery by TW UK of
the Ordinary Shares issuable upon the exercise of the Warrants and the
performance by each of the Companies with respect to the redemption and put of
the Subordinated Notes, the PIK Notes, the Mirror Notes, the Mirror PIK Notes,
the Ordinary Shares and the Warrants in accordance with the terms thereof and of
this Agreement are (i) within each of the Companies' legal right and corporate
power, having been duly authorized by all necessary corporate action (including,
without limitation, obtaining shareholder approval) on the part of each of the
Companies and if required their respective Subsidiaries; (ii) do not require any
License, authorization, approval, qualification or formal exemption from, or
other action by or in respect of, or filing of a declaration or registration
with, any court, Governmental Entity, agency or official or other Person (except
such as have been obtained); (iii) do not contravene or constitute a default
under or violation of (a) any provision of Applicable Law or regulation of any
Governmental Entity, (b) the respective Charter Documents of the Group
Companies, (c) any agreement (or require the consent of any Person under any
agreement that has not been obtained) to which any of the Group Companies is a
party, or (d) any judgment, injunction, order, decree or other instrument
binding upon any of the Group Companies or any of their respective properties or
assets; (iv) and do not and will not result in the creation or imposition of any
Lien on any asset of the Group Companies, other than Permitted Liens and the
Liens contemplated by the Credit Agreements.
4.5 Validity and Binding Effect. Each of the Transaction Documents has
been duly executed and delivered by each of the Companies and is a valid and
binding agreement of each of the Companies, enforceable against each of the
Companies in accordance with its respective terms.
4.6 Capitalization. Except as set forth in the Disclosure Letter or as
expressly provided for herein, no shares of or other equity interests in each of
the Group Companies are allotted, issued or outstanding, and currently there are
no outstanding conversion rights, subscriptions, contracts, options, rights,
warrants, convertible or exchangeable securities, or other rights of
pre-emption, obligations or commitments of any kind whatsoever to allot, issue,
sell or otherwise dispose of, or over, any shares of or other equity interests
in any of the Group Companies. None of the Group Companies is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any of its shares except as expressly provided for herein. Except as
contemplated by the Voting Trust Agreement, there are no voting trusts or other
agreements or understandings to which any of the Group Companies is a party with
respect to the voting of its respective shares and there are no Liens on or over
the shares of the Group Companies or any arrangements or obligations to create
any Liens other than Permitted Liens or the Liens contemplated by the Credit
Agreements.
4.7 Litigation; Compliance with Laws; Breaches. There is no action,
suit, proceeding, investigation, inquiry, under decree, decision or judgment,
which has been notified to any of
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the Group Companies or, to the knowledge of TW UK, threatened against or
affecting any of the Group Companies, before or by any court or arbitrator or
any Governmental Entity which (individually or in the aggregate) (i) has
impaired or could reasonably be expected to impair the ability of the Companies
to perform fully on a timely basis any obligation which the Companies have or
will have under any Transaction Document to which the Companies are a party, or
(ii) otherwise has or could reasonably be expected to have a Material Adverse
Effect. None of the Group Companies is in violation of, or in default under (and
there does not exist any event or condition which, after notice or lapse of time
or both, would or is likely to constitute such a default under), any term of its
respective Charter Documents, or of any term of any agreement, instrument,
judgment, decree, order, statute, exemption, injunction, Applicable Laws,
Environmental Law or other governmental regulation, rule or ordinance applicable
to the Group Companies or to which the Group Companies are bound, or to any
Properties of the Group Companies, except where such violation or default would
not have a Material Adverse Effect.
4.8 Outstanding Debt. Except as set forth in the Disclosure Letter or as
contemplated by the Credit Agreements or this Agreement, as of the Closing Date,
the Group Companies do not have outstanding any Indebtedness.
4.9 No Material Adverse Change. Since September 30, 1999, there has been
no material adverse change in the condition (financial or other), assets,
business, prospects, or results of operations of the Group Companies.
4.10 Benefit and Pension Plans. The Amcare Limited Group Personal
Pension Plan and the personal pension arrangements for Stephen Gullick, Charles
Kernahan, Roland Ellmer, Peter Nuttall, Charles Murphy, Michael Stothard and
David Johnson (collectively, the "Benefit Schemes") are the only schemes to
which any of the Group Companies make, or could become liable to make, payments
for providing retirement, death, disability or life assurance benefits. The
Amcare Limited Group Personal Pension Plan is an approved personal pension
scheme within the meaning of Chapter IV of Part XIV of the Income and
Corporation Taxes Act 1988. The Amcare Limited Group Personal Pension Plan is an
appropriate pension scheme for contracting-out purposes. None of the Group
Companies have ever undertaken, and there is no obligation under the Benefit
Schemes, to provide a minimum level of benefits or any defined level of benefits
in respect of any Person. All amounts due to the Benefit Schemes have been paid.
To the knowledge of TW UK, all taxes and expenses relating to the Benefit
Schemes and payable by the Group Companies have been paid. To the knowledge of
TW UK, there is no dispute about the benefits payable to Relevant Employees or
Former Employees of the Group Companies under the Benefit Schemes, no claim by
or against the Benefit Scheme's administrators or the Group Companies has been
made.
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4.11 Brokers' Fees. Except for the Arrangement Fee, as described in
Section 3.1(o), none of the Group Companies has any obligation to any Person in
respect of any finder's, broker's, investment banking or other similar fees in
connection with any Transaction Document or the transactions contemplated
therein.
4.12 Disclosure.
(a) There is no material fact specific to TW UK (as opposed to
the industry in which the Group Companies operate), in general, not in the
Accountant's Report or the Due Diligence Report and known to TW UK which the
Group Companies which has or, insofar as TW UK can reasonably foresee, will have
a Material Adverse Effect. Without limiting the foregoing, TW UK does not have
any knowledge or belief that there exists or there is pending or planned
statute, rule, law, regulation, standard or code which could have a Material
Adverse Effect. TW UK does not have any reason to believe that the Franchise
Agreement between Amcare Limited and RMS Homecare Limited previously in place
will not be renewed on terms substantially similar to those previously in
existence.
(b) The books of account, ledger, order books, records, lists and
documents of the Group Companies have been kept in accordance with Applicable
Law and fairly reflect the financial position of the Group Companies.
(c) Each of the Accountants' Report and Due Diligence Report has
been prepared after due and careful consideration. TW UK (i) is not aware of any
material inaccuracy or misstatement as to factual matters relating to the
business or operations of the Group Companies set forth in either the
Accountant's Report or the Due Diligence Report, (ii) is not aware of any facts
or matters not stated in either of the Accountant's Report or the Due Diligence
Report, the omission of which make any statements contained therein misleading
or inaccurate in any material respect, and (iii) has made full disclosure of all
material facts known to it (having made all reasonable inquiries) to all of the
Persons responsible for preparing either of the Accountant's Report or the Due
Diligence Report in relation to the Group Companies.
4.13 Environmental Regulation, Etc. Each of the Group Companies (i) has
conducted its business and operated its Properties in compliance with
Environmental Law, except where non-compliance would not have a Material Adverse
Effect; (ii) has not entered into or been subject to any judgment, voluntary
remediation agreement, consent decree, compliance order, or administrative order
with respect to any environmental or health and safety matter; (iii) has not
received any notice, demand letter, administrative inquiry, complaint or claim
from any Person with respect to the enforcement of any Environmental Law; (iv)
has not been subject to or threatened with inspection by any Governmental Entity
with respect to any environmental or health and safety matter which would have a
Material Adverse Effect; and (v) has no reason to believe that any of the items
enumerated in clauses (i) - (iv) of this Section 4.13 will be forthcoming. None
of the Group Companies has any knowledge of any Release or Threat of
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Release of a Hazardous Material at, on, in or under any Property presently or
formerly owned, operated, leased, or used by any of the Group Companies or
neighboring or other property. None of the Group Companies has ever had
Hazardous Materials transported from any Property presently or formerly owned,
operated, leased, or used by the Group Companies for treatment, storage, or
disposal at any other place, except in accordance with applicable Environmental
Laws.
4.14 Properties and Assets. The Group Companies own, lease or otherwise
have the right to use all Property and assets, whether tangible or intangible,
used by them in the conduct of the business of the Group Companies which are
material in and for the conduct of such business. There are no outstanding
actions, disputes, claims or demands between any of the Group Companies and any
other party affecting any such Property or assets. All of the leases under which
the Group Companies hold any material Property or assets, real or personal, are
valid, subsisting and enforceable, and no default by the Group Companies exists
under any of the provisions thereof, except where such default would not have a
Material Adverse Effect. No compulsory purchase, appropriation or similar
proceeding has been notified to any of the Group Companies or, to the knowledge
of TW UK threatened against any of the Group Companies. The Group Companies'
Property and assets as a whole are adequate for the conduct of their business.
4.15 Insurance. There is no claim by any of the Group Companies existing
under any insurance policies covering the assets, business, equipment,
properties, operations, employees, officers and directors under which the Group
Companies may derive any material benefit as to which coverage has been
questioned, reserved, denied or disputed by the underwriters of such policies or
their agents, except for individual claims not in excess of (pounds
sterling)25,000, which in the aggregate do not exceed (pounds sterling)150,000.
All premiums due and payable under all such policies have been paid, and the
Group Companies are not aware they are not otherwise in full compliance with the
terms and conditions of all such policies. To the knowledge of TW UK, such
policies of insurance are of the type and in amounts customarily carried by
Persons conducting business similar to that presently conducted by the Group
Companies. To the knowledge of TW UK, such policies of insurance are in full
force and effect and none of the Group Companies know of any threatened
termination of any such policies.
4.16 Employment Practices.
(a) No Relevant Employee is the subject of any disciplinary
proceedings and no Relevant Employee has raised or threatened to raise a
grievance under any grievance procedure which has not been resolved in
accordance with any relevant grievance procedure other than each case in the
ordinary course consistent with past experience. The Group Companies have
maintained current, adequate and suitable records regarding the service of each
Relevant Employee.
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(b) There is not outstanding any threats of claims in connection
with the employment of any Relevant Employee or Former Employee or engagement of
any Contractor or former Contractor or the breach or termination of any contract
of employment with any Relevant Employee or any Former Employee or the breach or
termination of any contract with any Contractor or former Contractor, including,
without limitation, liability for redundancy payments, protective awards,
compensation for wrongful dismissal or unfair dismissal or for failure to comply
with any order for reinstatement or re-engagement or for sex, race or disability
discrimination or equal pay under any Applicable Laws which would have a
Material Adverse Effect. None of the Group Companies has been (and has been
withing the period of 12 months preceding the date of this Agreement) involved
in any dispute or negotiation regarding the dismissal, suspension or discipline
of any Relevant Employee or Former Employee and there are no fact known, or
which would on reasonable inquiry be known, which would indicate that there may
be any such dispute which would have a Material Adverse Effect. The Group
Companies have, with respect to each Relevant Employee, Former Employee,
Contractor or former Contractor, complied in all material respects with the
following: (i) all obligations imposed upon them by all Applicable Laws,
regulations, bye-laws and codes of conduct and practice relevant to the
relations between them and any such Relevant Employee, Former Employee,
Contractor or former Contractor or any trade union or other Employee
Representative; and (ii) all orders, declarations and awards made under any
Applicable Laws, regulations, bye-laws or code of conduct or practice affecting
the conditions of service of any Relevant Employee or Former Employee.
(c) There is no investigation or inquiry, which has been notified
to any of the Group Companies, or to the knowledge of TW UK threatened by the
Health and Safety Executive, the Commission for Racial Equality, the Equal
Opportunities Commission or other Governmental Entity or regulatory body, the
outcome of which may have a Material Adverse Effect.
(d) None of the Group Companies have entered into any security of
employment, union membership, recognition or other collective agreement (whether
legally binding or not) with any Employee Representative or done any act which
might be construed as recognition of any Employee Representative for any
purpose.
(e) There is no claim by or on behalf of any Relevant Employee or
Former Employee which has been notified to any of the Group Companies, or to the
knowledge of TW UK threatened, with respect to any accident, injury or disease.
4.17 Financial Statements.
(a) TW UK has delivered to the Purchasers (i) balance sheets of
TW UK for the fiscal year ended on September 30, 1998 and statements of profit
and loss and cash flows for such year then ended, with appropriate footnotes,
reported on by PricewaterhouseCoopers, TW UK's auditors, and (ii) balance sheets
of TW UK for the fiscal year ended on September
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30, 1999 and statements of profit and loss and cash flows for such year then
ended, each certified by TW UK's Chief Financial Officer (collectively with the
financial statements referred to in the foregoing clause (a), the "Financial
Statements"). The Financial Statements have been prepared in accordance with
Applicable Law and in accordance with accounting principles, standards and
practices generally accepted at the relevant date in the United Kingdom, applied
consistently during the periods covered thereby, present a true and fair view of
the assets, liabilities and state of affairs of TW UK and its Subsidiaries at
the dates of said statements and of the profits and losses for the periods
covered therein and the results of their operations and their cash flows for the
periods covered thereby and disclose all liabilities (contingent or otherwise)
and all unrealized or anticipated losses of TW UK and its Subsidiaries to the
extent required by the accounting principles, standards, and practices referred
to above.
(b) Since September 30, 1999 no material liabilities or claims
relating to the Group Companies of any nature, whether accrued, absolute,
contingent or otherwise, asserted or, to TW UK's knowledge, unasserted, which in
accordance with accounting principles, standards and practices generally
accepted at the relevant date in the United Kingdom, applied consistently, and
Applicable Law would have to be stated or adequately reserved against in the
appropriate Financial Statements (had such Financial Statements been prepared at
the date of this Agreement) have arisen other than liabilities or claims
incurred in the ordinary course of the Group Companies' operations. Nothing has
come to the attention of the Group Companies since the date of the Financial
Statements which would indicate that the Financial Statements did not present a
true and fair view of the financial position of the Group Companies as of the
respective dates thereof.
4.18 Intellectual Property. Except as described in the Disclosure
Letter, the Group Companies have ownership of, or license to use, all material
patents, registered and unregistered decision rights, copyright, database
rights, trade secrets, trademarks, service marks, trade names, logos, get-up or
other proprietary rights, including, without limitation, Know-how (as defined
below), necessary for the operation of the business of the Group Companies and
in any jurisdiction in which the Group Companies conduct business (collectively,
"Intellectual Property"). There are no claims or demands of any other Person
pertaining to any of such Intellectual Property and no proceedings have been
instituted, or notified to any of the Group Companies or, to the knowledge of TW
UK, threatened, which challenge the rights of the Group Companies in respect
thereof. The Group Companies have the right to use, free and clear of claims or
rights of other Persons, all confidential and proprietary industrial and
commercial information and techniques in any form (including, without
limitation, paper, electronically stored data, magnetic media, film and
microfilm), including, without limitation, drawings, formulae, reports, project
reports and testing procedures, institution and training manuals, tables of
operations, market forecasts, lists and particulars of customers and suppliers,
lists, designs, manufacturing, billing systems or other processes, computer
software systems, data compilations, research results and other information
(collectively "Know-how") required to conduct their business as presently
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conducted or contemplated. In the case of such Intellectual Property that is
registered or the subject of an application for registration, all renewal fees
which are due and steps which are required for their maintenance and protection
have been paid or taken. All of the licenses or other agreements under which the
Group Companies is granted rights in Intellectual Property are in full force and
effect and no notice having been given on either side to terminate them, the
obligations of all parties to such licenses and agreements have been performed
and complied with in all material respects, no disputes have arisen or, to the
knowledge of TW UK, are threatened with respect to the ownership or use of any
Intellectual Property or Know-how.
The Group Companies have taken all steps considered reasonable by them
to establish and preserve their ownership of Intellectual Property and Know-how.
To the best of TW UK's knowledge, the present business, activities and
products of the Group Companies do not infringe any Intellectual Property of any
other Person. No proceeding charging the Group Companies with infringement of
any adversely held Intellectual Property is, to the knowledge of TW UK,
threatened. The Group Companies are not making unauthorized use of any
confidential information or trade secrets of any Person, including without
limitation any former employer of any past or present employee of the Group
Companies. No moral rights have been asserted which would affect the use of any
of the Intellectual Property in the business or operations of any of the Group
Companies.
TW UK and each of its Subsidiaries have each obtained and maintained in
force any registration under the Data Protection Act 1984 necessary and
appropriate in relation to its business and operations. Each of the Group
Companies, with respect to any personal data relating to its business and
operations, at all times, has complied with the Data Protection Principles
contained in Schedule 1 to the Data Protection Act 1984. None of the records,
systems, data or information of any of the Group Companies is recorded, stored,
maintained, operated or otherwise wholly or partially dependent on or held or
accessible by any means, which are no under the ownership and control of the
Group Companies.
4.19 Taxes. The Group Companies, and any predecessors to the Group
Companies, have filed or obtained extensions of all Tax Returns heretofore
required by law to be filed by any of them and have paid all Taxes shown as due
on such returns in full. All Taxes required by law to be withheld with respect
to Taxes constituting employees' income withholding taxes, have been duly made,
withheld, collected or provided for and have been paid over to the proper
federal, provincial, state, municipal or local authority, or are held by the
applicable Person for such payment. None of the Group Companies, including any
predecessors thereto, has executed or filed with any taxing authority any
agreement or document extending, or having the effect of extending, the period
for assessment or collection of any Taxes. None of the Group Companies is a
party to any tax sharing agreement or arrangement. No audits or investigations
have been notified to any of the Group Companies or, to the knowledge of TW
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UK, threatened with respect to any tax returns or taxes of the Group Companies,
or any predecessor thereto.
4.20 Transactions with Affiliates. Other than as disclosed to the
Purchasers, there are no transactions, agreements or understandings, existing or
presently contemplated between or among the Group Companies and any of their
respective officers or directors or shareholders or any of their respective
Affiliates or associates.
4.21 Solvency. On the Closing Date and after giving effect to the
transactions contemplated by the Transaction Documents, each of the Group
Companies is not Insolvent and there is no Event of Breach or Event of Default.
4.22 Limitations.
(a) Notwithstanding anything to the contrary contained herein, TW
UK shall be under no liability with respect to any claim under this Article IV
to the extent that the facts giving rise thereto are fairly disclosed in the
Disclosure Letter. No liability shall attached to TW UK with respect to any
claim under this Article IV to the extent that: (i) the claim or the events
giving rise to the claim would not have arisen but for a voluntary act, omission
or transaction of the Purchasers outside the ordinary course of business; (ii)
the claim is based upon a liability which is contingent only, unless and until
such contingent liability becomes an actual liability provided that this
sub-clause shall not operate to avoid a claim made with respect to a contingent
liability within the applicable time limit specified in this Section 4.22; (iii)
provision or reserve with respect to the matter giving rise to the claim shall
have been made, and as of the date of this Agreement shall not have been
released, in the Financial Statements; (iv) the claim occurs out of or the
amount thereof is increased as a result of (A) any increase in the rates of
taxation made after the date hereof; or (B) any change in law or regulation not
actually, or prospectively, in effect at the date of this Agreement; and (v) the
loss or damage giving rise to the claim is recovered by the Purchasers under any
policy of insurance, after deduction of any increase in premium and all expenses
of recovery including, if applicable, taxation costs incurred by the Purchasers
in making the insurance claim.
(b) TW UK shall be under no liability with respect to any claim
under this Article IV unless written notice of such claim setting out reasonable
details (so far as the same are known to the Purchasers) of the relevant claim
shall have been served upon TW UK by the Purchasers: (i) in the case of a claim
under the warranties (other than those relating to Tax), by no later than 5:00
p.m. on the second anniversary of the date hereof; and (ii) in the case of a
claim under the warranties relating to Tax, by no later than 5:00 p.m. on the
seventh anniversary of the date hereof. The liability of TW UK for any claim
specified in such notice shall cease (unless the amount payable with respect to
a relevant claim has been agreed by TW UK within twelve months of the date of
such written notice) if legal proceedings have not been instituted with respect
to such claim by the service of process on TW UK within twelve months of the
date of such written notice. For purposes of this Section 4.22, legal
proceedings shall
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not be deemed to have been commenced unless they shall have been issued and
served upon TW UK.
(c) TW UK shall be under no liability with respect to any claim
under this Article IV unless and until the aggregate amount of all claims
against TW UK exceed (pounds sterling)250,000, but if liability exceeds that
figure then all claims, including claims previously notified, shall accrue
against TW UK. The aggregate liability of TW UK with respect to all claims under
this Article IV shall not exceed (pounds sterling)22.0 million, plus all
outstanding and accrued interest on the Subordinated Notes and the PIK Notes.
(d) Notwithstanding any other provision of this Agreement, none
of the limitations set forth in this Section 4.22 shall apply to any claim which
arises or is increased or to the extent to which it arises or is increased or
delayed as a result of fraud, wilful misconduct or wilful concealment by any of
the Group Companies or any of their respective officers, directors, employees or
agents.
(e) The Purchasers shall (i) promptly inform TW UK in writing of
any fact, matter, event or circumstance which comes to their notice whereby it
appears that TW UK are or will be liable to make any payment with respect to any
claim under this Article IV and (ii) subject to the legal privilege and
confidentiality, thereafter keep TW UK informed of all material developments in
relation thereof; provided, however, that the failure of the Purchasers to
comply with this provision shall no in any way prejudice their rights to make a
claim under this Article IV.
(f) The only remedies available to the Purchasers with respect to
the Warranties set forth in this Article IV shall be for damages for breach of
contract (subject to limitation set out in this Agreement) and, for the
avoidance of doubt, the Purchasers shall not have any right to rescind or
terminate this Agreement for breach of contract or for negligent or innocent
misrepresentations or otherwise; provided that the provisions of this Section
4.22(f) shall not (i) exclude any liability which any of the parties would
otherwise have to any other party or any right which any of them may have to
rescind this Agreement in respect of any statements made fraudulently by any of
them prior to the execution of this Agreement or any rights which any of them
may have in respect of fraudulent concealment by any of them or (ii) limit any
of the Purchasers' rights to seek an injunction against a violation of any
breach of the covenants set forth in Article IX hereof.
(g) In the event that TW UK at any time after the date hereof
shall wish to take out insurance against their liability hereunder, the
Purchasers undertake (subject to any concerns that they may have regarding
confidentiality) to provide such information, at the cost of TW UK, as the
prospective insurer may reasonably require before effecting such insurance.
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(h) The Purchasers hereby acknowledge that they have not entered
into this Agreement or any of the other Transaction Documents in reliance on any
warranty, except the Warranties.
(i) In assessing any liabilities, damages or other amounts
recoverable by the Purchasers as a result of any claims under this Article IV,
there shall be taken into account any Taxes for which the claiming Purchaser is
liable in respect of the same or any Tax Benefit to the claiming Purchaser so
that the Purchaser is in no better and no worse position after such Tax than he,
she or it would have been had no claim arisen under this Article IV. For
purposes of this Section 4.22(i), "Tax Benefit" shall mean (i) an amount equal
to the cash value of the amount by which the Taxes payable by a Purchaser are
actually reduced simultaneously with or immediately prior to the liabilities,
damages or other amounts incurred by such Purchaser or (ii) an amount equal to
any cash refund such Purchaser receives in the taxable period in which such
liability, damage or amount was incurred or in a prior relevant taxable period;
provided, however, that any such amount will not be included in this
determination if it is subject to forfeiture in future periods; and, provided,
further that any such amount shall be adjusted for any Tax detriment established
to be associated with the payment of any liabilities or damages hereunder.
ARTICLE V
WARRANTIES OF THE PURCHASERS
As a material inducement for TW UK to enter into this Agreement and
issue the Purchasers' Securities, the Purchasers hereby warrants to TW UK that
the statements contained in this Article V are correct and complete as of the
date of this Agreement.
5.1 Authority. Each of the Purchasers has full power and authority and
has taken all action necessary to authorize it to enter into and perform its
obligations under this Agreement and all other Transaction Documents and other
documents or instruments contemplated hereby or thereby. This Agreement and the
other Transaction Documents are the legal, valid and binding obligation of the
Purchasers, and are enforceable in accordance with their terms.
5.2 Organization and Qualification. Each of the Purchasers is an
individual or corporation, limited liability company or partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, has full power and authority as
a corporation, limited liability company or partnership to own the Subordinated
Notes, PIK Notes, Warrants and Special Share, as the case may be.
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ARTICLE VI
REDEMPTION OF NOTES
6.1 Optional Redemption of Subordinated Notes by UK Parent.
(a) The Subordinated Notes may be redeemed by UK Parent at its
option, in whole, but not in part, at the Subordinated Note Redemption Price,
subject to the Purchasers' Exercise Right, after the later to occur of (i) the
third anniversary of the Closing Date or (ii) payment in full of the Bank
Indebtedness and the Mezzanine Debt. Notwithstanding the foregoing, UK Parent
shall not have the right to redeem the Subordinated Notes unless and until
either (i) TW UK consummates a Qualified Public Offering or (ii) a Qualified
Public Value is achieved. In the event UK Parent elects to redeem the
Subordinated Notes pursuant to this Section 6.1(a), it shall promptly notify the
Purchasers and TW UK in writing of such proposed redemption. The Purchasers will
have the right (which right if exercised, will take priority over UK Parent's
right of redemption) to exercise the Warrants, in whole or in part, at any time
on or before the redemption date (such date shall be referred to herein as the
"Redemption Date") of the Subordinated Notes by tendering cash or Subordinated
Notes in the appropriate principal amount to satisfy the exercise price of the
Warrants to TW UK in exchange for (A) the Ordinary Shares issuable pursuant to
the exercise of the Warrants and (B) a cash payment from TW UK equal to all
accrued and unpaid interest on the tendered Subordinated Notes as of the date of
such tender (the "Purchasers' Exercise Right"). In the event that any Purchaser
elects to exercise any Warrants by tendering Subordinated Notes, UK Parent shall
cause TW UK to, and TW UK shall, issue to such Purchaser the Ordinary Shares
issuable upon exercise of his, her or its Warrants and pay the cash amount
referred to in clause (B) in the foregoing sentence; provided, however, that if
for any reason such cash payment is not paid by TW UK, it will remain the sole
and absolute obligation of UK Parent to pay such accrued and unpaid interest.
Notwithstanding anything to the contrary contained herein, in the event that any
Purchaser elects to exercise any Warrants by tendering cash, UK Parent shall
have the right, at its option, to redeem from such Purchaser the aggregate
principal amount of Subordinated Notes held by such Purchaser equal to the
number of Warrants so exercised multiplied by the Warrant Exercise Price.
(b) If the Purchasers do not exercise some or all of the Warrants
prior to the Redemption Date, subject to and upon actual receipt by the
Purchasers of payment in full in cash of the Subordinated Note Redemption Price
and the PIK Note Redemption Price (as provided in Section 6.4), the Warrants
shall automatically lapse without further action by UK Parent or TW UK.
(c) The "Subordinated Note Redemption Price" shall mean a price
equal to the principal amount of the Subordinated Notes outstanding plus any and
all accrued and unpaid interest on the Subordinated Notes up to and including
the Redemption Date.
6.2 Mandatory Redemption of Mirror Notes.
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(a) Upon written notice to TW UK of UK Parent's election to
redeem the Subordinated Notes pursuant to Section 6.1(a) above, TW UK shall,
immediately prior to such redemption by UK Parent, redeem the Mirror Notes at
the Mirror Note Redemption Price. UK Parent shall use the funds it receives from
such redemption of the Mirror Notes to redeem the Subordinated Notes.
(b) "Mirror Note Redemption Price" shall mean, with respect to
the Mirror Notes being redeemed, a price equal to the principal amount of the
Mirror Notes outstanding plus any and all accrued and unpaid interest on the
Mirror Notes up to and including the Redemption Date.
6.3 Optional Redemption of PIK Notes by UK Parent. If permitted under
the terms of the Intercreditor Agreement or anytime after the Bank Indebtedness
and the Mezzanine Indebtedness have been paid in full, the PIK Notes shall be
subject to redemption by UK Parent at its option, in whole or in part, at any
time after issuance thereof at the PIK Note Redemption Price. The "PIK Note
Redemption Price" shall mean the aggregate principal amount of the PIK Notes
called for redemption by UK Parent, plus a cash payment equal to the sum of any
and all accrued and unpaid interest on the PIK Notes to be redeemed up to and
including the date of redemption. If less than all outstanding PIK Notes are to
be redeemed, UK Parent may select specific PIK Notes for redemption in its sole
discretion.
6.4 Mandatory Redemption of PIK Notes. Upon any optional redemption of
the Subordinated Notes by UK Parent pursuant to Section 6.1 hereof, UK Parent
shall be obligated, on such Redemption Date, to redeem all outstanding PIK Notes
at the PIK Note Redemption Price.
6.5 Mandatory Redemption of Mirror PIK Notes. Upon written notice to TW
UK of UK Parent's election to redeem any PIK Notes pursuant to Section 6.3 above
or upon a mandatory PIK Note redemption pursuant to Section 6.4 above, TW UK
shall, immediately prior to such redemption by UK Parent, redeem the Mirror PIK
Notes, at the Mirror PIK Note Redemption Price. UK Parent shall use the funds it
receives from such redemption of the Mirror PIK Notes to redeem the PIK Notes.
The "Mirror PIK Note Redemption Price" shall mean, with respect to the Mirror
PIK Notes being redeemed, the aggregate principal amount of such Mirror PIK
Notes plus a cash payment equal to the sum of any and all accrued and unpaid
interest on such Mirror PIK Notes.
6.6 Redemption Procedures for Subordinated Notes and PIK Notes. The
election of UK Parent to redeem Subordinated Notes or PIK Notes pursuant to
Section 6.1(a) or 6.3 hereof shall be evidenced by a Board Resolution. Notice of
redemption of the Subordinated Notes or any of the PIK Notes ("Redemption
Securities") shall be mailed, at UK Parent's expense, not less than thirty (30)
nor more than sixty (60) days prior to the Redemption Date, to each Purchaser
with a copy to TW UK, at its address appearing on the signature page hereto. All
notices of redemption shall include the following information: (1) the
Redemption
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Date; (2) the Redemption Price for the Redemption Securities and the amount of
unpaid and accrued interest on such Redemption Securities as of the Redemption
Date; (3) the place or places where such Redemption Securities are to be
surrendered for payment of the Redemption Price; (4) that the Purchasers may
exercise the Warrants prior to the Redemption Date of the Subordinated Notes;
and (5) a copy of the Board Resolution, certified by the Secretary of UK Parent.
6.7 Deposit of Subordinated Note and PIK Note Redemption Price. Prior to
any Redemption Date with respect to the Subordinated Notes or any PIK Note, UK
Parent shall deposit with a paying agent, or into a segregated account of UK
Parent, an amount of money sufficient to pay the Subordinated Note Redemption
Price and PIK Note Redemption Price of, and (except if the Redemption Date shall
be an Interest Payment Date, in which case, UK Parent shall pay the interest due
as of such Interest Payment Date in cash on the Redemption Date) any and all
accrued and unpaid interest on all the Subordinated Notes and any of the PIK
Notes which are to be redeemed. The Purchasers' obligation to tender the
Subordinated Notes or the PIK Notes called for redemption by UK Parent or the
exercise of the Purchasers' Exercise Right shall not arise until such time as
sufficient funds have been deposited to pay the Subordinated Note Redemption
Price and the PIK Note Redemption Price for the Redemption Securities to be
redeemed.
6.8 Redemption Securities Payable on Redemption Date. Notice of
redemption having been given as provided in Section 6.6 hereof, the Redemption
Securities to be redeemed shall, on the Redemption Date, become due and payable
at the Redemption Price therein specified, and from and after such date (unless
UK Parent shall default in the payment of the Redemption Price and any unpaid
and accrued interest) such Redemption Securities shall cease to bear interest
and any other rights shall cease, other than the right to receive the payment of
the Redemption Price, whether pursuant to this Agreement, the instrument
representing the Redemption Securities or otherwise. Upon surrender of any such
Redemption Security for redemption in accordance with said notice, such
Redemption Security shall be paid by UK Parent at the applicable Redemption
Price, together with any unpaid and accrued interest up to and including the
Redemption Date. If any Redemption Security called for redemption by UK Parent
shall not be paid upon surrender thereof by the Purchasers for the Redemption
Price, the principal and interest, until paid, shall bear interest from the
Redemption Date at the rate borne by the Redemption Security. Interest shall
cease to run on any Redemption Security not validly tendered in accordance with
the notice of redemption and no interest shall accrue on any amount payable
thereon.
6.9 Payment of Mirror Note and Mirror PIK Note Redemption Price. Upon
the mailing of a notice pursuant to Section 6.6 hereof, TW UK promptly shall
deliver to UK Parent cash sufficient to pay the Mirror Note Redemption Price and
the Mirror PIK Note Redemption Price on the Redemption Date in accordance with
the terms of this Article VI such as to allow UK Parent to deposit the amounts
required by Section 6.7 hereof.
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ARTICLE VII
PUT OF NOTES
7.1 Put of Subordinated Notes and PIK Notes Pursuant to Purchasers'
Election. The Subordinated Notes and the PIK Notes, subject to the terms and
provisions of the Intercreditor Agreement, shall be subject to redemption, in
whole or in part, at the Subordinated Note Redemption Price and the PIK Note
Redemption Price at the option of a Majority in Interest of the Purchasers
("Purchasers' Put") upon and after the occurrence of a Put Event; provided,
however, that the Purchasers' Put cannot be exercised on more than three (3)
separate occasions or for an aggregate Subordinated Note Redemption Price plus
PIK Note Redemption Price equal to less than (i) (pounds sterling)5.0 million on
any occasion or (ii) 100% of the remaining Subordinated Notes and PIK Notes
outstanding at the time if exercise of the Purchasers' Put would result in less
than (pounds sterling)5.0 million in the aggregate remaining outstanding.
Notwithstanding the foregoing, the Purchasers may not elect such redemption
unless they also exercise their right to require UK Parent to purchase the
Warrants pursuant to Section 8.1 hereof. The date on which such Put Event occurs
is referred to as the "Put Event Trigger Date." A "Put Event" shall mean, with
respect to the Subordinated Notes and the PIK Notes elected to be redeemed ("Put
Securities"): (1) any Liquidity Event; or (2) a date subsequent to the eighth
anniversary of the Closing Date if the Bank Indebtedness and the Mezzanine
Indebtedness have been paid in full on or before such date.
7.2 Put Offer Procedures. Within five (5) Business Days after UK Parent
becomes aware of the occurrence of a Put Event and in any event not later than
the Put Event Trigger Date, UK Parent shall mail a notice (the "Offer") to each
of the Purchasers notifying them that the Subordinated Notes and the PIK Notes
will be redeemable at the election of the Purchasers in accordance with this
Article VII. If a Majority in Interest of the Purchasers elect to exercise their
redemption rights pursuant to this Article VII, they shall give notice to UK
Parent setting forth the amount of Put Securities to be redeemed and the
redemption date shall be the earlier of (i) a date selected by UK Parent, but
not be later than 30 days from the date such notice is given, or (ii) if such
notice relates to a Liquidity Event and is given prior to the occurrence of the
Liquidity Event, the date of completion of the Liquidity Event (the "Purchase
Date"). An election to exercise redemption rights pursuant to this Article VII
in connection with a Liquidity Event shall in all circumstances be conditional
upon the completion of the Liquidity Event and no obligation to redeem Put
Securities shall arise if the Liquidity Event cannot be completed. In the event
of a Purchaser's Put exercised with respect to a Liquidity Event, the Purchaser
will be entitled to withdraw his or its election to tender the Put Securities by
delivering to UK Parent, not later than the close of business on the second
Business Day preceding the Purchase Date, a telegram, telex, facsimile
transmission or letter to that effect. Any Subordinated Note or PIK Note not
tendered in accordance with this Section 7.2 will continue to accrue interest.
Upon a Purchaser's election to tender any Put Securities, the Purchasers will be
required to surrender such Put Securities with a form requiring redemption
completed to UK Parent at the address specified in the signature page hereto
prior to the close of business on the Business Day preceding the Purchase Date.
On the Purchase Date, UK
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Parent will redeem the Put Securities tendered for cash in an amount equal to
the aggregate principal amount of all Subordinated Notes and PIK Notes tendered
for redemption plus all accrued and unpaid interest thereon up to and including
the Purchase Date. If not all of the Put Securities can be redeemed by UK Parent
for any reason, UK Parent shall select, on or prior to the Purchase Date, the
specific Put Securities or portions thereof to be redeemed pro rata among the
Purchasers and interest shall continue to accrue on all Subordinated Notes and
PIK Notes not redeemed; provided, however, that nothing in this Article VII
shall be deemed a waiver or contractual impairment of the right of the
Purchasers to have all Put Securities redeemed in full pursuant to Section 7.1
and UK Parent shall not be relieved of its obligation to redeem any unredeemed
Put Securities in full. Promptly after the Purchase Date UK Parent shall, with
respect to any Put Securities not redeemed in whole, return to the appropriate
Purchaser the unredeemed Put Securities or a new Subordinated Note or PIK Note,
as the case may be, equal in principal amount to the unredeemed portion of the
Put Securities, as the case may be.
7.3 Mandatory Redemption of Mirror Notes and Mirror PIK Notes. Upon
written notice to TW UK of UK Parent's redemption of the Put Securities and the
accompanying purchase by UK Parent of the Warrants referred to in Section 7.1
above (which notice UK Parent will be required to serve as soon as possible), TW
UK shall, immediately prior to such redemption and/or purchase by UK Parent,
redeem the Mirror Notes and the Mirror PIK Notes, at the Mirror Note Redemption
Price and the Mirror PIK Note Redemption Price, respectively. UK Parent shall
use the funds it receives from such redemption of the Mirror Notes and the
Mirror PIK Notes to redeem the Subordinated Notes and the PIK Notes tendered by
the Purchasers and accepted for redemption by UK Parent.
7.4 Obligations of UK Parent and TW UK Upon Purchasers' Put. Prior to
the Purchase Date in connection with a Liquidity Event, UK Parent will, and UK
Parent shall cause TW UK to, in good faith seek to obtain any required consent
of the holders of the Bank Indebtedness and/or Mezzanine Indebtedness the terms
of which prohibit UK Parent from redeeming the Subordinated Notes or PIK Notes,
as the case may be, or TW UK from redeeming the Mirror Notes or the Mirror PIK
Notes, as the case may be, so as to permit the making of the Offer and the
redemption of all Put Securities pursuant to Section 7.1 hereof, including
repayment out of the proceeds of such Liquidity Event of all Obligations under
such Bank Indebtedness and/or Mezzanine Indebtedness to the extent necessary to
permit the making of the Offer and the redemption of Subordinated Notes and PIK
Notes pursuant to Section 7.1 hereof.
7.5 Redemption Prohibited. Subject to compliance with Section 7.4
hereof, if, at a Purchase Date, UK Parent is prohibited under Applicable Laws or
under any other contractual or other arrangement, including, without limitation,
the Credit Agreements or the Intercreditor Agreement, or other legal restriction
whatsoever from redeeming all Subordinated Notes and PIK Notes for which
redemption is elected hereunder pursuant to the Purchasers' Put, then UK Parent
shall redeem such Subordinated Notes and PIK Notes to the extent permissible and
shall redeem
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the remaining Subordinated Notes or PIK Notes to be redeemed as soon as UK
Parent is not so prohibited. UK Parent shall use all reasonable endeavors to
take such action as shall be necessary or appropriate to review and promptly
remove any impediment to its ability to redeem the Subordinated Notes and PIK
Notes under the circumstances contemplated by Section 7.1 hereof other than the
Credit Agreements and the Intercreditor Agreement; provided, however, that this
provision shall not require the repayment of Designated Indebtedness other then
upon the occurrence of a Liquidity Event. In the event that UK Parent fails for
any reason to redeem any Subordinated Notes or PIK Notes for which redemption is
required pursuant to Section 7.1 hereof, then during the period from the
applicable Purchase Date through to the date on which such Subordinated Notes or
PIK Notes are redeemed the Subordinated Notes and PIK Notes which remain
outstanding and shall continue to accrue interest at the rate provided therein,
plus two percent (2%). Nothing in this Section 7.5 shall impair or be deemed to
limit, modify or affect the rights of the Purchasers (unless otherwise
restricted, including, without limitation, under the Intercreditor Agreement) to
pursue any available remedy, at law or in equity, to enforce or seek to enforce,
in any manner whatsoever, UK Parent's obligations under this Article VII,
including without limitation filing any suit or complaint or seeking to file a
suit or complaint with any court of competent jurisdiction to obtain injunctive
or other equitable relief and/or damages arising from a breach of UK Parent's
obligation to redeem the Subordinated Notes and the PIK Notes and enforcing any
judgment obtained in any such suit in any manner available under Applicable Law
to judgment creditors in general.
7.6 Failure of UK Parent and TW UK to Honor Purchasers' Put. In the
event that UK Parent fails to perform in full its obligations following the
Purchasers' election to exercise the Purchasers' Put pursuant to Section 7.1
hereof and TW UK fails to perform its obligations as a guarantor of such
obligations pursuant to Section 7.7 hereof, then a Majority in Interest of the
Purchasers shall have the right, at their or its option, to: (i) exercise the
Purchaser's Put against TW UK to the same extent and with the same effect as
such exercise against UK Parent and TW UK hereby agrees that it shall be fully
bound by this Article VII as if it were UK Parent, except that (A) to the extent
that any deductions and withholdings on account of Taxes are required under
Applicable Law or of any Taxes imposed on any Purchaser as a result of failure
of UK Parent to fulfill its obligations under Section 7.1 above and TW UK to
fulfill its obligations under Section 7.7 below which would not have been
required had no such failure occurred and taking into account all such Taxes
(unless such failure was directly attributable to a prohibition against such
fulfillment by UK Parent or TW UK, as the case may be, under Applicable Law),
the Subordinated Note Redemption Price and PIK Note Redemption Price shall be
increased, as may be necessary, so that after making all such deductions and
withholdings and taking into account all such Taxes (whether applicable to the
original redemption price payable or to additional sums payable under this
Section 7.6 and taking into account all Taxes on and arising by reason of the
payment of additional sums payable under this Section 7.6), the Purchasers
receive an amount equal to the sum that it would have received had no such
deductions or withholdings been made or Taxes imposed, (B) the Companies shall
make required deductions or withholdings, and (C) the Companies shall pay the
full amount deducted or withheld to the relevant taxing or other Governmental
Entity; or
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(ii) exercise directly through instructions to the Trustee under the Voting
Trust Agreement the "drag-along rights" set forth in the Charter Documents of TW
UK without any requirement that the Board of Directors of UK Parent or TW UK
first take any action and, on such election by a Majority in Interest of the
Purchasers, all of the parties hereto undertake to take all such action and give
all such instructions as may be necessary to effect in full such drag-along
rights.
7.7 TW UK Guaranty.
(a) TW UK hereby unconditionally, irrevocably and absolutely
guarantees payment in full of the obligations of UK Parent to the Purchasers
upon the election of the Purchasers to exercise the Purchasers' Put with respect
to the Subordinated Notes and the PIK Notes. To the extent that UK Parent
defaults on such obligations, TW UK shall be absolutely and unconditionally
obligated to pay the Subordinated Note Redemption Price and the PIK Note
Redemption Price in immediately available funds in full on the Purchase Date and
shall not be entitled to set off any claim of any kind which UK Parent or TW UK
may have against anyone whether arising under or by reason of this Agreement,
the other Transaction Documents or for any other reason of any kind. In the
event that the Purchasers shall not for any reason receive on the Purchase Date
the full payment of the Subordinated Note Redemption Price and the PIK Note
Redemption Price, including, without limitation, any accrued and unpaid
interest, for the Subordinated Notes and/or the PIK Notes being redeemed, then
in any proceeding instituted by the Purchasers, no defense by TW UK to its
obligation to pay the Subordinated Note Redemption Price and the PIK Note
Redemption Price, whether by counterclaim, affirmative defense or new matter,
that is not also available to UK Parent with respect to the primary obligation
to redeem the Put Securities, shall be interposed or shall be of any force or
effect, said defenses being waived for purposes of such proceeding.
(b) Subject to compliance in full with this Article VII by the
Purchasers, TW UK waives any and all notice of the creation, renewal, extension
or accrual of any component of the Subordinated Note Redemption Price and the
PIK Note Redemption Price and notice of or proof of reliance by the Purchasers
upon this Section 7.7 or acceptance of this Section 7.7; the obligation to pay
the Subordinated Note Redemption Price and the PIK Note Redemption Price shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon this Section 7.7; and all dealings between UK Parent or TW UK, on the one
hand, and the Purchasers, on the other, shall likewise be conclusively presumed
to have been had or consummated in reliance upon this Section 7.7. TW UK waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon TW UK with respect to the Subordinated Note Redemption
Price and the PIK Note Redemption Price. TW UK's obligations under this Section
7.7 shall be construed as a continuing, absolute and unconditional guarantee of
payment to pay the Subordinated Note Redemption Price and the PIK Note
Redemption Price and shall not be diminished or impaired by (i) any defense,
set-off or counterclaim (other than a defense of payment) which may at any time
be available to or be asserted by UK Parent or TW UK against the Purchasers, or
(ii) any other circumstance
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whatsoever (with or without notice to or knowledge of UK Parent or TW UK) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of UK Parent from the obligation to pay the entire Subordinated Note
Redemption Price and the PIK Note Redemption Price, or of TW UK under this
Section 7.7, on the occurrence of any Insolvency Proceedings or in any other
instance.
(c) This Section 7.7 shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Subordinated Note Redemption Price and the PIK Note Redemption Price
is rescinded or must otherwise be restored or returned by the Purchasers upon
the occurrence of any Insolvency Proceedings relating to UK Parent or upon or as
a result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, UK Parent or any substantial part of its
property, or otherwise, all as though such payments had not been made.
(d) Any provision of this Section 7.7 which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(e) No failure to exercise, nor any delay in exercising, on the
part of the Purchasers, any right, power or privilege hereunder shall operate as
a waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Purchasers of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Purchaser would otherwise have on any future occasion.
The rights and remedies provided in this Section 7.7 are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
ARTICLE VIII
PUT OF WARRANTS AND WARRANT SHARES
8.1 Put of Warrants. The Warrants, subject to the terms of the
Intercreditor Agreement, shall be subject to purchase by UK Parent, in whole or
in part, at the Warrant Purchase Price, at the option of a Majority in Interest
of the Purchasers ("Purchasers' Warrant Put") upon and after the occurrence of a
Warrant Put Event; provided, however, that the Purchasers' Warrant Put cannot be
exercised on more than three (3) separate occasions or for an aggregate Warrant
Purchase Price equal to less than (i) (pounds sterling)5.0 million on any
occasion or (ii) 100% of the remaining Warrants outstanding at the time if
exercise of the Purchasers' Warrant Put would result in less than (pounds
sterling)5.0 million of Warrant Purchase Price being owed with respect to all
remaining outstanding Warrants in the aggregate. Notwithstanding the foregoing,
the Purchasers may not elect such purchase unless they also exercise their right
to require UK
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Parent to redeem Subordinated Notes pursuant to Section 7.1 hereof having a
principal amount equal to the aggregate exercise price of the Warrants the
subject of the Purchasers's Warrant Put, and in such event UK Parent shall be
required to redeem such Subordinated Notes in the manner provided in Article VII
hereof and TW UK shall be required to redeem the Mirror Notes in the manner
provided in Article VII hereof. The date on which such Warrant Put Event occurs
is referred to as the "Warrant Put Event Trigger Date." A "Warrant Put Event"
shall mean, with respect to the Warrants elected to be purchased by the
Purchasers, (i) any Liquidity Event, (ii) a date subsequent to the eighth
anniversary of the Closing Date if the Bank Indebtedness and the Mezzanine
Indebtedness have been paid in full on or before such date or (iii) a date
subsequent to the Stated Maturity of the Subordinated Notes. The "Warrant
Purchase Price" shall be equal to: (i) the Fair Market Value of the Ordinary
Shares which the Purchasers have the right to acquire upon exercise of the
Warrants which are the subject of the Purchasers' Warrant Put, minus (ii) the
product of (x) the exercise price of each Warrant, as provided therein,
multiplied by (y) the number of Ordinary Shares which correspond to the Warrants
for which such Purchasers' Warrant Put is exercised.
8.2 Warrant Put Offer Procedures. Within five (5) Business Days after UK
Parent becomes aware of the occurrence of a Warrant Put Event and in any event
not later than the Warrant Put Event Trigger Date, UK Parent shall mail a notice
(the "Warrant Put Offer") to each of the Purchasers notifying them that the
Warrants and Subordinated Notes will be purchased and redeemed, respectively, at
the election of the Purchasers in accordance with this Article VIII. If a
Majority in Interest of the Purchasers elect to exercise their redemption rights
pursuant to this Article VIII, they shall give notice to UK Parent setting forth
the number of Warrants to be purchased and the aggregate amount of Subordinated
Notes to be redeemed and the purchase date shall be the earlier of (i) a date
selected by UK Parent, but not later than 30 days from the date such notice is
given, or (ii) if such notice relates to a Liquidity Event and is given prior to
the occurrence of the Liquidity Event, the date of completion of the Liquidity
Event (the "Warrant Purchase Date"). An election to exercise purchase and
redemption rights pursuant to this Article VIII in connection with a Liquidity
Event shall in all circumstances be conditional upon the completion of the
Liquidity Event and no obligation to purchase or redeem, as the case may be,
Purchasers' Securities shall arise if the Liquidity Event cannot be completed.
In the event a Warrant Put is exercised with respect to a Liquidity Event, the
Purchasers will be entitled to withdraw their election to tender the Warrants
and the Subordinated Notes by delivering to UK Parent, not later than the close
of business on the second Business Day preceding the Warrant Purchase Date, a
telegram, telex, facsimile transmission or letter to that effect. Upon a
Purchaser's election to tender any Warrant or Subordinated Note, the Purchaser
will be required to surrender such Warrant and Subordinated Note with a form
requiring purchase and redemption completed to UK Parent at the address
specified in the signature page hereto prior to the close of business on the
Business Day preceding the Warrant Purchase Date. On the Warrant Purchase Date,
UK Parent will (i) purchase the Warrants tendered pursuant to Section 8.1 hereof
for cash in an amount equal to the aggregate Warrant Purchase Price for all
Warrants tendered for purchase and (ii) redeem the Subordinated Notes tendered
pursuant to Section 8.1 hereof for cash in an amount equal to
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the aggregate Subordinated Note Redemption Price for all Subordinated Notes
tendered for redemption. If not all of the Warrants and Subordinated Notes
tendered pursuant to a Warrant Put Offer can be purchased or redeemed,
respectively, by UK Parent for any reason, UK Parent shall select, on or prior
to the Warrant Put Date, the Warrants and Subordinated Notes (or portions
thereof, provided, that, UK Parent shall select for purchase the same proportion
of the Warrants as Subordinated Notes) to be purchased and redeemed, as the case
may be, pro rata among the Purchasers and interest shall continue to accrue on
all Subordinated Notes not redeemed, provided, however, that nothing in this
Article VIII shall be deemed a waiver or contractual impairment of the right of
the Purchasers to have all Warrants purchased and all Subordinated Notes
redeemed in full pursuant to Section 8.1 hereof and UK Parent shall not be
relieved of its obligations to purchase unpurchased Warrants and redeem
unredeemed Subordinated Notes in full. Promptly after the Warrant Put Date, UK
Parent shall, with respect to any Warrants and Subordinated Notes not purchased
or redeemed, respectively, in whole, return to the appropriate Purchaser, the
unpurchased Warrants and the unredeemed Subordinated Notes or a new Warrant
certificate and Subordinated Note, as the case may be, equal in number and
principal amount, as the case may be, to the unpurchased portion of the tendered
Warrants and unredeemed portion of the tendered Subordinated Notes.
8.3 Put of Ordinary Shares; Share Put Offer Procedures.
(a) The Ordinary Shares issued to the Purchasers upon exercise of
the Warrants, subject to the terms and provisions of the Intercreditor
Agreement, shall be subject to purchase by UK Parent, in whole or in part, at
the Share Purchase Price, at the option of a Majority in Interest of the
Purchasers ("Purchasers' Share Put") upon and after the occurrence of a Share
Put Event; provided, however, that the Purchasers' Share Put cannot be exercised
on more than three (3) separate occasions or for an aggregate Share Purchase
Price equal to less than (i) (pounds sterling)5.0 million on any occasion or
(ii) 100% of the remaining Ordinary Shares held by the Purchasers at the time if
exercise of the Purchasers' Share Put would result in less than (pounds
sterling)5.0 million of Share Purchase Price being owed with respect to all
Ordinary Shares which are the subject of the Purchasers' Share Put held by the
Purchasers in the aggregate. In the event the Purchasers exercise the
Purchasers' Share Put, UK Parent shall be required to purchase such Ordinary
Shares in the manner provided in this Article VIII. The date on which a Share
Put Event occurs is referred to as the "Share Put Event Trigger Date." A "Share
Put Event" shall mean (i) any Liquidity Event or (ii) if TW UK has not
consummated a Qualified Public Offering and the Qualified Public Value has not
been achieved, the earlier of (A) a date subsequent to the eighth anniversary of
the Closing Date if the Bank Indebtedness and the Mezzanine Indebtedness have
been paid in full, on or before such date or (B) a date subsequent to the Stated
Maturity of the Subordinated Notes. The "Share Purchase Price" shall be equal to
the Fair Market Value of the Ordinary Shares which are the subject of the
Purchasers' Share Put.
(b) Within five (5) Business Days after UK Parent becomes aware
of the occurrence of a Share Put Event and in any event not later than the Share
Put Event Trigger Date, UK Parent shall mail a notice (the "Share Put Offer") to
each of the Purchasers,
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notifying them that the Ordinary Shares which are the subject of the Purchasers'
Share Put will be purchased at the election of the Purchasers in accordance with
this Article VIII. If a Majority in Interest of the Purchasers elect to exercise
their purchase rights pursuant to this Article VIII, they shall give notice to
UK Parent setting forth the amount of Ordinary Shares to be purchased and the
purchase date shall be the earlier of (i) a date selected by UK Parent, but not
later than 30 day from the date such notice is given, or (ii) if such notice
relates to a Liquidity Event and is given prior to the occurrence of the
Liquidity Event, the date of completion of the Liquidity Event (the "Share Put
Purchase Date"). An election to exercise purchase rights pursuant to this
Article VIII in connection with a Liquidity Event shall in all circumstances be
conditional upon the completion of the Liquidity Event and no obligation to
purchase Ordinary Shares shall arise if the Liquidity Event cannot be completed.
In the event a Purchasers' Share Put is exercised with respect to a Liquidity
Event, the Purchasers will be entitled to withdraw their election to tender the
Ordinary Shares by delivering to UK Parent, not later than the close of business
on the second Business Day preceding the Share Put Purchase Date, a telegram,
telex, facsimile transmission or letter to that effect. Upon a Purchaser's
election to tender any Ordinary Shares, the Purchaser will be required to
surrender such Ordinary Shares with a form requiring purchase completed, to UK
Parent at the address specified in the signature page hereto prior to the close
of business on the Business Day preceding the Share Put Purchase Date. On the
Share Put Purchase Date UK Parent will purchase the Ordinary Shares tendered for
cash in an amount equal to the aggregate Share Purchase Price for all the
Ordinary Shares tendered for purchase. If not all of the Ordinary Shares can be
purchased by UK Parent for any reason, UK Parent shall select, on or prior to
the Share Put Purchase Date, the specific Ordinary Shares or portions thereof to
be purchased pro rata among the Purchasers; provided, however, that nothing in
this Article VIII shall be deemed a waiver or contractual impairment of the
right of the Purchasers to have all Ordinary Shares which are the subject of the
Purchasers' Share Put purchased in full pursuant to Section 8.3(a) hereof and UK
Parent shall not be relieved of its obligations to purchase unpurchased Ordinary
Shares in full. Promptly after the Share Put Purchase Date, UK Parent shall,
with respect to any Ordinary Shares which are the subject of the Purchasers'
Share Put not redeemed in whole, return to the appropriate Purchaser the
unpurchased Ordinary Shares or a new Ordinary Share certificate equal in number
to the unpurchased portion of the tendered Ordinary Shares.
8.4 Mandatory Redemption of Mirror Notes. Upon written notice to TW UK
of UK Parent's purchase of (i) the Warrants and accompanying redemption of the
Subordinated Notes pursuant to Section 8.1 above and (ii) the Ordinary Shares
pursuant to Section 8.3 above (which notice UK Parent will be required to serve
as soon as practical), TW UK shall, immediately prior to such purchase and
redemption by UK Parent, redeem the Mirror Notes. UK Parent shall use the funds
it receives from such redemption of the Mirror Notes to purchase the Warrants
accepted for purchase by UK Parent and redeem the Subordinated Notes or PIK
Notes tendered by the Purchasers and accepted for redemption by UK Parent
pursuant to Section 8.2 hereof or to purchase the Ordinary Shares tendered by
the Purchasers and accepted for purchase by UK Parent pursuant to Section 8.3
hereof.
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8.5 Obligations of UK Parent and TW UK Upon Purchasers' Put. Prior to
the Warrant Purchase Date or the Share Purchase Date, as the case may be, in
connection with a Liquidity Event, UK Parent will, and UK Parent shall cause TW
UK, in good faith, to seek to obtain any required consent of the holders of the
Bank Indebtedness and/or the Mezzanine Indebtedness the terms of which prohibit
UK Parent from purchasing the Warrants or the Ordinary Shares, as the case may
be, so as to permit the making of the Warrant Put Offer or the Share Put Offer
and the purchasing of the Warrants and accompanying redemption of the
Subordinated Notes pursuant to Section 8.1 hereof and the Ordinary Shares
pursuant to Section 8.3 hereof, respectively, including repayment out of the
proceeds of such Liquidity Event of all Obligations under such Bank Indebtedness
and/or Mezzanine Indebtedness to the extent necessary to permit the making of
the Warrant Put Offer or the Share Put Offer and the purchase of Warrants and
accompanying redemption of the Subordinated Notes pursuant to Section 8.1 hereof
or the purchase of the Ordinary Shares pursuant to Section 8.3 hereof,
respectively.
8.6 Warrant Put or Share Put Prohibited. Subject to compliance with
Section 8.5 hereof, if, at a Warrant Put Purchase Date or a Share Put Purchase
Date, as the case may be, UK Parent is prohibited under Applicable Laws or under
any other contractual or other arrangement, including, without limitation, the
Credit Agreements or the Intercreditor Agreement, or other legal restriction
whatsoever from purchasing all Warrants or Ordinary Shares for which purchase is
elected hereunder pursuant to the Purchasers' Warrant Put or the Purchasers'
Share Put, as the case may be, then UK Parent shall purchase such Warrants or
Ordinary Shares, as the case may be, to the extent permissible and shall
purchase the remaining Warrants or Ordinary Shares as the case may be, as soon
as UK Parent is not so prohibited. UK Parent shall use all reasonable endeavors
to take such action as shall be necessary or appropriate to review and promptly
remove any impediment to its ability to purchase the Warrants or the Ordinary
Shares under the circumstances contemplated by Section 8.1 hereof or 8.3 hereof,
respectively, other than the Credit Agreements and the Intercreditor Agreement;
provided, however, that this provision shall not require the repayment of
Designated Indebtedness other then upon the occurrence of a Liquidity Event. In
the event that UK Parent fails for any reason to purchase any Warrants or
Ordinary Shares for which purchase is required pursuant to Section 8.1 hereof or
Section 8.3 hereof, then (i) the Purchasers shall have the right to revoke their
exercises of the Purchasers' Warrant Put or the Purchasers' Share Put at any
time and (ii) if the Purchasers do not elect to so revoke such exercise, during
the period from the applicable Warrant Put Purchase Date through to the date on
which such Warrants are purchased or from the applicable Share Put Purchase Date
through to the date on which such Ordinary Shares are purchased, UK Parent shall
pay, in addition to such amounts due pursuant to exercise of the Purchasers'
Warrant Put or the Purchasers' Share Put, as the case may be, to the Purchasers
an amount equal to two percent (2%) of the Warrant Purchase Price for any of the
Warrants not purchased hereunder or the Share Purchase Price for any of the
Ordinary Shares not purchased hereunder, as the case may be. Nothing in this
Section 8.6 shall impair or be deemed to limit, modify or affect the rights of
the Purchasers (unless otherwise restricted, including, without limitation,
under the Intercreditor Agreement) to pursue any available remedy, at law or in
equity,
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to enforce or seek to enforce, in any manner whatsoever, UK Parent's obligations
under this Article VIII, including without limitation filing any suit or
complaint or seeking to file a suit or complaint with any court of competent
jurisdiction to obtain injunctive or other equitable relief and/or damages
arising from a breach of UK Parent's obligation to purchase the Warrants or the
Ordinary Shares and enforcing any judgment obtained in any such suit in any
manner available under Applicable Law to judgment creditors in general.
8.7 Failure of UK Parent and TW UK to Honor Purchasers' Warrant Put or
Share Put. In the event that UK Parent fails to perform in full its obligations
following the Purchasers' election to exercise the Purchasers' Warrant Put
pursuant to Section 8.1 hereof or the Purchasers' Share Put pursuant to Section
8.3 hereof, as the case may be, and TW UK fails to perform its obligations as a
guarantor of the obligations of UK Parent pursuant to Section 8.8 hereof, then a
Majority in Interest of the Purchasers shall have the right, at their option,
to: (i) exercise the Purchasers' Warrant Put or Purchasers' Share Put, as the
case may be, against TW UK to the same extent and with the same effect as such
exercise against UK Parent and TW UK hereby agrees that it shall be fully bound
by this Article VIII as if it were UK Parent, except that (A) to the extent that
any deductions and withholdings on account of Taxes are required under
Applicable Law or of any Taxes imposed on any Purchaser as a result of failure
of UK Parent to fulfill its obligations under Sections 8.1 or 8.3 hereof and TW
UK to fulfill its obligations under Section 8.8 below which would not have been
required had no such failure occurred (unless such failure was directly
attributable to a prohibition against such fulfillment by UK Parent or TW UK, as
the case may be, under Applicable Law), the Warrant Purchase Price and the Share
Purchase Price, as the case may be, shall be increased, as may be necessary, so
that after making all such deductions and withholdings and taking into account
all such Taxes (whether applicable to the original redemption price payable or
to additional sums payable under this Section 8.7 and taking into account all
Taxes on and arising by reason of the payment of additional sums payable under
this Section 8.7), the Purchasers receive an amount equal to the sum that it
would have received had no such deductions or withholdings been made or Taxes
imposed, (B) the Companies shall make required deductions or withholdings, and
(C) the Companies shall pay the full amount deducted or withheld to the relevant
taxing or other Governmental Entity; or (ii) exercise directly through
instructions to the Trustee under the Voting Trust Agreement the "drag-along
rights" set forth in the Charter Documents of TW UK without any requirement that
the Board of Directors of UK Parent or TW UK first take any action and, on such
election by a Majority in Interest of the Purchasers, all of the parties hereto
undertake to take all such action and give all such instructions as may be
necessary to effect in full such drag along rights.
8.8 TW UK Guaranty.
(a) TW UK hereby unconditionally, irrevocably and absolutely
guarantees payment in full of the obligations of UK Parent to the Purchasers
upon the election of the Purchasers to exercise (i) the Purchasers' Warrant Put
with respect to the Warrants and (ii) the Purchasers' Share Put with respect to
the Ordinary Shares. To the extent that UK Parent
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defaults on such obligations, TW UK shall be absolutely and unconditionally
obligated to pay the Warrant Purchase Price and the accompanying Subordinated
Note Redemption Price or the Share Purchase Price, as the case may be, in
immediately available funds in full on the Warrant Put Purchase Date or the
Share Purchase Date, as the case may be, and shall not be entitled to set off
any claim of any kind which UK Parent or TW UK may have against anyone whether
arising under or by reason of this Agreement, the other Transaction Documents or
for any other reason of any kind. In the event that the Purchasers shall not for
any reason receive (i) on the Warrant Put Purchase Date the full payment of the
Warrant Purchase Price and the accompanying Subordinated Note Redemption Price
for the Warrants being purchased and the Subordinated Notes being redeemed, as
the case may be, or (ii) on the Share Put Purchase Date, the full payment of the
Share Purchase Price for the Ordinary Shares being purchased, then in any
proceeding instituted by the Purchasers, no defense by TW UK to its obligation
to pay the Warrant Purchase Price, the Subordinated Note Redemption Price or the
Share Purchase Price, as the case may be, whether by counterclaim, affirmative
defense or new matter, that is not also available to UK Parent with respect to
the primary obligation to purchase or redeem the Purchasers' Securities pursuant
to the Purchasers' Warrants Put and the Purchasers' Share Put, shall be
interposed or shall be of any force or effect, said defenses being waived for
purposes of such proceeding.
(b) Subject to compliance in full with this Article VIII by the
Purchasers, TW UK waives any and all notice of the creation, renewal, extension
or accrual of any component of the Warrant Purchase Price or the Share Purchase
Price and notice of or proof of reliance by the Purchasers upon this Section 8.8
or acceptance of this Section 8.8; the obligation to pay the Warrant Purchase
Price and the accompanying Subordinated Note Redemption Price shall conclusively
be deemed to have been created, contracted or incurred in reliance upon this
Section 8.8; the obligation to pay the Share Purchase Price conclusively shall
be deemed to have been created, contracted or incurred in reliance upon this
Section 8.8; and all dealings between UK Parent or TW UK, on the one hand, and
the Purchasers, on the other, shall likewise be conclusively presumed to have
been had or consummated in reliance upon this Section 8.8. TW UK waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon TW UK with respect to the Warrant Purchase Price and the
accompanying Subordinated Note Redemption Price or the Share Purchase Price, as
the case may be. TW UK's obligations under this Section 8.8 shall be construed
as a continuing, absolute and unconditional guarantee of payment to pay the
Warrant Purchase Price and the accompanying Subordinated Note Redemption Price
or the Share Purchase Price, as the case may be, and shall not be diminished or
impaired by (i) any defense, set-off or counterclaim (other than a defense of
payment) which may at any time be available to or be asserted by UK Parent or TW
UK against the Purchasers, or (ii) any other circumstance whatsoever (with or
without notice to or knowledge of UK Parent or TW UK) which constitutes, or
might be construed to constitute, an equitable or legal discharge of UK Parent
from the obligation to pay the entire Warrant Purchase Price and accompanying
Subordinated Note Redemption Price or the Share Purchase Price, or of TW UK
under this Section 8.8, upon the occurrence of any Insolvency Proceedings or in
any other instance.
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(c) This Section 8.8 shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Warrant Purchase Price and accompanying Subordinated Note Redemption
Price or the Share Purchase Price, as the case may be, is rescinded or must
otherwise be restored or returned by the Purchasers upon the occurrence of any
Insolvency Proceedings relating to UK Parent or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, UK Parent or any substantial part of its property, or otherwise,
all as though such payments had not been made.
(d) Any provision of this Section 8.8 which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(e) No failure to exercise, nor any delay in exercising, on the
part of the Purchasers, any right, power or privilege hereunder shall operate as
a waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Purchasers of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Purchaser would otherwise have on any future occasion.
The rights and remedies provided in this Section 8.8 are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
8.9 Further Action. Subject to the requirements of law, each of
Transworld and UK Parent (or their successors or assigns or any Person to whom
they transfer any of their shares in UK Parent or TW UK, respectively) shall
exercise or direct the exercise of their voting rights (whether at a general or
extraordinary meeting of shareholders or by consent in lieu of a meeting of
shareholders) and where appropriate to give effect to such matters, shall
convene any necessary shareholders meeting, for the purpose of passing (and,
unless pursuant to an amending resolution required for the purpose of
authorizing and giving effect to the Purchasers' Share Put against TW UK under
this Article VIII, not revoking) such resolutions as may be required by law to
approve or authorize any purchase of Securities pursuant to Articles VII and
VIII hereof, including, without limitation, any special resolutions required
under sections 165 and/or 171 of the Companies Act 1985 in connection with a
purchase by TW UK of its own shares (whether out of distributable profits or out
of the proceeds of a new issue of shares or otherwise).
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ARTICLE IX
COVENANTS
9.1 General Covenants of the Companies. As a material inducement for the
Purchasers to enter into this Agreement and subscribe for the Purchasers'
Securities, each of the Companies hereby makes the following covenants and
agreements for so long as the Purchasers hold any Ordinary Shares, Subordinated
Notes, PIK Notes or Warrants; provided, however, that all such covenants and
agreements shall lapse upon the earlier of (i) TW UK consummating a Qualified
Public Offering or (ii) the Ordinary Shares achieving a Qualified Public Value:
(a) Payment of Securities. UK Parent and TW UK, respectively,
shall pay, subject to the terms of the Intercreditor Agreement, when due all
principal of, interest on, and redemption price of the Subordinated Notes and
the PIK Notes, respectively, deliver Ordinary Shares upon the exercise of the
Warrants, and pay when due the redemption and purchase price of Warrants and
Ordinary Shares in the manner provided herein. Other than as provided in or
contemplated by the Intercreditor Agreement or the Credit Agreements as in
effect on the date hereof, the Companies shall not, or permit any of their
respective Subsidiaries to, enter into any agreement with any party which by its
express terms: (a) restricts payments due the Purchasers hereunder; or (b)
otherwise conflicts with or impairs any of the express rights or privileges
granted to the Purchasers hereunder or under any other Transaction Document.
(b) Accounting Methods; Organizational Existence.
(i) Unless consistent with Applicable Law and with
accounting principles, standards and practices generally accepted at the
relevant date in the United Kingdom consistently applied, the Companies
will not, and they will not permit any Subsidiary to, change or
introduce any new method of accounting which differs in any substantive
respect from the accounting as reflected in the audited financial
statements delivered to the Purchasers hereunder.
(ii) The Companies will do or cause to be done all things
necessary to preserve and keep in full force and effect their respective
and their respective Subsidiaries' organizational existence as limited
liability companies and the rights (charter and statutory), licenses and
franchises of the Companies and their respective Subsidiaries; provided,
however, that the Companies shall not be required to preserve any such
right, license or franchise, or the corporate, organizational or similar
existence of any Subsidiary, if the Board of Directors of TW UK shall
determine that the preservation thereof is no longer desirable in the
conduct of the business of the Group Companies taken as a whole.
(c) Indemnification of Directors; Payment of Directors' Expenses.
Each of the Companies shall (i) at all times maintain provisions in its Charter
Documents indemnifying any member of the Board of Directors of such Company
chosen by the Purchasers pursuant to the terms of the Charter Documents of such
Company against liability and limiting such liability, both to the maximum
extent permitted under the laws of England and (ii) promptly reimburse
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any such member of the Board of Directors of such Company for his reasonable
out-of-pocket expenses in accordances with the regular policies of the Companies
incurred in attending each meeting of the Board of Directors of such Company or
any committee thereof of which he or she is a member.
9.2 Covenants of the Companies Applicable to the Purchasers' Securities.
As a material inducement for the Purchasers to enter into this Agreement and
subscribe for the Purchasers' Securities, each of the Companies hereby makes the
following covenants and agreements; provided, however, that all such covenants
and agreements shall lapse upon the earlier of (i) TW UK consummating a
Qualified Public Offering or (ii) the Ordinary Shares achieving a Qualified
Public Value:
(a) Compliance Certificate and Opinion.
(i) UK Parent and TW UK shall deliver to the Purchasers,
within one hundred and twenty (120) days after the end of each fiscal
year of UK Parent and TW UK, and within forty five (45) days after the
end of each of the first three quarters of each fiscal year of UK Parent
and TW UK, an Officers' Certificate on behalf of each of UK Parent and
TW UK stating that (i) a review of the activities of UK Parent and TW UK
during the preceding fiscal year or quarter, as the case may be, has
been made to determine whether the Companies have kept, observed,
performed and fulfilled all of their respective obligations under this
Agreement and the Securities, (ii) such review was supervised by the
Officers of the Companies signing such certificate, and (iii) to the
best knowledge of each Officer signing such certificate, (A) the
Companies have kept, observed, performed and fulfilled each and every
covenant contained in this Agreement and are not in default in the
performance or observance of any of the terms, provisions and conditions
of this Agreement (or, if a Covenant Breach or Event of Default
occurred, describing all such Covenant Breaches or Events of Default of
which each such Officer may have knowledge and what action the Companies
have taken or proposes to take with respect thereto), and (B) no event
has occurred and remains in existence by reason of which payments on
account of the principal of, or premium, if any, or interest on (or the
Subordinated Note Redemption Price of, when applicable) any Security, or
issuances of Ordinary Shares upon the exercise of Warrants, are
prohibited or if such event has occurred, a description of the event and
what action the Companies are taking or proposes to take with respect
thereto.
(ii) The Companies shall deliver to the Purchasers,
promptly after any Officer of the Companies becomes aware of (i) any
Covenant Breach or Event of Default, or (ii) any default or event of
default under any other mortgage, agreement or instrument that could
result in an Event of Default under Section 17.2(a), an Officers'
Certificate specifying such Breach, Event of Breach or default and what
action the Companies are taking or proposes to take with respect
thereto.
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(iii) To the extent not disclosed in the reports provided
under this Section 9.2(a), the Companies shall promptly advise the
Purchasers of any event (including without limitation each suit or
proceeding commenced or threatened against the Companies, assuming for
purposes of this Section 9.2(a)(iii) that such action is or will be
adversely determined) which, in the reasonable judgment of the
Companies, has resulted in or, insofar as the Companies can reasonably
foresee, may result or will result in: (i) a Material Adverse Effect or
(ii) a material adverse effect on the ability of the Companies to
perform their respective obligations under any of the Transaction
Documents or in respect of the Purchasers' Securities or any document
contemplated hereby or thereby.
(iv) The Companies shall deliver to the Purchasers, as
soon as available but in no event more than one hundred and twenty (120)
days after the close of each of UK Parent's and TW UK's fiscal years, a
letter from the independent certified public accountant who examined
such annual financial statements relating to UK Parent and TW UK,
stating whether anything in such certified public accountant's
examination has revealed the occurrence of an event which constitutes a
Breach or an Event of Breach, and, if so, stating the facts with respect
thereto.
(b) Restrictive Covenants. The Companies shall not, and shall
procure that each of the Subsidiaries shall not, without the consent of a
Majority in Interest of the Purchasers:
(i) approve an annual budget and financial forecast of
results of operations and sources and uses of cash for each of the
Companies or their Subsidiaries or any material deviations from any such
approved annual budget;
(ii) amend, alter or repeal any provision of, or add any
provision to, any of the Charter Documents;
(iii) except as explicitly permitted herein, create,
obligate itself to create, authorize, reclassify or issue any Capital
Shares of the Companies or of any of the Subsidiaries (other than the
issue of Ordinary Shares pursuant to the exercise of the Warrants and
the Mezzanine Warrants or the employee options described below in this
Section 9.2(b)); or
(iv) declare or pay any dividends or make any
distributions of cash, Property or securities in respect of their
respective Capital Shares, or apply any of their assets to the
redemption, retirement, purchase or other acquisition of their
respective Capital Shares, directly or indirectly, or otherwise, except
for the redemption of Purchaser Securities pursuant to and as provided
in Articles VI, VII and VIII of this Agreement or as may be necessary to
provide UK Parent with sufficient funds to settle any applicable
assessment of taxation or any professional fees and administration costs
in the ordinary course of business (including any interest paid on the
Subordinated Notes or the PIK Notes incurred by it pursuant to the terms
of the Transaction Documents) and the
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parties shall exercise or direct the exercise of their voting rights for
the purpose of passing or authorizing and giving effect to such
redemption and any related dividend or distribution.
Notwithstanding anything to the contrary contained herein, TW UK may
grant options to employees of the Group Companies at an exercise price that is
equal to or greater than the Warrant Exercise Price (as defined in the Warrant
Instrument, currently (pounds sterling)1) of the Warrants as of the date hereof
and issue Ordinary Shares upon the exercise of such options; provided, that,
such grants do not in the aggregate exceed 9,850,000 Ordinary Shares.
(c) Limitation on Transactions with Affiliates.
(i) Neither UK Parent nor TW UK shall, nor shall the
Companies permit any of their respective Subsidiaries to, enter into any
transaction or series of transactions to sell, lease, transfer, exchange
or otherwise dispose of any of its properties or assets to or to
purchase any property or assets from, or for the direct or indirect
benefit of, any Purchaser (other than relating to this Agreement and the
transactions contemplated hereby) or any Affiliate of any Purchaser,
Transworld, UK Parent or TW UK, make any Investment in or enter into any
contract, agreement, understanding, loan, advance or Guarantee with, or
for the direct or indirect benefit of, any Purchasers (other than
relating to this Agreement and the transactions contemplated hereby) or
any Affiliate of any Purchaser, Transworld, UK Parent or of TW UK (each,
including any series of transactions with one or more Purchasers or
Affiliates, an "Affiliate Transaction"), unless:
(1) the Board of Directors of TW UK determines, as
evidenced by a Board Resolution, that the terms of such Affiliate
Transaction are fair and reasonable to the Group Companies, and
no less favorable to the Group Companies than those that could
have been obtained at that time in a comparable arms-length
transaction by the applicable Group Company with an unrelated
Person; and
(2) such transaction has been approved by a
majority of members of the Board of Directors of TW UK who have
no direct or indirect interest in the Affiliate Transaction
itself or in the Affiliate that is a party to the Affiliate
Transaction, or in any other party that is an Affiliate of any
such Affiliate, and TW UK shall have delivered to the Purchasers
and Transworld an Officers' Certificate certifying that the
conditions of this clause (2) have been satisfied; and
(3) with respect to an Affiliate Transaction
involving or having a potential aggregate value of more than
(pounds sterling)1,000,000, the Board of Directors of TW UK shall
first have received a written opinion from an Independent
Financial Advisor for the benefit of Transworld, TW UK and the
Purchasers, which firm is not receiving any contingent fee or
other consideration directly or indirectly related
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to the successful completion of the Affiliate Transaction, to the
effect that the proposed Affiliate Transaction is fair to the
Group Companies from a financial point of view.
(ii) The provisions of this Section 9.2(c) shall not apply
to (i) the reasonable and customary fees and compensation paid to or
indemnity provided on behalf of, officers, directors, employees or
consultants of the Group Companies, as determined by the Board of
Directors of TW UK (with respect to officers and directors of TW UK) or
the senior management of TW UK in good faith (with respect to other
employees and consultants of the Group Companies), (ii) transactions
exclusively between or among UK Parent and TW UK and any Wholly-Owned
Subsidiary or exclusively between or among Wholly-Owned Subsidiaries,
provided such transactions are not otherwise prohibited by this
Agreement, (iii) any Affiliate Transaction in existence as of the date
hereof, or (iv) any amendment, restructuring or modification of the
terms of the Securities or the rights and obligations of the Purchasers
under this Agreement or the other Transaction Documents which is
approved by a majority of the members of the Board of Directors other
than the Purchaser Director.
(iii) Notwithstanding anything to the contrary contained
herein, neither UK Parent nor TW UK shall enter into, or permit any of
their respective Subsidiaries to enter into any transaction or series of
transaction, whatever the form or consideration, with Transworld without
the prior written consent of a Majority in Interest of the Purchasers.
(d) Intentionally Omitted.
(e) Intentionally Omitted.
(f) Restrictions Against Limitations on Upstream Payments.
Neither UK Parent nor TW UK shall, nor shall it permit any Subsidiary to, create
or otherwise cause or to become effective any Payment Restriction, except for
such Payment Restrictions existing under or by reason of: (i) Applicable Law;
(ii) the terms of the Transaction Documents; (iii) the terms of the Credit
Agreements as in existence on the date hereof and any other document entered
into in connection therewith; (iv) any instrument governing Indebtedness or
Capital Shares of an Acquired Person as in effect at the time of such
acquisition (except to the extent such Indebtedness was Incurred in
contemplation of or in connection with such acquisition), provided, that such
restriction is not applicable to any Person, or the Property or assets of any
Person, other than the Acquired Person; (v) non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices; (vi) instruments governing purchase money Indebtedness for Property
acquired in the ordinary course of business that only impose restrictions on the
Property so acquired; or (vii) Refinancing Indebtedness approved by the Board of
Directors of TW UK, with respect to Indebtedness described in clauses (ii),
(iii) or (iv), provided that the restrictions contained in the agreements
governing such Refinancing Indebtedness are no more restrictive in the aggregate
than those contained in
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the instrument governing the Indebtedness being refinanced immediately prior to
such refinancing.
(g) Limitation on Sales of Assets. Other than as contemplated in
the Charter Documents of the Companies, the Companies shall not, and shall not
permit any of their respective Subsidiaries to undertake any Asset Disposition
unless (i) the Board of Directors of TW UK (evidenced by a certified copy of a
Board Resolution), approves such Asset Disposition and (ii) no Covenant Breach
or Event of Default exists at the time, or would occur as a consequence, of
(after giving effect, on a pro forma basis, to) such Asset Disposition.
(h) Limitation on Indebtedness.
(i) Each of the Companies will not, and will not permit any of its
Subsidiaries to, Incur, directly or indirectly, any Indebtedness; provided,
however, that TW UK and its Subsidiaries may Incur Indebtedness if on the date
of such Incurrence and after giving effect thereto the Net Leverage Ratio would
be 7.0:1 or less. For purposes of this Section 9.2(h) the following terms shall
have the following meaning:
"Acquisition Costs" means all fees, out-of-pocket costs and expenses,
stamp, registration and other taxes incurred by any Group Company in connection
with the Credit Agreements, the Transaction Documents, the Securities, the
Designated Indebtedness and any documentation and transactions contemplated
thereby, as well as in connection with a Permitted Acquisition (as defined in
the Credit Facility).
"Agreed Pro Forma Adjustments" means in respect of any Permitted
Acquisition or Permitted Equity Funded Acquisition (each as defined in the
Credit Agreements) adjustments made to EBIT relating to such acquisition which:
(a) add back any non-recurring costs and expenses of the vendors and any overall
reduction in operating expenses arising as a result of such acquisition; (b)
deduct any new operational costs and expenses including amounts payable to any
superintendent or similar person; and (c) in respect of any calculation of EBIT
or EBITDA for any Relevant Period where such Permitted Acquisition or Permitted
Equity Funded Acquisition did not occur at the commencement of such Relevant
Period, annualizes actual EBIT or, as the case may be, EBITDA of the Relevant
Business or Restricted Subsidiary (each as defined in the Credit Agreements)
since the date of such acquisition.
"Available Cash" means cash from time to time, standing to the credit of
the Acquisition Expenditure Account (as defined in the Credit Facility) in the
name of any Borrower (as defined in the Credit Agreements).
"Cash" means, at my time, cash at bank denominated in sterling and
credited to an account in the name of a Group Company that is a Borrower (as
defined in the Credit Facility) under the Credit Facility with an Eligible
Deposit Bank (as defined in the Credit Facility) and to which such Group
Company is alone beneficially entitled and for so long as (a) such cash is
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repayable on demand and (b) repayment of such cash is not contingent on the
prior discharge of any other Indebtedness of any Group Company or of any other
person whatsoever or on the satisfaction of any other condition.
"EBIT" means, in respect of any Relevant Period, the Consolidated profit
of the Group Companies for such period:
(a) before any deduction of corporation tax or other taxes on income
or gains for such Relevant Period;
(b) before any deduction of Interest Payable in respect of such
Relevant Period and before amortization of Acquisition Costs, to
the extent amortized;
(c) after deducting (to the extent included) Interest Receivable in
respect of such Relevant Period;
(d) excluding extraordinary items relating to such Relevant Period;
(e) after deducting (to the extent otherwise included) the amount of
profit (or adding back the loss) for such Relevant Period of any
Group Company which is attributable to any third party (not being
a Group Company) which is a shareholder in such Group Company;
(f) after deducting (to the extent otherwise included) any gain over
book value arising in favor of a Group Company on the disposal of
any asset (not being any disposals made in the ordinary course of
trading) during such Relevant Period and any gain arising on any
revaluation of any asset during such period;
(g) after adding back (to the extent otherwise deducted) any loss
against book value incurred by any of the Group Companies on the
disposal of any asset (not being any disposals made in the
ordinary course of trading) during such Relevant Period;
(h) after deducting any depreciation on fixed assets relating to such
Relevant Period.
"EBITDA" means, in respect of any Relevant Period, EBIT for such period
adding back depreciation and amortization during that period, to the extent
deducted in calculating EBIT and taking into account any applicable Agreed Pro
Forma Adjustments. In relation to any Relevant Period ending on or before
September 30, 2000, EBITDA shall be determined on a rolling 12 month basis and
shall be calculated by annualizing actual EBITDA, in respect of the period from
January 1, 2000 to the last day of the Relevant Period.
"Financial Indebtedness" means all Indebtedness of the Group Companies
determined on a Consolidated basis in respect of or arising under or in
connection with:
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(a) monies borrowed (including overdrafts); or
(b) indebtedness under any debenture, bond (other than a performance:
bond issued in respect of the trade obligations), note or loan
stock or other similar instrument; or
(c) any acceptance or documentary credit (other than in respect of
trade obligations), or
(d) receivables sold or discounted (otherwise than on a non-recourse
basis); or
(e) the acquisition cost of any asset to the extent payable after the
time of acquisition or possession by the person liable as
principal obligor for the payment thereof where the deferred
payment is arranged primarily as a method of raising finance or
financing or refinancing the acquisition of the asset acquired
(excluding, for the avoidance of doubt, trade credit with a term
of 180 days or less on customary terms); or
(f) the sale price of any asset to the extent paid before the time of
sale or delivery by the Person liable to effect such sale or
delivery where the advance payment is arranged primarily as a
method of raising finance or financing or refinancing the
manufacture, assembly, acquisition or holding of the asset to be
sold (excluding, for the avoidance of doubt, trade credit with a
term of 180 days or less on customary terms); or
(g) Finance Leases, credit sale or conditional sale agreements
(whether in respect of land, buildings, plant, machinery,
equipment or otherwise) entered into primarily as a method of
raising finance or financing or refinancing the acquisition of
the relevant asset (but not including liabilities under operating
leases); or
(h) the net amount from time to time due pursuant to any agreement
for managing or hedging currency and/or interest rate and/or
commodity risk whether by way of forward exchange, cap, collar,
swap, forward rate agreement or otherwise or the net amount from
time to time due under any other derivative contract; or
(i) the amount payable under any put option or other arrangement
(excluding, until exercisable, the Warrants) whereby any Group
Company is liable, at the request of a third party, to purchase
share capital or other securities issued by it or any other Group
Company prior to December 17, 2006; or
(j) the amount payable by any Group Company in respect of the
redemption of any share capital or other securities issued by it
prior to December 17, 2006; or
(k) the amount of any guarantee or indemnity of any Person in respect
of any Indebtedness falling within paragraphs (a) to (j)
inclusive of this definition;
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and so that, where the amount of Financial Indebtedness falls to be calculated,
no amount shall be taken into account more than once in the same calculation.
For the avoidance of doubt, Financial Indebtedness shall not include
Indebtedness Incurred in relation to any Earnouts payable at the date hereof.
"Financial Quarter" means the period commencing on the day after one
Quarter Date and ending on the next Quarter Date.
"Indebtedness for Borrowed Money" means any Indebtedness in respect of
or arising under or in connection with Financial Indebtedness (save for
Indebtedness falling within paragraph (h) of the definition of Financial
Indebtedness).
"Interest" means in respect of any Relevant Period, amounts payable
pursuant to Clause 14 of the Credit Agreements (Taxes) and interest and amounts
in the nature of interest paid or payable in respect of any Indebtedness for
Borrowed Money of any Group Company, excluding any interest paid or payable on
Indebtedness for Borrowed Money between any Group Company and any other Group
Company, but including:
(a) the interest element of finance leases;
(b) discount and acceptance fees payable (or deducted) in respect of
any Indebtedness for Borrowed Money excluding any income or
expense received or incurred in connection with any sales through
factoring or leasing transactions but only to the extent that
such amounts have been taken into account in the cost of sales
for the purposes of calculating EBIT;
(c) the net amount (expressed as a positive or negative amount, as
appropriate) due to or from any of the Group Companies pursuant
to interest rate hedging or similar agreements; and
(d) commitment, utilization and non-utilization fees payable or
incurred in respect of Indebtedness for Borrowed Money.
"Interest Payable" means, in respect of any Relevant Period, Interest
accrued (whether or not paid or capitalized) during that Relevant Period as an
obligation of any Group Company during that period and calculated on the basis
that amortization of Acquisition Costs, to the extent amortized, will be
excluded.
"Interest Receivable" means, in respect of any Relevant Period, the
amount of Interest (which for this purpose shall include all payments of the
type described in the definition of Interest above (except for paragraph (c)
thereof)) received by Group Companies (other than by other Group Companies)
during such period whether or not paid.
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"Net Cash Interest" means, in respect of any Relevant Period, Interest
Payable less Interest Receivable to the extent actually received in cash during
that period.
"Net Leverage Ratio" means, as of any date of determination, the ratio
of Total Net Leverage at such date to EBITDA for the Relevant Period.
"Quarter Date" means each of 31 March, 30 June, 30 September and 31
December.
"Relevant Period" means (notwithstanding that such period commenced
prior to the date hereof) the four consecutive Financial Quarters ended on the
last day of the Fiscal Quarter most recently ended.
"Total Leverage" means at any time the aggregate amount of Indebtedness
for Borrowed Money (including all Indebtedness incurred in relation to the
Subordinated Notes, but excluding any Indebtedness in relation to the PIK Notes)
of the Group Companies at such time.
"Total Net Leverage" means with respect to any Relevant Period, Total
Leverage less the aggregate amount of all cash balances (including Available
Cash).
A Majority in Interest of the Purchasers may at any time if they have
reasonable grounds for believing that the figures prepared by the Companies are
incorrect, inaccurate or incomplete, at the Companies' expense, require the
auditors of the Group Companies to verify the figures supplied by the Companies
in connection with the financial conditions set out in this Section 9.2(h). If
such auditors fail to verify such figures to the reasonable satisfaction of a
Majority in Interest of the Purchasers after being requested to do so, a
Majority in Interest of the Purchasers may appoint an independent firm of
accountants to carry out an appropriate investigation and give a certificate in
a form and content reasonably satisfactory to a Majority in Interest of the
Purchasers certifying or verifying the relevant figures and satisfaction of the
above financial conditions shall be determined be reference to the figures so
verified or certified, even if the audited or management accounts for the same
date or period have not yet been published.
(ii) Notwithstanding the foregoing paragraph (i), TW UK or
its Subsidiaries may Incur the following Indebtedness:
(1) Bank Indebtedness in an aggregate principal
amount not to exceed (pounds sterling)45.5 million, less
the aggregate amount of all mandatory prepayments of
principal applied to permanently reduce any such
Indebtedness;
(2) Mezzanine Indebtedness in an aggregate
principal amount not to exceed (pounds sterling)10.0
million, less the aggregate amount of all mandatory
prepayments of principal applied to permanently reduce any
such Indebtedness;
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(3) Indebtedness evidenced by the Mirror Notes and
any Mirror PIK Notes required to be issued from time to
time in lieu of cash payments of interest on the Mirror
Notes and any Mirror PIK Notes already outstanding;
(4) Indebtedness owed to and held by any
Wholly-Owned Subsidiary; provided, however, that any
subsequent issuance or transfer of any Capital Shares or
any other event that results in any such Wholly-Owned
Subsidiary ceasing to be a Wholly-Owned Subsidiary or any
subsequent transfer of any such Indebtedness (except to TW
UK or a Wholly-Owned Subsidiary) shall be deemed, in each
case, to constitute the Incurrence of such Indebtedness by
the issuer thereof;
(5) Indebtedness (A) outstanding on the Closing
Date (other than the Indebtedness described in clauses
(1), (2) and (3) above), (B) consisting of Refinancing
Indebtedness Incurred in respect of any Indebtedness
described in clauses (1), (2), (3), (7) or (8) of this
Section 9.2(h)(ii) (including Refinancing Indebtedness)
and (D) consisting of Guarantees of any Indebtedness
permitted under clauses (1), (2), (3), (5), (6), (7) and
(8) of this Section 9.2(h)(ii);
(6) Indebtedness (A) in respect of performance
bonds, bankers' acceptances, letters of credit and surety
or appeal bonds provided by TW UK for itself or for the
benefit of its Subsidiaries in the ordinary course of
their business, and (B) under Hedging Obligations entered
into for bona fide hedging purposes of the Group Companies
in the ordinary course of business; provided, however,
that such Hedging Obligations do not increase the
Consolidated Indebtedness of the Group Companies
outstanding at any time other than as a result of
fluctuations in interest rates or currency exchange rates
or by reason of fees, indemnities and compensation payable
thereunder;
(7) Indebtedness represented by Finance Lease
Obligations in an aggregate principal amount not to exceed
(pounds sterling)250,000 outstanding at any one time;
(8) Indebtedness (other than Indebtedness permitted
to be incurred pursuant to Section 9.2(h)(i) hereof or any
other clause of this Section 9.2(h)(ii)) of TW UK in an
aggregate principal amount on the date of Incurrence that,
when added to all other Indebtedness Incurred by TW UK
pursuant to this Section 9.2(h)(ii)(8) and then
outstanding, shall not exceed (pounds sterling)20.0
million outstanding at any one time; or
(9) Indebtedness in respect of interest payments
accruing on Indebtedness which is otherwise permitted.
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(iii) Notwithstanding the foregoing Section 9.2(h)(i), UK
Parent may Incur Indebtedness with respect to the Subordinated
Notes, the PIK Notes and Guarantees of Designated Indebtedness
and other Indebtedness of any Group Company permitted hereby.
(iv) Notwithstanding any other provision of this Section
9.2(h), the maximum amount of Indebtedness that the Companies or
any Subsidiary may Incur pursuant to this Section 9.2(h) shall
not be deemed to be exceeded solely as a result of fluctuations
in the exchange rates of currencies. For purposes of determining
the outstanding principal amount of any particular Indebtedness
Incurred pursuant to this covenant:
(1) Indebtedness Incurred pursuant to the Credit
Agreements prior to or on the Closing Date shall be
treated as Incurred pursuant to Section 9.2(h)(ii)(1);
(2) Indebtedness permitted by this Section 9.2(h)
need not be permitted solely by reference to one provision
permitting such Indebtedness but may be permitted in part
by one such provision and in cart by one or more other
provisions of this covenant permitting such Indebtedness;
and
(3) in the event that Indebtedness meets the
criteria of more than one of the types of Indebtedness
described in this Section 9.2(h), TW UK, in its sole
discretion, shall classify such Indebtedness and only be
required to include the amount of such Indebtedness in one
of such clauses.
(v) For purposes of determining compliance with any
Sterling-denominated restriction on the Incurrence of
Indebtedness the Sterling-equivalent principal amount of
Indebtedness denominated in a foreign currency shall be
calculated based on the relevant currency exchange rate in effect
on the date such Indebtedness was Incurred, in the case of term
debt, or first committed, in the case of revolving credit debt;
provided that (1) the Sterling-equivalent principal amount of any
such Indebtedness outstanding or committed on the Closing Date
shall be calculated based on the relevant currency exchange rate
in effect on the Closing Date, and (2) if such Indebtedness is
Incurred to Refinance other Indebtedness denominated in a foreign
currency, and such Refinancing would cause the applicable
Sterling-denominated restriction to be exceeded if calculated at
the relevant currency exchange rate in effect on the date of such
Refinancing, such Sterling-denominated restriction shall be
deemed not to have been exceeded so long as the principal amount
of such Refinancing Indebtedness does not exceed the principal
amount of such Indebtedness being Refinanced. The principal
amount of any Indebtedness Incurred to Refinance other
Indebtedness, if Incurred in a different currency from the
Indebtedness being Refinanced, shall be calculated
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based on the currency exchange rate applicable to the currencies
in which such respective Indebtedness is denominated that is in
effect on the date of such Refinancing.
(i) Protection of Purchasers' Rights Generally.
(i) Neither UK Parent nor TW UK shall, or shall permit any
of its Subsidiaries to, by amendment of any Charter Document or
through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, agreement or
any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed
hereunder by UK Parent and TW UK.
(ii) Upon request by the Purchasers, the Companies shall
do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged and delivered such reasonable further act,
deed, conveyance, transfer and assurance necessary to better
assure their compliance with the terms, provisions, purposes and
intents of this Agreement and the other Transaction Documents,
and all other agreements, securities and instruments contemplated
hereby and thereby, and the effectiveness of the rights, benefits
and remedies provided for hereby and thereby.
(j) Amendments and Supplements Requiring Consent of Purchasers.
(i) Except as otherwise provided in this Section
9.2(j)(i), the Mirror Notes and Mirror PIK Notes may be amended
or supplemented only with the written consent of a Majority in
Interest of the Purchasers, and any existing Covenant Breach or
Event of Default or compliance with any provision of the Mirror
Notes and/or Mirror PIK Notes may be waived only with the consent
of a Majority in Interest of the Purchasers.
(ii) Without the written consent of each Purchaser
affected, no amendment, supplement or waiver to the Subordinated
Notes or PIK Notes shall: (A) amend this Section 9.2(j), (B)
reduce the principal of or change the fixed maturity of any
Subordinated Note or any PIK Note, or alter the provisions with
respect to the redemption of the Subordinated Notes or PIK Notes
in a manner adverse to the Purchasers, (C) reduce the rate of or
change the time for payment of interest on any Subordinated Note
or any PIK Note, (D) waive a Covenant Breach or Event of
Default in the payment of principal of, or premium, if any, or
interest on, the Subordinated Notes or PIK Notes (except that a
Majority in Interest of the Purchasers may (1) rescind an
acceleration of the Subordinated Notes that resulted from a
Covenant Breach or an Event of Default, and (2) waive the payment
default that resulted from such acceleration), (E) make any
Subordinated Note or PIK Note
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payable in money other than that stated in the Subordinated Notes
or PIK Notes, respectively.
(iii) It shall not be necessary for the consent of the
Purchasers under this Section 9.2(j) to approve the particular
form of any proposed amendment or waiver, but it shall be
sufficient if such consent approves the substance thereof. After
an amendment, supplement or waiver under this Section 9.2(j)
becomes effective, the Companies shall mail to each Purchaser a
notice briefly describing the amendment, supplement or waiver.
Any failure of the Companies to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the
validity of any such amendment or waiver.
(k) Conduct of Business of UK Parent. Notwithstanding anything to
the contrary in this Agreement. UK Parent shall not: (i) own any
Properties other than Ordinary Shares of TW UK, cash or other assets
incidental to its status as a holding company of TW UK or necessary to
discharge the obligations under the Transaction Documents (ii) Incur any
Indebtedness as primary obligor or principal borrower other than the
Subordinated Notes, the PIK Notes and any Indebtedness permitted by the
Credit Agreements, provided, that, UK Parent may Guarantee Indebtedness
of its Subsidiaries or Guarantees of the Designated Indebtedness, or
(iii) conduct any business operations of any kind whatsoever other than
serving as the holding company of TW UK and discharging its obligations
under the Credit Agreements and the Transaction Documents.
(l) US Tax Status. TW UK shall qualify as a corporation, as
defined under Treasury Regulation Section 301.7701-2(b) for U.S. federal income
tax purposes, at all times subsequent to the Closing.
(m) Prohibitions Against UBTI. UK Parent shall not own any assets
other than the Capital Shares of TW UK, the Mirror Notes and the Mirror PIK
Notes. UK Parent shall not own debt-financed property within the meaning of
Section 514(b) of the Code and the Treasury Regulations promulgated thereunder.
UK Parent shall not incur gross income that would, if UK Parent were any entity
exempt from taxation pursuant to Section 501(a) of the Code, constitute
unrelated business taxable income as defined in Section 512 of the Code and the
Treasury Regulations promulgated thereunder.
ARTICLE X
PROVISION OF INFORMATION
10.1 Provision of Information. Until the earlier of (i) TW UK
consummating a Qualified Public Offering or (ii) the Ordinary Shares achieving a
Qualified Public Value, TW UK shall:
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(a) prepare at the cost of TW UK and deliver to the Purchasers
and Transworld:
(i) within 25 days of the end of each month consolidated
monthly management accounts of the Group Companies including a profit
and loss account and a balance sheet, cash flow statement and 12 month
cash flow forecast in each case with a comparison against the Budget
together with a commentary on the trading and prospects of the Group
Companies; and
(ii) such other information as the Purchasers and
Transworld may reasonably require;
(b) despatch the audited accounts of the Group Companies for each
financial period of TW UK to members of TW UK and the Purchasers and Transworld
not later than 120 days after the end of each financial period;
(c) procure that not later than the beginning of each financial
accounting reference period there is prepared and delivered to the Purchasers
and Transworld a detailed operating budget for such financial accounting
reference period (including a schedule of all forecast capital expenditure and
cash flow forecast for the Group Companies in respect of such financial
accounting reference period) of the Group Companies; and
(d) procure that all material developments regarding any of the
Group Companies' affairs are communicated to the Purchaser Director and the
Transworld Director at meetings of the Board of Directors (or through Board of
Directors papers) or in writing to the Purchasers and Transworld and that the
Purchasers and Transworld are given such information and such access to the
officers, employees and premises of the Group Companies as they may reasonably
require.
The Companies shall enter into and deliver to Transworld at the Closing
the Transworld Rights Letter.
10.2 Communication of Information. The Purchaser Director and the
Transworld Director may communicate any information received by them pursuant to
this Agreement or otherwise in their capacity as director of UK Parent or TW UK
to any Purchaser and Transworld, respectively. Each of the Purchasers and
Transworld may communicate any such information to any company or other entity
which is its subsidiary or holding company or a subsidiary of its ultimate
holding company or to its manager or investment or other professional adviser or
any Person or Persons on behalf of whom it holds Securities; provided, that it
shall use its reasonable endeavors to procure that such recipient is aware of
the confidential nature of such information and does not use any such
information other than for the purpose of reviewing its or clients' investment
in TW UK or UK Parent.
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ARTICLE XI
CONDUCT OF THE GROUP AND MANAGEMENT
11.1 Conduct of the Group Companies Following Closing. Until the earlier
of (i) UK consummating a Qualified Public Offering or (ii) the Ordinary Shares
achieving a Qualified Public Value, TW UK shall:
(a) send to the Purchaser Director and the Transworld Director:
(i) reasonable advance notice of each meeting of the Board
of Directors or committee of the Board of Directors or of a meeting of
the Directors of any member of the Group Companies of which that Person
is a director (such notice to be not less than seven days' notice unless
otherwise agreed by the Purchaser Director) and an agenda of the
business to be transacted at such meeting (together with all papers
circulated or presented to the same);
(ii) as soon as practicable after each such meeting of the
Board of Directors or of a committee of the Board of Directors, a copy
of the draft minutes thereof;
(b) procure that at least four Board of Directors meetings of TW
UK shall be held each year (at not more than sixteen weekly intervals) in London
or such other venue as the Board of Directors may determine (or such other venue
as is approved by the Purchaser Director and the Transworld Director);
(c) procure that if the Purchasers or Transworld have not for the
time being appointed an Purchaser Director or a Transworld Director pursuant to
this Agreement, they shall be entitled themselves to send a representative to
any such meeting of the Board of Directors and Board of Directors meetings of
all members of the Group Companies;
(d) procure that if the Purchasers or Transworld have not for the
time being appointed a Purchaser Director or a Transworld Director,
respectively, pursuant to the Voting Trust Agreement they shall be entitled
themselves to send a representative to any such meeting of the Board of
Directors and Board of Directors meetings of all members of the Group Companies;
11.2 Management of the Companies. The management of TW UK and UK Parent
shall be carried out by the Officers and the Officers shall not be subject to
any significant day to day responsibilities to Transworld.
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ARTICLE XII
DRAG ALONG RIGHTS
12.1 Drag Along Rights.
(a) If Transworld, UK Parent, TW UK or any of the Purchasers
receives an offer from any Person, or themselves make an offer, which, if
accepted in full, would result in a Qualifying Liquidity Event ("Qualifying
Offer"), then such person receiving or so making the offer shall immediately
notify the Board of Directors of such offer.
(b) In the event of:
(i) a Qualifying Offer being so received or made, and the
Board of Directors so requesting in writing; or
(ii) a Qualifying Offer being so received or made and an
Extraordinary Event (as defined in the Voting Trust Agreement)
having occurred, and the Purchasers' Representative so requesting
in writing; or
(iii) a Put Breach having occurred or being continuing and
any of Transworld, TW UK, UK Parent or any of the Purchasers
having received a bona fide offer from any Person who is not an
Affiliate of TW UK or of the Purchasers' Representative, which if
accepted in full would constitute a Liquidity Event, and the
Purchasers' Representative so requesting in writing;
each of Transworld, UK Parent, TW UK and each Purchaser, in the case of
each of (i), (ii) and (iii) above, whichever is applicable, shall be
obliged to and shall:
(1) sell, transfer and deliver, or cause to be
sold, transferred and delivered, to the purchaser or
acquirer (the "Buyer"), all Capital Shares of TW UK and
Subordinated Notes of UK Parent then held by each of them
on substantially identical terms (with appropriate
adjustments to reflect the conversion of convertible
securities, the redemption of redeemable securities and
the exercise of exercisable securities, as well as the
relative preferences and priorities of any preferred
securities then outstanding); and
(2) execute and deliver such instruments of
transfer, and take such other action, including voting
such Ordinary Shares or Voting Trust
Certificates, as the case may be, of TW UK held by such
party in favor of any such transaction and executing any
purchase agreements, merger agreements, indemnity
agreements, escrow agreements or related documents, as the
Board of Directors and/or the Buyer may reasonably require
in order to carry out the terms and provisions of this
Article 12,
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provided that no party hereto shall be required to execute any indemnity or
similar agreement rendering such party personally liable for any amount in
excess of the proceeds to be received by such Person from such transaction.
12.2 Notification. Not less than 20 Business Days prior to the date
proposed for the completion of any transaction described in Section 12.1 hereof,
the Board of Directors (or in the circumstances set forth in Section 12.1(b)(ii)
and (iii) above, the Purchasers' Representative) shall cause TW UK to give (and
TW UK shall give) written notice to Transworld, UK Parent and the Purchasers,
setting forth in reasonable detail the name or names of the Buyer, the terms and
conditions of the transaction and the proposed completion date.
12.3 Appointment of Agent. Transworld, UK Parent and the Purchasers
(other than the Purchasers' Representative) hereby: (a) irrevocably appoint the
Chief Executive Officer of TW UK as his, her or its agent and attorney (the
"Agent") (with full power of substitution) to execute all agreements,
instruments and certificates and take all actions necessary or desirable to give
effect to the provisions of this Article 12; and (b) subject to the provisions
of the Voting Trust Agreement grant to the Agent a proxy (which shall be
irrevocable) to vote all voting Capital Shares of TW UK owned by such Person and
exercise any consent rights applicable thereto to give effect to the provisions
of this Article 12, provided that the Agent shall not exercise such power of
attorney or proxy with respect to any Person unless such Person is in breach of
its obligations under this Article XII.
12.4 Termination. The drag along rights provided for in this Article XII
shall terminate automatically upon the effective date of an amendment to the
Articles of Association of TW UK that deletes, eliminates or otherwise
terminates such rights in the Articles of Association of TW UK.
ARTICLE XIII
CO-SALE RIGHTS
13.1 Co-Sale Rights. Except for any transfer of Capital Shares expressly
authorized by the provisions of the Voting Trust Agreement, this Agreement, the
Warrant Instrument or the Charter Documents of TW UK (other than transfers
specifically authorized under Article 7 of the Articles of Association of TW UK
to which the provisions of this Article XIII shall apply), with respect to any
proposed transfer of Capital Shares or Subordinated Notes by any holder
thereof (the "Transferor") to any person ("Proposed Purchaser") prior to the
consummation of a Qualified Public Offering or achievement of a Qualified Public
Value, each of UK Parent, Transworld and the other Purchasers, or their
transferees and assigns (the "Other Shareholders"), shall have the right
("Co-Sale Rights") to require the Proposed Purchaser to purchase from it a
portion of its Capital Shares (including Ordinary Shares issued or issuable
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upon exercise of Warrants) and Subordinated Notes (such Other Shareholder's "Pro
Rata Share") which is equal to the product obtained by multiplying:
(i) the total number of Capital Shares that the Proposed Purchaser is
prepared to purchase; by
(ii) a fraction, the numerator of which is the total number of Capital
Shares (including Ordinary Shares issued or issuable upon exercise of
Warrants) owned by such Other Shareholder, and the denominator of which is
the total number of Capital Shares issued and outstanding immediately
before the transfer (including Ordinary Shares issued or issuable upon
exercise of Warrants);
or such greater number of Capital Shares which is determined in accordance with
the remainder of this Article XIII.
The price per Ordinary Share and, subject to Section 13.4 hereof, the
terms and conditions, shall be the same as those of such proposed transfer by
the Transferor, with appropriate adjustments to reflect the conversion of
convertible securities, the redemption of redeemable securities and the exercise
of exercisable securities as well as the relative preferences and priorities of
any preferred securities then outstanding (it being understood that such terms
and conditions may include the execution and delivery of such instruments of
transfer as are executed and delivered by the Transferor to the Proposed
Purchaser, provided that the Other Shareholders shall not be required to execute
any indemnity or similar agreement rendering such Other Shareholder personally
liable for any amount in excess of the proceeds to be received by such Other
Shareholder from such transfer).
13.2 Sale Notice. The Transferor shall notify, or cause to be notified,
each Other Shareholder in writing of each such proposed transfer. Such notice
(the "Sale Notice") shall set forth:
(a) the number of Capital Shares and principal amount of Subordinated
Notes proposed to be transferred;
(b) the maximum number of Capital Shares and principal amount of
Subordinated Notes that such Other Shareholder can sell to such Proposed
Purchaser;
(c) the name and address of the Proposed Purchaser;
(d) the proposed amount and form of consideration and terms and
conditions of payment offered by such Proposed Purchaser;
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(e) that the Proposed Purchaser has been informed of the Co-Sale
Rights provided for in this Article XIII and has agreed to purchase Capital
Shares and principal amount of Subordinated Notes in accordance with the terms
hereof; and
(f) that, with respect to the Capital Shares and principal amount
of Subordinated Notes to be purchased by the Proposed Purchaser, the Proposed
Purchaser agrees to enter into a Deed of Adherence in accordance with this
Agreement.
At the request of the Transferor, TW UK shall provide to the Transferor
any information available to TW UK, to the extent such information is required
for the delivery of a Sale Notice by the Transferor, and each Other Shareholder
shall provide to the Transferor information concerning such Other Shareholder's
name and address and the number of Capital Shares and principal amount of
Subordinated Notes held by such Other Shareholder (including Ordinary Shares
issuable upon exercise of the Warrants).
13.3 Co-Sale Notice. The Co-Sale Rights may be exercised by any Other
Shareholder by delivery of a written notice to the Transferor giving a Sale
Notice (the "Co-Sale Notice") within 10 Business Days following their receipt of
the Sale Notice. The Co-Sale Notice shall constitute an agreement, binding on
the Other Shareholder delivering it, to sell up to the number of Capital Shares
and principal amount of Subordinated Notes specified in the Co-Sale Notice to
the Proposed Purchaser in the event the proposed sale to the Proposed Purchaser
can, as modified by the inclusion of such Other Shareholder(s), still be
consummated as originally proposed, and is so consummated. In such event, the
number of Capital Shares and principal amount of Subordinated Notes to be sold
by each Other Shareholder giving a Co-Sale Notice shall be determined as
follows:
(a) each such Other Shareholder shall be entitled to sell at
least the lesser of the number of Capital Shares and principal amount of
Subordinated Notes specified in such Other Shareholder's Co-Sale Notice or such
Shareholder's Pro Rata Share. Such amount is referred to as such Other
Shareholder's "Basic Sale Amount" and, in the case of any Other Shareholder who
requested the sale of a number of Capital Shares and principal amount of
Subordinated Notes in excess of such Other Shareholders Pro Rata Share, the
amount of such excess is referred to as such Other Shareholder's "Excess Sale
Request." If not all Other Shareholders requested the sale of at least their Pro
Rata Share, the excess of the total of the Pro Rata Shares of all Other
Shareholders over the total of the Basic Sale Amount of the Other Shareholders
who gave Co-Sale Notices is referred to as the "Undersubscribed Amount."
(b) If there is an Undersubscribed Amount, it shall be allocated
between the Other Shareholders who gave Co-Sale Notices, as a class, and the
Transferor pro rata as follows:
(i) an amount equal to the Undersubscribed Amount
multiplied by a fraction, the numerator of which is the total of the
Basic Sales Amounts of such Other
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Shareholders and the denominator of which is the total amount of
Capital Shares and Subordinated Notes to be purchased by the Proposed
Purchaser, shall be allocated to such Other Shareholders, as a class
(such amount is referred to as the "Excess Allocable Amount") in
accordance with Section 13.3(c); and
(ii) the remainder of the Undersubscribed Amount shall be
allocated to the Transferor.
(c) If there is an Excess Allocable Amount, each Other
Shareholder who had an Excess Sale Request shall also be entitled to sell an
amount equal to the lesser of such Other Shareholder's Excess Sale Request or
the Excess Allocable Amount multiplied by a fraction, the numerator of which is
such Other Shareholder's Excess Sale Request and the denominator of which is the
total of the Excess Sale Requests of all Other Shareholders having Excess Sale
Requests.
13.4 Procedures. In the event that the Proposed Purchaser does not
purchase all Capital Shares and Subordinated Notes to be sold by all Other
Shareholders giving Co-Sale Notices (as determined pursuant to Section 13.3(a),
(b) and (c) hereof), on the terms and conditions stated in the Sale Notice or on
terms and conditions no less favorable to the Transferor, then the Transferor
may not make the proposed sale to such Proposed Purchaser without renewed
compliance with this Article XIII. After expiration of the 10 Business Day
period referred to above, the Transferor shall have the right during the
following 120 calendar day period to transfer, or to enter into a binding
agreement to transfer, any of the Capital Shares and Subordinated Notes not
subject to a Co-Sale Notice to the Proposed Purchaser or subject to the
remainder of this Article XIII, to a different purchaser, on the terms and
conditions stated in the Sale Notice or on terms and conditions no more
favorable to the Transferor, so long as the Capital Shares subject to Co-Sale
Notices are also purchased or agreed to be purchased at the same time, provided
that the Transferor may not, without renewed compliance with this Article XIII:
(a) make a sale pursuant to a previously executed agreement to
transfer Capital Shares or Subordinated Notes on a date which is more than 180
days after the date of the applicable Sale Notice; or
(b) make a sale to a different purchaser on terms and conditions
(including the financial standing and creditworthiness of such different
purchaser) more favorable to the Transferor than those set forth in the
applicable Sale Notice.
13.5 Adjustments. All numbers in this Article XIII which refer to
Capital Shares shall be subject to appropriate adjustment in the event of any
share dividend, share split, reverse share split, consolidation or similar
transaction.
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13.6 Registration Rights. For the purpose of this Article XIII if: (a)
the Transferor has agreed to sell any Capital Shares or Subordinated Notes for
consideration which includes securities; (b) such non-cash consideration
includes securities (other than notes, debentures or similar instruments
evidencing indebtedness) which are not readily marketable on a public market
providing regularly maintained price quotations and a regular flow of
transactions; and (c) after giving effect to the proposed transfer of Capital
Shares or Subordinated Notes by the Transferor and any related transactions, the
Proposed Purchaser or the issuer of such securities would be an Affiliate of the
Transferor, then the Proposed Purchaser's offer to the Other Shareholders shall
include registration rights for the benefit of the Other Shareholders accepting
such offer and covering any such securities, upon terms and conditions no less
favorable to the Other Shareholders than those set forth in the Registration
Rights Agreement.
13.7 Termination. The rights set forth in this Article XIII shall
terminate automatically upon the effective date of an amendment to the Articles
of Association of TW UK that deletes, eliminates or otherwise terminates such
rights in the Charter Documents of TW UK.
ARTICLE XIV
PRE-EMPTION
14.1 Limitations. Until the earlier of (i) the consummation of a
Qualified Public Offering or (ii) the achievement of a Qualified Public Value,
except in the case of a Permitted Transfer (to which the provisions of this
Article XIV shall not apply), any Person who wishes to transfer Capital Shares
of TW UK or Securities (the "Seller") shall give notice in writing (the
"Transfer Notice") to TW UK of his, her or its wish specifying:
(a) the number and class(es) of Capital Shares of TW UK and the
Securities which he, she or it wishes to transfer (the "Sale
Securities");
(b) the name of any third party to whom he, she or it proposes to
sell or transfer the Sale Securities;
(c) the price at which he, she or it wishes to transfer the Sale
Securities (which shall be deemed to be the Fair Market Value if
no price is specified) (the "Transfer Price"); and
(d) whether or not the Transfer Notice is conditional upon all, and
not part only, of the Capital Shares of TW UK or Securities so
specified being sold pursuant to the offer hereinafter mentioned
and, in the absence of such stipulation, it shall be deemed not
be so conditional.
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Where any Transfer Notice is deemed to have been given in accordance
with this Section 14.1, the deemed Transfer Notice shall be treated as having
specified: (i) that all the Sale Securities registered in the name of the Seller
shall be included for transfer; (ii) that the price for the Sale Securities
shall be as agreed between the Board of Directors and the Seller or, failing
agreement, shall be the Fair Market Value; and (iii) that no condition as
referred to in Section 14.1(d) shall apply.
Unless otherwise agreed by Transworld, the Purchasers and TW UK in
writing, no Transfer Notice once given or deemed to have been given in
accordance with this Section 14 shall be withdrawn. The Transfer Notice shall
constitute TW UK the agent of the Seller (other than the Purchasers'
Representative) for the sale of the Sale Securities specified therein at the
Transfer Price.
14.2 Notice. TW UK shall as soon as practicable following receipt of a
Transfer Notice or, where later, upon the determination of the Transfer Price
give notice in writing to each of the holders of Sale Securities (the "Members")
(for which purpose all of the Warrants shall be deemed to have been exercised
immediately prior to such notice and holders of Warrant shall be treated as
members in respect of all the Ordinary Shares which are the subject of the
Warrants) informing them that the Sale Securities are available and of the
Transfer Price. Such notice shall invite each of the Members to state, in
writing within 42 days from the date of such notice (which date shall be
specified therein), whether he, she or it is willing to purchase any and, if so,
how many of the Sale Securities.
14.3 Offer.
(a) The Sale Securities shall be offered to each Member on terms
that, in the event of competition, the Sale Securities offered
shall be sold to the Members accepting the offer in proportion
(as nearly as may be) to their existing holdings of Sale
Securities to which the offer is made (the "Proportionate
Entitlement"). It shall be open to each such Member to specify if
he, she or it is willing to purchase Sale Securities in excess of
his Proportionate Entitlement ("Excess Shares") and, if the
Member does so specify, he shall state the number of Excess
Shares.
(b) After the expiration of the offers to be made pursuant to Section
14.3(a) (or sooner if all the Sale Securities offered shall have
been accepted in the manner provided in Section 14.3(a)), the
Board shall allocate the Sale Securities in the following manner:
(i) if the total number of Sale Securities applied for is equal
to or less than the available number of Sale Securities, TW
UK shall allocate the number applied for in accordance with
the applications; or
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(ii) if the total number of Sale Securities applied for is more
than the available number of Sale Securities, each of
Transworld and the Purchasers shall be allocated his, her or
its Proportionate Entitlement (or such lesser number of Sale
Securities for which he, she or it may have applied);
applications for Excess Shares shall be allocated in
accordance with such applications or, in the event of
competition, (as nearly as may be) to each Member applying
for Excess Shares in the proportion which shares of the
relevant class held by such Member bears to the total number
of shares of that class held by all such Members applying
for Excess Shares; provided, that, such Member shall not
be allocated more Excess Shares than he shall have stated
himself, herself or it willing to take,
and in either case, TW UK shall forthwith give notice of each
such allocation (an "Allocation Notice") to the Seller and each
of the persons to whom Sale Securities have been allocated (a
"Member Applicant") and shall specify in the Allocation Notice
the place and time (being not later than 14 days after the date
of the Allocation Notice) at which the sale of the Sale Shares
shall be completed.
(c) Subject to Section 14.4 upon such allocations being made as
aforesaid, the Seller shall be bound, on payment of the
Transfer Price, to transfer the Sale Securities comprised in
the Allocation Notice to the Member Applicants named therein
at the time and place therein specified. If he, she or it
makes default in so doing the Chairman for the time being of
TW UK or, failing him, one of the Directors, or some other
person duly nominated by a resolution of the Board of
Directors for that purpose, shall forthwith be deemed to be
the duly appointed attorney of the Seller with full power to
execute, complete and deliver in the name and on behalf of
the Seller a transfer of the relevant Sale Securities to the
Member Applicant and any Director may receive and give a
good discharge for the purchase money on behalf of the
Seller and (subject to the transfer being duly stamped)
enter the name of the Member Applicant in the register of
members as the member or members by transfer of the Sale
Securities so purchased by him or them, The Board of
Directors shall forthwith pay the purchase money into a
separate bank account in TW UK's name and shall hold money
on trust (but without interest) for the Seller until he, she
or it shall deliver up his, her or its certificate or
certificates for the relevant shares (or an indemnity, in a
form reasonably satisfactory to the Board of Directors, in
respect of any lost certificate) to TW UK when he shall
thereupon be paid the purchase money.
14.4 Additional Offer. If the Seller shall have included in the Transfer
Notice a provision that unless all the Sale Securities are sold, none shall be
sold and if the total number of Sale Securities applied for by Member Applicants
is less than the number of Sale Securities then the Allocation Notice shall
refer to such provision and shall contain a further invitation,
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open for 28 days, to those Persons to whom the Sale Securities have been
allocated to apply for further Sale Securities and completion of the sales in
accordance with this Section 14.4 hereof shall be conditional upon such
provision as aforesaid being complied with in full.
In the event all of the Sale Securities not being sold under the
preceding paragraph of this Section 14.4 the Seller may, at any time within six
calendar months after receiving confirmation from TW UK that the pre-emption
provisions herein contained have been exhausted, transfer any Sale Securities
(which have not been sold) to any Person or Persons at any price not less than
the Transfer Price, provided, that:
(a) if the Seller stipulated in the Transfer Notice that unless all the
Sale Securities were sold none should be sold, the Seller shall not be
entitled, save with the written consent of the Members holding Capital
Shares (for which purpose all of the Warrants shall be deemed to have
been exercised immediately prior to such Transfer Notice and the
holders of Warrants shall be treated as members in respect of all
Ordinary Shares which are the subject of the Warrants) carrying 80
percent of voting rights which may for the time being be cast at a
general meeting of TW UK, to sell hereunder only some of the Sale
Securities comprised in the Transfer Notice to such Person or Persons;
(b) any such sale shall be a bona fide sale and the Board of Directors may
require to be satisfied in such manner as it may reasonably require
that the Sale Securities are being sold in pursuance of a bona fide
sale for not less than the Transfer Price without any deduction,
rebate or allowance whatsoever to the buyer and, if not so satisfied,
may refuse to register the instrument of transfer.
The costs of determining the Fair Market Value shall be borne by TW UK
unless, in the case of a determination required pursuant to the provisions of
Section 14.1, the Fair Market Value so determined is less than that suggested by
the Board of Directors, in which event the costs of determining the Fair Market
Value shall be borne by the Seller.
ARTICLE XV
TRANSFERS
15.1 Limitations. Until the consummation of a Flotation, no Transfer of
any Securities, any Capital Shares of TW UK, any Capital Shares of UK Parent or
any rights contained herein, either in whole or in part, directly or indirectly,
shall be made at any time by any Purchasers, Transworld or UK Parent; provided,
that:
(a) a Purchaser which is a corporation, limited or general
partnership, company or other business entity may Transfer for any consideration
whatsoever all of the Securities registered in its name to any other company (an
"Associated Company") which is an Affiliate
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of that Purchaser, a holding company of that Purchaser or which is a subsidiary
of that Purchaser or which is another subsidiary of such a holding company (the
expressions "subsidiary" and "holding company" having the meanings given to them
respectively in section 736 of the Companies Act 1985) provided that if at any
time the transferor and transferee cease to be so associated for any reason
other than a change in general partner, manager or advisor, the transferee shall
forthwith Transfer to the original Purchaser the Securities then registered in
its name;
(b) a Purchaser which is a corporation, limited or general
partnership, company or other business entity may Transfer for any consideration
whatsoever any of the Securities held in its name to any limited partner or
other constituent owner of such Purchaser;
(c) Transworld and UK Parent may Transfer any Capital Shares of
UK Parent or Ordinary Shares of TW UK, respectively, with the prior written
consent of the Board of Directors of TW UK (evidenced by a Board Resolution);
(d) each of the Purchasers may Transfer any Purchasers'
Securities with the prior written consent of the Board of Directors of TW UK
(evidenced by a Board Resolution);
(e) any Transfer of Securities pursuant to Articles VI, VII or
VIII hereof is permitted if effected in accordance therewith;
(f) any Transfer of Voting Trust Certificates or Capital Shares
pursuant to the provisions of the Voting Trust Agreement is permitted if
effected in accordance therewith and with the Charter Documents;
(g) any Transfer of Securities or Capital Shares pursuant to the
provisions of the Charter Documents of UK Parent or TW UK is permitted if
effected in compliance therewith; and
(h) after the consummation of a Flotation
(i) any Purchaser other than the Purchaser's Representative
may Transfer any Purchasers' Securities,
(ii) the Purchasers' Representative may Transfer Securities
without the loss of any of its rights set out herein and in the
other Transaction Documents (including the Voting Trust
Agreement) so long as the Purchaser's Representative continues to
hold at least a majority of the Purchasers' Securities acquired
by it on the date hereof under this Agreement (for the avoidance
of doubt, if after a Flotation the Purchasers' Representative
Transfers more than a majority of the Purchasers' Securities
acquired by it under this Agreement, such Transfer will have
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the same consequences as a Transfer in compliance with Section
15.1(d) hereof as described in Section 15.3(b)(ii)), and
(iii) UK Parent may Transfer Ordinary Shares without the
loss of its rights set out herein or in the Voting Trust
Agreement so long as UK Parent continues to hold at least a
majority of the Ordinary Shares held by it on the date hereof
(for the avoidance of doubt, if after a Flotation UK Parent
Transfers more than a majority of the Ordinary Shares held by it,
such Transfer will have the same consequences as described in
Section 15.3(a) hereof) (each of the events in clauses (a)
through (h) above is referred to herein as, a "Permitted
Transfer").
Prior to the consummation of a Flotation, no Transfer shall be made
unless the transferee shall have entered into an enforceable written agreement
satisfactory to the Board of Directors of TW UK agreeing to be bound by the
terms of this Agreement and any other applicable Transaction Documents
(including the Voting Trust Agreement) and the transferor complies with the
obligation under the Intercreditor Agreement to procure that the transferee
agrees to be bound by the terms of the Intercreditor Agreement.
Notwithstanding any other provisions of this Agreement, the Purchaser's
Representative may transfer all of the Securities and the Special Share
registered in its name to its partners in connection with a winding up of its
affairs.
15.2 Transfer Instrument. Every Transfer of Securities hereunder shall
be made by an instrument of Transfer in the usual or common form or in any other
form which may be approved by the Board of Directors. Every instrument of
Transfer must be signed by the transferor or where the transferor is a
corporation given under its common seal or signed on its behalf by a duly
authorized officer or agent and the transferor shall remain the owner of the
Securities to be transferred until the name of the transferee is entered in the
Register in respect thereof. Every instrument of Transfer must be lodged for
registration at the place where the Register shall for the time being be kept
accompanied by the certificate for the Securities all or part of the nominal
amount of which is to be transferred and such other evidence as the Directors or
other officers of UK Parent or TW UK, as the case may be, authorized to deal
with transfers may require to prove the title of the transferor or his right to
Transfer the Securities and, if the instrument of Transfer is executed by some
other person on his behalf, the authority of the person signing the same. All
instruments of Transfer which shall be registered may be retained by UK Parent
or TW UK, as the case may be.
15.3 Transfers in Violation of this Agreement.
(a) Subject to Section 5.1(h), Transworld's and UK Parent's
rights set out in Articles X, XI, XII, XIII and XIV and Section 18.1(c) hereof
and their right to direct the voting of shares held under the Voting Trust
Agreement shall absolutely terminate forthwith upon any Transfer of any Capital
Shares of UK Parent held by Transworld or Ordinary Shares
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held by UK Parent, in each case, both if such Transfer is in violation of
Section 15.1 hereof and if such Transfer is in compliance with Section 15.1(c)
hereof.
(b) Subject to Section 5.1(h), a Purchaser's rights set out in
(i) Articles IV, VIII, IX, X, XI, XII, XIII, XIV and XVI hereof and, in the
event the Purchasers' Representative is the transferring Purchaser, such
Purchasers' Representative's right to direct the voting of shares held under the
Voting Trust Agreement shall absolutely terminate forthwith upon any transfer of
any of his, her or its Purchaser's Securities held by such transferring
Purchaser in violation of Section 15.1 hereof and (ii) Articles IV, XII, XIII
and XVIII and, in the event the Purchasers' Representative is the transferring
Purchaser, such Purchasers' Representative's right to direct the voting of
shares held under the Voting Trust Agreement shall absolutely terminate
forthwith upon any Transfer of any Purchaser's Securities held by such
transferring Purchaser in compliance with Section 15.1(d) hereof.
(c) Any transfer by the Purchasers' Representative of its
Securities, (i) in violation of Section 15.1 hereof or (ii) in accordance with
Section 15.1(d), also shall be deemed an automatic transfer of the Special Share
by the Purchasers' Representative to TW UK for no consideration.
(d) In the event Hyperion Capital Transfers, whether in one
transaction or in a series of transactions, Capital Shares in Transworld such
that after giving effect thereto, Hyperion Capital would no longer own
beneficially and of record 50.1% or more of all Capital Shares of Transworld,
Transworld's and UK Parent's rights set out in Articles X, XI, XII, XIII, XIV,
XV, XVI and XXI and Section 18.1(c) hereof and their right to direct the voting
of shares held under the Voting Trust Agreement shall absolutely terminate
forthwith upon such Transfer.
15.4 Additional Transfer. Notwithstanding any other provision of this
Agreement, no Transfer of Subordinated Notes or of Warrants shall be effected
unless any Transfer of Subordinated Notes is accompanied by a Transfer (to the
same transferee) of Warrants having an aggregate Warrant Exercise Price (as
defined in the Warrant Instrument) equal to the aggregate principal amount of
the Subordinated Notes the subject of the Transfer, and vice versa.
ARTICLE XVI
SUCCESSORS
16.1 Merger or Consolidation.
(a) The Companies shall not directly or indirectly, by operation
of law or otherwise (i) be acquired by any other Person; (ii) permit
substantially all of their assets to be acquired by any other Person; (iii)
consolidate, merge, or otherwise combine with or into any
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other Person; (iv) permit any other Person to acquire, consolidate, merge, or
otherwise combine with or into the Companies; (v) permit any other Person to
acquire, consolidate, merge, or otherwise combine with or into or be
consolidated, merged, or otherwise combined with or into by, any Subsidiary (in
a transaction in which such Subsidiary (or successor Person) remains (or
becomes) a Subsidiary); and (vi) directly or indirectly, transfer, convey, sell,
lease or otherwise dispose of all or substantially all of the properties and
assets of any of the Subsidiaries as an entirety or permit any of the
Subsidiaries to do any of the foregoing (except for any Permitted Disposition,
or the merger, consolidation or other combination of any Subsidiary of the
Companies with or into, or the disposition of all or substantially all of the
assets of any Subsidiary of the Companies to, the Companies or any Wholly-Owned
Subsidiary of the Companies), unless:
(i) in any such transaction in which the Person acquires
by transfer, conveyance, sale, lease or other disposition all or
substantially all of the properties and assets of the Companies as an
entirety (for purposes of this Article X, "Successor Companies"), such
Successor Companies shall be a corporation or limited liability company,
shall be organized, duly incorporated and validly existing under the
laws of England and shall expressly assume pursuant to the terms and
conditions of this Agreement, in form reasonably satisfactory to a
Majority in Interest of the Purchasers, the due and punctual payment of
the principal of and interest on all the Subordinated Notes and PIK
Notes then outstanding, all obligations with respect to the Warrants
then outstanding, and the performance of every covenant and obligation
set forth in this Agreement on the part of the Companies to be performed
or observed and shall take all such action and pass all such resolutions
as may be necessary to enable it to assume all such obligations,
including, without limitation, the obligations with respect to the
guarantee of the Purchasers' Puts and the purchase of Warrants and
Ordinary Shares under Articles VII and VIII hereof;
(ii) immediately before and after giving effect to such
transaction, no Breach or Event of Breach shall have occurred and be
continuing;
(iii) the Companies have delivered to the Purchasers an
Officers' Certificate and a written opinion from legal counsel, each
stating that such consolidation, merger, amalgamation, combination,
conveyance, transfer, lease or acquisition and, if the assumption of the
obligations of the Companies under this Agreement is required in
connection with such transaction, such documents effecting such
assumption, complies with this Article XVI and that all conditions
precedent herein for relating to such transaction have been complied
with and satisfied; and
(iv) any of the Group Companies ceases or suspends
generally payment of its debts or publicly announces an intention to do
so (or is deemed for the purposes of any Applicable Law to be) or is
unable to pay its debts as they fall due or commences negotiations with
or makes a proposal to any one or more of its creditors with a view to
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the readjustment or rescheduling of all or a substantial part of its
Indebtedness or makes a general assignment for the benefit of or a
composition with its creditors or a moratorium is declared in respect of
all or a substantial part of the Indebtedness of any of the Group
Companies.
(b) For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions, of all or substantially all of the properties and assets of one or
more Subsidiaries, the Capital Shares of which constitutes all or substantially
all of the properties and assets of the Companies, shall be deemed to be the
transfer of all or substantially all of the properties and assets of the
Companies.
16.2 Surviving Person Substituted. Upon any acquisition, disposal,
consolidation, merger or other combination, or any transfer of assets in
accordance with Section 16.1, the Surviving Person (if other than the Companies)
following such transaction or formed by such consolidation or into which the
Companies is merged or otherwise combined or to which such transfer is made
shall succeed to, and be substituted for, and may exercise every right and power
of, the Companies under this Agreement with the same effect as if such Surviving
Person had been named as the Companies herein. When, and only when, a Successor
Companies assumes all of the obligations of the Companies hereunder and under
the Securities and agrees to be bound hereby and thereby, the predecessor shall
be released from such obligations.
ARTICLE XVII
BREACHES AND REMEDIES
17.1 Covenant Breaches. Each of the following constitutes a "Covenant
Breach":
(a) the Companies shall fail to make any payment in respect of (A)
the principal of the Subordinated Notes, the PIK Notes, the
Mirror Notes or the Mirror PIK Notes as the same shall become
due, whether at maturity, upon acceleration, redemption or
otherwise, (B) interest on or in respect of any of the
Subordinated Notes, the PIK Notes, the Mirror Notes or the Mirror
PIK Notes as the same shall become due where UK Parent or TW UK,
as applicable, had the ability to make such interest payments
under the Credit Agreements or otherwise, and such failure shall
relate to two quarterly interest payments or more; or (C) the
Subordinated Note Redemption Price, the PIK Note Redemption
Price, the Mirror Note Redemption Price, the Mirror PIK Note
Redemption Price, the Warrant Purchase Price and/or the Share
Purchase Price as the same shall become due upon redemption or
purchase; or
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(b) failure by the Companies for thirty (30) days after receipt of
notice from the Purchasers representing at least one-half of a
Majority in Interest of the Purchasers to comply with Section
9.2(b), 9.2(c) or 9.2(h) hereof or Article XVI hereof; provided,
however, that in respect of Section 9.2(h), even though TW UK and
its Subsidiaries are permitted to incur Indebtedness pursuant to
Section 9.2(h)(i) so long as on the date of such Incurrence and
after giving effect thereto the Net Leverage Ratio would be 7.0:1
or less and pursuant to Section 9.2(h)(ii)(8) regardless of Net
Leverage Ratio in an aggregate principal amount not
exceeding(pounds sterling)20.0 million outstanding at any one
time, for purposes of the remedies set forth in Section 17.3
hereof and in Section 6 of the Voting Trust Agreement a "Covenant
Breach" shall be deemed to occur either if:
(i) TW UK or any of its Subsidiaries incur
Indebtedness pursuant to Section 9.2(h)(i) in such an
amount that on the date of such Incurrence and after
giving effect thereto the Net Leverage Ratio would be
6.5:1 or more, except that the Net Leverage Ratio for this
purpose shall be calculated with the inclusion of
Indebtedness in relation to all PIK Notes outstanding in
Total Leverage (even though such definition as written
excludes such Indebtedness); or
(ii) TW UK or any of its Subsidiaries Incur
Indebtedness pursuant to Section 9.2(h)(ii)(8) which
exceeds (pounds sterling)5.0 million outstanding at any
one time;
provided that under no circumstances will Incurrence of
the following Indebtedness trigger the foregoing deemed
Covenant Breach:
(A) Indebtedness represented by PIK Notes, and
(B) increases in the amount of Earnouts after the
initial date of Incurrence of the Earnout
obligation due to the occurrence or removal of
contingencies or similar events.
For the avoidance of doubt, the parties' intent in respect
to the preceding sentence is that (x) TW UK and its
Subsidiaries be allowed to incur Indebtedness pursuant to
Section 9.2(h)(i) and Section 9.2(h)(ii)(8) above the
amounts set forth in Clauses (i) and (ii) of this Section
17.1(c), but (y) if and to the extent that Indebtedness is
Incurred above the amounts set forth in Clauses (i) or
(ii) of this Section 17.1(c), the Purchasers will have the
remedies provided in Section 17 hereof and in Section 6 of
the Voting Trust Agreement upon the occurrence of a
Covenant Breach and such Covenant Breach shall be deemed
to continue for so long as such Indebtedness remains
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outstanding at a level in excess of the amounts set forth
in Clauses (i) or (ii) of this Section 17.1.
17.2 Defaults on Insolvency. Each of the following constitutes an "Event
of Default":
(a) a default under any Designated Indebtedness if such
default results in the acceleration of such Indebtedness
prior to its express maturity or shall constitute a
default in the payment of such Indebtedness at final
maturity and such acceleration has not been cured or
waived within 30 days of such default; or
(b) an Insolvency Event occurs with respect to either of the
Companies which is not discharged or discontinued within 14 days of the
commencement of the relevant proceedings save that such 14 day period shall not
apply or shall cease to apply forthwith in the event of any of the following
occurring in connection with either of the Companies:
(i) an administrative receiver or liquidator being
appointed;
(ii) an order being made for the appointment of an
administrator;
(iii) an order being made for the liquidation, bankruptcy,
winding-up, dissolution or any other insolvency
proceedings or analogous proceedings under the laws of
any jurisdiction; or
(iv) a corporate voluntary arrangement or scheme of
arrangement (other than a solvent members' scheme of
arrangement under Section 425 of the Companies Act
1985) being made by either of the Companies or any
other Person in relation to either of the Companies.
17.3 Remedies.
(a) If a Covenant Breach arising under Section 17.1 above occurs,
then beginning upon such occurrence and for so long as the Covenant Breach is
continuing:
(i) the interest rate accruing on the Subordinated Notes, the PIK
Notes, the Mirror Notes and the Mirror PIK Notes, commencing from (and
including) the date of such Covenant Breach, shall be increased each
quarter by 0.5% (for the avoidance of doubt, from 9.375% per annum to
9.875% upon the occurrence of the Covenant Breach, to 10.375% one
quarter after such date, to 10.875% two quarters after such date, etc.)
(the "Breach Interest Rate") and interest shall continue to accrue at
the Breach Interest Rate while such Covenant Breach is continuing;
provided, that the Breach Interest Rate shall forthwith be reduced back
to the interest rate set forth in the Subordinated Notes, the PIK Notes,
the Mirror Notes and the Mirror PIK Notes if, and when, the original
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Covenant Breach and all other Covenant Breaches that may have arisen
while such original Covenant Breach was continuing have been eliminated
or waived in writing by a Majority in Interest of the Purchasers and are
no longer continuing; and
(ii) the number of directors of the Companies shall be increased
as provided in Sections 6(a)(ii)(D) and 6(c) of the Voting Trust
Agreement.
(b) If an Event of Default under Section 17.2 above occurs, a
Majority in Interest of the Purchasers may declare an "Acceleration." Upon such
declaration of Acceleration, the respective Subordinated Note Redemption Price,
PIK Note Redemption Price, Mirror Note Redemption Price, Mirror PIK Note
Redemption Price, Warrant Purchase Price and/or Share Purchase Price (each
calculated to the date of actual payment) of all outstanding Subordinated Notes,
PIK Notes, Mirror Notes, Mirror PIK Notes, Warrants and Ordinary Shares issuable
upon exercise of the Warrants, respectively, in addition to all accrued unpaid
interest thereon (collectively the "Accelerated Claims"), shall be due and
payable immediately. In the event of a declaration of Acceleration under this
Agreement because an Event of Default set forth in Section 17.2(a) has occurred
and is continuing, such declaration of Acceleration shall be automatically
rescinded and annulled if either (i) the holders of the Designated Indebtedness
have waived such failure to pay at maturity or have rescinded the Acceleration
in respect of such Indebtedness, or (ii) such Indebtedness shall have been
discharged or the maturity thereof shall have been extended such that it is not
then due and payable, or the underlying default has been cured.
(c) In the event of a breach of warranties under Article IV or a
Breach of Covenant that results in a judgment as determined by an appropriate
court or other administrative body in favor of the Purchasers in an amount equal
to or greater than (pounds sterling)5.0 million and such amount due to the
Purchasers is not permitted to be paid by the terms of the Intercreditor
Agreement, then in such event (i) interest on such entire amount due the
Purchasers shall accrue at a rate of 9.375% per annum and such rate of interest
shall be increased each quarter by 0.5% (same as described in Section 17.3(a)(i)
above) until such time as the full amount due to the Purchasers has been paid by
the Companies and (ii) the number of directors of the Companies shall be
increased as provided in Sections 6(a)(ii)(D) and 6(c) of the Voting Trust
Agreement.
17.4 Rights and Remedies of the Purchaser, its Securities and Assigns.
The Purchases agree that any right to receive money damages or other monetary
compensation on account of breaches by the Companies of any of their respective
warranties, covenants, obligations or other agreements made or contained in this
Agreement ("Monetary Relief Claims") shall be subordinated in right of payment
to the Senior Liabilities and the Mezzanine Liabilities (as defined in the
Intercreditor Agreement) to the same extent as the Subordinated Liabilities
under the terms of the Intercreditor Agreement. Notwithstanding anything to the
contrary herein, neither this Section 17.4 nor the Intercreditor Agreement shall
restrict the right and ability of the Purchasers to file any suit or complaint
or to seek to file any suit or complaint with any
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court of competent jurisdiction, or otherwise enforce or seek to enforce, in any
manner whatsoever, including by way of equitable remedies such as injunctive
relief, their rights on account of any breach by any Group Companies of any
covenants set forth in this Agreement or the other Transaction Documents or (b)
impair or be deemed to limit, modify or affect the rights of the Purchasers as
shareholders of TW UK.
17.5 Waiver of Breach. To the extent permitted under Section 18.1(b), a
Majority in Interest of the Purchasers by notice to the Companies may on behalf
of all Purchasers waive any existing Covenant Breach or Event of Default and its
consequences under this Agreement and rescind any declaration of Acceleration
and its consequences. Upon any such waiver, such Covenant Breach shall cease to
exist be deemed to have been cured for every purpose of this Agreement; provided
that no such waiver shall extend to any subsequent or other Covenant Breach or
Event of Default.
17.6 Other Remedies. The Purchasers may pursue any available remedy to
collect the payments owing hereunder or under the Subordinated Notes or PIK
Notes, as each becomes due and payable, or to enforce the performance of any
provision of this Agreement or the other Transaction Documents. A delay or
omission by any Purchasers in exercising any right or remedy shall not impair
such right or remedy or constitute a waiver of or acquiescence in the applicable
breach. All remedies are cumulative to the extent permitted by law. A Majority
in Interest of the Purchasers may direct the time, method and place of
conducting any proceeding for any remedy available to the Purchasers.
ARTICLE XVIII
AMENDMENTS
18.1 Amendments and Supplements Requiring Consent of Purchasers; Other
Consents.
(a) Except as otherwise provided in Section 18.1(b) or 18.1(c)
hereof, as applicable, this Agreement and the Securities may be amended or
supplemented with the written consent of, and any existing Breach or Event of
Breach or compliance with any provision of this Agreement or the Securities may
be waived only with the written consent of a Majority in Interest of Purchasers.
(b) Without the consent of every affected Purchaser who is a
registered owner of (pounds sterling)500,000 or more in aggregate principal
amount of Subordinated Notes, no amendment, supplement or waiver to this
Agreement shall: (i) reduce the principal amount or value of the Subordinated
Notes, the PIK Notes, the Mirror Notes or the Mirror PIK Notes; (ii) reduce the
number of Ordinary Shares issuable upon exercise of any Warrant (except pursuant
to adjustment provisions as provided therein), change the fixed maturity of any
Subordinated Note, PIK Note, Mirror Note or Mirror PIK Note or the expiration
date of any Warrant, or alter the provisions with respect to the redemption of
the Subordinated Notes, the PIK Notes,
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the Mirror Notes or the Mirror PIK Notes or the purchase of the Warrants or the
Ordinary Shares issuable upon exercise of the Warrants in a manner adverse to
the Purchasers; (iii) reduce the rate of or change the time for payment of
interest on any Subordinated Note, PIK Note, Mirror Note or Mirror PIK Note;
(iv) waive a Breach or Event of Breach in the payment of principal of, or
interest on, any Subordinated Note, PIK Note, Mirror Note or Mirror PIK Note or
on the payment of the Subordinated Note Redemption Price, the PIK Note
Redemption Price, the Mirror Note Redemption Price, the Mirror PIK Note
Redemption Price, the Warrant Purchase Price or the Share Purchase Price (except
that a Majority in Interest of the Purchasers may (A) rescind an Acceleration
that resulted from a non-payment default, and (B) waive the payment default that
resulted from such Acceleration); (v) make any Subordinated Note, PIK Note,
Mirror Note or Mirror PIK Note payable in consideration other than that stated
in such instruments; (vi) waive a payment of the Subordinated Note Redemption
Price, the PIK Note Redemption Price, the Mirror Note Redemption Price, the
Mirror PIK Note Redemption Price, the Warrant Purchase Price or the Share
Purchase Price upon redemption or purchase of the relevant Security; or (vii)
make any change in this Section 17.1(b).
(c) Articles X, XI, XII, XIII, XIV, XV and XXI and Sections 8.9
and 18.1(c) of this Agreement may not be amended except with the written consent
of Transworld, but, for the avoidance of doubt, any other provisions of the
Agreement may be amended without its written consent.
(d) After an amendment, supplement or waiver under this Section
18.1 becomes effective, the Companies shall mail to the Purchasers a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Companies to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amended or supplemental Agreement
or waiver.
18.2 Revocation and Effect of Consents.
(a) Until an amendment, supplement or waiver becomes effective, a
consent to it by the Purchasers is a continuing consent by such Purchasers and
every subsequent holder of Securities (whether subsequently holding in whole or
in part), even if notation of the consent is not made on any Security.
(b) The Companies may, but shall not be obligated to, fix a
record date for the purpose of determining the subsequent holders of Securities
entitled to consent to any amendment or waiver. If a record date is fixed, then
notwithstanding the provisions of the immediately preceding paragraph, those
Persons who were holders of Securities at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to consent to
such amendment or waiver or to revoke any consent previously given, whether or
not such Persons continue to be holders of such Securities after such record
date.
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(c) After an amendment or waiver becomes effective it shall bind
the Purchasers and any subsequent holder.
18.3 Notation on or Exchange of Securities. The Companies may place an
appropriate notation about an amendment, supplement or waiver on any Security
thereafter issued in exchange for any Security issued and outstanding as of the
date of such amendment, supplement or waiver. The Companies in exchange for such
issued and outstanding Securities may issue all new Securities that reflect the
amendment, supplement or waiver. Failure to make the appropriate notation or
issue a new Security shall not affect the validity and effect of such amendment,
supplement or waiver.
18.4 Board Approval. The Companies may not sign an amendment, supplement
or waiver with respect to this Agreement until the Board of Directors of TW UK
approves it.
ARTICLE XIX
THE SECURITIES
19.1 Restrictive Legends. Except as otherwise permitted by this Section
19.1, each Security (or Ordinary Share certificate issued on exercise of the
Warrants) issued pursuant to this Agreement shall be stamped or otherwise
imprinted with a legend in substantially the following form:
ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF
THIS SECURITY IS RESTRICTED BY, AND THE RIGHTS OF THE HOLDER OF
SUCH SECURITY ARE SUBJECT TO THE TERMS AND CONDITIONS CONTAINED
IN, A SECURITIES PURCHASE AGREEMENT DATED DECEMBER 17, 1999, A
VOTING TRUST AGREEMENT December 17, 1999 AND INTERCREDITOR
AGREEMENT DATED DECEMBER 17, 1999, A COMPLETE AND CORRECT COPY OF
WHICH WILL BE FURNISHED BY THE ISSUER TO THE HOLDER HEREOF UPON
WRITTEN REQUEST AND WITHOUT CHARGE.
The Companies shall maintain a copy of this Agreement and the other
Transaction Documents and any amendments thereto on file in its principal
office, and will make such copy available during normal business hours for
inspection to any party thereto or will provide such copy to the Purchasers upon
its request.
Whenever the legend requirement imposed by this Section 19.1 shall
terminate, the respective holders of Securities for which such legend
requirements have terminated shall be entitled to receive from the Companies, at
the Companies' expense, new Subordinated Notes,
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PIK Notes, Warrant certificates (or Ordinary Share certificates issued on
exercise thereof), Mirror Notes or Mirror PIK Notes, as applicable, without such
legend.
ARTICLE XX
INDEMNIFICATION
20.1 Indemnification; Expenses, Etc.
(a) In addition to any and all obligations of the Companies to
indemnify the Purchasers hereunder or under the other Transaction Documents, the
Companies agree, without limitation as to time, to indemnify and hold harmless
the Purchasers, its Affiliates, and the employees, officers, directors, and
agents of the Purchasers and its Affiliates (individually, an "Indemnified
Party" and, collectively the "Indemnified Parties") from and against any and all
losses, claims, damages, liabilities, reasonable expenses, charges and costs
(including the reasonable costs of preparation and attorneys' fees, including
without limitation, the Purchasers' Special Counsel) and expenses (including
reasonable expenses of investigation) (collectively, "Losses") incurred or
suffered by an Indemnified Party in connection with any proceeding against any
Group Company or any Indemnified Party brought by any third party arising out of
or in connection with this Agreement or the other Transaction Documents or the
transactions contemplated hereby or thereby or any action taken in connection
herewith or therewith (or any other document or instrument executed herewith or
pursuant hereto or thereto), whether or not the transactions contemplated by
this Agreement are consummated and whether or not any Indemnified Party is a
formal party to any proceeding; provided, however, that (i) this Section 20.1(a)
shall not apply to third party, claims or proceedings made or brought by
Affiliates of the Purchasers, or shareholders, partners, directors, employees,
or agents of the Purchasers or any of their Affiliates (it being understood and
agreed that under no circumstances will any Group Company be deemed an Affiliate
of the Purchasers for purposes of the foregoing sentence) and (ii) the Companies
shall not be liable for any Losses resulting from action on the part of any
Indemnified Party which is finally determined in such proceeding to be an act of
gross negligence or willful misconduct by such Indemnified Party. The Companies
agree promptly to reimburse any Indemnified Party for all such Losses as they
are incurred or suffered by such Indemnified Party. Except as otherwise provided
herein, the Companies agree (for the benefit of each Purchaser) to pay, and to
hold each Purchaser harmless from and against, all costs and expenses
(including, without limitation, reasonable documented attorneys' fees, expenses
and disbursements), if any, in connection with the enforcement against the
Companies of this Agreement and the other Transaction Documents to which the
Purchasers are parties in any action in which any Purchaser attempting to
enforce any of the foregoing shall prevail or in any action in which a Purchaser
shall successfully assert any provision of any of the foregoing as a defense.
(b) If any Indemnified Party is entitled to indemnification
hereunder, such Indemnified Party shall give prompt notice to the Companies of
any claim or of the
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commencement of any proceeding against the Companies or brought by any
Indemnified Party or third party with respect to which such Indemnified Party
seeks indemnification pursuant hereto; provided, however, that the failure so to
notify the Companies shall not relieve the Companies from any obligation or
liability except to the extent the Companies are prejudiced by such failure. The
Companies shall have the right, exercisable by giving written notice to an
Indemnified Party promptly after the receipt of written notice from such
Indemnified Party of such claim or proceeding, to assume, at the expense of the
Companies, the defense of any such claim or proceeding with counsel reasonably
satisfactory to such Indemnified Party (except that if such Indemnified Party
has reasonable grounds for believing that counsel engaged by the Companies will
have a conflict of interest in representing the Companies and such Indemnified
Party, then such Indemnified Party, together with all similarly situated
Indemnified Parties, may engage, at the Companies' expense, one lead counsel and
not more than one local counsel in each relevant local jurisdiction). The
Indemnified Party or Parties will not be subject to any liability for any
settlement made without its or their consent (but such consent will not be
unreasonably withheld). The Companies shall not consent to entry of any judgment
or enter into any settlement that does not include as an unconditional term
thereof the giving by claimant or plaintiff to such Indemnified Party or Parties
of a release, in form and substance satisfactory to the Indemnified Party or
Parties, from all liability in respect of such claim, litigation or proceeding.
(c) The Companies will pay or reimburse, and will hold and save
each Purchaser and each other holder of any of the Securities harmless from
liability for the payment of, all expenses arising in connection with any future
amendment, restructuring or modification of or proposed consent under any
Transaction Documents or the transactions contemplated thereby, whether or not
such proposed amendment, restructuring or modification is effected or such
proposed consent is granted, including the negotiation, preparation, execution
and delivery of any required agreements or documents to be executed and
delivered in connection therewith, including, without limitation: (i) all
document production and duplication charges and the reasonable documented fees,
charges and expenses of Purchaser' Special Counsel; and (ii) the cost of
delivering to such Purchaser's principal office, insured to its satisfaction,
the Securities delivered to such Purchaser hereunder and any Securities
delivered to such Purchaser upon any substitution, exchange or conversion of any
of the Securities pursuant to the terms of this Agreement or the other
Transaction Documents to which the Purchasers are parties and of such
Purchaser's delivering any certificates representing Securities, insured to its
satisfaction, upon any such substitution, exchange or conversion.
(d) Any indemnification or reimbursement with respect to costs
and expenses shall include any value added tax payable with respect to such
costs and expenses.
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ARTICLE XXI
MISCELLANEOUS
21.1 Survival of Warranties; Severability. All Warranties contained in
this Agreement or the other Transaction Documents or made in writing by or on
behalf of the Companies in connection with the transactions contemplated by this
Agreement or the other Transaction Documents shall survive, for the duration of
any statutes of limitation applicable thereto, the execution and delivery of
this Agreement, the subscription for the Purchasers' Securities by the
Purchasers under this Agreement and any disposition of or payment on the
Purchasers' Securities. All statements contained in any certificate or other
instrument delivered to the Purchasers by or on behalf of the Group Companies
pursuant to this Agreement or the other Transaction Documents at the Closing
shall be deemed warranties of TW UK under this Agreement. If any provision in
this Agreement shall be held to be illegal, invalid or unenforceable, in whole
or in part, under any enactment or rule of law, such provision or part shall to
that extent be deemed not to form part of this Agreement but the legality,
validity and enforceability of the remainder of this Agreement shall not be
affected.
21.2 Notices, Etc. Any notice or communication under this Agreement
shall be duly given if in writing and delivered in person, mailed by registered
or certified mail, postage prepaid, return receipt requested or delivered by
telecopier or overnight air courier guaranteeing next day delivery to the
other's address:
If to the Companies: Transworld Holdings UK, Ltd.
c/o Omnicare plc
Balderton Hall - South Drive
Balderton, Newark
Nottingham NG24 3JR
Attn: President
Fax: 44-163-661-0659
Tel: 44-163-661-0101
With a copy to: Ashurst Morris Crisp
5 Appold Street
London, EC2A 2HA
Attn: David MacFarlane and Paul Gadd
Fax: 0207 972-7990
Tel: 0207 638-1111
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If to the Purchasers'
Representative: Triumph Partners III, L.P.
28 State Street, 37th Floor
Boston, MA 02109
Attn: Frederick S. Moseley IV
Fax: (617) 557-6014
Tel: (617) 557-6000
With a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attn: Ettore Santucci, P.C.
Fax: (617) 570-8150
Tel: (617) 570-1000
If to the other Purchasers: the address set forth below his, her or
its name on the signature pages hereto
The Companies or the Purchasers by notice to the other may designate
additional or different addresses for subsequent notices or communications.
All notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; the date receipt is
acknowledged, if mailed by registered or certified mail; the next Business Day,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery. If a notice or
communication is mailed in the manner provided above within the time prescribed,
it is duly given, whether or not the addressee receives it.
21.3 Successors and Assigns. Except as otherwise expressly set forth
herein, none of the rights and obligations of any party may be assigned or
transferred. Whenever in this Agreement any of the parties hereto are referred
to, such reference shall be deemed to include the successors and assigns of such
party; and all covenants, promises and agreements by or on behalf of the
respective parties which are contained in this Agreement shall bind and inure to
the benefit of the successors and assigns of all other parties. The terms and
provisions of this Agreement and the other Transaction Documents shall inure to
the benefit of and shall be binding upon any assignee or transferee of the
Purchasers and in the event of such transfer or assignment, the rights and
privileges herein conferred upon the Purchasers shall automatically extend to
and be vested in, and become an obligation of, such transferee or assignee, all
subject to the terms and conditions hereof. In connection therewith, such
transferee or assignee may disclose all documents and information which such
transferee or assignee now or hereafter may have relating to the Purchasers'
Securities, this Agreement, the other Transaction Documents, the Companies, any
other Persons referred to herein or any of the business of any of the foregoing
entities.
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21.4 Descriptive Headings. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
21.5 Satisfaction Requirement. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to the Purchasers or to the Purchasers of a
specified portion of the Securities, the determination of such satisfaction
shall be made by the Purchasers or such Purchasers, as the case may be, in the
sole and exclusive judgment (exercised in good faith and acting reasonably) of
the Person or Persons making such determination.
21.6 Governing Law and Jurisdiction. This Agreement (and any dispute,
controversy, proceedings or claim of whatever nature arising out of or in any
way relating to this Agreement or its formation) shall be governed by and
construed in accordance with English law. Each of the parties to this Agreement
irrevocably agrees that the courts of England shall have exclusive jurisdiction
to hear and decide any suit, action or proceedings and/or settle any disputes,
which may arise out of or in connection with this Agreement and, for these
purposes, each party irrevocably submits to the jurisdiction of the courts of
England. Each of the parties to this Agreement irrevocably waives any objection
which it might at any time have to the courts of England being nominated as the
forum to hear and decide and/or settle any such matter and agrees not to claim
that the courts of England are not a convenient or appropriate forum for any
such matter and further irrevocably agrees that a judgment in any such matter
brought in any court referred to in this Section 21.6 shall be conclusive and
binding upon the parties and may be enforced in the courts of any other
jurisdiction. Without prejudice to any other permitted mode of service the
parties agree that service of any claim form, notice or other document for the
purpose of any suit, action or proceeding begun in England shall be duly served
upon him or it if delivered personally or sent by registered post, in the case
of: TW UK to [INSERT ADDRESS] (marked for the attention of [INSERT NAME OF THE
PERSON OR OFFICER TO WHOM THE DOCUMENTS ARE TO BE SENT]).
21.7 Agent for Service of Process. The Purchasers' Representative hereby
appoints Hackwood Secretaries Limited, as its registered office for the time
being, (being the date hereof at One Silk Street, London, EC2Y 8HQ), to act as
it is agents to accept service of process out of the English Courts in relation
to all matters arising out of this Agreement.
21.8 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, and it shall
not be necessary in making proof of this Agreement to produce or account for
more than one such counterpart.
21.9 No Adverse Interpretation of Other Agreements. Except as otherwise
expressly provided herein, this Agreement may not be used to interpret another
agreement, indenture, loan or debt agreement of the Companies or any Subsidiary.
Any such agreement, indenture, loan or debt agreement may not be used to
interpret this Agreement.
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21.10 Merger. This Agreement, the Subordinated Notes, the PIK Notes, the
Warrant Instrument, the Mirror Notes, the Mirror PIK Notes and the other
Transaction Documents collectively constitute the entire agreement of the
Companies and the Purchasers and express the entire understanding of the
Companies and the Purchasers with respect to the Securities.
21.11 Expenses. The Companies agrees to pay, on demand, all reasonable
out-of-pocket expenses incurred by the Purchasers, including, without
limitation, legal and accounting fees, in connection with the collection of
amounts upon the occurrence of an Event of Breach hereunder, and the revision,
protection or enforcement of the Purchasers' rights against the Companies under
this Agreement and the Securities.
21.12 Conflict. If there is a conflict between the provisions of (i)
this Agreement or the Voting Trust Agreement and (ii) the Charter Documents of
TW UK or UK Parent or any of the other Group Companies during the continuance of
this Agreement or the Voting Trust Agreement (as the case may be), it is the
intention of the parties hereto that the provisions of this Agreement or the
Voting Trust Agreement (as the case may be) shall prevail over such Charter
Documents during such period and accordingly Transworld, the Companies and the
Purchasers shall exercise all voting and other rights and powers available to
them so as to give effect to the provisions of this Agreement or the Voting
Trust Agreement (as the case may be) and shall further if necessary procure any
required amendment to the Charter Documents of the Group Companies.
21.13 Parties in Interest. The operation of The Contracts (Rights of
Third Parties) Act 1999 is hereby excluded in relation with this Agreement and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any Person who is not a party to this Agreement any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
Notwithstanding the foregoing, except as expressly set forth in Articles X, XI,
XII, XIII, XIV, XV, XVII and XXI and Sections 8.9 and 18.1(c) hereof, Transworld
shall not have any rights, benefits or remedies of any nature whatsoever under
any provision of this Agreement.
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IN WITNESS WHEREOF, the Companies and the Purchasers have executed and
delivered this Security Purchase Agreement as a Deed on the date first written
above.
COMPANIES:
Signed as a deed for and on behalf of
TRANSWORLD HEALTHCARE (UK) LIMITED
acting as its duly authorized attorney:
By: /s/ Wayne A. Palladino
---------------------------------------
Name:
Signed as a deed for and on behalf of
TRANSWORLD HOLDINGS (UK) LIMITED
acting as its duly authorized attorney:
By: /s/ Wayne A. Palladino
---------------------------------------
Name:
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PURCHASERS:
Signed as a deed for and on
behalf of TRIUMPH PARTNERS III, L.P.
By: Triumph III Advisors, L.P., its general
partner
By: Triumph III Advisors, Inc., its general
partner
By: /s/ John H. Turner
---------------------------------------
Name: John H. Turner
Title: Principal
By: /s/ Frederick S. Moseley, IV
---------------------------------------
Name: Frederick S. Moseley, IV
Title: President
Signed as a deed for and on
behalf of TRIUMPH III INVESTORS, L.P.
By: Triumph III Investors, Inc., its general
partner
By: /s/ John H. Turner
---------------------------------------
Name: John H. Turner
Title: Principal
By: /s/ Frederick S. Moseley IV
---------------------------------------
Name: Frederick S. Moseley IV
Title: President
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Signed as a Deed by
PARIBAS
acting by its duly authorized attorney
/s/ Patrick Fox
---------------------------------------
Name: Patrick Fox
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Solely for the purposes of
Article X, XI, XII, XIII,
XIV, XV and XXI and
Sections 8.9 and 18.1(c)
Signed as a Deed by
TRANSWORLD HEALTHCARE, INC.
acting by its duly authorized attorney
By:
-------------------------------------
Name:
Title:
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EXHIBIT B
Form of Warrant Instrument
<PAGE>
EXHIBIT B
DATED DECEMBER 17, 1999
TRANSWORLD HEALTHCARE (UK) LIMITED
WARRANT INSTRUMENT
<PAGE>
WARRANT INSTRUMENT
THIS DEED is executed on December 17, 1999 by TRANSWORLD HEALTHCARE (UK)
LIMITED a company incorporated in England and Wales ("TW UK").
WHEREAS:
(A) By a resolution of the Board of Directors of TW UK passed on
December 17, 1999, TW UK determined to issue Warrants
conferring the right upon the holders thereof to subscribe for
every Warrant held (subject to adjustment as referred to
herein) for one Ordinary Share; and
(B) TW UK has determined to execute this Instrument to set out the
rights and interests of the Warrantholders.
NOW THIS INSTRUMENT WITNESSETH as follows:
1. DEFINITIONS. In this Instrument, except to the extent that the context
otherwise requires:
"ARTICLES" means the Articles of Association of TW UK for the time being;
"INSTRUMENT" means this deed and its Appendix (as from time to time
modified in accordance with the terms hereof and thereof), and includes any
instrument which is executed in accordance with the provisions hereof and
thereof (as from time to time modified as aforesaid) and expressed to be
supplemental hereto;
"REGISTER" means the register of Warrantholders required to be maintained
pursuant to Section 10 of the Appendix;
"WARRANTS" means the rights created by this Instrument entitling the
holders thereof to subscribe for Ordinary Shares on the terms set out in this
Instrument.
<PAGE>
Other words and expressions defined in the Appendix shall have the same
meaning herein.
2. CREATION OF WARRANTS.
2.1 Creation of Rights. TW UK hereby creates, pursuant to a resolution
of the Board of Directors dated December 17, 1999, the right, subject to the
provisions of this Instrument, to subscribe for Ordinary Shares in such number
as may for the time being be applicable in accordance with the provisions hereof
on the basis that one Warrant (subject to adjustment as referred to herein)
entitles the Warrantholder to subscribe for one Ordinary Share at the Initial
Warrant Exercise Price (as defined in the Appendix hereto) per Warrant.
2.2 Issue of Warrants. TW UK shall grant the Warrants in accordance
with the provisions of the Purchase Agreement. Upon the grant of any Warrant TW
UK shall cause the person or persons to whom the Warrant is granted to be
entered on the Register in respect of such Warrant.
2.3 Allotment and issue of Ordinary Shares. TW UK shall, upon exercise
of all or any of the Warrants allot and issue the number of Ordinary Shares
required to give effect to the terms of this Instrument in accordance with the
Appendix hereto.
2.4 Terms of this Instrument binding on all Warrantholders. The rights
to subscribe represented by the Warrants shall be subject to and have the
benefit of the terms and conditions set out in this Instrument which shall be
binding upon TW UK, the Warrantholders and all persons claiming through or under
them respectively.
3. TERMS AND CONDITIONS OF WARRANTS. Warrants shall be issued on the terms and
conditions contained in the Appendix hereto.
<PAGE>
4. WARRANT CERTIFICATES.
4.1 Warrants will be issued in registered form and Warrantholders shall
be entitled to certificates in the form contained in the Appendix hereto
evidencing the Warrants registered in their name within 5 business days of being
registered as a holder thereof. The provisions of Section 10 of the Appendix
shall apply to Warrant certificates.
4.2 TW UK shall maintain a register of Warrantholders in accordance
with the provisions of Section 10 of the Appendix.
5. MODIFICATIONS TO THE INSTRUMENT.
5.1 Modifications. Any modification to this Instrument may be effected
only by deed poll executed by TW UK and expressed to be supplemental hereto, and
only if it shall first have been approved in writing by the Warrantholders in
accordance with the provisions set out in the Purchase Agreement.
5.2 Memorandum. A memorandum of every such supplemental deed shall be
endorsed on this Instrument.
5.3 Notice of Modification. Notice of every modification to this
Instrument shall be given by TW UK to the Warrantholders in writing.
6. AVAILABILITY OF INSTRUMENT AND NOTIFICATION. Every Warrantholder shall be
entitled to inspect a copy of this Instrument at the registered office from time
to time of TW UK (or such other address as the Directors of TW UK may from time
to time notify the Warrantholders) during normal business hours (Saturdays,
Sundays and public holidays excepted), and shall be entitled to receive a copy
of this Instrument against payment of such charges as the Directors of TW UK may
impose in their absolute discretion.
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7. SUIT BY WARRANTHOLDERS.
7.1 Benefit of Covenants etc. TW UK hereby acknowledges and covenants
that the benefit of the covenants, obligations and conditions on the part of or
binding upon it contained in this Instrument hereto shall enure to the benefit
of each and every Warrantholder.
7.2 Enforcement. Each Warrantholder shall be entitled to enforce the
said covenants, obligations and conditions against TW UK insofar as each of his
Warrants is concerned, without the need to join the allottee of any such Warrant
or any intervening or other Warrantholder in the proceedings for such
enforcement.
8. GOVERNING LAW. This Instrument shall be governed by, and construed in
accordance with, English law.
<PAGE>
IN WITNESS WHEREOF this Instrument has been executed as a Deed on the date
and first above written.
SIGNED as a DEED by the said
TRANSWORLD HEALTHCARE (UK) LIMITED
acting by its duly authorized attorney:
---------------------------
Name:
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APPENDIX
FORM OF WARRANT CERTIFICATE
TRANSWORLD HEALTHCARE (UK) LIMITED
(Incorporated under the Companies Act 1985 and registered in England number
3370146)
____WARRANTS TO SUBSCRIBE FOR
ORDINARY SHARES
-----------------------
THIS WARRANT CERTIFICATE (the "Warrant Certificate") certifies that
_______________ (the "Investor" or sometimes referred to as the "Holder"), for
value received and subject to the terms and conditions set forth in an
instrument entered into by Transworld Healthcare (UK) Limited, a company
incorporated in England and Wales with registered number 3370146 ("TW UK"), on
December 17, 1999 (the "Instrument") holds XX Warrants and is entitled to
exercise the Warrants represented by this Warrant Certificate to subscribe at
any time prior to the Expiration Date (as defined in Section 2 hereof) for XX
ordinary shares (the "Ordinary Shares") in the capital of TW UK at a
subscription price of (pounds sterling)1 per share (the "Initial Warrant
Exercise Price"), subject to the provisions (including the adjustment provisions
in Section 3 hereof) and upon the conditions set forth herein and in the
Instrument. The Warrants represented by this Warrant Certificate are issued with
the benefit of, and subject to the provisions contained herein and in the
Instrument. A copy of the Instrument is available for inspection during business
hours on any business day at the registered office of TW UK.
This Warrant Certificate and the Warrants are originally issued in
connection with the execution and delivery of the Securities Purchase Agreement,
dated as of the date hereof (the "Purchase Agreement"), by and among TW UK,
Transworld Holdings (UK) Limited, a company incorporated in England and Wales
with registered number 3890177 ("UK Parent"), Transworld Healthcare, Inc., a New
York corporation, and the other parties identified therein. Terms used herein
and not otherwise defined shall have the meanings ascribed thereto in the
Purchase Agreement and the Instrument.
The terms and conditions of the Warrants are as follows:
1. FORM AND TITLE. The Warrants of TW UK will be issued in registered form.
Warrants will be evidenced by registered Warrant Certificates. Title to the
Warrant passes by registration in the Register (as defined in Section 10.1
hereto). In these conditions, "Warrantholder" and (in relation to a Warrant)
"Holder" means a person in whose name a Warrant is registered.
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2. EXERCISE OF WARRANTS.
2.1 Optional Exercise of Warrant. At any time on or before the
Expiration Date (unless and to the extent that some or all of the Warrants have
previously lapsed upon redemption of the Subordinated Notes pursuant to the
Purchase Agreement), the Holder shall be entitled to cause all or any portion of
this Warrant to be exercised for that number of Ordinary Shares which results
from multiplying the number of Warrants being exercised by such Holder by the
Warrant Exercise Price (as defined in this Section 3.1 hereof) in effect at the
time of exercise by surrender of this Warrant Certificate to TW UK (as provided
in Section 2.2 below), accompanied by a notice of subscription ("Subscription"),
in substantially the form of Exhibit A attached hereto, duly executed by such
Holder and by payment as set forth below ("Optional Exercise").
2.2 Manner of Optional Exercise of Warrant. In order to exercise an
Optional Exercise, the Holder shall surrender this Warrant Certificate, duly
completed, to TW UK or shall deliver an agreement satisfactory to TW UK to
indemnify TW UK from any loss incurred by it in connection therewith (an
"Affidavit of Loss") with respect to such Warrant Certificate, at the registered
office of TW UK. Upon surrender to TW UK of (i) this Warrant Certificate, or
delivery of an Affidavit of Loss; (ii) a Subscription stating the number of
Warrants the Holder elects to exercise; and (iii) (a) cash in an amount equal to
the product of the number of Ordinary Shares for which the Investor desires to
exercise the Warrants, multiplied by the Warrant Exercise Price or (b) the
aggregate principal amount of Subordinated Notes equal to the product of the
number of Ordinary Shares for which the Investor desires to exercise the
Warrants, multiplied by the Warrant Exercise Price, TW UK shall (1) allot and
issue to the Holder, at the address designated by such Holder, share
certificates for such number of Ordinary Shares to which such Holder shall be
entitled upon exercise pursuant to this Section 2; (2) pay to the holder
exercising an Optional Exercise in cash all accrued unpaid interest on the
tendered Subordinated Notes; and (3) issue to the Holder thereof, at the address
designated by such holder, with respect to any Warrants not exercised, a new
Warrant Certificate authenticated by TW UK and equal in amount to the
unexercised portion of the Warrants that will remain outstanding, if any. The
issuance of share certificates for Ordinary Shares upon exercise of Warrants
will be made without charge to the Holders of such shares for any issuance tax
in respect thereof or other costs incurred by TW UK in connection with such
exercise.
2.3 Automatic Exercise. The Warrants shall, subject to compliance in
full by the Holder with Section 2.4, automatically be exercised to subscribe for
Ordinary Shares ("Automatic Exercise" and together with an Optional Exercise, an
"Exercise") as of, and in all cases subject to, the consummation of a Qualified
Public Offering by TW UK (an "Automatic Exercise Event"), provided, that, if an
Automatic Exercise Event occurs, all outstanding Warrants shall be deemed to
have been exercised pursuant to this Section 2.3 to subscribe for Ordinary
Shares immediately prior to the occurrence of such Automatic Exercise Event. Any
such Automatic Exercise shall be at the Warrant Exercise Price in effect upon
the closing of such Qualified Public Offering.
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2.4 Manner of Automatic Exercise of Warrant. Subject to compliance in
full by the Holder with this Section 2.4, as of, and in all cases subject to,
the occurrence of an Automatic Exercise Event (the "Automatic Exercise Date"),
all outstanding Warrants shall be exercised automatically to subscribe for
Ordinary Shares at the Warrant Exercise Price provided that the Warrant
Certificate(s) or an Affidavit of Loss in respect of all outstanding Warrants is
surrendered to TW UK on or prior to the Automatic Exercise Date. Notwithstanding
the foregoing, after an Automatic Exercise Date, each Holder shall retain the
right to receive the number of Ordinary Shares to which the Holder is entitled
upon such Automatic Exercise in respect of any Warrant Certificate or Affidavit
of Loss not surrendered by such Holder on or prior to such Automatic Exercise
Date, plus any accrued and unpaid Interest on any Subordinated Notes and PIK
Notes held by such Holder, but shall retain no other rights with respect to such
Warrants. As of, and in all cases subject to, the occurrence of an Automatic
Exercise Event, the Holder shall either (i) pay to TW UK in cash an amount equal
to the product of the number of Ordinary Shares for which the Warrants have been
exercised multiplied by the Warrant Exercise Price or (ii) tender to TW UK such
number of Subordinated Notes with an aggregate face value equal to the product
of the number of Ordinary Shares for which the Warrants have been exercised
multiplied by the Warrant Exercise Price. In the event that the Investor elects
to pay the Warrant Exercise Price by tendering the Subordinated Notes, TW UK
shall pay to the Holder, in cash, an amount equal to the sum of all accrued and
unpaid interest on the tendered Subordinated Notes plus the principal amount of
any issued PIK Notes, plus all accrued an unpaid interest on such PIK Notes. On
the Automatic Exercise Date all rights with respect to the Warrants so exercised
shall terminate, except any of the rights of the Holder thereof upon surrender
of this Warrant Certificate therefor or delivery of an Affidavit of Loss thereof
to receive share certificates for the number of Ordinary Shares subscribed for
pursuant to the exercise of such Warrants. If so required by TW UK, this Warrant
Certificate surrendered for exercise shall be endorsed or accompanied by written
instrument or instruments of transfer, in form satisfactory to TW UK, duly
executed by the Holder or by his, her or its attorney duly authorized in
writing. Upon surrender of this Warrant Certificate or Affidavit of Loss, TW UK
shall issue and deliver to the Holder, promptly (and in any event in such time
as is sufficient to enable such holder to participate in such Qualified Public
Offering) at such office and in its name as shown on such surrendered Warrant
Certificate, a share certificate for the number of Ordinary Shares for which the
Holder exercised the Warrants on the Automatic Exercise Date.
2.5 Tender of Subordinated Notes and Mirror Notes. Simultaneous with
the issuance of Ordinary Shares to the Holder, TW UK shall tender any
Subordinated Notes and PIK Notes tendered to TW UK upon exercise of the Warrants
to UK Parent, and UK Parent immediately shall exchange such tendered
Subordinated Notes for such number of Mirror Notes and Mirror PIK Notes with an
aggregate face value equal to the aggregate face value of the Subordinated Notes
tendered to UK Parent by TW UK, plus all accrued and unpaid interest on such
Mirror Notes.
2.6 Expiration Date. The Warrants shall lapse without further action
by TW UK on the earlier of (i) the redemption or repayment at Maturity of
all the Subordinated Notes and all
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of the PIK Notes pursuant to the terms of the Purchase Agreement; (ii) upon an
Automatic Exercise provided that if any Holder has not complied in full with
Section 2.4, by surrendering to TW UK the relative Warrant Certificates or
Affidavit of Loss and, if relevant, Subordinated Notes in respect of the
Warrants registered in his name on or prior to an Automatic Exercise Event,
provided that such Holder shall retain only the right to receive Ordinary
Shares, plus any accrued and unpaid Interest on any Subordinated Notes and PIK
Notes held by such Holder, as set forth in Section 2.4 above; (iii) a purchase
of all the outstanding Warrants pursuant to a Purchasers' Warrant Put; or (iv)
the date which is nine (9) years after the date of issuance of this Warrant
(such date hereinafter referred to as the "Expiration Date"), provided, however,
that the Expiration Date shall be no earlier than the date on which the
Subordination Notes and the PIK Notes have been paid in full.
2.7 Reservation of Stock Issuable Upon Exercise. TW UK shall at all
times reserve and keep available for issue out of its authorized but unissued
share capital free from pre-emptive rights such number of its Ordinary Shares as
shall from time to time be sufficient to allow the Holders to exercise all
outstanding Warrants pursuant to the terms thereof. If at any time the
authorized, or the authorized but unissued share capital shall not be sufficient
to allow the Exercise of all then outstanding Warrants, TW UK will take such
corporate action as may be necessary to increase its authorized share capital
and/or the number of shares available for issue (as the case may be) to such
number of Ordinary Shares as shall be sufficient for such purpose, as
applicable.
2.8 Warrant Put. Subject to the terms of Section 8 of the Purchase
Agreement, the Warrants shall be purchased in whole or in part, at the election
of the Holder, upon the occurrence of a Warrant Put Event, as set forth in
Section 8 of the Purchase Agreement, at the Warrant Purchase Price determined
pursuant to and in accordance with the procedures set forth in Section 8 of the
Purchase Agreement.
2.9 Any Warrants which have not been exercised prior to the Expiration
Date shall lapse immediately following the Expiration Date.
2.10 Delivery of the items specified in Section 2.2 to TW UK shall be
an irrevocable election by the Holder to exercise the relevant Warrants.
2.11 Where the Automatic Exercise Event in response to which any
automatic exercise of Warrants is made does not occur within 30 Business Days of
the proposed date of such Automatic Exercise Event:
(a) TW UK shall forthwith deliver to each relevant Holder the
Subordinated Notes it had tendered to TW UK in respect of such exercise
of Warrants; and
(b) the relevant Warrants shall remain exercisable by the
relevant Holder in accordance with the provisions of this Warrant as if
they had never been exercised.
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<PAGE>
2.12 Special Redemption of Notes. In the case of an Optional Exercise,
if a Holder elects to effect such Exercise through delivery of cash pursuant to
Section 2.2(iii)(a) hereto, UK Parent shall have the right, at its option, to
redeem from such Holder the aggregate principal amount of Subordinated Notes
held by such Holder equal to the number of Warrants so exercised multiplied by
the Warrant Exercise Price, at the Subordinated Note Redemption Price.
3. ADJUSTMENT OF ORDINARY SHARES ISSUABLE UPON EXERCISE
3.1 General; Number of Ordinary Shares; Warrant Exercise Price. The
number of Ordinary Shares which the Holder shall be entitled to receive upon the
exercise hereof shall be the number of Ordinary Shares originally issuable upon
the exercise of this Warrant as adjusted, from time to time, pursuant to this
Section 3. The aggregate exercise price shall be determined by multiplying such
number by the Warrant Exercise Price in effect on the date of such exercise. The
"Warrant Exercise Price," which shall initially be the Initial Ordinary Share
Exercise Price, shall be adjusted and readjusted from time to time as provided
in this Section 3 and, as so adjusted and readjusted, shall remain in effect
until a further adjustment or readjustment thereof is required by this Section
3.
3.2 Adjustments for Dividends and Distributions. In case TW UK at any
time or from time to time after the date hereof shall declare, order, pay or
make a dividend or other distribution including without limitation any
distribution of cash, other or additional shares or other securities or property
or the right to purchase any such securities or property, by way of dividend or
spin-off, reclassification, recapitalization or similar corporate rearrangement
or otherwise on the Ordinary Shares of TW UK, other than a dividend permitted by
Section 9.2(b)(iv) of the Purchase Agreement, then:
(i) in the case of a distribution in cash, the Warrant
Exercise Price shall be reduced (without duplication)
by an amount equal to the per share amount of the cash
dividend; and
(ii) in the case of any other distribution, TW UK shall
provide the Holder with ten (10) Business Days' prior
written notice of such distribution and make
appropriate provisions to ensure that the Holder shall
thereafter have the right to receive (without
duplication), upon exercise of the Warrants, in
addition to the Ordinary Shares immediately theretofore
issuable upon exercise of the Warrants, either, at the
option of the Holder, (a) such shares or other
securities, property or rights as would have been
receivable by the Holder had the Warrants been
exercised immediately prior to the time TW UK took a
record of holders of shares of TW UK for purposes of
entitling them to receive such dividend or
distribution, or (b) an amount of cash equal to the
Fair Market Value of the property described in clause
(a) as of
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the date of such distribution, as determined in good faith
by the Board of Directors of TW UK.
The adjustment provided for in this Section 3.2 shall under no
circumstances reduce the Warrant Exercise Price payable in connection with any
exercise of this Warrant below the par value per share issuable upon such
exercise. Notwithstanding the foregoing, there shall be no adjustment pursuant
to this Section 3.2 for any increase in the amounts paid by TW UK due to a
change in Applicable Law as set forth in Sections 2.7, 7.6 and 8.7 of the
Purchase Agreement.
3.3 Adjustments for Subdivision or Combination. If TW UK at any time or
from time to time subdivides (by any share split, share dividend,
recapitalization or otherwise) its outstanding Ordinary Shares into a greater
number of Ordinary Shares or consolidates its outstanding shares into a lesser
number of Ordinary Shares, immediately after the occurrence of such subdivision
or consolidation, the number of Ordinary Shares for which the Warrants are
exercisable shall be the number of Ordinary Shares which a record holder of the
same number of Ordinary Shares for which the Warrants are exercisable
immediately prior to such event would own or be entitled to receive in respect
of such shares upon the happening of such event. In the event an adjustment is
made to the number of Ordinary Shares for which the Warrants are exercisable,
the Warrant Exercise Price shall be adjusted by multiplying (i) the current
Warrant Exercise Price by (ii) a fraction where the numerator is (y) the number
of Ordinary Shares for which the Warrants were exercisable immediately prior to
such adjustment and the denominator is (z) the number of Ordinary Shares for
which the Warrants were exercisable immediately following such adjustment.
3.4 Adjustments for Acquisition, Disposal, Sale of Assets, Etc. In case
TW UK after the date hereof (a) is acquired by any other Person or (b) acquires
any other Person and, in connection with such acquisition, the Ordinary Shares
of TW UK shall be exchanged for shares or other securities of any other Person
or cash or any other property, or (c) shall transfer all or substantially all of
its properties or assets to any other Person, or (d) shall effect a capital
reorganization or reclassification of the Ordinary Shares, then, and in the case
of each such transaction, proper provision shall be made so that, upon the basis
and the terms and in the manner provided in this Warrant, the Holder, upon the
exercise hereof at any time after the consummation of such transaction, shall be
entitled to receive (at the aggregate Warrant Exercise Price in effect at the
time of such consummation for all Ordinary Shares issuable upon such exercise
immediately prior to such consummation), in lieu of the Ordinary Shares issuable
upon the exercise prior to such consummation, the greatest amount of securities,
cash or other property to which the Holder would actually have been entitled as
a shareholder upon such consummation if the Holder had exercised the rights
represented by the Warrants immediately prior thereto, subject to adjustments
(subsequent to such consummation) as nearly equivalent as possible to the
adjustments provided for in this Section 3;
3.5 Assumption of Obligations. Notwithstanding anything contained in
this Warrant Certificate to the contrary, TW UK will not effect any of the
transactions described in clauses
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(a) through (d) of Section 3.4 hereof unless, prior to the consummation thereof,
each Person (other than TW UK) which may be required to deliver any shares,
securities, cash or property upon the exercise of the Warrants as provided
herein shall by written instrument delivered to, and reasonably satisfactory to,
the Holder, assume (a) the obligations of TW UK under the Warrants, including
without limitation the Guarantees of TW UK as described in the Purchase
Agreement (and if TW UK shall survive the consummation of such transaction, such
assumption shall be in addition to, and shall not release TW UK from, any
continuing obligations of TW UK under this Warrant), (b) the obligations of TW
UK under the Registration Rights Agreement and (c) the obligation to deliver to
the Holder such shares, securities, cash or property as, in accordance with the
provisions of Section 3.4, the Holder may be entitled to receive.
3.6 Adjustments for Diluting Issues. In the event TW UK shall at any
time or from time to time issue, sell or exchange (i) any Ordinary Shares at a
price per share, or (ii) any rights, options, warrants or convertible or
exchangeable securities entitling the holders thereof to purchase Ordinary
Shares at an exercise price per share (when aggregated with any price payable
and actually paid for the grant of such right to purchase an Ordinary Share),
less than the Warrant Exercise Price, the Warrant Exercise Price shall be
adjusted immediately thereafter so that it shall equal the price determined by
multiplying the Warrant Exercise Price in effect immediately prior thereto by a
fraction, of which the numerator shall be the number of Ordinary Shares
outstanding immediately prior to such issuance or exercise price, sale or
exchange plus the number of Ordinary Shares which the aggregate offering price
of the total number of Ordinary Shares so issued or issuable would purchase at
the Warrant Exercise Price per share (prior to adjustment), and of which the
denominator shall be the number of Ordinary Shares outstanding immediately prior
to such issuance, sale or exchange plus the number of additional Ordinary Shares
so issued or issuable. Such adjustment shall be made successively whenever such
an issuance, sale or exchange is made. To the extent that any such rights,
options, warrants or convertible or exchangeable securities are not so issued or
expire unexercised, the Warrant Exercise Price then in effect shall be
readjusted to the Warrant Exercise Price which would then be in effect if such
unissued or unexercised rights, options, warrants or convertible or exchangeable
securities had not been issuable.
3.7 Expiration or Change in Price. If the consideration per share
provided for in any options or rights to subscribe for Ordinary Shares or any
securities exercisable or exchangeable for or convertible into Ordinary Shares,
changes at any time, the Warrant Exercise Price in effect at the time of such
change shall be readjusted to the Warrant Exercise Price which would have been
in effect at such time had such options or convertible securities provided for
such changed consideration per share, at the time initially granted, issued or
sold. No adjustment of the Warrant Exercise Price shall be made under this
Section 3.7 upon the issuance of any additional Ordinary Shares which are issued
pursuant to the exercise of any warrants, options or other subscription or
purchase rights or pursuant to the exercise of any conversion or exchange rights
in any convertible securities if an adjustment shall previously have been made
upon the issuance of such warrants, options or other rights. Any adjustment of
the Warrant Exercise Price shall be disregarded if, as, and when the rights to
acquire
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Ordinary Shares upon exercise or conversion of the warrants, options, rights or
convertible securities which gave rise to such adjustment expire or are
canceled, redeemed or repurchased without having been exercised, so that the
Warrant Exercise Price effective immediately upon such cancellation or
expiration shall be equal to the Warrant Exercise Price in effect at the time of
the issuance of the expired or canceled warrants, options, rights or convertible
securities, with such additional adjustments as would have been made to that
Warrant Exercise Price had the expired or canceled warrants, options, rights or
convertible securities not been issued.
3.8 Certificate of Adjustment. Upon the occurrence of each adjustment
or readjustment pursuant to this Section 3, TW UK at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to the Holder a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. TW UK shall, upon written request at any time of the
Holder, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the applicable
Warrant Exercise Prices before and after such adjustment or readjustment, and
(iii) the number of Ordinary Shares and the amount, if any, of other property
which at the time would be received upon the exercise of such Holder's Warrant.
4. OTHER DILUTIVE EVENTS. In case any event shall occur as to which the
provisions of Section 3 hereof are not strictly applicable but the failure to
make any adjustment would not, in the opinion of the Holder, fairly protect the
subscription rights represented by each Warrant in accordance with the essential
intent and principles of such Section, then, in each such case, at the request
of the Holder, TW UK shall appoint a firm of independent investment bankers of
recognized national standing (which shall be completely independent of TW UK and
shall be satisfactory to the Holder), which shall give their opinion upon the
adjustment, if any, on a basis consistent with the essential intent and
principles established in Section 3 hereof, necessary to preserve, without
dilution, the purchase rights represented by this Warrant. Upon receipt of such
opinion, TW UK will promptly mail a copy thereof to the Holder and shall make
the adjustments described therein.
5. NO DILUTION OR IMPAIRMENT. TW UK (a) will not permit the par value of any
shares receivable upon the exercise of the Warrants to exceed the amount payable
therefor upon such exercise and (b) will take all such action as may be
necessary or appropriate in order that TW UK may validly and legally issue fully
paid shares on the exercise of each Warrant from time to time outstanding in
accordance with the provisions set forth herein.
6. ACCOUNTANTS' REPORT AS TO ADJUSTMENTS. In each case of any adjustment or
readjustment in the Ordinary Shares issuable upon the exercise of this Warrant,
TW UK will promptly compute such adjustment or readjustment in accordance with
the terms of the Warrants. In the event of a dispute in connection with such
adjustment, TW UK will cause independent chartered accountants of recognized
international standing (which may be the regular auditors of TW UK) selected by
the Holder to verify such computation (other than any computation of the Fair
Market Value of property as determined in good faith by the
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<PAGE>
Board of Directors of TW UK) and prepare a report setting forth such adjustment
or readjustment and showing in reasonable detail the method of calculation
thereof and the facts upon which such adjustment or re-adjustment is based. TW
UK will promptly mail a copy of each such report to the Holder and will, upon
the written request at any time of the Holder, furnish to the Holder a like
report setting forth the Warrant Exercise Price at the time in effect and
showing in reasonable detail how it was calculated. TW UK will also keep copies
of all such reports at its registered office and will cause the same to be
available for inspection at such office during normal business hours by the
Holder.
7. NOTICES OF CORPORATE ACTION. In the event of
(a) any taking by TW UK of a record of the holders of any
class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution or any
right to subscribe for, purchase or otherwise acquire any shares of any
class or any other securities or property, or to receive any other
right, or
(b) any capital reorganization of TW UK, any reclassification,
consolidation or recapitalization (or other similar procedure) of the
shares of TW UK or any acquisition, disposal or merger involving TW UK
and any other Person or any transfer of all or substantially all the
assets of TW UK to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of TW UK,
TW UK will mail to the Holder a notice specifying (i) the date or expected date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right and (ii) the date or the date on which any such
reorganization, reclassification, consolidation, recapitalization, acquisition,
disposal, merger, transfer, dissolution, liquidation, winding-up or other
similar event is to take place, the time, if any such time is to be fixed, as of
which the Holder shall be entitled to exchange its Ordinary Shares for the
securities or other property deliverable upon such reorganization,
reclassification, consolidation, recapitalization, acquisition, disposal,
merger, transfer, dissolution, liquidation, winding-up or other similar event
and a description in reasonable detail of the transaction. Such notice shall be
mailed at least thirty (30) days prior to the date therein specified.
8. REGISTRATION OF ORDINARY SHARES. The Ordinary Shares issuable upon exercise
of this Warrant shall constitute Registrable Shares (as such term is defined in
the Registration Rights Agreement). The Holder shall be entitled to all of the
benefits afforded to a Holder of any such Registrable Shares under the
Registration Rights Agreement and the Holder, by its acceptance of this Warrant,
agrees to be bound by and agrees to the terms and conditions of the Registration
Rights Agreement applicable to the Holder as a Holder of such Registrable
Securities.
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9. OWNERSHIP, TRANSFER AND SUBSTITUTION OF WARRANTS.
9.1 Ownership of Warrants. TW UK may treat the person in whose name the
Warrants are registered on the register kept at the registered office of TW UK
as the owner and Holder thereof for all purposes, notwithstanding any notice to
the contrary. The Warrants may be exercised by a new Holder without a new
Warrant Certificate first having been issued.
9.2 Transfer of Warrants. A Transfer of this Warrant shall only be made
if it is made in compliance with Article XV of the Purchase Agreement and in
compliance with this Section 9.
9.3 Any Transfer of a Warrant permitted under the Purchase Agreement
shall be made by an instrument of transfer in the usual or common form or in any
other form which may be reasonably approved by the Board of Directors.
9.4 The instrument of Transfer of a Warrant shall be executed by or on
behalf of the transferor and the transferee agreeing to comply with the terms of
the Warrant. The transferor shall be deemed to remain the Holder of the Warrant
until the name of the transferee is entered in the Register (as herein defined)
in respect of the Warrant being Transferred.
9.5 The Board of Directors may decline to recognize any instrument of
Transfer of a Warrant otherwise permitted by clause 9 of this Warrant unless
such instrument is deposited at the registered office of TW UK accompanied by
the Warrant Certificate to which it relates, and such other evidence as the
Board of Directors may reasonably require to show, the right of the transferor
to make the Transfer. The Directors shall waive production of any Warrant
Certificate upon production to them of an Affidavit of Loss. The Board of
Directors shall be bound to register any transfer permitted under the Purchase
Agreement within 14 days after the lodging of the instrument of transfer with TW
UK and to enter the name of the transferee on the Register (as defined below).
9.6 No fee shall be charged for any registration of a transfer of a
Warrant or for the registration of any other documents which in the opinion of
the Board of Directors require registration.
9.7 The registration of a Transfer shall be conclusive evidence of the
approval by the Board of Directors of such a transfer.
9.8 For the purposes of this instrument, "Transfer" means any sale,
transfer (whether voluntary or otherwise except for any transfer required by
operation of law) or other disposition of any Warrant or any interest (legal or
equitable) therein.
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10. REGISTER AND CERTIFICATES.
10.1 Register. An accurate register of entitlement to the Warrants (the
"Register") will be kept by TW UK at its registered office in which TW UK shall
enter:
(a) the names and addresses of the persons for the time being
entitled to be registered as the Holders of the Warrants;
(b) the number of Warrants held by every registered Holder, and
(c) the date on which the name of every registered Holder is
entered in the Register in respect of the Warrants in his name.
10.2 Any Holder, and any person authorized by any Holder, may at all
reasonable times during office hours inspect the Register and take copies of or
extracts from it or any part of it.
10.3 TW UK may treat the registered Holder as the absolute owner of a
Warrant and accordingly shall not, except as ordered by a court of competent
jurisdiction or as required by law, be bound to recognize any equitable or other
claim to or interest in a Warrant on the part of any other person, whether or
not it shall have express or other notice of such a claim.
10.4 Every Holder will be recognized by TW UK as entitled to its
Warrants free from any equity, set-off or cross-claim on the part of TW UK
against the original or any intermediate holder of Warrants.
10.5 Within five (5) Business Days of entering the name of a Holder in
the Register, TW UK shall issue to the Holder a Warrant Certificate in respect
of the Warrants in respect of which it is recorded in the Register as the
Holder.
10.6 If a Warrant Certificate is mutilated, defaced, lost, stolen or
destroyed TW UK will replace it provided that:
(a) the Holder seeking the replacement provides TW UK with such
evidence and indemnity in respect of the mutilation, defacement, loss,
theft or destruction as TW UK may reasonably require;
(b) the Holder seeking the replacement pays TW UK's reasonable
costs in connection with the issue of the replacement; and
(c) the mutilated or defaced certificates in respect of which
replacements are being sought are surrendered.
11. ROUNDING. If the number of Ordinary Shares falling to be allotted to a
Holder (or its direction) on an exercise of Warrants would otherwise require a
fraction of an Ordinary
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Share to be allotted, the number of Ordinary Shares to be so allotted will be
rounded up to the nearest whole number of Ordinary Shares.
12. GOVERNING LAW AND JURISDICTION. This Warrant (and any dispute,
controversy, proceedings or claim of whatever nature arising out of or in any
way relating to this Warrant or its formation) shall be governed by and
construed in accordance with English law. Each of the parties to this Warrant
irrevocably agrees that the courts of England shall have exclusive jurisdiction
to hear and decide any suit, action or proceedings and/or settle any disputes,
which may arise out of or in connection with this Warrant and, for these
purposes, each party irrevocably submits to the jurisdiction of the courts of
England. Each of the parties to this Warrant irrevocably waives any objection
which it might at any time have to the courts of England being nominated as the
forum to hear and decide and/or settle any such matter and agrees not to claim
that the courts of England are not a convenient or appropriate forum for any
such matter and further irrevocably agrees that a judgment in any such matter
brought in any court referred to in this Section 12 shall be conclusive and
binding upon the parties and may be enforced in the courts of any other
jurisdiction.
13. NOTICES.
13.1 Mode of Service. Subject to clause 13.2 any notice, demand or
other communication given or made under or in connection with the matters
contemplated by this Warrant shall be in writing and shall be delivered
personally or sent by fax or prepaid first class post (air mail if posted to or
from a place outside the United Kingdom):
(a) in the case of TW UK to:
c/o Omnicare plc
Balderton Hall - South Drive
Balderton, Newark
Nottingham NG24 3JR
Attention: President
(b) in the case of a Holder to:
the address of the Holder shown in the Register or,
if no address is shown in the Register, to its last
known place of business or residence.
13.2 Procedure if no known address. If no address has been notified to
TW UK by a Holder, any notice, demand or other communication given or made under
or in connection with the matters contemplated by this Warrant may be given to
that Holder by TW UK by exhibiting it for three (3) days at the registered
office of TW UK.
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<PAGE>
13.3 Deemed Service. Any notice, demand or other communication given or
made under or in connection with the matters contemplated by this Warrant in
accordance with clause 13.1 or 13 shall be deemed to have been duly given or
made as follows:
(a) if personally delivered, upon delivery at the address of the
relevant party;
(b) if sent by first class post two (2) Business Days after the
date of posting;
(c) if sent by air mail, five (5) Business Days after the date of
posting;
(d) if sent by fax, when despatched; and
(e) if clause 13.2 applies, at the expiry of the three (3) day
period referred to in that clause,
provided that if, in accordance with the above provision, any
such notice, demand or other communication would otherwise be
deemed to be given or made after 5.30 p.m. such notice, demand or
other communication shall be deemed to be given or made at 9.30
a.m. on the next Business Day.
13.4 Joint Registered Holders. All notices and other communications
with respect to Warrants standing in the names of joint registered holders shall
be given to whichever of such persons is named first in the Register and such
notice so given shall be sufficient notice to all the registered holders of such
Warrants.
13.5 Successors. Any person who becomes entitled to any Warrant
(whether by operation of law, transfer or otherwise) shall be bound by every
notice given in respect of that Warrant before its name and address is entered
on the Register.
14. REMEDIES. TW UK stipulates that the remedies at law of the Holder in the
event of any default or threatened default by TW UK in the performance of or
compliance with any of the terms of this Warrant may not be adequate and that,
to the fullest extent permitted by law, such terms may be specifically enforced
by a decree for the specific performance of any agreement contained herein or by
an injunction against a violation of any of the terms hereof or otherwise.
15. NO LIABILITIES AS SHAREHOLDER. Without prejudice to the rights of the
Special Share, nothing contained in this Warrant shall be construed as
conferring upon the Holder any rights as a shareholder of TW UK or as imposing
any obligation on the Investor to purchase any securities or as imposing any
liabilities on the Investor as a shareholder of TW UK, whether such obligation
or liabilities are asserted by TW UK or by creditors of TW UK.
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16. ENTIRE AGREEMENT. This Warrant and all other documents delivered in
connection with the transactions contemplated by the Purchase Agreement embody
the entire agreement and understanding between the Holder and TW UK and
supersede all prior agreements and understandings relating to the subject matter
hereof.
17. AMENDMENTS. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
18. HEADINGS. The Section headings in this Warrant are for purposes of
convenience only and shall not constitute a part hereof.
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IN WITNESS WHEREOF, the undersigned have executed this Warrant as a
DEED on the day and year first above written.
Signed as a DEED by
TRANSWORLD HEALTHCARE (UK) LIMITED
acting by its duly authorized attorney:
By:
----------------------------------
Name:
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Exhibit A
FORM OF SUBSCRIPTION
Date:
---------------------
Transworld Healthcare (UK) Limited
c/o Omnicare plc
Balderton Hall
South Drive
Balderton, Newark
Nottingham NG24 3JR
The undersigned registered Holder of the attached Warrant Certificate
hereby irrevocably exercises Warrants to subscribe for Ordinary Shares
and herewith makes payment of (i) (pounds sterling) in cash by wire
transfer or certified check or (ii) Subordinated Notes with an aggregate
face value equal to (pounds sterling) therefor, and requests that a
certificate for such Ordinary Shares be issued in the name of the undersigned
and be delivered to the undersigned at the address stated below.
Signed:
By:
----------------------------
Name:
Title:
Address:
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Exhibit C
Form of Subordinated Note
<PAGE>
EXHIBIT C
ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THIS SECURITY IS
RESTRICTED BY, AND THE RIGHTS OF THE HOLDER OF SUCH SECURITY ARE SUBJECT TO THE
TERMS AND CONDITIONS CONTAINED IN, A SECURITIES PURCHASE AGREEMENT DATED AS OF
DECEMBER 17, 1999 A COMPLETE AND CORRECT COPY OF WHICH WILL BE FURNISHED BY THE
ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
THIS SUBORDINATED NOTE IS SUBJECT TO THE TERMS OF THE SUBORDINATION PROVISIONS
SET FORTH IN THE INTERCREDITOR AGREEMENT (AS DEFINED HEREIN).
SENIOR SUBORDINATED PROMISSORY NOTE
(pounds sterling)[ ] December 17, 1999
London, England
FOR VALUE RECEIVED, the undersigned, Transworld Holdings (UK) Limited,
a company incorporated in England and Wales with registered number 3890177 ("UK
Parent"), hereby promises to pay to or to its registered assigns
("Payee" or "Noteholder") the principal sum of Pounds Sterling
((pounds sterling) ).
This senior subordinated promissory note ("Subordinated Note") has been
created and authorized by UK Parent in accordance with its Memorandum and
Articles of Association and by a resolution of the board of directors of UK
Parent on December 17, 1999 and is issued pursuant to and is entitled to the
benefits of the Securities Purchase Agreement, dated as of the date hereof, by
and among UK Parent, Transworld Healthcare (UK) Limited, a company incorporated
in England and Wales with registered number 3370146 ("TW UK"), and the
purchasers identified therein (the "Purchase Agreement"). Terms used herein and
not otherwise defined shall have the meanings set forth in the Purchase
Agreement.
1. Maturity. This Subordinated Note shall mature and the
principal and all accrued but unpaid interest and any other payments due
hereunder shall be due and payable, without set-off, deduction or counterclaim,
on December 15, 2008 (the "Maturity Date").
2. Interest. UK Parent promises to pay interest on the principal
amount of this Subordinated Note at the rate and in the manner specified below.
Interest on the outstanding principal balance of this Subordinated Note will
accrue at 9.375% per annum, or such higher rate of Interest as set forth in
Article XVII of the Purchase Agreement in the event of a Covenant Breach or an
Event of Default compounded quarterly from the date hereof until maturity and
will be payable quarterly in cash, in arrears, on December 31, March 31, and
September 30 of each year beginning on March 30, 2000, or if any such day is not
a Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"), to Payee; provided, however, that interest payments hereunder shall be
paid in the manner and at the time provided in the Intercreditor Agreement,
dated as of the date hereof, by and among the Banks, the Purchasers, TW UK and
the other parties identified therein (the "Intercreditor Agreement"). If UK
Parent is unable to pay interest in cash on a given Interest Payment Date, UK
Parent shall pay interest on
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this Subordinated Note in the form of a PIK Note in an amount equal to the
amount of interest due, but not paid in cash, on the Interest Payment Date. PIK
Notes shall be deemed to have been issued by UK Parent, and its obligations
thereunder shall commence, as of the applicable Interest Payment Date,
irrespective of the actual date of execution and delivery of the PIK Notes. All
PIK Notes issued pursuant to this Section 2 shall be due and payable upon
maturity of this Subordinated Note and shall bear interest at the same rate.
Interest shall be computed on the basis of a 365 day year and the actual days
elapsed. Interest on this Subordinated Note will accrue from the most recent
date on which interest has been paid or, if no interest has been paid, from the
Closing Date. Interest shall be paid net of any withholding of any Taxes which
UK Parent shall be required to withhold by Applicable Law, provided that to the
extent the same would not have arisen but for a change in applicable tax
legislation after the date hereof, UK Parent shall pay such additional sums as
set forth in Section 2.7 of the Purchase Agreement.
3. Further Provisions Relating to Principal and Interest
3.1 The "record date" shall mean the thirtieth day before the
relevant Interest Payment Date or, if such day is not a
Business Day, then the next following Business Day and every
Payee shall be deemed for the purposes of this Subordinated
Note to be the holder on such date of the Subordinated Notes
held by him on such preceding date, notwithstanding any
intermediate transfer or transmission of any such Subordinated
Notes.
3.2 The amount of interest payable on a Subordinated Note shall be
rounded up to the nearest penny. The calculation of each
interest amount shall, in the absence of manifest error, be
final and binding.
3.3 Interest on the Subordinated Notes becoming liable to
repayment shall cease to accrue as of the date of actual
repayment of such Subordinated Notes.
3.4 Any interest which remains unclaimed after the period ending
on the later of (i) the Maturity Date or (ii) six years from
the date of first payment shall revert to UK Parent
notwithstanding that in the intervening period the obligation
to pay the same may have been provided for in the books,
accounts and the other records of UK Parent.
4. Method of Payment. UK Parent will pay interest on this
Subordinated Note to the Person who is the registered Holder of this
Subordinated Note at the close of business on the record date for the next
Interest Payment Date even if such Subordinated Note is canceled after such
record date and on or before such Interest Payment Date. Payee must surrender
this Subordinated Note to UK Parent to collect principal payments on such
Subordinated Note. Except for the payment of interest in PIK Notes as permitted
in certain circumstances by Section 2 above, UK Parent will pay principal,
premium, if any, and interest in pounds sterling. UK Parent may pay principal,
premium, if any, and interest by bank transfer of funds or other funds transfer,
or interest by check payable in such money, and any such check shall be
delivered to a Payee's registered address. Every such cheque, warrant or money
order shall be made payable to
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the order of the person to whom it is sent (or to such person as the Payee or
joint Payee may in writing direct) and payment of the cheque, warrant or money
order shall be a satisfaction of the principal and interest represented thereby.
If payment is made by a bank or other funds transfer, UK Parent shall be
responsible for amounts lost or delayed in the course of the transfer.
5. Optional Redemption. Subject to the terms of Section 6 of the
Purchase Agreement, this Subordinated Note may be redeemed at the option of UK
Parent, in whole but not in part, upon the terms and in accordance with the
procedures set forth in Section 6 of the Purchase Agreement. This Subordinated
Note may also be redeemed at the option of UK Parent in certain circumstances as
set forth in Section 2.12 of the Warrant Instrument.
6. Noteholder's Put. Subject to the terms of Section 7 of the
Purchase Agreement, this Subordinated Note may be redeemed at the option of the
Payee, in whole or in part, upon the occurrence of a Put Event, upon the terms
and in accordance with the procedures set forth in Section 7 of the Purchase
Agreement.
7. Surrender of Certificate and Prescription. Every Payee any of
whose Subordinated Notes are due to be repaid on the Maturity Date under any of
the provisions of this Subordinated Note shall, not later than the due date for
such repayment, deliver the relevant certificates for such Subordinated Notes or
an agreement satisfactory to UK Parent to indemnify UK Parent from any losses
incurred by it in connection therewith with respect to such Subordinated Note(s)
to the registered office of UK Parent or as it shall direct. Unless payment of
the amount due to be repaid has already been made in accordance with Section 4
above, upon such delivery, UK Parent shall pay to the Payee the amount payable
to him in respect of such repayment in accordance with condition 4. If part only
of any Subordinated Note(s) as evidenced by the relevant certificate so
delivered is then due to be repaid, UK Parent shall either endorse such
Subordinated Note with a memorandum of the date and amount paid to the holder of
such Subordinated Note and return it to the Payee or shall cancel such
Subordinated Note and without charge issue to such Payee a new Subordinated Note
for the balance of the principal amount due to him.
8. Subordination. This Subordinated Note shall be subordinated to
certain indebtedness of UK Parent and TW UK in accordance with and to the extent
provided in the Intercreditor Agreement.
9. Events of Default; Acceleration. Upon the occurrence of an
Event of Default, the principal amount of this Subordinated Note, together with
all accrued interest and all other payments due hereunder or under the PIK
Notes, if any, or the Purchase Agreement, may be declared to be immediately due
and payable in the manner and with the effect provided in the Purchase
Agreement. Subject to the terms of the Purchase Agreement, following the
occurrence of an Event of Default, the Payee may proceed to enforce and exercise
its rights by suit in equity, action at law and/or other appropriate means. UK
Parent agrees to pay on demand all reasonable costs of collection and all other
reasonable costs and expenses, including without limitation reasonable
attorneys' fees, incurred or paid by the Payee in enforcing or collecting this
Subordinated Note upon the occurrence of an Event of Default.
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10. No Waivers; Amendments. No failure or delay on the part of UK
Parent or the Payee in exercising any right, power or remedy hereunder or under
the Purchase Agreement shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein and in the Purchase Agreement are cumulative
and are not exclusive of any remedies that may be available to UK Parent or the
Payee at law or in equity or otherwise. This Subordinated Note may be amended,
and the provisions hereof may be waived only with the express written consent of
Payee and UK Parent.
11. Successor Substituted. Subject to and in accordance with the
Agreement, upon the acquisition of, or any merger, consolidation or other
business combination involving, UK Parent or upon the sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
UK Parent's properties and assets (each a "Disposition"), the Surviving Person
(if other than UK Parent) resulting from such Disposition shall, if the Holder
so elects, succeed to, and be substituted for, and may exercise every right and
power of, UK Parent under the Agreement with the same effect as if such
surviving person had been named as UK Parent in the Agreement.
12. Register of Subordinated Notes
12.1 The Company shall cause a register to be maintained at the
registered office of UK Parent (the "Register") showing the
amount of the Subordinated Notes for the time being issued,
the date of issue and the amount of Subordinated Notes for the
time being outstanding, the names and addresses of the
Noteholders, the nominal amounts of the Subordinated Notes
held by them respectively and all transfers or changes of
ownership of the Subordinated Notes.
12.2 Any change of name or address on the part of any holder of
Subordinated Notes shall forthwith be notified by the holder
to UK Parent and UK Parent shall alter the Register
accordingly.
13. Notice to Noteholders
13.1 Any notice or other document (including certificates for
Subordinated Notes) may be served on a Payee by sending the
same by post in a prepaid letter addressed to such Payee at
his registered address.
13.2 In the case of joint Noteholders a notice or document served
on the Payee whose name stands first in the Register shall be
sufficient notice to all the joint Noteholders.
13.3 Any notice or other document may be served on the person
entitled to a Subordinated Note in consequence of the death or
bankruptcy of any Payee by sending the same by post, in a
prepaid letter addressed to him by name or by the title of the
representative or trustee of such Payee, at the address
supplied for the
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purpose by such persons or (until such address is supplied) by
giving notice in the manner in which it would have been given
if the death or bankruptcy had not occurred.
14. Notices to UK Parent
Any notice, demand or other document (including certificates
for Subordinated Notes and transfers of Subordinated Notes)
may be served on UK Parent by sending the same by post in a
prepaid letter to the registered office of UK Parent or to
such other address as UK Parent may from time to time notify
Noteholders.
15. Service of Notices
Any notice or document served by post shall be deemed to have
been served on the day after it is posted or, if such day is
not a Business Day, then on the next following Business Day
and in proving such service it shall be sufficient to prove
that the letter containing the notice was properly addressed,
stamped or posted.
16. Recognition of Payee as Absolute Owner
16.1 Except as required by law, UK Parent will recognize the
registered holder of any Subordinated Notes as the absolute
owner thereof and shall not (except as ordered by a court of
competent jurisdiction) be bound to take notice or see to the
execution of any trust, whether express, implied or
constructive, to which any Subordinated Notes may be subject
and UK Parent may accept the receipt of the registered holder
for the time being of any Subordinated Notes, or in the case
of joint registered holders the receipt of any of them, for
the principal monies payable in respect thereof or for the
interest from time to time accruing due in respect thereof or
for any other monies payable in respect thereof as a good
discharge to UK Parent notwithstanding any notice it may have
whether express or otherwise of the right, title, interest or
claim of any other person to or in such Subordinated Notes,
interests or monies.
16.2 No notice of any trust, express, implied or constructive,
shall (except as by statute provided or as required by order
of a court of competent jurisdiction) be entered in the
Register in respect of any Subordinated Notes.
17. Exclusion of Equities. UK Parent will recognize every holder of
Subordinated Notes as entitled to his Subordinated Notes free from any equity,
set-off or cross-claim on the part of UK Parent against the original or any
intermediate holder of the Subordinated Notes.
18. Transferability of Subordinated Notes
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18.1 This Subordinated Note may only be Transferred by a Transfer
made in accordance with Article XV of the Purchase Agreement
and in compliance with this Section 18.
18.2 Every transfer of a Subordinated Note permitted under the
Purchase Agreement shall be made by an instrument of transfer
in the usual or common form or in any other form which may be
reasonably approved by the Board of Directors.
18.3 Every instrument of Transfer must be signed by the transferor
or where the transferor is a corporation given under its
common seal or signed on its behalf by a duly authorized
officer or agent and the transferor shall remain the owner of
the Subordinated Notes to be transferred until the name of the
transferee is entered in the Register in respect thereof. The
Board of Directors shall be bound to register any transfer
permitted under the Purchase Agreement within 14 days after
the lodging as the instrument of transfer with TW UK and to
enter the name of the transferee on the register of TW UK.
18.4 Every instrument of Transfer must be lodged for registration
at the place where the Register shall for the time being be
kept accompanied by the certificate for the Subordinated Notes
all or part of the nominal amount of which is to be
transferred and such other evidence as the Directors or other
officers of UK Parent authorized to deal with transfers may
reasonably require to prove the title of the transferor or his
right to transfer the Subordinated Notes and, if the
instrument of transfer is executed by some other person on his
behalf, the authority of the person signing the same.
18.5 No Transfer shall be registered of Subordinated Notes in
respect of which a notice requiring repayment has been given.
18.6 All instruments of Transfer which shall be registered may be
retained by UK Parent.
18.7 UK Parent hereby acknowledges and covenants that the benefit
of the covenants, obligations and conditions on the part of it
or binding on it contained in this Subordinated Note hereto
shall enure to the benefit of each and every holder of the
Subordinated Notes.
Each holder of Subordinated Notes shall be entitled to enforce
the said covenants, obligations and conditions against UK
Parent insofar as each of his Subordinated Notes is concerned,
without the need to join the allottee of any such Subordinated
Note or any intervening or other holder of Subordinated Notes
in the proceedings for such enforcement.
19. Receipt of Joint Holders. If several Persons are entered in the
Register as joint registered holders of any Subordinated Notes then, without
prejudice to paragraph 16 above, the
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receipt of any one of such Persons for any interest or principal or other monies
in respect of such Subordinated Notes shall be as effective a discharge to UK
Parent as if the person signing such receipt were the sole registered holder of
such Subordinated Notes.
20. Replacement of Certificates. If the certificate for any
Subordinated Notes is lost, defaced or destroyed, it may be renewed, on such
terms (if any) as to evidence and indemnity as the board of directors may
require, but so that in the case of defacement the defaced certificate shall be
surrendered before the new certificate is issued.
21. Governing Law and Jurisdiction. This Subordinated Note (and any
dispute, controversy, proceedings or claim of whatever nature arising out of or
in any way relating to this Subordinated Note or its formation) shall be
governed by and construed in accordance with English law. Each of the parties to
this Subordinated Note irrevocably agrees that the courts of England shall have
exclusive jurisdiction to hear and decide any suit, action or proceedings and/or
settle any disputes, which may arise out of or in connection with this
Subordinated Note and, for these purposes, each party irrevocably submits to the
jurisdiction of the courts of England. Each of the parties to this Subordinated
Note irrevocably waives any objection which it might at any time have to the
courts of England being nominated as the forum to hear and decide and/or settle
any such matter and agrees not to claim that the courts of England are not a
convenient or appropriate forum for any such matter and further irrevocably
agrees that a judgment in any such matter brought in any court referred to in
this Section 21 shall be conclusive and binding upon the parties and may be
enforced in the courts of any other jurisdiction.
22. Successors. Any person who becomes entitled to any Subordinated
Note (whether by operation of law, transfer or otherwise) shall be bound by
every notice given in respect of that Subordinated Note before its name and
address is entered on the Register.
23. Entire Agreement. This Subordinated Note and all other documents
delivered in connection with the transactions contemplated by the Purchase
Agreement embody the entire agreement and understanding between the Holder and
UK Parent and supersede all prior agreements and understandings relating to the
subject matter hereof.
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IN WITNESS WHEREOF, UK Parent has caused this Subordinated Note to be
duly executed and delivered as a Deed at the place and on the date set forth
above.
Signed as a DEED by
TRANSWORLD HOLDINGS (UK) LIMITED
Acting by its duly authorized attorney
By:
-----------------------------------
Name:
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Exhibit E
Form of Mirror Note
<PAGE>
EXHIBIT E
ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THIS SECURITY IS
RESTRICTED BY, AND THE RIGHTS OF THE HOLDER OF SUCH SECURITY ARE SUBJECT TO THE
TERMS AND CONDITIONS CONTAINED IN, A SECURITIES PURCHASE AGREEMENT DATED AS OF
DECEMBER 17, 1999 A COMPLETE AND CORRECT COPY OF WHICH WILL BE FURNISHED BY THE
ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
THIS MIRROR NOTE IS SUBJECT TO THE TERMS OF THE SUBORDINATION PROVISIONS SET
FORTH IN THE INTERCREDITOR AGREEMENT (AS DEFINED HEREIN).
MIRROR SUBORDINATED PROMISSORY NOTE
(pounds sterling)[ ] December 17, 1999
London, England
FOR VALUE RECEIVED, the undersigned, Transworld Healthcare (UK)
Limited, a company incorporated in England and Wales with registered number
3370146 ("TW UK"), hereby promises to pay to Transworld Holdings (UK) Limited, a
company incorporated in England and Wales with registered number 3890177 or to
its registered assigns ("Payee" or "Noteholder") the principal sum of
Pounds Sterling ((pounds sterling) ).
This mirror senior subordinated promissory note ("Mirror Note") has
been created and authorized by TW UK in accordance with its Memorandum and
Articles of Association and by a resolution of the board of directors of TW UK
on December , 1999 and is issued pursuant to and is entitled to the benefits
of the Securities Purchase Agreement, dated as of the date hereof, by and among
TW UK, Payee, and the parties identified therein (the "Purchase Agreement").
Terms used herein and not otherwise defined shall have the meanings set forth in
the Purchase Agreement.
1. Maturity. This Mirror Note shall mature and the principal and
all accrued but unpaid interest and any other payments due hereunder shall be
due and payable, without set-off, deduction or counterclaim, on December 15,
2008 (the "Maturity Date").
2. Interest. TW UK promises to pay interest on the principal
amount of this Mirror Note at the rate and in the manner specified below.
Interest on the outstanding principal balance of this Mirror Note will accrue at
9.376% per annum, or such higher rate of Interest as set forth in Section of
the Purchase Agreement in the event of a Covenant Breach or an Event of Default
compounded quarterly from the date hereof until maturity and will be payable
quarterly in cash, in arrears, on December 31, March 31, June 30, and September
30 of each year beginning on March 30, 2000, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"), to Payee; provided, however, that interest payments hereunder shall be
paid in the manner and at the time provided in the Intercreditor Agreement,
dated as of the date hereof, by and among the Banks, the Purchasers, TW UK and
certain of its Subsidiaries (the "Intercreditor Agreement"). If TW UK is unable
to pay interest in cash on a given Interest Payment Date because TW UK is unable
to satisfy such test, TW UK shall pay interest on this
<PAGE>
Mirror Note in the form of a Mirror PIK Note in an amount equal to the amount of
interest due, but not paid in cash, on the Interest Payment Date. Mirror PIK
Notes shall be deemed to have been issued by TW UK, and its obligations
thereunder shall commence, as of the applicable Interest Payment Date,
irrespective of the actual date of execution and delivery of the Mirror PIK
Notes. All Mirror PIK Notes issued pursuant to this Section 2 shall be due and
payable upon maturity of this Mirror Note and shall bear interest at the same
rate. Interest shall be computed on the basis of a 365 day year and the actual
days elapsed. Interest on this Mirror Note will accrue from the most recent date
on which interest has been paid or, if no interest has been paid, from the
Closing Date. If, due to a change in applicable tax legislation, UK Parent shall
be required to pay such additional sums ("Additional Tax Payment") as set forth
in Section 2.7 of the Purchase Agreement, TW UK shall, prior to the date on
which UK Parent shall be required to pay the Additional Tax Payment, pay to UK
Parent a sum equal to the Additional Tax Payment.
3. Further Provisions Relating to Principal and Interest
3.1 The "record date" shall mean the thirtieth day before the
relevant Interest Payment Date or, if such day is not a
Business Day, then the next following Business Day and every
Payee shall be deemed for the purposes of this Mirror Note to
be the holder on such date of the Mirror Notes held by him on
such preceding date, notwithstanding any intermediate transfer
or transmission of any such Mirror Notes.
3.2 The amount of interest payable on a Mirror Note shall be
rounded up to the nearest penny. The calculation of each
interest amount shall, in the absence of manifest error, be
final and binding.
3.3 Interest on the Mirror Notes becoming liable to repayment
shall cease to accrue as of the date of actual repayment of
such Mirror Notes.
3.4 Any interest which remains unclaimed after the period ending
on the later of (i) the Maturity Date or (ii) six years from
the date of first payment shall revert to TW UK
notwithstanding that in the intervening period the obligation
to pay the same may have been provided for in the books,
accounts and the other records of TW UK.
4. Method of Payment. TW UK will pay interest on this Mirror Note
to the Person who is the registered Holder of this Mirror Note at the close of
business on the record date for the next Interest Payment Date even if such
Mirror Note is canceled after such record date and on or before such Interest
Payment Date. Payee must surrender this Mirror Note to TW UK to collect
principal payments on such Mirror Note. Except for the payment of interest in
Mirror PIK Notes as permitted in certain circumstances by Section 2 above, TW UK
will pay principal, premium, if any, and interest in pounds sterling. TW UK may
pay principal, premium, if any, and interest by bank transfer of funds or other
funds transfer, or interest by check payable in such money, and any such check
shall be delivered to a Payee's registered address. Every such cheque, warrant
or money order shall be made payable to the order of the person to whom it is
sent (or to such
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person as the Payee or joint Payee may in writing direct) and payment of
the cheque, warrant or money order shall be a satisfaction of the principal and
interest represented thereby. If payment is made by a bank or other funds
transfer, TW UK shall be responsible for amounts lost or delayed in the course
of the transfer.
5. Optional Redemption. This Mirror Note shall be redeemed by TW
UK immediately prior to any redemption by TW UK as set forth in Section 6.2(c)
of the Purchase Agreement.
6. Surrender of Certificate and Prescription. Every Payee any of
whose Mirror Notes are due to be repaid on the Maturity Date under any of the
provisions of this Mirror Note shall, not later than the due date for such
repayment, deliver the relevant certificates for such Mirror Notes or an
agreement satisfactory to TW UK to indemnify TW UK from any losses incurred by
it in connection therewith with respect to such Mirror Note(s) to the registered
office of TW UK or as it shall direct. Unless payment of the amount due to be
repaid has already been made in accordance with Section 4 above, upon such
delivery, TW UK shall pay to the Payee the amount payable to him in respect of
such repayment in accordance with condition 4. If part only of any Mirror
Note(s) as evidenced by the relevant certificate so delivered is then due to be
repaid, TW UK shall either endorse such Mirror Note with a memorandum of the
date and amount paid to the holder of such Mirror Note and return it to the
Payee or shall cancel such Mirror Note and without charge issue to such Payee a
new Mirror Note for the balance of the principal amount due to him.
7. Subordination. This Mirror Note shall be subordinated to
certain indebtedness of TW UK and TW UK in accordance with and to the extent
provided in the Intercreditor Agreement.
8. Events of Default; Acceleration. Upon the occurrence of an
Event of Default, the principal amount of this Mirror Note, together with all
accrued interest and all other payments due hereunder or under the Mirror PIK
Notes, if any, or the Purchase Agreement, may be declared to be immediately due
and payable in the manner and with the effect provided in the Purchase
Agreement. Subject to the terms of the Purchase Agreement, following the
occurrence of an Event of Default, the Payee may proceed to enforce and exercise
its rights by suit in equity, action at law and/or other appropriate means. TW
UK agrees to pay on demand all reasonable costs of collection and all other
reasonable costs and expenses, including without limitation reasonable
attorneys' fees, incurred or paid by the Payee in enforcing or collecting this
Mirror Note upon the occurrence of an Event of Default.
9. No Waivers; Amendments. No failure or delay on the part of TW
UK or the Payee in exercising any right, power or remedy hereunder or under the
Purchase Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein and in the Purchase Agreement are cumulative
and are not exclusive of any remedies that may be available to TW UK or the
Payee at law or in
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equity or otherwise. This Mirror Note may be amended, and the provisions hereof
may be waived only with the express written consent of Payee and TW UK.
10. Successor Substituted. Subject to and in accordance with the
Agreement, upon the acquisition of, or any merger, consolidation or other
business combination involving, TW UK or upon the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of TW UK's
properties and assets (each a "Disposition"), the Surviving Person (if other
than TW UK) resulting from such Disposition shall, if the Holder so elects,
succeed to, and be substituted for, and may exercise every right and power of,
TW UK under the Agreement with the same effect as if such surviving person had
been named as TW UK in the Agreement.
11. Register of Mirror Notes
11.1 The Company shall cause a register to be maintained at the
registered office of TW UK (the "Register") showing the amount
of the Mirror Notes for the time being issued, the date of
issue and the amount of Mirror Notes for the time being
outstanding, the names and addresses of the Noteholders, the
nominal amounts of the Mirror Notes held by them respectively
and all transfers or changes of ownership of the Mirror Notes.
11.2 Any change of name or address on the part of any holder of
Mirror Notes shall forthwith be notified by the holder to TW
UK and TW UK shall alter the Register accordingly.
12. Notice to Noteholders
12.1 Any notice or other document (including certificates for
Mirror Notes) may be served on a Payee by sending the same by
post in a prepaid letter addressed to such Payee at his
registered address.
12.2 In the case of joint Noteholders a notice or document served
on the Payee whose name stands first in the Register shall be
sufficient notice to all the joint Noteholders.
12.3 Any notice or other document may be served on the person
entitled to a Mirror Note in consequence of the death or
bankruptcy of any Payee by sending the same by post, in a
prepaid letter addressed to him by name or by the title of the
representative or trustee of such Payee, at the address
supplied for the purpose by such persons or (until such
address is supplied) by giving notice in the manner in which
it would have been given if the death or bankruptcy had not
occurred.
13. Notices to TW UK
Any notice, demand or other document (including certificates
for Mirror Notes and transfers of Mirror Notes) may be served
on TW UK by sending the same by
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post in a prepaid letter to the registered office of TW UK or
to such other address as TW UK may from time to time notify
Noteholders.
14. Service of Notices
Any notice or document served by post shall be deemed to have
been served on the day after it is posted or, if such day is
not a Business Day, then on the next following Business Day
and in proving such service it shall be sufficient to prove
that the letter containing the notice was properly addressed,
stamped or posted.
15. Recognition of Payee as Absolute Owner
15.1 Except as required by law, TW UK will recognize the registered
holder of any Mirror Notes as the absolute owner thereof and
shall not (except as ordered by a court of competent
jurisdiction) be bound to take notice or see to the execution
of any trust, whether express, implied or constructive, to
which any Mirror Notes may be subject and TW UK may accept the
receipt of the registered holder for the time being of any
Mirror Notes, or in the case of joint registered holders the
receipt of any of them, for the principal monies payable in
respect thereof or for the interest from time to time accruing
due in respect thereof or for any other monies payable in
respect thereof as a good discharge to TW UK notwithstanding
any notice it may have whether express or otherwise of the
right, title, interest or claim of any other person to or in
such Mirror Notes, interests or monies.
15.2 No notice of any trust, express, implied or constructive,
shall (except as by statute provided or as required by order
of a court of competent jurisdiction) be entered in the
Register in respect of any Mirror Notes.
16. Exclusion of Equities. TW UK will recognize every holder of
Mirror Notes as entitled to his Mirror Notes free from any equity, set-off or
cross-claim on the part of TW UK against the original or any intermediate holder
of the Mirror Notes.
17. Transferability of Mirror Notes
17.1 This Mirror Note may be transferred as permitted by the
Purchase Agreement and in compliance with this Section 17.
17.2 Every transfer of a Mirror Note permitted under the Purchase
Agreement shall be made by an instrument of transfer in the
usual or common form or in any other form which may be
reasonably approved by the Board of Directors.
17.3 Every instrument of Transfer must be signed by the transferor
or where the transferor is a corporation given under its
common seal or signed on its behalf by a duly authorized
officer or agent and the transferor shall remain the owner of
the Mirror Notes to be transferred until the name of the
transferee is entered in the
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Register in respect thereof. The Board of Directors shall be
bound to register any transfer permitted under the Purchase
Agreement within 14 days after the lodging as the instrument
of transfer with TW UK and to enter the name of the transferee
on the register of TW UK.
17.4 Every instrument of Transfer must be lodged for registration
at the place where the Register shall for the time being be
kept accompanied by the certificate for the Mirror Notes all
or part of the nominal amount of which is to be transferred
and such other evidence as the Directors or other officers of
TW UK authorized to deal with transfers may reasonably require
to prove the title of the transferor or his right to transfer
the Mirror Notes and, if the instrument of transfer is
executed by some other person on his behalf, the authority of
the person signing the same.
17.5 No Transfer shall be registered of Mirror Notes in respect of
which a notice requiring repayment has been given.
17.6 All instruments of Transfer which shall be registered may be
retained by TW UK.
17.7 TW UK hereby acknowledges and covenants that the benefit of
the covenants, obligations and conditions on the part of it or
binding on it contained in this Mirror Note hereto shall enure
to the benefit of each and every holder of the Mirror Notes.
Each holder of Mirror Notes shall be entitled to enforce the
said covenants, obligations and conditions against TW UK
insofar as each of his Mirror Notes is concerned, without the
need to join the allottee of any such Mirror Note or any
intervening or other holder of Mirror Notes in the proceedings
for such enforcement.
18. Receipt of Joint Holders. If several Persons are entered in
the Register as joint registered holders of any Mirror Notes then, without
prejudice to paragraph 16 above, the receipt of any one of such Persons for any
interest or principal or other monies in respect of such Mirror Notes shall be
as effective a discharge to TW UK as if the person signing such receipt were the
sole registered holder of such Mirror Notes.
19. Replacement of Certificates. If the certificate for any Mirror
Notes is lost, defaced or destroyed, it may be renewed, on such terms (if any)
as to evidence and indemnity as the board of directors may require, but so that
in the case of defacement the defaced certificate shall be surrendered before
the new certificate is issued.
20. Governing Law and Jurisdiction. This Mirror Note (and any
dispute, controversy, proceedings or claim of whatever nature arising out of or
in any way relating to this Mirror Note or its formation) shall be governed by
and construed in accordance with English law. Each of the parties to this Mirror
Note irrevocably agrees that the courts of England shall have exclusive
jurisdiction to hear and decide any suit, action or proceedings and/or settle
any disputes, which
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may arise out of or in connection with this Mirror Note and, for these purposes,
each party irrevocably submits to the jurisdiction of the courts of England.
Each of the parties to this Mirror Note irrevocably waives any objection which
it might at any time have to the courts of England being nominated as the forum
to hear and decide and/or settle any such matter and agrees not to claim that
the courts of England are not a convenient or appropriate forum for any such
matter and further irrevocably agrees that a judgment in any such matter brought
in any court referred to in this Section 21 shall be conclusive and binding upon
the parties and may be enforced in the courts of any other jurisdiction.
21. Successors. Any person who becomes entitled to any Mirror Note
(whether by operation of law, transfer or otherwise) shall be bound by every
notice given in respect of that Mirror Note before its name and address is
entered on the Register.
22. Entire Agreement. This Mirror Note and all other documents
delivered in connection with the transactions contemplated by the Purchase
Agreement embody the entire agreement and understanding between the Holder and
TW UK and supersede all prior agreements and understandings relating to the
subject matter hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, TW UK has caused this Mirror Note to be duly
executed and delivered as a Deed at the place and on the date set forth above.
Signed as a DEED by
TRANSWORLD HOLDINGS (UK)
LIMITED acting by its duly
authorized attorney:
-----------------------------
Name:
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Exhibit I
Form of Intercreditor Agreement
<PAGE>
EXHIBIT I
CONFORMED COPY
BARCLAYS BANK PLC
as Security Agent and as Senior Agent
PARIBAS
as Arranger
THE SENIOR LENDERS
named herein
THE HEDGE COUNTERPARTIES
named herein
PARIBAS
as Mezzanine Agent
THE MEZZANINE LENDERS
named herein
TRIUMPH PARTNERS III, L.P. AND OTHERS
as Subordinated Noteholders
TRANSWORLD HOLDINGS (UK) LIMITED
as the Mirror Noteholder
and Others
----------------------------------------
INTERCREDITOR DEED
----------------------------------------
CLIFFORD CHANCE
<PAGE>
CONTENTS
CLAUSE PAGE
1. Interpretation And Definitions.........................................2
2. Consent To The Finance Documents And Security Documents...............10
3. Subordination And Ranking.............................................10
4. Undertakings Of The Obligors..........................................12
5. Undertakings Of The Intra-Group Lenders...............................13
6. Undertakings Of The Mirror Noteholder.................................13
7. Undertakings Of The Subordinated Noteholders..........................14
8. Undertakings Of The Mezzanine Agent And The Mezzanine Lenders.........15
9. Accession And Undertakings Of Hedge Counterparties....................16
10. Undertakings In Respect Of The Senior Liabilities.....................19
11. Consents And Entrenched Provisions....................................21
12. Permitted Payments....................................................22
13. Turnover..............................................................24
14. Suspension Of Permitted Payments......................................25
15. Subordination.........................................................26
16. Distributions.........................................................27
17. Action By Security Agent..............................................29
18. Restrictions On Enforcement...........................................31
19. Permitted Enforcement.................................................34
20. Preservation..........................................................36
21. Enforcement Of Security...............................................37
22. Sales By Security Agent Or An Obligor.................................38
23. Priority Of Security..................................................39
24. Appropriation.........................................................40
25. Discharge Of Senior Liabilities.......................................41
26. Obligors' Acknowledgement.............................................41
27. Defences..............................................................42
28. Disclosure............................................................42
29. Repayments............................................................43
30. Amendments............................................................44
31. Reports...............................................................44
<PAGE>
32. New Intra-Group Lenders And Borrowers.................................44
33. Notices...............................................................45
34. Miscellaneous.........................................................45
35. Assignments And Transfers.............................................46
36. The Security Agent....................................................48
37. Status Of Obligors....................................................55
38. Expenses..............................................................55
39. Governing Law.........................................................55
40. Jurisdiction..........................................................55
SCHEDULE 1 THE SENIOR LENDERS.........................................57
SCHEDULE 2 THE HEDGE COUNTERPARTIES...................................58
SCHEDULE 3 THE MEZZANINE LENDERS......................................59
SCHEDULE 4 THE SUBORDINATED NOTEHOLDERS...............................60
SCHEDULE 5 ...........................................................61
Part A Intra-Group Lenders........................................61
Part B Intra-Group Borrowers......................................61
Part C Obligors...................................................61
SCHEDULE 6 FORM OF DEED OF ACCESSION.................................62
<PAGE>
THIS INTERCREDITOR DEED is made the day of December, 1999
BETWEEN:
(1) BARCLAYS BANK PLC as security agent (the "SECURITY AGENT");
(2) BARCLAYS BANK PLC as agent for the Senior Lenders under the Senior
Facility Agreement (the "SENIOR AGENT");
(3) PARIBAS as arranger under the Senior Facility Agreement (the "ARRANGER");
(4) THE FINANCIAL INSTITUTIONS whose names are set out in Schedule 1 (The
Senior Lenders) as senior lenders (the "SENIOR LENDERS");
(5) THE FINANCIAL INSTITUTIONS whose names are set out in Schedule 2 (The
Hedge Counterparties) as hedge counterparties (the "HEDGE
COUNTERPARTIES");
(6) PARIBAS as agent for the Mezzanine Lenders under the Mezzanine Facility
Agreement (the "MEZZANINE AGENT");
(7) THE FINANCIAL INSTITUTIONS whose names are set out in Schedule 3 (The
Mezzanine Lenders) as mezzanine lenders (the "MEZZANINE LENDERS");
(8) TRIUMPH PARTNERS II, L.P. AND OTHERS who names are set out in Schedule 4
(The Subordinated Noteholders) as subordinated noteholders (the
"SUBORDINATED NOTEHOLDERS");
(9) TRANSWORLD HOLDINGS (UK) LIMITED as the mirror noteholder (the "MIRROR
NOTEHOLDER");
(10) TRANSWORLD HEALTHCARE (UK) LIMITED as borrower (the "BORROWER");
(11) THE COMPANIES whose names are set out in Part A (Intra-Group Lenders) of
Schedule 5 as intra-group lenders (the "INTRA-GROUP LENDERS");
(12) THE COMPANIES whose names are set out in Part B (Intra-Group Borrowers)
of Schedule 5 as intra-group borrowers (the "INTRA-GROUP BORROWERS");
(13) THE COMPANIES whose names are set out in Part C (Obligors) of Schedule 5
as obligors (the "OBLIGORS"); and
(14) RICHARD GREEN as trustee under the Voting Trust Agreement (the "VOTING
TRUSTEE").
WHEREAS:
(A) By a senior facilities agreement (the "SENIOR FACILITY AGREEMENT") of
even date herewith and originally made between the Borrower, the Security
Agent, the Senior Agent, the Arranger and the Senior Lenders, the Senior
Lenders have agreed to make available to the Borrower term and revolving
loan facilities of such amounts and on the terms referred to in the
Senior Facility Agreement for the purposes therein mentioned.
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(B) The Hedge Counterparties (together with any Approved Affiliate Senior
Lender entering into a Hedging Agreement) have entered into or have
agreed to or may enter into Hedging Documents with a Borrower pursuant to
and in accordance with the terms of the Senior Facility Agreement.
(C) By a mezzanine facility agreement (the "MEZZANINE FACILITY AGREEMENT") of
even date herewith originally made between the Borrower, the Mezzanine
Agent and the Mezzanine Lenders, the Mezzanine Lenders have agreed to
make available to the Borrower a term loan facility of such amount and on
the terms referred to in the Mezzanine Facility Agreement for the
purposes therein mentioned.
(D) Security (the "SECURITY") is to be granted in favour of the Secured
Beneficiaries as security for the obligations of the Borrower under the
Senior Documents, the Hedging Documents and the Mezzanine Documents.
(E) Under a securities purchase agreement (the "SECURITIES PURCHASE
AGREEMENT") dated of even date herewith made between Transworld Holdings
(UK) Limited, the Borrower, the Subordinated Noteholders and Transworld
Healthcare Inc, the Subordinated Noteholders have agreed to purchase the
Subordinated Notes and the Mirror Noteholder has agreed to purchase the
Mirror Notes.
NOW THIS DEED WITNESSETH and IT IS HEREBY AGREED AND DECLARED as follows:
1. INTERPRETATION AND DEFINITIONS
1.1 Terms defined in the Senior Facility Agreement shall, unless otherwise
defined herein, bear the same meaning herein and the provisions of
clauses 1.2, 1.3, 1.4 and 1.5 of the Senior Facility Agreement shall be
deemed to be incorporated into this Deed as if set out herein in full.
1.2 IN THIS DEED: "AGENT" means the Senior Agent and/or the Mezzanine Agent,
as the context requires;
"ANCILLARY LIABILITIES" in relation to any of the Liabilities means:
(a) any refinancing, novation (not being a transfer permitted by the
Senior Documents or the Mezzanine Documents), refunding, deferral
or extension of any of those liabilities;
(b) any further advance which may be made under any agreement
supplemental to any relevant facilities agreement plus all
interest, fees and costs in connection therewith;
(c) any claim for damages or injunction in respect of any
misrepresentation or breach or anticipated breach of covenant or
other obligation;
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(d) any claim for damages or restitution in the event of rescission of
any such liabilities or otherwise in connection with any relevant
agreement or arrangement;
(e) any claim flowing from any recovery of a payment or discharge in
respect of those liabilities on the grounds of preference or
otherwise; and
(f) any amounts (such as post-insolvency interest) which would be
included in any of the above but for any discharge,
non-provability, unenforceability or non-allowability of the same
in any insolvency or other proceedings;
"APPROVED AFFILIATE SENIOR LENDER" means an affiliate of a Senior Lender
which (a) the Senior Agent has agreed may be a Hedge Counterparty and (b)
is or has become a party to this Deed pursuant to and in accordance with
the provisions hereof;
"BENEFICIARIES" means each of the Senior Agent, Security Agent, Arranger,
Senior Lenders, Hedge Counterparties, Mezzanine Agent, Mezzanine Lenders,
Subordinated Noteholders and the Mirror Noteholder;
"COLLECTION ACCOUNT" means the account in the name of the Security Agent
established for the purposes of this Deed;
"DEED OF ACCESSION" means a deed of accession substantially in the form
set out in Schedule 6 (Form of Deed of Accession) executed or to be
executed by a person intending to become a party hereto;
"DEFAULT" means any Senior Event of Default or any Mezzanine Event of
Default;
"FINANCE DOCUMENTS" means the Senior Documents, the Mezzanine Documents,
the Hedging Documents, the Subordinated Note Documents, the Mirror Note
Documents and the Intra-Group Documents;
"GUARANTOR" means each of the Senior Guarantors and the Mezzanine
Guarantors;
"HEDGE COUNTERPARTIES" means those financial institutions whose names are
set out in Schedule 2 (The Hedge Counterparties) and any other financial
institution to whom any Hedging Liabilities become outstanding and who
accedes to this Deed by executing a Deed of Accession in the form set out
in Schedule 6 (Form of Deed of Accession);
"HEDGING DOCUMENTS" means the agreements entered into by the Borrower in
relation to Treasury Transactions and any transaction or confirmation
entered into pursuant thereto or which is subject thereto;
"HEDGING LIABILITIES" means all present and future sums, liabilities and
obligations whatsoever (actual or contingent) payable, owing, due or
incurred by any Borrower to any Hedge Counterparty pursuant to the terms
of any Hedging Agreement together with all Ancillary Liabilities relating
thereto, as determined by the relevant Hedge Counterparty and agreed by,
prior to the Senior Discharge Date, the Senior Agent and thereafter, the
Mezzanine Agent at any given time;
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"INTRA-GROUP BORROWER" means those members of the Group whose names are
set out in Part B of Schedule 5 (Intra-Group Borrowers), and any other
member of the Group by whom any Intra-Group Liabilities from time to time
may be payable or owing, guaranteed or secured, or who may be otherwise
actually or contingently liable therefor after the date hereof;
"INTRA-GROUP DOCUMENTS" means any and all agreements and other
instruments under or by which any Intra-Group Liabilities are
outstanding, evidenced, secured or guaranteed in each case as, and
including any instrument pursuant to which the same is novated, varied,
supplemented or amended from time to time;
"INTRA-GROUP LENDERS" means those members of the Group whose names are
set out in Part A of Schedule 5 (Intra-Group Lenders), and any other
member of the Group to whom any Intra-Group Liabilities become
outstanding after the date hereof and who accedes to this Deed in
accordance with Clause 35.2 (Deed of Accession);
"INTRA-GROUP LIABILITIES" means all present and future sums, liabilities
and obligations whatsoever (actual or contingent) payable, owing, due or
incurred by any Intra-Group Borrower to any Intra-Group Lender (whether
pursuant to any intra-group loan or otherwise) together with all
Ancillary Liabilities relating thereto (other than the Subordinated
Liabilities and the Mirror Note Liabilities);
"LENDERS" means the Senior Lenders, the Hedge Counterparties, the
Mezzanine Lenders, the Subordinated Noteholders, the Mirror Noteholder
and the Intra-Group Lenders;
"LIABILITIES" means the Senior Liabilities, the Mezzanine Liabilities,
the Hedging Liabilities, the Subordinated Liabilities, the Mirror Note
Liabilities and the Intra-Group Liabilities;
"MAJORITY MEZZANINE LENDERS" means an Instructing Group as defined in the
Mezzanine Facility Agreement;
"MAJORITY SENIOR LENDERS" means an Instructing Group as defined in the
Senior Facility Agreement;
"MATERIAL VARIATION" means in relation to the Senior Documents and the
Mezzanine Documents:
(a) increases in margin or a change in the basis on which interest
accrues, is calculated or is payable (not being, for the avoidance
of doubt, fluctuations of LIBOR or any Associated Costs Rate or
any substitute basis) not provided for by the original terms of
the documents (except, in the case of the Senior Documents, any
amendment or variation which results in an increase of margin of
not more than 1% per annum);
(b) changes in the basis on which guarantee or other fees, commissions
or other like payments are made or calculated;
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(c) alterations of the provisions relating to increasing the amount or
changing the currency or accelerating the date of any repayment;
(d) alterations relating to the deferral of any scheduled or mandatory
repayment and/or the extension of any final maturity date;
(e) increases in the maximum amounts available to be raised from that
as at the date hereof as reduced from time to time by any
scheduled permanent reduction or cancellation of the relevant
facility (excluding any rolled-up or capitalised interest
originally provided for);
(f) any amendment, variation, waiver or release of or supplement in a
manner whereby any Obligor becomes liable to make an additional
payment (or increase an existing payment);
(g) any amendment, variation, waiver or release of or supplement in a
manner whereby the ranking and/or subordination arrangements
provided for herein are adversely affected; and
(h) any amendment, variation, supplement or additions to any of the
representations, warranties, covenants, financial covenants,
events of default or put events;
"MEZZANINE BORROWER" means Transworld Healthcare (UK) Limited;
"MEZZANINE DISCHARGE DATE" means the date on which all Mezzanine
Liabilities have been fully paid and discharged, whether or not as a
result of enforcement;
"MEZZANINE DOCUMENTS" means the Mezzanine Facility Agreement, (where and
to the extent capable according to their terms of security any Mezzanine
Liabilities) the Security Documents and any documents entered into
pursuant thereto;
"MEZZANINE EVENT OF DEFAULT" means any event specified as an event of
default in Clause 21 (Events of Default) of the Mezzanine Facility
Agreement;
"MEZZANINE GUARANTORS" shall have the meaning ascribed to "Guarantors" in
the Mezzanine Facility Agreement;
"MEZZANINE LENDERS" means each of the parties specified in Schedule 3
(The Mezzanine Lenders) and any other party, upon their acquiring by way
of subrogation, assignment, transfer or novation any right or interest in
the Mezzanine Liabilities;
"MEZZANINE LIABILITIES" means all present and future sums, liabilities
and obligations whatsoever (actual or contingent) payable, owing, due or
incurred by any Mezzanine Obligor to any of the Mezzanine Agent and the
Mezzanine Lenders pursuant to the terms of the Mezzanine Documents
together with all Ancillary Liabilities relating thereto;
"MEZZANINE OBLIGORS" means Mezzanine Borrower and the Mezzanine
Guarantors;
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"MEZZANINE STANDSTILL PERIOD" has the meaning given to it in Clause 19.3
(Enforcement by Mezzanine Lenders);
"MIRROR NOTE ISSUER" means Transworld Healthcare (UK) Limited;
"MIRROR NOTE LIABILITIES" means all present and future sums, liabilities
and obligations whatsoever (actual or contingent) payable, owing due or
incurred by the Mirror Note Issuer or any other number of the Group
pursuant to the terms of the Mirror Note Documents together with all
Ancillary Liabilities relating thereto;
"OBLIGORS" means the Parent, the Borrower, each Guarantor, each
Intra-Group Lender and each Intra-Group Borrower;
"POSTPONED SENIOR LIABILITIES" means any Senior Liabilities (and any
Ancillary Liabilities relating thereto) which do not have priority over
the Mezzanine Liabilities by reason of Clause 10.2 (Postponed Senior
Liabilities);
"POWERS OF ATTORNEY" means any powers of attorney given to the Security
Agent under or pursuant to Clause 17.2 (Powers of Attorney) or Clause
17.3 (Further Assurance);
"PURCHASERS' REPRESENTATIVE" shall have the meaning ascribed thereto in
the Securities Purchase Agreement;
"SECURED BENEFICIARIES" means each of the Senior Agent, the Security
Agent, the Arranger, the Senior Lenders, the Hedge Counterparties, the
Mezzanine Agent and the Mezzanine Lenders;
"SECURITY" means the security granted pursuant to the Security Documents
or otherwise in respect of the Senior Liabilities and/or the Mezzanine
Liabilities;
"SECURITY DOCUMENTS" means:
(a) the Security Documents as defined in the Senior Facility
Agreement;
(b) the Security Documents as defined in the Mezzanine Facility
Agreement;
(c) any present or future document conferring or evidencing any
Encumbrance over the assets of any member of the Group or
guarantee given by any member of the Group for or in respect of
any of the Senior Liabilities or the Mezzanine Liabilities; and
(d) any Encumbrance granted over the assets of any member of the Group
under any covenant for further assurance in any of those security
documents;
"SECURED PROPERTY" means:
(a) the assets and rights in respect of which security interests are
granted and the rights and powers given under and pursuant to the
Security Documents
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including the covenants given in respect of the obligations under
the Security Documents;
(b) all assets, rights, powers, guarantees, encumbrances or money at
any time transferred, paid to or vested in the Security Agent as
additions to the Secured Property; and
(c) all investments, property or money at any time representing the
Secured Property or any part thereof, including all income and
other sums at any time received or receivable by the Security
Agent in respect of the Secured Property (or any part thereof);
"SENIOR DISCHARGE DATE" means the date on which all Senior Liabilities
(other than the Postponed Senior Liabilities) have been fully paid and
discharged (or the Senior Agent, the Senior Lenders and the Hedge
Counterparties have otherwise received an amount equal to the Senior
Liabilities (other than the Postponed Senior Liabilities)), whether or
not as a result of an enforcement;
"SENIOR DOCUMENTS" means the Senior Facility Agreement, the Hedging
Documents and (where and to the extent capable according to their terms
of securing any Senior Liabilities) the Security Documents and any
documents entered into pursuant thereto;
"SENIOR EVENT OF DEFAULT" means any event specified as an event of
default in Clause 24 (Events of Default) of the Senior Facility
Agreement;
"SENIOR GUARANTOR" shall have the meaning ascribed to "Guarantors" in the
Senior Facility Agreement;
"SENIOR FACILITIES" means "Facilities" as defined in the Senior Facility
Agreement;
"SENIOR LENDERS" means each of the banks and financial institutions
specified in Schedule 1 (The Senior Lenders) and any other bank or
financial institution upon their acquiring by way of subrogation,
assignment, transfer or novation any right or interest in the Senior
Liabilities;
"SENIOR LIABILITIES" means all present and future sums, liabilities and
obligations whatsoever (actual or contingent) payable, owing due or
incurred by any Borrower to any of the Senior Agent or any Senior Lender
or Hedge Counterparty under the Senior Documents together with all
Ancillary Liabilities relating thereto and the Hedging Liabilities;
"STOP EVENT" means:
(a) a notice has been issued under Clause 24.23 (Acceleration and
Cancellation) and/or 24.24 (Advances Due on Demand) of the Senior
Facility Agreement (which has not been withdrawn); or
(b) a Senior Event of Default has occurred and is continuing under
Clause 24.1 (Failure to Pay) of the Senior Facility Agreement;
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"STOP NOTICE" means a written notice served by the Senior Agent under
Clause 14.2 (Right to issue a Stop Notice);
"STOP NOTICE EVENT" means:
(a) a Senior Event of Default has occurred and is continuing;
(b) any event or circumstance which would become (with the passage of
time, the giving of notice, the making of any determination or any
combination thereof, in each case as contemplated or required
under Clause 24 (Event of Default) of the Senior Facility
Agreement) a Senior Event of Default has occurred and is
continuing,
provided that any such event or circumstance falling within this
paragraph (b) shall not be capable of "continuing" for more than
30 days with respect to a particular event or circumstance;
"SUBORDINATED NOTE DOCUMENTS" means Senior Subordinated Note Documents,
the Warrant Documents and any documents entered into pursuant thereto;
"SUBORDINATED LIABILITIES" means all present and future sums, liabilities
and obligations whatsoever (actual or contingent) payable, owing, due or
incurred by the Subordinated Note Issuer or any other member of the Group
to any of the Subordinated Noteholders pursuant to the terms of the
Subordinated Note Documents together with all Ancillary Liabilities
relating thereto;
"SUBORDINATED NOTE ISSUER" means Transworld Holdings (UK) Limited;
"SUBORDINATED NOTE PUT EVENT" shall have the meaning ascribed to "Put
Event" in Article 7.1 of the Securities Purchase Agreement;
"SUBORDINATED NOTES" means the senior subordinated promissory notes
constituted by the Securities Purchase Agreement together with any PIK
Notes;
"SUBORDINATED PUT EVENT" means may of a Subordinated Note Put Event, a
Subordinated Warrant Put Event or a Subordinated Warrant Shares Put
Event;
"SUBORDINATED WARRANT PUT EVENT" shall have the meaning ascribed to
"Warrant Put Event" in Article 8.1 of the Securities Purchase Agreement;
"SUBORDINATED WARRANT SHARES PUT EVENT" shall have the meaning ascribed
to "Shares Put Event" in Article 8.3(a) of the Securities Purchase
Agreement;
"WARRANT DOCUMENTS" means the warrant instrument (the "WARRANT
INSTRUMENT") of even date herewith executed by the Warrant Issuer in
respect of the warrants to be issued to the Subordinated Noteholders
pursuant to the Securities Purchase Agreement and any documents entered
into pursuant thereto;
"WARRANT ISSUER" means Transworld Healthcare (UK) Limited; and
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"WARRANTS" shall have the meaning ascribed thereto in the Warrant
Documents.
1.3 Any reference in this Deed to the "SECURITY AGENT", the "SENIOR AGENT"
the "Arranger", the "SENIOR LENDERS", the "HEDGE COUNTERPARTIES", the
"MEZZANINE AGENT", the "MEZZANINE LENDERS" the "SUBORDINATED
NOTEHOLDERS", the "MIRROR NOTEHOLDER", the "BORROWER", the "INTRA-GROUP
LENDERS" or the specified "INTRA-GROUP BORROWER" shall be construed so as
to include any of their respective successors, permitted transferees and
assigns any other person which becomes party to or is entitled to the
benefit of this Deed in the specified capacity.
1.4 "Subordinated" means that (i) such liabilities are subject to all of the
terms and conditions of this Deed and (ii) without limitation of the
foregoing, that in any insolvency proceeding in which any Obligor is a
debtor (a "PROCEEDING"), the holders of the Liabilities ("PRIOR
LIABILITIES") to which any other Liabilities ("JUNIOR LIABILITIES") are
said to be "subordinate" shall be entitled to receive payment in full in
cash of all principal of, interest on (including, without limitation,
interest accruing after the commencement of such Proceeding, whether or
not a claim for such interest is an allowed claim in such Proceeding) and
other amounts payable in connection with, such Prior Liabilities before
the holders of such Junior Liabilities are entitled to receive any
payments or distribution (whether in cash, property or securities) on
account of principal of, interest on or other amounts payable in
connection with any such Junior Liabilities and to that end the holders
of the Prior Liabilities shall be entitled to receive for application (as
provided in Clause 22 (Appropriation)) in payment thereof any payment or
distribution, whether in cash, property or securities, which may be
payable or deliverable in any such Proceeding in respect of such Junior
Liabilities, including any such payment or distribution which may be
payable or deliverable by virtue of the provisions of any indebtedness
which is subordinate and junior in right of payment to such Junior
Liabilities.
1.5 For the purposes of the Deed, "fully paid", "payment in full", "paid in
full" or "satisfied", as used with respect to the Senior Liabilities, the
Mezzanine Liabilities or the Intra-Group Liabilities, means the receipt
of cash (including by way of cash collateral) equal to the full amount of
the Senior Liabilities, or as the case may be, the Mezzanine Liabilities
or the Intra-Group Liabilities, including, without limitation, the
principal amount of the Senior Liabilities or, as the case may be, the
Mezzanine Liabilities or the Intra-Group Liabilities, interest thereon
(including post-petition interest whether or not a claim for such
post-petition interest is an allowed claim) to the date of such payment
and all other amounts, including, without limitation, fees, costs,
expenses and indemnities, payable in connection therewith; provided,
however that any such cash that the Senior Lenders or, as the case may
be, the Mezzanine Lenders or the Intra-Group Lenders have been required
to return or disgorge (or have disgorged through compromise or
settlement) shall not be deemed to have been paid to the Senior Lenders
or, as the case may be, the Mezzanine Lenders or the Intra-Group Lenders
for the purposes of determining whether the Senior Liabilities or, as the
case may be, the Mezzanine Liabilities or the Intra-Group Liabilities
have been "paid in full" or "satisfied".
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2. CONSENT TO THE FINANCE DOCUMENTS AND SECURITY DOCUMENTS
Subject to the terms of this Deed and the Security Documents, each of the
Senior Agent, the Arranger, the Senior Lenders, the Hedge Counterparties,
the Mezzanine Agent, the Mezzanine Lenders, the Subordinated Noteholders,
the Mirror Noteholder and the Intra-Group Lenders for all purposes hereby
consents to the entering into and performance of the Finance Documents
and the Security Documents by the parties thereto and to the giving by
the Obligors of the security constituted by the Security Documents so
that such actions shall not constitute a default or potential default
under any of the Finance Documents.
3. SUBORDINATION AND RANKING
3.1 SUBORDINATION
Each of the Senior Agent, the Security Agent, the Mezzanine Agent and the
Lenders agrees and each of the Obligors hereby acknowledges that:
(a) the Mezzanine Liabilities, the Subordinated Liabilities, the
Mirror Note Liabilities and the Intra-Group Liabilities are
subordinated to the Senior Liabilities (other than the Postponed
Senior Liabilities);
(b) the Postponed Senior Liabilities, the Subordinated Liabilities,
the Mirror Note Liabilities and the Intra-Group Liabilities are
subordinated to the Mezzanine Liabilities;
(c) the Subordinated Liabilities, the Mirror Note Liabilities and the
Intra-Group Liabilities are subordinated to the Postponed Senior
Liabilities; and
(d) the Intra-Group Liabilities are subordinated to the Subordinated
Liabilities and the Mirror Note Liabilities.
3.2 RANKING
Each of the Senior Agent, the Mezzanine Agent and the Lenders hereby
agrees and each of the Obligors and the Security Agent hereby
acknowledges that:
(a) the Senior Liabilities, whether secured or unsecured, but subject
to Clause 10.2 (Postponed Senior Liabilities), shall rank in
priority to the Mezzanine Liabilities, Subordinated Liabilities,
the Mirror Note Liabilities and the Intra-Group Liabilities;
(b) that the Mezzanine Liabilities, whether secured or unsecured,
shall rank in priority to the Postponed Senior Liabilities, the
Subordinated Liabilities, the Mirror Note Liabilities and the
Intra-Group Liabilities;
(c) that the Postponed Senior Liabilities, whether secured or
unsecured shall rank in priority to, the Subordinated Liabilities,
the Mirror Note Liabilities and Intra-Group Liabilities; and
(d) that the Subordinated Liabilities and the Mirror Note Liabilities,
whether secured or unsecured shall rank in priority to the
Intra-Group Liabilities.
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3.3 SUBORDINATION AND PRIORITIES NOT AFFECTED
Subject to Clause 10.2 (Postponed Senior Liabilities) the priorities
referred to in Clauses 3.1 (Subordination) and 3.2 (Ranking) will not be
affected by any reduction or increase in the principal amount secured by
the Security in respect of the Senior Liabilities or, as the case may be,
the Mezzanine Liabilities or by any intermediate reduction or increase
in, amendment or variation to any of the Finance Documents, or by any
variation or satisfaction of, any of the Liabilities or any other
circumstances.
3.4 EXECUTION AND REGISTRATION
The provisions of Clause 3.2 (Ranking) shall apply notwithstanding the
order in which or dates upon which the Finance Documents and this Deed
are executed or any of them are registered or notice of them is given to
any person.
3.5 CONSENTS
In circumstances where the proportion of the proceeds of any disposal
which are required to be applied in mandatory prepayment of the Senior
Liabilities will be so applied then, no consent is required under the
Mezzanine Documents, the Subordinated Note Documents, the Mirror Note
Documents or the Intra-Group Documents (and any necessary consent or
release of any security over the relevant asset or guarantee issued by
any member of the Group being disposed of shall be deemed to be granted
thereunder) for such disposal.
3.6 APPLICATION OF PROCEEDS UNDER SECURITY DOCUMENTS
If under the terms of any of the Senior Documents the proceeds from any
disposal of assets the subject of the security constituted by the
Security Documents or any part thereof are required to be applied in
mandatory prepayment of the Senior Liabilities, other than the Postponed
Senior Liabilities, then the prior written consent of the Mezzanine Agent
or the Mezzanine Lenders shall not be required for such application and
such proceeds shall be applied in or towards payment of the Senior
Liabilities, other than the Postponed Senior Liabilities, in accordance
with the terms of the Senior Facility Agreement and Clause 24
(Appropriation) of this Deed, without any obligation to apply such
amounts in or towards payment of the Mezzanine Liabilities.
3.7 REFINANCING OF SENIOR LIABILITIES AND/OR MEZZANINE LIABILITIES
In the event that any of the Senior Liabilities and/or the Mezzanine
Liabilities are to be refinanced (a "REFINANCING") in whole or in part
(it being acknowledged by the Subordinated Noteholders and the Mirror
Noteholder that the terms and conditions (including amount and pricing)
may be different to those applicable to the Senior Liabilities and/or the
Mezzanine Liabilities), each of the Subordinated Noteholders, the Mirror
Noteholder and the Voting Trustee undertakes to enter into a further
intercreditor deed to provide substantially similar rights and remedies
to the providers of such Refinancing as those that are afforded to the
Senior Lenders or, as the case may be, the Mezzanine Lenders.
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4. UNDERTAKINGS OF THE OBLIGORS
Each of the Obligors undertakes that it will not (and in the case of the
Parent, that it will procure that each member of the Group will not):
(a) in respect of Mezzanine Liabilities until the Senior Discharge
Date, unless the Majority Senior Lenders otherwise consent in
writing:
(b) in respect of the Intra-Group Liabilities, the Postponed Senior
Liabilities, the Subordinated Liabilities and the Mirror Note
Liabilities, until the later of the Senior Discharge Date and the
Mezzanine Discharge Date, unless the Majority Senior Lenders (or,
after the Senior Discharge Date, the Majority Mezzanine Lenders)
otherwise consent in writing:
and subject always to Clause 19 (Permitted Enforcement):
4.1.1 pay, repay, prepay, redeem, purchase, defease or otherwise acquire
or satisfy in any manner the whole or any part of any of the
Mezzanine Liabilities or the Postponed Senior Liabilities save to
the extent permitted or contemplated by Clause 12 (Permitted
Payments);
4.1.2 discharge any of the Mezzanine Liabilities or the Postponed Senior
Liabilities by set-off, any right of combination of accounts or
otherwise save to the extent permitted or contemplated by Clause
12 (Permitted Payments);
4.1.3 pay, repay, prepay, redeem, purchase, defease or otherwise acquire
or satisfy in any manner the whole or any part of any of the
Intra-Group Liabilities save as permitted or contemplated by
Clause 12 (Permitted Payments);
4.1.4 discharge any of the Intra-Group Liabilities by set-off, any right
of combination of accounts or otherwise save to the extent
permitted or contemplated by Clause 12 (Permitted Payments);
4.1.5 pay, repay, prepay, redeem, purchase, defease or otherwise acquire
or satisfy in any manner the whole or any part of any of the
Subordinated Liabilities or the Mirror Note Liabilities (other
than interest payments contemplated by sub-clause 12.1.4 of Clause
12.1 (Permitted Payments) or discharge any of the Subordinated
Liabilities or the Mirror Note Liabilities by set-off, any right
of combination of accounts or otherwise;
4.1.6 create or permit to subsist any Encumbrance over any of its assets
for, or any guarantee in respect of, any of the Mezzanine
Liabilities, the Postponed Senior Liabilities, the Subordinated
Liabilities, the Mirror Note Liabilities or the Intra-Group
Liabilities except, in the case of the Mezzanine Liabilities and
the Postponed Senior Liabilities only, Encumbrances created under
the Security Documents, Encumbrances permitted under sub-clause
8.1.3 of Clause 8 (Undertakings of the Mezzanine Agent and the
Mezzanine Lenders) or sub-clause 10.3.2 of Clause 10.3
(Undertakings of Senior Lenders); or
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4.1.7 take or omit any action whereby the ranking or subordination
contemplated by this Deed may be impaired.
5. UNDERTAKINGS OF THE INTRA-GROUP LENDERS
Each of the Intra-Group Lenders undertakes that it will not, unless the
Majority Senior Lenders (or, after the Senior Discharge Date, the
Majority Mezzanine Lenders) otherwise consent in writing or require the
relevant Intra-Group Lender to take the specified action:
5.1.1 permit or require any Intra-Group Borrower to pay, repay, prepay,
redeem, purchase, defease, issue share capital or otherwise
acquire or satisfy in any manner the whole or any part of the
Intra-Group Liabilities save to the extent permitted or
contemplated by Clause 12 (Permitted Payments) or otherwise take
or receive from any member of the Group any payment (whether in
cash, by way of set off or otherwise) in respect thereof (other
than the conversion of the Intra-Group Liabilities, prior to the
occurrence of a Senior Event of Default, or after the Senior
Discharge Date, the occurrence of a Mezzanine Event of Default,
into ordinary shares of the relevant Intra-Group Borrower which
are immediately subject to the Security Documents);
5.1.2 take, accept or receive the benefit of any Encumbrance or
guarantee in respect of the Intra-Group Liabilities;
5.1.3 agree to any amendment, variation, waiver or supplement to any
provision of the Intra-Group Documents except to the extent that
such amendment, variation, waiver or supplement does not adversely
affect the interests of the Senior Lenders and Mezzanine Lenders
or the ranking and/or subordination arrangements provided for in
this Deed;
5.1.4 claim or rank as a creditor in the insolvency, winding-up,
bankruptcy or liquidation of any member of the Group;
5.1.5 save to the extent permitted or contemplated by Clause 12
(Permitted Payments), discharge or seek to discharge all or any
part of the Intra-Group Liabilities by set-off, any right of
combination of accounts or otherwise; or
5.1.6 take or omit any action whereby the ranking or subordination
contemplated by this Deed may be impaired.
6. UNDERTAKINGS OF THE MIRROR NOTEHOLDER
6.1 RESTRICTED ACTIVITIES
The Mirror Noteholder undertakes that, subject to Clause 19 (Permitted
Enforcement), it will not, unless the Majority Senior Lenders (or, after
the Senior Discharge Date, the Majority Mezzanine Lenders) otherwise
consent in writing or require the Mirror Noteholder to take the specified
action:
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6.1.1 permit or require the Mirror Note Issuer or any other member of
the Group to pay, repay, prepay, subject to Clause 6.2 (Warrant
Exercise) redeem, purchase, defease, or otherwise acquire or
satisfy in any manner the whole or any part of the Mirror Note
Liabilities (other than interest payments contemplated by Clause
12 (Permitted Payments)) or otherwise take or receive from any
member of the Group any payment (whether in cash, by way of
set-off or otherwise) in respect thereof;
6.1.2 take, accept or receive the benefit of any Encumbrance or
guarantee in respect of the Mirror Note Liabilities;
6.1.3 agree to any amendment, variation, waiver, supplement or addition
to any provision of the Mirror Note Documents;
6.1.4 discharge or seek to discharge all or any part of the Mirror Note
Liabilities by set-off, any right of combination of accounts or
otherwise; or
6.1.5 take or omit any action whereby the ranking or subordination
contemplated by this Deed may be impaired.
6.2 WARRANT EXERCISE
In the event that the Subordinated Noteholders exercise the Warrants in
accordance with the Warrant Documents:
6.2.1 by delivery of Subordinated Notes to the Mirror Note Issuer, the
Mirror Note Issuer shall redeem and cancel an equivalent number of
Mirror Notes by delivery of such Subordinated Notes to the
Subordinated Note Issuer; or
6.2.2 by payment of cash to the Mirror Note Issuer, the Mirror Note
Issuer shall utilise such cash to redeem the Mirror Notes.
7. UNDERTAKINGS OF THE SUBORDINATED NOTEHOLDERS
7.1 RESTRICTED ACTIVITIES
Each of the Subordinated Noteholders undertakes that, subject to Clause
19 (Permitted Enforcement), it will not prior to the Senior Discharge
Date, unless the Majority Senior Lenders (or, after the Senior Discharge
Date, the Majority Mezzanine Lenders) otherwise consent in writing or
require the Subordinated Noteholders to take the specified action:
7.1.1 permit or require the Subordinated Note Issuer, the Warrant Issuer
or any other member of the Group to pay, repay, prepay, redeem,
purchase, defease or otherwise acquire or satisfy in any manner
the whole or any part of any of the Subordinated Liabilities save
to the extent permitted or contemplated by Clause 12 (Permitted
Payments) or otherwise take or receive from any member of the
Group any payment (whether in cash, by way of set-off or
otherwise) in respect thereof save to the extent permitted or
contemplated by Clause 12 (Permitted Payments);
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7.1.2 take, accept or receive the benefit of any Encumbrance or
guarantee in respect of the Subordinated Liabilities;
7.1.3 agree to any amendment, variation, waiver, supplement or addition
to any provision of the Subordinated Note Documents;
7.1.4 discharge or seek to discharge all or any part of the Subordinated
Liabilities by set-off, any right of combination of accounts or
otherwise; or
7.1.5 take or omit any action whereby the ranking or subordination
contemplated by this Deed may be impaired.
7.2 WARRANT EXERCISE
In the event that the Subordinated Noteholders exercise the Warrants in
accordance with the Warrant Documents:
7.2.1 by delivery of Subordinated Notes to the Mirror Note Issuer, the
Subordinated Note Issuer shall cancel such Subordinated Notes on
delivery of the same by the Mirror Note Issuer in redemption of an
equivalent number of Mirror Notes; or
7.2.2 by payment of cash to the Mirror Note Issuer, the Subordinated
Note Issuer shall utilise the cash received from the Mirror Note
Issuer (in redemption of the Mirror Notes) to redeem the
Subordinated Notes.
8. UNDERTAKINGS OF THE MEZZANINE AGENT AND THE MEZZANINE LENDERS
Each of the Mezzanine Agent and the Mezzanine Lenders agrees with the
Senior Agent and the Senior Lenders that it will prior to the Senior
Discharge Date, unless the Majority Senior Lenders otherwise consent in
writing and subject always to Clause 19 (Permitted Enforcement):
8.1.1 not permit or require any Obligor or any other member of then
Group to pay, repay, prepay, subject to Clause 7.2 (Warrant
Exercise) redeem, purchase, defease or otherwise acquire or
satisfy in any manner the whole or any part of any of the
Mezzanine Liabilities save to the extent permitted or contemplated
by Clause 12 (Permitted Payments) or otherwise take or receive
from any member of the Group any payment (whether in cash, by way
of set off or otherwise) in respect thereof save to the extent
permitted or contemplated by Clause 12 (Permitted Payments);
8.1.2 agrees to ensure that the sole borrower under the Mezzanine
Facility Agreement is the Mezzanine Borrower;
8.1.3 (other than under the Security Documents executed in favour of the
Security Agent not take, accept or receive the benefit of any
Encumbrance in respect of the Mezzanine Liabilities unless (a)
first or at the same time there is conferred on the Senior Lenders
and the Hedge Counterparties the benefit (ranking first in point
of security) of such Encumbrance (or a substantially similar
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Encumbrance) in such manner and such form as the Senior Agent may
require or (b) the Senior Agent shall have declined to take the
benefit of such Encumbrance and shall have notified such decision
to the Mezzanine Agent in writing and,
in any event the Senior Agent shall have received a legal opinion
in form and substance satisfactory to the Senior Agent stating
that the Encumbrances constituted by the Security Documents and
the ranking created hereby will not thereby be prejudiced;
8.1.4 (other than under the guarantees issued on or prior to the date
hereof) not take, accept or receive the benefit of any guarantee
in respect of the Mezzanine Liabilities unless (a) first or at the
same time there is conferred on the Senior Lenders and the Hedge
Counterparties the benefit (ranking first in point of security) of
such guarantee (or a substantially similar guarantee) in such
manner and such form as the Senior Agent may require or (b) the
Senior Agent shall have declined to take the benefit of such
guarantee and shall have notified such decision to the Mezzanine
Agent in writing and,
in any event the Senior Agent shall have received a legal opinion
in form and substance satisfactory to the Senior Agent stating
that the guarantees constituted by the Security Documents and the
ranking created hereby will not thereby be prejudiced;
8.1.5 not agree to any Material Variation (other than an amendment of a
minor or a technical nature) to the Mezzanine Documents;
8.1.6 not discharge or seek to discharge all or any part of the
Mezzanine Liabilities by set-off, any right of combination of
accounts or otherwise save to the extent permitted or contemplated
by Clause 12 (Permitted Payments); or
8.1.7 not take or omit any action whereby the ranking or subordination
contemplated by this Deed may be impaired.
9. ACCESSION AND UNDERTAKINGS OF HEDGE COUNTERPARTIES
9.1 ACCESSION OF HEDGE COUNTERPARTIES
If there are no Hedge Counterparties specified in Schedule 2 (The Hedge
Counterparties) then the provisions of this Deed relating to Hedge
Counterparties will not come into effect until such time as a Senior
Lender or Approved Affiliate Senior Lender enters into a Treasury
Transaction with any member of the Group and executes and delivers to the
Security Agent a Deed of Accession undertaking to be bound as a Hedge
Counterparty by all the provisions of this Deed. No Senior Lender or
Approved Affiliate Senior Lender will be entitled to share in any of the
security constituted by the Security Documents in respect of the Hedging
Liabilities unless and until it has executed and delivered to the
Security Agent a Deed of Accession. Forthwith upon delivery of a Deed of
Accession to the Security Agent a Hedge Counterparty will acquire all its
rights and assume all its obligations under this Deed.
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Notwithstanding the foregoing, no person may become a Hedge Counterparty
unless it is a Senior Lender or Approved Affiliate Senior Lender.
9.2 UNDERTAKINGS OF HEDGE COUNTERPARTIES
Until the Senior Discharge Date, except as the Majority Senior Lenders
have previously consented in writing, no Hedge Counterparty will:
9.2.1 demand (other than as may be necessary in order to exercise any
right to terminate or close out any Treasury Transaction as
provided in and permitted under sub-clause 9.2.2) or receive
payment, prepayment or repayment of, or any distribution in
respect of or on account of, any of the Hedging Liabilities in
cash or in kind or apply any money or property in or towards the
discharge of any Hedging Liabilities except:
(a) for scheduled payments arising under the original terms of
the Hedging Documents (without regard to any amendment made
after the date of those Hedging Documents other than those
permitted by the terms of this Deed); and/or
(b) for the proceeds of enforcement of the Security Documents
received and applied in the order permitted by Clause 24
(Appropriation);
9.2.2 exercise any right it might otherwise have pursuant to any Hedging
Agreement to terminate any hedging transactions under such Hedging
Agreement or to refuse to make any payment due from it thereunder
until service of a notice by the Senior Agent under clause 27.21
(Acceleration and Cancellation) of the Senior Facility Agreement;
9.2.3 discharge all or any part of the Hedging Liabilities by set-off,
any right of combination of accounts or otherwise except if and to
the extent that those Hedging Liabilities are permitted to be paid
under sub-clause 9.2.1(a);
9.2.4 take, accept or receive the benefit of any Encumbrance or
guarantee in respect of the Hedging Liabilities other than under
the Security Documents or any other Encumbrance or guarantee
granted for the full benefit of the Senior Lenders and the Hedge
Counterparties in accordance with the ranking specified in this
Deed.
9.3 TWO WAY PAYMENTS
Each Borrower and each Hedge Counterparty agrees that:
9.3.1 any Hedging Agreement to which it is at any time party governing
the terms of a hedging transaction will provide for "two-way
payments" in the event of a termination of that hedging
transaction whether upon a Termination Event or an Event of
Default (each as defined therein), meaning that the defaulting
party under that Hedging Agreement will be entitled to receive
payment under the relevant termination provisions if the net
replacement value of all terminated transactions affected under
the Hedging Agreement is in its favour;
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9.3.2 if on termination of any hedging transaction under any Hedging
Agreement to which it is a party a settlement amount or other
amount falls due from the Hedge Counterparty to any Borrower then,
if the security constituted by the Security Documents has become
enforceable, that amount shall be paid by such Hedge Counterparty
to the Security Agent and treated as proceeds of enforcement of
the security conferred by the Security Documents for application
in the order prescribed in this Deed;
9.3.3 the Hedge Counterparty will promptly (and in any event within 5
business days of the relevant event) exercise any rights it may
have to terminate the hedging transactions under the Hedging
Documents, unless the Majority Senior Lenders otherwise agree or
require, on the date on which the Senior Agent has served a notice
on the occurrence of a Senior Event of Default declaring that all
of the Senior Liabilities have become prematurely due and payable
under the Senior Documents; and
9.3.4 if the Senior Discharge Date has occurred or would have occurred
but for the fact that Hedging Liabilities only remain outstanding,
the Mezzanine Agent (acting on the instructions of the Majority
Mezzanine Lenders) may by notice to any Obligor which is party to
any Hedging Agreement require such Obligor to terminate or procure
the termination of all outstanding hedging transactions under the
Hedging Documents in relation to any Hedge Counterparty if that
Hedge Counterparty is requiring any Mezzanine Lender to refrain
from taking any step which, but for the provisions of this Deed it
would not have been prevented from taking or requiring it to do
anything but for this Deed it would not have to do.
9.4 HEDGING DOCUMENTS
9.4.1 The Borrower and each Hedge Counterparty shall ensure that each
Hedging Agreement to which it is a party shall include as an Event
of Default (as therein defined) a Senior Event of Default and a
Mezzanine Event of Default;
9.4.2 each Hedge Counterparty will provide to the Security Agent copies
of all documents constituting the Hedging Documents as soon as
reasonably practicable.
9.5 CHANGES TO HEDGING DOCUMENTS
Except as the Majority Senior Lenders have previously consented in
writing, no Borrower or Hedge Counterparty will amend, vary, supplement
(excluding, for the avoidance of doubt, entering into any transactions
pursuant thereto) or allow to be superseded any provision of the Hedging
Documents which would result in:
9.5.1 any provision in the Hedging Documents being amended unless the
Hedge Counterparty concerned acting reasonably and in good faith
certifies that it considers such amendment does not impose
restrictions or obligations or conditions on any Borrower which
are more onerous than those originally provided for in the Hedging
Documents;
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9.5.2 any payment under the Hedging Documents being required to be
made by a Borrower earlier than the date originally provided for
in the Hedging Documents; or
9.5.3 any Borrower becoming liable to make an additional payment (or
increase an existing payment) under any of the Hedging Documents
which liability does not arise from the original provisions of
the Hedging Documents.
9.6 OTHER HEDGING DOCUMENTS
In the event that any Borrower wishes to enter into a Hedging Agreement
with a bank or financial institution (a "TREASURY BANK") which is not a
Hedge Counterparty or an Approved Affiliate Senior Lender, such Borrower:
9.6.1 confirms and acknowledges that a Treasury Bank will not have the
benefit of this Deed or any of the Security Documents; and
9.6.2 undertakes to ensure that any Hedging Agreement entered into
with a Treasury Bank complies with the requirements of
sub-clause 9.3.1 of Clause 9.3 (Two Way Payments).
10. UNDERTAKINGS IN RESPECT OF THE SENIOR LIABILITIES
10.1 MATERIAL VARIATIONS
Subject to Clause 10.2 (Postponed Senior Liabilities) each of the Senior
Agent and the Senior Lenders agrees with the Mezzanine Agent and the
Mezzanine Lenders that, unless the Majority Mezzanine Lenders otherwise
consent in writing:
10.1.1 neither the Senior Agent nor the Senior Lenders nor any of them
will agree to any variation to the Senior Facility Agreement
falling within paragraphs (a), (b) or (c) of the definition of
"MATERIAL VARIATION"; and
10.1.2 neither the Senior Agent nor the Senior Lenders nor any of them
will agree to any deferral of any scheduled or mandatory
repayment or prepayment or extend the Final Maturity Date for
all or any of the Senior Facilities, in each case, to a date
falling after the Final Maturity Date for the Mezzanine
Liabilities.
10.2 POSTPONED SENIOR LIABILITIES
It is hereby understood that any breach of the provisions of Clause 10.1
(Material Variations) shall result in any increased principal amount of
the Senior Liabilities being ranked, for all purposes of this Deed and
the Security Documents, behind the Mezzanine Liabilities. The Senior
Agent and the Senior Lenders shall be permitted at any time (and still
preserve their priority over the Mezzanine Liabilities in respect
thereof):
(a) to increase the principal amount (in excess of the Commitments
originally stated of the Senior Banks) under the Senior Facility
Agreement by, in aggregate an amount of, up to (pounds sterling)
6,500,000 (less the aggregate principal amount
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of any scheduled or mandatory repayment or prepayment which has
been deferred for more than 12 months);
(b) to extend the date on which any principal amount is to be paid
provided the date of such extension is not beyond the Final
Maturity Date for the Mezzanine Liabilities, or to bring such
date forward;
(c) to be paid additional fees in respect of any amendments, waivers
or consents to the Senior Documents; and
(d) to provide additional amounts to fund any acquisition of assets
or share in any business and/or companies (which are similar in
nature and scope to the business of the Group at the time of
such acquisition) by any member of the Group.
Notwithstanding the provisions of Clause 10.1 (Material Variations) or
this Clause 10.2, on or after the occurrence of a Senior Event of
Default, the Senior Agent and/or the Senior Lenders shall be entitled to
agree to any amendment, supplement or novation to the Senior Documents
without prejudicing the priority created thereby.
10.3 UNDERTAKINGS OF SENIOR LENDERS
Each of the Senior Agent and the Senior Lenders agrees with the Mezzanine
Agent and the Mezzanine Lenders that it will not prior to the Mezzanine
Discharge Date, unless the Majority Mezzanine Lenders otherwise consent
in writing:
10.3.1 permit or require any Obligor or any other member of the Group
to pay, repay, prepay, redeem, purchase, defease or otherwise
acquire or satisfy in any manner the whole or any part of the
principal and any of the Postponed Senior Liabilities save to
the extent permitted or contemplated by Clause 12 (Payments) or
otherwise take or receive from any member of the Group any
payment (whether in cash, by way of set off or otherwise) in
respect thereof save to the extent permitted or contemplated by
Clause 12 (Payments);
10.3.2 (other than under the Security Documents executed in favour of
the Security Agent and/or the Common Representative) take,
accept or receive the benefit of any Encumbrance or guarantee in
respect of the Postponed Senior Liabilities unless (a) first or
at the same time there is conferred on the Mezzanine Lenders the
benefit (ranking first in point of security) of such Encumbrance
or guarantee in such manner and such form as the Mezzanine Agent
may require or (b) the Mezzanine Agent shall have declined to
take the benefit of such Encumbrance or guarantee and shall have
notified such decision to the Senior Agent in writing and in any
event (c) the Mezzanine Agent shall have received a legal
opinion in form and substance satisfactory to the Mezzanine
Agent stating that the Encumbrances constituted by the Security
Documents and the ranking created hereby will not thereby be
prejudiced;
10.3.3 discharge or seek to discharge all or any part of the Postponed
Senior Liabilities by set-off, any right of combination of
accounts or otherwise; or
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10.3.4 take any action or omit to take any action whereby the ranking
contemplated of the Postponed Senior Liabilities by this Deed
may be impaired,
PROVIDED THAT nothing in this Clause 10.3 shall prevent any enforcement
of the Security Documents by or on behalf of the Senior Agent and/or the
Senior Lenders in respect of the Senior Liabilities.
11. CONSENTS AND ENTRENCHED PROVISIONS
11.1 CONSENTS AND ENTRENCHED PROVISIONS
If the Senior Agent or the Senior Lenders or, after the Senior Discharge
Date, the Mezzanine Agent, the Mezzanine Lenders:
11.1.1 grants any consent, release, approval or waiver to any Obligor
pursuant to the terms of any of the Finance Documents;
11.1.2 makes any determination under, or agrees any amendment,
supplement or novation to, any of the Finance Documents; or
11.1.3 waives any Senior Event of Default or, after the Senior
Discharge Date, any Mezzanine Event of Default;
then the Intra-Group Lenders, the Subordinated Noteholders and the Mirror
Noteholder shall be deemed to have given or made, at the same time, a
corresponding consent, release, approval, determination, amendment,
supplement, novation or waiver, in each case in equivalent terms, for the
purposes of the Intra-Group Documents, the Subordinated Note Documents
or, as the case may be, the Mirror Note Documents to which they are party
and shall not be permitted to object to any such action by the Senior
Agent or the Senior Lenders (or the Mezzanine Agent or the Mezzanine
Lenders), or any Obligor or other member of the Group doing anything in
accordance with such action by the Senior Agent (or the Mezzanine Agent),
by virtue of anything in the Intra-Group Documents, the Subordinated Note
Documents or, as the case may be, the Mirror Note Documents and the
Intra-Group Lenders, the Subordinated Noteholders and the Mirror
Noteholder shall do all such things and execute or procure the execution
of all such documents as the Senior Agent (or the Mezzanine Agent) may
require to give effect to the terms of this Clause.
11.2 NO LIABILITY
None of the Senior Agent, the Senior Lenders, the Mezzanine Agent, the
Mezzanine Lenders nor any of them shall be liable for any consent,
release, approval, determination, amendment, supplement, novation or
waiver or other action given or taken under Clause 11.1 (Consents and
Entrenched Provisions) to any of the Intra-Group Lenders, the
Subordinated Noteholders, the Mirror Noteholder or any other person.
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12. PERMITTED PAYMENTS
12.1 PERMITTED PAYMENTS
Subject to Clauses 14 (Suspension of Permitted Payments) and 15
(Subordination):
12.1.1 so long as, prior to the Senior Discharge Date, no Stop Event
has occurred (or would occur by reason of the proposed payments)
and is continuing or Stop Notice has been issued, the Mezzanine
Borrower may pay a Mezzanine Liability and the Mezzanine Lenders
may receive payment of a Mezzanine Liability to the extent that
the payment or receipt is a payment or receipt of interest due
under Clause 5.3 (Cash Paid Interest) of the Mezzanine Facility
Agreement (excluding any interest capitalised (save for interest
capitalised under Clause 5.4 (Rolled-Up Interest) of the
Mezzanine Facility Agreement) but including default interest and
any interest compounded under the terms of the Mezzanine
Documents) or any amount payable under Clauses 23 (Fees), 24
(Costs and Expenses), 11 (Taxes), 13 (Increased Costs) or 26
(Indemnities) of the Mezzanine Facility Agreement each in
accordance with the terms of the Mezzanine Documents as at the
date hereof or as amended in accordance with Clause 8
(Undertakings of the Mezzanine Lenders);
12.1.2 so long as, prior to the Senior Discharge Date, no Stop Event
has occurred (or would occur by reason of the proposed payments)
and is continuing or Stop Notice has been issued or, after the
Senior Discharge Date and before the Mezzanine Discharge Date,
no notice has been issued under Clause 21.23 (Acceleration and
Cancellation) and/or Clause 21.24 (Advances due on Demand) of
the Mezzanine Facility Agreement, the Mirror Note Issuer may
make cash payments in respect of interest on Mirror Notes
subject to the following:
(a) no cash payments may be made during the period to 30 June
2001 (the "INITIAL PERIOD") and all interest accrued in
such period shall be capitalised (or satisfied through
the issue of Mirror PIK Notes);
(b) after the expiry of the Initial Period, cash payments may
be made subject to the following conditions:
(i) cash payments may only be made on each Coupon Date
(being 31 March, 30 June, 30 September and 31
December in each year); the first Coupon Date on
which cash payments may be made is 30 September
2001;
(ii) cash payments may only be made in respect of
interest accruing in the period (the "COUPON
PERIOD") from (and including) the previous Coupon
Date to (but excluding) the relevant Coupon Date);
(iii) the aggregate of the cash payments which may be
paid on any Coupon Date shall not exceed:
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A where A = 9.375% x [n divided by 365] x P
where n = number of days in Coupon Period
P = the Original Senior Subordinated Note Amount;
and
(iv) the Fixed Charge Cover for each 12 month period
expiring on (1) the Quarter Date immediately
preceding the relevant Coupon Date, (2) the Quarter
Date being such Coupon Date and (3) each of the
next 2 succeeding Quarter Dates (the Quarter Dates
mentioned in sub-paragraphs (2) and (3) are
referred to as the "FORWARD QUARTER DATES") shall
not be less than 1.30:1.
For such purposes Fixed Charge Cover shall be
determined in a manner consistent with the Senior
Facility Agreement subject to:
(x) Net Debt Service shall include the proposed amount
of cash interest on the relevant Coupon Date;
(y) Fixed Charge Cover being determined in respect of
the Forward Quarter Dates by reference to actual
performance to the immediately preceding Quarter
Date (and, to the extent feasible, actual
performance for the Financial Quarter ending on the
Coupon Date) and projected performance by reference
to the most recent budget or Revised Financial
Projections delivered to the Senior Agent under the
Senior Facility Agreement; and
(c) The Mirror Note Issuer shall be entitled to utilise any
amount of cash which it would otherwise be entitled to
pay as interest, to redeem any Mirror PIK Notes issued in
the previous 12 months.
Any interest not capable of being paid in cash will be
satisfied by the issue of Mirror PIK Notes by the Mirror
Note Issuer;
12.1.3 so long as, prior to the Senior Discharge Date, no Stop Event
has occurred (or would occur by reason of the proposed payments)
and is continuing or Stop Notice has been issued or, after the
Senior Discharge Date and before the Mezzanine Discharge Date,
no notice has been issued under Clause 21.23 (Acceleration and
Cancellation) and/or Clause 21.24 (Advances due on Demand) of
the Mezzanine Facility Agreement, Subordinated Note Issuer may
make cash payments in respect of interest on the Subordinated
Notes to the extent the Subordinated Note Issuer has received
cash interest in respect of the Mirror Notes in respect of the
same Coupon Period or the Subordinated Note Issuer shall be
entitled to utilise any amounts of cash so received to redeem
any PIK Notes issued in the previous 12 months. Any interest not
capable of
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being paid in cash will be satisfied by the issue of further
Subordinated Notes by the Subordinated Note Issuer;
12.1.4 so long as, prior to the Senior Discharge Date, no Stop Event
has occurred (or would occur by reason of the proposed payments)
and is continuing or Stop Notice has been issued or, after the
Senior Discharge Date and before the Mezzanine Discharge Date,
no notice has been issued under Clause 21.23 (Acceleration and
Cancellation) and/or Clause 21.24 (Advances Due on Demand) of
the Mezzanine Facility Agreement, any Intra-Group Borrower may
pay an Intra-Group Liability and an Intra-Group Lender may
receive payment of an Intra-Group Liability;
12.1.5 so long as no notice has been issued under Clause 21.23
(Acceleration and Cancellation) and/or Clause 21.24 (Advances
due on Demand) of the Mezzanine Facility Agreement, the
Borrowers may pay any Postponed Senior Liability (other than
principal) and the Senior Lenders may receive payment of any
such Postponed Senior Liability; and
12.2 DEFAULTS
It is expressly agreed that non-payment of any amount due under any of
the Mezzanine Documents or the Senior Documents as a result of Clause 14
(Suspension of Permitted Payments) shall not prevent a Default arising.
12.3 DEFAULT INTEREST
It is expressly agreed as between the Obligors and the Lenders that the
obligation to make any payment under the Senior Documents, the Mezzanine
Documents, the Subordinated Note Documents, the Mirror Note Documents or
the Intra-Group Documents not permitted to be paid under this Clause,
shall continue and that default interest shall accrue thereon in
accordance with the provisions of the Senior Documents, the Mezzanine
Documents, the Subordinated Note Documents, the Mirror Note Documents or,
as the case may be, the Intra-Group Documents (as each is in force at the
date hereof).
13. TURNOVER
If, prior to the Senior Discharge Date and the Mezzanine Discharge Date:
(a) any Senior Lender, Mezzanine Lender, Subordinated Noteholder,
Mirror Noteholder or Intra-Group Lender receives a payment or
distribution in cash or in kind of, or on account of, any of the
Postponed Senior Liabilities, the Mezzanine Liabilities, the
Subordinated Liabilities, the Mirror Note Liabilities or, as the
case may be, Intra-Group Liabilities, in each case, not
permitted by Clause 12 (Permitted Payments) or made in
accordance with Clause 24 (Appropriation);
(b) any Mezzanine Lender or the Mezzanine Agent receives the
proceeds of any enforcement of any security conferred by the
Security Documents otherwise than in the order set out in Clause
24 (Appropriation); or
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(c) any Obligor or any member of the Group or its estate or any
liquidator, receiver or like officer consequent upon any
insolvency proceeding makes any payment or distribution in cash
or in kind on account of the purchase or other acquisition of
any of the Mezzanine Liabilities, the Subordinated Liabilities,
the Mirror Note Liabilities or Intra-Group Liabilities,
the receiving Senior Lender, Mezzanine Lender, Subordinated Noteholder,
Mezzanine Agent, Mirror Noteholder or Intra-Group Lender (as the case may
be) will forthwith pay any and all such amounts to the Security Agent
(and pending such payment such receipts shall be held on trust for
application in accordance with Clause 24 (Appropriation)) which shall be
held by the Security Agent on trust for application in accordance with
Clause 24 (Appropriation).
14. SUSPENSION OF PERMITTED PAYMENTS
14.1 EFFECT OF STOP NOTICE OR THE OCCURRENCE OF A STOP EVENT
Any Obligor may make any payment in respect of the Mezzanine Liabilities,
the Subordinated Liabilities or, as the case may be, the Mirror Note
Liabilities as expressly permitted by Clause 12 (Permitted Payments) on
the relevant payment date if, immediately prior to such payment being
made:
(a) no Stop Notice has been issued in accordance with Clause 14.2
(Right to issue a Stop Notice) which has not ceased to have
effect under Clause 14.3 (Duration of a Stop Notice); or
(b) no Stop Event has occurred and is continuing.
14.2 RIGHT TO ISSUE A STOP NOTICE
14.2.1 The Senior Agent, acting on the instructions of the Majority
Senior Lenders, shall be entitled to issue a Stop Notice only if
a Stop Notice Event has occurred and is continuing unremedied
and unwaived.
14.2.2 No Stop Notice may be served by the Senior Agent in reliance on
a particular event or circumstance more than six months after
the Senior Agent receives notice in writing from any Borrower,
Senior Lender, Mezzanine Agent, Mezzanine Lender or Subordinated
Noteholder specifying the event or occurrence constituting that
Senior Event of Default (or Potential Event of Default as
defined in the Senior Facility Agreement) and specifying that it
constitutes a Senior Event of Default (or Potential Event of
Default as defined in the Senior Facility Agreement) under the
Senior Facility Agreement.
14.2.3 No more than one Stop Notice may be served with respect to the
same particular event or circumstances, but without prejudice to
the ability of the Senior Agent to issue a Stop Notice in
respect of any other particular event or set of circumstances
whether connected in any way to the former event or set of
circumstances or not, further provided that if (x), at the time
the Senior Agent wishes to serve a Stop Notice (an "INTENDED
STOP NOTICE") in reliance on any Stop Notice Event(s), less than
360 days has elapsed since the service
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of the most recently preceding Stop Notice (the "PRIOR STOP
NOTICE") and (y) the Stop Notice Event(s) to be relied upon in
relation to the Intended Stop Notice are the same or
substantially the same as (or a direct or indirect result of) a
Stop Notice Event which was in existence at the time of the
Prior Stop Notice (the "RELEVANT EVENT(S)"), the Senior Agent
may only serve the Intended Stop Notice if the Relevant Event(s)
to be relied upon in respect of the Intended Stop Notice had
been cured or waived or complied with for at least 180 days
prior to the date of service of the Intended Stop Notice.
14.2.4 Notwithstanding anything in paragraph (a) above, no Stop Notice
may be served by the Senior Agent with respect to a Senior Event
of Default being a breach of Clause 22 (Financial Condition) of
the Senior Facility Agreement where the Parent has subsequent to
such breach, complied with the requirements of Clause 22
(Financial Condition) as demonstrated by the delivery of
accounts pursuant to Clause 20.1 or 20.2 (Financial Information)
of the Senior Facility Agreement (as appropriate).
14.3 DURATION OF A STOP NOTICE
A Stop Notice will cease to have effect on the earlier of:
(a) the date 120 days after receipt by the Mezzanine Lenders of the
Stop Notice or, if any Standstill Period is current at any time
during such 120 day period, the expiry of such Standstill
Period;
(b) the date on which the circumstances specified in the relevant
Stop Notice has been cured or waived by the Majority Senior
Lenders in writing or have ceased to be continuing;
(c) the date on which the Senior Agent, acting on the instructions
of the Majority Senior Lenders, by notice in writing to the
Mezzanine Lenders, cancels the Stop Notice; and
(d) the Senior Discharge Date.
14.4 PARTIAL PAYMENTS
Any Borrower may make a permitted payment pursuant to Clause 12
(Permitted Payments) which would otherwise be blocked by this Clause 14
to the extent that, by reduction of the amount of such permitted payment,
Clause 14 can be complied with and the relevant Lenders may by notice to
such Borrower (and the Security Agent) elect to receive part only of a
permitted payment for such purpose.
15. SUBORDINATION
15.1 SENIOR EVENT OF DEFAULT
After service of a notice under clause 24.23 (Acceleration and
Cancellation) of the Senior Facility Agreement following the occurrence
of a Senior Event of Default, notwithstanding the terms of the Finance
Documents it is agreed that:
15.1.1 all amounts payable under the Finance Documents;
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15.1.2 all proceeds of enforcement of the Security Documents; and
15.1.3 any payment or distribution of any kind or character, whether in
cash, securities or other property which is payable or
deliverable upon or with respect to the Senior Liabilities, the
Mezzanine Liabilities, the Subordinated Liabilities, the Mirror
Note Liabilities or the Intra-Group Liabilities or any part
thereof by any member of the Group or its estate or any
liquidator, receiver or like officer consequent upon its
winding-up,
shall forthwith be paid or delivered direct to the Security Agent.
15.2 SUBORDINATION ON INSOLVENCY
If:
15.2.1 there occurs any distribution, division or application, partial
or complete, voluntary or involuntary, by operation of law or
otherwise, of all or any part of the assets of any Obligor by
reason of the liquidation, dissolution or other winding-up of
any Obligor or its businesses or any sale, receivership or other
insolvency proceeding or assignment for the benefit of
creditors; or
15.2.2 any Obligor goes into liquidation or becomes subject to any
insolvency or rehabilitation proceeding, administration, or
voluntary arrangement,
then and in any such event:
(a) the Mezzanine Liabilities, the Subordinated Liabilities, the
Mirror Note Liabilities and the Intra-Group Liabilities are
subordinated to the Senior Liabilities (other than the Postponed
Senior Liabilities);
(b) the Postponed Senior Liabilities, the Subordinated Liabilities,
the Mirror Note Liabilities and the Intra-Group Liabilities are
subordinated to the Mezzanine Liabilities;
(c) the Subordinated Liabilities and the Mirror Note Liabilities and
the Intra-Group Liabilities are subordinated to the Postponed
Senior Liabilities; and
(d) the Subordinated Liabilities and the Mirror Note Liabilities are
subordinated to the Intra-Group Liabilities.
16. DISTRIBUTIONS
16.1 PAYMENT TO SECURITY AGENT
Any amounts paid or delivered to the Security Agent shall be held by the
Security Agent on trust for application in accordance with Clause 24
(Appropriation).
16.2 RECEIPT OF AMOUNTS BY LENDERS
16.2.1 If after service of notice under Clause 24.23 (Acceleration and
Cancellation) of the Senior Facility Agreement any amounts
described in Clause 15.1 (Senior Event of Default) are received
by any of the Mezzanine Lenders, the Subordinated Noteholders,
the Mirror Noteholder or the Intra-Group Lenders
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or the Senior Lenders (in respect of the Postponed Senior
Liabilities) or any person acting on their behalf with respect
to the Mezzanine Liabilities, the Subordinated Liabilities, the
Mirror Note Liabilities, the Postponed Senior Liabilities or, as
the case may be, the Intra-Group Liabilities or any part
thereof, the relevant Mezzanine Lender, Subordinated Noteholders
or Mirror Noteholder, the relevant Senior Lender in respect of
the Postponed Senior Liabilities or, as the case may be, the
relevant Intra-Group Lender (or in each case any person acting
on their behalf as aforesaid) shall forthwith pay (and pending
such payment shall hold the same on trust for the Security Agent
for the purpose hereof) an amount equal to the amount received
to the Security Agent to be held on trust and to be applied in
accordance with the terms of Clause 24 (Appropriation).
16.2.2 If after the Senior Discharge Date and after service of notice
under Clause 21.23 (Acceleration and Cancellation) of the
Mezzanine Facility Agreement any amounts described in Clause o
(Event of Default) are received by any of the Subordinated
Noteholders, the Mirror Noteholder or the Intra-Group Lenders or
any person acting on their behalf with respect to the
Subordinated Liabilities, the Mirror Note Liabilities, or, as
the case may be, the Intra-Group Liabilities or any part
thereof, the relevant Subordinated Noteholders or Mirror
Noteholder, or, as the case may be, the relevant Intra-Group
Lender (or in each case any person acting on their behalf as
aforesaid) shall forthwith pay (and pending such payment shall
hold the same on trust for the Security Agent for the purpose
hereof) an amount equal to the amount received to the Security
Agent to be held on trust and to be applied in accordance with
the terms of Clause 24 (Appropriation).
16.3 EQUIVALENT PAYMENT
If the trust referred to in Clause 16.2 (Receipt of Amounts by Lenders)
fails or cannot be given effect to, the relevant Mezzanine Lender,
Subordinated Noteholders, Mirror Noteholder, Intra Group Lender or, as
the case may be, Senior Lender will pay an amount equal to any such
payment or distribution in respect of the relevant Liabilities received
by such Lender to the Security Agent for application in accordance with
Clause 24 (Appropriation).
16.4 PAYMENT BY LIQUIDATOR
The liquidator or other insolvency representative or trustee of any
Obligor or its estate is authorised to apply any assets or moneys
received by him in accordance with the terms of this Deed or as
instructed by the Security Agent.
16.5 DISCHARGE OF LIABILITIES BY SET-OFF
Save to the extent that the payment is a permitted payment under Clause
12 (Permitted Payments) hereunder, if any Mezzanine Liabilities, any
Hedging Liabilities, any Postponed Senior Liabilities, Subordinated
Liabilities, any Mirror Note Liabilities or, as the case may be, any
Intra-Group Liabilities are discharged in whole or in part by a set-off,
the relevant Mezzanine Lender, Hedging Counterparty, Senior Lender (in
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respect of the Postponed Senior Liabilities), Subordinated Noteholders,
Mirror Noteholder or, as the case may be, the relevant Intra-Group Lender
will forthwith pay (and pending such payment shall hold the same on trust
for the Security Agent for the purpose hereof) an amount equal to the
amount of the Mezzanine Liabilities, the Hedging Liabilities, the
Postponed Senior Liabilities, the Subordinated Liabilities, Mirror Note
Liabilities or, as the case may be, the Intra-Group Liabilities
discharged by the set-off to the Security Agent to be held on trust and
to be applied in accordance with the terms of Clause 24 (Appropriation).
17. ACTION BY SECURITY AGENT
17.1 FILING OF CLAIMS
Each of the Senior Agent, the Arranger, the Senior Lenders, the Hedging
Counterparties, the Mezzanine Agent, the Mezzanine Lenders, the
Subordinated Noteholders, the Mirror Noteholder and the Intra-Group
Lenders irrevocably authorises and empowers the Security Agent to demand,
sue and prove for, collect and receive every payment or distribution
referred to in Clause 15.1 (Senior Events of Default) and give
acquittance therefor and to file claims and take such other proceedings,
in the Security Agent's own name, the name of the relevant Senior Agent,
the Arranger, the Senior Lenders, the Mezzanine Lenders, the Mezzanine
Agent, the Subordinated Noteholders, the Mirror Noteholder or, as the
case may be, the Intra-Group Lenders or otherwise, as the Security Agent
may deem necessary or advisable for the enforcement of the provisions of
this Deed or otherwise to ensure the payment of debts in accordance with
the priorities set out herein.
17.2 POWERS OF ATTORNEY
The Senior Agent, the Arranger, each Senior Lender, each Hedging
Counterparty, the Mezzanine Agent, each Mezzanine Lender, the
Subordinated Noteholders, the Mirror Noteholder and each Intra-Group
Lender hereby irrevocably appoints the Security Agent individually as its
attorney (with full power to appoint substitutes and to delegate), in its
name and on its behalf, and as its act and deed or otherwise, at any time
after the Senior Agent has issued a notice under Clause 24.23
(Acceleration and Cancellation) of the Senior Facility Agreement, or
after the Senior Discharge Date, the Mezzanine Agent has issued a notice
under Clause 24.23 (Acceleration and Cancellation) of the Mezzanine
Facility Agreement, and for so long as such Event of Default is
continuing, to execute and deliver and otherwise perfect any agreement,
assurance, deed, release (whether of security or of any claim or
liability), transfer or assignment, instrument or document, or perform
any act which may reasonably be deemed by the Security Agent (or any such
substitute or delegate) necessary or desirable to perfect any Security or
to enforce any and all claims upon or with respect to any Security
(including, without limitation, to effect any disposal or other
realisation of any or all of the assets the subject thereof), the Senior
Liabilities, the Mezzanine Liabilities, the Postponed Senior Liabilities,
the Subordinated Liabilities, the Mirror Note Liabilities or, as the case
may be, the Intra-Group Liabilities or any part thereof and to collect
and receive any and all payments or distributions which may be payable or
deliverable at any time upon or with respect to any Security or the
Senior Liabilities,
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the Mezzanine Liabilities, the Postponed Senior Liabilities, the
Subordinated Liabilities, the Mirror Note Liabilities or, as the case may
be, the Intra-Group Liabilities or any part thereof PROVIDED THAT in the
case of the power of attorney granted by the Subordinated Noteholders,
such power of attorney shall relate to the express obligations and
liabilities of the Subordinated Noteholders under the Finance Documents
and shall only be utilised following the failure of any of the
Subordinated Noteholders to perform or comply with such obligations or
liabilities.
17.3 FURTHER ASSURANCE
The Senior Agent, the Arranger, each Senior Lender, each Hedging
Counterparty, the Mezzanine Agent, each Mezzanine Lender, each
Subordinated Noteholders, the Mirror Noteholder and each Intra-Group
Lender will execute or procure the execution of and deliver to the
Security Agent such powers of attorney, assignments, releases or other
instruments as may be requested by the Security Agent from time to time
in order to enable the Security Agent (after a Default) to perform any
act which may reasonably be deemed by the Security Agent necessary or
desirable to perfect any Security or to enforce any and all claims upon
or with respect to any Security (including, without limitation, to effect
any disposal or other realisation of any or all of the assets the subject
thereof) or, as the case may be, take all action contemplated in Clause
17.1 (Filing of Claims) in his own name pursuant to his Powers of
Attorney or the Senior Liabilities, the Mezzanine Liabilities, the
Postponed Senior Liabilities, the Subordinated Liabilities, the Mirror
Note Liabilities or, as the case may be, the Intra-Group Liabilities or
any part thereof and to collect and receive any and all payments or
distributions which may be payable or deliverable at any time upon or
with respect to any Security or the Senior Liabilities, the Mezzanine
Liabilities, the Postponed Senior Liabilities, the Subordinated
Liabilities, the Mirror Note Liabilities or, as the case may be, the
Intra-Group Liabilities or any part thereof.
17.4 RATIFICATION
Without prejudice to the generality of Clause 17.2 (Powers of Attorney),
the Senior Agent, the Arranger, each Senior Lender, each Hedging
Counterparty, the Mezzanine Agent, each Mezzanine Lender, each
Subordinated Noteholder, the Mirror Noteholder and each Intra-Group
Lender hereby undertakes with the Security Agent that if required so to
do such party will ratify and confirm all transactions entered into by
the Security Agent (or any substitute or delegate) in the proper exercise
of the Power of Attorney.
17.5 PROOF IN LIQUIDATION
Without prejudice to the foregoing provisions of this Clause 17 or any
other provision hereof, nothing in this Deed shall inhibit the Senior
Lenders, the Hedging Counterparties, the Mezzanine Lenders or, with the
consent of the Security Agent, the Intra-Group Lenders, the Subordinated
Noteholders and the Mirror Noteholder from claiming or proving in the
liquidation of any relevant Obligor for the amount of the Senior
Liabilities, the Hedging Liabilities, the Mezzanine Liabilities, the
Postponed Senior Liabilities, the Subordinated Liabilities, the Mirror
Note Liabilities or, as the case may be, Intra-Group Liabilities owing to
them.
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18. RESTRICTIONS ON ENFORCEMENT
18.1 HEDGING LIABILITIES
So long as any of the Senior Liabilities (other than the Hedging
Liabilities) are or may be outstanding, the Hedge Counterparties shall
not be entitled, unless the Senior Agent has delivered a Notice under
Clause 27.21 (Acceleration and Cancellation) of the Senior Facility
Agreement:
18.1.1 to accelerate or close out any of the Hedging Liabilities or
Hedging Documents, unless at the same time as, or prior to, such
acceleration the Senior Liabilities (other than the Hedging
Liabilities) have been accelerated or make demand or claim under
any guarantee; or
18.1.2 enforce any security conferred by any of the Security Documents
by sale, possession, appointment of a receiver or otherwise or
to require any other person to enforce the same; or
18.1.3 discharge, sue for or institute legal proceedings to recover all
or any part of the Hedging Liabilities; or
18.1.4 petition, apply or vote in favour of any resolution for the
winding-up, dissolution, administration or voluntary arrangement
or any other insolvency proceeding in relation to any member of
the Group.
18.2 MEZZANINE LIABILITIES
Prior to the Senior Discharge Date, none of the Mezzanine Lenders will be
entitled to (except as expressly permitted by this Deed) unless the
Mezzanine Lenders have become, pursuant to the provisions of Clause 19
(Permitted Enforcement), entitled to enforce the Mezzanine Liabilities
and the Security Documents:
18.2.1 accelerate any of the Mezzanine Liabilities or otherwise declare
any of the Mezzanine Liabilities prematurely due and payable on
or by reason of the occurrence of a Mezzanine Event of Default
or any other circumstances howsoever described unless at the
same time, or prior to, such acceleration or declaration, the
Senior Liabilities (or any of them) have been accelerated or
make demand or claim under any guarantee; or
18.2.2 enforce any security conferred by any of the Security Documents
by sale, possession, appointment of a receiver or otherwise or
to require any other person to enforce the same; or
18.2.3 discharge, sue for or institute legal proceedings to recover all
or any part of the Mezzanine Liabilities; or
18.2.4 petition or apply or vote in favour of any resolution for the
winding-up, dissolution, administration or voluntary arrangement
or any other insolvency proceeding in relation to any member of
the Group; or
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18.2.5 save to the extent expressly permitted under Clause 12
(Permitted Payments) take or receive from any member of the
Group by cash receipt, set-off (save to the extent it may be
required to do so or the same occurs automatically by operation
of law under any applicable law) or in any other manner
whatsoever, the whole or any part of the Mezzanine Liabilities
nor any security therefor
Provided that, for the avoidance of doubt, the Mezzanine Lenders shall be
entitled to apply to a court for injunctive relief, an order for specific
performance or a declaratory order on the interpretation of any of the
Mezzanine Documents.
18.3 SUBORDINATED LIABILITIES
Prior to the occurrence of the Senior Discharge Date and the Mezzanine
Discharge Date, none of the Subordinated Noteholders (and, with respect
to Clause 18.3.3, the Voting Trustee) shall be entitled to (unless the
Subordinated Noteholders have become, pursuant to the provisions of
Clause 19 (Permitted Enforcement) entitled, to enforce the Subordinated
Liabilities):
18.3.1 accelerate (or exercise any put with respect to) any of the
Subordinated Liabilities, make demand in respect of any of the
Subordinated Liabilities or otherwise declare any of the
Subordinated Liabilities prematurely due and payable on or by
reason of the occurrence of an event of default, put event or
any other circumstances howsoever described or make demand or
claim under any guarantee (it being further agreed by the
parties hereto that to the extent that any of the Subordinated
Note Documents provide for any liability to fall due
automatically without further action by any of the Subordinated
Noteholders, such liability shall not fall due unless it relates
to any exercise of Relevant Put Rights in accordance with Clause
19.5 (Subordinated Note Enforcement); or
18.3.2 discharge, sue for or institute legal proceedings (including in
respect of any injunction) to recover, enforce or seek
compliance with all or any part of the Subordinated Liabilities
(including, without limitation, for any breach of representation
or breach of covenant or obligation) from any person; or
18.3.3 petition, apply or vote in favour of any resolution for the
winding-up, dissolution, administration or voluntary arrangement
or any other insolvency proceeding in relation to any members of
the Group, or
18.3.4 save to the extent expressly permitted under Clause 12
(Permitted Payments) take or receive from any of the member of
the Group by cash receipt, set-off (save to the extent it may be
required to do so or the same occurs automatically by operation
of law under any applicable law) or in any other manner
whatsoever, the whole or any part of the Subordinated
Liabilities nor any security therefor,
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18.4 MIRROR NOTE LIABILITIES
Prior to the occurrence of the Senior Discharge Date and the Mezzanine
Discharge Date, neither the Mirror Noteholder, nor, in the case of Clause
18.4.3, the Voting Trustee, shall not be entitled to:
18.4.1 accelerate (or exercise any put with respect to) any of the
Mirror Note Liabilities, make demand in respect of any of the
Mirror Note Liabilities or otherwise declare any of the Mirror
Note Liabilities prematurely due and payable on or by reason of
the occurrence of an event of default, put event or any other
circumstances howsoever described or make demand or claim under
any guarantee (it being further agreed by the parties hereto
that to the extent that any of the Mirror Note Documents provide
for any liability to fall due automatically without further
action by any of the Mirror Noteholders, such liability shall
not fall due unless it relates to any exercise of Relevant Put
Rights in accordance with Clause 19.5 (Subordinated Note
Enforcement); or
18.4.2 discharge, sue for or institute legal proceedings (including in
respect of any injunction) to recover, enforce or seek
compliance with all or any part of the Mirror Note Liabilities
(including, without limitation, for any breach of representation
or breach of covenant or obligation) from any person; or
18.4.3 petition, apply or vote in favour of any resolution for the
winding-up, dissolution, administration or voluntary arrangement
or any other insolvency proceeding in relation to any member of
the Group; or
18.4.4 save to the extent expressly permitted under Clause 12
(Permitted Payments), take or receive from any member of the
Group by cash receipt, set-off (save to the extent it may be
required to do so or the same occurs automatically by operation
of law under any applicable law) or in any other manner
whatsoever, the whole or any part of the Mirror Note Liabilities
nor any security therefor.
18.5 INTRA-GROUP LIABILITIES
Prior to the Senior Discharge Date and the Mezzanine Discharge Date, none
of the Intra-Group Lenders shall be entitled to without the consent of
the Senior Agent (or, after the Senior Discharge Date, the consent of the
Mezzanine Agent):
18.5.1 accelerate any of the Intra-Group Liabilities, make demand in
respect of any of the Intra-Group Liabilities or otherwise
declare any of the Intra-Group Liabilities prematurely due and
payable for any reason whatsoever; or
18.5.2 discharge, sue for or institute legal proceedings to recover all
or any part of the Intra-Group Liabilities from any person; or
18.5.3 petition, apply for or vote in favour of any resolution for the
winding-up, dissolution, administration or voluntary arrangement
or any other insolvency proceeding in relation to any of the
Obligors.
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18.5.4 save to the extent expressly permitted under Clause 12
(Permitted Payments), take or receive from any member of the
Group by cash receipt, set-off (save to the extent it may be
required to do so or the same occurs automatically by operation
of law under any applicable law) or in any other manner
whatsoever, the whole or any part of the Intra-Group Liabilities
nor any security therefor.
19. PERMITTED ENFORCEMENT
19.1 MEZZANINE ENFORCEMENT NOTICE
If any Mezzanine Event of Default occurs (otherwise than as a direct
result of a breach by any Mezzanine Lender of its obligations under the
Mezzanine Documents) and being a Mezzanine Event of Default which the
Mezzanine Agent (acting on the instructions of the Majority Mezzanine
Lenders) certifies to the Senior Lenders as being material in the opinion
of the Majority Mezzanine Lenders, the Mezzanine Agent may by written
notice to the Senior Agent specifying the Mezzanine Event of Default (a
"MEZZANINE ENFORCEMENT NOTICE") request the Senior Agent to inform the
Mezzanine Agent whether it is proposed to enforce the security conferred
by the Security Documents.
19.2 MEZZANINE ENFORCEMENT
If the Senior Agent within 60 days of such notice informs the Mezzanine
Agent that it is proposed to enforce the Security Documents or if the
Senior Agent does not respond within such 60 days, and if in either case
the Senior Lenders are entitled to procure enforcement of the Security at
that time and subject to Clause 21.3 (Manner of Mezzanine Enforcement),
then promptly thereafter the Senior Lenders will instruct the Security
Agent to enforce the Security and the Security Agent will enforce the
Security Documents by the taking of such steps as it deems appropriate in
accordance with its powers and duties including taking action in its own
name failing which the Mezzanine Agent may so instruct the Security Agent
and the Security Agent shall so enforce.
19.3 ENFORCEMENT BY MEZZANINE LENDERS
If the Senior Agent informs the Mezzanine Agent within such 60 days that
it is not proposed to enforce the Security Documents, then, not earlier
than 90 days, in the case of a Mezzanine Event of Default relating to
failure to pay an amount (whether of principal, interest, fees or
otherwise) due under the Mezzanine Documents, or 120 days, in the case of
a Mezzanine Event of Default relating to a breach of the financial
covenants contained in Clause 17 (Financial Condition) of the Mezzanine
Facility Agreement or 150 days, in the case of any other Mezzanine Event
of Default, after the service of the Enforcement Notice (each such period
being a "MEZZANINE STANDSTILL PERIOD") and PROVIDED THAT the same
Mezzanine Event of Default (by reference to the same event or
circumstance) referred to in such Enforcement Notice is continuing at the
expiry of the Mezzanine Standstill Period and subject to Clause 21.3
(Manner of Enforcement), the Mezzanine Agent may declare the Mezzanine
Liabilities due and payable and require the Secured Beneficiaries to
instruct the Security Agent to enforce and the Security Agent will
enforce the Security Documents by the taking of such steps
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as the Security Agent deems appropriate in accordance with its powers and
duties including, by taking action in its own name.
19.4 DEMANDS AGAINST MEZZANINE GUARANTORS
The Mezzanine Lenders (or the Mezzanine Agent) may not make any demand on
or take any other action against any Obligor in relation to the Mezzanine
Liabilities in circumstances which would otherwise be permitted by this
Clause 19 (Permitted Enforcement) where the Security Agent (or any
receiver appointed pursuant to any of the Security Documents), acting on
the instructions of the Majority Senior Lenders and in accordance with
the terms hereof, confirms to the Mezzanine Lenders in writing that it is
enforcing or taking steps to enforce security or has enforced security
conferred by any of the Security Documents over the shares of such
Obligor or over the shares of any holding company of such Obligor by
selling or procuring the sale of all such shares (or rights relating
thereto) which are subject to such security, and has not subsequently
notified the Mezzanine Lenders (or the Mezzanine Agent) to the contrary
in writing (and, if applicable, the Security Agent undertakes to notify
or procure that any such receiver (or similar officer in any
jurisdiction) notifies the Mezzanine Lenders (or the Mezzanine Agent)
promptly upon such enforcement being discontinued).
19.5 INSOLVENCY OF A MEZZANINE OBLIGOR
If an insolvency proceeding, winding-up, liquidation or dissolution is
begun and not discharged within the remedy period specified in the
Mezzanine Facility Agreement in relation to the Mezzanine Borrower or any
Mezzanine Guarantor, the Mezzanine Agent may at any time thereafter
notify the Senior Agent thereof and then (subject to Clause 21 (Manner of
Enforcement)) the Senior Agent shall require the Secured Beneficiaries to
instruct the Security Agent to enforce, the Mezzanine Agent may declare
the Mezzanine Liabilities due and payable and the Security Agent will,
acting pursuant to its Powers of Attorney, enforce the Security
Documents, whereupon the Secured Beneficiaries shall promptly instruct
the Security Agent to enforce and the Security Agent will, acting
pursuant to its Powers of Attorney, enforce the Security Documents (if
entitled to do so) by the taking of such steps as the Senior Agent may
instruct.
19.6 MEZZANINE ENFORCEMENT FOLLOWING ACCELERATION OF SENIOR DEBT
Notwithstanding the other provisions of this Clause 19, on an
acceleration of the Senior Liabilities pursuant to Clause 24.23
(Acceleration and Cancellation) of the Senior Facility Agreement the
Mezzanine Agent and Mezzanine Lenders may immediately accelerate the
Mezzanine Liabilities.
19.7 SUBORDINATED NOTE ENFORCEMENT
19.7.1 If any Subordinated Put Event occurs, the Purchasers'
Representative may by written notice to the Security Agent,
specifying the Subordinated Put Event (a "SUBORDINATED
ENFORCEMENT NOTICE"), inform the Security Agent that one or more
Subordinated Noteholders wishes to exercise their rights under
Article VII or, as the case may be, Article VIII of the
Securities Purchase Agreement. Following the receipt of the
Subordinated Enforcement Notice by the Security
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Agent, the Subordinated Noteholders specified in the
Subordinated Enforcement Notice may exercise the Relevant Put
Rights.
19.7.2 The Subordinated Noteholders (or the Purchaser's Representative
on their behalf) may take action against the Subordinated Note
Issuer (including the commencement of legal proceedings) seeking
specific performance or, as the case may, an injunction in order
to ensure compliance with the Subordinated Note Documents but
shall not seek any damages or other monetary amounts. Without
prejudice to the foregoing, if any amount of damages or other
monetary amount is declared or awarded such amount shall not be
paid and shall be treated as a Subordinated Liability.
19.8 INSOLVENCY OF THE MIRROR NOTE ISSUER
If an insolvency proceeding, winding-up, liquidation or dissolution is
begun (and not discharged within 28 days) in relation to the Mirror Note
Issuer, the Subordinated Noteholders may exercise the acceleration rights
as referred to in Section 17.2 of the Securities Purchase Agreement.
20. PRESERVATION
Each of the Senior Agent, the Senior Lenders, the Mezzanine Agent, the
Mezzanine Lenders, the Subordinated Noteholders, the Mirror Noteholder
and the Intra-Group Lenders agrees that the subordination effected hereby
shall be in addition to and shall not prejudice or affect any security or
any right or remedy of the Senior Lenders and the Hedge Counterparties in
respect of the Senior Liabilities, the Mezzanine Lenders in respect of
the Mezzanine Liabilities or the Subordinated Noteholders in respect of
the Subordinated Liabilities and each of the Senior Agent, the Senior
Lenders, the Mezzanine Agent, the Mezzanine Lenders, the Subordinated
Noteholders, the Mirror Noteholder and the Intra-Group Lenders hereby
agrees that:
20.1.1 the obligations and liabilities of each of the Obligors, or any
other party or parties, for or in respect of the Senior
Liabilities and the Mezzanine Liabilities (subject to the
provisions of this Deed) may in whole or in part, be renewed,
extended, amended, supplemented, novated, accelerated,
compromised, terminated, sold, transferred, exchanged, waived or
released;
20.1.2 the Senior Lenders, the Hedge Counterparties and the Mezzanine
Lenders may exercise or refrain from exercising any right,
remedy or power granted by the Security Documents or any other
document creating, evidencing or otherwise related to the Senior
Liabilities, the Mezzanine Liabilities or any Encumbrance or
guarantee held, given or intended to be given therefor
(including, without limitation, the right to perfect any
Encumbrance or guarantee created in connection therewith);
20.1.3 (subject to the provisions of this Deed) any and all
Encumbrances or guarantees at any time, present or future, held,
given or intended to be given for the Senior Liabilities or the
Mezzanine Liabilities, and any rights or
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remedies of the Senior Lenders, the Hedge Counterparties and the
Mezzanine Lenders in respect thereof may, from time to time, in
whole or in part, be exchanged, sold, transferred, released,
modified, waived or extended by the Senior Lenders, the Hedge
Counterparties or the Mezzanine Lenders; and
20.1.4 any balance or balances of funds with the Senior Lenders, the
Hedge Counterparties or the Mezzanine Lenders at any time
standing to the credit of any of the Obligors may, from time to
time, in whole or in part, be surrendered or released,
and that all of the above shall be without impairing, abridging,
diminishing, releasing or affecting the subordination or ranking of
Liabilities provided for herein.
21. ENFORCEMENT OF SECURITY
21.1 SENIOR AGENT ENTITLED TO INSTRUCT
If, prior to the Senior Discharge Date, the Senior Agent has issued a
notice under Clause 24.23 (Acceleration and Cancellation) of the Senior
Facility Agreement, then the Senior Agent shall be entitled to instruct
each other Secured Beneficiary to instruct the Security Agent, either
acting on its own behalf or acting pursuant to its Powers of Attorney, to
enforce the Security and any of the Liabilities and each Secured
Beneficiary shall be bound to do so.
21.2 MEZZANINE AGENT ENTITLED TO INSTRUCT
Following the Senior Discharge Date, if the Mezzanine Agent has issued a
notice under Clause 21.23 (Acceleration and Cancellation) of the
Mezzanine Facility Agreement, then the Mezzanine Agent shall be entitled
to instruct each other Secured Beneficiary to instruct the Security
Agent, either acting on its own behalf or acting pursuant to its Powers
of Attorney, to enforce the Security and any of the Liabilities and each
Secured Beneficiary shall be bound to do so.
21.3 MANNER OF ENFORCEMENT
The Secured Beneficiaries will procure the enforcement of the Security
Documents pursuant to Clause 21.1 (Senior Agent Entitled to Instruct) or
Clause 21.2 (Mezzanine Agent entitled to Instruct) only at the request of
the Senior Agent or, as the case may be, at the request of the Mezzanine
Agent. In relation to the manner of enforcement (apart from the decision
or right to commence an enforcement, which shall be in accordance with
the other provisions of this Deed) of the Security Documents, the Secured
Beneficiaries and the Security Agent will always act on the directions of
the Senior Agent or, after the Senior Discharge Date, the Mezzanine
Agent. The Senior Agent or, after the Senior Discharge Date, the
Mezzanine Agent is entitled to give such directions and do such other
things in relation to the enforcement of the Security Documents as it
considers appropriate including (without limitation) determining the
timing and manner of enforcement against any particular person or asset.
Any partial enforcement of the Security Documents will be considered to
be an enforcement of the security for the purposes of this Deed.
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21.4 INSURANCE PROCEEDS
Each of the Mezzanine Agent and the Mezzanine Lenders waives, as against
the Senior Lenders and the Hedge Counterparties any right it may have of
requiring that insurance proceeds be applied in reinstatement of any
assets subject to the security constituted by the Security Documents in
the event that such insurance proceeds are to be applied in or towards
the repayment of the Senior Liabilities.
21.5 ENFORCEMENT AND THE OBLIGORS
The Obligors shall have no right to be consulted in relation to or object
to any enforcement or other action by the Secured Beneficiaries in
relation to the Finance Documents.
22. SALES BY SECURITY AGENT OR AN OBLIGOR
Without prejudice to the provisions of Clause 21 (Enforcement of
Security), if:
22.1.1 pursuant to an enforcement of any of the Security Documents, the
Security Agent (or any Secured Beneficiary acting through the
Security Agent and/or, as the case may be, the Common
Representative as its attorney pursuant to the Powers of
Attorney) on the instructions or with the consent, if prior to
the Senior Discharge Date, of the Majority Senior Lenders or, if
after the Senior Discharge Date but prior to the Mezzanine
Discharge Date or pursuant to an enforcement by the Mezzanine
Lenders pursuant to Clause 19.3 (Enforcement by Mezzanine
Lenders), the Majority Mezzanine Lenders, sells or otherwise
disposes of any assets; or
22.1.2 the Obligor concerned sells or otherwise disposes of any assets
at the request of the Senior Agent after a Senior Event of
Default, or, if after the Senior Discharge Date but before the
Mezzanine Discharge Date, the Mezzanine Agent after a Mezzanine
Event of Default (PROVIDED THAT the proceeds of such sale or
disposal are being applied in repayment or prepayment of the
Senior Liabilities or Mezzanine Liabilities as the case may be),
the Security Agent is hereby authorised by each of the Senior Lenders,
the Hedge Counterparties and the Mezzanine Lenders to execute on behalf
of itself and, pursuant to the Powers of Attorney, each such Senior
Lender and Hedge Counterparty (if prior to the Senior Discharge Date) or
each such Mezzanine Lenders, without the need for any further referral to
or authority from such Senior Lender, Hedge Counterparty, Mezzanine
Lender, any release of the security created by the Security Documents or
other claim over that asset and, if such asset comprises all of the
shares in the capital of any Obligor, the Security Agent is hereby
further authorised to execute on behalf of each of the Senior Lenders,
the Hedge Counterparties and the Mezzanine Lenders, without the need for
any further referral to or authority from such Senior Lender, Hedge
Counterparty or Mezzanine Lender, a release of such Obligor from all
past, present and future liabilities (both actual or contingent
including, without limitation, any liability to any member of the Group
or to any of the Beneficiaries under the Finance Documents or otherwise
by way of guarantee, contribution or indemnity) and
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to release any Encumbrance granted over the relevant shares or any other
assets the subject of the disposal (and the Lenders each undertake to
execute such releases or other documents as may be necessary to give
effect to the above-mentioned releases and disposals) provided that in
each such case the proceeds are to be applied in the manner provided for
in this Deed.
23. PRIORITY OF SECURITY
23.1 PRIORITY OF SECURITY
23.1.1 The Security conferred by the Security Documents on the Secured
Beneficiaries will, to the extent that it secures Senior
Liabilities (other than the Postponed Senior Liabilities)
subject to Clause 10 (Undertakings in Respect of Senior
Liabilities):
(a) rank in all respects prior to existing and future
security conferred by the Security Documents on the
Mezzanine Lenders, regardless of order of registration,
notice, execution or otherwise; and
(b) secure all the Senior Liabilities (other than the
Postponed Senior Liabilities) in priority to the
Mezzanine Liabilities, regardless of the date upon which
the Senior Liabilities arise, regardless of whether a
Senior Lender is obliged to advance monies included in
the Senior Liabilities, and regardless of any
fluctuations in the amount of Senior Liabilities
outstanding or any intermediate discharge of the Senior
Liabilities in whole or in part.
23.1.2 The Security conferred by the Security Documents on the Secured
Beneficiaries will, to the extent that it secures the Mezzanine
Liabilities:
(a) rank in all respects prior to any existing and future
security conferred by the Security Documents on the
Senior Lenders but only to the extent that such security
only secures Postponed Senior Liabilities; and
(b) secure all the Mezzanine Liabilities in priority to the
Postponed Senior Liabilities, regardless of the date upon
which the Mezzanine Liabilities arise, regardless of
whether a Mezzanine Lender is obliged to advance monies
included in the Mezzanine Liabilities, and regardless of
any fluctuations in the amount of the Mezzanine
Liabilities outstanding or any intermediate discharge of
the Mezzanine Liabilities in whole or in part.
23.2 LENDERS TO CO-OPERATE
The Mezzanine Agent and each Lender will take such action as the Senior
Agent may reasonably request with a view to reflecting the priority of
the security conferred by the Security Documents in any register or with
any filing or registration authority and in giving notice to insurers,
debtors liable for receivables covered by the security conferred by the
Security Documents and other persons.
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23.3 FURTHER ACTIONS TO EVIDENCE PRIORITY
In the event of any Beneficiary taking any collateral, additional or
substituted security for all or any part of the Senior Liabilities or the
Mezzanine Liabilities respectively, such Beneficiary and each of the
Obligors, the Security Agent respectively undertake to execute such
documents and do such other acts or things as may be necessary to
evidence the priority of such security in the manner established by this
Deed.
23.4 ENCUMBRANCE EXISTING IN BREACH
In the event of any of the Obligors, the Intra-Group Lenders, the Mirror
Noteholder, the Subordinated Noteholders, the Mezzanine Agent or the
Mezzanine Lenders breaching the terms of sub-clause 4.1.6 of Clause 4
(Undertakings of the Obligors), sub-clause 5.1.2 of Clause 5
(Undertakings of the Intra-Group Lenders) or sub-clause 6.1.3 of Clause 6
(Undertakings of the Mirror Noteholder) or sub-clause 7.1.2 of Clause 7
(Undertakings of the Subordinated Noteholders) or sub-clause 8.1.3 of
Clause 8 (Undertakings of the Mezzanine Lenders) (as applicable), the
Encumbrance, guarantee, indemnity so granted or given shall be deemed to
have been granted or given in favour of the Security Agent to hold on the
trusts created by this Deed.
24. APPROPRIATION
24.1 ORDER OF APPLICATION
All amounts received by each Beneficiary pursuant to any enforcement of
Security or otherwise with respect to any of the Liabilities shall be
immediately paid by such Beneficiary to the Collection Account to be held
therein by the Security Agent for the account of the Beneficiaries in
accordance with the terms of this Deed and after providing for all of its
outgoings, costs, charges, expenses and liabilities incurred by or on
behalf of itself and any receiver, attorney or agent in connection with
carrying out duties and exercising its powers and discretions under the
Security Documents and any remuneration due to it or to any receiver and
for payments ranking in priority as a matter of law, amounts standing to
the credit of the Collection Account shall be applied by the Security
Agent:
24.1.1 first, in or towards payment of all amounts due to the Senior
Agent or the Security Agent and which comprise Senior
Liabilities;
24.1.2 secondly in or towards payment to the Senior Lenders of amounts
up to in aggregate the amount of the Senior Liabilities other
than the Postponed Senior Liabilities to be distributed pro rata
to the Senior Lenders and the Hedge Counterparties;
24.1.3 thirdly, in or towards payment of all amounts due to the
Mezzanine Agent and which comprise Mezzanine Liabilities;
24.1.4 fourthly in or towards payment to the Mezzanine Lenders of
amounts up to in aggregate the amount of the Mezzanine
Liabilities provided either:
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(a) if any Senior Liabilities other than the Postponed Senior
Liabilities are or may be outstanding, such payment may
be made under Clause 12 (Permitted Payments); or
(b) the Senior Discharge Date has occurred,
to be distributed pro rata to the Mezzanine Lenders;
24.1.5 fifthly in or towards payment to the Senior Lenders of amounts
up to in aggregate the amount outstanding in respect of the
Postponed Senior Liabilities;
24.1.6 sixthly in or towards payment to the Mirror Noteholder and the
Subordinated Noteholders of amounts up to in aggregate the
amount outstanding in respect of the Mirror Note Liabilities or,
as the case may be, the Subordinated Liabilities; and
24.1.7 seventhly in or towards payment to the Intra-Group Lenders of
amounts up to in aggregate the amounts outstanding in respect of
the Intra-Group Liabilities.
24.2 APPLICATION OF BALANCE
Any balance held by the Security Agent in the Collection Account shall be
subsequently applied in accordance with sub-clauses 24.1.1 to 24.1.7 of
Clause 24.1 (Order of Application) as and when relevant amounts become
due and may be so applied. Any balance held by the Security Agent on
irrevocable discharge by payment in full of the Liabilities, shall (after
providing for payments ranking in priority as a matter of law) be paid to
the relevant Obligor or to such other person as may be entitled thereto.
25. DISCHARGE OF SENIOR LIABILITIES
On the Senior Discharge Date, all the rights of the Senior Agent and the
Senior Lenders under the Finance Documents in respect of the Senior
Liabilities (other than the Postponed Senior Liabilities) shall (to the
extent that the Senior Lenders and/or the Senior Agent is or are entitled
to do so) automatically be assigned to and assumed by the Mezzanine Agent
for and on behalf of the Mezzanine Lenders and thereafter references in
this Deed to the Senior Agent shall be deemed to be references to the
Mezzanine Agent.
26. OBLIGORS' ACKNOWLEDGEMENT
26.1 OBLIGORS' ACKNOWLEDGEMENT
Each of the Obligors recognises the undertakings and obligations to
and on the parts of the Beneficiaries herein contained and
26.1.1 expressly authorises them (and the Security Agent as their
attorney pursuant to the Powers of Attorney) to enforce the
Security Documents in the manner provided for herein; and
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26.1.2 irrevocably waives any rights which each respectively or
collectively may now or in the future have to challenge or have
set aside any arrangement relating to:
(a) the placing of the proceeds of the enforcement of the
Security Documents in the Collection Account or any
suspense account; or
(b) any other matter or thing regarding the order of
enforcement of the Security Documents and the priority of
the application of the proceeds of such enforcement; and
26.1.3 confirms that none of them have any right to enforce any
agreement, arrangement or understanding herein contained or to
claim any right of estoppel in relation hereto.
26.2 PRESERVATION OF SUBORDINATED AND MEZZANINE LIABILITIES
Except where expressly provided in this Deed, nothing contained in this
Deed is intended to or shall impair, as between any Obligor and any
Lender, the obligations of any Obligor under any of the Finance
Documents. Each Obligor expressly acknowledges that no failure or delay
by any Lender in exercising any of their respective rights in relation to
any of the Liabilities as a result of the provisions of this Deed shall
operate as a waiver or variation of its rights with respect thereto.
27. DEFENCES
The provisions of this Deed shall not be affected, impaired or revoked by
any act, omission, transaction, limitation, matter, thing or circumstance
whatsoever which but for this provision might operate to affect the
priorities of any of the Security Documents or the subordination provided
for herein including without limitation:
27.1.1 any time, waiver or indulgence granted to any Obligor or any
other person;
27.1.2 the taking of any other Encumbrance from any Obligor or any
other person or the variation, compromise, renewal or release
of, or the failure, refusal or neglect to take, perfect or
enforce, any rights, remedies or Encumbrances from or against
any Obligor or any other person or all or any part of the
security constituted by the Security Documents or any other
document;
27.1.3 any legal limitation, disability, incapacity or other
circumstances relating to any Obligor or any other person; or
27.1.4 any amendment, supplement to or novation of any of the Finance
Documents.
28. DISCLOSURE
Each of the Obligors hereby consents, so long as any of the security
constituted by the Security Documents shall remain subsisting, to the
disclosure by any of the Beneficiaries to each other of such information
concerning such Obligor to such extent as any Beneficiary shall see fit.
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29. REPAYMENTS
29.1 REPAYMENTS
No such payments, receipts or amounts in respect of set off as described
in Clause 13 (Turnover), 16.2 (Receipt of Amounts by Lenders) or 16.5
(Discharge of Liabilities by Set-off) shall, as between any Obligor and
its creditors, be deemed to constitute payment by any Obligor to any
Beneficiary in respect of any of the Liabilities and the Obligor shall
indemnify the relevant Beneficiary on demand in respect of any amount
which is required to be paid by such Beneficiary to another person
pursuant to the provisions referred to above.
29.2 TRANSFERS OF SENIOR AND HEDGING LIABILITIES
If at any time and for so long as the Mezzanine Lenders are not entitled
to receive payments pursuant to Clause 14 (Suspension of Permitted
Payments), the Mezzanine Agent (acting on the instructions of the
Majority Mezzanine Lenders) shall be entitled to request that the Senior
Lenders and the Hedge Counterparties shall transfer to the Mezzanine
Lenders in accordance with Clause 39 (Assignments and Transfers) of the
Senior Facility Agreement (or, as the case may be, in accordance with the
Hedging Documents) all (and not part only) of their rights and
obligations in respect of the Senior Liabilities and Hedging Liabilities
whereupon:
29.2.1 to the extent that they are lawfully able to do so; and
29.2.2 upon receipt by the Senior Agent of the amounts referred to in
Clause 29.3 (Payment by Mezzanine Lenders),
each of the Senior Lenders and the Hedge Counterparties shall as soon as
reasonably practicable after such receipt so transfer all of its rights
and obligations in respect of the Senior Liabilities or, as the case may
be, the Hedging Liabilities to such person or persons as the Mezzanine
Agent shall reasonably request.
29.3 PAYMENT BY MEZZANINE LENDERS
In consideration of the Senior Lenders and the Hedge Counterparties
transferring their rights and obligations in respect of the Senior
Liabilities or, as the case may be, the Hedging Liabilities as provided
for in Clause 29.2 (Transfer of Senior Liabilities), the Mezzanine
Lenders (in such proportions as they may agree) shall pay to the Senior
Agent for the account of the Senior Lenders or, as the case may be, the
Hedge Counterparties and in the currency in which the same are
outstanding or incurred:
29.3.1 an amount equal to all amounts then due to the Senior Agent and
the Senior Lenders in respect of the Senior Liabilities or
outstanding in respect thereof (whether or not due) including by
way of principal, interest or otherwise (including cash
collateral for any contingent obligations or liabilities);
29.3.2 an amount equal to all amounts then due to the Hedge
Counterparties in respect of the Hedging Liabilities or
outstanding in respect thereof (whether or not due) including by
way of principal, interest or otherwise;
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29.3.3 an amount equal to all the costs which will be incurred by the
Senior Lenders (or any of them) in terminating any arrangements
which they may have made to fund such due or outstanding
amounts; and
29.3.4 any fees, costs or expenses (including legal fees) which the
Senior Agent, the Senior Lenders, the Hedge Counterparties or
any of them may properly incur in connection with effecting such
transfer,
all as certified by the Senior Agent to the Mezzanine Agent within 10
business days of receipt of the request for such transfer.
30. AMENDMENTS
The provisions of this Deed may not be amended (otherwise than in
accordance with the terms hereof) except by written agreement between the
Security Agent, the Senior Agent, the Senior Lenders, the Hedge
Counterparties, the Mezzanine Agent, the Mezzanine Lenders, the
Subordinated Noteholders, the Mirror Noteholder and, if any such
amendment would impose upon or vary any obligation or right of the
Intra-Group Lenders, or any Obligor, then the consent and agreement of
such party to such amendment shall be required.
31. REPORTS
Nothing in this Deed shall prevent any of the parties hereto making a
claim for costs or damages in relation to the Reports PROVIDED THAT:
31.1.1 before any party to this Deed (other than the Security Agent,
the Common Representative, the Senior Agent, the Arranger or the
Senior Lenders) takes such action it will consult with the other
parties to this Deed on the nature of such action to be taken;
and
31.1.2 if any Lender (other than (save in respect of the Postponed
Senior Liabilities) the Senior Lenders) receives any money
before the discharge in full of the Senior Liabilities as a
result of making any claim for costs or damages in relation to
any Report, it should pay an amount equal to the amount of such
monies (less the costs and expenses directly incurred in making
such claim) into the Collection Account to be held and be
applied in accordance with the terms of this Deed and, in
particular, Clause 24 (Appropriation).
32. NEW INTRA-GROUP LENDERS AND BORROWERS
If at any time there shall be any indebtedness owed by one member of the
Group to another member of the Group which (a) does not constitute an
Intra-Group Liability, and (b) represents Financial Indebtedness of a
member of the Group, and (c) is of an amount in excess of (pounds
sterling)500,000, the Parent shall procure that such indebtedness becomes
an Intra-Group Liability and that the debtor and creditor in respect
thereof become party hereto as an Intra-Group Borrower and Intra-Group
Lender respectively by execution of a Deed of Accession.
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33. NOTICES
33.1 NOTICES IN WRITING
Each communication to be made hereunder shall be made in writing and,
unless otherwise stated, shall be made by fax or letter.
33.2 DELIVERY OF NOTICES
Any communication or document to be made or delivered by one person to
another pursuant to or in connection with this Deed shall (unless that
other person has by fifteen days' written notice to the one specified
another address or fax number) be made or delivered to that other person
at the address or fax number identified with its signature below and
shall if by way of fax be deemed to have received when transmission has
been completed or (in the case of any communication made by letter) when
left at that address or (as the case may be) ten days after being
deposited in the post, postage prepaid, in an envelope addressed to it at
that address PROVIDED that if such communication or document would
otherwise be deemed to have been received on a day which is not a
business day it shall be deemed to have been received on the next
subsequent business day.
33.3 ENGLISH LANGUAGE
Each communication and document made or delivered by one party to another
pursuant to this Agreement shall be in the English language.
34. MISCELLANEOUS
34.1 COUNTERPARTS
This Deed may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which, when
executed and delivered, shall constitute an original, but all the
counterparts shall together constitute one and the same instrument.
34.2 OBLIGATIONS BINDING
The obligations of the parties who have executed this Deed shall not be
affected by the fact that not all of the parties hereto have validly
executed this Deed and such obligations shall be binding inter se.
34.3 SEVERABILITY
If any provision of this Deed is prohibited or unenforceable in any
jurisdiction in relation to any party hereto, such prohibition or
unenforceability shall not invalidate the remaining provisions hereof or
affect the validity or enforceability of such provision in any other
jurisdiction or in relation to any of the other parties hereto.
34.4 INTEREST ON OVERDUE AMOUNTS
Each amount payable by the Senior Lenders, the Hedging Counterparties,
the Mezzanine Lenders, the Subordinated Noteholders, the Mirror
Noteholder or the Intra-Group Lenders into the Collection Account or
otherwise to the Security Agent which is not paid when due and payable
shall carry interest until paid (as well before as after
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judgement) payable on demand at a rate of interest as would equal the
cost to the Security Agent of borrowing such amount as determined by the
Security Agent.
34.5 BENEFICIARIES ACKNOWLEDGEMENT
The Beneficiaries hereby acknowledge that the certificate of the Senior
Agent concerning the amounts due to each Beneficiary in respect of the
payment obligations of the Obligors under the Senior Documents and of the
Mezzanine Agent concerning the amounts due to each Beneficiary in respect
of the payment obligations of the Obligors under the Mezzanine Documents,
shall be binding upon each Beneficiary hereunder in the absence of
manifest error.
34.6 PRIORITY CUMULATIVE
The priority and subordination provisions of this Deed are cumulative.
34.7 DEED TO OVERRIDE
This Deed overrides anything in the Finance Documents.
34.8 DEED SHALL NOT CONSTITUTE SECURITY
The parties hereto confirm that this Deed shall not constitute nor create
nor is it intended to constitute or create any Encumbrance on the part of
the Lenders.
34.9 AGENT RESIGNATION
None of the Senior Agent or Mezzanine Agent may resign or be removed as
specified in the Senior Facility Agreement or the Mezzanine Facility
Agreement (as the case may be) unless a replacement Senior Agent or
Mezzanine Agent agrees with all other parties hereto to become the
replacement agent under this Deed by execution of a Deed of Accession.
34.10 SENIOR AGENT NOTIFICATION
Promptly after the Senior Agent has been notified by the Senior Lenders
and the Hedge Counterparties that the Senior Liabilities have been
irrevocably paid in full, the Senior Agent shall confirm this fact in
writing to the Mezzanine Agent.
34.11 SEVERAL OBLIGATIONS
The obligations of each Beneficiary are several and no Beneficiary shall
be responsible or liable for the acts or omissions of any other
Beneficiary.
35. ASSIGNMENTS AND TRANSFERS
35.1 LENDER ENTITLED TO BENEFIT OF DEED
The parties hereto confirm that any person becoming a Lender (by the
execution of a substitution or transfer certificate or otherwise) shall
be entitled to the benefit of the provisions contained herein as if it
had been originally named a party hereto. Each party hereto makes an
irrevocable offer, without the need for any further action, to each such
person which may be accepted by such person becoming a Lender. In
addition each party hereto (including parties subsequently becoming bound
by this Deed) irrevocably authorises prior to the Senior Discharge Date,
the Senior Agent and thereafter, the Mezzanine Agent to agree, on its
behalf with any other person intended
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to become a party hereto as a Lender to the execution of a Deed of
Accession so as to make such person a party to this Deed as a Lender. The
parties hereto agree that this authorisation is given to secure the
interests of the parties under this Deed and is accordingly irrevocable.
35.2 DEED OF ACCESSION
The parties hereto agree that none of the Senior Lenders, the Mezzanine
Lenders, the Subordinated Noteholders, the Mirror Noteholder or, as the
case may be, the Intra-Group Lenders will assign or transfer to any
person the whole or any part of their rights or obligations in respect of
the Senior Liabilities or the Mezzanine Liabilities, the Subordinated
Liabilities, the Mirror Note Liabilities or, as the case may be, the
Intra-Group Liabilities unless the assignee or transferee previously or
simultaneously agrees with the other parties hereto to be bound by the
provisions of this Deed as if it was named herein and subject to the same
rights and obligations (mutatis mutandis) as the Senior Lenders, the
Mezzanine Lenders, the Subordinated Noteholders, the Mirror Noteholder
or, as the case may be, the Intra-Group Lenders and executes and
delivers, prior to the Senior Discharge Date, to the Security Agent and
thereafter, the Mezzanine Agent, a Deed of Accession. In the event that
any person not already a party hereto acquires by way of subrogation or
otherwise any right or interest in the Mezzanine Liabilities, the
Subordinated Liabilities, the Mirror Note Liabilities or, as the case may
be, the Intra-Group Liabilities, the Lender previously entitled to such
rights or interest shall procure that such person shall enter into a Deed
of Accession so as to become party hereto as a Mezzanine Lender,
Subordinated Noteholder, Mirror Noteholder or, as the case may be,
Intra-Group Lender.
35.3 NO TRANSFER OF MIRROR LIABILITIES
The Mirror Noteholder undertakes not to assign, transfer or otherwise
create any rights or interest in any of the Mirror Liabilities (otherwise
than under the Security Documents).
35.4 ACCESSION AS AN OBLIGOR
If any person becomes liable for (except as a provider) any of the
Liabilities, the Parent will procure that such person will become a party
hereto as an Obligor by the execution of a Deed of Accession. The Parent
shall not permit any person to become a guarantor or otherwise liable for
(except as a provider) any of the Mezzanine Liabilities, the Subordinated
Liabilities, the Mirror Note Liabilities or the Intra-Group Liabilities
unless the prior written consent of the Senior Agent shall first have
been obtained.
35.5 NO DETACHMENT OF WARRANTS
Each of the Subordinated Noteholders undertakes that it will not assign,
transfer or otherwise create any rights or interest in any of the
Subordinated Notes in favour of any person unless it assigns, transfers
or otherwise creates rights with respect to an equivalent number of
Warrants in favour of the same person.
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36. THE SECURITY AGENT
36.1 APPOINTMENT OF SECURITY AGENT
Each of the Beneficiaries hereby appoints the Security Agent to act as
its trustee in connection herewith and authorises the Security Agent to
exercise such rights, powers and discretions as are specifically
delegated to the Security Agent by the terms hereof together with all
rights, powers and discretions as are reasonably incidental thereto or
necessary to give effect to the trusts hereby created and each of the
Secured Beneficiaries irrevocably authorises the Security Agent on its
behalf to enter into any and each Security Document.
36.2 TRUST PROPERTY
The Security Agent shall stand possessed of any Secured Property (or any
proceeds thereof) received by it upon trust for the benefit of the
Secured Beneficiaries on the terms and subject to the conditions set out
in this Deed. It is hereby agreed that, in relation to any jurisdiction
the courts of which would not recognise or give effect to the trust
expressed to be created by this Deed, the relationship of the Secured
Beneficiaries to the Security Agent shall be construed as one of
principal and agent but, to the extent permissible under the laws of such
jurisdiction, all the other provisions of this Deed shall have full force
and effect between the parties hereto.
36.3 DIRECTIONS
The Secured Beneficiaries shall not exercise any independent power which
they may have to enforce the Security Documents or to exercise any
rights, discretions or powers or to grant any consents or releases under
or pursuant to the Security Documents or otherwise exercise direct
recourse to the security constituted by the Security Documents except
through the Security Agent either acting on its own behalf or acting
pursuant to its Powers of Attorney. Subject to Clause 36.9 (Provision of
Directions and Information) (and subject to its being indemnified to its
satisfaction), the Security Agent shall take such action (including,
without limitation, the exercise of all rights, discretions or powers and
the granting of consents or releases) or, as the case may be, refrain
from taking such action under or pursuant to this Deed and the Security
Documents as the Senior Agent or, subject to the terms hereof, the
Mezzanine Agent shall specifically direct the Security Agent in writing
(and so that only the Senior Agent or, subject to the terms hereof, the
Mezzanine Agent shall be entitled to give any such directions to the
Security Agent. Unless and until the Security Agent shall have received
such directions, the Security Agent shall not take any action under this
Deed or the Security Documents. The provisions of the preceding two
sentences of this Clause shall not apply where the terms of the Security
Documents entitle the Security Agent to take, or refrain from taking, any
action and in any such case the Security Agent shall be entitled to take
or, as the case may be, refrain from taking such action without reference
to (and notwithstanding any contrary direction from) the Senior Agent or
the Mezzanine Agent.
36.4 EXERCISE OF POWERS OF ENFORCEMENT
Subject to Clause 36.3 (Directions), at any time after the Security
Documents have become so enforceable in accordance with their respective
terms, the Security Agent
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shall, acting on the written directions of the Senior Agent or, subject
to the terms hereof, the Mezzanine Agent (but not otherwise), either
acting on its own behalf pursuant to its Powers of Attorney, exercise all
powers of enforcement of the security conferred by or pursuant to the
Security Documents in accordance with such directions but not otherwise.
36.5 NO OTHER ACTION
The Security Agent shall not be required to take any action or exercise
any rights, remedies, powers or discretions under or in connection with
this Deed beyond those which the Senior Agent or, subject to the terms
hereof, the Mezzanine Agent shall specifically instruct the Security
Agent in writing to take or exercise and then only to the extent stated
in the Senior Agent's or, as the case may be, the Mezzanine Agent's
specific instructions in writing.
36.6 SECURITY AGENT'S ASSUMPTIONS
The Security Agent shall be entitled to assume that any instructions or
certificates received by it from the Senior Agent or the Mezzanine Agent
under or pursuant to this Deed are (a) given in accordance with the
provisions of this Deed and (b) given, where appropriate, in accordance
with directions of persons or the provisions of agreements by which the
Senior Agent or the Mezzanine Agent (as the case may be) is bound and the
Security Agent shall not be liable to any other person for any action
taken or omitted under or in connection with this Deed in accordance with
any such instructions or certificates unless caused by its gross
negligence or wilful misconduct.
36.7 IDENTITY OF AGENTS
The Security Agent shall be entitled (and bound) to assume that the
identity of the Senior Agent and the Mezzanine Agent is as notified to it
at the date of this Deed, unless and until it is notified otherwise by
both the retiring such Senior Agent or Mezzanine Agent and the successor
agent in writing together with the date from which the change becomes
effective. The Security Agent shall be entitled to rely upon and assume
that any such notification is authentic and shall not be liable for any
loss occasioned by so assuming or relying.
36.8 MODIFICATION TO SECURITY DOCUMENTS
On the instructions of the Senior Agent or, after the Senior Discharge
Date, the Mezzanine Agent, the Security Agent shall concur with the
Parent in making any modification to the Security Documents which:
36.8.1 in the opinion of the Senior Agent or, after the Senior
Discharge Date, the Mezzanine Agent, it may be expedient to make
and such modification will not be prejudicial to the interests
of any of the Secured Beneficiaries; or
36.8.2 is necessary to correct a manifest error.
Any such modification shall be promptly notified to the Secured
Beneficiaries by the Senior Agent or the Mezzanine Agent (as the case may
be) and shall be binding on all the Secured Beneficiaries. For the
purposes of this Clause (a) the execution of a
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Security Document by a Borrower and (b) the release from the security
constituted by the Security Documents of any property which may be so
released shall be deemed not to constitute a modification.
36.9 PROVISION OF DIRECTIONS AND INFORMATION
The parties hereto (other than the Security Agent) (whether direct or
through the Senior Agent) shall provide the Security Agent with all
necessary directions and information as it may reasonably require for the
purposes of carrying out its duties and obligations under this Deed.
36.10 NO DUTY OR RESPONSIBILITY
The Security Agent shall not have any duty or responsibility, either
initially or on a continuing basis:
36.10.1 to provide any Beneficiaries with any information with respect
to any Borrower whenever coming into its possession or to
provide any other person with any communication received by it
under or in connection with this Deed; or
36.10.2 to investigate the application of sums distributed pursuant to
Clause 24 (Appropriation).
36.11 FURTHER ACTS
On the instructions of the Senior Agent or, after the Senior Discharge
Date, the Mezzanine Agent, the Security Agent shall be entitled to agree
to and execute and perform any documents and do such other acts or things
as may in the opinion of the Senior Agent or, after the Senior Discharge
Date, the Mezzanine Agent be necessary or expedient to give effect to the
provisions of Clauses 30 (Amendments), 32 (New Intra-Group Lenders and
Borrowers), 34.9 (Agent Resignation) and 35 (Assignments and Transfers).
36.12 FORMAL NOTICES
The Security Agent shall, as soon as practicable upon receipt, send to
the Senior Agent and the Mezzanine Agent copies of each formal notice
received by it as Security Agent from the Parent or any Borrower.
36.13 NO DELEGATION
The Security Agent may not delegate any power, trust, authority or
discretion vested in it by this Deed and/or the Security Documents to any
other person without the prior written consent of the Senior Agent or,
after the Senior Discharge Date, the Mezzanine Agent.
36.14 SECURITY AGENT'S DISCRETIONS
It is expressly declared (which in so far as relates to the discretions
of the Security Agent shall operate by way of supplement to the Trustee
Act 1925) as follows:
36.14.1 the Security Agent may in relation to any of the provisions of
this Deed act or rely upon the opinion or advice of or any
information obtained from any
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lawyer, accountant, valuer, surveyor, broker, auctioneer or
other expert commissioned by the Security Agent and the Security
Agent shall not be responsible for any loss occasioned by so
acting or relying;
36.14.2 any opinion, advice or information obtained pursuant to
sub-clause 36.14.1 may be sent or obtained by letter, telex
message, facsimile transmission, telephone or any other means
and the Security Agent shall not be liable for acting on any
opinion, advice or information purporting to be so conveyed
although the same shall contain some error or shall not be
authentic;
36.14.3 the Security Agent shall be at liberty to accept as sufficient
evidence a certificate signed or purported to be signed on
behalf of the Senior Agent or, subject to the terms hereof, the
Mezzanine Agent (on behalf of the Mezzanine Lenders) to the
effect that any particular dealing, transaction, step or thing
is, in the opinion of the Senior Agent or, subject to the terms
hereof, the Mezzanine Agent (on behalf of the Mezzanine
Lenders), suitable or expedient or as to any other fact or
matter upon which the Security Agent may require to be satisfied
and the Security Agent shall not be in any way bound to call for
further evidence or to be responsible for any loss that may be
occasioned by acting on any such certificate;
36.14.4 the Security Agent may refrain from doing anything which would
or might in its opinion be contrary to any law of any
jurisdiction or any directive or regulation of any agency of any
state or which would or might otherwise render it liable to any
person and may do anything which is, in its opinion, necessary
to comply with any such law, directive or regulation;
36.14.5 the Security Agent shall not be liable for any failure, omission
or defect in perfecting the arrangements created by or pursuant
to this Deed other than in respect of its gross negligence or
wilful misconduct;
36.14.6 the Security Agent and every attorney, agent or other person
appointed by it under or in connection with this Deed shall be
entitled to be indemnified out of amounts received by the
Security Agent under this Deed against all liabilities and
expenses properly incurred in the execution of any power, trust,
authority or discretion in connection with this Deed and against
all actions, proceedings, costs, claims and demands in respect
of any matter or thing done or omitted to be done in any way
relating to this Deed other than in respect of its gross
negligence or wilful misconduct;
36.14.7 all moneys which under the trusts contained in this Deed are
received or held by the Security Agent may be invested in the
name of the Security Agent or any nominee or under the control
of the Security Agent in any investment for the time being
authorised by English law for the investment by a trustee of
trust moneys or by placing the same on deposit in the name of
the Security Agent or any nominee or under the control of the
Security Agent at such bank or institution (including the
Security Agent) as the Senior Agent or, subject to
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the terms hereof, the Mezzanine Agent may direct or in such
currency as the Senior Agent or, subject to the terms hereof,
the Mezzanine Agent may direct and the Security Agent may at any
time vary or transfer any such investments for or into other
such investments or convert any moneys so deposited into any
other currency as the Senior Agent or, subject to the terms
hereof, the Mezzanine Agent shall from time to time direct and
shall not be responsible for any loss occasioned thereby,
whether by depreciation in value, fluctuation in exchange rates
or otherwise except for any loss or liability arising from its
own gross negligence or wilful misconduct;
36.14.8 the Security Agent shall have full power to determine all
questions and doubts arising in relation to the interpretation
or application of any of the provisions of this Deed as it
affects the Security Agent and every such determination made in
good faith (whether made upon a question actually raised or
implied in the acts or proceedings of the Security Agent) shall
be conclusive and shall bind the other parties hereto;
36.14.9 the Security Agent (in the conduct of the trusts hereof
(otherwise than in relation to its right to make any
declaration, determination or decision)) may instead of acting
personally employ and pay an agent (whether being a lawyer or
other person) to transact or concur in transacting any business
and to do or concur in doing any acts required to be done by the
Security Agent (including the receipt and payment of money) and
any such agent engaged in any profession or business shall be
entitled to be paid all usual professional and other charges for
business transacted and acts done by him or any partner or
employee of his in connection with the trusts hereof;
36.14.10 the Security Agent shall be at liberty to place all title deeds
and other documents certifying, representing or constituting the
title to any of the property which is the subject matter of the
Security Documents for the time being in its hands in any safe
deposit, safe or receptacle selected by the Security Agent or
with any bankers or banking company (including the Security
Agent or the Senior Agent or the Mezzanine Agent or any of the
Secured Beneficiaries) or company whose business includes
undertaking the safe custody of documents or solicitors or firm
of solicitors and may on the instructions of the Senior Agent
or, subject to the terms hereof, the Mezzanine Agent make any
such arrangements as they think fit for allowing the relevant
Borrower or its lawyers or auditors access to or possession of
such title deeds and other documents when necessary or
convenient and the Security Agent shall not be responsible for
any loss incurred in connection with any such deposit, access or
possession; and
36.14.11 any investment or any part or all of the Secured Property may,
at the discretion of the Security Agent either acting on its own
behalf or acting pursuant to its Powers of Attorney, be made or
retained in the names of nominees.
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36.15 PARTIES PERFORMING OBLIGATIONS
The Security Agent may assume without enquiry (in the absence of
knowledge by or an express notice to it to the contrary acquired or
received by it in its capacity as Security Agent hereunder) that each of
the parties hereto is duly performing and observing all its obligations
contained in this Deed.
36.16 OTHER CAPACITY AND BUSINESS
The Security Agent may, from time to time, be a Secured Beneficiary or
act in any other capacity and shall in such event be entitled,
notwithstanding that it is also Security Agent, to take, or refrain from
taking, any action which it would be entitled so to take if it was not
the Security Agent and shall not be precluded, by virtue of its position
as a Secured Beneficiary or acting in any other capacity, from exercising
any of its discretions, powers and duties as Security Agent. The Security
Agent may enter into any financial or business contracts or any other
transaction or arrangement with any Obligor or any other person and the
Security Agent shall not be in any way accountable to such Obligor or any
other person for any profits or benefits arising from any such contract
or transaction.
36.17 POWERS CONFERRED BY GENERAL LAW
The powers, trusts, authorities and discretions conferred upon the
Security Agent by this Deed shall be in addition to any which may from
time to time be vested in the Security Agent by the general law or
otherwise.
36.18 ADDITIONAL TRUSTEES
36.18.1 The statutory power to appoint new or additional trustees hereof
shall be vested in the Security Agent. A trust corporation may
be appointed as sole trustee hereof.
36.18.2 The Security Agent hereof may retire at any time and without
being responsible for the costs occasioned by such retirement.
Prior to confirmation by the Senior Agent that the Senior
Liabilities have been irrevocably discharged in full and the
Mezzanine Agent that the Mezzanine Liabilities have been
irrevocably discharged in full, the retirement of a Security
Agent shall not take effect until the appointment of a new
Security Agent has been made and accepted by the Senior Agent
and the Mezzanine Agent (in each case acting reasonably) and the
Security Agent and the new Security Agent shall have executed
all deeds and documents as are necessary to effect such
appointment and the transfer of the Security Agent's rights and
obligations in respect hereof in a legal, valid and binding
manner.
36.18.3 The Senior Agent or, after the Senior Discharge Date, the
Mezzanine Agent may require the Security Agent to retire at any
time, upon 60 days prior written notice. The Security Agent
shall not be responsible for the costs occasioned by such
retirement. The Security Agent agree to co-operate in executing
all deeds and documents as are necessary to effect the
retirement of the Security Agent, the appointment of the new
Security Agent and the
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transfer of the Security Agent's rights and obligations in
respect hereof in a legal, valid and binding manner.
36.19 INDEMNITY
Each of the Senior Lenders, the Hedge Counterparties and the Mezzanine
Lenders hereby undertakes severally in the proportion which the amounts
then due to them in respect of the Senior Liabilities, the Hedging
Liabilities and the Mezzanine Liabilities bears to the then aggregate
amount of such liabilities, to indemnify and hold harmless the Security
Agent against (a) all costs, charges, losses, claims, damages,
liabilities, expenses and other sums (or actions in respect thereof)
including value added tax thereon suffered or incurred by the Security
Agent or any person appointed by the Security Agent to whom any power,
trust, authority or discretion may be delegated by it pursuant hereto, in
connection with this Deed, the Security Documents and the powers, trusts,
authorities and discretion and duties contemplated therein or actions in
respect thereof (including, without limitation, legal fees and other
expenses incurred in connection with the negotiation of this Deed and the
Security Documents) and all costs, charges, expenses and other sums
suffered or incurred by the Security Agent or such person as a result of
complying with the provisions hereof or as a result of any Beneficiary
challenging the right of the Security Agent so to comply, save in respect
of any suffered or incurred directly as a result of the gross negligence
or wilful default of the Security Agent (or any such person appointed by
the Security Agent) and (b) any fees owing, demanded and remaining unpaid
to it by any Obligor in respect of the performance of the Security
Agent's duties hereunder and under the Security Documents.
36.20 REMUNERATION
The Security Agent shall be entitled to such remuneration as it may from
time to time agree with the Parent and have approved by the Senior Agent
or, after the Senior Discharge Date, the Mezzanine Agent.
36.21 PERPETUITY PERIOD
The perpetuity period for each trust created pursuant to this Deed shall
be eighty (80) years from the date hereof.
36.22 RELEASE OF SECURITY
The Security Agent shall and is hereby authorised by each of the Secured
Beneficiaries (and to the extent it may have any interest therein, every
other party hereto) to execute on behalf of itself and, either acting on
its own behalf or acting pursuant to the Powers of Attorney, each Secured
Beneficiary and other party hereto where relevant without the need for
any further referral to, or authority from, any Secured Beneficiaries or
other person all necessary releases of any security or guarantees given
by any Obligor under any Senior Document or any Mezzanine Document in
relation to the disposal of any asset which is permitted under or
consented to in accordance with the Senior Documents or the Mezzanine
Documents including, without limitation:
36.22.1 any formal release of any asset which the Security Agent in its
absolute discretion considers necessary or desirable in
connection with that disposal;
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<PAGE>
36.22.2 any release of any guarantee given under any Senior Document or
the Mezzanine Document or any other document referred to therein
where all the shares in the capital of the party giving such
guarantee are so disposed of in accordance with the terms of and
without any breach of the Senior Documents or the Mezzanine
Documents.
For the avoidance of doubt, the authorisation conferred by this Clause
36.22 (Release of Security) shall include the power to release any
security or guarantee maintained pursuant to any Security Documents after
any prepayment of amounts secured thereunder.
37. STATUS OF OBLIGORS
37.1 PRIORITIES
Each of the Obligors joins in this Deed for the purpose of acknowledging
the priorities, rights and obligations recorded in this Deed and
undertakes with each of the other parties hereto to observe the
provisions of this Deed at all times and not in any way to prejudice or
affect the enforcement of such provisions or do or suffer anything which
would be inconsistent with the terms of this Deed.
37.2 NO RIGHTS OF OBLIGORS
None of the Obligors shall have any rights hereunder and none of the
undertakings herein contained on the part of the Lenders are given (or
shall be deemed to have been given) to, or for the benefit of, the
Obligors.
38. EXPENSES
38.1 ENFORCEMENT EXPENSES
Each of the Obligors shall, forthwith on demand, pay to the Senior Agent,
each Senior Lender, the Mezzanine Agent and each Mezzanine Lender the
amount of all costs and expenses incurred by it in connection with the
enforcement against that Obligor (as the case may be) of such person's
rights against it under this Deed.
38.2 LEGAL COSTS AND TAX
The costs and expenses referred to above include, without limitation, the
fees and expenses of legal advisers and any value added tax or similar
tax, and are payable in the currency in which they are incurred.
39. GOVERNING LAW
This Deed shall be governed by, construed and interpreted in accordance
with the laws of England.
40. JURISDICTION
40.1 ENGLISH COURTS
Each of the parties hereto irrevocably agrees for the benefit of each of
the Beneficiaries that the courts of England shall have jurisdiction to
hear and determine any suit, action or proceeding, and to settle any
disputes, which may arise out of or in connection with
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<PAGE>
this Deed and, for such purposes, irrevocably submits to the jurisdiction
of such courts.
40.2 APPROPRIATE FORUM
Each of the parties hereto waives any objection which it might now or
hereafter have to the courts referred to in Clause 39.1 (English Courts)
being nominated as the forum to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out of or in
connection with this Deed and agrees not to claim that any such court is
not a convenient or appropriate forum.
40.3 PROCESS AGENT
Each of the parties agrees that the process by which any suit, action or
proceeding is begun may be served on it by being delivered in connection
with any suit, action or proceeding in England to its principal place of
business in England for the time being or, if none, shall within 30 days
of the date hereof (or the date of becoming party hereto) appoint a
person in England to accept service of process on its behalf in England.
Nothing contained herein shall affect the right to serve process in any
other manner permitted by law.
40.4 NO LIMITATION
The submission to the jurisdiction of the courts referred to in Clause
39.1 (English Courts) shall not (and shall not be construed so as to)
limit the right of the Beneficiaries or any of them to take proceedings
against any other party hereto in any other court of competent
jurisdiction nor shall the taking of any proceedings in any one or more
jurisdictions preclude the taking of proceedings in any other
jurisdiction (whether concurrently or not) if and to the extent permitted
by applicable law.
40.5 WAIVER OF JURY TRIAL
Each of the parties hereto hereby waives trial by jury in any judicial
proceeding involving, directly or indirectly, any matter (whether
sounding in tort, contract or otherwise) in any way arising out of,
related to, or connected with any of this Deed or the relationships
established hereunder and whether arising or asserted before or after the
date hereof or before or after the payment, observance and performance in
full of such party's obligations hereunder.
IN WITNESS whereof this Deed has been executed by the parties hereto the day and
year first above written.
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<PAGE>
THE SECURITY AGENT
EXECUTED AS A DEED
BARCLAYS BANK PLC
By: ANTHONY NASH
Address: 5 THE NORTH COLONNADE
CANARY WHARF
LONDON, E14 4PU
Attention: MALCOLM ORTON
Fax: 0171 773 6454
acting in its capacity as security agent
THE SENIOR AGENT
EXECUTED AS A DEED
BARCLAYS BANK PLC
By: ANTHONY NASH
Address: 5 THE NORTH COLONNADE
CANARY WHARF
LONDON, E14 4PU
Attention: MALCOLM ORTON
Fax: 0171 773 6454
acting in its capacity as agent
on behalf of the Senior Lenders
THE ARRANGER
EXECUTED AS A DEED
PARIBAS
By: PATRICK FOX
Address: 10 HAREWOOD AVENUE
LONDON, NW1 6AA
Attention: PATRICK FOX
Fax: 0171 595 5019
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<PAGE>
THE SENIOR LENDERS
EXECUTED AS A DEED
BARCLAYS BANK PLC
By: ANTHONY NASH
Address: 5 THE NORTH COLONNADE
CANARY WHARF
LONDON, E14 4PU
Attention: MALCOLM ORTON
Fax: 0171 773 6454
EXECUTED AS A DEED
by PARIBAS
By: PATRICK FOX
Address: 10 HAREWOOD AVENUE
LONDON, NW1 6AA
Attention: PATRICK FOX
Fax: 0171 595 5019
THE MEZZANINE AGENT
EXECUTED AS A DEED
By PARIBAS
By: PATRICK FOX
Address: 10 HAREWOOD AVENUE
LONDON, NW1 6AA
Attention: PATRICK FOX
Fax: 0171 595 5019
acting in its capacity as agent
on behalf of the Mezzanine Lenders
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<PAGE>
THE MEZZANINE LENDERS
EXECUTED AS A DEED
PARIBAS
By: PATRICK FOX
Address: 10 HAREWOOD AVENUE
LONDON, NW1 6AA
Attention: PATRICK FOX
Fax: 0171 595 5019
THE SUBORDINATED NOTEHOLDERS
EXECUTED AS A DEED
TRIUMPH PARTNERS III L.P.
Address:
Attention:
Fax:
THE MIRROR NOTEHOLDER
EXECUTED AS A DEED
TRANSWORLD HOLDINGS (UK) LIMITED
By: WAYNE PALLADINO
Address: BROADWALK HOUSE
5 APPOLD STREET
LONDON EC2A 2HA
Attention:
Fax:
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<PAGE>
THE BORROWER, OBLIGORS, THE INTRA-GROUP LENDERS, THE INTRA-GROUP BORROWER AND
THE OBLIGORS
EXECUTED AS A DEED
TRANSWORLD HOLDINGS (UK) LIMITED
By: WAYNE PALLADINO
Address: BROADWALK HOUSE
5 APPOLD STREET
LONDON EC2A 2HA
Attention:
Fax:
EXECUTED AS A DEED
TRANSWORLD HEALTHCARE (UK) LIMITED
By: WAYNE PALLADINO
Address: BALDERTON HALL
SOUTH DRIVE
BALDERTON
NEWARK
NOTTINGHAMSHIRE NG24 3JR
Attention:
Fax:
EXECUTED AS A DEED
OMNICARE LIMITED
By: WAYNE PALLADINO
Address: BALDERTON HALL
SOUTH DRIVE
BALDERTON
NEWARK
NOTTINGHAMSHIRE NG24 3JR
Attention:
Fax:
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<PAGE>
EXECUTED AS A DEED
ALLIED MEDICARE LIMITED
By: WAYNE PALLADINO
Address: MEDICARE HOUSE
STONE BUSINESS PARK
BROOKES ROAD
STONE
STAFFORDSHIRE ST15 0TL
Attention:
Fax:
EXECUTED AS A DEED
AMCARE LIMITED
By: WAYNE PALLADINO
Address: 39B PALLION WAY
PALLION TRADING ESTATE
SUNDERLAND
TYNE & WEAR SR4 6SN
Attention:
Fax:
EXECUTED AS A DEED
ALLIED OXYCARE LIMITED
By: WAYNE PALLADINO
Address: CHARLES HOUSE
ENTERPRISE DRIVE
FOUR ASHES
WOLVERHAMPTON WV10 7DF
Attention:
Fax:
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<PAGE>
EXECUTED AS A DEED
NOVACARE (UK) LIMITED
By: WAYNE PALLADINO
Address: UNIT 10
HORTON COURT
HORTON SQUARE
TELFORD
SALOP TF1 4GY
Attention:
Fax:
THE VOTING TRUSTEE
EXECUTED AS A DEED
by: RICHARD GREEN
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<PAGE>
Exhibit L
Form of Articles of Association of TW UK
<PAGE>
EXHIBIT L
(No. 3370146)
THE COMPANIES ACTS 1985 TO 1989
---------------------------
PRIVATE COMPANY HAVING A SHARE CAPITAL
---------------------------
ARTICLES OF ASSOCIATION
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TRANSWORLD HEALTHCARE (UK) LIMITED
---------------------------
ASHURST MORRIS CRISP
Broadwalk House
5 Appold Street
London EC2A 2HA
Tel: 0171-638-1111
Fax: 0171-972 7990
DJM/PDG/BRK/T73800003
<PAGE>
THE COMPANIES ACTS 1985 TO 1989
PRIVATE COMPANY HAVING A SHARE CAPITAL
ARTICLES OF ASSOCIATION
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TRANSWORLD HEALTHCARE (UK) LIMITED
(adopted by special resolution passed on 17 December 1999)
PRELIMINARY
1.1 In these Articles:
"AFFILIATE" means with respect to any specified Person, any other person
directly or indirectly controlling (including, but not limited to, each
director of such Person), controlled by or under direct or indirect
common control with such specified Person. A Person shall be deemed to
control a company if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
such company whether through the ownership of voting securities, by
contract or otherwise;
"ARTICLE" means the appropriate section of these Articles;
"AUDITORS" means the auditors of the Company from time to time;
"THE ACT" means the Companies Act 1985, including any statutory
modification or re-enactment thereof for the time being in force;
"BOARD" means the board of directors of the Company from time to time or
any duly authorised committee thereof;
"BUSINESS DAY" means any day on which banking institutions are generally
open in London for the transaction of normal banking business (excluding
Saturdays);
"CAPITAL SHARES" means any and all shares, interests, participations,
and/or other equivalents of or in (however designated) shares or equity
securities of the Company, including each class of ordinary shares and
preferred shares of the Company and including
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any securities convertible into or exercisable or exchangeable for
rights to subscribe for, and any options, warrants or other rights to
acquire, any such shares or equity securities of the Company (including,
for the avoidance of doubt, the Warrants);
"DESIGNATED OFFSHORE SECURITIES MARKET" has the meaning set out in the
Purchase Agreement;
"DISPOSITION" means, with respect to any Person, any disposal, merger,
consolidation or other business combination involving such person or the
sale, assignment, transfer, lease, conveyance or other disposition of
all or substantially all of such person's assets in one transaction or a
series of related transactions;
"EXIT OFFER" has the meaning given to it in the definition in Article
8.2 (b);
"EXTRAORDINARY EVENT" has the meaning set out in the Voting Trust
Agreement;
"FAIR MARKET VALUE" has the meaning set out in the Purchase Agreement;
"FLOTATION" has the meaning set out in the Purchase Agreement;
"GROUP" means the Company, its holding company and any subsidiary
undertakings;
"GROUP ASSETS" has the meaning set out in the Purchase Agreement;
"GROUP REVENUES" has the meaning set out in the Purchase Agreement;
"INSTITUTIONAL INVESTMENT" means (pounds sterling)19,000,000 subscribed
by the Lead Investors for Warrants and for subordinated loan notes in
Transworld Holdings (UK) Limited on the date of the adoption of these
Articles;
"LEAD INVESTORS" means Triumph Partners III L.P.;
"LIQUIDITY EVENT" has the meaning set out in the Purchase Agreement;
"PERSON" has the meaning set out in the Purchase Agreement;
"PERMITTED TRANSFER" means any Transfer of Capital Shares expressly
authorised by the provisions of the Voting Trust Agreement, the Purchase
Agreement or these Articles;
"PURCHASE AGREEMENT" means the Securities Purchase Agreement dated 17
December 1999 between, inter alia, Transworld Holdings UK, Ltd,
Transworld Healthcare UK, Ltd and the Lead Investors;
"PROHIBITED DISPOSAL" means a Liquidity Event which is neither a
Qualifying Liquidity Event nor a Liquidity Event which results from an
Exit Offer;
"PUT BREACH" has the meaning set out in the Voting Trust Agreement;
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"QUALIFIED PUBLIC OFFERING" has the meaning set out in the Purchase
Agreement;
"QUALIFYING LIQUIDITY EVENT" has the meaning set out in the Purchase
Agreement;
"REGISTRATION RIGHTS AGREEMENT" has the meaning given to it in the
Purchase Agreement;
"REGULATION" means the appropriate regulation from Table A;
"SPECIAL SHARE" means the special share in the Company, the rights of
which are set out in Article 3;
"SPECIAL SHAREHOLDER" means the registered holder of the Special Share;
"SUBORDINATED NOTES" means the senior subordinated promissory notes
having an aggregate principal amount of up to (pounds sterling) 22.6
million constituted on 17 December 1999, as amended from time to time;
"SURVIVING PERSON" means with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such
Disposition or the Person to which such Disposition is made;
"TABLE A" means Table A set out in the schedule to the Companies (Table
A to F) Regulations 1985 (SI 1985 No. 805) as amended by the Companies
(Table A to F) (Amendment) Regulations 1985 (SI 1985 No. 1052);
"TRANSFER" means any sale, transfer (whether voluntary or otherwise) or
other disposition of (including the granting of any security encumbrance
over) any security (including, for the avoidance of doubt, any
Subordinated Notes or Warrants) or any interest (legal or equitable)
therein;
"VOTING TRUST AGREEMENT" means the Voting Trust Agreement dated 17
December 1999 between, inter alia, Transworld Holdings UK, Ltd,
Transworld Healthcare UK, Ltd, Transworld Healthcare, Inc, the Lead
Investors and the Trustee thereunder;
"WARRANTHOLDERS" means those persons entered in the register of holders
of the Warrants from time to time;
"WARRANT INSTRUMENT" means together the warrant document dated 17
December 1999 creating the Warrants issued to, inter alia, the Lead
Investor (the "INVESTOR WARRANT INSTRUMENT") and the mezzanine warrant
instrument dated 17 December 1999 ; and
"WARRANTS" means a share warrant to subscribe for ordinary shares in the
capital of the Company constituted by the Investor Warrant Instrument
("INVESTOR WARRANTS") and the mezzanine warrant instrument.
1.2 Defined terms used in these Articles, unless the context otherwise
requires, shall have the meaning set out in the Purchase Agreement.
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1.3 The following are the Articles of the Company to the exclusion, save as
provided herein, of all other regulations or Articles of Association.
Table A applies to the Company, as amended or excluded by the following
Articles and to the extent there is any inconsistency between the
following Articles and Table A, the following Articles shall prevail.
SHARE CAPITAL
2.1 The authorised share capital of the Company at the date of the adoption
of these Articles is (pounds sterling)4,500,000 divided into 89,999,999
ordinary shares of 5p each and one Special Share of 5p.
SPECIAL SHARE
3. The rights attached to the Special Share are as follows:
3.1 the Special Share shall not entitle the holder thereof to a dividend or
to any distribution on a return of capital or otherwise;
3.2 the Special Shareholder shall have the right to require the Company,
and, subject to the Act, the Company shall have the right (in each case
upon not less than 5 days' prior notice in writing to the other of the
date when such notice is to be effective) to redeem the Special Share at
nominal value at any time after (a) all of the Warrants held by the
Special Shareholder have been exercised or (b) the fiftieth anniversary
of the date of allotment (whichever is the earlier);
3.3 except as otherwise provided in these Articles, the Special Shareholder
shall be treated as an ordinary shareholder for the purposes of voting
rights, including, without limitation, the right to receive notice of,
and to attend and vote at (whether on a poll or a show of hands)
meetings of the Company pursuant to these Articles with the rights
attaching to the Special Share and the number of ordinary shares deemed
to be held by the Special Shareholder being determined by reference to
the number of ordinary shares which would be issued to the Lead
Investors and other holders of Warrants from time to time if, at the
relevant time, all the outstanding Warrants held by them were exercised
in accordance with the provisions of the Warrant Instrument. The voting
rights attaching to the Special Share and any shares issued to all Lead
Investors and other holders of Warrants from time to time pursuant to
the exercise of the Warrants shall, for class purposes, be deemed to
vote together;
3.4 save for Permitted Transfers, the Special Shareholder shall not be
entitled to transfer the Special Share;
3.5 any Transfer (other than a Transfer pursuant to Articles 6.2, 6.3 or
6.4) of the Special Share shall terminate all rights which may attach to
the Special Share, and in particular under this Article 3;
3.6 the Special Share shall cease to have any rights whatsoever upon any
Transfer of any Subordinated Notes, PIK Notes, Warrants or Warrant
Shares comprising or derived from (whether by way of exercise,
conversion or accretion) the Institutional Investment (other than a
Transfer pursuant to Articles 6.2, 6.3 or 6.4).
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<PAGE>
ALLOTMENT OF SHARES
4. Subject to Section 80 of the Act and Article 20.2, all authorised but
unissued shares shall be at the disposal of the Directors and they may
allot, grant options over or otherwise dispose of them to such persons,
at such times, and on such terms as they think proper and Section 89 of
the Act shall not apply.
SHARES
5.1 The liability of any member who has not paid a call shall be increased
by the addition at the end of the first sentence of Regulation 18 of the
words "and all expenses that may have been incurred by the Company by
reason of such non-payment".
TRANSFER OF SHARES
6.1 Except for Permitted Transfers, the Directors may, in their absolute
discretion and without giving any reason, decline to register the
transfer of a share, whether or not it is a fully paid share, and the
first sentence of Regulation 24 shall not apply to the Company nor shall
the provisions of Regulation 24(a) requiring the instrument of transfer
to be accompanied by the relevant share certificates. The Directors
shall be bound to register any Permitted Transfer within 14 days after
the lodging of the instrument of transfer with the Company and to enter
the name of the transferee in the register of members accordingly. No
shares in the Company may be transferred (whether by way of sale or
otherwise) except pursuant to a Permitted Transfer.
6.2 A member:-
(a) which is a company, a limited or general partnership or other
business entity may transfer for any consideration whatsoever
all of the shares registered in its name to any other company
(in these Articles called an "ASSOCIATED COMPANY") which is an
Affiliate of that member, a holding company of that member or
which is a subsidiary of that member or which is another
subsidiary of such a holding company (the expressions
"SUBSIDIARY" and "HOLDING COMPANY" having the meanings given to
them respectively in section 736 of the Act) provided that if at
any time the transferor and transferee cease to be so associated
for any reason other than a change in general partner, manager
or advisor, the transferee shall forthwith transfer to the
transferor the shares then registered in its name;
(b) which is a company, a limited or general partnership or other
business entity may transfer for any consideration whatsoever
any of the shares registered in its name to any limited partner
or other constituent owner of such member.
6.3 Notwithstanding any other provision of these Articles, the Special
Shareholder may transfer all the shares registered in its name to its
partners in connection with a winding-up of its affairs.
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6.4 After the consummation of a Flotation;
(a) any member other than the Lead Investors or Transworld Holdings
(UK) Limited may transfer any of the shares registered in its
name; and
(b) the Lead Investors and Transworld Holdings (UK) Limited may
transfer shares registered in their respective names so long as
after giving effect to such transfer they continue to hold (i)
in the case of the Lead Investors, at least a majority of the
Institutional Investment and (ii) in the case of Transworld
Holdings (UK) Limited, at least 24,000,001 shares.
PRE-EMPTION
7.1 Except in the case of a Permitted Transfer (to which the provisions of
this Article 7 shall not apply), any member who wishes to transfer
shares (the "SELLER") shall give notice in writing (the "TRANSFER
NOTICE") to the Company of his wish specifying:
(a) the number and class(es) of shares which he wishes to transfer
(the "SALE SHARES");
(b) the name of any third party to whom he proposes to sell or
transfer the shares;
(c) the price at which he wishes to transfer the shares (which shall
be deemed to be the Fair Market Value if no price is specified)
(the "TRANSFER PRICE"); and
(d) whether or not the Transfer Notice is conditional upon all, and
not part only, of the shares so specified being sold pursuant to
the offer hereinafter mentioned and, in the absence of such
stipulation, it shall be deemed not be so conditional.
7.2 Where any Transfer Notice is deemed to have been given in accordance
with these Articles, the deemed Transfer Notice shall be treated as
having specified:
(a) that all the shares registered in the name of the Seller shall
be included for transfer;
(b) that the price for the shares shall be as agreed between the
Board and the Seller or, failing agreement, shall be the Fair
Market Value; and
(c) that no condition as referred to in Article 7.1(d) shall apply.
7.3 Unless otherwise agreed by the members and the Company in writing, no
Transfer Notice once given or deemed to have been given in accordance
with these Articles shall be withdrawn.
7.4 The Transfer Notice shall constitute the Company the agent of the Seller
for the sale of the Sale Shares specified therein at the Transfer Price.
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7.5 The Company shall as soon as practicable following receipt of a Transfer
Notice or, where later, upon the determination of the Transfer Price
give notice in writing to each of the members of the Company (for which
purpose all of the Warrants shall be deemed to have been exercised
immediately prior to such notice and the Warrantholders shall be treated
as members in respect of all the shares which are the subject of the
Warrants) informing them that the Sale Shares are available and of the
Transfer Price. Such notice shall invite each member to state, in
writing within 42 days from the date of such notice (which date shall be
specified therein), whether he is willing to purchase any and, if so,
how many of the Sale Shares.
(a) The Sale Shares shall be offered to each class of member on
terms that, in the event of competition, the Sale Shares offered
shall be sold to the members accepting the offer in proportion
(as nearly as may be) to their existing holdings of shares of
the class or classes to which the offer is made (the
"PROPORTIONATE ENTITLEMENT"). It shall be open to each such
member to specify if he is willing to purchase shares in excess
of his Proportionate Entitlement ("EXCESS SHARES") and, if the
member does so specify, he shall state the number of Excess
Shares.
(b) After the expiry of the offers to be made pursuant to Article
7.5(a) (or sooner if all the Sale Shares offered shall have been
accepted in the manner provided in Article 7.5(a)), the Board
shall allocate the Sale Shares in the following manner:
(i) if the total number of shares applied for is equal to or
less than the available number of Sale Shares the Company
shall allocate the number applied for in accordance with
the applications; or
(ii) if the total number of shares applied for is more than
the available number of Sale Shares, each member shall be
allocated his Proportionate Entitlement (or such lesser
number of Sale Shares for which he may have applied);
applications for Excess Shares shall be allocated in
accordance with such applications or, in the event of
competition, (as nearly as may be) to each member
applying for Excess Shares in the proportion which shares
of the relevant class held by such member bears to the
total number of shares of that class held by all such
members applying for Excess Shares PROVIDED THAT such
member shall not be allocated more Excess Shares than he
shall have stated himself willing to take,
and in either case, the Company shall forthwith give notice of
each such allocation (an "ALLOCATION NOTICE") to the Seller and
each of the persons to whom Sale Shares have been allocated (a
"MEMBER APPLICANT") and shall specify in the Allocation Notice
the place and time (being not later than 14 days after the date
of the Allocation Notice) at which the sale of the Sale Shares
shall be completed.
7.6 Subject to Article 7.7, upon such allocations being made as aforesaid,
the Seller shall be bound, on payment of the Transfer Price, to transfer
the Sale Shares comprised in the Allocation Notice to the Member
Applicants named therein at the time and place therein specified. If he
makes default in so doing the Chairman for the time being of the Company
or, failing him, one of the Directors, or some other person duly
nominated by a resolution of
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the Board for that purpose, shall forthwith be deemed to be the duly
appointed attorney of the Seller with full power to execute, complete
and deliver in the name and on behalf of the Seller a transfer of the
relevant Sale Shares to the Member Applicant and any Director may
receive and give a good discharge for the purchase money on behalf of
the Seller and (subject to the transfer being duly stamped) enter the
name of the Member Applicant in the register of members as the member or
members by transfer of the shares so purchased by him or them. The Board
shall forthwith pay the purchase money into a separate bank account in
the Company's name and shall hold money on trust (but without interest)
for the Seller until he shall deliver up his certificate or certificates
for the relevant shares (or an indemnity, in a form reasonably
satisfactory to the Board, in respect of any lost certificate) to the
Company when he shall thereupon be paid the purchase money.
7.7 If the Seller shall have included in the Transfer Notice a provision
that unless all the Sale Shares are sold none shall be sold and if the
total number of shares applied for by Member Applicants is less than the
number of Sale Shares then the Allocation Notice shall refer to such
provision and shall contain a further invitation, open for 28 days, to
those persons to whom the Sale Shares have been allocated to apply for
further Sale Shares and completion of the sales in accordance with the
preceding paragraphs of this Article 7 shall be conditional upon such
provision as aforesaid being complied with in full.
7.8 In the event of all the Sale Shares not being sold under the preceding
paragraphs of this Article 7 the Seller may, at any time within six
calendar months after receiving confirmation from the Company that the
pre-emption provisions herein contained have been exhausted, transfer
any Sale Shares (which have not been sold) to any person or persons at
any price not less than the Transfer Price PROVIDED THAT:-
(a) if the Seller stipulated in the Transfer Notice that unless all
the Sale Shares were sold none should be sold, the Seller shall
not be entitled, save with the written consent of members of the
Company holding shares carrying 80 per cent of voting rights
which may for the time being be cast at a general meeting of the
Company, to sell hereunder only some of the Sale Shares
comprised in the Transfer Notice to such person or persons;
(b) any such sale shall be a bona fide sale and the Board may
require to be satisfied in such manner as it may reasonably
require that the Sale Shares are being sold in pursuance of a
bona fide sale for not less than the Transfer Price without any
deduction, rebate or allowance whatsoever to the buyer and, if
not so satisfied, may refuse to register the instrument of
transfer; and
7.9 The costs of determining the Fair Market Value shall be borne by the
Company unless, in the case of a determination required pursuant to the
provisions of Article 7.2, the Fair Market Value so determined is less
than that suggested by the Board, in which event the costs of
determining the Fair Market Value shall be borne by the Seller.
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QUALIFYING LIQUIDITY EVENT
8.1 If any member receives an offer from any Person (including from any
member) which, if accepted in full, would result in a Qualifying
Liquidity Event (a "QUALIFYING Offer"), then such member receiving or so
making shall immediately notify the Company of the receipt of such
offer.
8.2 In the event of:
(a) a Qualifying Offer being received by a member or by or on behalf
of the Company itself; or
(b) a Put Breach occurring or being continuing and thereafter any
bona fide offer which, if accepted in full, would result in a
Liquidity Event (an "EXIT OFFER") being received by or on behalf
of the Special Shareholder from a Person who is not an Affiliate
of the Company or the Lead Investors,
then each member shall:
(c) in the circumstances specified in (a) above, upon the written
request of the Board, or, if an Extraordinary Event has
occurred, upon the written request of the Special Shareholder;
or
(d) in the circumstances specified in (b) above, upon the written
request of the Special Shareholder only,
be obliged to and shall:
(e) sell, transfer and deliver, or cause to be sold, transferred and
delivered, to the purchaser or acquirer (the "BUYER"), all
Capital Shares and Subordinated Notes then held by each of them
on substantially identical terms and bases (with appropriate
adjustments to reflect the conversion of convertible securities,
the redemption of redeemable securities and the exercise of
exercisable securities as well as the relative preferences and
priorities of any preferred securities then outstanding); and
(f) execute and deliver such instruments of transfer, and take such
other action, including voting all of the shares of the Company
held by that member in favour of any such transaction and
executing any purchase agreements, merger agreements, indemnity
agreements, escrow agreements or related documents, as the Board
and/or the Buyer may reasonably require in order to carry out
the terms and provisions of this Article 8,
provided that no member hereto shall be required to execute any
indemnity or similar agreement rendering such member personally liable
for any amount in excess of the proceeds to be received by such member
from such transaction.
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8.3 Not less than 20 Business Days prior to the date proposed for the
completion of any sale pursuant to a Qualifying Liquidity Offer or Exit
Offer, the Board (or, in the circumstances specified or referred to in
sub-paragraphs (c) and (d) above, the Special Shareholder) shall cause
the Company to give (and the Company shall give) written notice to the
members, setting forth in reasonable detail the name or names of the
Buyer, the terms and conditions of the transaction and the proposed
completion date.
8.4 Each of the members other than the holder of the Special Share hereby:-
(a) irrevocably appoints the chief executive officer of the Company
as its agent and attorney (the "AGENT") (with full power of
substitution) to execute all agreements, instruments and
certificates and take all actions necessary or desirable to give
effect to the provisions of this Article 8;
(b) subject to the provisions of the Voting Trust Agreement grant to
the Agent a proxy (which shall be irrevocable) to vote all
voting Capital Shares owned by such members and exercise any
consent rights applicable thereto provided that the Agent shall
not exercise such power of attorney or proxy with respect to any
person unless such person is in breach of its obligations under
this Article 8.
CO - SALE RIGHTS
9.1 Except for Permitted Transfers (other than transfers specifically
authorised under Article 7 to which the provisions of this Article 9
shall apply), with respect to any proposed transfer of Capital Shares by
any member (the "TRANSFEROR") to any person (the "PROPOSED PURCHASER")
prior to the completion of a Qualified Public Offering or achievement of
a Qualified Public Value, each of the other members (the "OTHER
SHAREHOLDERS"), shall have the right (the "CO-SALE RIGHTS") to require
the Proposed Purchaser to purchase from it a portion of its Capital
Shares (including shares issued or issuable upon exercise of Warrants)
(such Other Shareholder's "PRO RATA SHARE") which is equal to or less
than the product obtained by multiplying:
(a) the total number of Capital Shares that the Proposed Purchaser
is prepared to purchase; by
(b) a fraction, the numerator of which is the total number of
Capital Shares (including shares issued or issuable upon
exercise of Warrants) owned by such Other Shareholder, and the
denominator of which is the total number of Capital Shares
issued and outstanding immediately before the transfer
(including shares issued or issuable upon exercise of Warrants),
or such greater number of Capital Shares which is determined in
accordance with the remainder of this Article 9.
9.2 The price per Capital Share and, subject to Article 9.8 hereof, the
terms and conditions shall be the same as those of such proposed
transfer by the Transferor, with appropriate adjustments to reflect the
conversion of convertible securities, the redemption of redeemable
securities and the exercise of exercisable securities as well as the
relative preferences and
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priorities of any preferred securities then outstanding (it being
understood that such terms and conditions may include the execution and
delivery of such instruments of transfer as are executed and delivered
by the Transferor to the Proposed Purchaser, provided that the Other
Shareholders shall not be required to execute any indemnity or similar
agreement rendering any such Other Shareholder personally liable for any
amount in excess of the proceeds to be received by such Other
Shareholder from such transfer).
9.3 Any holder of Warrants shall be permitted to sell to the Proposed
Purchaser, in connection with any exercise of the rights set forth in
this Article 9, Warrants and Subordinated Notes with the same effect as
if shares were being conveyed (subject to appropriate adjustments to the
net sale price to deduct the exercise price of such Warrants).
9.4 The Transferor shall notify, or cause to be notified, each Other
Shareholder in writing of each such proposed transfer. Such notice (the
"SALE NOTICE") shall set forth:
(a) the number of Capital Shares proposed to be transferred;
(b) the maximum number of Capital Shares that such Other Shareholder
can sell to such Proposed Purchaser;
(c) the name and address of the Proposed Purchaser;
(d) the proposed amount and form of consideration and terms and
conditions of payment offered by such Proposed Purchaser;
(e) that the Proposed Purchaser has been informed of the Co-Sale
Rights provided for in this Article 9 and has agreed to purchase
Capital Shares in accordance with the terms hereof; and
(f) that, with respect to the Capital Shares to be purchased by the
Proposed Purchaser, the Proposed Purchaser agrees to enter into
a deed of adherence in accordance with the Purchase Agreement.
9.5 At the request of the Transferor, the Company shall provide to the
Transferor any information available to the Company, to the extent that
such information is required for the delivery of a Sale Notice by the
Transferor, and each Other Shareholder shall provide to the Transferor
information concerning such Other Shareholder's name and address and the
number of Capital Shares held by such Other Shareholder.
9.6 The Co-Sale Rights may be exercised by any Other Shareholder by delivery
of a written notice to the Transferor giving a Sale Notice (the "Co-Sale
Notice") within 10 Business Days following their receipt of the Sale
Notice. The Co-Sale Notice shall constitute an agreement, binding on the
Other Shareholder delivering it, to sell up to the number of Capital
Shares and Subordinated Notes specified in the Co-Sale Notice to the
Proposed Purchaser in the event the proposed sale to the Proposed
Purchaser can, as modified by the inclusion of such Other
Shareholder(s), still be consummated as originally proposed, and is so
consummated. In such event, the number of Capital Shares to be sold by
each Other Shareholder giving a Co-Sale Notice shall be determined as
follows:
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(a) each such Other Shareholder shall be entitled to sell at least
the lesser of the number of Capital Shares specified in such
Other Shareholder's Co-Sale Notice or such Other Shareholder's
Pro Rata Share. Such amount is referred to as such Other
Shareholder's "BASIC SALE AMOUNT" and, in the case of any Other
Shareholder who requested the sale of a number of Capital Shares
in excess of such Other Shareholder's Pro Rata Share, the amount
of such excess is referred to as such Other Shareholder's
"EXCESS SALE REQUEST". If not all Other Shareholders requested
the sale of at least their Pro Rata Share, the excess of the
total of the Pro Rata Shares of all Other Shareholders over the
total of the Basic Sale Amount of the Other Shareholders who
gave Tag-Along Notices is referred to as the "Undersubscribed
Amount".
(b) If there is an Undersubscribed Amount, it shall be allocated
between the Other Shareholders who gave Co-Sale Notices, as a
class, and the Transferor pro rata as follows:
(i) an amount equal to the Undersubscribed Amount multiplied
by a fraction, the numerator of which is the total of the
Basic Sales Amounts of such Other Shareholders and the
denominator of which is the total amount of Capital
Shares to be purchased by the Proposed Purchaser, shall
be allocated to such Other Shareholders, as a class (such
amount is referred to as the "EXCESS ALLOCABLE AMOUNT")
in accordance with Article 9.6(iii); and
(ii) the remainder of the Undersubscribed Amount shall be
allocated to the Transferor.
(c) If there is an Excess Allocable Amount, each Other Shareholder
who had an Excess Sale Request shall also be entitled to sell an
amount equal to the lesser of such Other Shareholder's Excess
Sale Request or the Excess Allocable Amount multiplied by a
fraction, the numerator of which is such Other Shareholder's
Excess Sale Request and the denominator of which is the total of
the Excess Sale Requests of all Other Shareholders having Excess
Sale Requests.
9.7 In the event that the Proposed Purchaser does not purchase all Capital
Shares to be sold by all Other Shareholders giving Co-Sale Notices (as
determined pursuant to Articles 9.6(a), (b) and (c) hereof), on the
terms and conditions stated in the Sale Notice or on terms and
conditions no less favourable to the Transferor, then the Transferor may
not make the proposed sale to such Proposed Purchaser without renewed
compliance with this Article 9. After expiration of the 10 Business Day
period referred to above, the Transferor shall have the right during the
following 120 day period to transfer, or to enter into a binding
agreement to transfer, any of the Capital Shares not subject to a
Co-Sale Notice to the Proposed Purchaser or subject to the remainder of
this Article 9, to a different purchaser, on the terms and conditions
stated in the Sale Notice or on terms and conditions no more favourable
to the Transferor, so long as the shares subject to Co-Sale Notices are
also purchased or agreed to be purchased at the same time, provided that
the Transferor may not, without renewed compliance with this Article 9:
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(a) make a sale pursuant to a previously executed agreement to
transfer Capital Shares on a date which is more than 180 days
after the date of the applicable Sale Notice; or
(b) make a sale to a different purchaser on terms and conditions
(including the financial standing and creditworthiness of such
different purchaser) more favourable to the Transferor than
those set forth in the applicable Sale Notice.
9.8 All numbers in this Article 9 which refer to Capital Shares shall be
subject to appropriate adjustment in the event of any stock dividend,
stock split, consolidation, or similar transaction.
9.9 For the purpose of this Article 9 if:
(a) the Transferor has agreed to sell any Capital Shares for
consideration which includes securities;
(b) such non-cash consideration includes securities (other than
notes, debentures or similar instruments evidencing
indebtedness) which are not readily marketable on a public
market providing regularly maintained price quotations and a
regular flow of transactions; and
(c) after giving effect to the proposed transfer of Capital Shares
by the Transferor and any related transactions, the Proposed
Purchaser or the issuer of such securities would be an Affiliate
of the Transferor,
then the Proposed Purchaser's offer to the Other Shareholders shall
include registration rights for the benefit of the Other Shareholders
accepting such offer and covering any such securities, upon terms and
conditions no less favourable to the Other Shareholders than those set
forth in the Registration Rights Agreement.
GENERAL MEETINGS AND RESOLUTIONS
10.1 Every notice convening a general meeting shall comply with the
provisions of section 372(3) of the Act as to the giving of information
to members in respect of their right to appoint proxies; and notices of
and other communications relating to any general meeting which any
member is entitled to receive shall be sent to the Directors and to the
auditors for the time being of the Company.
10.2 A member whose registered address is not within the United Kingdom shall
be entitled to have notices sent to him at his registered address
outside the United Kingdom and the last sentence of Regulation 112 and
the whole of Regulations 39 and 115 shall not apply.
10.3 No business shall be transacted at any general meeting unless a quorum
is present. Subject to Article 10.4 the Special Shareholder (or a proxy
for the Special Shareholder) and one or more persons (or their proxies)
holding shares carrying at least 50% of the votes normally exerciseable
in general meeting entitled to vote upon the business to be transacted,
each being a member or a proxy for a member or a duly authorised
representative of a corporation, shall be a quorum.
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10.4 If and for so long as the Company has only one member, that member
present in person or by proxy or if that member is a corporation by a
duly authorised representative shall be a quorum.
10.5 If at any meeting such a quorum is not present within half an hour from
the time appointed for a general meeting (or such longer interval as the
chairman of the meeting may think fit to allow) the general meeting
shall stand adjourned to the same day in the next week at the same time
and place or to such other day and at such other time and place as the
Directors may determine and of which at least 7 clear days notice shall
have been given to the members; and if at the adjourned general meeting
a quorum is not present within half an hour from the time appointed
therefor any two members present in person or by proxy shall constitute
a quorum.
10.6 An instrument appointing a proxy (and, where it is signed on behalf of
the appointor by an attorney, the letter of power of attorney or a duly
certified copy thereof) must either:
(a) be delivered at such place or one of such places (if any) as may
be specified for that purpose in or by way of note to the notice
convening the meeting (or, if no place is so specified, at the
registered office) at least one hour before the time appointed
for holding the meeting or adjourned meeting or (in the case of
a poll taken otherwise than at or on the same day as the meeting
or adjourned meeting) for the taking of the poll at which it is
to be used; or
(b) be delivered to the Secretary (or the chairman of the meeting)
on the day and at the place of, but in any event before the time
appointed for holding, the meeting or adjourned meeting or poll.
The instrument shall, unless the contrary is stated thereon, be
valid as well for any adjournment of the meeting as for the
meeting to which it relates. An instrument of proxy relating to
more than one meeting (including any adjournment thereof) having
once been so delivered for the purposes of any meeting shall not
require again to be delivered for the purposes of any subsequent
meeting to which it relates. Regulation 62 shall not apply to
the Company.
10.7 Regulations 40, 41 and 50 shall not apply to the Company.
WRITTEN RESOLUTIONS
11.1 If and for so long as the Company has only one member and that member
takes any decision which is required to be taken in general meeting or
by means of a written resolution, that decision shall be as valid and
effectual as if agreed by the Company in general meeting save that this
paragraph shall not apply to resolutions passed pursuant to sections 303
and 391 of the Act.
11.2 Any decision taken by a sole member pursuant to Article 11.1 shall be
recorded in writing and delivered by that member to the Company for
entry in the Company's Minute Book.
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11.3 In the case of a corporation or limited partnership, a resolution in
writing may be signed on its behalf by a director or the secretary
thereof or by its duly authorised representative. Regulation 53 shall be
extended accordingly. Regulation 53 (as so extended) shall apply mutatis
mutandis to resolutions in writing of any class of members of the
Company.
APPOINTMENT OF DIRECTORS
12.1 Regulation 64 shall not apply to the Company.
12.2 The number of Directors shall be a maximum of five.
12.3 The Directors shall not be required to retire by rotation and
Regulations 73 to 80 (inclusive) shall not apply to the Company and any
other references in Table A to retirement by rotation shall not apply.
12.4 The office of a Director shall be vacated in any of the following
events, namely:
(a) if he shall resign by notice to the Company;
(b) if notice requiring his removal and signed by the member holding
shares representing at least 80 per cent. of the votes which may
be cast at a general meeting;
(c) if he shall become prohibited by law from acting as a Director;
(d) if he becomes bankrupt or makes any arrangement or composition
with his creditors generally;
(e) if in England or elsewhere an order shall be made by any court
claiming jurisdiction in that behalf on the ground (however
formulated) of mental disorder for his detention or for the
appointment of a guardian or receiver or other person (by
whatever name called) to exercise powers with respect to his
property or affairs;
(f) if he is admitted to hospital in pursuance of an application for
admission for treatment under the Mental Health Act 1983, or in
Scotland under the Mental Health (Scotland) Act 1960; or
(g) if in respect of any director appointed at the direction of a
member, such member deposits with the Company notice terminating
such appointment,
and regulation 81 shall be modified accordingly.
12.5 The Company may by ordinary resolution appoint a person who is willing
to act to be a Director whether to fill a vacancy or as an additional
director, provided that the appointment does not cause the number of
directors to exceed five.
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12.6 The Directors may appoint a person who is willing to act to be a
Director, either to fill a vacancy or as an additional director,
provided that the appointment does not cause the number of directors to
exceed five.
BORROWING POWERS
13. Subject to Article 20.2, the Directors may exercise all the powers of
the Company to borrow upon such terms and in such manner as they think
fit, and subject (in the case of any security convertible into shares)
to section 80 of the Act to grant any mortgage, charge or other security
over its undertaking, property and uncalled capital, or any part
thereof, and to issue debentures, debenture stock and other securities
whether outright or as security for any debt, liability or obligation of
the Company or of any third party.
ALTERNATE DIRECTORS
14.1 An alternate director shall not be entitled as such to receive any
remuneration from the Company, save that he may be paid by the Company
such part (if any) of the remuneration otherwise payable to his
appointor as such appointor may by notice in writing to the Company from
time to time direct, and the first sentence of Regulation 66 shall be
modified accordingly.
14.2 A Director, or any such other person as is mentioned in Regulation 65,
may act as an alternate director to represent more than one director,
and an alternate director shall be entitled at any meeting of the
directors or of any committee of the directors to one vote for every
director whom he represents in addition to his own vote (if any) as a
director, but he shall count as only one for the purpose of determining
whether a quorum is present.
14.3 The appointment of an alternate director shall determine on the
happening of any event which, if he were a Director, would cause him to
vacate such office or if the Director for whom he is an alternate ceases
to be a Director. Regulation 67 shall not apply to the Company.
GRATUITIES AND PENSIONS
15.1 The Directors may exercise the powers of the Company conferred by clause
3(ii)(s) of the Memorandum of Association of the Company and shall be
entitled to retain any benefits received by them or any of them by
reason of the exercise of any such powers.
15.2 Regulation 87 shall not apply to the Company.
15.3 Any Director who serves on any committee, or who otherwise performs
services which in the opinion of the Directors are outside the scope of
the ordinary duties of a Director, may be paid such extra remuneration
by way of salary, commission or otherwise or may receive such other
benefits as the Directors may determine. Regulation 82 shall be extended
accordingly.
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<PAGE>
MEETINGS AND PROCEEDINGS OF DIRECTORS
16.1 Unless otherwise agreed by all of the Directors in any particular case,
at least 10 clear days' written notice shall be given to each Director
of every meeting of the Directors. Regulations 88 and 111 shall be
modified accordingly.
16.2 Each such notice shall (i) be sent to the address notified from time to
time by each Director to the Company Secretary as his address for the
service of such notices (or if no address has been so supplied, to his
last known address); (ii) contain an agenda specifying in reasonable
detail the matters to be discussed at the relevant meeting; (iii) be
accompanied by any relevant papers for discussion at such meeting; and
(iv) if sent to an address outside the United Kingdom, be sent by
courier or facsimile transmission.
16.3 The quorum at a meeting of Directors or at a meeting of any committee of
the Directors shall be three. If within half an hour of the time
appointed for the holding of any meeting of the Directors (or a
committee of the Directors) at least three Directors shall not be
present, the Director(s) present shall resolve to adjourn that meeting
to the same place and a specified time (which shall not be earlier than
three nor later than seven days after the date originally fixed for the
meeting). If at such adjourned meeting a quorum is not present within
half an hour from the time appointed therefor such adjourned meeting
shall be dissolved. An alternate Director shall be counted in the quorum
in the same capacity as his appointor but so that not less than three
individuals will constitute the quorum at such adjourned meeting.
Regulation 89 shall be modified accordingly.
16.4 All business arising at any meeting of the Directors or any committee of
the Directors shall be determined by resolution carried by a majority
except where the terms of any agreement for the time being binding on
all of the members and the Company provide otherwise.
16.5 A Director may vote, at any meeting of the Directors or of any committee
of the Directors, on any resolution, notwithstanding that it in any way
concerns or relates to a matter in which he has, directly or indirectly,
any kind of interest whatsoever, and if he shall vote on any such
resolution as aforesaid his vote shall be counted; and in relation to
any such resolution as aforesaid he shall (whether or not he shall vote
on the same) be taken into account in the calculating the quorum present
at the meeting and (save as otherwise agreed) may retain for his
absolute use and benefit all profits and advantages directly or
indirectly accruing to him thereunder or in consequence thereof.
16.6 Regulations 92 and 94 to 98 (inclusive) shall not apply to the Company.
16.7 Any or all Directors or members of a committee of the Directors may
participate in a meeting of the Directors or such committee by means of
conference telephone or similar communications equipment whereby all
persons participating in the meeting can hear each other and
participation in a meeting in this manner shall be deemed to constitute
presence in person at such meeting. Such a meeting shall be deemed to
take place where the largest group of those participating is assembled
or, if there is no such group, where the Chairman of the meeting is.
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16.8 The Chairman shall not be entitled to a second or casting vote.
Regulation 88 shall be modified accordingly.
PURCHASE OF OWN SECURITIES
17.1 Subject to the Act, the Company may purchase any of its own securities
(including any of its own shares of any class and the Warrants) and make
a payment in respect of such redemption or purchase, out of its
distributable reserves or out of a fresh issue of shares or otherwise
and may purchase any of the debt securities of its holding company in
accordance with the provisions of the Purchase Agreement and, without
prejudice to any approval required from the members, this Article 17
gives the Directors authority to approve any such purchase.
17.2 Subject to the Act, the members shall exercise or direct the exercise of
their voting rights (whether at a general or extraordinary meeting of
the shareholders or by consent in lieu of a meeting of shareholders) and
where appropriate to give effect to such matter shall convene any
necessary shareholder meeting for the purpose of passing (and, unless
pursuant to an amending resolution required under this Article 17.2, not
revoking) such resolutions as may be required by law to approve or
authorise any purchase pursuant to Article 17.1 above, including,
without limitation, any special resolutions required under sections 165
and/or 171 of the Act in connection with a purchase by the Company of
its own shares (whether out of distributable profits or out of the
proceeds of a fresh issue of shares or otherwise). The provisions of
Article 8.4 above shall apply mutatis mutandis to this Article 17.2 for
the purpose of giving effect to this Article 17.2.
THE SEAL
18.1 If the Company has a seal it shall only be used with the authority of
the Directors or of a committee of directors. The Directors may
determine who shall sign any instrument to which the seal is affixed and
unless otherwise so determined it shall be signed by a Director and by
the secretary or second Director. The obligation under Regulation 6
relating to the sealing of share certificates shall apply only if the
Company has a seal. Regulation 101 shall not apply to the Company.
18.2 The Company may exercise the powers conferred by section 39 of the Act
with regard to having an official seal for use abroad, and such powers
shall be vested in the Directors.
INDEMNITY
19.1 Subject to the provisions of and so far as may be permitted by law,
every Director, secretary or other officer of the Company shall be
indemnified by the Company out of the Company's own funds against and/or
exempted by the Company from all costs, charges, losses, expenses and
liabilities incurred by him in the actual or purported execution and/or
discharge of his duties and/or the exercise or purported exercise of his
powers and/or otherwise in relation to or in connection with his duties,
powers or office including (without prejudice to the generality of the
foregoing) any liability incurred by him in defending any proceedings,
civil or criminal, or in connection with any application under section
144 or section 727 of the
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Act, which relate to anything done or omitted or alleged to have been
done or omitted by him as an officer or employee of the Company and in
which judgement is given in his favour (or the proceedings are otherwise
disposed of without any finding or admission of any material breach of
duty on his part) or in which he is acquitted or in connection with any
application under any statute for relief from liability in respect of
any such act or omission in which relief is granted to him by the Court.
19.2 Without prejudice to the provisions of Article 19.1, the Directors shall
have the power to purchase and maintain insurance for or for the benefit
of any person who is or was at any time a Director or officer of any
Relevant Company (as defined in Article 19.3), or who is or was at any
time a trustee of any pension fund or employees' share scheme in which
employees of any Relevant Company are interested, including (without
prejudice to the generality of the foregoing) insurance against any
liability incurred by him in respect of any act or omission in the
actual or purported execution and/or discharge of his duties and/or in
the exercise or purported exercise of his powers and/or otherwise in
relation to his duties, powers or offices in relation to any Relevant
Company, or any such pension fund or employees' share scheme.
19.3 For the purpose of this Article 19, "Relevant Company" shall mean the
Company, any holding company of the Company or any other body, whether
or not incorporated, in which the Company or such holding company or any
of the predecessors of the Company or of such holding company has or had
any interest whether direct or indirect or which is in any way allied to
or associated with the Company, or any subsidiary undertaking of the
Company or of any such other body.
19.4 Regulation 118 shall not apply to the Company.
OVERRIDING PROVISIONS
20.1 To the extent of any inconsistency this Article shall have overriding
effect as against all other provisions of these Articles.
20.2 Notwithstanding any provision in these Articles to the contrary, unless
and until the circumstances referred to in Article 3.6 shall have
occurred, no resolution may validly be passed by the members or by the
Directors authorising any of the following actions without the prior
consent in writing of members holding shares representing at least 80
per cent. of the votes which may for the time being be cast at a general
meeting of the Company:
(a) taking or omitting to take any action which would involve a
breach of any one or more of Sections 9.2(c) (Limitation on
Transactions with Affiliates), 9.2(h) (Limitation on
Indebtedness), 9.2(j) (Amendments and Supplements requiring
consent of Purchasers) or 9.2(l) (US Tax Status);
(b) taking any action which would result in a Prohibited Disposal or
omitting to take any action if such omission would result in a
Prohibited Disposal; or
(c) the creation, allotment or issue of any Capital Shares or
securities or the grant of any right that would require the
allotment or issue of any such shares or securities (other
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than in connection with a Qualifying Public Offer) or the variation or
abrogation of any rights attaching to any such shares or securities
(other than pursuant to any obligation binding upon the Company on the
date of adoption of these Articles, including, for the avoidance of
doubt, pursuant to the exercise of the Warrants). Regulations 2 and 32
shall not apply to the Company.
20.3 The following matters shall be deemed to be a variation of the rights
attaching to, respectively, the Special Share and to the ordinary
shares:
(a) any amendment to these Articles or the Memorandum of
Association;
(b) any resolution to wind up the Company; or
(c) any resolution to increase, reduce or alter the authorised or
issued share capital of the Company.
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Exhibit M
Form of Articles of Association of UK Parent
<PAGE>
EXHIBIT M
(No. 3890177)
THE COMPANIES ACTS 1985 TO 1989
---------------------------
PRIVATE COMPANY HAVING A SHARE CAPITAL
---------------------------
ARTICLES OF ASSOCIATION
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TRANSWORLD HOLDINGS (UK) LIMITED
---------------------------
ASHURST MORRIS CRISP
Broadwalk House
5 Appold Street
London EC2A 2HA
Tel: 0171-638-1111
Fax: 0171-972 7990
DJM/PDG/BRK/T73800003
<PAGE>
THE COMPANIES ACTS 1985 TO 1989
PRIVATE COMPANY HAVING A SHARE CAPITAL
ARTICLES OF ASSOCIATION
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TRANSWORLD HOLDINGS (UK) LIMITED
(adopted by special resolution passed on 17 December 1999)
PRELIMINARY
1.1 In these Articles:
"AFFILIATE" means with respect to any specified Person, any other person
directly or indirectly controlling (including, but not limited to, each
director of such Person), controlled by or under direct or indirect
common control with such specified Person. A Person shall be deemed to
control a company if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
such company whether through the ownership of voting securities, by
contract or otherwise;
"ARTICLE" means the appropriate section of these Articles;
"AUDITORS" means the auditors of the Company from time to time;
"THE ACT" means the Companies Act 1985, including any statutory
modification or re-enactment thereof for the time being in force;
"BOARD" means the board of directors of the Company from time to time or
any duly authorised committee thereof;
"BUSINESS DAY" means any day on which banking institutions are generally
open in London for the transaction of normal banking business (excluding
Saturdays);
"GROUP" means the Company, its holding company and any subsidiary
undertakings;
"PERSON" has the meaning set out in the Purchase Agreement;
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"PERMITTED TRANSFER" means any Transfer of Capital Shares expressly
authorised by the provisions of the Voting Trust Agreement, the Purchase
Agreement or these Articles;
"PURCHASE AGREEMENT" means the Securities Purchase Agreement dated 17
December 1999 between, inter alia, Transworld Holdings UK, Ltd,
Transworld Healthcare UK, Ltd and Triumph Capital Group Inc;
"REGULATION" means the appropriate regulation from Table A;
"SURVIVING PERSON" means with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such
Disposition or the Person to which such Disposition is made;
"TABLE A" means Table A set out in the schedule to the Companies (Table
A to F) Regulations 1985 (SI 1985 No. 805) as amended by the Companies
(Table A to F) (Amendment) Regulations 1985 (SI 1985 No. 1052);
"TRANSFER" means any sale, transfer (whether voluntary or otherwise) or
other disposition of (including the granting of any security encumbrance
over) any security (including, for the avoidance of doubt, any
Subordinated Notes or Warrants) or any interest (legal or equitable)
therein;
1.2 Defined terms used in these Articles, unless the context otherwise
requires, shall have the meaning set out in the Purchase Agreement.
1.3 The following are the Articles of the Company to the exclusion, save as
provided herein, of all other regulations or Articles of Association.
Table A applies to the Company, as amended or excluded by the following
Articles and to the extent there is any inconsistency between the
following Articles and Table A, the following Articles shall prevail.
SHARE CAPITAL
2.1 The authorised share capital of the Company at the date of the adoption
of these Articles is (pounds sterling) 100,000 divided into 100,000
ordinary shares of (pounds sterling) 1 each.
ALLOTMENT OF SHARES
3. Subject to Section 80 of the Act all authorised but unissued shares
shall be at the disposal of the Directors and they may allot, grant
options over or otherwise dispose of them to such persons, at such
times, and on such terms as they think proper and Section 89 of the Act
shall not apply.
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SHARES
4.1 The liability of any member who has not paid a call shall be increased
by the addition at the end of the first sentence of Regulation 18 of the
words "and all expenses that may have been incurred by the Company by
reason of such non-payment".
TRANSFER OF SHARES
5.1 Except for Permitted Transfers, the Directors may, in their absolute
discretion and without giving any reason, decline to register the
transfer of a share, whether or not it is a fully paid share, and the
first sentence of Regulation 24 shall not apply to the Company nor shall
the provisions of Regulation 24(a) requiring the instrument or transfer
to be accompanied by the relevant share certificates. The Directors
shall be bound to register any Permitted Transfer within 14 days after
the lodging of the instrument of transfer with the Company and to enter
the name of the transferee in the register of members accordingly. No
shares in the Company may be transferred (whether by way of sale or
otherwise) except pursuant to a Permitted Transfer.
5.2 A member:-
(a) which is a company, limited or general partnership or other
business entity may transfer for any consideration whatsoever
all of the shares registered in its name to any other company
(in these Articles called an "ASSOCIATED COMPANY") which is an
Affiliate of that member or which is a subsidiary of that member
or which is another subsidiary of such a holding company (the
expressions "SUBSIDIARY" and "HOLDING COMPANY" having the
meanings given to them respectively in section 736 of the Act)
provided that if at any time the transferor and transferee cease
to be so associated, the transferee shall forthwith transfer to
the transferor the shares then registered in its name and in
default of so doing within a period of 14 days after being
required to do so by notice in writing given by any other
member, it shall be deemed to have given a Transfer Notice
pursuant to Article 7, the offer price for such shares being the
aggregate of the subscription price therefor together with any
dividends thereon but unpaid at the date of such notice;
(b) which is the general partner of a limited partnership at the
date of the adoption of those Articles may transfer for any
consideration whatsoever all of the shares registered in its
name to any other limited partner or other constituent owner of
such member.
5.3 Notwithstanding any other provision of these Articles, the Special
Shareholder may transfer all the shares registered in its name to its
partners in connection with a winding-up of its affairs.
GENERAL MEETINGS AND RESOLUTIONS
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6.1 Every notice convening a general meeting shall comply with the
provisions of section 372(3) of the Act as to the giving of information
to members in respect of their right to appoint proxies; and notices of
and other communications relating to any general meeting which any
member is entitled to receive shall be sent to the Directors and to the
auditors for the time being of the Company.
6.2 A member whose registered address is not within the United Kingdom shall
be entitled to have notices sent to him at his registered address
outside the United Kingdom and the last sentence of Regulation 112 and
the whole of Regulations 39 and 115 shall not apply.
6.3 No business shall be transacted at any general meeting unless a quorum
is present. Any two persons each being a member or a proxy for a member
or a duly authorised representative of a corporation, shall be a quorum.
6.4 If and for so long as the Company has only one member, that member
present in person or by proxy or if that member is a corporation by a
duly authorised representative shall be a quorum.
6.5 If at any meeting such a quorum is not present within half an hour from
the time appointed for a general meeting (or such longer interval as the
chairman of the meeting may think fit to allow) the general meeting
shall stand adjourned to the same day in the next week at the same time
and place or to such other day and at such other time and place as the
Directors may determine and of which at least 7 clear days notice shall
have been given to the members; and if at the adjourned general meeting
a quorum is not present within half an hour from the time appointed
therefor any two members present in person or by proxy shall constitute
a quorum.
6.6 An instrument appointing a proxy (and, where it is signed on behalf of
the appointor by an attorney, the letter of power of attorney or a duly
certified copy thereof) must either:
(a) be delivered at such place or one of such places (if any) as may
be specified for that purpose in or by way of note to the notice
convening the meeting (or, if no place is so specified, at the
registered office) at least one hour before the time appointed
for holding the meeting or adjourned meeting or (in the case of
a poll taken otherwise than at or on the same day as the meeting
or adjourned meeting) for the taking of the poll at which it is
to be used; or
(b) be delivered to the Secretary (or the chairman of the meeting)
on the day and at the place of, but in any event before the time
appointed for holding, the meeting or adjourned meeting or poll.
The instrument shall, unless the contrary is stated thereon, be
valid as well for any adjournment of the meeting as for the
meeting to which it relates. An instrument of proxy relating to
more than one meeting (including any adjournment thereof) having
once been so delivered for the purposes of any meeting shall not
require again to be delivered for the purposes of any subsequent
meeting to which it relates. Regulation 62 shall not apply to
the Company.
6.7 Regulations 40, 41 and 50 shall not apply to the Company.
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WRITTEN RESOLUTIONS
7.1 If and for so long as the Company has only one member and that member
takes any decision which is required to be taken in general meeting or
by means of a written resolution, that decision shall be as valid and
effectual as if agreed by the Company in general meeting save that this
paragraph shall not apply to resolutions passed pursuant to sections 303
and 391 of the Act.
7.2 Any decision taken by a sole member pursuant to Article 11.1 shall be
recorded in writing and delivered by that member to the Company for
entry in the Company's Minute Book.
7.3 In the case of a corporation or limited partnership, a resolution in
writing may be signed on its behalf by a director or the secretary
thereof or by its duly authorised representative. Regulation 53 shall be
extended accordingly. Regulation 53 (as so extended) shall apply mutatis
mutandis to resolutions in writing of any class of members of the
Company.
APPOINTMENT OF DIRECTORS
8.1 Regulation 64 shall not apply to the Company.
8.2 The number of Directors shall be a maximum of five.
8.3 The Directors shall not be required to retire by rotation and
Regulations 73 to 80 (inclusive) shall not apply to the Company and any
other references in Table A to retirement by rotation shall not apply.
8.4 The office of a Director shall be vacated in any of the following
events, namely:
(a) if he shall resign by notice to the Company;
(b) if notice requiring his removal and signed by the member holding
shares representing at least 80 per cent. of the votes which may
be cast at a general meeting;
(c) if he shall become prohibited by law from acting as a Director;
(d) if he becomes bankrupt or makes any arrangement or composition
with his creditors generally;
(e) if in England or elsewhere an order shall be made by any court
claiming jurisdiction in that behalf on the ground (however
formulated) of mental disorder for his detention or for the
appointment of a guardian or receiver or other person (by
whatever name called) to exercise powers with respect to his
property or affairs;
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(f) if he is admitted to hospital in pursuance of an application for
admission for treatment under the Mental Health Act 1983, or in
Scotland under the Mental Health (Scotland) Act 1960; or
(g) if in respect of any director appointed at the direction of a
member, such member deposits with the Company notice terminating
such appointment,
and regulation 81 shall be modified accordingly.
8.5 The Company may by ordinary resolution appoint a person who is willing
to act to be a Director whether to fill a vacancy or as an additional
director, provided that the appointment does not cause the number of
directors to exceed five.
8.6 The Directors may appoint a person who is willing to act to be a
Director, either to fill a vacancy or as an additional director,
provided that the appointment does not cause the number of directors to
exceed five.
BORROWING POWERS
9. Subject to Article 20.2, the Directors may exercise all the powers of
the Company to borrow d upon such terms and in such manner as they think
fit, and subject (in the case of any security convertible into shares)
to section 80 of the Act to grant any mortgage, charge or other security
over its undertaking, property and uncalled capital, or any part
thereof, and to issue debentures, debenture stock and other securities
whether outright or as security for any debt, liability or obligation of
the Company or of any third party.
ALTERNATE DIRECTORS
10.1 An alternate director shall not be entitled as such to receive any
remuneration from the Company, save that he may be paid by the Company
such part (if any) of the remuneration otherwise payable to his
appointor as such appointor may by notice in writing to the Company from
time to time direct, and the first sentence of Regulation 66 shall be
modified accordingly.
10.2 A Director, or any such other person as is mentioned in Regulation 65,
may act as an alternate director to represent more than one director,
and an alternate director shall be entitled at any meeting of the
directors or of any committee of the directors to one vote for every
director whom he represents in addition to his own vote (if any) as a
director, but he shall count as only one for the purpose of determining
whether a quorum is present.
10.3 The appointment of an alternate director shall determine on the
happening of any event which, if he were a Director, would cause him to
vacate such office or if the Director for whom he is an alternate ceases
to be a Director. Regulation 67 shall not apply to the Company.
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GRATUITIES AND PENSIONS
11.1 The Directors may exercise the powers of the Company conferred by clause
3(ii)(s) of the Memorandum of Association of the Company and shall be
entitled to retain any benefits received by them or any of them by
reason of the exercise of any such powers.
11.2 Regulation 87 shall not apply to the Company.
11.3 Any Director who serves on any committee, or who otherwise performs
services which in the opinion of the Directors are outside the scope of
the ordinary duties of a Director, may be paid such extra remuneration
by way of salary, commission or otherwise or may receive such other
benefits as the Directors may determine. Regulation 82 shall be extended
accordingly.
MEETINGS AND PROCEEDINGS OF DIRECTORS
12.1 Unless otherwise agreed by all of the Directors in any particular case,
at least 10 clear days' written notice shall be given to each Director
of every meeting of the Directors. Regulations 88 and 111 shall be
modified accordingly.
12.2 Each such notice shall (i) be sent to the address notified from time to
time by each Director to the Company Secretary as his address for the
service of such notices (or if no address has been so supplied, to his
last known address); (ii) contain an agenda specifying in reasonable
detail the matters to be discussed at the relevant meeting; (iii) be
accompanied by any relevant papers for discussion at such meeting; and
(iv) if sent to an address outside the United Kingdom, be sent by
courier or facsimile transmission.
12.3 The quorum at a meeting of Directors or at a meeting of any committee of
the Directors shall be three. If within half an hour of the time
appointed for the holding of any meeting of the Directors (or a
committee of the Directors) at least three Directors shall not be
present, the Director(s) present shall resolve to adjourn that meeting
to the same place and a specified time (which shall not be earlier than
three nor later than seven days after the date originally fixed for the
meeting). If at such adjourned meeting a quorum is not present within
half an hour from the time appointed therefor such adjourned meeting
shall be dissolved. An alternate Director shall be counted in the quorum
in the same capacity as his appointor but so that not less than three
individuals will constitute the quorum at such adjourned meeting.
Regulation 89 shall be modified accordingly.
12.4 All business arising at any meeting of the Directors or any committee of
the Directors shall be determined by resolution carried by a majority
except where the terms of any agreement for the time being binding on
all of the members and the Company provide otherwise.
12.5 A Director may vote, at any meeting of the Directors or of any committee
of the Directors, on any resolution, notwithstanding that it in any way
concerns or relates to a matter in which he has, directly or indirectly,
any kind of interest whatsoever, and if he shall vote on any such
resolution as aforesaid his vote shall be counted; and in relation to
any such resolution as aforesaid he shall (whether or not he shall vote
on the same) be taken into account in the calculating the quorum present
at the meeting and (save as otherwise agreed) may retain for
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his absolute use and benefit all profits and advantages directly or
indirectly accruing to him thereunder or in consequence thereof.
12.6 Regulations 92 and 94 to 98 (inclusive) shall not apply to the Company.
12.7 Any or all Directors or members of a committee of the Directors may
participate in a meeting of the Directors or such committee by means of
conference telephone or similar communications equipment whereby all
persons participating in the meeting can hear each other and
participation in a meeting in this manner shall be deemed to constitute
presence in person at such meeting. Such a meeting shall be deemed to
take place where the largest group of those participating is assembled
or, if there is no such group, where the Chairman of the meeting is.
12.8 The Chairman shall not be entitled to a second or casting vote.
Regulation 88 shall be modified accordingly.
THE SEAL
13.1 If the Company has a seal it shall only be used with the authority of
the Directors or of a committee of directors. The Directors may
determine who shall sign any instrument to which the seal is affixed and
unless otherwise so determined it shall be signed by a Director and by
the secretary or second Director. The obligation under Regulation 6
relating to the sealing of share certificates shall apply only if the
Company has a seal. Regulation 101 shall not apply to the Company.
13.2 The Company may exercise the powers conferred by section 39 of the Act
with regard to having an official seal for use abroad, and such powers
shall be vested in the Directors.
INDEMNITY
14.1 Subject to the provisions of and so far as may be permitted by law,
every Director, secretary or other officer of the Company shall be
indemnified by the Company out of the Company's own funds against and/or
exempted by the Company from all costs, charges, losses, expenses and
liabilities incurred by him in the actual or purported execution and/or
discharge of his duties and/or the exercise or purported exercise of his
powers and/or otherwise in relation to or in connection with his duties,
powers or office including (without prejudice to the generality of the
foregoing) any liability incurred by him in defending any proceedings,
civil or criminal, or in connection with any application under section
144 or section 727 of the Act, which relate to anything done or omitted
or alleged to have been done or omitted by him as an officer or employee
of the Company and in which judgement is given in his favour (or the
proceedings are otherwise disposed of without any finding or admission
of any material breach of duty on his part) or in which he is acquitted
or in connection with any application under any statute for relief from
liability in respect of any such act or omission in which relief is
granted to him by the Court.
14.2 Without prejudice to the provisions of Article 19.1, the Directors shall
have the power to purchase and maintain insurance for or for the benefit
of any person who is or
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was at any time a Director or officer of any Relevant Company (as
defined in Article 19.3), or who is or was at any time a trustee of any
pension fund or employees' share scheme in which employees of any
Relevant Company are interested, including (without prejudice to the
generality of the foregoing) insurance against any liability incurred by
him in respect of any act or omission in the actual or purported
execution and/or discharge of his duties and/or in the exercise or
purported exercise of his powers and/or otherwise in relation to his
duties, powers or offices in relation to any Relevant Company, or any
such pension fund or employees' share scheme.
14.3 For the purpose of this Article 19, "Relevant Company" shall mean the
Company, any holding company of the Company or any other body, whether
or not incorporated, in which the Company or such holding company or any
of the predecessors of the Company or of such holding company has or had
any interest whether direct or indirect or which is in any way allied to
or associated with the Company, or any subsidiary undertaking of the
Company or of any such other body.
14.4 Regulation 118 shall not apply to the Company.
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CONFORMED COPY
TRANSWORLD HOLDINGS (UK) LIMITED
AS PARENT
TRANSWORLD HEALTHCARE (UK) LIMITED
AS ORIGINAL BORROWER
AND
TRANSWORLD HOLDINGS (UK) LIMITED
TRANSWORLD HEALTHCARE (UK) LIMITED
OMNICARE LIMITED
ALLIED MEDICARE LIMITED
AMCARE LIMITED
ALLIED OXYCARE LIMITED
NOVACARE (UK) LIMITED
AS ORIGINAL GUARANTORS
PARIBAS
AS ARRANGER
PARIBAS
BARCLAYS BANK PLC
AS UNDERWRITERS
BARCLAYS BANK PLC
AS AGENT AND SECURITY AGENT
AND
OTHERS
-------------------------------------------
(POUNDS STERLING)45,500,000
SENIOR CREDIT AGREEMENT
-------------------------------------------
CLIFFORD CHANCE
<PAGE>
CONTENTS
CLAUSE Page
1. Definitions And Interpretation........................................1
2. The Facilities.......................................................31
3. Utilisation Of The Term Facility.....................................32
4. Interest Periods For Term Advances...................................35
5. Payment And Calculation Of Interest On Term Advances.................36
6. Utilisation Of The Revolving Facility................................37
7. Payment And Calculation Of Interest On Revolving Advances............39
8. Market Disruption And Alternative Interest Rates.....................40
9. Notification.........................................................41
10. Repayment Of The Term Facility.......................................42
11. Repayment Of The Revolving Facility..................................43
12. Mandatory Prepayment.................................................43
13. Cancellation And Voluntary Prepayment................................46
14. Taxes................................................................48
15. Tax Receipts.........................................................50
16. Increased Costs......................................................51
17. Illegality...........................................................52
18. Mitigation...........................................................53
19. Representations......................................................53
20. Financial Information................................................62
21. Other Information....................................................65
22. Financial Condition..................................................66
23. Covenants............................................................75
24. Events Of Default....................................................84
25. Guarantee And Indemnity..............................................90
26. Commitment Commission And Fees.......................................93
27. Costs And Expenses...................................................94
28. Default Interest And Break Costs.....................................95
29. Parent's Indemnities.................................................96
30. Currency Of Account And Payment......................................98
31. Payments.............................................................98
<PAGE>
32. Set-Off..............................................................99
33. Sharing.............................................................100
34. The Agent, The Arranger, The Underwriters And The Banks.............101
35. Assignments And Transfers...........................................106
36. Additional Borrowers................................................108
37. Additional Guarantors...............................................109
38. Calculations And Evidence Of Debt...................................110
39. Remedies And Waivers, Partial Invalidity............................111
40. Notices.............................................................111
41. Counterparts........................................................112
42. Amendments..........................................................113
43. Governing Law.......................................................114
44. Jurisdiction........................................................114
Schedule 1 THE BANKS ......................................................116
Schedule 2 FORM OF TRANSFER CERTIFICATE....................................117
Schedule 3 CONDITIONS PRECEDENT............................................121
Schedule 4 NOTICE OF DRAWDOWN..............................................127
Schedule 5 FORM OF COMPLIANCE CERTIFICATE..................................129
Schedule 6 FORM OF BORROWER ACCESSION MEMORANDUM...........................130
Schedule 7 FORM OF GUARANTOR ACCESSION MEMORANDUM..........................132
Schedule 8 ADDITIONAL CONDITIONS PRECEDENT.................................134
Schedule 9 FORM OF RESIGNATION NOTICE......................................136
Schedule 10 ASSOCIATED COSTS RATE..........................................137
Schedule 11 FORM OF CLOSING CERTIFICATE....................................139
<PAGE>
THIS AGREEMENT is made on 17 December 1999
BETWEEN
(1) TRANSWORLD HOLDINGS (UK) LIMITED a company incorporated in England and
Wales with company registration number 3890177 (the "PARENT");
(2) TRANSWORLD HEALTHCARE (UK) LIMITED (a company incorporated in England
and Wales with company registration number 03370146) in its capacity as
borrower hereunder (the "ORIGINAL BORROWER");
(3) TRANSWORLD HOLDINGS (UK) LIMITED, TRANSWORLD HEALTHCARE (UK) LIMITED,
OMNICARE LIMITED, ALLIED MEDICARE LIMITED, AMCARE LIMITED, ALLIED
OXYCARE LIMITED and NOVACARE (UK) LIMITED (the "ORIGINAL GUARANTORS");
(4) PARIBAS as arranger of the Facilities (the "ARRANGER");
(5) BARCLAYS BANK PLC as agent for the Banks (the "AGENT");
(6) BARCLAYS BANK PLC as security agent for and on behalf of the Finance
Parties (as defined below) (the "SECURITY AGENT");
(7) PARIBAS and BARCLAYS BANK PLC as underwriters of the Facilities (the
"UNDERWRITERS"); and
(8) THE BANKS (as defined below).
IT IS AGREED as follows.
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"ACCESSION MEMORANDUM" means a Borrower Accession Memorandum or a
Guarantor Accession Memorandum.
"ACCOUNTANTS REPORT" means the long form report by
PricewaterhouseCoopers dated December 1999 in relation to the Business
in the agreed form which deals with, among other things, the tax and VAT
treatment of the Group.
"ACCOUNT DEBTOR" in relation to any person, means any other person who
is or may become obligated to such first mentioned person under, with
respect to, or on account of, a receivable.
"ACQUISITION AGREEMENT" means, in relation to a Permitted Acquisition or
a Permitted Equity Funded Acquisition, the purchase agreement prepared
in accordance with its Acquisition Feasibility Memorandum between the
purchaser and the vendors together with all schedules, exhibits and
attachments to such agreement and all amendments to such purchase
agreement.
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"ACQUISITION COSTS" means all fees, out-of-pocket costs and expenses,
stamp, registration and other taxes incurred by the Parent or any other
member of the Group in connection with the a Permitted Acquisition, the
Facilities, the Warrants, the Notes, the Mezzanine Facility, the Finance
Documents or the Mezzanine Finance Documents, the documentation relating
to the Warrants and/or the documentation relating to the Notes.
"ACQUISITION DOCUMENTS" means the Acquisition Agreements and all
documents to be executed pursuant thereto in the form to be agreed for
the purposes of the relevant Acquisition Agreement and such other
documents (if any) relating to the transactions contemplated in such
agreements and identified by the Agent and the Parent in writing as an
Acquisition Document.
"ACQUISITION EXPENDITURE ACCOUNT" means an interest bearing account with
the Security Agent into which Available Cash is to be paid into and held
and which is charged in favour of the Security Agent for the obligations
of the Obligors under this Agreement. Such Available Cash may be
withdrawn from time to time from the date hereof for the purposes of
financing the Total Consideration.
"ACQUISITION FEASIBILITY MEMORANDUM" means, in relation to a Permitted
Acquisition, the acquisition feasibility memorandum (to be delivered to
the Agent as a condition precedent to drawdown of a Term B Advance)
describing the Permitted Acquisition and prepared in accordance with the
Acquisition Policy including:
(a) a report detailing the extent to which such acquisition deviates
(if at all) from the Acquisition Policy together with the
rationale for the Board's recommendation to make such deviation;
and
(b) the Acquisition Agreement marked to show material amendments
from the Framework Acquisition Agreement together with a
commentary explaining the rationale for such amendments.
"ACQUISITION POLICY" means, in relation to a Permitted Acquisition, the
acquisition policy of the Group as identified in Section I Clause C(5)
of Schedule 3 (Conditions Precedent).
"ACQUISITION WORKING CAPITAL" means, in relation to a Permitted
Acquisition, the estimated permanent working capital of the Relevant
Business being an amount equal to fifteen per cent. of the turnover of
the Relevant Business for the 12 months preceding the date of the
proposed acquisition.
"ADDITIONAL BORROWER" means any company which has become an Additional
Borrower in accordance with Clause 36 (Additional Borrowers).
"ADDITIONAL GUARANTOR" means any company which has become an Additional
Guarantor in accordance with Clause 37 (Additional Guarantors).
"ADDITIONAL OBLIGOR" means an Additional Borrower or Additional
Guarantor.
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"ADJUSTED CASH FLOW" means, in respect of any Relevant Period, Cash Flow
for such Relevant Period:
(a) plus Interest Receivable, to the extent received in cash;
(b) minus Interest Payable, to the extent payable in cash; and
(c) minus any taxes paid in cash during such Relevant Period.
"ADVANCE" means a Revolving Advance or a Term Advance.
"AGREED PRO FORMA ADJUSTMENTS" means in respect of any Permitted
Acquisition or Permitted Equity Funded Acquisition adjustments made to
EBIT relating to such acquisition which:
(a) add back any non-recurring costs and expenses of the vendors and
any overall reduction in operating expenses arising as a result
of such acquisition;
(b) deducting any new operational costs and expenses including
amounts payable to any superintendent or similar person; and
(c) in respect of any calculation of EBIT or EBITDA for any Relevant
Period where such Permitted Acquisition or Permitted Equity
Funded Acquisition did not occur at the commencement of such
Relevant Period, annualised actual EBIT or, as the case may be,
EBITDA of the Relevant Business or Restricted Subsidiary since
the date of such acquisition.
"APPLICABLE A MARGIN" means, in relation to the Term A Outstandings,
2.00% per annum.
"APPLICABLE B MARGIN" means, in relation to the Term B Outstandings,
2.75% per annum.
"APPLICABLE REVOLVING MARGIN" means, in relation to the Revolving
Outstandings, 2.00% per annum.
"APPLICABLE TREATY" means a double tax treaty or convention relating to
the relief from double taxation on income and capital.
"APPLICABLE TREATY BANKS" means a Bank acting out of a Facility Office
to which payments pursuant to this Agreement by a Borrower may be made
free and clear of any deduction or withholding on account of any taxes
of, or imposed by, the country of incorporation of such Borrower,
pursuant to an Applicable Treaty (assuming all relevant forms have been
duly completed and any necessary direction made).
"ASSOCIATED COSTS RATE" means, in relation to each Advance or Unpaid
Sum, the percentage rate from time to time determined by the Agent in
accordance with Schedule 11 (Associated Costs Rate).
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"AUTHORISED SIGNATORY" means, in relation to an Obligor or proposed
Obligor, any person who is duly authorised (in such manner as may be
reasonably acceptable to the Agent) to sign, seal or execute documents
on behalf of such Obligor and to take such action as is required of an
Authorised Signatory under the Finance Documents and in respect of whom
the Agent has received a certificate signed by a director or another
Authorised Signatory of such Obligor or proposed Obligor setting out the
name and signature of such person and confirming such person's authority
to act.
"AVAILABLE CASH" means cash from time to time, standing to the credit of
the Acquisition Expenditure Account in the name of the Borrower.
"AVAILABLE COMMITMENT" means, in relation to a Bank at any time, the
aggregate of its Available Term Commitment and Available Revolving
Commitment.
"AVAILABLE REVOLVING COMMITMENT" means, in relation to a Bank at any
time and save as otherwise provided herein, its Revolving Commitment
less its share of the Sterling Amount of the Revolving Outstandings at
such time provided that such amount shall not be less than zero.
"AVAILABLE REVOLVING FACILITY" means, at any time, the aggregate amount
of the Available Revolving Commitments adjusted, in the case of any
proposed utilisation, so as to take into account:
(a) any reduction in the Revolving Commitment of a Bank pursuant to
the terms hereof;
(b) any Revolving Advance which, pursuant to any other utilisation,
is to be made; and
(c) any Revolving Advance which is due to be repaid,
on or before the proposed Utilisation Date relating to such utilisation.
"AVAILABLE TERM COMMITMENT" means, in relation to a Bank at any time and
save as otherwise provided herein, the aggregate of its Available Term A
Commitment and its Available Term B Commitment at such time.
"AVAILABLE TERM A COMMITMENT" means, in relation to a Bank at any time
and save as otherwise provided herein, its Term A Commitment at such
time LESS the aggregate of its share of the Sterling Amount of the Term
A Advances which are then outstanding.
"AVAILABLE TERM B COMMITMENT" means, in relation to a Bank at any time
and save as otherwise provided herein, its Term B Commitment at such
time LESS the aggregate of its share of the Sterling Amount of the Term
B Advances which are then outstanding.
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"AVAILABLE TERM FACILITIES" means, at any time, the aggregate of the
Available Term A Facility and the Available Term B Facility at such time
and "AVAILABLE TERM FACILITY" means the amount of any such available
facility.
"AVAILABLE TERM A FACILITY" means, at any time, the aggregate amount of
the Available Term A Commitments adjusted, in the case of any proposed
utilisation, so as to take into account any reduction in the Term A
Commitment of a Bank on or before the proposed Utilisation Date relating
to such utilisation.
"AVAILABLE TERM B FACILITY" means, at any time, the aggregate amount of
the Available Term B Commitments adjusted, in the case of any proposed
utilisation, so as to take into account any reduction in the Term B
Commitment of a Bank on or before the proposed Utilisation Date relating
to such utilisation.
"BANK" means any financial institution:
(a) named in Schedule 1 (The Banks); or
(b) which has become a party hereto in accordance with the
provisions of Clause 35.4 (Assignments by Banks) or 35.5
(Transfers by Banks),
and which has not ceased to be a party hereto in accordance with the
terms hereof.
"BORROWER" means the Original Borrower and each Additional Borrower,
PROVIDED THAT such company has not been released from its rights and
obligations hereunder in accordance with Clause 36.3 (Resignation of a
Borrower).
"BORROWER ACCESSION MEMORANDUM" means a memorandum substantially in the
form set out in Schedule 6 (Form of Borrower Accession Memorandum).
"BUDGET" means, in relation to the Group and the period starting no
later than the date of this Agreement and ending 30 September 2004, the
Business Plan, and in relation to each successive twelve (12) month
period thereafter:
(a) a projected balance sheet;
(b) a projected profit and loss account;
(c) a projected cash flow statement; and
(d) a projected covenant calculation relating to each financial
undertaking contained in Clause 22.1 (Financial Covenants).
"BUSINESS" means the provision of healthcare services to the community
and NHS Trust falling into the following divisions:
(a) the supply of nurses and carers to the NHS local authorities,
private nursing homes, industry and private individuals;
(b) the supply of ostomy and urology products; and
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(c) the supply of oxygen cylinders and concentrators.
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
banks are open for business generally in London.
"BUSINESS PLAN" means the business plan for the Group and TW US Strategy
Paper describing the nature and extent of, and prospects for the Group's
business and operations, dated on or about the date of this Agreement
and prepared by the Parent.
"CASH EQUIVALENT INVESTMENTS" means:
(a) debt securities denominated in (i) US Dollars or (ii) euro or
Sterling ("OTHER CURRENCY") issued by the United States of
America or the United Kingdom ("UK") or any country which is a
member of the European Union whose indebtedness is rated AA or
better by Standard & Poor's Corporation which are (in each case)
not convertible into any other form of security;
(b) debt securities denominated in US Dollars or Other Currency
which are not convertible into any other form of security, rated
P-1 (Moody's Investor Services Inc.) or A-1 (Standard & Poor's
Corporation) and not issued or guaranteed by any member of the
Group;
(c) certificates of deposit denominated in US Dollars or Other
Currency issued by, and sterling acceptances by, banking
institutions authorised under applicable UK legislation which at
the time of making such issue or acceptances, have outstanding
debt securities rated as provided in paragraph (b) above; and
(d) such other securities (if any) as are approved as such in
writing by the Agent
PROVIDED THAT any such debt securities, certificates of deposit,
acceptances and other securities referred to in paragraphs (a) - (d)
above shall only constitute Cash Equivalent Investments if they have a
maturity of six months or less or (if they have a maturity of longer
than six months) they do not have a fixed interest rate/coupon.
"CAPITAL EXPENDITURE" shall have the meaning given to such term in
Clause 22.3 (Financial Definitions).
"CASH FLOW" shall have the meaning given to such term in Clause 22.3
(Financial Definitions).
"CHANGE OF CONTROL" means the occurrence of the following event or
circumstances:
(a) any person or group of connected persons which does not at the
date hereof have control of the Parent or any holding company of
the Parent acquires such control (for the purposes of this
paragraph "connected person" shall be construed in accordance
with Section 839 of the Income and Corporation Taxes Act 1988);
or
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(b) the persons listed in Clause 19.20 (Control of the Parent)
ceases to have control of the Parent.
"CLOSING CERTIFICATE" means the closing certificate substantially in the
form set out in Schedule 11 (Form of Closing Certificate).
"COMMITMENT" means, in relation to a Bank at any time, the aggregate of
its Term Commitment and its Revolving Commitment.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
set out in Schedule 5 (Form of Compliance Certificate).
"CONFIDENTIALITY UNDERTAKING" means a confidentiality undertaking in the
standard form from time to time of the LMA or in such other form as may
be agreed between the Parent and the Agent.
"DEBENTURE" means a debenture in the agreed form executed or to be
executed in favour of the Security Agent.
"DISPUTE" means any dispute referred to in Clause 44 (Jurisdiction).
"DORMANT SUBSIDIARY" means, on any given date, a Group company
(a) which has been dormant within the meaning of section 250(3) of
the Act for the period of 12 months ending on that date (or, if
a shorter period, for the period from the date of its
incorporation to that date) and;
(b) the value of whose assets does not exceed in aggregate
(pounds sterling)10,000.
"DUE DILIGENCE REPORT" means the preliminary legal due diligence report
in relation to the Group dated 16 December 1999, together with the
preliminary report dated 25 July 1999.
"EARN OUT" means, in relation to a Permitted Acquisition, the earn out
element (as set out in the Acquisition Policy, the related Acquisition
Feasibility Memorandum, the Framework Acquisition Agreement and the
relevant Acquisition Agreement) payable to the vendors as part of the
Total Consideration.
"ENCUMBRANCE" means (a) a mortgage, charge, pledge, lien or other
encumbrance securing any obligation of any person, (b) any arrangement
under which money or claims to, or the benefit of, a bank or other
account may be applied, set off or made subject to a combination of
accounts so as to effect discharge of any sum owed or payable to any
person or (c) any other type of preferential arrangement (including any
title transfer and retention arrangement) the effect of which is to give
a creditor a preferential position in relation to any asset of a person
on any insolvency proceeding of that person.
"ENVIRONMENTAL CLAIM" means any claim, proceedings or official
investigation by any person pursuant to any Environmental Law.
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"ENVIRONMENTAL LAW" means any applicable law in any jurisdiction in
which any member of the Group conducts business giving rise to legal
obligations or liability relating to the pollution or protection of the
environment or harm to or the protection of human health or the health
of animals or plants.
"ENVIRONMENTAL PERMITS" means any permit, licence, consent, approval and
other authorisation and the filing of any notification, report or
assessment required under any Environmental Law for the operation of the
business of any member of the Group conducted on or from the properties
owned or used by the relevant member of the Group.
"EVENT OF DEFAULT" means any circumstance described as such in Clause 24
(Events of Default).
"EXCESS CASH FLOW" has the meaning given to such term in Clause 22.3
(Financial Definitions).
"EXCLUDED PROCEEDS" means (a) aggregate Net Disposal Proceeds received
in respect of sales or other transfers of assets or revenues where the
proceeds of each such asset disposal do not exceed (pounds
sterling)50,000 (or its equivalent) and up to but not more than s
sterling100,000 (or its equivalent) in aggregate in any period of twelve
months (the "PERMITTED RETENTION") and (b) any insurance recovery where
the proceeds arising out of the same are to be applied and are applied
in acquiring replacement assets for the assets damaged or destroyed (or
in reinstating the relevant damaged assets) or meeting any liability in
respect of which such moneys are received within 180 days of receipt
PROVIDED THAT such proceeds are deposited into and held in the Holding
Account until such time that a replacement of such asset is required or
such reinstatement is made or such liability is met.
"EXISTING TW US LOAN " means the existing intra-group loans between TW
US and the Original Borrower in the amount of approximately
(pounds sterling)40,000,000.
"FACILITIES" means the Term Facilities and the Revolving Facility.
"FACILITY OFFICE" means, in relation to the Agent, each office
identified with its signature below or such other office(s) as it may
select by notice and, in relation to any Bank, each office notified by
it to the Agent in writing prior to the date hereof (or, in the case of
a Transferee, at the end of the Transfer Certificate to which it is a
party as Transferee) or such other office(s) as it may from time to time
select by notice to the Agent.
"FINAL MATURITY DATE" means:
(a) when designated "TERM A FACILITY" or "REVOLVING FACILITY", the
sixth anniversary of the date hereof; or
(b) when designated "TERM B FACILITY", the seventh anniversary of
the date hereof.
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<PAGE>
"FINANCE DOCUMENTS" means this Agreement, any Borrower Accession
Memorandum or Guarantor Accession Memorandum, the fee letters referred
to in Clauses 26.3 (Arrangement Fee), 26.4 (Agency Fee) and 26.5
(Underwriting Fee), the Security Documents, the Intercreditor
Arrangements, Mezzanine Warrant Instrument, the Hedging Agreements
entered into by a Bank (but not any other financial institution) and any
documents evidencing the terms of any other agreement or document that
may be entered into or executed pursuant to any of the foregoing by any
Obligors and any other document which is designated a "FINANCE DOCUMENT"
in writing signed by the Parent and the Agent.
"FINANCE LEASE" means a contract treated as a finance lease in
accordance with UK GAAP.
"FINANCE PARTIES" means the Agent, the Security Agent, the Arranger, the
Underwriters and the Banks and any Hedge Counterparties which are Banks.
"FINANCIAL INDEBTEDNESS" means any indebtedness in respect of or arising
under or in connection with:
(a) moneys borrowed (including overdrafts); or
(b) indebtedness under any debenture, bond (other than a performance
bond issued in respect of the trade obligations), note or loan
stock or other similar instrument; or
(c) any acceptance or documentary credit (other than in respect of
trade obligations); or
(d) receivables sold or discounted (otherwise than on a non-recourse
basis); or
(e) the acquisition cost of any asset to the extent payable after
the time of acquisition or possession by the person liable as
principal obligor for the payment thereof where the deferred
payment is arranged primarily as a method of raising finance or
financing or refinancing the acquisition of the asset acquired
(excluding, for the avoidance of doubt, trade credit with a term
of 180 days or less on customary terms); or
(f) the sale price of any asset to the extent paid before the time
of sale or delivery by the person liable to effect such sale or
delivery where the advance payment is arranged primarily as a
method of raising finance or financing or refinancing the
manufacture, assembly, acquisition or holding of the asset to be
sold (excluding, for the avoidance of doubt, trade credit with a
term of 180 days or less on customary terms); or
(g) Finance Leases, credit sale or conditional sale agreements
(whether in respect of land, buildings, plant, machinery,
equipment or otherwise) entered into primarily as a method of
raising finance or financing or refinancing the
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acquisition of the relevant asset (but not including liabilities
under operating leases); or
(h) the net amount from time to time due pursuant to any agreement
for managing or hedging currency and/or interest rate and/or
commodity risk whether by way of forward exchange, cap, collar,
swap, forward rate agreement or otherwise or the net amount from
time to time due under any other derivative contract; or
(i) the amount payable under any put option or other arrangement
(excluding, until exercisable, the warrants issued under the
Warrant Documents) whereby any member of the Group is liable, at
the request of a third party, to purchase share capital or other
securities issued by it or any other member of the Group prior
to the Final Maturity Date; or
(j) the amount payable by any member of the Group in respect of the
redemption of any share capital or other securities issued by it
prior to the Final Maturity Date; or
(k) the amount of any guarantee or indemnity of any person in
respect of any indebtedness falling within paragraphs (a) to (j)
inclusive of this definition,
and so that, where the amount of Financial Indebtedness falls to be
calculated, no amount shall be taken into account more than once in the
same calculation.
For the avoidance of doubt Financial Indebtedness shall not include
indebtedness incurred in relation to any Earn Outs payable at the date
hereof.
"FINANCIAL MODEL" means the financial model in the agreed form prepared
by PricewaterhouseCoopers.
"FINANCIAL QUARTER" shall have the meaning ascribed to it in Clause 22.3
(Financial Definitions).
"FLOTATION" means a successful application being made for any part of
the share capital of the Group or any holding company of the Parent to
be listed on any stock exchange or the grant of permission to deal in
any such share capital on any recognised exchange.
"FRAMEWORK ACQUISITION AGREEMENT" means the form of purchase agreement
as identified in Section I Clause C (5) of Schedule 3 (Conditions
Precedent).
"FUNDS FLOW STATEMENT" means the chart and memorandum in the agreed form
showing the payments to be made by each member of the Group and TW US at
or immediately prior to the date hereof for the purposes of repaying the
Existing TW US Loan.
"GROUP" means the Parent and its subsidiaries for the time being.
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"GROUP ASSETS" means all the assets, properties and business of the
Group taken as a whole.
"GROUP REVENUES" means all revenues of the Parent.
"GROUP STRUCTURE CHART" means the group structure chart in agreed form
showing:
(a) all members of the Group;
(b) any person in which any Group member has an interest in the
issued share capital or equivalent ownership interest of such
person;
(c) the jurisdiction of incorporation or establishment of each
person within (a) above; and
(d) that all members of the Group are wholly-owned subsidiaries of
the Parent.
"GUARANTOR ACCESSION MEMORANDUM" means a memorandum substantially in the
form set out in Schedule 7 (Form of Guarantor Accession Memorandum).
"GUARANTORS" means each of the Original Guarantors and each Additional
Guarantor.
"HEDGE COUNTERPARTY" means a Bank which has become a party to the
Intercreditor Arrangements as a Hedge Counterparty in accordance with
the provisions thereof.
"HEDGING AGREEMENTS" means each of the agreements entered into or to be
entered into between the Group member(s) approved by the Agent and a
Hedge Counterparty for the purpose of hedging interest rate liabilities
in accordance with Clause 23.34 (Hedging).
"HOLDING ACCOUNT" means the account specified in a letter between the
Parent and the Agent which account is held by the Original Borrower with
the Security Agent (or any other interest bearing account held in
England (or any other jurisdiction agreed to by the Security Agent
(acting reasonably)) with the Security Agent by a Group member which is
opened after the date hereof and after receipt by the Agent of written
confirmation from the Parent that such account is to be a "Holding
Account") (as the same may be redesignated, substituted or replaced from
time to time) which is pledged, charged or assigned to the Security
Agent pursuant to the Security Documents to secure all amounts due under
the Finance Documents and from which the only withdrawals which may be
made are to:
(a) (i) in the case of any disposal proceeds deposited in such
account, reinvest in assets which are similar to the assets to
which such disposal proceeds relate or (ii) in the case of
insurance proceeds deposited in such account, repair, replace or
reinstate the assets to which such insurance proceeds relate or
to meet a third party claim or (iii) in the case of acquisition
recoveries deposited in such account, discharge the liability,
charge or claim to which such acquisition recoveries relate or
to be applied in repair, replacement or reinstatement of assets
which are a total loss or damaged as a result of the event or
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circumstance giving rise to such acquisition recoveries PROVIDED
THAT, in the case of any withdrawal, such withdrawal is made as
soon as reasonably practicable and in any event within 90 days
(or such longer period agreed by the Agent) of receipt of such
disposal proceeds or, as the case may be, acquisition recoveries
or within 180 days (or such longer period agreed by the Agent)
of receipt of such insurance proceeds and provided further the
Parent has provided a certificate to the Security Agent
requesting withdrawal of such proceeds (setting out in
reasonable detail how such withdrawal shall be applied); or
(b) repay amounts due to the Finance Parties under this Agreement,
and the interest rate on the deposit in such account to be the rate
applicable to corporate customers of a similar standing to such Group
member in respect of deposits in the same currency of similar amounts
and similar duration.
"HYPERION" means Hyperion Capital.
"INDEBTEDNESS FOR BORROWED MONEY" means any indebtedness in respect of
or arising under or in connection with Financial Indebtedness (save for
Financial Indebtedness falling within paragraph (h) of the definition of
"FINANCIAL INDEBTEDNESS").
"INFORMATION MEMORANDUM" means the document approved by the Parent
concerning the Group which, at their request and on their behalf, has
been prepared in relation to this transaction and distributed by the
Arranger to selected banks.
"INITIAL INVESTOR" means Triumph Partners III, L.P. and each of its
permitted successors, assigns or transferees.
"INSTRUCTING GROUP" means:
(a) whilst there are no Outstandings, a Bank or Banks whose
Commitments amount (or, if each Bank's Commitment has been
reduced to zero, did immediately before such reduction to zero,
amount) in aggregate to more than sixty-six and two thirds per
cent. of the Total Commitments; and
(b) whilst there are Outstandings, a Bank or Banks to whom in
aggregate more than sixty-six and two thirds per cent. of the
Sterling Amount of the Outstandings is owed.
"INTELLECTUAL PROPERTY" means any and all interests in any part of the
world in or relating to registered and unregistered trade marks and
service marks, domain names, patents, registered designs, trade names,
business names, titles, registered or unregistered copyrights in
published and unpublished works, unregistered designs, inventions
registered or unregistered, data base rights, know-how, any other
intellectual property rights and any applications for any of the
foregoing and any goodwill therein.
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"INTERCREDITOR ARRANGEMENTS" means the intercreditor deed referred to in
Schedule 3 Part 1 paragraph E(3) (Conditions Precedent).
"INTEREST PERIOD" means, save as otherwise provided herein:
(a) any of those periods mentioned in Clause 4.1 (Interest Periods);
and
(b) in relation to an Unpaid Sum, any of those periods mentioned in
Clause 28.1 (Default Interest Periods).
"INTRA-GROUP BORROWERS" means the intra-group borrowers named in the
Intra-Group Loan.
"INTRA-GROUP LOAN" means any loan between members of the Group evidenced
by a loan agreement in the agreed form.
"IP LICENCE" means the licence or agreement pursuant to or under which
any Intellectual Property is held, used or exploited by any Group
member.
"JOINT VENTURE" means any joint venture entity, whether a company,
unincorporated firm, undertaking, association, joint venture or
partnership or any other entity.
"LEGAL OPINIONS" means the Legal Opinions delivered to the Agent in
accordance with Clause 2.3 (Conditions Precedent), Clause 36.2 (Borrower
Conditions Precedent) and Clause 37.2 (Guarantor Conditions Precedent).
"LEGAL RESERVATIONS" means the principle that equitable remedies may be
granted or refused at the discretion of a court, the limitation of
enforcement by laws relating to bankruptcy, insolvency, liquidation,
reorganisation, court schemes, moratoria, administration and other laws
generally affecting the rights of creditors, the time barring of claims
under the Limitation Acts, the possibility that an undertaking to assume
liability for or indemnify a person against non-payment of UK stamp duty
may be void and defences of set-off or counterclaim, rules against
contractual penalties and similar principles which are set out in the
Legal Opinions as qualifications as to matters of law.
"LIBOR" means, in relation to any amount owed by an Obligor hereunder on
which interest for a given period is to accrue:
(a) the percentage rate per annum equal to the offered quotation
which appears on the page of the Telerate Screen which displays
an average British Bankers Association Interest Settlement Rate
for sterling (being currently "3750") for such period at or
about 11.00 a.m. on the Quotation Date for such period or, if
such page or such service shall cease to be available, such
other page or such other service for the purpose of displaying
an average British Bankers Association Interest Settlement Rate
for such currency as the Agent, after consultation with the
Banks and the Parent, shall select; or
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(b) if no quotation for the relevant currency and the relevant
period is displayed and the Agent has not selected an
alternative service on which a quotation is displayed, the
arithmetic mean (rounded upwards to four decimal places) of the
rates (as notified to the Agent) at which each of the Reference
Banks was offering to prime banks in the London Interbank Market
deposits in the currency of such amount and for such period at
or about 11.00 a.m. on the Quotation Date for such period.
"LMA" means the Loan Market Association.
"MARKET REPORT" means the market report by Cambridge Pharma Consultancy
dated November 1999 in relation to the Group in agreed form.
"MANAGEMENT OPTIONS" means the seven (7) day option for management to
invest in the Original Borrower pursuant to the Securities Purchase
Agreement.
"MANDATORY PREPAYMENT ACCOUNT" means an interest bearing account held in
England by the Original Borrower with the Security Agent and identified
in a letter between the Original Borrower and the Agent as a Mandatory
Prepayment Account (as the same may be redesignated, substituted or
replaced from time to time) which is pledged, charged or assigned to the
Security Agent pursuant to the Security Documents to secure amounts due
under the Finance Documents and from which no withdrawals may be made by
any Group members and the interest rate on the deposit in such account
to be the rate applicable to corporate customers of a similar standing
to such Group member in respect of deposits in the same currency of
similar amounts and similar duration.
"MARGIN" means the Applicable A Margin (subject to Clause 5.3 (Term
Margin Ratchet)), the Applicable B Margin or, as the context may
require, the Applicable Revolving Margin (subject to Clause 7.3
(Revolving Margin Ratchet)).
"MATERIAL ADVERSE EFFECT" means (a) a material adverse effect on the
assets, property, business, financial condition or the results of
operations of the Group taken as a whole or (b) a material adverse
effect on the ability of any Obligor to comply with any of its payment
obligations (and its obligations under Clause 22.1 (Financial
Covenants)) under the Finance Documents.
"MATERIAL SUBSIDIARY" means the Obligors and each other member of the
Group whose assets exceed 5% of the total assets of the Group and whose
profit exceed 5% of the gross profit of the Group by reference to the
most recently delivered audited accounts.
"MEZZANINE FACILITY" means the mezzanine loan facility made available to
the Borrower (as defined therein) on the terms and conditions of the
Mezzanine Credit Agreement.
"MEZZANINE CREDIT AGREEMENT" means the mezzanine credit agreement dated
of even date herewith and made between Transworld Healthcare UK, Limited
as borrower and
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the banks and financial institutions named therein as Banks, setting out
the terms and conditions on which the Mezzanine Outstandings will be
made available.
"MEZZANINE FINANCE DOCUMENTS" means the Mezzanine Credit Agreement, the
Mezzanine Warrant Instrument, any guarantor accession memorandum under
the Mezzanine Credit Agreement, the Security Documents which provide
security to the Mezzanine Lenders, the Intercreditor Arrangements, the
fee letters referred to in Clause 26.3 (Arrangement Fee) of the
Mezzanine Credit Agreement and any documents evidencing the terms of any
other agreement or document that may be entered into or executed
pursuant to any of the foregoing by the Obligors or any of them and any
other document which is designated a "MEZZANINE FINANCE DOCUMENT" or
"FINANCE DOCUMENT" in writing signed by the Parent and the Mezzanine
Banks.
"MEZZANINE BANKS" means the "BANKS" as defined in the Mezzanine Credit
Agreement.
"MEZZANINE OUTSTANDINGS" means the loan in the maximum principal amount
of (pounds sterling)10,000,000 to be made available by the Mezzanine
Banks under the Mezzanine Credit Agreement, the rights in relation to
which are subject to the provisions of the Intercreditor Arrangements.
"MEZZANINE WARRANT INSTRUMENT" means the mezzanine warrant instrument
executed as a deed dated of even date hereof by the Original Borrower
and any other document or agreement entered into or executed in
connection with such instrument or the rights set out therein.
"MIRROR NOTES" means the mirror loan notes constituted by the Securities
Purchase Agreement.
"MIRROR PIK NOTES" means promissory loan notes constituted by the
Securities Purchase Agreement issued in lieu of the interest due on the
Mirror Notes.
"MIRROR NOTE DOCUMENTS" means the Mirror Notes and the Securities
Purchase Agreement in agreed form and any other documents entered into
pursuant thereto.
"NET DISPOSAL PROCEEDS" means the gross total proceeds (including any
amounts received in repayment of intercompany debt) received by Group
members in cash from all disposals of any revenues or fixed assets of
the Group (other than Excluded Proceeds) less:
(a) reasonable out of pocket expenses of the Group incurred due to
such disposal;
(b) restructuring and other costs incurred by the Group in
connection with any such disposal to the extent not included in
(a) above provided that such costs are in an amount acceptable
to an Instructing Group (acting reasonably);
(c) the VAT or similar tax paid or payable by any member of the
Group due to such disposal; and
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(d) any income, capital gains or other taxes incurred and required
to be paid by any member of the Group in connection with such
disposal as reasonably determined in good faith by such member
of the Group on the basis of the existing tax rates applicable
to the gain (if any) and after taking into account all available
credits, deductions and allowances.
"NOTICE OF DRAWDOWN" means a notice substantially in the form set out in
Schedule 4 (Notice of Drawdown).
"OBLIGORS" means the Parent, the Borrower and the Guarantors.
"ORIGINAL FINANCIAL STATEMENT" means:
(a) in relation to the Parent, its audited consolidated financial
statements for its financial year ended 30 September 1999; and
(b) in relation to each Obligor other than the Parent, its audited
financial statements for its financial year ended 30 September
1999; and
(c) in relation to any Additional Obligor, its audited financial
statements delivered pursuant to Schedule 8 (Additional
Conditions Precedent).
"ORIGINAL OBLIGORS" means the Original Borrower and the Original
Guarantors.
"ORIGINAL SENIOR SUBORDINATED NOTE AMOUNT" means the actual issued
amount (up to (pounds sterling)22,600,000) pursuant to the Securities
Purchase Agreement being the aggregate principal amount of the Senior
Subordinated Notes on issue but excluding any PIK Notes.
"ORIGINAL STERLING AMOUNT" means:
(a) in relation to a Revolving Advance, the amount specified in the
Notice of Drawdown relating thereto, as the same may be reduced
pursuant to Clause 6.2 (Reduction of Available Revolving
Commitment); and
(b) in relation to a Term Advance:
(i) where such Advance came into existence as a result of a
drawing under either Term Facility, the amount specified
as such in the Notice of Drawdown relating thereto, as
the same may be reduced pursuant to Clause 3.4
(Reduction of Available Term Commitment);
(ii) where such Term Advance came into existence upon the
consolidation of two or more Term Advances, the
aggregate of the Sterling Amounts of the Term Advances
so consolidated; and
(iii) where such Term Advance came into existence upon the
division of a Term Advance, the amount specified as such
by the relevant Borrower pursuant to Clause 4.4
(Division of Term Advances).
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"OUTSTANDINGS" means, at any time, the Term Outstandings and the
Revolving Outstandings.
"PARTY" means a party to this Agreement.
"PAYMENT BLOCKAGE EVENT" means:
(a) the occurrence of any Event of Default which is continuing; or
(b) any event or circumstance which would become (with the passage
of time, the giving of notice in each case as contemplated or
required under Clause 24 (Events of Default)) an Event of
Default PROVIDED THAT in the case of any event or circumstance
falling within this paragraph (b) such Payment Blockage Event
shall not be capable of "continuing" for more than 30 days with
respect to a particular event or circumstance.
"PERMITTED ACQUISITIONS" means an acquisition of a business (a "RELEVANT
BUSINESS") where:
(a) the acquisition comprises an acquisition of assets and not
shares;
(b) the assets to be acquired are free from all Encumbrances (except
the Encumbrance identified in paragraph (h) and (i) of the
definition of Permitted Encumbrances) and any other third party
claim;
(c) the Relevant Business is substantially similar to paragraph (a)
of the definition of Business as conducted at the time of the
proposed acquisition;
(d) the Total Consideration for any single Permitted Acquisition
hereunder shall not exceed five times EBITDA. Where the turnover
of the Relevant Business is up to (pounds sterling)200,000,
EBITDA shall be evidenced by the latest available financial
statements and where such turnover is greater than
(pounds sterling)200,000, EBITDA shall be determined by
reference to the latest available audited financial statements
or the latest available financial statements for a twelve (12)
month period reviewed by an independent accounting firm;
(e) the Relevant Business must have a positive Adjusted Cash Flow
taking into account the applicable Agreed Pro Forma Adjustments;
(f) a certificate signed by the Chief Financial Officer of the
Parent (supported by a board resolution authorising the issue of
such certificate) confirming that the Group companies have
sufficient available cash resources and/or credit facilities
under or permitted by the terms of this Agreement to meet the
ongoing working capital requirements of the Group as enlarged by
such acquisition;
(g) the Revised Financial Projections demonstrate that the Group
will at all times be in compliance with its obligations under
Clause 22 (Financial Condition).
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"PERMITTED DISPOSALS" means:
(a) disposals on arm's length terms of stock in trade or expenditure
of cash by a Group member in its ordinary course of trade;
(b) disposals:
(i) by an Obligor to another Obligor (other than the Parent
or the Original Borrower) which is party to a legally
valid, binding and (subject to the Legal Reservations)
enforceable Security Document which creates a first
priority Encumbrance over the assets and/or revenue
disposed of; or
(ii) by a member of the Group which is not an Obligor to
another member of the Group (other than to the Parent or
the Original Borrower) PROVIDED THAT, in the case of
transfer to an Obligor, such assets and/or revenue are
not subject to any material liabilities or Encumbrances;
(c) disposals for cash on arm's length terms of any surplus or
obsolete or worn-out assets not required for the efficient
operation of the business of the Group by any Group member;
(d) disposals of Cash Equivalent Investments on arm's length terms;
and
(e) disposals on arm's length terms of assets in return for other
assets of comparable or greater value;
(f) disposals on arm's length terms of assets the proceeds of which
are to be re-invested in similar or like assets within a period
of 180 days from the date of receipt of such proceeds by the
relevant member of the Group;
(g) disposals of cash where such disposal is not prohibited by the
Finance Documents;
(h) any other disposal PROVIDED THAT the consideration (both cash
and non-cash) received for such disposal(s) does not exceed in
aggregate (pounds sterling)250,000 in any period of twelve
months.
"PERMITTED ENCUMBRANCE" means:
(a)
(i) any netting or set-off arrangement (or any Encumbrance
over a credit balance in a bank account which is entered
into in order to effect such an arrangement) entered
into by any member of the Group in the normal course of
its banking arrangements;
(ii) any netting or set-off arrangement under a Hedging
Agreement where the obligations of other parties
thereunder are calculated by reference to net exposure
thereunder (but not any netting or set-off relating to
such
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<PAGE>
Hedging Agreement in respect of cash collateral or any
other Encumbrance except as otherwise permitted
hereunder);
(b) any title transfer or retention of title arrangement entered
into by any member of the Group in the normal course of its
trading activities on the counterparty's standard or usual
terms;
(c) any lien arising by operation of law and in the normal course of
business PROVIDED THAT such lien is discharged within thirty
days of arising;
(d) any Encumbrance arising under or evidenced by a Security
Document;
(e) any Encumbrance entered into pursuant to this Agreement;
(f) any Encumbrance arising under the Mezzanine Credit Agreement;
(g) any lien in favour of a bank over goods and documents of title
to goods arising in the ordinary course of documentary credit
transactions entered into in the ordinary course of trade; and
(h) any Encumbrance constituted by a Finance Lease which does not
exceed (pounds sterling)50,000 for each transaction and subject
to an aggregate amount which does not at any time exceed
(pounds sterling)500,000;
(i) in addition to any Encumbrances subsisting pursuant to paragraph
(a) to (h) above any other Encumbrances PROVIDED THAT the amount
secured by such Encumbrances referred to in this paragraph (i)
does not at any time exceed (pounds sterling)200,000.
"PERMITTED EQUITY FUNDED ACQUISITIONS" means an acquisition of the whole
of the shares in a limited liability company (a "RESTRICTED SUBSIDIARY")
or the acquisition of a business (a "PERMITTED BUSINESS") funded
entirely from Available Cash where:
(a) no later than eight days before the purchase date of a Permitted
Equity Funded Acquisition, the Agent has received all the
materials set out in Clause 3.2.3 and Schedule 3 (Conditions
Precedent) Part II it would have received had this acquisition
been a Permitted Acquisition;
(b) the acquisition comprises an acquisition of assets of a
Permitted Business or shares of a Restricted Subsidiary;
(c) the assets of the Permitted Business to be acquired are free
from all Encumbrances and any other third party claims;
(d) the Restricted Subsidiary (i) holds its assets free from all
Encumbrances (except the Encumbrance identified in paragraph (h)
and (i) of the definition of Permitted Encumbrances), (ii) is
acquired on arm's length terms, (iii) has no Financial
Indebtedness and (iv) accedes to this Agreement as a Guarantor
pursuant to Clause 37 (Additional Guarantors);
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<PAGE>
(e) the Relevant Business or the Restricted Subsidiary's business is
substantially similar to paragraph (a) of the definition of
business as conducted at the time of the proposed acquisition;
(f) the Restricted Subsidiary or Permitted Business must be EBITDA
positive. Where the turnover of the Relevant Business or
Restricted Subsidiary is up to (pounds sterling)200,000, EBITDA
shall be evidenced by the latest available financial statements
and where such turnover is greater than (pounds sterling)
200,000, EBITDA shall be determined by reference to the latest
available audited financial statements or the latest financial
statements for a twelve (12) month period reviewed by an
independent accounting firm;
(g) the Restricted Subsidiary or the Permitted Business must have a
positive Adjusted Cash Flow taking into account the applicable
Agreed Pro Forma Adjustments;
(h) a certificate signed by the Chief Financial Officer of the
Parent (supported by a board resolution authorising the issue of
such certificate) confirming that the Group companies have
sufficient available cash resources and/or credit facilities
under or permitted by the terms of this Agreement to meet the
ongoing working capital requirements of the Group as enlarged by
such acquisition;
(i) the Revised Financial Projections demonstrate that the Group
will at all times be in compliance with its obligations under
Clause 22 (Financial Condition); and
(j) the aggregate amount of Total Consideration for all Permitted
Equity Funded Acquisitions hereunder shall not exceed
(pounds sterling)5,000,000 in each financial year.
"PERMITTED INDEBTEDNESS" means:
(a) any Financial Indebtedness arising under or permitted pursuant
to the Finance Documents;
(b) any Financial Indebtedness arising under the Mezzanine Credit
Agreement;
(c) any Financial Indebtedness arising under the Senior Subordinated
Note Documents or the Mirror Note Documents;
(d) any Financial Indebtedness arising under Permitted Transactions;
(e) any Financial Indebtedness arising under Permitted Treasury
Transactions;
(f) any Financial Indebtedness PROVIDED THAT such Financial
Indebtedness is subordinated on terms acceptable to an
Instructing Group);
(g) any Financial Indebtedness arising under Finance Leases;
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<PAGE>
(h) any Financial Indebtedness under unsecured overdraft facilities
in an amount, when aggregated with the amount of all
indebtedness incurred under (i) below, not exceeding
(pounds sterling)100,000 (or its equivalent) at any time;
(i) any other Financial Indebtedness which, when aggregated with all
Financial Indebtedness incurred under (h) above, does not exceed
(pounds sterling)100,000 (or its equivalent) at any time.
"PERMITTED TRANSACTIONS" means:
(a) Intra-Group Loans PROVIDED THAT such loans are:
(i) trade credits or guarantees or indemnities granted in
the ordinary course of trading and upon terms usual for
trade; or
(ii) loans by a member of the Group which is not an Obligor
to another member of the Group which is not an Obligor;
or
(iii) loans by an Obligor to the Original Borrower to fund the
obligations of the Original Borrower under the Finance
Documents, the Mezzanine Documents or, as the case may
be, the Mirror Notes provided that in each case the
proceeds of such Intra Group Loan are immediately
applied in satisfaction of such obligation(s);
(iv) loans by an Obligor to another Obligor (other than the
Parent or the Original Borrower);
(v) loans by an Obligor to the Parent to fund (1) tax
liabilities and (2) administration costs provided that
the aggregate amount of such loans outstanding do not
exceed (pounds sterling)100,000 per annum; and
(vi) loans by any Obligor to any of its employees provided
that the aggregate amount of such loans outstanding at
anytime does not exceed (pounds sterling)250,000.
(b) payments permitted pursuant to Clause 23.24 (Dividends,
Distributions and Interest).
"PERMITTED TREASURY TRANSACTIONS" means the Treasury Transactions
entered into in accordance with Clause 23.34 (Hedging).
"PIK NOTES" means the promissory loan notes constituted by the
Securities Purchase Agreement issued in lieu of interest on the Senior
Subordinated Notes.
"POTENTIAL EVENT OF DEFAULT" means any event which would become (with
the passage of time, the giving of notice or any combination thereof) an
Event of Default PROVIDED THAT any such event which requires the
satisfaction of any conditions as to materiality before it becomes an
Event of Default shall not be a Potential Event of Default until that
condition is satisfied.
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"PROPORTION" means, in relation to a Bank:
(a) whilst no Advance is outstanding, the proportion borne by its
Commitment to the Total Commitments (or, if the Total
Commitments are then zero, by its Commitment to the Total
Commitments immediately prior to their reduction to zero); or
(b) whilst at least one Advance is outstanding, the proportion borne
by its share of the Sterling Amount of the Outstandings to the
Sterling Amount of the Outstandings.
"QUALIFYING BANK" means an Applicable Treaty Bank or a Bank acting out
of a Facility Office to which payments pursuant to this Agreement by a
Borrower may be made free and clear of any deduction or withholding on
account of any taxes of, or imposed by, the Relevant Jurisdiction of
such Borrower.
"QUOTATION DATE" means, in relation to any period for which an interest
rate is to be determined hereunder, the day on which quotations would
ordinarily be given by prime banks in the London Interbank Market for
deposits in the currency in relation to which such rate is to be
determined for delivery on the first day of that period, PROVIDED THAT,
if, for any such period, quotations would ordinarily be given on more
than one date, the Quotation Date for that period shall be the last of
those dates.
"REFERENCE BANKS" means the principal London offices of Barclays Bank
PLC, Paribas and such Banks as may be appointed as such by the Agent
after consultation with the Parent.
"RELIANCE LETTER" means any letter in the agreed form from a provider of
a Report and which is addressed to the Agent (on behalf of the Finance
Parties) pursuant to which the provider of the Report agrees that the
Finance Parties are entitled to rely on such Report.
"REPAYMENT DATE" means, in relation to any Revolving Advance, the last
day of the Term thereof.
"REPEATED REPRESENTATIONS" means:
(a) on the date hereof and on the first date on which an Advance is
made under the Facilities, all of the representations set out in
Clause 19 (Representations); and
(b) at any other time, each of the representations set out in:
(i) Clause 19.1 (Status) to Clause 19.10 (No Immunity) other
than Clauses 19.3 (Execution and Power), 19.7 (Validity
and Admissibility in Evidence) and 19.4.2 (No Material
Proceedings); and
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<PAGE>
(ii) Clause 19.14 (No Material Defaults) to Clause 19.32
(Year 2000 Compliance) other than Clauses 19.15
(Information), 19.16 (Information Memorandum), 19.23
(Consents and Approvals).
"REPORTS" means the Accountants Report, the Due Diligence Report and the
Market Report.
"RESIGNATION NOTICE" means a notice substantially in the form set out in
Schedule 9 (Form of Resignation Notice).
"REVISED FINANCIAL PROJECTIONS" means the financial projections of the
Group and each Group member on a consolidated and consolidating basis
prepared on a pro forma basis assuming that the proposed acquisition was
completed at the start of the twelve month period ending on the next
Quarter Date falling after the proposed Purchase Date.
"REVOLVING ADVANCE" means an advance made or to be made by the Banks
under the Revolving Facility.
"REVOLVING COMMITMENT" means, in relation to a Bank at any time and save
as otherwise provided herein, the amount set opposite its name under the
heading "REVOLVING COMMITMENT" in Schedule 1 (The Banks).
"REVOLVING FACILITY" means the revolving loan granted to the Borrower in
this Agreement.
"REVOLVING OUTSTANDINGS" means, at any time, the aggregate of the
Sterling Amounts of each outstanding Revolving Advance.
"REVOLVING TERMINATION DATE" means the date falling one month prior to
the Final Maturity Date PROVIDED THAT if such day is not a Business Day,
it shall be deemed to be the next succeeding Business Day.
"ROLLOVER ADVANCE" means an Advance which is used to refinance a
maturing Advance and which is the same amount or lesser amount and the
same currency as such maturing Advance and is to be drawn on the day
such maturing Advance is to be repaid.
"SECURITIES PURCHASE AGREEMENT" means the loan note instrument made by
the Parent constituting up to (pounds sterling)22,600,000 senior
subordinated loan notes, 9.375% due 2007 and by the Original Borrower
constituting up to (pounds sterling)22,600,000 senior subordinated
mirror notes, 9.375% due 2007.
"SECURITY" means the security from time to time constituted by or
pursuant to the Security Documents.
"SECURITY DOCUMENTS" means each of the Debentures by each Obligor
together with any other document entered into by any member of the Group
creating or evidencing security for all or any part of the obligations
of the Obligors or any of them under any
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of the Finance Documents whether by way of personal covenant, charge,
security interest, mortgage, pledge or otherwise and as referred to in
Part I Section E of Schedule 3 (Conditions Precedent).
"SENIOR SUBORDINATED NOTES" means the senior subordinated loan notes
constituted by the Securities Purchase Agreement.
"SENIOR SUBORDINATED NOTE DOCUMENTS" means the Senior Subordinated Notes
and the Securities Purchase Agreement in agreed form and any other
documents entered into pursuant thereto.
"SENIOR SUBORDINATED NOTE HOLDERS" means the holders of any Senior
Subordinated Notes from time to time.
"SERVICE CONTRACTS" means the deed of restrictive covenant in agreed
form entered into between the Original Borrower and Timothy Aitken,
Sarah Eames and Wayne Palladino.
"SOLVENCY CERTIFICATE" means each of the solvency certificates certified
by the Chief Finance Officer of the Parent in relation to the solvency
of the Parent and the Original Borrower and certified by the Chief
Finance Officer of TW US in relation to the solvency of TW US.
"STERLING AMOUNT" means:
(a) in relation to an Advance, its Original Sterling Amount as
reduced by the proportion (if any) of such Advance which has
been repaid; and
(b) in relation to the Outstandings, the aggregate of the Sterling
Amounts of each outstanding Advance.
"STRATEGIC SALE" means the sale, liquidation or disposition or
(including by way of merger or consolidation, regardless of whether the
Parent or the Original Borrower are the surviving or resulting
corporation) of stock or assets accounting for ninety per cent. (90%) or
more of the total value of all Group Assets or generating ninety per
cent. (90%) or more of all Group Resources.
"SYNDICATION DATE" means the day specified by the Arranger as the date
on which primary syndication of the Facilities is completed.
"TERM" means, save as otherwise provided herein in relation to any
Advance, the period for which such Advance is borrowed, as specified in
the Notice of Drawdown relating thereto.
"TERM ADVANCE" means a Term A Advance or a Term B Advance.
"TERM A ADVANCE" means an advance (as from time to time consolidated,
divided or reduced by repayment) made or to be made by the Banks under
the Term A Facility.
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"TERM B ADVANCE" means an advance (as from time to time consolidated,
divided or reduced by repayment) made or to be made by the Banks under
the Term B Facility.
"TERM AVAILABILITY PERIOD" means the Term A Availability Period and the
Term B Availability Period.
"TERM A AVAILABILITY PERIOD" means the period from the date hereof to
and including the earlier of (a) thirty days from the date hereof and
(b) the first Business Day on which the Available Term A Commitment of
each of the Banks is zero.
"TERM B AVAILABILITY PERIOD" means the period from the date hereof to
and including the earlier of (a) thirty-six months from the date hereof
and (b) the first Business Day on which the Available Term B Commitment
of each of the Banks is zero.
"TERM COMMITMENT" means, in relation to a Bank at any time and save as
otherwise provided herein, the aggregate of its Term A Commitment and
its Term B Commitment.
"TERM A COMMITMENT" means, in relation to a Bank at any time and save as
otherwise provided herein, the amount set opposite its name under the
heading "TERM A COMMITMENT" in Schedule 1 (The Banks).
"TERM B COMMITMENT" means, in relation to a Bank at any time and save as
otherwise provided herein, the amount set opposite its name under the
heading "TERM B COMMITMENT" in Schedule 1 (The Banks).
"TERM FACILITIES" means the Term A Facility and the Term B Facility and
"TERM FACILITY" shall mean any one of them.
"TERM A FACILITY" means the term loan facility granted to the Borrowers
under sub-clause 2.1.1 (Grant of the Facilities) of this Agreement.
"TERM B FACILITY" means the term loan facility granted to the Borrowers
under sub-clause 2.1.2 (Grant of the Facilities) of this Agreement.
"TERM OUTSTANDINGS" means, at any time, the aggregate of the Term A
Outstandings and the Term B Outstandings at such time.
"TERM A OUTSTANDINGS" means, at any time, the aggregate principal amount
of the outstanding Term A Advances.
"TERM B OUTSTANDINGS" means, at any time, the aggregate principal amount
of the outstanding Term B Advances.
"TERM REPAYMENT DATE" means the date specified in Clause 10.1 (Term
Repayment Instalments), provided that if such date is not a Business
Day, it shall be deemed to be the next succeeding Business Day.
"TOTAL COMMITMENTS" means, at any time, the aggregate of the Banks'
Commitments.
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"TOTAL CONSIDERATION" means, in relation to a Permitted Acquisition, the
aggregate amount of:
(a) the gross payment to the vendors;
(b) the Acquisition Working Capital; and
(c) the Earn Out.
"TRANSFER CERTIFICATE" means a certificate substantially in the form set
out in Schedule 2 (Form of Transfer Certificate) or the standard form
from time to time of the LMA Transfer Certificate (Par) signed by a Bank
and a Transferee under which:
(a) such Bank seeks to procure the transfer to such Transferee of
all or a part of such Bank's rights, benefits and obligations
hereunder upon and subject to the terms and conditions set out
in Clause 35.3 (Assignments and Transfers by Banks); and
(b) such Transferee undertakes to perform the obligations it will
assume as a result of delivery of such certificate to the Agent
as contemplated in Clause 35.5 (Transfers by Banks).
"TRANSFER DATE" means, in relation to any Transfer Certificate, the date
for the making of the transfer as specified in such Transfer
Certificate.
"TRANSFEREE" means a person to which a Bank seeks to transfer all or
part of such Bank's rights, benefits and obligations under the Finance
Documents.
"TREATY ON EUROPEAN UNION" means the Treaty of Rome of 25 March 1957, as
amended by the Single European Act 1986 and the Maastricht Treaty (which
was signed at Maastricht on 7 February 1992 and came into force on 1
November 1993).
"TREASURY TRANSACTION" means any currency or interest purchase, cap or
collar agreement, forward rate agreements, interest rate or currency
future or option contract, foreign exchange or currency purchase or sale
agreement, interest rate swap, currency swap or combined interest rate
and currency swap agreement and any other similar agreement.
"TW US" means Transworld Healthcare, Inc., a company incorporated in the
state of New Jersey, United States of America.
"TW US STRATEGY PAPER" means the strategy paper prepared by TW US
setting out the business strategy of TW US.
"UNPAID SUM" means the unpaid balance of any of the sums referred to in
Clause 28.1 (Default Interest Periods).
"UK GAAP" means generally accepted accounting principles in the United
Kingdom.
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"UTILISATION DATE" means, in relation to an Advance, the date on which
it is to be made.
"VOTING TRUST AGREEMENT" means the voting trust agreement dated on or
about the date hereof and made between the Parent, the Initial Investor,
the Original Borrower, TW US and the Trustee (as defined therein).
"WAREHOUSE ACQUISITION COST" means an amount equal to approximately
(pounds sterling)1,900,000 being the cost incurred by and payable to
Hyperion in relation to the acquisitions of Odiham, Finchley and
Birmingham made by Hyperion on behalf of Allied Medicare.
"WARRANT DOCUMENTS" means the Warrant Instrument and Mezzanine Warrant
Instrument.
"WARRANT INSTRUMENT" means the warrant instrument pursuant to which
warrants are to be issued to Senior Subordinated Noteholders pursuant to
the Securities Purchase Agreement executed as a deed dated of even date
herewith by the Original Borrower and any other document or agreement
entered into or executed in connection with such instrument or the
rights set out therein.
1.2 INTERPRETATION
Any reference in this Agreement to:
the "AGENT", any "ARRANGER", any "UNDERWRITER" the "SECURITY AGENT", any
"HEDGE COUNTERPARTY" or any "BANK" shall be construed so as to include
it and any subsequent successors and permitted transferees and assigns
in accordance with their respective interests;
a document is in "AGREED FORM" if it is initialled as such on or before
the date hereof for the purposes of identification by or on behalf of
the Parent and the Arranger or Agent or is executed on or before the
date hereof by the Parent and the Arranger or Agent or, if not so
executed or initialled, is in form and substance reasonably satisfactory
to the Agent;
"CONTINUING", in relation to an Event of Default, shall be construed as
a reference to an Event of Default which has not been waived in
accordance with the terms hereof or remedied and, in relation to a
Potential Event of Default, one which has not ceased to be a Potential
Event of Default;
the "CONTROL" of a company or corporation shall be construed as:
(a) the power (whether by way of ownership of shares, proxy,
contract, agency, operation of law, or otherwise, and whether
direct or indirect) to:
(i) cast, or control the casting of, more than one-half of
the maximum number of votes that might be cast at a
general meeting of that company or corporation; or
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(ii) appoint or remove all, or the majority, of the directors
or other equivalent officers of that company or
corporation (and the relevant person or persons shall be
deemed to have power to make such an appointment if:
(1) an individual cannot be appointed as a director
or an equivalent officer of that company or
corporation without the exercise by the relevant
person or persons of such power in the
individual's favour; or
(2) an individual's appointment as a director or an
equivalent officer of that company or
corporation follows necessarily from the
individual being a director or other equivalent
officer of any of the relevant person or
persons); or
(iii) give directions with respect to the management,
operating and/or financial policies of that company or
corporation which the directors or other equivalent
officers of that company or corporation are obliged to
comply with; or
(b) the holding of more than one-half of the issued share capital of
that company or corporation (excluding any part of that issued
share capital that carries no right to participate beyond a
specified amount in a distribution of either profits or
capital);
"DISPOSAL" shall be construed as any sale, lease, transfer, conveyance,
subparticipation, granting of derivative interests, assignment, licence,
sub-licence or other disposal (including, without limitation, any other
transaction or arrangement pursuant to which the economic or other
commercial benefit of the existing and/or remaining assets of the
relevant person is lost or materially diluted) and "DISPOSE" shall be
construed accordingly;
a "GUARANTEE" means any guarantee, bond, indemnity, or other legally
binding assurance against financial loss granted by one person in
respect of any indebtedness of another person, or any legally binding
agreement by one person to assume any indebtedness of (or any legally
binding arrangement by or under which indebtedness is assumed in respect
of) any other person and "GUARANTEED" shall be construed accordingly;
a "HOLDING COMPANY" of a company or corporation shall be construed as a
reference to any company or corporation of which the first-mentioned
company or corporation is a subsidiary;
"INDEBTEDNESS" shall be construed so as to include any obligation
(whether incurred as principal or as surety) for the payment or
repayment of money, whether present or future, actual or contingent;
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"INSOLVENCY PROCEEDING" (a) means any proceeding by, against or in
respect of any company or corporation for its liquidation, bankruptcy,
winding-up, dissolution, reorganisation, moratorium or for the
appointment of a receiver, administrator, administrative receiver,
trustee or similar officer in respect of it or of all or a substantial
part of its assets, and (b) shall be construed so as to include any
equivalent or analogous proceedings under the law of the jurisdiction in
which such company or corporation is incorporated or any jurisdiction in
which such company or corporation carries on business;
a "LAW" shall be construed as any law (including common or customary
law), statute, constitution, decree, judgment, treaty, regulation,
directive, bye-law, order or any other legislative measure of any
government, supranational, local government, statutory or regulatory
body or court;
a "MONTH" is a reference to a period starting on one day in a calendar
month and ending on the numerically corresponding day in the next
succeeding calendar month save that:
(a) if any such numerically corresponding day is not a Business Day,
such period shall end on the immediately succeeding Business Day
to occur in that next succeeding calendar month or, if none, it
shall end on the immediately preceding Business Day; and
(b) if there is no numerically corresponding day in that next
succeeding calendar month, that period shall end on the last
Business Day in that next succeeding calendar month;
a "PERSON" shall be construed as a reference to any person, firm,
company, corporation, government, state or agency of a state or any
association or partnership (whether or not having separate legal
personality) of two or more of the foregoing;
"REPAY" (or any derivative form thereof) shall, subject to any contrary
indication, be construed to include "PREPAY" (or, as the case may be,
the corresponding derivative form thereof);
a "SUBSIDIARY" of a company or corporation shall be construed as a
reference to any company or corporation:
(a) which is controlled, directly or indirectly, by the
first-mentioned company or corporation;
(b) more than half the issued share capital of which is beneficially
owned, directly or indirectly, by the first-mentioned company or
corporation; or
(c) which is a subsidiary of another subsidiary of the
first-mentioned company or corporation
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and, for these purposes, a company or corporation shall be treated as
being controlled by another if that other company or corporation is able
to direct its affairs and/or to control the composition of its board of
directors or equivalent body.
a "SUCCESSOR" shall be construed so as to include an assignee or
successor in title of such party and any person who under the laws of
its jurisdiction of incorporation or domicile has assumed the rights and
obligations of such party under this Agreement or to which, under such
laws, such rights and obligations have been transferred;
"TAX" shall be construed so as to include any tax (which shall include,
but not be limited to, corporation tax and advance corporation tax),
levy, impost, duty or other charge of a similar nature (including any
penalty or interest payable in connection with any failure to pay or any
delay in paying any of the same);
"VAT" shall be construed as a reference to value added tax including any
similar tax which may be imposed in place thereof from time to time; and
a "WHOLLY-OWNED SUBSIDIARY" of a company or corporation shall be
construed as a reference to any company or corporation which has no
other members except that other company or corporation and that other
company's or corporation's wholly-owned subsidiaries or persons acting
on behalf of that other company or corporation or its wholly-owned
subsidiaries.
1.3 CURRENCY SYMBOLS AND DEFINITIONS
"(pounds sterling)" AND "STERLING " denote lawful currency of the United
Kingdom.
1.4 AGREEMENTS AND STATUTES Any reference in this Agreement to:
1.4.1 this Agreement or any other agreement or document shall be
construed as a reference to this Agreement or, as the case may
be, such other agreement or document as the same may have been,
or may from time to time be, amended, varied, novated or
supplemented; and
1.4.2 a statute or treaty shall be construed as a reference to such
statute or treaty as the same may have been, or may from time to
time be, amended or, in the case of a statute, re-enacted.
1.5 HEADINGS
Clause and Schedule headings are for ease of reference only.
1.6 TIME
Any reference in this Agreement to a time of day shall, unless a
contrary indication appears, be a reference to London time.
1.7 NO PERSONAL LIABILITY FOR DIRECTORS
No part of this Agreement shall be construed so as to attach any
personal liability, obligation or duty to any director of any Group
member.
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2. THE FACILITIES
2.1 GRANT OF THE FACILITIES
The Banks grant to the Borrowers, upon the terms and subject to the
conditions hereof:
2.1.1 a term loan facility in an aggregate amount of up to
(pounds sterling)28,000,000 (THE "TERM A FACILITY");
2.1.2 a term loan facility in an aggregate amount of up to
(pounds sterling)12,500,000 (THE "TERM B FACILITY"); and
2.1.3 a revolving loan in an aggregate amount of up to
(pounds sterling)5,000,000 (THE "REVOLVING FACILITY").
2.2 PURPOSE AND APPLICATION
2.2.1 The Term A Facility is intended for the purpose of refinancing
Existing TW US Loans.
2.2.2 The Term B Facility is intended for the purpose of (a) financing
up to fifty per cent. of the Total Consideration payable in
relation to Permitted Acquisitions including the financing of
Acquisition Costs and (b) financing up to fifty per cent. of the
Warehouse Acquisition Cost.
2.2.3 The Revolving Facility is intended for financing the general
working capital and Capital Expenditure requirements and for
general corporate purposes of the Group.
2.2.4 The Available Cash is intended for the purpose of financing the
Total Consideration.
2.2.5 Accordingly, each Borrower shall so apply all amounts raised by
it hereunder and none of the Finance Parties shall be obliged to
concern themselves with such application.
2.3 CONDITIONS PRECEDENT
Save as the Banks may otherwise agree, none of the Borrowers may deliver
any Notice of Drawdown unless the Agent has confirmed to the Parent and
the Banks that it has received all of the documents and other evidence
listed in Schedule 3 Part I (Conditions Precedent) and that each is, in
form and substance, satisfactory to the Agent.
2.4 SEVERAL OBLIGATIONS
The obligations of each Bank are several and the failure by a Bank to
perform its obligations hereunder shall not affect the obligations of an
Obligor towards any other party hereto nor shall any other party be
liable for the failure by such Bank to perform its obligations
hereunder.
2.5 SEVERAL RIGHTS
The rights of each Finance Party are several and any debt arising
hereunder at any time from an Obligor to any Finance Party hereto shall
be a separate and independent debt.
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Each such party shall be entitled to protect and enforce its individual
rights arising out of this Agreement independently of any other party
(so that it shall not be necessary for any party hereto to be joined as
an additional party in any proceedings for this purpose).
3. UTILISATION OF THE TERM FACILITY
3.1 UTILISATION CONDITIONS FOR THE TERM A FACILITY
A Term A Advance will be made if:
3.1.1 not later than 11.00 a.m. three Business Days before the
proposed Utilisation Date, the Agent has received a completed
Notice of Drawdown from the Borrower;
3.1.2 the proposed Original Sterling Amount of such Term Advance is
(pounds sterling)28,000,000 which is equal to the amount of the
Available Term A Facility;
3.1.3 the interest rate applicable to such Term A Advance during its
first Interest Period would not fall to be determined pursuant
to Clause 8.1 (Market Disruption);
3.1.4 the proposed date for the making of such Term A Advance is a
Business Day falling within the Term A Availability Period;
3.1.5 on and as of the proposed Utilisation Date (a) no Event of
Default or Potential Event of Default is continuing or would
occur as a result of the making of such Term A Advance and (b)
the Repeated Representations are true (before and immediately
after the making of such Term Advance) by reference to the facts
and circumstances then existing.
3.2 UTILISATION CONDITIONS FOR THE TERM B FACILITY AND THE AVAILABLE CASH
3.2.1 A Term B Advance will be made if:
(a) (i) not later than eight Business Days before the
proposed Utilisation date, the Agent has received the
materials set out in Clause 3.2.3, and (ii) not later
than 11.00 a.m. three Business Days before the proposed
Utilisation Date, the Agent has received a completed
Notice of Drawdown from the Borrower;
(b) the proposed Original Sterling Amount of such Term B
Advance is (a) a minimum amount of (pounds
sterling)100,000 or (b) equal to or less than the amount
of the Available Term B Facility;
(c) there would not, immediately upon the maturity of such
Term B Advance, be more than six Term B Advances
outstanding;
(d) the interest rates applicable to such Term B Advance
during its first Interest Period would not fall to be
determined pursuant to Clause 8.1 (Market Disruption);
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(e) the proposed date for the making of such Term B Advance
is a Business Day falling within the Term B Availability
Period;
(f) on and as of the proposed Utilisation Date (a) no Event
of Default or Potential Event of Default is continuing
or would occur as a result of the making of such Term B
Advance and (b) the Repeated Representations are true
(before and immediately after the making of such Term
Advance) by reference to the facts and circumstances
then existing and (c) the Agent has confirmed to the
Parent and the Banks that it has received all of the
documents and other evidence listed in Schedule 3 Part
II (Conditions Precedent) and that each is, in form and
substance, satisfactory to the Agent (save in respect of
a drawdown to be made under this sub-clause 3.2.1 for
the purpose of financing the Warehouse Acquisition
Cost).
3.2.2 No later than eight days prior to the purchase date of a
Permitted Acquisition in relation to which the Total
Consideration is to be funded entirely from Available Cash, the
Agent shall receive the materials set out in sub-clause 3.2.3 as
it would have received had such Permitted Acquisition be funded
up to fifty per cent. from a Term B Advance. If the utilisation
conditions in sub-clause 3.2.1 are fulfilled, a Notice of
Drawdown may be delivered to the Agent in respect of a Term B
Advance in an amount up to fifty per cent. of the Total
Consideration of a Permitted Acquisition funded initially
entirely from Available Cash. Such drawndown Term B Advance
shall be credited to the Capital Expenditure Account.
3.2.3 Each Notice of Drawdown delivered to the Agent requesting a Term
B Advance must be accompanied by:
(a) a certificate properly completed, authorised and
executed by the Parent confirming:
(i) that the proceeds of such Term B Advance are to
be applied in the payment of up to fifty per
cent. of the Total Consideration payable in
relation to a Permitted Acquisition, that the
balance of such Permitted Acquisitions has been
funded out of the Available Cash;
(ii) no Event of Default, and no breach of a repeated
representation is likely to arise on and
following the purchase date as a result of the
completion of the relevant Permitted Acquisition
part of which is to be paid out of the proceeds
of the relevant Term B Advance;
(iii) (save in respect of such Term B Advance to be
drawndown for the purpose of financing the
Warehouse Acquisition Cost) that the Acquisition
Feasibility Memorandum is prepared in accordance
with the Acquisition Policy and to the extent
that it materially
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deviates from the Acquisition Policy, a
commentary from the Board in respect of such
deviation.
(b) (save in respect of such Term B Advance to be drawndown
for the purpose of financing the Warehouse Acquisition
Cost) the Acquisition Feasibility Memorandum, the
Framework Acquisition Agreement and the Acquisition
Agreement in relation to each Permitted Acquisition. In
the event that the terms of a proposed acquisition
deviates from the Acquisition Feasibility Memorandum,
the Borrower and the Initial Investor must be made
available to the Lenders to answer questions regarding
such proposed acquisition and the Acquisition
Feasibility Memorandum;
(c) (save in respect of such Term B Advance to be drawndown
for the purpose of financing the Warehouse Acquisition
Cost) the Budget (approved by the board of directors of
the Parent) relating to such Relevant Business and
Acquisition Working Capital together with such analysis
(as the Agent may from time to time reasonably require)
of the investment return projected in relation to such
Permitted Acquisition;
(d) (save in respect of such Term B Advance to be drawndown
for the purpose of financing the Warehouse Acquisition
Cost) the Revised Financial Projections in relation to a
Permitted Acquisition; and
(e) (save in respect of such Term B Advance to be drawndown
for the purpose of financing the Warehouse Acquisition
Cost) the financial statements for the period of twelve
(12) months ending on the last day of the month
immediately preceding the proposed purchase date of a
Permitted Acquisition or Permitted Equity Funded
Acquisition audited or reviewed by an accounting firm
acceptable to the Banks of the Relevant Business
including any pro forma adjustments at the start of the
twelve month period ending on the next Quarter Date
falling after the purchase date of a Permitted
Acquisition.
3.2.4 To the extent that any drawndown Term B Advance to be applied in
the payment of up to fifty per cent. of the Total Consideration
payable in relation to a Permitted Acquisition (in compliance
with Clause 3.2.3) is greater than the gross payment to the
vendors element of the definition of Total Consideration, such
surplus amount will be paid into the Capital Expenditure Account
to be applied by the Borrower to fund the Total Consideration in
relation to such Permitted Acquisition.
3.2.5 The Parent hereby agrees that:-
(a) none of the proceeds of Term B Advances may be used for
any purpose other than the finance of up to fifty per
cent. from time to time of
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Permitted Acquisitions and none of the Available Cash
may be used for any purpose other than the finance of
the Total Consideration; and
(b) Available Cash may only be withdrawn from the
Acquisition Expenditure Account to finance the Total
Consideration in relation to Permitted Acquisitions and
to finance the Warehouse Acquisition Cost.
3.3 EACH BANK'S PARTICIPATION IN TERM ADVANCES
Each Bank will participate through its Facility Office in each Term
Advance made in the proportion borne by its relevant Available Term
Commitment to the relevant Available Term Facility immediately prior to
the making of that Term Advance.
3.4 REDUCTION OF AVAILABLE TERM COMMITMENT
If a Bank's relevant Available Term Commitment is reduced in accordance
with the terms hereof after the Agent has received the Notice of
Drawdown for a Term Advance pursuant to this Clause 3 and such reduction
was not taken into account in calculating the relevant Available Term
Facility, then both the Original Sterling Amount and the amount of that
Term Advance shall be reduced accordingly.
4. INTEREST PERIODS FOR TERM ADVANCES
4.1 INTEREST PERIODS
The period for which a Term Advance is outstanding shall be divided into
successive periods each of which (other than the first, which shall
begin on the day such Term Advance is made) shall start on the last day
of the preceding such period.
4.2 DURATION
Until the earlier of six months after the date hereof and the
Syndication Date, the duration of each Interest Period shall be one
month. Thereafter, the duration of each Interest Period shall, save as
otherwise provided herein, be one, three or six months (or such other
period as may be agreed between the Parent and the Banks), in each case
as the Borrower to which such Term Advance is made (or the Parent) may
by no later than 10.00 a.m. three Business Days' prior notice to the
Agent select, or such other period as the Banks agree PROVIDED THAT:
4.2.1 if such Borrower fails to give such notice of its selection in
relation to an Interest Period, the duration of that Interest
Period shall, subject to sub-clauses 4.2.2, 4.2.3 and 4.2.3, be
three months;
4.2.2 any Interest Period which begins during or at the same time as
any other Interest Period and made under the same Term Facility
shall end at the same time as that other Interest Period;
4.2.3 to the extent necessary to ensure at any time Advances (in an
aggregate amount not less than the amount of the next scheduled
repayment of principal hereunder) have Interest Periods expiring
on the relevant scheduled Term Repayment Date or Final Maturity
Date, any Interest Period which would otherwise end during the
month preceding, or extend beyond, a Term
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Repayment Date or Final Maturity Date shall be of such duration
that it shall end on that Term Repayment Date or Final Maturity
Date.
4.3 CONSOLIDATION OF TERM ADVANCES
If two or more Interest Periods relating to Term Advances denominated in
the same currency end at the same time, then, on the last day of those
Interest Periods, the Term Advances to which they relate shall be
consolidated into and treated as a single Term Advance.
4.4 DIVISION OF TERM ADVANCES
The Borrower to which a Term Advance is made may, by no later than 10.00
a.m. three Business Days' prior notice to the Agent direct that such
Term Advance shall, at the beginning of any Interest Period relating
thereto, be divided into (and thereafter, save as otherwise provided
herein, treated in all respects as) two or more Term Advances having
such Original Sterling Amounts (in aggregate, equalling the Sterling
Amount of the Term Advance being so divided) as shall be specified by
such Borrower in such notice, PROVIDED THAT such Borrower shall not be
entitled to make such a direction if:
4.4.1 as a result of so doing, there would be more than six
outstanding Term Advances; or
4.4.2 any Term Advance thereby coming into existence would have a
Sterling Amount of less than (pounds sterling)10,000,000.
5. PAYMENT AND CALCULATION OF INTEREST ON TERM ADVANCES
5.1 PAYMENT OF INTEREST
On the last day of each Interest Period relating to a Term Advance (and,
if the Interest Period of such Term Advance exceeds six months, on the
expiry of each period of six months during that Interest Period) the
Borrower to which such Term Advance has been made shall pay accrued
interest on the Term Advance to which such Interest Period relates.
5.2 CALCULATION OF INTEREST
The rate of interest applicable to a Term Advance from time to time
during an Interest Period relating thereto shall be the rate per annum
which is the sum of the Margin at such time, the Associated Costs Rate
(if any) in respect thereof at such time and LIBOR on the Quotation Date
therefor. In relation to the first Interest Period of any Term Advance
made on the date hereof, LIBOR for such Term Advance for such Interest
Period shall be determined in accordance with paragraph (b) of the
definition of LIBOR.
5.3 TERM MARGIN RATCHET
5.3.1 Subject to sub-clause 5.3.3, if the ratio of Total Debt to
EBITDA in respect of the most recent Relevant Period (as defined
in Clause 22 (Financial Condition) is within the range set out
in column 1 of the margin grid table set out below, then the
Applicable A Margin shall be the percentage per annum set out
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opposite such range PROVIDED THAT from the date hereof until the
date falling 12 months after the date thereafter, the Applicable
A Margin shall be not less than 2.00% per annum.
MARGIN GRID TABLE
COLUMN 1 COLUMN 2
TOTAL DEBT TO EBITDA APPLICABLE A MARGIN
%
Less than 3.0:1 but greater than or 1.75
equal to 2.0:1
Less than 2.0:1 but greater than or 1.50
equal to 1.5:1
Less than 1.5:1 1.25
5.3.2 Any reduction or increase to the Applicable A Margin provided
for in sub-clause 5.3.1 shall take effect only in relation to
any Advance made or Interest Period commencing at least 15
Business Days after receipt by the Agent for the Relevant Period
of both (a) (in the case of a Relevant Period ending on the last
day of the Parent's financial year) the annual audited financial
statements of the Group in accordance with Clause 20.1 (Annual
Statements) or (in the case of a Relevant Period ending on the
last day of any other Financial Quarter of the Parent) quarterly
financial statements of the Group in accordance with Clause 20.2
(Quarterly Statements) for such Relevant Period and (b), in each
case, a Compliance Certificate for such Relevant Period pursuant
to Clause 20.7 (Compliance Certificates).
5.3.3 If at any time an Event of Default is continuing the Applicable
A Margin shall be 3.00% per annum.
5.3.4 The change to the Applicable A Margin set out in sub-clause
5.3.3 shall apply from the date certified by the Agent (in
writing) as the date on which an Event of Default has occurred
or come into existence until the date certified by the Agent (in
writing) as the date by which such Event of Default is no longer
continuing. The Agent shall give such certification promptly on
reasonably determining that an Event of Default has occurred or
exists and promptly upon it becoming reasonably apparent that
such Event of Default is no longer continuing.
6. UTILISATION OF THE REVOLVING FACILITY
6.1 UTILISATION CONDITIONS FOR THE REVOLVING FACILITY
Save as otherwise provided herein, a Revolving Advance will be made by
the Banks to the Borrower if:
6.1.1 not later than 11.00 a.m. one Business Day before the proposed
Utilisation Date, the Agent has received a completed Notice of
Drawdown from the
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Borrower stating whether the utilisation is to be made by way of
Revolving Advance;
6.1.2 the proposed Utilisation Date is a Business Day falling one
month or more before the Revolving Termination Date;
6.1.3 the proposed date for such utilisation is not less than two
Business Days after the date upon which the Revolving Facility
was previously utilised;
6.1.4 the proposed Original Sterling Amount of such Revolving Advance
is (a) (if less than the Available Revolving Facility) an amount
not less than (pounds sterling)500,000 and an integral multiple
of (pounds sterling)100,000 or (b) equal to the amount of the
Available Revolving Facility;
6.1.5 the proposed Term of the Revolving Advance requested is a period
of one, three or six months or such other period as the Banks
agree in each case ending on or before the Revolving Termination
Date;
6.1.6 in respect of an Advance other than a Rollover Advance neither
of the events mentioned in sub-clauses 8.1.1 and 8.1.2 of Clause
8.1 (Market Disruption) shall have occurred;
6.1.7 there would not, immediately after the making of such Revolving
Advance, be more than nine Revolving Advances outstanding; and
6.1.8 on and as of the proposed Utilisation Date:
(a) no Event of Default or (save in relation to a Rollover
Advance) Potential Event of Default is continuing
PROVIDED THAT in the case of a Potential Event of
Default:
(i) such Potential Event of Default shall not be
capable of continuing for more than thirty days
from the date of the Notice of Drawdown with
respect to a particular event or circumstance;
and
(ii) the Borrower may not deliver a further Notice of
Drawdown until the earlier of (a) the expiry of
such thirty day period and (b) the date on which
the Potential event of Default ceases to be
continuing.
If a further Potential Event of Default has occurred and
is continuing at the time of delivery of a further
Notice of Drawdown, the Banks may rely upon such further
Potential Event of Default for the purposes of this
Clause 6.1.8 and the provisions of sub-paragraphs (i)
and (ii) above shall apply to such further Potential
Event of Default;
(b) the Repeated Representations are true (before and
immediately after the making of such Revolving Advance)
by reference to the facts and circumstances then
subsisting; and
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(c) (in the case of an Advance proposed to be made on the
date hereof) the Agent has confirmed to the Parent and
the Banks that it has received all of the documents and
other evidence listed in Schedule 3 Part I (Conditions
Precedent) and that each is, in form and substance,
satisfactory to the Agent,
then, save as otherwise provided herein, such Revolving
Advance will be made.
6.2 REDUCTION OF AVAILABLE REVOLVING COMMITMENT
If a Bank's Revolving Commitment is reduced in accordance with the terms
hereof after the Agent has received the Notice of Drawdown for a
Revolving Advance then both the Original Sterling Amount and the amount
of that Revolving Advance be reduced accordingly.
7. PAYMENT AND CALCULATION OF INTEREST ON REVOLVING ADVANCES
7.1 PAYMENT OF INTEREST
On the Repayment Date relating to each Revolving Advance (and, if the
Term of such Revolving Advance exceeds six months, on the expiry of each
period of six months during such Term) the Borrower shall pay accrued
interest on that Revolving Advance.
7.2 CALCULATION OF INTEREST
The rate of interest applicable to a Revolving Advance from time to time
during its Term shall be the rate per annum which is the sum of the
Margin at such time, the Associated Costs Rate in respect thereof at
such time and LIBOR on the Quotation Date therefor. In relation to the
Term of any Revolving Advance made on the date hereof, LIBOR for such
Revolving Advance for such Term shall be determined in accordance with
paragraph (b) of the definition of LIBOR.
7.3 REVOLVING MARGIN RATCHET
7.3.1 Subject to sub-clause 7.3.3, if the ratio of Total Debt to
EBITDA in respect of the most recent Relevant Period is within
the range set out in column 1 of the margin grid table set out
below, then the Applicable Revolving Margin shall be the
percentage per annum set out opposite such range PROVIDED THAT
from the date hereof until the date falling twelve months after
the date thereafter, the Applicable Revolving Margin shall be
not less than 2.00 % per annum.
MARGIN GRID TABLE
COLUMN 1 COLUMN 2
TOTAL NET DEBT TO EBITDA APPLICABLE REVOLVING MARGIN %
Less than 3.0.:1 but greater 1.75%
than or equal to 2.01:1
Less than 2.0:1 but greater 1.50
than or equal to 1.5:1
Less than 1.5:1 1.25
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7.3.2 Any reduction or increase to the Revolving Margin provided for
in sub-clause 7.3.1 shall take effect only in relation to any
Revolving Advance made at least 15 Business Days after receipt
by the Agent for the Relevant Period of both (a) (in the case of
a Relevant Period ending on the last day of the Parent's
financial year) the annual audited financial statements of the
Group in accordance with Clause 20.1 (Annual Statements) or (in
the case of the Relevant Period ending on the last day of any
other Financial Quarter of the Parent) quarterly financial
statements of the Group in accordance with Clause 20.2
(Quarterly Statements) for such Relevant Period and (b), in each
case, a Compliance Certificate for such Relevant Period pursuant
to Clause 20.7 (Compliance Certificates).
7.3.3 If at any time an Event of Default is continuing the Applicable
Revolving Margin shall be 3.00% per annum.
7.3.4 The change to the Applicable Revolving Margin set out in
sub-clause 7.3.3 shall apply from the date certified by the
Agent (in writing) as the date on which an Event of Default has
occurred or come into existence until the date certified by the
Agent (in writing) as the date by which such Event of Default is
no longer continuing. The Agent shall give such certification
promptly upon reasonably determining that an Event of Default
has occurred or exists and promptly upon becoming aware it
becoming reasonably apparent that such Event of Default is no
longer continuing.
8. MARKET DISRUPTION AND ALTERNATIVE INTEREST RATES
8.1 MARKET DISRUPTION
If, in relation to any Advance or Unpaid Sum:
8.1.1 LIBOR is to be determined by reference to Reference Banks and at
or about 11.00 a.m. on the Quotation Date for the relevant
Interest Period or Term none or only one of the Reference Banks
supplies a rate for the purpose of determining LIBOR, for the
relevant Interest Period or Term; or
8.1.2 before the close of business in London on the Quotation Date for
such Advance or Unpaid Sum the Agent has been notified by a Bank
or each of a group of Banks to whom in aggregate thirty-five per
cent. or more of such Advance or Unpaid Sum is owed (or, in the
case of an undrawn Advance, if made, would be owed) that the
LIBOR rate does not accurately reflect the cost of funding its
participation in such Advance or Unpaid Sum,
then, the Agent shall notify the Parent, the relevant Borrower and the
Banks of such event and, notwithstanding anything to the contrary in
this Agreement, Clause 8.2 (Substitute Interest Period and Interest
Rate) shall apply to such Advance (if it is a Term Advance which is
already outstanding or a Rollover Advance) or Unpaid Sum. If sub-clause
8.1.1 or 8.1.2 of Clause 8.1 (Market Disruption) applies to a proposed
Advance (other than a Rollover Advance), such Advance shall not be made.
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8.2 SUBSTITUTE INTEREST PERIOD AND INTEREST RATE
If sub-clause 8.1.1 of Clause 8.1 (Market Disruption) applies to an
Advance, the duration of the relevant Interest Period or Term shall be
one month, or less, such that it shall end on the next succeeding
Repayment Date (in the case of a Term Advance) or the Revolving
Termination Date (in the case of a Rollover Advance). If either
sub-clause 8.1.1 or 8.1.2 of Clause 8.1 (Market Disruption) applies to
an Advance or Unpaid Sum, the rate of interest applicable to such
Advance or Unpaid Sum during the relevant Interest Period or Term shall
(subject to any agreement reached pursuant to Clause 8.3 (Alternative
Rate)) be the rate per annum which is the sum of:
8.2.1 the Margin at such time;
8.2.2 the Associated Costs Rate in respect thereof at such time; and
8.2.3 the rate per annum notified to the Agent by each Bank before the
last day of such Interest Period or Term to be that which
expresses as a percentage rate per annum the cost to such Bank
of funding from sources it reasonably selects its portion of
such Advance or Unpaid Sum during such Interest Period or Term.
8.3 ALTERNATIVE RATE
If:
8.3.1 either of those events mentioned in sub-clauses 8.1.1 and 8.1.2
of Clause 8.1 (Market Disruption) occurs in relation to an
Advance or Unpaid Sum; or
8.3.2 by reason of circumstances affecting the London Interbank Market
during any period of three consecutive Business Days LIBOR is
not available for Sterling to prime banks in the London
Interbank Market,
then, in any such case, if the Agent or the Parent so requires, the
Agent and the Parent shall enter into negotiations in good faith with a
view to agreeing an alternative basis:
(a) for determining the rates of interest from time to time
applicable to the Advances and Unpaid Sums; and/or
(b) upon which the Advances and Unpaid Sums may be maintained
thereafter,
and any such alternative basis that is agreed shall take effect in
accordance with its terms and be binding on each party hereto, PROVIDED
THAT the Agent may not agree any such alternative basis without the
prior consent of each Bank.
9. NOTIFICATION
9.1 ADVANCES
Not later than 11.00 a.m. three Business Days before the first day of an
Interest Period or Term (or, in the case of any utilisation being made
on the date hereof, not later than 11.30 a.m. on the date hereof), the
Agent shall notify each Bank of the Facility that is to be utilised, the
name of the Borrower, the proposed Sterling Amount of the relevant
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Advance, the proposed length of the relevant Interest Period or Term and
the aggregate principal amount of the relevant Advance allocated to such
Bank pursuant to this Agreement, the name of the proposed beneficiary.
9.2 INTEREST RATE DETERMINATION
The Agent shall promptly notify the relevant Borrower and the Banks of
each determination of LIBOR, Margin and the Associated Costs Rate.
9.3 CHANGES TO ADVANCES OR INTEREST RATES
The Agent shall promptly notify the relevant Borrower and the Banks of
any change to:
9.3.1 the proposed length of an Interest Period or Term; or
9.3.2 any interest rate;
in each case occasioned by the operation of Clause 8 (Market Disruption
and Alternative Interest Rates).
10. REPAYMENT OF THE TERM FACILITY
10.1 TERM REPAYMENT INSTALMENTS
10.1.1 Term A Repayment Instalments: The Parent shall procure (and the
Borrower which has drawn a Term A Advance shall repay the Term A
Outstandings in order to ensure) that the aggregate Sterling
Amount of the Term A Outstandings is repaid in instalments in
the amount and on the Term A Repayment Date set out in the table
below:
TERM A REPAYMENT DATE REPAYMENT INSTALMENTS
(pounds sterling)
30 July 2000 1,400,000
31 December 2000 1,400,000
30 June 2001 1,400,000
31 December 2001 1,400,000
30 June 2002 2,100,000
31 December 2002 2,100,000
30 June 2003 2,100,000
31 December 2003 2,100,000
30 June 2004 3,500,000
31 December 2004 3,500,000
30 June 2005 3,500,000
Final Maturity Date 3,500,000
Term B Repayment Instalments: The Parent shall procure (and the
Borrower which has drawn a Term B Advance shall repay its share
of the Term B Outstandings in order to ensure) that the Sterling
Amount of the Term B Outstandings is repaid in instalments on
each Term B Repayment Date in an amount equal to the percentage
of the aggregate principal amount advanced on
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the last day of the Term B Availability Period in respect of the
Term B Facility relating to such Term B Repayment Date as set
out in the table below:
TERM B REPAYMENT DATE REPAYMENT INSTALMENTS
%
31 December 2003 20%
31 December 2004 20%
31 December 2005 30%
Final Maturity Date 30%
10.2 SELECTION OF TERM ADVANCES
If, in relation to a Term Repayment Date, the aggregate amount of the
relevant Term Advances exceeds the amount of the relevant Term
Outstandings to be repaid, the Parent may, by not less than five
Business Days' prior notice to the Agent, select which of those Term
Advances will be wholly or partially repaid, PROVIDED THAT:
10.2.1 the Parent may not make any such selection if, as a result, more
than one such Term Advance would fall to be partially repaid;
and
10.2.2 if the Parent fails to give such notice, the Agent shall select
the relevant Term Advances to be wholly or partially repaid.
11. REPAYMENT OF THE REVOLVING FACILITY
11.1 The Borrower shall repay each Revolving Advance made to it in full on
the Repayment Date relating thereto. All Revolving Outstandings shall be
repaid on or before the Final Maturity Date by the Borrower.
11.2 REVOLVING FACILITY CLEAN DOWN
The Borrower will procure that the principal amount outstanding in
respect of all Advances of the Revolving Facility is no more than thirty
(30) per cent. of the Revolving Facility for a period of at least
fourteen (14) consecutive days in each twelve (12) month period falling
after twelve (12) months from the date hereof (the "CLEANING DOWN
PERIOD") with at least thirty (30) days falling between each Clean Down
Period.
12. MANDATORY PREPAYMENT
12.1 MANDATORY PREPAYMENT ON DISPOSAL
Subject to Clause 12.6 (Prepayment Accounts), the Parent shall procure
the application of an amount equal to the Net Disposal Proceeds in
respect of any disposal of any assets of the Group in repayment of the
Facilities in accordance with Clause 12.5 (Application of Prepayments)
promptly upon receipt of the same by any Group member.
The Parent will procure that any amounts which are retained for
reinvestments as envisaged by paragraph (b) of the definition of
Excluded Proceeds and paragraph (f) of the definition of Permitted
Disposals will be paid into the Holding Account promptly upon receipt of
the same.
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12.2 AMCARE DISPOSAL
The Group may, on approval by the Agent (acting on the instructions of
the Instructing Group), dispose of Amcare Limited (the "AMCARE
DISPOSAL"). So long as the Amcare Disposal occurs within twelve (12)
months of the date hereof, the Parent shall ensure that the application
of an amount equal to the Net Disposal Proceeds of such disposal (the
"AMCARE DISPOSAL PROCEEDS") shall be credited to the Holding Account
and, within six (6) months of such Amcare Disposal, the Amcare Disposal
Proceeds may be withdrawn from the Holding Account by the Original
Borrower from time to time to fund the whole of the Total Consideration
for one or more Permitted Acquisitions subject to clause 23.22 (Total
Permitted Acquisitions). For the avoidance of doubt Clauses 12.1
(Mandatory Prepayment on Disposal) and 12.5 (Application of Prepayments)
shall not apply to the Amcare Disposal Proceeds during such six (6)
month period from making the Amcare Disposal and if the Amcare Disposal
occurs after the date falling twelve (12) months after the date hereof,
the Amcare Disposal Proceeds shall be applied in accordance with Clause
12.1 (Mandatory Prepayment on Disposal).
12.3 MANDATORY PREPAYMENT ON CHANGE OF CONTROL OR SALE OF BUSINESS
The Parent shall procure that the Term Outstandings and the Revolving
Outstandings are immediately prepaid in full upon the occurrence of:
12.3.1 any Change of Control; or
12.3.2 Hyperion ceasing to have beneficial ownership of at least 50.1%
in TW US; or
12.3.3 the Initial Investor disposing of any Warrants or Senior
Subordinated Notes; or
12.3.4 any Flotation of any of the shares of any member of the Group or
any holding company of the Parent; or
12.3.5 a Strategic Sale.
12.4 MANDATORY PREPAYMENT OF EXCESS CASH FLOW
The Parent shall procure that, within ten Business Days of the
delivering to the Agent of aggregated and consolidated audited Accounts
of the Group pursuant to Clause 20.1 (Annual Statement) for any annual
Accounting Period, the Term Outstandings shall be prepaid in an
aggregate amount equal to 50% (fifty per cent.) of the Excess Cash Flow
(minus (pounds sterling)1,000,000) of the Group for such Accounting
Period to which such annual consolidated accounts relate. Any such
prepayment shall be applied in accordance with Clause 12.5 (Application
of Prepayments).
12.5 APPLICATION OF PREPAYMENTS
12.5.1 Any prepayment made under Clauses 12.1 (Mandatory Prepayment on
Disposal) (subject to Clause 12.2 (Amcare Disposal)) to 12.3
(Mandatory Prepayment on Change of Control or Sale of Business)
shall be applied in repayment:
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(a) first, pro rata across the Term A Outstandings and the
Term B Outstandings; and
(b) second, to the extent the Term A Outstandings and the
Term B Outstandings have been repaid in full, in
repayment of the Revolving Outstandings (and any amounts
so repaid may not be reborrowed and the Revolving
Commitments of the Banks will be permanently reduced pro
rata to the extent of such repayment).
12.5.2 Any prepayment of Term Outstandings in respect of a Term
Facility shall be applied so that the Borrower effects a
prepayment of the Term A Outstandings or, as the case may be,
the Term B Outstandings in order to satisfy the remaining
obligations under Clause 10.1 (Term Repayment Instalments) in
respect of outstandings under that Term Facility pro rata.
12.5.3 Any prepayment (other than as mentioned in sub-clause 12.5.1) of
Term Outstandings in respect of a Term Facility shall be applied
across the Term Advances then outstanding under such Term
Facility in the manner notified by the Original Borrower to the
Agent at the time of prepayment (or, if no such notice is given,
pro rata but in any event so that any such prepayment is applied
so that each Borrower effects a prepayment pro rata to its share
of the Term A Outstandings or, as the case may be, the Term B
Outstandings).
12.5.4 The Parent shall procure that upon any requirement hereunder to
prepay the Term Outstandings in full, the Revolving Outstandings
shall also be repaid and each Banks Available Revolving
Commitment shall be immediately cancelled and reduced to zero.
12.6 PREPAYMENT ACCOUNTS
12.6.1 If Clause 12.1 (Mandatory Prepayment on Disposal) (subject to
Clause 12.2 (Amcare Disposal)) to Clause 12.3 (Mandatory
Prepayment on Change of Control or Sale of Business) inclusive
would require the Original Borrower to procure the prepayment of
any Advance hereunder otherwise than at the end of an Interest
Period or on the maturity of a Revolving Advance, the Original
Borrower can elect (by written notice to the Agent to be
received not later than 11 a.m. three Business Days prior to the
date on which the prepayment obligation would, but for this
Clause 12.6 (Prepayment Accounts) arise) to credit the amount to
be repaid to the Mandatory Prepayment Account on the date on
which the prepayment obligation would, but for this Clause 12.6
(Prepayment Accounts), arise and to prepay the relevant Term
Advance and/or Revolving Advance at the first occurring end of
an Interest Period relative to the Term Advance to be repaid or
date on which a Revolving Advance matures (where such Term
Advance or, as the case may be, Revolving Advance is at least
equal to the amount to be repaid unless the Term Outstandings
under which such Term Advance was made or the Revolving
Outstandings is less than the amount to be repaid). Following
any such election and provided the required payment is made to
the Mandatory
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Prepayment Account the obligation to prepay the relevant Term
Advance and/or Revolving Advance will not arise until the first
occurring end of an Interest Period relative to such Term
Advance to be repaid or date on which such a Revolving Advance
matures.
12.6.2 The Original Borrower hereby irrevocably authorises the Agent to
withdraw monies from the Mandatory Prepayment Account and apply
such monies against prepayments which are due to be made
hereunder or, upon the occurrence of an Event of Default which
is continuing, against any amounts due and payable under the
Finance Documents.
12.6.3 Any Bank with which such account is held acknowledges and agrees
that interest shall accrue at normal commercial rates on amounts
credited to the Mandatory Prepayment Account and the Holding
Account and that the account holder shall be entitled to receive
such interest (which shall be paid in accordance with the
mandate relating to such account) provided that the account
holder shall not be entitled to receive such interest while an
Event of Default is continuing.
13. CANCELLATION AND VOLUNTARY PREPAYMENT
13.1 CANCELLATION OF THE TERM FACILITY
The Parent may, by giving to the Agent not less than five Business Days'
prior notice to that effect, cancel the whole or any part (being an
amount of not less than (pounds sterling)1,000,000 and an integral
multiple of (pounds sterling)1,000,000) of either Available Term
Facility. Any such cancellation shall reduce the Available Term
Commitments of the Banks in respect of such Available Term Facility
rateably.
13.2 PREPAYMENT OF THE TERM OUTSTANDINGS
13.2.1 The Borrower to which a Term Advance has been made may, if it
has given to the Agent not less than five Business Days' prior
notice to that effect, prepay the whole of any Term Advance or
any part of any Term Advance (being an amount such that the
Sterling Amount of such Term Advance will be reduced by an
amount of not less than (pounds sterling)1,000,000 and an
integral multiple of (pounds sterling)1,000,000) on the last day
of any Interest Period relating to that Term Advance (or at any
other time subject to payment of the appropriate breakage costs
in accordance with Clause 28.4 (Break Costs).
13.2.2 Any prepayment of Term Outstandings in respect of a Term
Facility shall satisfy pro tanto the remaining obligations under
Clause 10.1 (Term Repayment Instalments) in respect of
outstandings under such Term Facility pro rata.
13.2.3 Any prepayment of Term Outstandings in respect of a Term
Facility shall be applied across the Term Advances then
outstanding under such Term Facility in the manner notified by
the Parent to the Agent at the time of prepayment (or, if no
such notice is given, pro rata).
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13.3 CANCELLATION OF THE REVOLVING FACILITY
The Parent may, by giving to the Agent not less than five Business Days'
prior notice to that effect, cancel the whole or any part (being an
amount of not less than (pounds sterling)500,000 and an integral
multiple of (pounds sterling)500,000) of the Available Revolving
Facility. Any such cancellation shall reduce the Available Revolving
Commitment and Revolving Commitment of each Bank rateably.
13.4 PREPAYMENT OF REVOLVING OUTSTANDINGS
The Borrower to which a Revolving Advance has been made may, by giving
to the Agent not less than five Business Days' prior notice to that
effect, prepay the whole or any part of a Revolving Advance (being an
amount such that the Sterling Amount of such Revolving Advance will be
reduced by an amount of not less than (pounds sterling)500,000 or
integral multiple of (pounds sterling)1,000,000) subject to payment of
the appropriate breakage costs in accordance with Clause 28.4 (Break
Costs).
13.5 EARLY PREPAYMENT FEE
If a voluntary prepayment or a mandatory prepayment within the terms of
Clause 12 (Mandatory Prepayment) of the whole of any part of the
Facilities is made prior to the first anniversary of the date hereof
consequent upon a refinancing implemented through the bank or debt
capital markets, the Borrower shall pay to the Agent to the account of
the Banks a fee of an amount equal to 1% (one per cent.) of the amount
of the Facilities so prepaid.
13.6 NOTICE OF CANCELLATION OR PREPAYMENT
Any notice of cancellation or prepayment given by a Borrower pursuant to
this Clause 13 (Cancellation and Voluntary Prepayment) shall be
irrevocable, shall specify the date upon which such cancellation or
prepayment is to be made and the amount of such cancellation or
prepayment and, in the case of a notice of prepayment, shall oblige the
relevant Borrower to make such prepayment on such date.
13.7 NOTICE OF REMOVAL OF A BANK
If:
13.7.1 any sum payable to any Bank by an Obligor is required to be
increased pursuant to Clause 14.1 (Tax Gross-up); or
13.7.2 any Bank claims indemnification from an Obligor under Clause
14.2 (Tax Indemnity) or Clause 16.1 (Increased Costs), the
Parent may, whilst such circumstance continues, give the Agent
at least five Business Days notice (which notice shall be
irrevocable) of its intention (a) if such circumstance relates
to a Bank to cancel and repay.
13.8 REMOVAL OF A BANK
On the day the notice referred to in Clause 13.7 (Notice of Removal of a
Bank) expires each Borrower to which an Advance has been made shall
repay (without incurring the prepayment fee payable under Clause 13.5
(Prepayment Fee) such Bank's portion of each such Advance.
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13.9 NO FURTHER AVAILABILITY
A Bank for whose account a repayment is to be made under Clause 13.8
(Removal of a Bank) shall not be obliged to participate in the making of
Advances on or after the date upon which the Agent receives the Parent's
notice of its intention to procure the repayment of such Bank's share of
the Outstandings, and such Bank's Available Term Commitment and
Available Revolving Commitment shall be reduced to zero.
13.10 NO OTHER REPAYMENTS OR CANCELLATION
The Borrowers shall not repay or cancel all or any part of the
Outstandings except at the times and in the manner expressly provided
for in this Agreement.
13.11 NO REBORROWING
None of the Borrowers shall be entitled to reborrow any amount of any
Term Facility which is repaid or to reborrow any amount of the Revolving
Facility which is repaid where such repayment permanently reduces the
Revolving Facility.
14. TAXES
14.1 TAX GROSS-UP
All payments to be made by an Obligor to any Finance Party hereunder
shall be made free and clear of and without deduction for or on account
of tax unless such Obligor is required to make such a payment subject to
the deduction or withholding of tax, in which case the sum payable by
such Obligor (in respect of which such deduction or withholding is
required to be made) shall be increased to the extent necessary to
ensure that such Finance Party receives a sum net of any withholding or
deduction equal to the sum which it would have received had no such
deduction or withholding been made or required to be made.
14.2 TAX INDEMNITY
Without prejudice to Clause 14.1 (Tax Gross-up), if any Finance Party is
required to make any payment of or on account of tax on or in relation
to any sum received or receivable hereunder (including any sum deemed
for the purposes of tax to be received or receivable by such Finance
Party whether or not actually received or receivable) or if any
liability in respect of any such payment is asserted, imposed, levied or
assessed against any Finance Party, the Parent shall, upon demand of the
Agent, promptly indemnify the Finance Party which suffers a loss or
liability as a result against such payment or liability together with
any interest, penalties, costs and expenses payable or incurred in
connection therewith, PROVIDED THAT this Clause 14.2 (Tax Indemnity)
shall not apply to:
14.2.1 any tax imposed on and calculated by reference to the net income
actually received or receivable by such Finance Party (but, for
the avoidance of doubt, not including any sum deemed for
purposes of tax to be received or receivable by such Finance
Party but not actually receivable) by the jurisdiction in which
such Finance Party is incorporated or resident for tax purposes;
or
14.2.2 any tax imposed on and calculated by reference to the net income
of the relevant Facility Office of such Finance Party actually
received or receivable
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by such Finance Party (but, for the avoidance of
doubt, not including any sum deemed for purposes of tax to be
received or receivable by such Finance party but not actually
receivable) by the jurisdiction in which such Facility Office is
located.
14.3 BANKS' TAX STATUS CONFIRMATION
Each Bank confirms in favour of the Agent (on the date hereof or, in the
case of a Bank which becomes a party hereto pursuant to a transfer or
assignment, on the date on which the relevant transfer or assignment
becomes effective) that either:
14.3.1 it is a bank as defined for the purposes of Section 349 of the
Income and Corporation Taxes Act 1988 and it is within the
charge to United Kingdom Corporation tax as respects interest
payable to it hereunder and is beneficially entitled to its
share of the Outstandings and the interest thereon; or
14.3.2 it is not resident for tax purposes in the United Kingdom and is
beneficially entitled to its share of the Outstandings and the
interest thereon,
and each Bank shall promptly notify the Agent if there is any change in
its position from that set out above.
14.4 CLAIMS BY BANKS
A Bank intending to make a claim pursuant to Clause 14.2 (Tax Indemnity)
shall notify the Agent of the event or circumstance giving rise to the
claim as soon as reasonably practicable after its relevant Facility
Office has become aware of such event or circumstance, whereupon the
Agent shall notify the Parent thereof.
14.5 EXCLUDED CLAIMS
If any Bank is not or ceases to be a Qualifying Bank, no Obligor shall
be liable to pay to that Bank under Clause 14.1 (Tax Gross-Up) any
amount in respect of taxes levied or imposed in excess of the amount it
would have been obliged to pay if that Bank had been or had not ceased
to be a Qualifying Bank PROVIDED THAT this Clause 14.5 (Excluded Claims)
shall not apply (and each Obligor shall be obliged to comply with its
obligations under Clause 14.1 (Tax Gross-Up)) if:
14.5.1 after the date hereof and after the date when such Bank first
becomes a Bank for the purposes of this Agreement, there shall
have been any introduction of, change in, or change in the
interpretation, administration or application of, any law or
regulation or order or governmental rule or treaty or any
practice or concession of any applicable tax authority and as a
result thereof such Bank ceased to be a Qualifying Bank; or
14.5.2 such Bank is not or ceases to be a Qualifying Bank as a result
of the actions of or omission to act by any Obligor.
14.6 DOUBLE TAXATION RELIEF
If, and to the extent that, the effect of Clause 14.1 (Tax Gross-Up) or
Clause 14.2 (Tax Indemnity) can be mitigated by virtue of the provisions
of any Applicable Treaty
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(whether by a claim to repayment of any taxes referred to in Clause 14.1
(Tax Gross-Up) or Clause 14.2 (Tax Indemnity) or otherwise) each Bank
agrees to co-operate with the relevant Obligor with a view to submitting
any forms required for the purpose of ensuring the application of such
double tax convention so far as relevant, PROVIDED THAT no Bank shall be
required pursuant to this Clause 14.6 (Double Taxation Relief) to
complete or co-operate in completing any form which is not substantially
similar to any form in use at the date of this Agreement for the purpose
of claiming exemption or relief from or repayment of taxes envisaged
hereunder pursuant to an Applicable Treaty between England and such
Bank's jurisdiction of residence.
15. TAX RECEIPTS
15.1 NOTIFICATION OF REQUIREMENT TO DEDUCT TAX
If, at any time, an Obligor is required by law to make any deduction or
withholding from any sum payable by it hereunder (or if thereafter there
is any change in the rates at which or the manner in which such
deductions or withholdings are calculated), such Obligor shall promptly
notify the Agent.
15.2 EVIDENCE OF PAYMENT OF TAX
If an Obligor makes any payment hereunder in respect of which it is
required to make any deduction or withholding, it shall pay the full
amount required to be deducted or withheld to the relevant taxation or
other authority within the time allowed for such payment under
applicable law and shall deliver to the Agent for such Finance Party,
within thirty days after it has made such payment to the applicable
authority, an original receipt (or a certified copy thereof) issued by
such authority evidencing the payment to such authority of all amounts
so required to be deducted or withheld in respect of that Finance
Party's share of such payment.
15.3 TAX CREDIT PAYMENT
If an additional payment is made under Clause 14 (Taxes) by an Obligor
for the benefit of any Finance Party and such Finance Party, in its sole
discretion, determines that it has obtained (and has derived full use
and benefit from) a credit against, a relief or remission for, or
repayment of, any tax, then, if and to the extent that such Finance
Party, in its sole opinion, determines that:
15.3.1 such credit, relief, remission or repayment is in respect of or
calculated with reference to the additional payment made
pursuant to Clause 14 (Taxes); and
15.3.2 its tax affairs for its tax year in respect of which such
credit, relief, remission or repayment was obtained have been
finally settled,
such Finance Party shall, to the extent that it can do so without
prejudice to the retention of the amount of such credit, relief,
remission or repayment, pay to such Obligor such amount as such Finance
Party shall, in its sole opinion, determine to be the amount which will
leave such Finance Party (after such payment) in no worse after-tax
position than it would have been in had the additional payment in
question not been required to be made by such Obligor.
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15.4 TAX CREDIT CLAWBACK
If any Finance Party makes any payment to an Obligor pursuant to Clause
15.3 (Tax Credit Payment) and such Finance Party subsequently
determines, in its sole opinion, that the credit, relief, remission or
repayment in respect of which such payment was made was not available or
has been withdrawn or that it was unable to use such credit, relief,
remission or repayment in full, such Obligor shall reimburse such
Finance Party such amount as such Finance Party determines, in its sole
opinion, is necessary to place it in the same after-tax position as it
would have been in if such credit, relief, remission or repayment had
been obtained and fully used and retained by such Finance Party.
15.5 TAX AND OTHER AFFAIRS
No provision of this Agreement shall interfere with the right of any
Finance Party to arrange its tax or any other affairs in whatever manner
it thinks fit, oblige any Finance Party to claim any credit, relief,
remission or repayment in respect of any payment under Clause 14.1 (Tax
Gross-up) in priority to any other credit, relief, remission or
repayment available to it nor oblige any Finance Party to disclose any
information relating to its tax or other affairs or any computations in
respect thereof.
16. INCREASED COSTS
16.1 INCREASED COSTS
If, by reason of (a) any change in law or in its interpretation or
administration and/or (b) compliance with any request or requirement
relating to the maintenance of capital or any other request from or
requirement of any central bank or other fiscal, monetary or other
authority (including, for the avoidance of doubt, any minimum reserve
requirements imposed by the European Central Bank) (in each case after
the date of this Agreement):
16.1.1 a Bank or any holding company of such Bank is unable to obtain
the rate of return on its capital which it would have been able
to obtain but for such Bank's entering into or assuming or
maintaining a commitment, issuing or performing its obligations
under the Finance Documents;
16.1.2 a Bank any holding company of such Bank incurs a cost as a
result of such Bank's entering into or assuming or maintaining a
commitment, issuing or performing its obligations under the
Finance Documents; or
16.1.3 there is any increase in the cost to a Bank or any holding
company of such Bank of funding or maintaining such Bank's share
of the Advances or any Unpaid Sum,
(including, without limitation, any such circumstance (other than any
such circumstance which is existing on the date hereof and is applicable
to such Bank or any holding company of such Bank on the date hereof)
which results from the introduction or changeover to the Sterling in any
Participating Member State) then the Parent shall, from time to time on
demand of the Agent, promptly pay to the Agent for the account
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of that Bank amounts sufficient to indemnify that Bank or to enable that
Bank to indemnify its holding company from and against, as the case may
be, (a) such reduction in the rate of return of capital, (b) such cost
or (c) such increased cost.
16.2 INCREASED COSTS CLAIMS
A Bank intending to make a claim pursuant to Clause 16.1 (Increased
Costs) shall notify the Agent of the event or circumstance giving rise
to such claim as soon as reasonably practicable after its relevant
Facility Office has become aware of such event or circumstance,
whereupon the Agent shall notify the Parent thereof.
16.3 EXCLUSIONS
Notwithstanding the foregoing provisions of this Clause 16 (Increased
Costs), no Bank shall be entitled to make any claim in respect of:
16.3.1 any cost, increased cost or liability as referred to in Clause
16.1 (Increased Costs) to the extent the same is compensated by
the Associated Costs Rate; or
16.3.2 any cost, increased cost or liability compensated by Clause 14
(Taxes) or which would have been compensated by Clause 14
(Taxes) if the provisions of Clause 14.5 (Excluded Claims) or
sub-clauses 14.2.1 or 14.2.2 of Clause 14.2 (Tax Indemnity) had
not applied; or
16.3.3 any cost, increased cost or liability arising by reason of a
breach by a Bank or their holding company of any law or
regulatory request.
17. ILLEGALITY
If, at any time, it is or will become unlawful for a Bank to make, fund,
issue, participate in or allow to remain outstanding all or part of its
share of the Advances, then that Bank shall, promptly after becoming
aware of the same, deliver to the Parent through the Agent a notice to
that effect and:
17.1.1 such Bank shall not thereafter be obliged to participate in any
Advance and the amount of its Available Term Commitment and
Available Revolving Commitment shall be immediately reduced to
zero; and
17.1.2 if the Agent on behalf of such Bank so requires, the Parent
shall procure that each Borrower shall either (a) as soon as
practicable and in any event within 5 days of such notice or (b)
on the date specified by such Banks through the Agent as being,
in its bona fide opinion, the last day of any applicable grace
period permitted by law repay such Bank's share of any
outstanding Advances together with accrued interest thereon and
all other amounts owing to such Bank under the Finance Documents
and any repayment of any Term Advance so made shall reduce
rateably the remaining obligations under Clause 10.1 (Term
Repayment Instalments) in respect of the outstandings under the
Term Facility under which such Term Advance was made.
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18. MITIGATION
If, in respect of any Bank, circumstances arise which would or would
upon the giving of notice result in:
18.1.1 an increase in any sum payable to it or for its account pursuant
to Clause 14.1 (Tax Gross-up);
18.1.2 a claim for indemnification pursuant to Clause 14.2 (Tax
Indemnity) or Clause 16.1 (Increased Costs);
18.1.3 the reduction of its Available Term Commitment and Available
Revolving Commitment to zero or any repayment to be made
pursuant to Clause 17 (Illegality),
then, without in any way limiting, reducing or otherwise qualifying the
rights of such Bank or the obligations of the Obligors under any of the
Clauses referred to in sub-clauses 18.1.1, 18.1.2, 18.1.3 and 18.1.3,
such Bank shall, upon request by the Parent or relevant Borrower and, in
consultation with the Agent and the Parent and to the extent that it can
do so lawfully and without prejudice to its own position, take such
steps as may be reasonable and practical in all the circumstances
(including a change of location of such Facility Office or the transfer
of its rights, benefits and obligations hereunder to another financial
institution acceptable to the Parent and willing to participate in the
Facilities) to mitigate the effects of such circumstances, PROVIDED THAT
such Bank shall be under no obligation to take any such action if, in
the opinion of such Bank, to do so might have any adverse effect upon
its business, operations or financial condition (other than any minor
costs and expenses of an administrative nature).
19. REPRESENTATIONS
Each Obligor makes the representations and warranties set out in Clause
19.1 (Status) to Clause 19.33 (Financial Model and Financial
Projections) to the Finance Parties on its own behalf and, in addition,
the Parent makes the representations set out therein to the Finance
Parties on behalf of each member of the Group, in each case save as
specifically disclosed in the Disclosure Letter. The Original Obligors
acknowledge that the Finance Parties have entered into this Agreement in
reliance on those representations and warranties. The representations
and warranties in Clause 19.16 (Information Memorandum) shall only be
made on the dates specified in Clause 19.36 (Repetition of
Representations).
19.1 STATUS
It is a corporation duly organised and validly existing under the laws
of its jurisdiction of incorporation and is a limited liability
corporation and has the power and all necessary governmental and other
material consents, approvals, licences and authorisations under any
applicable jurisdiction to own its property and assets and to carry on
its business as currently conducted.
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19.2 BINDING OBLIGATIONS
The obligations expressed to be assumed by it in the Finance Documents
are legal and valid obligations binding on it and enforceable against it
in accordance with the terms thereof, subject to the Legal Reservations.
19.3 EXECUTION AND POWER
In relation to the Finance Documents, its execution of the Finance
Documents to which it is be a party and its exercise of its rights and
performance of its obligations thereunder and the transactions
contemplated thereby (including, without limit, borrowing thereunder and
granting any security or guarantees contemplated thereunder) do not:
19.3.1 conflict with any agreement, mortgage, bond or other instrument
or treaty to which it is a party or which is binding upon it or
any of its assets; or
19.3.2 conflict with its constitutive documents; or
19.3.3 conflict with any applicable law or any applicable official or
judicial regulation or order.
It has the power to enter into and perform its obligations under the
Finance Documents to which it is a party and all corporate and other
action required to authorise the execution, delivery and performance of
the Finance Documents to which it will be a party and the transactions
contemplated therein has been duly taken. No limit on its powers will be
exceeded as a result of the borrowings, granting of security or giving
of guarantees contemplated by the Finance Documents to which it is a
party.
19.4 NO MATERIAL PROCEEDINGS
19.4.1 No action or administrative proceeding of or before any court,
arbitrator or agency (including, but not limited to,
investigative proceedings) which could reasonably be expected to
have a Material Adverse Effect has been started or (to the best
of its knowledge or belief) threatened against it or its assets,
nor are there any circumstances likely to give rise to any such
action or proceedings.
19.4.2 It is not aware of any other event or circumstance which could
reasonably be expected to have a Material Adverse Effect.
19.5 FINANCIAL STATEMENTS
19.5.1 Its most recent audited financial statements delivered to the
Agent pursuant to Clause 20.1 (Annual Statements) (consolidated
in the case of the Parent):
(a) were prepared in accordance with UK GAAP and
consistently applied and comply with Clause 20.9
(Accounting Policies);
(b) disclose all liabilities (contingent or otherwise) and
all unrealised or anticipated losses of such Obligor or,
as the case may be, any member of the Group to the
extent required by the applicable accounting principles
referred to in Clause 20.9 (Accounting Policies); and
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(c) give a true and fair view of (in the case of audited
financial statements) or fairly present in all material
respects (in the case of unaudited financial statements)
the financial condition and the results of the
operations of such Obligor or, as the case may be, the
Group during the relevant period.
19.5.2 Its financial year end and, in the case of the Parent, the
financial year end of the Group is 30 September.
19.6 NO MATERIAL ADVERSE CHANGE
Since 16 December 1999 (being the date as at which the Accountants
Report was prepared), there has been no change in the assets, property,
business, financial condition, or results of the Group taken as a whole
which could reasonably be expected to have a Material Adverse Effect.
19.7 VALIDITY AND ADMISSIBILITY IN EVIDENCE
All acts, conditions and things required to be done, fulfilled and
performed in order:
19.7.1 to enable it lawfully to enter into, exercise its rights under
and perform and comply with the obligations expressed to be
assumed by it in the Finance Documents;
19.7.2 to ensure that the obligations expressed to be assumed by it in
the Finance Documents are legal, valid, binding and enforceable;
and
19.7.3 to make the Finance Documents admissible in evidence in its
jurisdiction of incorporation,
have been done, fulfilled and performed subject to any Legal
Reservations.
19.8 CLAIMS PARI PASSU
Under the laws of its jurisdiction of incorporation in force at the date
hereof, the claims of the Finance Parties against it under the Finance
Documents will rank to the extent that they are secured pursuant to a
Security Document, prior to and otherwise at least pari passu with the
claims of all its other unsecured and unsubordinated creditors save
those whose claims are preferred solely by any bankruptcy, insolvency,
liquidation or other similar laws of general application.
19.9 NO FILING OR STAMP TAXES
Under the laws of its jurisdiction of incorporation in force at the date
hereof, it is not necessary that the Finance Documents be filed,
recorded or enrolled with any court or other authority in such
jurisdiction or that any stamp, registration or similar tax be paid on
or in relation to the Finance Documents save for any filing or recording
of or tax payable in connection with any Security Document which is
referred to in the Legal Opinions and which will be effected or paid
promptly after the date hereof. For the purposes of this Clause 19.9 a
Transfer Certificate shall not be a Finance Document.
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19.10 NO IMMUNITY
In any proceedings taken in its jurisdiction of incorporation in
relation to the Finance Documents, it will not be entitled to claim for
itself or any of its assets immunity from suit, execution, attachment or
other legal process.
19.11 REPORTS
The Reports have been prepared after due and careful consideration and
the Parent (and its executive directors), having made all reasonable
enquiries in the circumstances:
19.11.1 is not aware of any material inaccuracy as to factual matters
relating to the Business contained in the Reports which render
the Reports misleading in any material respect;
19.11.2 does not (as at the date hereof) regard as unreasonable or
unattainable any of the forecasts or projections set out in any
of the Reports;
19.11.3 believes (having made all reasonable enquiries) the assumptions
upon which the forecasts and projections in relation to the
Business contained in the Reports are based to be fair and
reasonable; and
19.11.4 is not aware of any facts or matters not stated in the Reports,
the omission of which make any statements contained therein
misleading in any material respect;
19.11.5 has made full disclosure of all material facts known to it
(having made all reasonable enquiries) to all the persons
responsible for the preparing of Reports in relation to the
Parent and the Group where failure to disclose such facts could
be reasonably likely to render the Reports misleading in any
material respect; and
19.11.6 consider that the Accountants Report fairly presented in all
material respects the financial condition and the results of the
operations of the Business during the periods referred to
therein.
19.12 GROUP STRUCTURE
19.12.1 The Group Structure Chart delivered to the Agent pursuant to
Schedule 3 (Conditions Precedent) is true, complete and
accurate.
19.12.2 All necessary inter-company loans, transfers, share exchanges
and other steps resulting in the final Group structure set out
in the Group Structure Chart have been taken in compliance in
all material respects with all relevant laws and regulations and
all requirements of relevant regulatory authorities.
19.13 NO INSOLVENCY PROCEEDINGS
No Material Subsidiary has taken any corporate action nor have any other
steps been taken or insolvency proceedings been started or (to the best
of its knowledge and belief having made all reasonable enquiry)
threatened against any Material Subsidiary (whether by voluntary
arrangement, scheme of arrangement or otherwise save for any
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solvent reorganisation previously approved by an Instructing Group in
writing, such approval not to be unreasonably withheld) or for the
enforcement of an Encumbrance over all or any of its revenues or assets
or for the appointment of a receiver, administrator, administrative
receiver, conservator, custodian, trustee, or similar officer of it or
of any or all of its assets or revenues.
19.14 NO MATERIAL DEFAULTS
No member of the Group:
19.14.1 is in breach of or in default under any agreement to which it is
a party or which is binding on it or any of its assets to an
extent or in a manner which could reasonably be expected to have
a Material Adverse Effect; or
19.14.2 is or is likely to be in breach of or in default under any
agreement to which it is party or which is binding on it or any
of its assets as a result of entering into and performing its
obligations under the Finance Documents to an extent or in a
manner which could reasonably be expected to have a Material
Adverse Effect.
19.15 INFORMATION
19.15.1 All of the written information (taken as a whole) supplied by
the Parent, any Obligor and any advisers of the Parent and/or
any Obligor to the Agent and/or the Banks and/or their advisers
in connection with the Finance Documents and/or a Permitted
Acquisition or Permitted Equity Funded Acquisition is true,
complete and accurate in all material respects as at the date
such information was supplied and is not misleading in any
material respect.
19.15.2 The forecasts and projections contained in the Business Plan and
TW US Strategy Paper were made in good faith and based on
opinions and assumptions which its directors believe were
reasonable to hold and reasonable to make at the time of supply.
19.15.3 The Parent has not knowingly failed to disclose to the Agent any
material facts or circumstances which would be reasonably
likely, if disclosed, to adversely affect the decision of a
person considering whether or not to provide finance to the
Borrowers.
19.16 INFORMATION MEMORANDUM
The factual information contained in the Information Memorandum is true,
complete and accurate in all material respects, the financial
projections contained therein have been prepared in good faith on the
basis of recent historical information and on the basis of fair and
reasonable assumptions and after careful consideration, all material
statements of opinion/intention and expectation were made in good faith
and after careful consideration and nothing has occurred or been omitted
that renders the information contained in the Information Memorandum
inaccurate or misleading in any material respect.
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19.17 ENVIRONMENTAL COMPLIANCE
Each member of the Group has duly performed and observed in all material
respects all Environmental Law, Environmental Permits and all other
material covenants, conditions, restrictions or agreements directly or
indirectly concerned with any contamination, pollution or waste or the
release or discharge of any toxic or hazardous substance in connection
with any real property which is or was at any time owned, leased or
occupied by any member of the Group or on which any member of the Group
has conducted any activity where failure to do so could reasonably be
expected to have a Material Adverse Effect.
19.18 ENVIRONMENTAL CLAIMS
No Environmental Claim has been commenced or (to the best of the
Parent's knowledge and belief) is threatened against any member of the
Group where such claim could be reasonably be expected, if determined
against such member of the Group, to have a Material Adverse Effect.
19.19 ENCUMBRANCES AND FINANCIAL INDEBTEDNESS
19.19.1 Save for Permitted Encumbrances, no Encumbrance exists over all
or any of the present or future revenues, assets or undertakings
of any member of the Group.
19.19.2 Save for Permitted Indebtedness, it has no Financial
Indebtedness.
19.19.3 The execution of the Finance Documents to which it is a party
and the exercise by it of its rights thereunder will not result
in the existence or imposition of nor oblige any Group member to
create any Encumbrance (save for Permitted Encumbrances) in
favour of any person over any of its present or future revenues,
assets or undertakings.
19.20 CONTROL OF THE PARENT
The Trustee for and on behalf of the beneficiaries named therein (as
defined in the Voting Trust Agreement) has and will have control of the
Parent.
19.21 PARENT AND ORIGINAL BORROWER
The Parent and the Original Borrower are and will be holding companies
and do not and will not carry on any other business save as permitted
pursuant to Clause 23.35 (The Parent) and Clause 23.36 (The Original
Borrower).
19.22 NO EVENT OF DEFAULT
No Event of Default or Potential Event of Default has occurred which is
continuing save for any Event of Default or Potential Event of Default
notified to the Agent pursuant to Clause 23.4 (Notification of Events of
Default).
19.23 CONSENTS AND APPROVALS
All necessary consents, licences, authorisations and approvals to the
transactions constituted by a Permitted Acquisition or a Permitted
Equity Funded Acquisition and the Finance Documents have been obtained
on or prior to the date of the relevant acquisition and all consents,
licences, authorisations and other approvals necessary for
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the conduct of the business of the Group as carried on at the date
hereof have been, or when required will be obtained, their terms and
conditions have been, or once required, will be complied with in all
material respects and they have not been and, so far as it is aware,
will not be revoked or otherwise terminated.
19.24 TAXATION
19.24.1 Each Group member has duly and punctually paid and discharged
all taxes, assessments and governmental charges imposed upon it
or its assets within the time period allowed therefor without
imposing tax penalties or creating any Encumbrance with priority
to the Banks or the security granted or evidenced by the
Security Documents (save to the extent payment thereof is being
contested in good faith by the relevant Group member and
adequate reserves are being maintained for those taxes and where
payment thereof can lawfully be withheld and would not result in
an Encumbrance with priority to the security created or
evidenced by the Security Documents; in relation to the
representation made under this Clause 19.24 (Taxation) on the
date hereof, this proviso shall only apply to the extent any
such payment has been previously disclosed to the Agent in
writing) save that no breach of this representation in relation
to the payment and discharge of all taxes, assessments and
governmental charges imposed on each Group member or its assets
shall occur unless such payment and discharge would result in a
liability against any member of the Group in excess
of(pounds sterling)500,000.
19.24.2 No Group member is materially overdue in the filing of any tax
returns which would result in a liability against any Group
Member in excess of (pounds sterling)500,000.
19.24.3 No claims are being or are reasonably likely to be asserted
against any Group member with respect to taxes which could be
reasonably expected to have a Material Adverse Effect.
19.25 SECURITY INTEREST
Subject to the Legal Reservations, each Security Document to which it is
a party creates the security interest which that Security Document
purports to create or, if that Security Document purports to evidence a
security interest, accurately evidences a security interest which has
been validly created and each security interest ranks in priority as
specified in the Security Document creating or evidencing that interest.
19.26 INTELLECTUAL PROPERTY
It is not aware of any adverse circumstance relating to validity,
subsistence or use of any of its Intellectual Property which could
reasonably be expected to have a Material Adverse Effect.
19.27 GOOD TITLE TO ASSETS
It has good title to or valid leases of or other appropriate licence,
authorisation or consent to use its assets necessary to carry on its
business as presently conducted.
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19.28 LEGAL AND BENEFICIAL OWNER
It is the absolute legal (subject to the Voting Trust Agreement in
respect of the Parent and the Original Borrower any necessary
registrations in the books of the entity whose shares are being charged
or any other legal formalities referred to in the Legal Opinions which
will be effected promptly after the date hereof) and, where applicable,
beneficial owner of all its assets subject to any Permitted Encumbrances
and to any security granted under the Security Documents to which it is
a party.
19.29 ISSUE OF SHARE CAPITAL
Save to the extent contemplated in Clause 23.25 (Share Capital) or in
the Securities Purchase Agreement there are no agreements in force or
corporate resolutions passed which call for the present or further 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, loan note
or loan capital of the Parent or any Group member (including an option
or right of pre-emption or conversion).
19.30 NO TRADING
Save as contemplated by, or otherwise in connection with this Agreement,
the Finance Documents, the Mezzanine Finance Documents and the
Acquisition Documents and the transactions contemplated hereby or
thereby, neither the Parent nor the Original Borrower has not traded or
undertaken any commercial activities of any kind and has any liabilities
or obligations (actual or contingent).
19.31 PENSIONS
Each member of the Group is in material compliance with all applicable
laws and contracts relating to the pension schemes (if any) operated by
it or in which it participates and has no material unrecorded or
unindemnified liabilities in respect of such schemes which could
reasonably be expected to have a Material Adverse Effect.
19.32 YEAR 2000 COMPLIANCE
The Parent believes (having made all reasonable enquiries) that the Year
2000 problem (that is, the risk that any computer hardware or software
or any equipment operated by electronic means used by the Group may be
unable to recognise and perform properly date-sensitive functions
involving a date before, on or after 31 December 1999) could not
reasonably be expected to have a Material Adverse Effect.
19.33 FINANCIAL MODEL AND FINANCIAL PROJECTIONS
The Financial Model and any future projections prepared for the purposes
of any Permitted Acquisition have been prepared on a basis that is in
all material respects consistent with UK GAAP.
19.34 PROPERTY
No single freehold, feuhold, leasehold or heritable property owned by
any Obligor has a value in excess of (pounds sterling)500,000.
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19.35 PERMITTED ACQUISITIONS AND PERMITTED EQUITY FUNDED ACQUISITIONS
19.35.1 Execution and Power
In relation to a Permitted Acquisition or a Permitted Equity
Funded Acquisition, its execution of the Acquisition Documents
to which it will be a party and its exercise of its rights and
performance of its obligations thereunder and the transactions
contemplated thereby (including, without limit, borrowing
thereunder and granting any security or guarantees contemplated
thereunder) will not:
(a) conflict with any agreement, mortgage, bond or other
instrument or treaty to which it is a party or which is
binding upon it or any of its assets; or
(b) conflict with its constitutive documents; or
(c) conflict with any applicable law or any applicable
official or judicial regulation or order.
In relation to a Permitted Acquisition or a Permitted Equity
Funded Acquisition it has the power to enter into and perform
its obligations under the Acquisition Documents to which it will
be a party and all corporate and other action required to
authorise the execution, delivery and performance of the
Acquisition Document to which it will be a party and the
transactions contemplated therein has been duly taken.
19.35.2 Acquisition Documents
In relation to any Permitted Acquisition or a Permitted Equity
Funded Acquisition there will be no amendment, variation or
waiver of the terms of the Acquisition Documents after the
relevant purchase date save as approved in writing by the Agent
other than any amendments or variations which are of a minor or
technical nature or which could not reasonably be considered to
be material to the interests of the Finance Parties and the
Acquisition Documents contain all of the terms of the agreement
between the purchaser and the vendors in relation to a Permitted
Acquisition or a Permitted Equity Funded Acquisition.
19.35.3 Parent's Knowledge
In relation to a Permitted Acquisition or a Permitted Equity
Funded Acquisition, the Parent is not aware of any event, fact
or circumstance which would constitute a breach of warranty or
misrepresentation or breach of contract or other claim against
the vendors if all references in the Acquisition Documents to
"so far as the vendors are aware" or similar were deleted.
19.36 REPETITION OF REPRESENTATIONS
19.36.1 The Repeated Representations shall be deemed to be repeated by
the relevant Obligor by reference to the then existing facts and
circumstances on the date hereof, the date each Notice of
Drawdown is given, on the first day of each
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Interest Period, on each date on which an Advance is or is to be
made (or any Advance is rolled over), and on each date on which
a company becomes (or it is proposed that a company becomes) an
Additional Obligor and at the end of each Financial Quarter of
the Group.
19.36.2 Clause 19.16 (Information Memorandum) shall be deemed to be made
only on the date that the Information Memorandum is approved by
the Parent and on the Syndication Date.
20. FINANCIAL INFORMATION
20.1 ANNUAL STATEMENTS
The Parent shall as soon as the same become available, but in any event
within 120 days after the end of each of its financial years, deliver to
the Agent in sufficient copies for the Banks the financial statements of
the Group and each Group member on a consolidated and consolidating
basis for such financial year, audited by an internationally recognised
firm of independent auditors licensed to practise in its jurisdiction of
incorporation, and the related auditor's and director's reports.
Such annual statements shall include a balance sheet, profit and loss
account and cash flow statement.
20.2 QUARTERLY STATEMENTS
The Parent shall as soon as the same become available, but in any event
within 45 days after the end of each quarter of each of its financial
years, deliver to the Agent in sufficient copies for the Banks the
consolidated financial statements of the Group for such period.
Such quarterly statements shall be in a form reasonably acceptable to
the Agent and shall include a balance sheet, profit and loss account and
cash flow statement, and (other than in respect of quarterly statements
in respect of any financial quarter falling in 1999) a comparison with
the financial statements for the same financial quarter of the previous
year and a description of significant acquisitions and disposals, and
other transactions or events which are material in the context of the
Group occurring in that financial quarter and the financial year to
date.
20.3 MONTHLY MANAGEMENT STATEMENTS
The Parent shall as soon as the same become available but in any event
within 30 days after the end of each month deliver to the Agent in
sufficient copies for the Banks the consolidated financial statements of
the Group for such period.
Such monthly accounts shall be on a month-to-month and cumulative basis
and in a form reasonably acceptable to the Agent and shall include a
balance sheet, profit and loss account and cashflow statements and
provide a management commentary thereon as to, inter alia, the Group's
performance during such month and the financial year to date and any
material developments or proposals affecting the Group or its business.
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20.4 ANNUAL BUDGET
The Parent shall, as soon as the same become available, and in any event
no later than 10 days prior to the beginning of any financial year,
deliver to the Agent in sufficient copies for the Banks an annual Budget
(in form reasonably acceptable to the Agent) prepared by reference to
each month in respect of such financial year of the Group including:
20.4.1 forecasts of projected disposals other than in the ordinary
course of trade (including timing and amount thereof) on a
consolidated basis of the Group for such financial year;
20.4.2 projected annual profit and loss accounts (including turnover
and operating costs) for and projected balance sheets and cash
flow statements on a monthly basis for such financial year on a
consolidated basis for the Group;
20.4.3 projected Capital Expenditure to be incurred on a monthly basis
for such financial year on a consolidated basis for the Group;
20.4.4 projected EBIT as at the end of each month in such financial
year;
20.4.5 a quantitative analysis and commentary for the management on its
proposed activities for such financial year;
20.4.6 a comparison against the Business Plan forecast for such period.
The Parent shall forthwith provide the Agent with details of any
material changes in the projections delivered under this Clause 20.4
(Annual Budget) as soon as it becomes aware of any such change.
20.5 OTHER REPORTS AND FILINGS
The Parent shall, as soon as the same become available, but in any event
within 30 days after the filing thereof, deliver to the Agent in
sufficient copies for the Banks copies of any and all reports (whether
on Form 10-K, Form 10-Q or otherwise), proxy materials and other
information and documents, if any, which TW US shall file with the U.S.
Securities and Exchange Commission or any governmental agencies
substituted therefor under the U.S. Securities Act of 1933, as amended,
or the U.S. Securities Exchange Act of 1934, as amended.
20.6 REQUIREMENTS AS TO FINANCIAL STATEMENTS
The Parent shall ensure that each set of financial statements delivered
by it pursuant to this Clause 20 (Financial Information) is certified by
an Authorised Signatory of the Parent as giving a true and fair view of
(in the case of audited financial statements) or fairly presents in all
material respects (in the case of unaudited financial statements) the
consolidated financial condition of the Group as at the end of the
period to which those financial statements relate and of the results of
the Group's operations during such period.
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20.7 COMPLIANCE CERTIFICATES
The Parent shall ensure that each set of financial statements delivered
by it pursuant to Clause 20.1 (Annual Statements) and Clause 20.2
(Quarterly Statements) is accompanied by a Compliance Certificate signed
by the Parent's auditors (in the case of a Compliance Certificate
delivered with the annual financial statements of the Group) and by the
Group Finance Director and one other director of the Parent (in the case
of a Compliance Certificate delivered with the Parent's annual or its
quarterly financial statements). Each Compliance Certificate shall
provide sufficient information to determine which subsidiaries of the
Parent are Material Subsidiaries.
20.8 OTHER FINANCIAL INFORMATION
Each Obligor shall from time to time on the request of the Agent,
furnish the Agent with such information about the business or financial
condition of the Group as the Agent or any Bank (through the Agent) may
reasonably require and, for the avoidance of any doubt, it shall be
reasonable for a Bank (through the Agent) to require copies of the
annual financial statements of any Obligor.
20.9 ACCOUNTING POLICIES
The Parent shall ensure that each set of financial statements delivered
by the Parent pursuant to this Clause 20 (Financial Information) is
prepared using UK GAAP (with normal period end adjustments for monthly
and quarterly accounts) consistent with those applied in the preparation
of the Business Plan (the "REFERENCE ACCOUNTING POLICIES") unless, in
relation to any such set of financial statements, the Parent notifies
the Agent that there have been one or more changes in any such
accounting policies, practices, procedures and reference period and in
which case the Parent shall procure that its auditors provide:
20.9.1 a description of the changes and the adjustments which would be
required to be made to those financial statements if they have
been prepared using the Reference Accounting Policies; and
20.9.2 sufficient information, in such detail and format as may be
reasonably required by the Agent, to enable the Banks to make an
accurate comparison between the financial position indicated by
those financial statements and the Business Plan or, as the case
may be, any accounts previously delivered under Clauses 20.1,
(Annual Statements) 20.2 (Quarterly Statements) and 20.3
(Monthly Management Statements).
If there has been a change in accounting policies, practices, procedures
or reference period and the description and information required by this
Clause 20.9 (Accounting Policies) have been provided by the auditors in
connection with such change and any amendments have been agreed pursuant
to Clause 20.10 (Change in Accounting Policy) in connection with such
change, then such change shall become part of the normal accounting
policies, practices, procedures and reference period as if it were used
in the preparation of the Reference Accounting Policies.
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20.10 CHANGE IN ACCOUNTING POLICIES
If there has been one or more such changes in any accounting policies,
practices or procedures or reference period:
20.10.1 the Agent and the Parent shall, at the Agent's or the Parent's
request, negotiate in good faith with a view to agreeing such
amendments to the financial covenants in Clause 22 (Financial
Condition) and the definitions used therein as may be necessary
to grant to the Banks protection comparable to that granted on
the date hereof, and any amendments as agreed will have effect
on the date agreed between the Agent and the Parent; and
20.10.2 if no such agreement is reached within 30 days of the Agent's
request, the Agent shall (if so requested by an Instructing
Group) instruct the auditors of the Parent or independent
accountants (approved by the Parent or, in the absence of such
approval within 5 days of request by the Agent therefor, a firm
with internationally recognised expertise) to determine any
amendment to Clause 22 (Financial Condition) which those
auditors or, as the case may be, accountants (acting as experts
and not arbitrators) consider appropriate to grant to the Banks
protection comparable to that granted on the date hereof, which
amendments shall take effect when so determined by those
auditors, or as the case may be, accountants. Where such
auditors or accountants are instructed hereunder, the cost and
expense of those auditors or accountants shall be for the
account of the Parent.
21. OTHER INFORMATION
21.1 SHAREHOLDER INFORMATION
The Parent shall, as soon as reasonably practicable, after the same are
supplied or made available, furnish the Agent with such general
information as is required by law to be supplied or made available to
all shareholders (in their capacity as such) of the Parent or, in the
case of any Obligor, their creditors generally or any class thereof.
21.2 AUDITOR'S LETTER
The Parent shall at the reasonable request of the Agent require and
authorise its auditors to discuss with the Agent the information and
other matters related to or arising out of the annual audit of the Group
by the auditors for the time being of the Parent.
21.3 LITIGATION AND ENVIRONMENTAL CLAIMS
The Parent shall advise the Agent promptly upon becoming aware of the
same of the details of:
21.3.1 each litigation, arbitration or administrative proceeding
pending or reasonably likely to be commenced against any member
of the Group which would, if adversely determined, result in
liability of such member of the Group in an amount in excess of
(pounds sterling)500,000; and
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21.3.2 each Environmental Claim which would involve liability or
expenditure in excess of (pounds sterling)500,000.
21.4 SHAREHOLDERS
The Parent shall promptly inform the Agent in writing upon any transfer
of any legal or beneficial ownership of the Borrower and itself or any
change of control of such shares of which it is aware and such notice
shall include details of the previous owner or controller and the new
owner or controller and the number and type of shares affected.
21.5 INFORMATION COVENANTS
The Parent shall procure that any notices required to be delivered to
the Agent under Clause 23 (Covenants) are delivered in accordance with
such clause.
22. FINANCIAL CONDITION
22.1 FINANCIAL COVENANTS
The Parent shall ensure that the financial condition of the Group shall
be such that:
22.1.1 Senior Interest Cover Ratio: Interest Cover for each Relevant
Period specified in Column 1 below shall not be less than the
ratio set out in Column 2 below opposite each Relevant Period.
COLUMN 1 COLUMN 2
RELEVANT PERIOD RATIO (TO 1.0)
(ENDING ON)
Date hereof - 31 March 2000 2.75
Date hereof - 30 June 2000 2.75
Date hereof - 30 September 2000 3.00
1 January 2000 - 31 December 2000 3.00
1 April 2000 - 31 March 2001 3.00
1 July 2000 - 30 June 2001 3.00
1 October 2000 - 30 September 2001 3.50
1 January 2001 - 31 December 2001 3.50
1 April 2001 - 31 March 2002 3.50
1 July 2001 - 30 June 2002 3.50
1 October 2001 - 30 September 2002 4.50
1 January 2002 - 31 December 2002 4.50
1 April 2002 - 31 March 2003 4.50
1 July 2002 - 30 June 2003 4.50
1 October 2002 - 30 September 2003 5.00
Each 12 month period ending on a Quarter Date 5.00
falling after 30 September 2003
"INTEREST COVER" means, in relation to any Relevant Period, the
ratio of EBITA to Net Senior Cash Interest for such Relevant
Period.
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22.1.2 Fixed Charge Cover: Fixed Charge Cover for each Relevant Period
specified in column 1 below shall not be less than the ratio set
out in column 2 below opposite such Relevant Period.
COLUMN 1 COLUMN 2
RELEVANT PERIOD RATIO (TO 1.0)
1 January 2000 - 30 June 2000 1.0
1 January 2000 - 30 September 2000 1.0
1 January 2000 - 31 December 2000 1.0
1 April 2000 - 30 March 2001 1.0
Each 12 month period ending on a Quarter Date 1.0
falling after 30 March 2001
"FIXED CHARGE COVER" means, in relation to any Relevant Period,
the ratio of Cash Flow to Net Debt Service for such Relevant
Period.
22.1.3 Debtor Days: The Parent shall ensure that on each Quarter Date,
the Debtor Days shall not exceed 82.
22.1.4 Net Worth: Consolidated Net Worth shall not at any time during
each period specified in column 1 below be less than the amount
specified in column 2 below opposite such Relevant Period.
COLUMN 1 COLUMN 2
FINANCIAL YEAR ENDING Amount (pounds (million)
sterling)
Date hereof - 29 September 2001 20 + X
30 September 2001 - 29 September 2002 22 + X
30 September 2002 - 29 September 2003 25 + X
30 September 2003 - 29 September 2004 30 + X
30 September 2004 - 29 September 2005 35 + X
Each 12 month period ending on 29 35 + X
September after 29 September 2005
"X" means adjusted as appropriate to take account of any
revaluation arising out of the consolidation of the Group.
22.1.5 Total Net Debt Cover Ratio: Total Net Debt Cover as at the end
of each Relevant Period specified in Column 1 below shall not be
more than the ratio set out in Column 2 below opposite such
Relevant Period.
COLUMN 1 COLUMN 2
RELEVANT PERIOD RATIO (TO 1.0)
(ENDING ON)
1 January 2000 - 31 March 2000 4.50
1 January 2000 - 30 June 2000 4.50
1 January 2000 - 30 September 2000 4.50
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1 January 2000 - 31 December 2000 4.50
1 April 2000 - 31 March 2001 4.50
1 July 2000 - 30 June 2001 4.50
1 October 2000 - 30 September 2001 4.25
1 January 2001 - 31 December 2001 4.25
1 April 2001 - 31 March 2002 4.25
1 July 2001 - 30 June 2002 4.25
1 October 2001 - 30 September 2002 3.50
1 January 2002 - 31 December 2002 3.50
1 April 2002 - 31 March 2003 3.50
1 July 2002 - 30 June 2003 3.50
1 October 2002 - 30 September 2003 3.00
1 January 2003 - 31 December 2003 3.00
1 April 2003 - 31 March 2004 3.00
1 July 2003 - 30 June 2004 3.00
1 October 2003 - 30 September 2004 2.50
Each 12 month period ending on a Quarter Date 2.50
falling after 30 September 2004
"TOTAL NET DEBT COVER" means, in relation to any Relevant
Period, the ratio of Total Net Debt as at the last day of such
period to EBITDA for such period.
22.1.6 Capital Expenditure: The Group shall not in any financial year
incur a greater amount of Capital Expenditure than is specified
in the annual Budget relating to such financial year.
22.2 CALCULATIONS
For the purpose of calculating Total Net Debt Cover:
In relation to any Relevant Period ending on or before 30 September
2000, EBITDA shall be determined on a rolling 12 month basis and shall
be calculated by annualising actual EBITDA, in respect of the period
from 1 January 2000 to the last day of the Relevant Period.
22.3 FINANCIAL DEFINITIONS
In Clause 22 (Financial Condition) the following terms have the
following meanings.
"APPROVED ACCOUNTING PRINCIPLES" means UK GAAP.
"AVERAGE DAILY SALES" means, the total sales during the relevant quarter
divided by the number of days in that quarter.
"CASH" means, at any time, cash at bank denominated in sterling and
credited to an account in the name of a Borrower with an Eligible
Deposit Bank and to which a Borrower is alone beneficially entitled and
for so long as (a) such cash is repayable on
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demand and (b) repayment of such cash is not contingent on the prior
discharge of any other indebtedness of any Group member or of any other
person whatsoever or on the satisfaction of any other condition.
"CAPITAL EXPENDITURE" means any expenditure which would be treated as
capital expenditure in accordance with Approved Accounting Principles.
"CASH FLOW" means, in respect of any Relevant Period, EBIT for such
Relevant Period:
(a) adding back depreciation and the amount attributable to
amortisation of goodwill or any intangible assets during that
period, to the extent deducted in arriving at EBIT;
(b) minus any taxes paid in cash during such Relevant Period;
(c) minus all Capital Expenditure during such Relevant Period and
for this purpose to the extent that any Capital Expenditure is
financed by finance lease, hire purchase or similar arrangements
the amount included in Capital Expenditure shall be the amount
which would have been included had such Capital Expenditure not
been so financed but after including the principal amount
financed under such financing arrangements as a cash inflow;
(d) plus any extraordinary items received in cash during such
Relevant Period;
(e) minus any extraordinary items paid in cash during such Relevant
Period;
(f) minus the amount of the increase or plus the amount of the
decrease (as the case may be) in Working Capital during such
Relevant Period;
(g) plus the amount of any dividends or other profit distributions
(net of tax) received in cash by any member of the Group during
such Relevant Period from companies which are not members of the
Group;
(h) minus the aggregate amount of Total Consideration of Permitted
Acquisitions and Permitted Equity Funded Acquisitions made
during such Relevant Period;
(i) plus the aggregate of the Available Cash and drawings under the
Term B Facility utilised to fund Permitted Acquisitions and
Permitted Equity Funded Acquisitions made during such Relevant
Period;
(j) after adding back or deducting, as the case may be, the amount
of any gain or any loss against book value arising on a disposal
of any asset (not being stock disposed of in the ordinary course
of trading) during such Relevant Period to the extent deducted
or added back in arriving at EBIT for that period;
(k) plus (to the extent not already included) the amount of any Net
Disposal Proceeds arising during such Relevant Period on the
disposal of any asset (not
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being stock disposed of in the ordinary course of trading) save
for any Net Disposal Proceeds which are held in the Holding
Account;
(l) plus (to the extent not already included) any amount of
additional available cash resulting from the use of any pension
surplus during such Relevant Period;
(m) minus, except to the extent deducted in calculating EBIT, the
net cost of management fees during such Relevant Period;
(n) minus payments on provisions or reserves not included in Working
Capital in respect of such Relevant Period;
(o) minus payments with respect to capitalised assets not included
in Capital Expenditure or Working Capital in respect of such
Relevant Period; and
(p) after adding back the aggregate amount of payments during such
Relevant Period made in respect of Earn Out obligations of the
Group entered into prior to the date of the Agreement PROVIDED
THAT the aggregate of all such adjustments made under this
sub-paragraph (p) since the date of this Agreement shall not
exceed the cash balances (excluding Available Cash) of the Group
at the date hereof.
"CONSOLIDATED FIXED CHARGES" means, in respect of any Relevant Period,
the aggregate of:
(a) Net Cash Interest for that Relevant Period;
(b) all scheduled repayments of principal under the terms of any
Indebtedness for Borrowed Money (but excluding any voluntary or
mandatory prepayment of the Facilities) of any member of the
Group (excluding any Indebtedness for Borrowed Money between any
member of the Group and any other member of the Group) falling
due during that period:
(i) including, without limitation, all capital payments
falling due in respect of any Indebtedness for Borrowed
Money falling within paragraph (g) of the definition of
that term; and
(ii) excluding any repayment or prepayment of any overdraft
or revolving credit facility (including, without
limitation, the Revolving Advances) falling due during
that period and capable of being simultaneously redrawn
under the terms of the relevant facility;
"CONSOLIDATED NET WORTH" means at any time the aggregate of the amounts
paid up or credited as paid up on the issued share capital of the Parent
(other than any redeemable shares) and the aggregate amount of the
reserves of the Group including:
(a) any amount credited to the share premium account;
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(b) any capital redemption reserve fund; and
(c) any balance standing to the credit or debit of the consolidated
profit and loss account reserve of the Group, adjusted for (i)
the effect of the historic goodwill arising on consolidation of
(pounds sterling)50,701,000; (2) the elimination of the
amortisation charged in respect of purchased goodwill as per the
consolidated profit and loss account of the Group; and (3)
deducting the amortisation of purchased goodwill using a five
(5) year amortisation period,
but deducting:
(i) (to the extent included) any amounts arising from an upward
revaluation of assets made at any time after 30 September 1999;
and
(ii) (to the extent included) any dividend or distribution
recommended but not debited to the profit and loss account
reserve or made by any member of the Group to the extent payable
to a person who is not a member of the Group and such
distribution is not provided for in the most recent financial
statements,
and so that no amount shall be included or excluded more than once.
"CURRENT ASSETS" means the sum of inventory, trade receivables and other
receivables (including sundry debtors) falling due within 12 months,
prepaid accounts and other assets but excluding cash at bank and in
hand.
"CURRENT LIABILITIES" means the sum of all liabilities falling due
within 12 months (including trade creditors, accruals and provisions and
prepayments but excluding any Indebtedness for Borrowed Money falling
due within such period.
"DEBTOR DAYS" means, with respect to any Quarter Date, the aggregate of
all outstanding receivables (excluding VAT) (net of any provisions) on
such Quarter Date divided by Average Daily Sales.
"EBIT" means, in respect of any Relevant Period, the consolidated profit
of the Group for such period:
(a) before any deduction of corporation tax or other taxes on income
or gains for such Relevant Period;
(b) before any deduction of Interest Payable in respect of such
Relevant Period and before amortisation of Acquisition Costs, to
the extent amortised;
(c) after deducting (to the extent included) Interest Receivable in
respect of such Relevant Period;
(d) excluding extraordinary items relating to such Relevant Period;
(e) after deducting (to the extent otherwise included) the amount of
profit (or adding back the loss) for such Relevant Period of any
member of the Group
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which is attributable to any third party (not being a member of
the Group) which is a shareholder in such member of the Group;
(f) after deducting (to the extent otherwise included) any gain over
book value arising in favour of a member of the Group on the
disposal of any asset (not being any disposals made in the
ordinary course of trading) during such Relevant Period and any
gain arising on any revaluation of any asset during such period;
(g) after adding back (to the extent otherwise deducted) any loss
against book value incurred by a member of the Group on the
disposal of any asset (not being any disposals made in the
ordinary course of trading) during such Relevant Period; and
(h) after deducting any depreciation on fixed assets relating to
such Relevant Period.
"EBITA" means, in respect of any Relevant Period, EBIT for such period
before deducting amortisation of any goodwill on any intangible assets
relating to such Relevant Period.
"EBITDA" means, in respect of any Relevant Period, EBIT for such period
adding back depreciation and amortisation during that period, to the
extent deducted in calculating EBIT and taking into account any
applicable Agreed Pro Forma Adjustments.
"ELIGIBLE DEPOSIT BANKS" means any bank or financial institution with a
short term rating of at least A1 granted by Standard & Poor's
Corporation or P1 granted by Moody's Investors Services Inc..
"EXCESS CASH FLOW" means, in respect of any financial year of the Group,
Cash Flow for such financial year:
(a) less the aggregate of:
(i) Consolidated Fixed Charges of the Group; and
(ii) (9.375% multiplied by the Original Senior Subordinated
Note Amount) minus any cash interest paid under the
Senior Subordinated Notes,
for such financial year;
(b) less (to the extent included in calculating Cash Flow) the
amount prepaid during such financial year pursuant to the
provisions of Clause 12.1 (Mandatory Prepayment on Disposals);
(c) less an amount equal to the amount required to reduce drawings
under the Revolving Facility to zero as at the date of
calculation.
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"FINANCIAL QUARTER" means the period commencing on the day after one
Quarter Date and ending on the next Quarter Date.
"INTEREST" means, in respect of any Relevant Period, amounts payable
pursuant to Clause 14 (Taxes) and interest and amounts in the nature of
interest paid or payable in respect of any Indebtedness for Borrowed
Money of any member of the Group excluding any interest paid or payable
on Indebtedness for Borrowed Money between any member of the Group and
any other member of the Group but including:
(a) the interest element of finance leases;
(b) discount and acceptance fees payable (or deducted) in respect of
any Indebtedness for Borrowed Money excluding any income or
expense received or incurred in connection with any sales
through factoring or leasing transactions but only to the extent
that such amounts have been taken into account in the cost of
sales for the purposes of calculating EBIT;
(c) the net amount (expressed as a positive or negative amount, as
appropriate) due to or from members of the Group pursuant to
interest rate hedging or similar agreements; and
(d) commitment, utilisation and non-utilisation fees payable or
incurred in respect of Indebtedness for Borrowed Money.
"INTEREST PAYABLE" means, in respect of any Relevant Period, Interest
accrued (whether or not paid or capitalised) during that Relevant Period
as an obligation of any member of the Group during that period and
calculated on the basis that amortisation of Acquisition Costs, to the
extent amortised, will be excluded.
"INTEREST RECEIVABLE" means, in respect of any Relevant Period, the
amount of Interest (which for this purpose shall include all payments of
the type described in the definition of Interest above (except for
paragraph (c) thereof)) received by members of the Group (other than by
other members of the Group) during such period whether or not paid.
"MONITORED CAPITAL EXPENDITURE" means Capital Expenditure other than
Permitted Acquisitions.
"NET CASH INTEREST" means, in respect of any Relevant Period, Interest
Payable less Interest Receivable to the extent actually received in cash
during that period.
"NET DEBT SERVICE" means, in respect of any Relevant Period, the
aggregate of:
(a) Net Cash Interest; and
(b) the aggregate of scheduled payments of any Indebtedness for
Borrowed Money falling due.
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"NET SENIOR CASH INTEREST" means, in respect of any Relevant Period,
Senior Interest Payable less Interest Receivable to the extent actually
received in cash during that period.
"NET SENIOR DEBT" means, at any time, all Indebtedness for Borrowed
Money of the Group at such time:
(a) less amounts outstanding under the Mezzanine Facility at such
time;
(b) less the aggregate amount of all cash balances (excluding the
Available Cash) and Cash Equivalent Investments;
(c) less any Indebtedness for Borrowed Money (not falling within (a)
above) which is subordinated pursuant to the Intercreditor
Arrangements or otherwise on terms acceptable to an Instructing
Group.
"QUARTER DATE" means each of 31 March, 30 June, 30 September and 31
December.
"RELEVANT PERIOD" means (notwithstanding that such period commenced
prior to the date hereof):
(a) each period of twelve months ending on the last day of the
Parent's financial year; and
(b) each period of twelve months ending on the last day of each
Financial Quarter of the Parent's financial year,
PROVIDED THAT if any such period includes the date hereof, it shall be
deemed to commence on such date.
"SENIOR INTEREST" means, in respect of any Relevant Period, all interest
and amounts in the nature of interest paid or payable in respect of the
Facilities of any member of the Group including any commitment,
utilisation and non-utilisation fees payable or incurred in respect of
the Facilities.
"SENIOR INTEREST PAYABLE" means, in respect of any Relevant Period,
Senior Interest accrued (whether or not paid or capitalised) during that
Relevant Period as an obligation of any member of the Group during that
period.
"TOTAL DEBT" means, at any time, the aggregate amount of Indebtedness
for Borrowed Money (excluding any indebtedness incurred in relation to
Senior Subordinated Notes) of the Group at such time.
"TOTAL NET DEBT" means, in respect of any Relevant Period, Total Debt
less the aggregate amount of all cash balances (excluding the Available
Cash).
"WORKING CAPITAL" means, at any time, the Consolidated Net Assets of the
Group comprising stock and debtors (but excluding any cash) and
deducting trade creditors and other Current Liability at the last day of
such Relevant Period.
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22.4 FINANCIAL TESTING
The financial covenants set out in Clause 22 (Financial Condition) shall
be tested by reference to each of the financial statements and/or each
Compliance Certificate delivered pursuant to Clause 20 (Financial
Information).
22.5 AUDITOR'S VERIFICATION
The Agent may, at any time if it has reasonable grounds for believing
that the figures prepared by the Parent are incorrect, inaccurate or
incomplete at the Parent's expense require the auditors of the Group or
the Group to verify the figures supplied by the Parent in connection
with the financial conditions set out in Clause 22.1 (Financial
Covenants).
The Agent may, in accordance with this Clause 22.5, request verification
of any figure or calculation made in a Compliance Certificate and/or
delivered under Clause 21 (Other Information) and/or any figure
contained in the financial statements delivered under Clause 20
(Financial Information) which is relevant to the calculation of the
financial conditions referred to above.
If such auditors fail to verify such figures to the reasonable
satisfaction of the Agent after being requested to do so, the Agent may
appoint an independent firm of accountants to carry out an appropriate
investigation and give a certificate in a form and content reasonably
satisfactory to the Agent certifying or verifying the relevant figures
and satisfaction of the above financial conditions shall be determined
be reference to the figures so verified or certified even if the audited
or management accounts for the same date or period have not yet been
published.
22.6 ACCOUNTING TERMS
All accounting expressions to the extent that not otherwise defined
herein shall be construed in accordance with UK GAAP.
23. COVENANTS
23.1 MAINTENANCE OF LEGAL VALIDITY AND LEGAL STATUS
Each Obligor shall do all such things as are necessary to maintain its
and its subsidiaries existence as a legal person and obtain, comply with
the terms of and do all that is necessary to maintain in full force and
effect all authorisations, approvals, licences, consents and exemptions
required in or by the laws of its jurisdiction of incorporation to
enable it lawfully to enter into and perform its obligations under the
Finance Documents to which it is expressed to be a party and to ensure
the legality, validity, enforceability (subject to the Legal
Reservations) or admissibility in evidence in its jurisdiction of
incorporation of the Finance Documents and, on request of the Agent,
supply copies (certified by an Authorised Signatory of the relevant
Obligor as true, complete and up to date) of any such authorisations,
approvals, licences, consents and exemptions.
23.2 INSURANCE
23.2.1 Each Obligor shall and shall procure that each Material
Subsidiary shall effect and maintain insurances on and in
relation to its business and assets with
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reputable underwriters or insurance companies against such risks
and to such extent as is usual for prudent companies carrying on
a business such as that carried on by such Material Subsidiary
(including, but not limited to, loss of earnings, business
interruption, directors and officers liability cover).
23.2.2 Without prejudice to sub-clause 23.2.1, each Obligor shall, and
shall procure that each Material Subsidiary effects and
maintains insurances on and in relation to its business and
assets:
(a) against such risks and at such levels as are recommended
by such Material Subsidiary's insurance advisers or such
higher levels as are normally maintained by persons
carrying on the same business as that carried on by such
Group member; and
(b) in compliance with any relevant agreements which are
binding on it from time to time.
23.2.3 The Parent shall (if so requested in writing) supply the Agent
with copies of all such insurance policies or certificates of
insurance in respect thereof or (in the absence of the same)
such other evidence of the existence of such policies as may be
reasonably acceptable to the Agent and shall, in any event,
notify the Agent of any material changes to its insurance cover
made from time to time.
23.3 ENVIRONMENTAL MATTERS
23.3.1 Each Obligor shall and shall ensure that each member of the
Group shall comply in all material respects with all
Environmental Law and obtain and maintain any Environmental
Permits and take all reasonable steps in anticipation of known
or expected future changes to or obligations under the same,
breach of which (or failure to obtain, maintain or take which)
could reasonably be expected to have a Material Adverse Effect.
23.3.2 Each Obligor shall, and shall procure that each Group member
shall, inform the Agent in writing as soon as reasonably
practicable upon becoming aware of the same if any Environmental
Claim has been commenced or (to the best of it's knowledge and
belief) is threatened against any member of the Group in any
case where such claim would be reasonably likely to have a
Material Adverse Effect or of any facts or circumstances which
will or are reasonably likely to result in any Environmental
Claim being commenced or threatened against any member of the
Group in any case where such claim could reasonably be expected
to have a Material Adverse Effect.
23.4 NOTIFICATION OF EVENTS OF DEFAULT
Each Obligor shall and shall procure that each Group member shall,
inform the Agent of the occurrence of any Event of Default or Potential
Event of Default and, upon receipt of a written request to that effect
from the Agent (if the Agent has reasonable grounds for believing that
there may be an Event of Default or Potential Event of
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Default), confirm to the Agent that, save as previously notified to the
Agent or as notified in such confirmation, no Event of Default or
Potential Event of Default has occurred.
23.5 CLAIMS PARI PASSU
Each Obligor shall ensure that at all times the claims of the Finance
Parties against it under the Finance Documents rank at least pari passu
with the claims of all its other unsecured and unsubordinated creditors
save those whose claims are preferred by any bankruptcy, insolvency,
liquidation or other similar laws of general application.
23.6 CONSENTS AND APPROVALS
Each Obligor shall, and shall procure that each member of the Group
shall, comply with all applicable laws, rules, regulations and orders
and obtain and maintain all governmental and regulatory consents,
licences, authorisations and approvals the failure to comply with which
or the failure to obtain and maintain which could be reasonably be
expected to have a Material Adverse Effect.
23.7 CONDUCT OF BUSINESS
Each Obligor shall, and shall procure that each Material Subsidiary
shall, ensure that it has the right and is duly qualified to conduct its
business as it is conducted from time to time in all applicable
jurisdictions and does all things necessary to obtain, preserve and keep
in full force and effect all material rights including, without
limitation, all franchises, contracts, licences, IP Licences, consents
and other rights which are necessary for the conduct of its business.
23.8 TAX
Each Obligor shall, and shall procure that each Material Subsidiary
shall, duly and punctually pay and discharge (a) all taxes, assessments
and governmental charges imposed upon it or its assets within the time
period allowed therefor without imposing penalties and without resulting
in an Encumbrance with priority to any Bank or any security purported to
be granted by or created pursuant to the Security Documents (save to the
extent payment thereof is being contested in good faith by the relevant
Group member and adequate reserves are being maintained for those taxes
and where payment thereof can lawfully be withheld and would not result
in an Encumbrance with priority to the security created or evidenced by
the Security Documents) and (b) all lawful claims which, if unpaid,
would by law become Encumbrances upon its assets which are not Permitted
Encumbrances.
23.9 PRESERVATION OF ASSETS
Each Obligor shall, and shall procure that each Material Subsidiary
shall, maintain and preserve all of its assets that are necessary in the
conduct of its business as conducted at the date hereof in good working
order and condition, ordinary wear and tear excepted.
23.10 SECURITY
23.10.1 Each Obligor shall, and shall procure that each member of the
Group shall, at its own expense, take all such action as the
Agent or the Security Agent may
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require (acting reasonably) for the purpose of perfecting or
protecting the Agent's or Security Agent's rights under and
preserving the security interests intended to be created or
evidenced by any of the Finance Documents and as the Agent or
the Security Agent may require following the making of any
declaration pursuant to Clause 24.23 (Acceleration and
Cancellation) or 24.24 (Advances Due on Demand) for facilitating
the realisation of any such security or any part thereof.
23.10.2 Each Obligor shall, and shall procure that each member of the
Group shall, ensure that (save as specified in the Legal
Reservations) each Security Document to which it is a party
creates the security interest which that Security Document
purports to create or, if that Security Document purports to
evidence a security interest, accurately evidences a security
interest which has been validly created and that each security
interest ranks in priority as specified in the Security Document
creating or evidencing that interest.
23.11 PENSIONS
The Obligors shall, and shall procure that each Group member shall,
ensure that all pension schemes are administered and funded in
accordance with applicable law.
23.12 ACCESS
While an Event of Default or Potential Event of Default (or the Agent
reasonably suspects an Event of Default) is continuing and is not
remedied or waived in respect of which information has been requested by
the Agent and not supplied or not adequately answered, the Parent shall,
ensure that any one or more representatives, agents and advisers of the
Agent will on reasonable notice be allowed to have access to the assets,
books, records and premises of each Group member and to inspect the same
during normal business hours (at the reasonable expense of the Parent).
23.13 INTELLECTUAL PROPERTY
Each Obligor shall, and shall procure that each Group member shall do
all acts as are reasonably practicable to maintain, protect and
safeguard the Intellectual Property necessary for the business of the
relevant Group member and not terminate or discontinue the use of any
such Intellectual Property save that licensing arrangements in relation
to such Intellectual Property may be entered into between members of the
Group provided that (1) such licensing arrangements do not allow any
further sub-licensing by the licensee and (2) such licensing
arrangements would not have a material adverse effect on the value of
any of the Intellectual Property the subject matter of such licensing
arrangements Provided that a failure to do so would cause a Material
Adverse Effect.
23.14 BANK ACCOUNTS
Each Obligor shall ensure that all sums received by an Obligor which is
party to a Security Document providing security over a bank account
which security is ultimately assigned and/or pledged to the Security
Agent are paid into a bank account or accounts with such banks or
financial institutions previously approved in writing by the Agent
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and which are subject (to the extent legally possible) to security in
favour of the Security Agent pursuant to the Security Documents.
23.15 VENDORS WARRANTIES
In relation to a Permitted Acquisition or a Permitted Equity Funded
Acquisition, the Borrower shall diligently pursue all material claims
(if any) for breach of contract or warranty by, or misrepresentation by,
or indemnity or other claim (if any) against the vendors or any
affiliate thereof or any of their respective employees, officers or
advisers or any other party under or in connection with any Acquisition
Document which could reasonably be expected to have a Material Adverse
Effect.
23.16 BANK ACCOUNTS
The Parent shall, as soon as possible, but in any event, no later than
the day following three (3) months after the date hereof, ensure that in
relation to a Borrower, all sums received by it or by any Group Member
are paid into a bank account or accounts with a member of the syndicate
Banks hereunder and are subject to the security in favour of the
Security Agent pursuant to the Security Documents.
23.17 NEGATIVE PLEDGE
No Obligor shall, and each Obligor will procure that no member of the
Group shall, create or permit to subsist any Encumbrance over all or any
of its present or future revenues or assets other than a Permitted
Encumbrance or create any restriction or prohibition on Encumbrances
over all or any of its present or future revenues or assets.
23.18 LOANS AND GUARANTEES
No Obligor shall, and each Obligor will procure that no member of the
Group shall, make any loans, grant any credit or other financial
accommodation or give any guarantee (except as required by the Finance
Documents) to or for the benefit of any person or otherwise voluntarily
assume any liability, whether actual or contingent, in respect of any
obligation of any other person except:
23.18.1 trade credit or indemnities or guarantees granted in the
ordinary course of trading and upon terms usual for such trade;
or
23.18.2 Permitted Transactions.
23.19 FINANCIAL INDEBTEDNESS
No Obligor shall, and each Obligor will procure that no member of the
Group shall, incur, create or permit to subsist or have outstanding any
Financial Indebtedness or enter into any agreement or arrangement
whereby it is entitled to incur, create or permit to subsist any
Financial Indebtedness other than, in either case, Permitted
Indebtedness.
23.20 DISPOSALS
No Obligor shall, and each Obligor shall procure that no member of the
Group shall make any disposal of, by one or more transactions or series
of transactions (whether related or not), the whole or any part of its
revenues or its assets or its business or undertakings other than
Permitted Disposals.
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23.21 MERGERS
No Obligor shall, and each Obligor shall procure that no member of the
Group shall, without the prior consent of an Instructing Group, merge or
consolidate with any other person, enter into any demerger transaction
or participate in any other type of corporate reconstruction (other than
a corporate reconstruction which is effected by means of capitalisation
of any Intra-Group Loan permitted hereunder).
23.22 ACQUISITIONS
Other than Permitted Acquisitions or Permitted Equity Funded
Acquisitions no Obligor shall, and each Obligor shall procure that no
member of the Group shall (without the prior consent of an Instructing
Group):
23.22.1 purchase, subscribe for or otherwise acquire any shares (or
other securities or any interest therein) in, or incorporate,
any other company or agree to do any of the foregoing; or
23.22.2 purchase or otherwise acquire any assets (other than in the
ordinary course of business or pursuant to any Capital
Expenditure permitted under the terms of this Agreement) or
(without limitation to any of the foregoing) acquire any
business or interest therein or agree to do so; or
23.22.3 form, or enter into, any partnership, consortium, Joint Venture
or other like arrangement or agree to do so.
23.23 TOTAL PERMITTED ACQUISITIONS
23.23.1 The Parent shall ensure that the aggregate Total Consideration
incurred in each financial year in relation to Permitted
Acquisitions and Permitted Equity Funded Acquisitions does not
exceed (pounds sterling)12,500,000.
23.23.2 The Parent shall ensure that the Total Consideration for any
single Permitted Acquisition is not greater than
(pounds sterling)1,250,000.
23.24 DIVIDENDS, DISTRIBUTIONS AND INTEREST
23.24.1 No Obligor shall, and each Obligor shall procure that no Group
member shall, pay, make or declare any dividend, return on
capital, repayment of capital contributions or other
distribution (whether in cash or in kind) or make any
distribution of assets or other payment (including management
fees) whatsoever whether directly or indirectly save (i) in
relation to such payments made by an Obligor to the Parent to
fund (a) tax liabilities and (b) administration costs provided
that the aggregate amount of the loans made under paragraph
(a)(v) of the definition of Permitted Transactions and this
paragraph (i) does not exceed (pounds sterling)100,000 per annum
and (ii) for Permitted Transactions.
23.24.2 No Obligor shall, and each Obligor shall procure that no Group
member shall, pay any interest or return on principal or
repayment of principal or other distribution (in cash or in
kind) to make any distribution of assets or other payment
whatsoever in respect of the Senior Subordinated Notes or any
other
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loan notes or loan capital whether directly or indirectly save
for Permitted Transactions and payments of interest in respect
of the Senior Subordinated Notes permitted under the
Intercreditor Arrangements.
23.24.3 No Obligor shall, and each Obligor shall procure that no Group
member shall, pay any fees or make any other payment whatsoever
whether directly or indirectly save each Obligor may pay
management fees for the two financial years after the date
hereof in aggregate up to an amount of (pounds sterling)500,000
in each financial year (and thereafter if the proposed assets
sales as identified in the TW US Strategy Paper do not occur,
(pounds sterling)250,000 in aggregate in each financial year) in
management fees charged by TW US to the Group in relation to
compensation for providing management, personnel and facilities
to the Group.
PROVIDED THAT no such payments shall be made under this Clause 23.24
(Dividends, Distributions and Interest) if a Payment Blockage Event has
occurred and is continuing and the Agent (acting on the instructions of
an Instructing Group) has issued a Stop Notice (as such term is defined
in the Intercreditor Arrangements).
23.25 SHARE CAPITAL
No Obligor shall, and shall procure that no member of the Group shall,
issue or redeem or repurchase, purchase, defease or retire any shares or
grant any person the right (whether conditional or unconditional) to
call for the issue or allotment of any share of the Parent or any Group
member or any other equity investments, howsoever called, or alter any
rights attaching to its issued shares (including ordinary and preference
shares) other than:
23.25.1 in the case of the Original Borrower, ordinary shares to be
issued pursuant to the Warrant Documents or which are otherwise
issued to satisfy the obligations of the Parent under the Senior
Subordinated Notes and/or the obligations of the Original
Borrower under the Mirror Notes;
23.25.2 (i) any issue of shares by an Obligor (other than the by the
Original Borrower or the Parent) to another wholly-owned
member of the Group;
(ii) the redemption, repurchase, defeasance or retirement by
or purchase by a Group member of shares or share capital
owned by the Original Borrower;
23.25.3 the granting of its options to employees of any Group member to
acquire 10,010,021 shares and the issue of shares upon the
exercise of such options; and
23.25.4 under the Management Options.
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23.26 AMENDMENTS
No Obligor shall, and shall procure that no Group member shall, amend,
vary, novate, supplement or terminate any of the Voting Trust Agreement,
the Mezzanine Credit Agreement, the constitutional documents or any
other document delivered to the Agent pursuant to Clauses 2.3
(Conditions Precedent), 36.2 (Borrower Conditions Precedent) or 37.2
(Guarantor Conditions Precedent) or waive any right thereunder other
than any amendment or variation which is of a minor or technical nature
or which could not reasonably be considered to be material to the
interests of the Finance Parties.
23.27 CHANGE OF BUSINESS
No Obligor shall, and shall procure that no Material Subsidiary shall,
without the prior consent of an Instructing Group, make any material
changes to the general nature of the business of the Group as carried on
at the date hereof, or carry on any other business which results in any
material change to the nature of such business.
23.28 FEES, COMMISSIONS AND INTEREST
No Obligor shall, and shall procure that no Group member shall, other
than as required or permitted hereunder or under the Intercreditor
Arrangements, pay any fees or commissions or interest or repayments of
intra-group indebtedness other than the arrangers fee of (pounds
sterling)555,000 payable by the Original Borrower to Triumph Corporate
Finance Group, Inc. on the date hereof.
23.29 ARM'S LENGTH BASIS
No Obligor shall, and shall procure that no Group member shall, enter
into any arrangement or contract with any of its affiliates or any Group
member save where:
23.29.1 both parties to the arrangement are Obligors; or
23.29.2 in any other case such arrangement or contract is entered into
on an arm's length basis and is fair and equitable to such Group
member; or
23.29.3 it is pursuant to any other transaction expressly permitted
under the terms of the Finance Documents.
For the purposes of this Clause 23.29 "AFFILIATE" of the specified
person shall mean any other person directly or indirectly controlling or
controlled by or under common control with such specified person or
which is a director, officer or partner (limited or general) of such
specified person; for the purposes of this definition "control", when
used with respect of any specified person, means the possession, direct
or indirect, of the power to vote five per cent. (5%) or more of the
securities having ordinary voting power for the election of directors or
the power to direct or cause the direction of the management and
policies of such person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
23.30 TREASURY TRANSACTIONS
No Obligor shall, and each Obligor shall procure that no Group member
shall, enter into any Treasury Transaction which is not a Permitted
Treasury Transaction.
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23.31 SUBORDINATED DEBT
No Obligor shall, and each Obligor shall procure that no Group member
shall, unless permitted under the Intercreditor Arrangements or this
Agreement, pay, prepay or repay or defease, exchange or repurchase any
amount under (a) the Mezzanine Credit Agreement or (b) any Intra-Group
Loan subordinated under the Intercreditor Arrangements or (c) the Senior
Subordinated Notes or (d) the Mirror Notes.
23.32 JOINT VENTURES
No Obligor shall, and each Obligor shall procure that no Group member
shall, enter into or acquire or subscribe (or agree to enter into or
acquire or subscribe) for any shares, stocks, securities or other
interest in or transfer of any assets to or lend to or guarantee or give
security for the obligations of any Joint Ventures without prior
consultation with the Agent and provided that the aggregate liability
and total exposure (including, without limitation, the aggregate of any
investment or contribution for the Joint Venture and the amount of any
liability, actual or contingent, of any member of the Group with respect
to the obligations of such Joint Venture) of the Group to all such Joint
Ventures shall not exceed (pounds sterling)250,000 at any one time.
23.33 YEAR 2000
The Parent shall procure that all computer hardware and software and any
equipment operated by electronic means ("COMPUTER SYSTEMS") used by any
member of the Group are Year 2000 compliant (that is, in relation to any
such Computer Systems that any reference to or use of a date before, on
or after 31 December 1999 in the operation of such Computer Systems will
not have an adverse effect on the use of such Computer Systems) provided
that this provision will only apply if the failure in question could be
reasonably be expected to have a Material Adverse Effect.
23.34 HEDGING
23.34.1 The Parent shall, within ninety days of the date hereof, procure
that the Borrower approved by the Agent shall enter into secured
hedging arrangements for a period of no less than three years
ranking pari passu with the claims of the Finance Parties under
the Finance Documents satisfactory to the Banks (acting
reasonably) with a Bank or Banks in order to fix or cap the
total interest cost of the Obligors in respect of at least 66%
of the drawndown amount of the aggregate of the Term A
Outstandings as at the date such hedging arrangements are
entered into.
23.34.2 The Parent shall, within ninety days of the end of the Term B
Availability Period, procure that the Borrower approved by the
Agent shall enter into secured hedging arrangements for a period
of no less than three years ranking pari passu with the claims
of the Finance Parties under the Finance Documents satisfactory
to the Banks (acting reasonably) with a Bank or Banks in order
to fix or cap the total interest cost of the Obligors in respect
of at least 66% of (i) the drawndown amount of the Term B
Outstandings and (ii) any amounts outstanding under the
Mezzanine Credit Agreement.
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23.35 THE PARENT
The Parent shall not carry on any business other than as holding company
of the Group and shall not own any assets other than its shareholding in
the Original Borrower and the Mirror Notes and shall not incur any
liabilities of any nature whatsoever save for (a) any Security
contemplated pursuant to the terms of this Agreement or the Mezzanine
Finance Documents; (b) its obligations under the Senior Subordinated
Notes; (c) professional fees and administration costs in the ordinary
course of business; (d) any liabilities under the Finance Documents and
Mezzanine Finance Documents and (e) any liabilities incurred pursuant to
Permitted Acquisitions.
23.36 THE ORIGINAL BORROWER
The Original Borrower shall not carry on any business other than as a
holding company of the Group and shall not own any assets other than its
shareholding in its subsidiaries and shall not incur any liabilities of
any nature whatsoever save for (a) any Security contemplated pursuant to
the terms of this Agreement or the Mezzanine Finance Documents; (b) its
obligations under the Mirror Notes; (c) professional fees and
administration costs in the ordinary course of business; and (d) the
intra-group loans referred to in Clause (a)(iii) of the definition of
Permitted Transactions.
23.37 ACCEDING GUARANTORS
The Parent shall use all reasonable endeavours to ensure that each
member of the Group does all that is necessary (including, without
limitation, by re-registering public companies as private companies) in
order to follow the procedures set out in Sections 155-158 of the
Companies Act 1985 (or its equivalent in any other jurisdiction) in
order to ensure that the it can become an Additional Guarantor.
23.38 MEDIGAS LIMITED
The Parent shall ensure that as soon as practicable after four (4) weeks
from the date hereof and no later than six (6) weeks from the date
hereof, Medigas Limited will accede as a Guarantor in accordance with
Clause 37 (Additional Guarantors) and enter into a Debenture.
24. EVENTS OF DEFAULT
Each of Clause 24.1 (Failure to Pay) to Clause 24.20 (Material Adverse
Change) describes circumstances which constitute an Event of Default for
the purposes of this Agreement.
24.1 FAILURE TO PAY
Any amount due from an Obligor or the Obligors under the Finance
Documents is not paid at the time, in the currency and in the manner
specified herein unless such failure to pay is caused by technical
difficulties with the banking system in relation to the transmission of
funds and payment is made within three Business Days of the due date.
24.2 MISREPRESENTATION
Any representation or statement made or deemed to be made by an Obligor
in any Finance Document or in any notice or other document, certificate
or statement delivered by it pursuant thereto or in connection therewith
is or proves to have been
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incorrect or misleading in any material respect when made or deemed to
be made and if the circumstances causing such misrepresentation are
reasonably capable of remedy, such Obligor shall have failed to remedy
such circumstances within 28 days of receipt by it of written notice
from the Agent requiring such circumstances to be remedied.
24.3 BREACH OF SPECIFIC COVENANTS
At any time any of the requirements of Clause 22.1 (Financial
Covenants), Clause 23.5 (Claims Pari Passu), Clause 23.16 (Negative
Pledge), Clause 23.20 (Disposals), Clause 23.24 (Dividends,
Distributions and Interest), Clause 23.25 (Share Capital) or Clause
23.26 (Amendments) are not satisfied.
24.4 BREACH OF OTHER OBLIGATIONS
An Obligor fails duly to perform or comply with any other obligation
expressed to be assumed by it in the Finance Documents and such failure,
if capable of remedy, is not remedied within 28 days after the earlier
to occur of the date the Agent has given notice thereof to the Parent or
such Obligor and the date the Obligor or the Parent has actual knowledge
and if in the opinion of the Agent, acting reasonably, the circumstances
causing such breach are reasonably capable of remedy, such Obligor shall
have failed to remedy such circumstances within 28 days of receipt by it
of written notice from the Agent requiring such circumstances to be
remedied.
24.5 CROSS DEFAULT
Any Financial Indebtedness of any Material Subsidiary is not paid when
due, any Financial Indebtedness of any Material Subsidiary is declared
to be or otherwise becomes due and payable prior to its specified
maturity by reason of a default (however described), any commitment for
any Financial Indebtedness of any Material Subsidiary is cancelled or
suspended by a creditor of any Material Subsidiary by reason of a
default (however described) or any creditor of any Material Subsidiary
becomes entitled to declare or demand any Financial Indebtedness of any
Material Subsidiary due and payable prior to its specified maturity by
reason of a default (however described), provided that it shall not
constitute an Event of Default under this Clause 24.5 (Cross Default) if
the aggregate amount of all such Financial Indebtedness is less than
(pounds sterling)200,000.
24.6 INSOLVENCY AND RESCHEDULING
Any Material Subsidiary ceases or suspends generally payment of its
debts or publicly announces an intention to do so (or is deemed for the
purposes of any law applicable to it to be) or is unable to pay its
debts as they fall due or commences negotiations with or makes a
proposal to any one or more of its creditors with a view to the
readjustment or rescheduling of all or a substantial part of its
indebtedness or makes a general assignment for the benefit of or a
composition with its creditors or a moratorium is declared in respect of
all or a substantial part of the indebtedness of any Material
Subsidiary.
24.7 INSOLVENCY PROCEEDINGS
Any Material Subsidiary takes any corporate action or other steps are
taken or formal insolvency proceedings are started (whether by way of
voluntary arrangement, scheme
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of arrangement or otherwise) (save for any pursuant to a solvent
reorganisation previously approved in writing by an Instructing Group)
or for the appointment of a liquidator, receiver, administrator,
administrative receiver, conservator, custodian, trustee or similar
officer of it or of any or all of its revenues and assets (or any event
occurs or proceedings are taken with respect to any Group member which
has a similar or equivalent effect to any of the foregoing in this
Clause 24.7) PROVIDED THAT it shall not constitute an Event of Default
under this Clause 24.7 if a petition is presented in an winding-up
proceeding of a Material Subsidiary and such petition is discharged
within 14 days of being presented.
24.8 EXECUTION OR DISTRESS
Any execution or distress is levied against, or any encumbrancer(s) take
possession of, the whole or any part of, the property, undertaking or
assets of any Material Subsidiary or any event occurs which under the
laws of any jurisdiction has a similar or analogous effect in respect of
indebtedness exceeding (pounds sterling)200,000 (or its equivalent) in
aggregate at any time and which, in any case, is not stayed or
discharged within 21 days after such levy, taking of possession or
effect and during such 21 day period is contested in good faith by
appropriate means diligently pursued.
24.9 FAILURE TO COMPLY WITH FINAL JUDGMENT
Any Material Subsidiary fails to comply with or pay any sum due from it
or them under any final judgment or any final order made or given by any
court of competent jurisdiction when such sums exceed (pounds
sterling)200,000 (or its equivalent) in aggregate at any time.
24.10 GOVERNMENTAL INTERVENTION
By or under the authority of any government:
24.10.1 the management of any Material Subsidiary is wholly or partially
displaced or the authority of any Material Subsidiary in the
conduct of its business is wholly or partially curtailed; or
24.10.2 all or a majority of the issued shares of any Material
Subsidiary or the whole or any material part of its revenues or
assets is seized, nationalised, expropriated or compulsorily
acquired.
24.11 OWNERSHIP OF THE OBLIGORS
After the date hereof, any Obligor (other than the Parent) ceases to be
a wholly-owned subsidiary of the Parent, except where such disposal is
permitted hereunder and in the case of the Original Borrower except
where provided under the Warrant Document and in respect of the
Management Options.
24.12 THE GROUP'S BUSINESS
Except by reason of a Permitted Disposal, the Group as a whole ceases to
carry on the business it carries on at the date hereof or enters into
any unrelated business.
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24.13 REPUDIATION
(1) Any Finance Document or Acquisition Document or the Voting Trust
Agreement or the security intended to be constituted by or the
subordination effected under any of the Finance Documents is repudiated
by any Party (other than a Finance Party) or (2) any Party (other than a
Finance Party) does or causes to be done any act or thing reasonably
evidencing an intention to repudiate any Finance Document or any such
security or subordination effected under any of the Finance Documents or
(3) any Finance Document or Acquisition Document is not or ceases to be
in full force and effect for a continuous period of 28 days Provided
that any circumstances causing such Finance Document or Acquisition
Document to cease to be in full force and effect are capable of remedy,
such Party shall have failed to remedy such circumstances within 28 days
of receipt by it of written notice from the Agent requiring such
circumstances to be remedied or (4) the validity or applicability
thereof to any sums due or to become due thereunder is disaffirmed by or
on behalf of any Obligor.
24.14 ILLEGALITY
24.14.1 At any time any Obligor no longer has the legal power to perform
its obligations under the Finance Documents to which it is a
party or to own its assets or to carry on its business or at any
time it is or becomes unlawful for an Obligor to perform or
comply with any or all of its obligations under any Finance
Document to which it is a party or any of the obligations of an
Obligor thereunder are not or cease to be legal, valid, binding
and enforceable (except as provided in the Legal Reservations)
and if capable of remedy such Obligor shall have failed to
remedy such circumstances with 14 days of receipt by it of
written notice from the Agent requiring such circumstances to be
remedied.
24.14.2 At any time it is or becomes unlawful for any Party to perform
or comply with any or all of its obligations under any
Acquisition Document or
24.14.3 At any time any of the obligations of any person party to any
Acquisition Document are not or cease to be legal, valid,
binding and enforceable, which in each case could be reasonably
expected to have a Material Adverse Effect.
24.15 AUDITOR'S QUALIFICATION
The auditors of the Parent or any Group member qualify their annual
audit report to the consolidated accounts of the Group or the
unconsolidated accounts of any Group member in a manner which is, in the
reasonable opinion of an Instructing Group, material in the context of
the Facilities.
24.16 ENVIRONMENTAL
Any Group member breaches any Environmental Law or any Environmental
Claim is made or threatened against any Group member which, in either
case, could reasonably be expected (taking into account the likelihood
of success of such proceedings) to have a Material Adverse Effect.
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24.17 LITIGATION
24.17.1 Any litigation, arbitration, administrative proceedings or
governmental or regulatory investigations, proceedings or
disputes are commenced or threatened against any Group member or
its respective assets or revenues (taking into account the
likelihood of success of such proceedings) which could
reasonably be expected to have a Material Adverse Effect; or
24.17.2 the filing by any person other than the Initial Investors or a
Finance Party, whether at law or in equity, of any suit or
complaint (or, in the case of derivative or other actions, on
behalf of the TW US and the Parent or their successors or
assigns by any representative, trustee, agent, court or
administrative agency, receiver or administrator preliminary
proceedings seeking permission or authority for the filing of
any suit or complaint) with any court of competent jurisdiction,
or the commencement of any other legal proceeding or
administrative process seeking in any manner whatsoever to (i)
have the creation of the voting trust pursuant to the Voting
Trust Agreement or the transfer to such voting trust of all the
issued shares of the Parent and the Original Borrower declared
void or invalid or rescinded, (ii) challenge the validity,
enforceability or effectiveness of the Voting Trust Agreement or
the voting trust created hereby, or (iii) direct the Trustee (as
defined in the Voting Trust Agreement) to vote or refrain from
voting or to transfer or refrain from transferring the issued
shares of the Parent and the Original Borrower held in the
voting trust in any manner inconsistent in any respect with
Section 6 of the Voting Trust Agreement including injunctive or
similar equitable relief seeking to prevent the taking of any
action that requires the approval of the shareholders of the
Parent or the Original Borrower pending resolution of any legal
challenge involving the voting share created by the Voting Trust
Agreement, the Original Borrower Constitutional documents or the
rights of the Initial Investors under the Securities Purchase
Agreement or any agreement or instruct contemplated thereby.
24.18 SUBORDINATED DEBT
An event of default (howsoever described) occurs under the Mezzanine
Credit Agreement and is continuing unremedied or unwaived.
24.19 INTERCREDITOR ARRANGEMENTS
Any party to the Intercreditor Arrangements (other than any Finance
Party, the Mezzanine Agent or any Mezzanine Lender) fails to comply with
its obligations under the Intercreditor Arrangements.
24.20 VOTING TRUST
24.20.1 Any party to the Voting Trust Agreement (other than any Finance
Party, the Mezzanine Agent or any Mezzanine Lender) fails to
comply with its obligations under the Voting Trust Agreement;
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24.20.2 at any time the Voting Trust Agreement is amended, varied,
novated, supplemented or terminated or any rights are waived (in
a manner which is prejudicial to the Banks) thereunder without
the consent of the Banks.
24.21 CONTROL OF PARENT
The Trustee for and on behalf of the beneficiaries named therein (as
defined in the Voting Trust Agreement) ceases to control the Parent.
24.22 MATERIAL ADVERSE CHANGE
Any event or circumstance occurs which could reasonably be expected to
have a Material Adverse Effect.
24.23 ACCELERATION AND CANCELLATION
Upon the occurrence of an Event of Default which is continuing and at
any time thereafter, the Agent may (and, if so instructed by an
Instructing Group, shall) by notice to the Parent:
24.23.1 declare all or any part of the Advances to be immediately due
and payable (whereupon the same shall become so payable together
with accrued interest thereon and any other sums then owed by
the Obligors under the Finance Documents) or declare all or any
part of the Advances to be due and payable on demand of the
Agent; and/or
24.23.2 declare that any unutilised portion of the Facilities shall be
cancelled, whereupon the same shall be cancelled and the
Available Commitment of each Bank shall be reduced to zero;
and/or
24.23.3 exercise or direct the Security Agent to exercise all rights and
remedies.
24.24 ADVANCES DUE ON DEMAND
If, pursuant to Clause 24.23 (Acceleration and Cancellation), the Agent
declares all or any part of the Advances to be due and payable on demand
of the Agent, then, and at any time thereafter, the Agent may (and, if
so instructed by an Instructing Group, shall) by notice to the Parent:
24.24.1 require repayment of all or such part of the Advances on such
date as it may specify in such notice (whereupon the same shall
become due and payable on the date specified together with
accrued interest thereon and any other sums then owed by the
Obligors under the Finance Documents) or withdraw its
declaration with effect from such date as it may specify; and/or
24.24.2 select as the duration of any Interest Period or Term which
begins whilst such declaration remains in effect a period of six
months or less; and/or
24.24.3 declare that the Security Documents (or any of them) shall have
become enforceable.
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25. GUARANTEE AND INDEMNITY
25.1 PARENT GUARANTEE AND INDEMNITY
The Parent irrevocably and unconditionally:
25.1.1 guarantees to each Finance Party the due and punctual observance
and performance of all the terms, conditions and covenants on
the part of each Obligor (other than the Parent) contained in
any of the Finance Documents and agrees to pay from time to time
on demand by the Agent any and every sum or sums of money which
each Obligor (other than the Parent) is at any time liable to
pay to any Finance Party under or pursuant to any of the Finance
Documents and which has become due and payable but has not been
paid at the time such demand is made; and
25.1.2 agrees as a primary obligation to indemnify each Finance Party
from time to time on demand by the Agent from and against any
loss incurred by any Finance Party as a result of any of the
obligations of each Obligor (other than the Parent) under or
pursuant to any of the Finance Documents being or becoming void,
voidable, unenforceable or ineffective as against such Obligor
for any reason whatsoever, whether or not known to any Finance
Party or any other person, the amount of such loss being the
amount which the person or persons suffering it would otherwise
have been entitled to recover from such Obligor.
25.2 GROUP GUARANTEE AND INDEMNITY
Each Guarantor other than the Parent irrevocably and unconditionally:
25.2.1 guarantees to each Finance Party the due and punctual observance
and performance of all the terms, conditions and covenants on
the part of each Obligor (other than itself) contained in any of
the Finance Documents and agrees to pay from time to time on
demand by the Agent any and every sum or sums of money which
each Obligor (other than itself) is at any time liable to pay to
any Finance Party under or pursuant to any of the Finance
Documents and which has become due and payable but has not been
paid at the time such demand is made; and
25.2.2 agrees as a primary obligation to indemnify each Finance Party
from time to time on demand by the Agent from and against any
loss incurred by any Finance Party as a result of any of the
obligations of each Obligor (other than itself) under or
pursuant to any of the Finance Documents being or becoming void,
voidable, unenforceable or ineffective as against such Obligor
for any reason whatsoever, whether or not known to any Finance
Party or any other person, the amount of such loss being the
amount which the person or persons suffering it would otherwise
have been entitled to recover from such Obligor.
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25.3 ADDITIONAL SECURITY
The obligations of each Guarantor herein contained shall be in addition
to and independent of every other security which any Finance Party may
at any time hold in respect of any of any Obligor's obligations under
the Finance Documents.
25.4 CONTINUING OBLIGATIONS
The obligations of each Guarantor herein contained shall constitute and
be continuing obligations notwithstanding any settlement of account or
other matter or thing whatsoever and shall not be considered satisfied
by any intermediate payment or satisfaction of all or any of the
obligations of the Obligors under the Finance Documents and shall
continue in full force and effect until final payment in full of all
amounts owing by any Obligor under the Finance Documents and total
satisfaction of all the Obligors' actual and contingent obligations
thereunder.
25.5 OBLIGATIONS NOT DISCHARGED
Neither the obligations of each Guarantor herein contained nor the
rights, powers and remedies conferred in respect of each Guarantor upon
any Finance Party by any Finance Document or by law shall be discharged,
impaired or otherwise affected by:
25.5.1 any insolvency proceeding in respect of any Obligor or any other
person or any change in its status, function, control or
ownership;
25.5.2 any of the obligations of any Obligor or any other person under
any Finance Document or under any other security taken in
respect of any of its obligations under any Finance Document
being or becoming illegal, invalid, unenforceable or ineffective
in any respect;
25.5.3 time or other indulgence being granted or agreed to be granted
to any Obligor in respect of its obligations under any Finance
Document or under any such other security;
25.5.4 any amendment to, or any variation, waiver or release of, any
obligation of any Obligor under any Finance Document or under
any such other security;
25.5.5 any failure to take, or fully to take, any security contemplated
hereby or otherwise agreed to be taken in respect of any
Obligor's obligations under any Finance Document;
25.5.6 any failure to realise or fully to realise the value of, or any
release, discharge, exchange or substitution of, any security
taken in respect of any Obligor's obligations under any Finance
Document; or
25.5.7 any other act, event or omission which, but for this Clause 25.5
(Obligations not Discharged) might operate to discharge, impair
or otherwise affect any of the obligations of each Guarantor
contained in any Finance Document or any of the rights, powers
or remedies conferred upon any of the Finance Parties by any
Finance Document or by law.
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25.6 SETTLEMENT CONDITIONAL
Any settlement or discharge between an Obligor and any of the Finance
Parties shall be conditional upon no security or payment to any Finance
Party by an Obligor or any other person on behalf of an Obligor being
avoided or reduced by virtue of any laws relating to bankruptcy,
insolvency, liquidation or similar laws of general application and, if
any such security or payment is so avoided or reduced, each Finance
Party shall be entitled to recover the value or amount of such security
or payment from such Obligor subsequently as if such settlement or
discharge had not occurred.
25.7 EXERCISE OF RIGHTS
No Finance Party shall be obliged before exercising any of the rights,
powers or remedies conferred upon them in respect of any Guarantor by
this Agreement or by law:
25.7.1 to make any demand of any Obligor;
25.7.2 to take any action or obtain judgment in any court against any
Obligor;
25.7.3 to make or file any claim or proof in any insolvency proceedings
of any Obligor; or
25.7.4 to enforce or seek to enforce any other security taken in
respect of any of the obligations of any Obligor under any
Finance Document.
25.8 DEFERRAL OF GUARANTOR'S RIGHTS
Each of the Guarantors agrees that, so long as any amounts are or may be
owed by an Obligor under any Finance Document or an Obligor is under any
actual or contingent obligations under any Finance Document, it shall
not exercise any rights which it may at any time have by reason of
performance by it of its obligations under any Finance Document:
25.8.1 to be indemnified by an Obligor; and/or
25.8.2 to claim any contribution from any other guarantor of any
Obligor's obligations under any Finance Document; and/or
25.8.3 to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Finance Parties
under any Finance Document or of any other security taken
pursuant to, or in connection with, any Finance Document by all
or any of the Finance Parties.
25.9 SUSPENSE ACCOUNTS
All moneys received, recovered or realised by a Bank by virtue of Clause
25.1 (Parent Guarantee and Indemnity) or Clause 25.2 (Group Guarantee
and Indemnity) may, in that Bank's discretion, in order to preserve the
rights of the Bank to prove for the full amount of all its claim be
credited to a suspense or impersonal account and may be held in such
account for so long as such Bank thinks fit pending the application from
time to time (as such Bank may think fit) of such moneys in or towards
the payment
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and discharge of any amounts owing by an Obligor to such Bank under any
Finance Document.
25.10 AMENDMENTS BINDING
Without prejudice to the other provisions of Clause 25 (Guarantee and
Indemnity), each Guarantor hereby confirms that if the Parent and the
Finance Parties or any of them enter into any agreement or other
arrangement, including (without limitation) any amendment or supplement
to or restatement of this Agreement or the Finance Documents or any of
its or their provisions, howsoever fundamental, then the Parent's
execution of any such agreement or other arrangement, whether or not
expressly made or purportedly made on behalf of the Guarantors, shall
bind each of the Guarantors and the guarantee contained in Clause 25
(Guarantee and Indemnity) shall continue in full force and effect
without the need to obtain any confirmation or acknowledgement from the
Guarantors or any of them that their guarantee continues in full force
and effect and applies to the Guarantor's liabilities under the Finance
Documents as amended, supplemented or restated in accordance with the
agreement of the Parent.
26. COMMITMENT COMMISSION AND FEES
26.1 COMMITMENT COMMISSION ON THE REVOLVING FACILITY
The Parent (on behalf of itself and the Borrowers) shall pay to the
Agent for account of each Bank a commitment commission on the amount of
such Bank's Available Revolving Commitment from day to day during the
period beginning on the date hereof and ending on the Revolving
Termination Date, such commitment commission to be calculated at the
rate of 0.75 per cent. per annum and to be payable in arrear on the last
day of each successive period of three months which ends during such
period and on the Revolving Termination Date.
26.2 COMMITMENT COMMISSION ON THE TERM FACILITY
The Parent (on behalf of itself and the Borrowers) shall pay to the
Agent for account of each Bank a commitment commission on the amount of
such Bank's Available Term Commitment from day to day from the date
hereof until the end of the Term Availability Period, such commitment
commission to be calculated at the rate of 0.75 per cent. per annum and
to be payable on the last day of the Term Availability Period.
26.3 ARRANGEMENT FEE
The Parent (on behalf of itself and the Original Borrower) shall pay to
the Arranger the fees specified in the fee letter dated on or about the
date hereof from the Arranger to the Parent at the times, and in the
amounts, specified in such letter. The Parent acknowledges that it has
received a copy of and consents to the terms of such letter.
26.4 AGENCY FEE
The Parent (on behalf of itself and the Original Borrower) shall pay to
the Agent for its own account the agency fees specified in the agency
fee letter dated on or about the date hereof from the Agent to the
Parent at the times, and in the amounts, specified in such letter. The
Parent acknowledges that it has received a copy of and consents to the
terms of such letter.
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26.5 UNDERWRITING FEE
The Parent (on behalf of itself and the Original Borrower) shall pay to
each Underwriter the fees specified in the fee letter dated on or about
the date hereof from the Underwriter to the Parent at the times, and in
the amounts, specified in such letter. The Parent acknowledges that it
has received a copy of and consents to the terms of such letter.
27. COSTS AND EXPENSES
27.1 TRANSACTION EXPENSES
The Parent shall (on behalf of itself and the Borrower), from time to
time on demand of the Agent, reimburse each of the Agent, the Security
Agent and the Arranger and any of their affiliates (on a full indemnity
basis whether or not any of the Facilities are drawn down or utilised)
for all reasonable costs and expenses (including reasonable legal fees)
together with any VAT thereon incurred by it in connection with:
27.1.1 any due diligence carried out by it or on its behalf in
connection with the Finance Documents and the transactions
contemplated thereby;
27.1.2 the negotiation, preparation, execution and perfection of the
Finance Documents, any other document referred to in the Finance
Documents and the completion of the transactions therein
contemplated; and
27.1.3 the syndication of the Facilities.
27.2 PRESERVATION AND ENFORCEMENT OF RIGHTS
The Parent shall (on behalf of itself and the Borrower), from time to
time on demand of the Agent or Security Agent, reimburse the Finance
Parties for all costs and expenses (including legal fees) on a full
indemnity basis together with any VAT thereon incurred in or in
connection with the preservation and/or enforcement of any of the rights
of the Finance Parties under the Finance Documents and any document
referred to in the Finance Documents (including, without limitation, any
costs and expenses relating to any investigation as to whether or not an
Event of Default might have occurred or is likely to occur or any steps
necessary or desirable in connection with any proposal for remedying or
otherwise resolving an Event of Default or Potential Event of Default).
27.3 STAMP TAXES
The Parent shall (on behalf of itself and the Borrower) pay all stamp,
registration and other taxes to which the Finance Documents, any other
document referred to in the Finance Documents (other than any Transfer
Certificate) or any judgment given in connection therewith is or at any
time may be subject and shall (on behalf of itself and the Borrowers),
from time to time on demand of the Agent, indemnify the Finance Parties
against any liabilities, costs, claims and expenses resulting from any
failure to pay or any delay in paying any such tax.
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27.4 AMENDMENT COSTS
If an Obligor requests any amendment, waiver or consent then the Parent
shall (on behalf of such Obligor), within five Business Days of demand
by the Agent, reimburse the Finance Parties for all costs and expenses
reasonably incurred (including legal fees) together with any VAT thereon
incurred by such person in responding to or complying with such request.
27.5 BANKS' LIABILITIES FOR COSTS
If the Parent fails to perform any of its obligations under this Clause
27 (Costs and Expenses), each Bank shall, in its Proportion, indemnify
each of the Agent, the Security Agent and the Arranger against any loss
incurred by any of them (or their affiliates, in the case of costs and
expenses referred to in Clause 27.1 (Transaction Expenses)) as a result
of such failure.
28. DEFAULT INTEREST AND BREAK COSTS
28.1 DEFAULT INTEREST PERIODS
If any sum due and payable by an Obligor hereunder is not paid on the
due date therefor in accordance with Clause 31 (Payments) or if any sum
due and payable by an Obligor under any judgment of any court in
connection herewith is not paid on the date of such judgment, the period
beginning on such due date or, as the case may be, the date of such
judgment and ending on the date upon which the obligation of such
Obligor to pay such sum is discharged shall be divided into successive
periods, each of which (other than the first) shall start on the last
day of the preceding such period and the duration of each of which shall
(except as otherwise provided in this Clause 28 (Default Interest and
Break Costs)) be selected by the Agent.
28.2 DEFAULT INTEREST
An Unpaid Sum shall bear interest during each Interest Period in respect
thereof at the rate per annum which is two per cent. per annum above the
percentage rate which would apply to an Advance in the amount and
currency of such Unpaid Sum and for the same Interest Period, PROVIDED
THAT if such Unpaid Sum relates to an Advance which became due and
payable on a day other than the last day of an Interest Period or Term
relating thereto:
28.2.1 the first Interest Period applicable to such Unpaid Sum shall be
of a duration equal to the unexpired portion of the current
Interest Period or Term relating to that Advance; and
28.2.2 the percentage rate of interest applicable thereto from time to
time during such period shall be that which exceeds by one per
cent. the rate which would have been applicable to it had it not
so fallen due, save that the Margin shall be, or be deemed to
be, the highest rate specified in the definition thereof.
Where an Unpaid Sum does not relate to an Advance, interest
shall be calculated by reference to the Applicable B Margin.
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28.3 PAYMENT OF DEFAULT INTEREST
Any interest which shall have accrued under Clause 28.2 (Default
Interest) in respect of an Unpaid Sum shall be due and payable and shall
be paid by the Obligor owing such Unpaid Sum on the last day of each
Interest Period in respect thereof or on such other dates as the Agent
may specify by notice to such Obligor.
28.4 BREAK COSTS
If any Bank or the Agent on its behalf receives or recovers all or any
part of an Advance or Unpaid Sum otherwise than on the last day of an
Interest Period or Term relating thereto, the Agent shall calculate (a)
the additional interest which would have been payable on the amount so
received or recovered had it been received or recovered on the last day
of that Interest Period or Term and (b) the amount of interest which in
the opinion of the Agent (acting reasonably) would have been payable to
the Agent on the last day of that Interest Period or Term in respect of
a deposit in the currency of the amount so received or recovered equal
to the amount so received or recovered placed by it with a prime bank in
London for a period starting on the third Business Day following the
date of such receipt or recovery and ending on the last day of that
Interest Period or Term. If (a) exceeds (b), then the Parent shall pay
to the Agent on demand for account of such Bank an amount equal to such
excess.
29. PARENT'S INDEMNITIES
29.1 PARENT'S INDEMNITY
The Parent undertakes to indemnify:
29.1.1 each Finance Party against any cost, claim, loss, expense
(including legal fees) or liability together with any VAT
thereon, whether or not reasonably foreseeable, which it may
sustain or incur as a consequence of the occurrence of any Event
of Default or any default by any Obligor in the performance of
any of the obligations expressed to be assumed by it in any
Finance Document save to the extent that such cost, claim, loss,
expense or liability has arisen as a result of the negligence or
wilful default or wilful breach of obligation of such Finance
Party;
29.1.2 the Agent against any cost or loss it may suffer or incur as a
result of its entering into, or performing, any foreign exchange
contract for the purposes of Clause 31 (Payments);
29.1.3 each Bank against any cost or loss it may suffer under Clause
27.5 (Banks' Liabilities for Costs) or Clause 34.5
(Indemnification) save to the extent that such cost or loss has
arisen as a result of the negligence or wilful default or wilful
breach of obligation of such Bank;
29.1.4 each Bank against any cost or loss it may suffer or incur as a
result of its funding or making arrangements to fund its portion
of an Advance requested by any Borrower but not made by reason
of the operation of any one or more of the provisions hereof;
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29.1.5 each Finance Party and in each case each of their affiliates and
each of their respective officers, directors, employees, agents,
advisors and representatives (each, an "INDEMNIFIED PARTY") from
and against any and all claims, damages, losses, liabilities,
costs and expenses (including, without limitation, fees and
disbursements of legal counsel), joint or several, that may be
reasonably incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection
with or relating to any official investigation, litigation or
proceeding or the preparation of any defence with respect
thereto, arising out of or in connection with or relating to the
Finance Documents or the transactions contemplated hereby or
thereby or any use made or proposed to be made with the proceeds
of the Facilities, whether or not such official investigation,
litigation or proceeding is brought by a member of the Group,
any shareholder or creditors of any member of the Group, an
Indemnified Party or any other person, except to the extent that
such claim, damage, loss, liability, cost or expense is found in
a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's
negligence or wilful misconduct or wilful breach of obligation;
and
29.1.6 each Bank against any cost or loss it may suffer or any
reduction in its return on capital that it would have been able
to obtain but for entering into or performing its obligations
under this Agreement as a result of any minimum reserve
requirements imposed on it by the European Central Bank in
relation to an Advance or any funding of an Advance.
29.2 CURRENCY INDEMNITY
If any sum (a "SUM") due from an Obligor under the Finance Documents or
any order, judgment, award or decision given or made in relation thereto
has to be converted from the currency (the "FIRST CURRENCY") in which
such Sum is payable into another currency (the "SECOND CURRENCY") for
the purpose of:
29.2.1 making or filing a claim or proof against such Obligor;
29.2.2 obtaining an order, judgment, award or decision in any court,
arbitral proceedings or other tribunal; or
29.2.3 enforcing any order, judgment, award or decision given or made
in relation thereto,
the Parent shall indemnify each person to whom such Sum is due from and
against any loss suffered or incurred as a result of any discrepancy
between (a) the rate of exchange used for such purpose to convert such
Sum from the First Currency into the Second Currency and (b) the rate or
rates of exchange available to such person at the time of receipt of
such Sum.
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29.3 PARENT'S INDEMNITY FROM BORROWERS
If the Parent is required to make any payment under Clause 29.1
(Parent's Indemnity), then each Borrower agrees to indemnify the Parent
on demand in respect of any such payment.
30. CURRENCY OF ACCOUNT AND PAYMENT
30.1 CURRENCY OF ACCOUNT
Sterling is the currency of account and payment for each and every sum
at any time due from an Obligor hereunder, PROVIDED THAT:
30.1.1 each payment in respect of costs and expenses shall be made in
the currency in which the same were incurred; and
30.1.2 each payment pursuant to Clause 14.2 (Tax Indemnity) or Clause
16.1 (Increased Costs) shall be made in the currency specified
by the party claiming thereunder.
31. PAYMENTS
31.1 PAYMENTS TO THE AGENT
On each date on which this Agreement requires an amount to be paid by an
Obligor or a Bank, such Obligor or, as the case may be, such Bank shall
make the same available to the Agent for value on the due date at such
time and in such funds and to such account with such bank as the Agent
shall specify from time to time.
31.2 PAYMENTS BY THE AGENT
Save as otherwise provided herein, each payment received by the Agent
for the account of another person pursuant to Clause 31.1 (Payments to
the Agent) shall:
31.2.1 in the case of a payment received for the account of a Borrower,
be made available by the Agent to such Borrower by application:
(a) first, in or towards payment (on the date, and in the
currency and funds, of receipt) of any amount then due
from such Borrower hereunder to the person from whom the
amount was so received or in or towards the purchase of
any amount of any currency to be so applied; and
(b) secondly, in or towards payment (on the date, and in the
currency and funds, of receipt) to such account with
such bank in the principal financial centre of the
country of the currency of such payment as such Borrower
(or the Parent) shall have previously notified to the
Agent for this purpose; and
31.2.2 in the case of any other payment, be made available by the Agent
to the person for whose account such payment was received (in
the case of a Bank, for the account of the relevant Facility
Office) for value as soon as reasonably practicable after
receipt by the Agent by transfer to such account of such person
with such bank in the principal financial centre of the country
of the
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currency of such payment as such person shall have previously
notified to the Agent.
31.3 NO SET-OFF
All payments required to be made by an Obligor under any Finance
Document shall be calculated without reference to any set-off or
counterclaim and shall be made free and clear of and without any
deduction for or on account of any set-off or counterclaim.
31.4 CLAWBACK
Where a sum is to be paid under a Finance Document to the Agent for
account of another person, the Agent shall not be obliged to make the
same available to that other person or to enter into or perform any
exchange contract in connection therewith until it has been able to
establish to its satisfaction that it has actually received such sum,
but if it does so and it proves to be the case that it had not actually
received such sum, then the person to whom such sum or the proceeds of
such exchange contract was so made available shall on request refund the
same to the Agent together with an amount sufficient to indemnify the
Agent against any cost or loss it may have suffered or incurred by
reason of its having paid out such sum or the proceeds of such exchange
contract prior to its having received such sum.
31.5 PARTIAL PAYMENTS
If and whenever a payment is made by an Obligor hereunder and the Agent
receives an amount less than the due amount of such payment the Agent
may apply the amount received towards the obligations of the Obligors
under this Agreement in the following order:
31.5.1 FIRST, in or towards payment of any unpaid costs, fees and
expenses of each of the Agent, the Security Agent and the
Arranger;
31.5.2 SECOND, in or towards payment pro rata of any accrued interest,
commitment commission, payable to any Bank hereunder due but
unpaid;
31.5.3 THIRD, in or towards payment pro rata of any Outstandings due
but unpaid; and
31.5.4 FOURTH, in or towards payment pro rata of any other sum due but
unpaid.
31.6 VARIATION OF PARTIAL PAYMENTS
The order of partial payments set out in Clause 31.5 (Partial Payments)
shall override any appropriation made by the Obligor to which the
partial payment relates but the order set out in sub-clauses 31.5.2,
31.5.3 and 31.5.4 of Clause 31.5 (Partial Payments) may be varied if
agreed by all the Banks.
32. SET-OFF
32.1 CONTRACTUAL SET-OFF
Following an Event of Default which is continuing each Obligor
authorises each Bank to apply any credit balance to which such Obligor
is entitled on any account of such Obligor with such Bank in
satisfaction of any sum due and payable from such Obligor
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to such Bank under any Finance Document but unpaid. For this purpose,
each Bank is authorised to purchase with the moneys standing to the
credit of any such account such other currencies as may be necessary to
effect such application.
32.2 SET-OFF NOT MANDATORY
No Bank shall be obliged to exercise any right given to it by Clause
32.1 (Contractual Set-off).
33. SHARING
33.1 PAYMENTS TO BANKS
If a Bank (a "RECOVERING BANK") applies any receipt or recovery from an
Obligor to a payment due under this Agreement and such amount is
received or recovered other than in accordance with Clause 31
(Payments), then such Recovering Bank shall:
33.1.1 notify the Agent of such receipt or recovery;
33.1.2 at the request of the Agent, promptly pay to the Agent an amount
(the "SHARING PAYMENT") equal to such receipt or recovery less
any amount which the Agent determines may be retained by such
Recovering Bank as its share of any payment to be made in
accordance with Clause 31.5 (Partial Payments).
33.2 REDISTRIBUTION OF PAYMENTS
The Agent shall treat the Sharing Payment as if it had been paid by the
relevant Obligor and distribute it between the Finance Parties (other
than the Recovering Bank) in accordance with Clause 31.5 (Partial
Payments).
33.3 RECOVERING BANK'S RIGHTS
The Recovering Bank will be subrogated to the rights of the parties
which have shared in a redistribution pursuant to Clause 33.2
(Redistribution of Payments) in respect of the Sharing Payment (and the
relevant Obligor shall be liable to the Recovering Bank in an amount
equal to the Sharing Payment).
33.4 REPAYABLE RECOVERIES
If any part of the Sharing Payment received or recovered by a Recovering
Bank becomes repayable and is repaid by such Recovering Bank, then:
33.4.1 each party which has received a share of such Sharing Payment
pursuant to Clause 33.2 (Redistribution of Payments) shall, upon
request of the Agent, pay to the Agent for account of such
Recovering Bank an amount equal to its share of such Sharing
Payment; and
33.4.2 such Recovering Bank's rights of subrogation in respect of any
reimbursement shall be cancelled and the relevant Obligor will
be liable to the reimbursing party for the amount so reimbursed.
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33.5 EXCEPTION
This Clause 33 (Sharing) shall not apply if the Recovering Bank would
not, after making any payment pursuant hereto, have a valid and
enforceable claim against the relevant Obligor.
33.6 RECOVERIES THROUGH LEGAL PROCEEDINGS
If any Bank intends to commence any action in any court or arbitral
proceedings it shall give prior notice to the Agent, the Security Agent
and the other Banks. If any Bank shall commence any action in any court
or arbitral proceedings to enforce its rights hereunder and, as a result
thereof or in connection therewith, receives any amount, then such Bank
shall not be required to share any portion of such amount with any Bank
which has the legal right to, but does not, join in such action or
commence and diligently prosecute a separate action to enforce its
rights in another court or arbitral proceedings.
34. THE AGENT, THE ARRANGER, THE UNDERWRITERS AND THE BANKS
34.1 APPOINTMENT OF THE AGENT
Each of the Arranger and the Banks hereby appoints the Agent to act as
its agent in connection with the Finance Documents and authorises the
Agent to exercise such rights, powers, authorities and discretions as
are specifically delegated to the Agent by the terms thereof together
with all such rights, powers, authorities and discretions as are
reasonably incidental thereto.
34.2 AGENT'S DISCRETIONS
The Agent may:
34.2.1 assume, unless it has, in its capacity as agent for the Banks,
received notice to the contrary from any other party hereto,
that (a) any representation made or deemed to be made by an
Obligor in connection with any Finance Document is true, (b) no
Event of Default or Potential Event of Default has occurred, (c)
no Obligor is in breach of or default under its obligations
under any Finance Document and (d) any right, power, authority
or discretion vested herein upon an Instructing Group, the Banks
or any other person or group of persons has not been exercised;
34.2.2 assume that each Facility Office of each Bank is that notified
to it by such Bank in writing prior to the date hereof (or, in
the case of a Transferee, at the end of the Transfer Certificate
to which it is a party as Transferee) until it has received from
such Bank a notice designating some other office of such Bank to
replace such Facility Office and act upon any such notice until
the same is superseded by a further such notice;
34.2.3 engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or services
may to it seem necessary, expedient or desirable and rely upon
any advice so obtained;
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34.2.4 rely as to any matters of fact which might reasonably be
expected to be within the knowledge of an Obligor upon a
certificate signed by or on behalf of such Obligor;
34.2.5 rely upon any communication or document believed by it to be
genuine;
34.2.6 refrain from exercising any right, power or discretion vested in
it as agent under any Finance Document unless and until
instructed by an Instructing Group as to whether or not such
right, power or discretion is to be exercised and, if it is to
be exercised, as to the manner in which it should be exercised;
34.2.7 refrain from acting in accordance with any instructions of an
Instructing Group to begin any legal action or proceeding
arising out of or in connection with any Finance Document until
it shall have received such security as it may require (whether
by way of payment in advance or otherwise) for all costs,
claims, losses, expenses (including legal fees) and liabilities
together with any VAT thereon which it will or may expend or
incur in complying with such instructions; and
34.2.8 assume (unless it has specific notice to the contrary) that any
notice or request made by the Parent is made on behalf of all
the Obligors.
34.3 AGENT'S OBLIGATIONS
The Agent shall:
34.3.1 promptly inform each Bank of the contents of any notice or
document received by it in its capacity as Agent from an Obligor
under any Finance Document;
34.3.2 promptly notify each Bank of the occurrence of any Event of
Default or any default by an Obligor in the due performance of
or compliance with its obligations under any Finance Document of
which the Agent has notice from any other party hereto;
34.3.3 save as otherwise provided herein, act as agent under any
Finance Document in accordance with any instructions given to it
by an Instructing Group, which instructions shall be binding on
the Arranger and the Banks; and
34.3.4 if so instructed by an Instructing Group, refrain from
exercising any right, power or discretion vested in it as agent
under any Finance Document.
The Agent's duties under the Finance Documents are solely mechanical and
administrative in nature.
34.4 EXCLUDED OBLIGATIONS
Notwithstanding anything to the contrary expressed or implied herein,
neither the Agent, any Underwriter nor the Arranger shall:
34.4.1 be bound to enquire as to (a) whether or not any representation
made or deemed to be made by an Obligor in connection with any
Finance Document
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is true, (b) the occurrence or otherwise of any Event of Default
or Potential Event of Default, (c) the performance by an Obligor
of its obligations under any Finance Document or (d) any breach
of or default by an Obligor of or under its obligations under
any Finance Document;
34.4.2 be bound to account to any Bank for any sum or the profit
element of any sum received by it for its own account;
34.4.3 be bound to disclose to any other person any information
relating to any member of the Group if (a) such person, on
providing such information, expressly stated to the Agent or, as
the case may be, the Arranger, that such information was
confidential or (b) such disclosure would or might in its
opinion constitute a breach of any law or be otherwise
actionable at the suit of any person;
34.4.4 be under any obligations other than those for which express
provision is made in any Finance Document; or
34.4.5 be or be deemed to be a fiduciary for any other party to any
Finance Document.
34.5 INDEMNIFICATION
Each Bank shall, in its Proportion, from time to time on demand by the
Agent, indemnify the Agent against any and all costs, claims, losses,
expenses (including legal fees) and liabilities together with any VAT
thereon which the Agent may incur, otherwise than by reason of its own
gross negligence or wilful misconduct, in acting in its capacity as
agent under any Finance Document (other than any which have been
reimbursed by the Parent pursuant to Clause 29.1 (Parent's Indemnity)).
34.6 EXCLUSION OF LIABILITIES
Except in the case of negligence or wilful default, none of the Agent,
the Underwriters and the Arranger accepts any responsibility:
34.6.1 for the adequacy, accuracy and/or completeness of the
Information Memorandum or any other information supplied by the
Agent or the Arranger, by an Obligor or by any other person in
connection with any Finance Document or any other agreement,
arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with any Finance
Document;
34.6.2 for the legality, validity, effectiveness, adequacy or
enforceability of any Finance Document or any other agreement,
arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with any Finance
Document; or
34.6.3 for the exercise of, or the failure to exercise, any judgement,
discretion or power given to any of them by or in connection
with any Finance Document or any other agreement, arrangement or
document entered into, made or
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executed in anticipation of, pursuant to or in connection with
any Finance Document.
Accordingly, none of the Agent, the Underwriters and the Arranger shall
be under any liability (whether in negligence or otherwise) in respect
of such matters, save in the case of negligence or wilful misconduct.
34.7 NO ACTIONS
Each of the Banks agree that it will not assert or seek to assert
against any director, officer or employee of the Agent, the Underwriters
or the Arranger any claim it might have against any of them in respect
of the matters referred to in Clause 34.6 (Exclusion of Liabilities).
34.8 BUSINESS WITH THE GROUP
The Agent and the Arranger may accept deposits from, lend money to and
generally engage in any kind of banking or other business with any
member of the Group.
34.9 RESIGNATION
The Agent, the Underwriters may resign its appointment hereunder at any
time without assigning any reason therefor by giving not less than
thirty days' prior notice to that effect to each of the other parties
hereto, provided that no such resignation shall be effective until a
successor for the Agent is appointed in accordance with the succeeding
provisions of this Clause 34 (The Agent, the Arrangers, the Underwriters
and the Banks).
34.10 SUCCESSOR AGENT
If the Agent gives notice of its resignation pursuant to Clause 34.9
(Resignation), then any reputable and experienced bank or other
financial institution in the United Kingdom may be appointed as a
successor to the Agent by an Instructing Group (who shall consult with
the Parent) during the period of such notice but, if no such successor
is so appointed, the Agent may appoint such a successor itself.
34.11 RIGHTS AND OBLIGATIONS
If a successor to the Agent is appointed under the provisions of Clause
34.10 (Successor Agent), then:
34.11.1 the retiring Agent shall be discharged from any further
obligation under any Finance Document but shall remain entitled
to the benefit of the provisions of this Clause 34 (The Agent,
the Arranger, the Underwriters and the Banks); and
34.11.2 its successor and each of the other parties to any Finance
Document shall have the same rights and obligations amongst
themselves as they would have had if such successor had been a
party to the Finance Documents.
34.12 OWN RESPONSIBILITY
It is understood and agreed by each Bank that at all times it has itself
been, and will continue to be, solely responsible for making its own
independent appraisal of and
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investigation into all risks arising under or in connection with the
Finance Documents including, but not limited to:
34.12.1 the financial condition, creditworthiness, condition, affairs,
status and nature of each member of the Group;
34.12.2 the legality, validity, effectiveness, adequacy and
enforceability of any Finance Documents and any other agreement,
arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with any Finance
Document;
34.12.3 whether such Bank has recourse, and the nature and extent of
that recourse, against an Obligor or any other person or any of
their respective assets under or in connection with any Finance
Document, the transactions therein contemplated or any other
agreement, arrangement or document entered into, made or
executed in anticipation of, pursuant to or in connection with
any Finance Document; and
34.12.4 the adequacy, accuracy and/or completeness of the Information
Memorandum and any other information provided by the Agent, an
Underwriter or the Arranger, an Obligor, or by any other person
in connection with any Finance Document, the transactions
contemplated therein or any other agreement, arrangement or
document entered into, made or executed in anticipation of,
pursuant to or in connection with any Finance Document.
Accordingly, each Bank acknowledges to the Agent, the Underwriters and
the Arranger that it has not relied on and will not hereafter rely on
the Agent, the Underwriters and the Arranger or any of them in respect
of any of these matters.
34.13 AGENCY DIVISION SEPARATE
In acting as agent under the Finance Documents for the Banks, the Agent
shall be regarded as acting through its agency division which shall be
treated as a separate entity from any other of its divisions or
departments and, notwithstanding the foregoing provisions of this Clause
34 (The Agent, the Arranger, the Underwriters and the Banks), any
information received by some other division or department of the Agent
may be treated as confidential and shall not be regarded as having been
given to the Agent's agency division.
34.14 RELIANCE AND ENGAGEMENT LETTERS
Each Finance Party confirms each of the Arranger and the Agent has
authority to accept on its behalf the terms of any Reliance Letter or
engagement letters relating to the Reports or any reports or letters
provided by accountants in connection with the Finance Documents or the
transactions contemplated therein (including any net asset letter in
connection with financial assistance procedures) and to bind it in
respect of such Reports, reports or letters and to sign such letters on
its behalf and further confirms that it accepts the terms and
qualifications set out in such letters.
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35. ASSIGNMENTS AND TRANSFERS
35.1 BINDING AGREEMENT
This Agreement shall be binding upon and enure to the benefit of each
party hereto and its or any subsequent successors and Transferees.
35.2 NO ASSIGNMENTS AND TRANSFERS BY THE OBLIGORS
No Obligor shall be entitled to assign or transfer all or any of its
rights, benefits and obligations under the Finance Documents.
35.3 ASSIGNMENTS AND TRANSFERS BY BANKS
Any Bank may, at any time, assign all or any of its rights and benefits
under the Finance Documents or transfer in accordance with Clause 35.5
(Transfers by Banks) all or any of its rights, benefits and obligations
under the Finance Documents to a bank or financial institution, PROVIDED
THAT no such assignment or transfer may be made without prior
consultation with the Parent, except in the case of any such assignment
or transfer:
35.3.1 to any subsidiary or holding company, or to any subsidiary of
any holding company, of such Bank; or
35.3.2 to any other Bank or any subsidiary or holding company, or to
any subsidiary of any holding company, of any other Bank; or
35.3.3 when an Event of Default has occurred which is continuing.
35.4 ASSIGNMENTS BY BANKS
If any Bank assigns all or any of its rights and benefits under the
Finance Documents in accordance with Clause 35.3 (Assignments and
Transfers by Banks), then, unless and until the assignee has delivered a
notice to the Agent confirming in favour of the Agent, the Arranger, the
Security Agent, the other Banks that it shall be under the same
obligations towards each of them as it would have been under if it had
been an original party to the Finance Documents as a Bank (whereupon
such assignee shall become a party to the Finance Documents as a
"Bank"), the Agent, the Arranger, the Security Agent, the other Banks
shall not be obliged to recognise such assignee as having the rights
against each of them which it would have had if it had been such a party
to the Finance Documents.
35.5 TRANSFERS BY BANKS
If any Bank wishes to transfer all or any of its rights, benefits and/or
obligations under the Finance Documents as contemplated in Clause 35.3
(Assignments and Transfers by Banks), then such transfer may be effected
by the delivery to the Agent of a duly completed Transfer Certificate
executed by such Bank and the relevant Transferee in which event, on the
later of the Transfer Date specified in such Transfer Certificate and
the fifth Business Day after (or such earlier Business Day endorsed by
the Agent on such Transfer Certificate falling on or after) the date of
delivery of such Transfer Certificate to the Agent:
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35.5.1 to the extent that in such Transfer Certificate the Bank party
thereto seeks to transfer its rights, benefits and obligations
under the Finance Documents, each of the Obligors and such Bank
shall be released from further obligations towards one another
under the Finance Documents and their respective rights against
one another shall be cancelled (such rights and obligations
being referred to in this Clause 35.5 (Transfers by Banks) as
"DISCHARGED RIGHTS AND OBLIGATIONS");
35.5.2 each of the Obligors and the Transferee party thereto shall
assume obligations towards one another and/or acquire rights
against one another which differ from such discharged rights and
obligations only insofar as each such Obligor and such
Transferee have assumed and/or acquired the same in place of
each such Obligor and such Bank;
35.5.3 the Agent, the Security Agent, the Underwriters, the Arranger,
such Transferee, the other Banks shall acquire the same rights
and benefits and assume the same obligations between themselves
as they would have acquired and assumed had such Transferee been
an original party to the Finance Documents as a Bank with the
rights, benefits and/or obligations acquired or assumed by it as
a result of such transfer and to that extent the Agent, the
Security Agent, the Underwriters, the Arranger and the relevant
Bank shall each be released from further obligations to each
other under the Finance Documents; and
35.5.4 such Transferee shall become a party hereto as a "Bank".
35.6 ASSIGNMENT AND TRANSFER FEES
On the date upon which an assignment takes effect pursuant to Clause
35.4 (Assignments by Banks) or a transfer takes effect pursuant to
Clause 35.5 (Transfers by Banks) the relevant assignee or Transferee
shall pay to the Agent for its own account a fee of (pounds
sterling)1,000.
35.7 DISCLOSURE OF INFORMATION
Any Bank may disclose to any person:
35.7.1 to (or through) whom such Bank assigns or transfers (or may
potentially assign or transfer) all or any of its rights,
benefits and obligations under any Finance Document;
35.7.2 with (or through) whom such Bank enters into (or may potentially
enter into) any sub-participation in relation to, or any other
transaction under which payments are to be made by reference to,
any Finance Document or any Obligor; or
35.7.3 to whom information may be required to be disclosed by any
applicable law or any regulatory authority,
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such information about any Obligor or the Group and any Finance Document
as such Bank shall consider appropriate PROVIDED THAT, in relation to a
disclosure under sub-clauses 35.7.1 and 35.7.2, the person to whom such
information is to be given has entered into a Confidentiality
Undertaking.
35.8 LIMITATION OF SPECIFIED INDEMNITIES
If, at any time, any Bank assigns or transfers any of its rights,
benefits and obligations hereunder or transfers a Facility Office and by
reasons of circumstances either in effect at the time of such assignment
or transfer or which at such time are known to become effective at a
later date there would, but for this Clause 35.8 (Limitation of
Specified Indemnities), arise an obligation on the part of an Obligor
under Clause 14 (Taxes) or Clause 16.1 (Increased Costs) to pay to such
assignee or Transferee any amount in excess of the amount it would have
then been obliged to pay but for such assignment or transfer, then such
Obligor shall not be obliged to pay the amount of such excess PROVIDED
THAT this Clause 35.8 (Limitation of Specified Indemnities) shall not
apply to any assignment or transfer made pursuant to Clause 18
(Mitigation) or to any assignment or transfer made in each case with the
Parent's prior consent or to any assignment or transfer following an
Event of Default which is continuing.
35.9 TRANSFERS OF PART
Any transfer pursuant to Clause 35.5 (Transfers by Banks) of part (but
not the whole) of a Bank's Commitment shall be in a minimum amount of
(pounds sterling)5,000,000 and shall be such that the amount of the
transferring Bank's Commitment shall not be reduced to less than
(pounds sterling)5,000,000.
35.10 INTERCREDITOR ARRANGEMENTS AND SECURITY
35.10.1 Each assignee or Transferee from a Bank shall enter into a deed
of accession in the form set out in the Intercreditor
Arrangements.
35.10.2 Both the transferor or assignor Bank and the relevant Transferee
or assignee shall take all steps necessary to ensure the
transfer of the benefit of any security relating to the transfer
or assignment and shall share (in a proportion to be agreed) any
costs attributable to the transfer of such security.
36. ADDITIONAL BORROWERS
36.1 REQUEST FOR ADDITIONAL BORROWER
The Parent may request that any of its wholly-owned subsidiaries become
an Additional Borrower by delivering to the Agent a Borrower Accession
Memorandum and (to the extent legally possible) a Guarantor Accession
Memorandum duly executed by the Parent and such subsidiary, together
with the documents and other evidence listed in Schedule 8 (Additional
Conditions Precedent) in relation to such subsidiary. Such Additional
Borrower will provide to the extent legally possible the Security
reasonably requested by the Agent which Security shall be given in
accordance with Clause 23.10 (Security).
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36.2 BORROWER CONDITIONS PRECEDENT
A company, in respect of which the Parent has delivered a Borrower
Accession Memorandum to the Agent, shall become an Additional Borrower
and assume all the rights, benefits and obligations of a Borrower as if
it had been an Original Borrower on the date on which the Agent notifies
the Parent that:
36.2.1 an Instructing Group accepts the Parent's request in respect of
such subsidiary and confirms that such subsidiary is suitable
from a withholding tax position; and
36.2.2 the Agent has received, in form and substance satisfactory to
it, all documents and other evidence listed in Schedule 8
(Additional Conditions Precedent) in relation to such
subsidiary,
unless on such date an Event of Default or Potential Event of Default is
continuing or would occur as a result of such subsidiary becoming an
Additional Borrower.
36.3 RESIGNATION OF A BORROWER
If at any time a Borrower (other than the Parent) is under no actual or
contingent obligation under or pursuant to any Finance Document and such
resignation would not affect the legality, validity or enforceability of
any security contemplated by the Security Documents in respect of such
Borrower or its assets, the Parent may request that such Borrower shall
cease to be a Borrower by delivering to the Agent a Resignation Notice.
Such Resignation Notice shall be accepted by the Agent on the date on
which it notifies the Parent that it is satisfied that such Borrower is
under no actual or contingent obligation under or pursuant to any
Finance Document and such Borrower shall immediately cease to be a
Borrower and shall have no further rights, benefits or obligations
hereunder save for those which arose prior to such date.
37. ADDITIONAL GUARANTORS
37.1 OBLIGATION FOR ADDITIONAL GUARANTOR
The Parent shall ensure that any of its subsidiaries (except Dormant
Subsidiaries) to the extent legally possible become an Additional
Guarantor by delivering to the Agent a Guarantor Accession Memorandum
duly executed by the Parent and such subsidiary, together with the
documents and other evidence listed in Schedule 8 (Additional Conditions
Precedent) in relation to such subsidiary promptly following the
acquisition or creation of such subsidiary by any member of the Group.
Such Guarantor will provide to the extent legally possible the Security
reasonably requested by the Agent which Security shall be given in
accordance with Clause 23.10 (Security).
37.2 GUARANTOR CONDITIONS PRECEDENT
A company, in respect of which the Parent has delivered a Guarantor
Accession Memorandum to the Agent, shall became an Additional Guarantor
and assume all the rights, benefits and obligations of a Guarantor which
is not a Guarantor referred to in Clause 25.1 (Parent Guarantee and
Indemnity) or 25.2 (Group Guarantee and Indemnity) as if it had been an
original party hereto as a Guarantor but with the exceptions (if any)
stipulated in the Guarantor Accession Memorandum on the date on
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which the Agent receives, in form and substance satisfactory to it, all
the documents and other evidence listed in Schedule 8 (Additional
Conditions Precedent). The Agent shall notify the Parent when requested
to do so whether it has received all such documents in form and
substance satisfactory to it.
38. CALCULATIONS AND EVIDENCE OF DEBT
38.1 BASIS OF ACCRUAL
Interest and commitment commission shall accrue from day to day and
shall be calculated on the basis of a year of 365 days and the actual
number of days elapsed.
38.2 QUOTATIONS
If on any occasion a Reference Bank or Bank fails to supply the Agent
with a quotation required of it under the foregoing provisions of this
Agreement, the rate for which such quotation was required shall be
determined from those quotations which are supplied to the Agent,
provided that, in relation to determining LIBOR, this Clause 38.2
(Quotations) shall not apply if only one Reference Bank supplies a
quotation.
38.3 EVIDENCE OF DEBT
Each Bank shall maintain in accordance with its usual practice accounts
evidencing the amounts from time to time lent by and owing to it
hereunder.
38.4 CONTROL ACCOUNTS
The Agent shall maintain on its books a control account or accounts in
which shall be recorded:
38.4.1 the amount and the Sterling Amount of any Advance or any Unpaid
Sum and each Bank's share therein;
38.4.2 the amount of all principal, interest and other sums due or to
become due from an Obligor and each Bank's share therein; and
38.4.3 the amount of any sum received or recovered by the Agent
hereunder and each Bank's share therein.
38.5 PRIMA FACIE EVIDENCE
In any legal action or proceeding arising out of or in connection with
this Agreement, the entries made in the accounts maintained pursuant to
Clause 38.3 (Evidence of Debt) and Clause 38.4 (Control Accounts) shall,
in the absence of manifest error, be prima facie evidence of the
existence and amounts of the specified obligations of the Obligors.
38.6 CERTIFICATES OF BANKS
A certificate of a Bank as to:
38.6.1 the amount by which a sum payable to it hereunder is to be
increased under Clause 14.1 (Tax Gross-up);
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38.6.2 the amount for the time being required to indemnify it against
any such cost, payment or liability as is mentioned in Clause
14.2 (Tax Indemnity) or Clause 16.1 (Increased Costs); or
38.6.3 the amount of any credit, relief, remission or repayment as is
mentioned in Clause 15.3 (Tax Credit Payment) or Clause 15.4
(Tax Credit Clawback)
shall, in the absence of manifest error, be prima facie evidence of the
existence and amounts of the specified obligations of the Obligors.
38.7 AGENT'S CERTIFICATES
A certificate of the Agent as to the amount at any time due from a
Borrower or the Parent hereunder or the amount which, but for any of the
obligations of such Borrower or the Parent hereunder being or becoming
void, voidable, unenforceable or ineffective, at any time would have
been due from such Borrower hereunder shall, in the absence of manifest
error, be conclusive for the purposes of Clause 25 (Guarantee and
Indemnity).
39. REMEDIES AND WAIVERS, PARTIAL INVALIDITY
39.1 REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of any
party, any right or remedy under any Finance Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any right or
remedy prevent any further or other exercise thereof or the exercise of
any other right or remedy. The rights and remedies provided herein and
in the Finance Documents are cumulative and not exclusive of any rights
or remedies provided by law.
39.2 PARTIAL INVALIDITY
If, at any time, any provision of the Finance Documents is or becomes
illegal, invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the
remaining provisions thereof nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction
shall in any way be affected or impaired thereby.
40. NOTICES
40.1 COMMUNICATIONS IN WRITING
Each communication to be made under the Finance Documents shall be made
in writing and, unless otherwise stated, shall be made by fax or letter.
40.2 ADDRESSES
Any communication or document to be made or delivered pursuant to the
Finance Documents shall (unless the recipient of such communication or
document has, by fifteen days' written notice to the Agent, specified
another address or fax number) be made or delivered to the address or
fax number:
40.2.1 in the case of the Original Obligors, the Security Agent, the
Arranger and the Agent, identified with its name below;
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40.2.2 in the case of each Bank, notified in writing to the Agent prior
to the date hereof (or, in the case of a Transferee, at the end
of the Transfer Certificate to which it is a party as
Transferee); and
40.2.3 in the case of each Additional Obligor, in the relevant
Accession Memorandum
PROVIDED THAT not more than one address may be specified by each party
pursuant to this Clause 40.2 (Addresses) at any time. Any Bank with more
than one Facility Office shall specify its main address and fax number
for the purpose of notices.
40.3 DELIVERY
Any communication or document to be made or delivered by one person to
another pursuant to the Finance Documents shall:
40.3.1 if by way of fax, be deemed to have been received when
transmission has been completed (and, if such date is not a
Business Day, shall be deemed to have been received on the next
Business Day); and
40.3.2 if by way of letter, deemed to have been delivered when left at
that address or, as the case may be, ten days after being
deposited in the post postage prepaid in an envelope addressed
to it at that address,
PROVIDED THAT any communication or document to be made or delivered to
the Agent or Security Agent shall be effective only when received by its
agency division or, as the case may be, trustee division and then only
if the same is expressly marked for the attention of the department or
officer identified with the Agent's or, as the case may be, Security
Agent's signature below (or such other department or officer as the
Agent or, as the case may be, the Security Agent shall from time to time
specify for this purpose).
40.4 ENGLISH LANGUAGE
Each communication and document made or delivered by one party to
another pursuant to the Finance Documents shall be in the English
language or accompanied by a translation thereof into English certified
(by an officer of the person making or delivering the same) as being a
true and accurate translation thereof.
40.5 NOTIFICATION OF CHANGES
Promptly upon receipt of notification of a change of address or fax
number pursuant to Clause 40.3 (Delivery) the Agent shall notify the
other parties hereto of such change.
41. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument.
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42. AMENDMENTS
42.1 AMENDMENTS
Subject to Clause 42.2 (Amendments requiring the Consent of all the
Banks) and Clause 42.3 (Exceptions) the Agent, if it has the prior
consent of an Instructing Group, and the Obligors may from time to time
agree in writing to amend the Finance Documents or to waive,
prospectively or retrospectively, any of the requirements of the Finance
Documents and any amendments or waivers so agreed shall be binding on
all the Finance Parties, provided that:
42.1.1 no such waiver or amendment shall subject any Finance Party
hereto to any new or additional obligations without the consent
of such Finance Party; and
42.1.2 no such amendment or waiver shall result in any Bank which has a
Revolving Commitment being required to participate in a
Revolving Advance unless the consent of the Banks with Revolving
Commitments exceeding sixty-six and two-thirds per cent. of the
aggregate of the Revolving Commitments has been obtained.
42.2 AMENDMENTS REQUIRING THE CONSENT OF ALL THE BANKS
An amendment or waiver which relates to:
42.2.1 Clause 33 (Sharing) or this Clause 42 (Amendments);
42.2.2 a decrease in the principal amount of any payment to a Bank
under the Finance Documents, or a change in the currency of any
Advance or deferral of any Term Repayment Date or Repayment Date
or Final Maturity Date or Revolving Termination Date;
42.2.3 a decrease in the Margin, the commitment commission, the amount
or currency of any payment of interest, fees or any other amount
payable hereunder to any Finance Party or deferral of the date
for payment thereof;
42.2.4 an increase in a Bank's Commitment;
42.2.5 the conditions set out in sub-clause 6.1.8 of Clause 6.1
(Utilisation Conditions for the Revolving Facility) if an Event
of Default or Potential Event of Default which relates to a
Repeated Representation, Clause 22 (Financial Condition) or
sub-clause 23.16 (Negative Pledge) is continuing;
42.2.6 the definition of Event of Default, Instructing Group Permitted
Acquisitions or Permitted Equity Funded Acquisitions;
42.2.7 a change to any material provision of any Security Document;
42.2.8 (save for Permitted Disposals) the discharge or release of any
Security; or
42.2.9 any provision which contemplates the need for the consent or
approval of all the Banks,
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shall not be made without the prior consent of all the Banks.
42.3 EXCEPTIONS
Notwithstanding any other provisions hereof, neither the Agent nor the
Security Agent shall be obliged to agree to any such amendment or waiver
if the same would:
42.3.1 (in respect of the Agent or Security Agent) amend or waive this
Clause 42 (Amendments), Clause 27 (Costs and Expenses) or Clause
34 (The Agent, the Arranger, the Underwriters and the Banks); or
42.3.2 otherwise amend or waive any of the Agent's or Security Agent's
rights hereunder or subject the Agent or Security Agent or any
Arranger to any additional obligations hereunder or under the
other Finance Documents.
42.4 AMENDMENTS BY PARENT
The Parent (acting on behalf of each of the Obligors) may agree any
amendment to or modification of the provisions of any of the Finance
Documents or any schedule thereto, or grant any waiver or consent in
relation thereto.
42.5 AMENDMENT TO CORRECT MANIFEST ERROR
The Agent may agree with the Parent (acting on behalf of each of the
Obligors) any amendment to or the modification of the provisions of any
of the Finance Documents or any schedule thereto, which is necessary to
correct a manifest error.
43. GOVERNING LAW
This Agreement is governed by English law.
44. JURISDICTION
44.1 ENGLISH COURTS
The courts of England have exclusive jurisdiction to settle any dispute
(a "DISPUTE") arising out of or in connection with the Finance Documents
(including a dispute regarding the existence, validity or termination of
this Agreement or the consequences of its nullity).
44.2 CONVENIENT FORUM
The parties agree that the courts of England are the most appropriate
and convenient courts to settle Disputes between them and, accordingly,
that they will not argue to the contrary.
44.3 NON-EXCLUSIVE JURISDICTION
This Clause 44 (Jurisdiction) is for the benefit of the Finance Parties
only. As a result and notwithstanding Clause 44.1 (English Courts), it
does not prevent any Finance Party from taking proceedings relating to a
Dispute ("PROCEEDINGS") in any other courts with jurisdiction. To the
extent allowed by law, the Finance Parties may take concurrent
Proceedings in any number of jurisdictions.
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44.4 SERVICE OF PROCESS
Each Original Obligor agrees that the documents which start any
Proceedings and any other documents required to be served in relation to
those Proceedings may be served on it on the Parent at its registered
office. If any Obligor ceases to have a place of business in Great
Britain or, as the case may be, the appointment of the person mentioned
in this Clause 44.4 (Service of Process) (or, as the case may be, the
relevant Accession Memorandum) ceases to be effective, the relevant
Obligor shall immediately appoint another person in England to accept
service of process on its behalf in England. If an Obligor fails to do
so (and such failure continues for a period of not less than fourteen
days), the Agent shall be entitled to appoint such a person by notice to
such Obligor. Nothing contained herein shall restrict the right to serve
process in any other manner allowed by law. This Clause 44.4 (Service of
Process) applies to Proceedings in England and to Proceedings elsewhere.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the date and year first above written.
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<PAGE>
SIGNATURES
THE PARENT
TRANSWORLD HOLDINGS (UK) LIMITED
By: WAYNE PALLADINO
Address: BROADWALK HOUSE
5 APPOLD STREET
LONDON, EC2A 2HA
Fax:
Attention:
THE ORIGINAL BORROWER
TRANSWORLD HEALTHCARE (UK) LIMITED
By: WAYNE PALLADINO
Address: BALDERTON HALL
SOUTH DRIVE
BALDERTON
NEWARK
NOTTINGHAMSHIRE, NG24 3JR
Fax:
Attention:
-116-
<PAGE>
THE ORIGINAL GUARANTORS
TRANSWORLD HOLDINGS (UK) LIMITED
By: WAYNE PALLADINO
Address: BROADWALK HOUSE
5 APPOLD STREET
LONDON, EC2A 2HA
Fax:
Attention:
TRANSWORLD HEALTHCARE (UK) LIMITED
By: WAYNE PALLADINO
Address: BALDERTON HALL
SOUTH DRIVE
BALDERTON
NEWARK
NOTTINGHAMSHIRE, NG24 3JR
Fax:
Attention:
OMNICARE LIMITED
By: WAYNE PALLADINO
Address: BALDERTON HALL
SOUTH DRIVE
BALDERTON
NEWARK
NOTTINGHAMSHIRE, NG24 3JR
Fax:
Attention:
-117-
<PAGE>
ALLIED MEDICARE LIMITED
By: WAYNE PALLADINO
Address: MEDICARE HOUSE
STONE BUSINESS PARK
BROOKES ROAD
STONE
STAFFORDSHIRE, ST15 0TL
Fax:
Attention:
AMCARE LIMITED
By: WAYNE PALLADINO
Address: 39B PALLION WAY
PALLION TRADING ESTATE
SUNDERLAND
TYNE & WEAR, SR4 6SN
Fax:
Attention:
ALLIED OXYCARE LIMITED
By: WAYNE PALLADINO
Address: CHARLES HOUSE
ENTERPRISE DRIVE
FOUR ASHES
WOLVERHAMPTON, WV10 7DF
Fax:
Attention:
-118-
<PAGE>
NOVACARE (UK) LIMITED
By: WAYNE PALLADINO
Address: UNIT 10
HORTON COURT
HORTON SQUARE
TELFORD
SALOP, TF1 4GY
Fax:
Attention:
THE ARRANGER
PARIBAS
By: PATRICK FOX
Address: 10 HAREWOOD AVENUE
LONDON, NW1 6AA
Fax: 0171 595 5019
Attention: PATRICK FOX
THE AGENT
BARCLAYS BANK PLC
By: ANTHONY NASH
Address: 5 THE NORTH COLONNADE
CANARY WHARF
LONDON, E14 4PU
Fax: 0171 773 6454
Attention: MALCOLM ORTON
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<PAGE>
THE SECURITY AGENT
BARCLAYS BANK PLC
By: ANTHONY NASH
Address: 5 THE NORTH COLONNADE
CANARY WHARF
LONDON, E14 4PU
Fax: 0171 773 6454
Attention: MALCOLM ORTON
THE UNDERWRITERS
BARCLAYS BANK PLC
By: ANTHONY NASH
Address: 1ST FLOOR
54 LOMBARD STREET
LONDON, EC3P 3AH
Fax: 0171 699 2770
Attention: A. NASH
PARIBAS
By: PATRICK FOX
Address: 10 HAREWOOD AVENUE
LONDON, NW1 6AA
Fax: 0171 595 5019
Attention: PATRICK FOX
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<PAGE>
THE BANKS
BARCLAYS BANK PLC
By: ANTHONY NASH
Address: 1ST FLOOR
54 LOMBARD STREET
LONDON, EC3P 3AH
Fax: 0171 699 2770
Attention: A. NASH
PARIBAS
By: PATRICK FOX
Address: 10 HAREWOOD AVENUE
LONDON, NW1 6AA
Fax: 0171 595 5019
Attention: PATRICK FOX
-121-
<PAGE>
CONFORMED COPY
TRANSWORLD HOLDINGS (UK) LIMITED
AS PARENT
TRANSWORLD HEALTHCARE (UK) LIMITED
AS ORIGINAL BORROWER
AND
TRANSWORLD HOLDINGS (UK) LIMITED
TRANSWORLD HEALTHCARE (UK) LIMITED
OMNICARE LIMITED
ALLIED MEDICARE LIMITED
AMCARE LIMITED
ALLIED OXYCARE LIMITED
NOVACARE (UK) LIMITED
AS ORIGINAL GUARANTORS
PARIBAS
AS ARRANGER
PARIBAS
AS UNDERWRITERS
PARIBAS
AS AGENT
BARCLAYS BANK PLC
AS SECURITY AGENT
AND
OTHERS
----------------------------------------------
(Pounds)10,000,000
MEZZANINE CREDIT AGREEMENT
----------------------------------------------
CLIFFORD CHANCE
<PAGE>
CONTENTS
CLAUSE PAGE
1. Definitions And Interpretation..........................................1
2. The Facility...........................................................24
3. Utilisation............................................................25
4. Interest Periods.......................................................26
5. Payment And Calculation Of Interest....................................27
6. Market Disruption And Alternative Interest Rates.......................28
7. Notification...........................................................29
8. Repayment..............................................................30
9. Mandatory Prepayment...................................................30
10. Cancellation And Voluntary Prepayment..................................32
11. Taxes..................................................................33
12. Tax Receipts...........................................................35
13. Increased Costs........................................................37
14. Illegality.............................................................38
15. Mitigation.............................................................38
16. Representations........................................................39
17. Financial Information..................................................46
18. Other Information......................................................50
19. Financial Condition....................................................50
20. Covenants..............................................................60
21. Events Of Default......................................................68
22. Guarantee And Indemnity................................................74
23. Commitment Commission And Fees.........................................77
24. Costs And Expenses.....................................................78
25. Default Interest And Break Costs.......................................79
26. Parent's Indemnities...................................................80
27. Currency Of Account And Payment........................................82
28. Payments...............................................................82
29. Set-Off................................................................83
30. Sharing................................................................84
31. The Agent, The Arranger, The Underwriters And The Banks................85
<PAGE>
32. Assignments And Transfers..............................................90
33. Additional Borrowers...................................................92
34. Additional Guarantors..................................................93
35. Calculations And Evidence Of Debt......................................94
36. Remedies And Waivers, Partial Invalidity...............................95
37. Notices................................................................95
38. Counterparts...........................................................96
39. Amendments.............................................................97
40. Governing Law..........................................................98
41. Jurisdiction...........................................................98
Schedule 1 THE BANKS........................................................100
Schedule 2 FORM OF TRANSFER CERTIFICATE.....................................101
Schedule 3 CONDITIONS PRECEDENT.............................................104
Schedule 4 NOTICE OF DRAWDOWN...............................................109
Schedule 5 FORM OF COMPLIANCE CERTIFICATE...................................111
Schedule 6 FORM OF BORROWER ACCESSION MEMORANDUM............................112
Schedule 7 FORM OF GUARANTOR ACCESSION MEMORANDUM...........................114
Schedule 8 ADDITIONAL CONDITIONS PRECEDENT..................................116
Schedule 9 FORM OF RESIGNATION NOTICE.......................................118
Schedule 10 ASSOCIATED COSTS RATE...........................................119
Schedule 11 FORM OF CLOSING CERTIFICATE.....................................121
<PAGE>
THIS AGREEMENT is made on 17 December 1999
BETWEEN
(1) TRANSWORLD HOLDINGS (UK) LIMITED a company incorporated in England and
Wales with company registration number 3890177 (the "PARENT");
(2) TRANSWORLD HEALTHCARE (UK) LIMITED (a company incorporated in England and
Wales with company registration number 03370146) in its capacity as
borrower hereunder (the "ORIGINAL BORROWER");
(3) TRANSWORLD HOLDINGS (UK) LIMITED, TRANSWORLD HEALTHCARE (UK) LIMITED,
OMNICARE LIMITED, ALLIED MEDICARE LIMITED, AMCARE LIMITED, ALLIED OXYCARE
LIMITED and NOVACARE (UK) LIMITED (the "ORIGINAL GUARANTORS");
(4) PARIBAS as arranger of the Facilities (the "ARRANGER");
(5) PARIBAS as agent for the Banks (the "AGENT");
(6) BARCLAYS BANK PLC as security agent for and on behalf of the Finance
Parties (as defined below) (the "SECURITY AGENT"); and
(7) THE BANKS (as defined below).
IT IS AGREED as follows.
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"ACCESSION MEMORANDUM" means a Borrower Accession Memorandum or a
Guarantor Accession Memorandum.
"ACCOUNTANTS REPORT" means the long form report by PricewaterhouseCoopers
dated December 1999 in relation to the Business in the agreed form which
deals with, among other things, the tax and VAT treatment of the Group.
"ACCOUNT DEBTOR" in relation to any person, means any other person who is
or may become obligated to such first mentioned person under, with
respect to, or on account of, a receivable.
"ACQUISITION COSTS" means all fees, out-of-pocket costs and expenses,
stamp, registration and other taxes incurred by the Parent or any other
member of the Group in connection with the Facility, the Mezzanine
Warrant Instrument and the Finance Documents.
"ADDITIONAL BORROWER" means any company which has become an Additional
Borrower in accordance with Clause 33 (Additional Borrowers).
- 1 -
<PAGE>
"ADDITIONAL GUARANTOR" means any company which has become an Additional
Guarantor in accordance with Clause 34 (Additional Guarantors).
"ADDITIONAL OBLIGOR" means an Additional Borrower or Additional
Guarantor.
"ADVANCE" means, save as otherwise provided herein, the advance (as from
time to time reduced by prepayment) made or to be made by the Banks
hereunder.
"APPLICABLE TREATY" means a double tax treaty or convention relating to
the relief from double taxation on income and capital.
"APPLICABLE TREATY BANKS" means a Bank acting out of a Facility Office to
which payments pursuant to this Agreement by a Borrower may be made free
and clear of any deduction or withholding on account of any taxes of, or
imposed by, the country of incorporation of such Borrower, pursuant to an
Applicable Treaty (assuming all relevant forms have been duly completed
and any necessary direction made).
"ASSOCIATED COSTS RATE" means, in relation to each Advance or Unpaid Sum,
the percentage rate from time to time determined by the Agent in
accordance with Schedule 11 (Associated Costs Rate).
"AUTHORISED SIGNATORY" means, in relation to an Obligor or proposed
Obligor, any person who is duly authorised (in such manner as may be
reasonably acceptable to the Agent) to sign, seal or execute documents on
behalf of such Obligor and to take such action as is required of an
Authorised Signatory under the Finance Documents and in respect of whom
the Agent has received a certificate signed by a director or another
Authorised Signatory of such Obligor or proposed Obligor setting out the
name and signature of such person and confirming such person's authority
to act.
"AVAILABLE CASH" means cash from time to time, standing to the credit of
the Acquisition Expenditure Account in the name of the Borrower.
"AVAILABLE COMMITMENT" means, in relation to a Bank at any time and save
as otherwise provided herein, its Commitment at such time LESS the
aggregate of its share of the Sterling Amount of the Advances which are
then outstanding.
"AVAILABLE FACILITY" means, at any time, the aggregate amount of the
Available Commitments adjusted, in the case of any proposed utilisation,
so as to take into account any reduction in the Commitment of a Bank on
or before the proposed Utilisation Date relating to such utilisation.
"AVAILABILITY PERIOD" means the period from the date hereof to and
including the earlier of (a) five days from the date hereof and (b) the
first Business Day on which the Available Commitment of each of the Banks
is zero.
"BANK" means any financial institution:
(a) named in Schedule 1 (The Banks); or
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<PAGE>
(b) which has become a party hereto in accordance with the provisions
of Clause 32.4 (Assignments by Banks) or 32.5 (Transfers by
Banks),
and which has not ceased to be a party hereto in accordance with the
terms hereof.
"BORROWER" means the Original Borrower and each Additional Borrower,
PROVIDED THAT such company has not been released from its rights and
obligations hereunder in accordance with Clause 33.3 (Resignation of a
Borrower).
"BORROWER ACCESSION MEMORANDUM" means a memorandum substantially in the
form set out in Schedule 6 (Form of Borrower Accession Memorandum).
"BUDGET" means, in relation to the Group and the period starting no later
than the date of this Agreement and ending 30 September 2004, the
Business Plan, and in relation to each successive twelve (12) month
period thereafter:
(a) a projected balance sheet;
(b) a projected profit and loss account;
(c) a projected cash flow statement; and
(d) a projected covenant calculation relating to each financial
undertaking contained in Clause 19.1 (Financial Covenants).
"BUSINESS" means the provision of healthcare services to the community
and NHS Trust falling into the following divisions:
(a) the supply of nurses and carers to the NHS local authorities,
private nursing homes, industry and private individuals;
(b) the supply of ostomy and urology products; and
(c) the supply of oxygen cylinders and concentrators.
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
banks are open for business generally in London.
"BUSINESS PLAN" means the business plan for the Group and TW US Strategy
Paper describing the nature and extent of, and prospects for the Group's
business and operations, dated on or about the date of this Agreement and
prepared by the Parent.
"CASH EQUIVALENT INVESTMENTS" means:
(a) debt securities denominated in (i) US Dollars or (ii) euro or
Sterling ("OTHER CURRENCY") issued by the United States of
America or the United Kingdom ("UK") or any country which is a
member of the European Union whose indebtedness is rated AA or
better by Standard & Poor's Corporation which are (in each case)
not convertible into any other form of security;
- 3 -
<PAGE>
(b) debt securities denominated in US Dollars or Other Currency which
are not convertible into any other form of security, rated P-1
(Moody's Investor Services Inc.) or A-1 (Standard & Poor's
Corporation) and not issued or guaranteed by any member of the
Group;
(c) certificates of deposit denominated in US Dollars or Other
Currency issued by, and sterling acceptances by, banking
institutions authorised under applicable UK legislation which at
the time of making such issue or acceptances, have outstanding
debt securities rated as provided in paragraph (b) above; and
(d) such other securities (if any) as are approved as such in writing
by the Agent
PROVIDED THAT any such debt securities, certificates of deposit,
acceptances and other securities referred to in paragraphs (a) - (d)
above shall only constitute Cash Equivalent Investments if they have a
maturity of six months or less or (if they have a maturity of longer than
six months) they do not have a fixed interest rate/coupon.
"CAPITAL EXPENDITURE" shall have the meaning given to such term in Clause
19.3 (Financial Definitions).
"CASH FLOW" shall have the meaning given to such term in Clause 19.3
(Financial Definitions).
"CASH PAID MARGIN" means all amounts of interest accrued on the Advance
which is paid in cash pursuant to Clause 5.3 (Cash Paid Interest).
"CASH PAID MARGIN" means three point five per cent. (3.5%) per annum.
"CHANGE OF CONTROL" means the occurrence of the following event or
circumstances:
(a) any person or group of connected persons which does not at the
date hereof have control of the Parent or any holding company of
the Parent acquires such control (for the purposes of this
paragraph "connected person" shall be construed in accordance
with Section 839 of the Income and Corporation Taxes Act 1988);
or
(b) the persons listed in Clause 16.20 (Control of the Parent) ceases
to have control of the Parent.
"CLOSING CERTIFICATE" means the closing certificate substantially in the
form set out in Schedule 11 (Form of Closing Certificate).
"COMMITMENT" means, in relation to a Bank at any time, the aggregate of
its Term Commitment and its Revolving Commitment.
"COMMITMENT" means, in relation to a Bank at any time and save as
otherwise provided herein, the amount set opposite its name under the
heading "TERM A COMMITMENT" in Schedule 1 (The Banks).
- 4 -
<PAGE>
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
set out in Schedule 5 (Form of Compliance Certificate).
"CONFIDENTIALITY UNDERTAKING" means a confidentiality undertaking in the
standard form from time to time of the LMA or in such other form as may
be agreed between the Parent and the Agent.
"DEBENTURE" means a debenture in the agreed form executed or to be
executed in favour of the Security Agent.
"DISPUTE" means any dispute referred to in Clause 41 (Jurisdiction).
"DORMANT SUBSIDIARY" means, on any given date, a Group company
(a) which has been dormant within the meaning of section 250(3) of
the Act for the period of 12 months ending on that date (or, if a
shorter period, for the period from the date of its incorporation
to that date) and;
(b) the value of whose assets does not exceed in aggregate
(Pounds)10,000.
"DUE DILIGENCE REPORT" means the preliminary legal due diligence report
in relation to the Group dated 16 December 1999, together with the
preliminary report dated 25 July 1999.
"EARN OUT" means any earn out element payable to vendors in relation to
acquisitions as permitted under the Senior Credit Agreement.
"ENCUMBRANCE" means (a) a mortgage, charge, pledge, lien or other
encumbrance securing any obligation of any person, (b) any arrangement
under which money or claims to, or the benefit of, a bank or other
account may be applied, set off or made subject to a combination of
accounts so as to effect discharge of any sum owed or payable to any
person or (c) any other type of preferential arrangement (including any
title transfer and retention arrangement) the effect of which is to give
a creditor a preferential position in relation to any asset of a person
on any insolvency proceeding of that person.
"ENVIRONMENTAL CLAIM" means any claim, proceedings or official
investigation by any person pursuant to any Environmental Law.
"ENVIRONMENTAL LAW" means any applicable law in any jurisdiction in which
any member of the Group conducts business giving rise to legal
obligations or liability relating to the pollution or protection of the
environment or harm to or the protection of human health or the health of
animals or plants.
"ENVIRONMENTAL PERMITS" means any permit, licence, consent, approval and
other authorisation and the filing of any notification, report or
assessment required under any Environmental Law for the operation of the
business of any member of the Group conducted on or from the properties
owned or used by the relevant member of the Group.
- 5 -
<PAGE>
"EVENT OF DEFAULT" means any circumstance described as such in Clause 21
(Events of Default).
"EXCESS CASH FLOW" has the meaning given to such term in Clause 19.3
(Financial Definitions).
"EXCLUDED PROCEEDS" means (a) aggregate Net Disposal Proceeds received in
respect of sales or other transfers of assets or revenues where the
proceeds of each such asset disposal do not exceed (pounds)50,000 (or its
equivalent) and up to but not more than (pounds sterling)100,000 (or its
equivalent) in aggregate in any period of twelve months (the "PERMITTED
RETENTION") and (b) any insurance recovery where the proceeds arising out
of the same are to be applied and are applied in acquiring replacement
assets for the assets damaged or destroyed (or in reinstating the
relevant damaged assets) or meeting any liability in respect of which
such moneys are received within 180 days of receipt PROVIDED THAT such
proceeds are deposited into and held in the Holding Account until such
time that a replacement of such asset is required or such reinstatement
is made or such liability is met.
"EXISTING TW US LOAN " means the existing intra-group loans between TW US
and the Original Borrower in the amount of approximately
(pounds sterling)40,000,000.
"FACILITY" means the term loan facility granted to the Borrowers under
Clause 2.1 (Grant of the Facility) of this Agreement.
"FACILITY OFFICE" means, in relation to the Agent, each office identified
with its signature below or such other office(s) as it may select by
notice and, in relation to any Bank, each office notified by it to the
Agent in writing prior to the date hereof (or, in the case of a
Transferee, at the end of the Transfer Certificate to which it is a party
as Transferee) or such other office(s) as it may from time to time select
by notice to the Agent.
"FINAL MATURITY DATE" means the eighth anniversary of the date hereof.
"FINANCE DOCUMENTS" means this Agreement, any Borrower Accession
Memorandum or Guarantor Accession Memorandum, the fee letters referred to
in Clauses 23.2 (Arrangement Fee), 23.3 (Agency Fee) and 23.4
(Underwriting Fee), the Security Documents, the Intercreditor
Arrangements, Mezzanine Warrant Instrument, the Hedging Agreements
entered into by a Bank (but not any other financial institution) and any
documents evidencing the terms of any other agreement or document that
may be entered into or executed pursuant to any of the foregoing by any
Obligors and any other document which is designated a "FINANCE DOCUMENT"
in writing signed by the Parent and the Agent.
"FINANCE LEASE" means a contract treated as a finance lease in accordance
with UK GAAP.
"FINANCE PARTIES" means the Agent, the Security Agent, the Arranger, the
Underwriters and the Banks and any Hedge Counterparties which are Banks.
- 6 -
<PAGE>
"FINANCIAL INDEBTEDNESS" means any indebtedness in respect of or arising
under or in connection with:
(a) moneys borrowed (including overdrafts); or
(b) indebtedness under any debenture, bond (other than a performance
bond issued in respect of the trade obligations), note or loan
stock or other similar instrument; or
(c) any acceptance or documentary credit (other than in respect of
trade obligations); or
(d) receivables sold or discounted (otherwise than on a non-recourse
basis); or
(e) the acquisition cost of any asset to the extent payable after the
time of acquisition or possession by the person liable as
principal obligor for the payment thereof where the deferred
payment is arranged primarily as a method of raising finance or
financing or refinancing the acquisition of the asset acquired
(excluding, for the avoidance of doubt, trade credit with a term
of 180 days or less on customary terms); or
(f) the sale price of any asset to the extent paid before the time of
sale or delivery by the person liable to effect such sale or
delivery where the advance payment is arranged primarily as a
method of raising finance or financing or refinancing the
manufacture, assembly, acquisition or holding of the asset to be
sold (excluding, for the avoidance of doubt, trade credit with a
term of 180 days or less on customary terms); or
(g) Finance Leases, credit sale or conditional sale agreements
(whether in respect of land, buildings, plant, machinery,
equipment or otherwise) entered into primarily as a method of
raising finance or financing or refinancing the acquisition of
the relevant asset (but not including liabilities under operating
leases); or
(h) the net amount from time to time due pursuant to any agreement
for managing or hedging currency and/or interest rate and/or
commodity risk whether by way of forward exchange, cap, collar,
swap, forward rate agreement or otherwise or the net amount from
time to time due under any other derivative contract; or
(i) the amount payable under any put option or other arrangement
(excluding, until exercisable, the warrants issued under the
Warrant Documents) whereby any member of the Group is liable, at
the request of a third party, to purchase share capital or other
securities issued by it or any other member of the Group prior to
the Final Maturity Date; or
- 7 -
<PAGE>
(j) the amount payable by any member of the Group in respect of the
redemption of any share capital or other securities issued by it
prior to the Final Maturity Date; or
(k) the amount of any guarantee or indemnity of any person in respect
of any indebtedness falling within paragraphs (a) to (j)
inclusive of this definition,
and so that, where the amount of Financial Indebtedness falls to be
calculated, no amount shall be taken into account more than once in the
same calculation.
For the avoidance of doubt Financial Indebtedness shall not include
indebtedness incurred in relation to any Earn Outs payable at the date
hereof.
"FINANCIAL MODEL" means the financial model in the agreed form prepared
by PricewaterhouseCoopers.
"FINANCIAL QUARTER" shall have the meaning ascribed to it in Clause 19.3
(Financial Definitions).
"FLOTATION" means a successful application being made for any part of the
share capital of the Group or any holding company of the Parent to be
listed on any stock exchange or the grant of permission to deal in any
such share capital on any recognised exchange.
"FUNDS FLOW STATEMENT" means the chart and memorandum in the agreed form
showing the payments to be made by each member of the Group and TW US at
or immediately prior to the date hereof for the purposes of repaying the
Existing TW US Loan.
"GROUP" means the Parent and its subsidiaries for the time being.
"GROUP ASSETS" means all the assets, properties and business of the Group
taken as a whole.
"GROUP REVENUES" means all revenues of the Parent.
"GROUP STRUCTURE CHART" means the group structure chart in agreed form
showing:
(a) all members of the Group;
(b) any person in which any Group member has an interest in the
issued share capital or equivalent ownership interest of such
person;
(c) the jurisdiction of incorporation or establishment of each person
within (a) above; and
(d) that all members of the Group are wholly-owned subsidiaries of
the Parent.
"GUARANTOR ACCESSION MEMORANDUM" means a memorandum substantially in the
form set out in Schedule 7 (Form of Guarantor Accession Memorandum).
- 8 -
<PAGE>
"GUARANTORS" means each of the Original Guarantors and each Additional
Guarantor.
"HEDGE COUNTERPARTY" means a Bank which has become a party to the
Intercreditor Arrangements as a Hedge Counterparty in accordance with the
provisions thereof.
"HEDGING AGREEMENTS" means each of the agreements entered into or to be
entered into between the Group member(s) approved by the Agent and a
Hedge Counterparty for the purpose of hedging interest rate liabilities
in accordance with Clause 20.32 (Hedging).
"HOLDING ACCOUNT" means the account specified in a letter between the
Parent and the Agent which account is held by the Original Borrower with
the Security Agent (or any other interest bearing account held in England
(or any other jurisdiction agreed to by the Security Agent (acting
reasonably)) with the Security Agent by a Group member which is opened
after the date hereof and after receipt by the Agent of written
confirmation from the Parent that such account is to be a "Holding
Account") (as the same may be redesignated, substituted or replaced from
time to time) which is pledged, charged or assigned to the Security Agent
pursuant to the Security Documents to secure all amounts due under the
Finance Documents and from which the only withdrawals which may be made
are to:
(a) (i) in the case of any disposal proceeds deposited in such
account, reinvest in assets which are similar to the assets to
which such disposal proceeds relate or (ii) in the case of
insurance proceeds deposited in such account, repair, replace or
reinstate the assets to which such insurance proceeds relate or
to meet a third party claim or (iii) in the case of acquisition
recoveries deposited in such account, discharge the liability,
charge or claim to which such acquisition recoveries relate or to
be applied in repair, replacement or reinstatement of assets
which are a total loss or damaged as a result of the event or
circumstance giving rise to such acquisition recoveries PROVIDED
THAT, in the case of any withdrawal, such withdrawal is made as
soon as reasonably practicable and in any event within 90 days
(or such longer period agreed by the Agent) of receipt of such
disposal proceeds or, as the case may be, acquisition recoveries
or within 180 days (or such longer period agreed by the Agent) of
receipt of such insurance proceeds and provided further the
Parent has provided a certificate to the Security Agent
requesting withdrawal of such proceeds (setting out in reasonable
detail how such withdrawal shall be applied); or
(b) repay amounts due to the Finance Parties under this Agreement,
and the interest rate on the deposit in such account to be the rate
applicable to corporate customers of a similar standing to such Group
member in respect of deposits in the same currency of similar amounts and
similar duration.
"HYPERION" means Hyperion Capital.
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<PAGE>
"INDEBTEDNESS FOR BORROWED MONEY" means any indebtedness in respect of or
arising under or in connection with Financial Indebtedness (save for
Financial Indebtedness falling within paragraph (h) of the definition of
"FINANCIAL INDEBTEDNESS").
"INFORMATION MEMORANDUM" means the document approved by the Parent
concerning the Group which, at their request and on their behalf, has
been prepared in relation to this transaction and distributed by the
Arranger to selected banks.
"INITIAL INVESTOR" means Triumph Partners III, L.P. and each of its
permitted successors, assigns or transferees.
"INSTRUCTING GROUP" means:
(a) whilst there are no Outstandings, a Bank or Banks whose
Commitments amount (or, if each Bank's Commitment has been
reduced to zero, did immediately before such reduction to zero,
amount) in aggregate to more than sixty-six and two thirds per
cent. of the Total Commitments; and
(b) whilst there are Outstandings, a Bank or Banks to whom in
aggregate more than sixty-six and two thirds per cent. of the
Sterling Amount of the Outstandings is owed.
"INTELLECTUAL PROPERTY" means any and all interests in any part of the
world in or relating to registered and unregistered trade marks and
service marks, domain names, patents, registered designs, trade names,
business names, titles, registered or unregistered copyrights in
published and unpublished works, unregistered designs, inventions
registered or unregistered, data base rights, know-how, any other
intellectual property rights and any applications for any of the
foregoing and any goodwill therein.
"INTERCREDITOR ARRANGEMENTS" means the intercreditor deed referred to in
Schedule 3 Part 1 paragraph E(3) (Conditions Precedent).
"INTEREST PERIOD" means, save as otherwise provided herein:
(a) any of those periods mentioned in Clause 4.1 (Interest Periods);
and
(b) in relation to an Unpaid Sum, any of those periods mentioned in
Clause 25.1 (Default Interest Periods).
"INTRA-GROUP BORROWERS" means the intra-group borrowers named in the
Intra-Group Loan.
"INTRA-GROUP LOAN" means any loan between members of the Group evidenced
by a loan agreement in the agreed form.
"IP LICENCE" means the licence or agreement pursuant to or under which
any Intellectual Property is held, used or exploited by any Group member.
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<PAGE>
"JOINT VENTURE" means any joint venture entity, whether a company,
unincorporated firm, undertaking, association, joint venture or
partnership or any other entity.
"LEGAL OPINIONS" means the Legal Opinions delivered to the Agent in
accordance with Clause 2.3 (Conditions Precedent), Clause 33.2 (Borrower
Conditions Precedent) and Clause 34.2 (Guarantor Conditions Precedent).
"LEGAL RESERVATIONS" means the principle that equitable remedies may be
granted or refused at the discretion of a court, the limitation of
enforcement by laws relating to bankruptcy, insolvency, liquidation,
reorganisation, court schemes, moratoria, administration and other laws
generally affecting the rights of creditors, the time barring of claims
under the Limitation Acts, the possibility that an undertaking to assume
liability for or indemnify a person against non-payment of UK stamp duty
may be void and defences of set-off or counterclaim, rules against
contractual penalties and similar principles which are set out in the
Legal Opinions as qualifications as to matters of law.
"LIBOR" means, in relation to any amount owed by an Obligor hereunder on
which interest for a given period is to accrue:
(a) the percentage rate per annum equal to the offered quotation
which appears on the page of the Telerate Screen which displays
an average British Bankers Association Interest Settlement Rate
for sterling (being currently "3750") for such period at or about
11.00 a.m. on the Quotation Date for such period or, if such page
or such service shall cease to be available, such other page or
such other service for the purpose of displaying an average
British Bankers Association Interest Settlement Rate for such
currency as the Agent, after consultation with the Banks and the
Parent, shall select; or
(b) if no quotation for the relevant currency and the relevant period
is displayed and the Agent has not selected an alternative
service on which a quotation is displayed, the arithmetic mean
(rounded upwards to four decimal places) of the rates (as
notified to the Agent) at which each of the Reference Banks was
offering to prime banks in the London Interbank Market deposits
in the currency of such amount and for such period at or about
11.00 a.m. on the Quotation Date for such period.
"LMA" means the Loan Market Association.
"MARKET REPORT" means the market report by Cambridge Pharma Consultancy
dated November 1999 in relation to the Group in agreed form.
"MANAGEMENT OPTIONS" means the seven (7) day option for management to
invest in the Original Borrower pursuant to the Securities Purchase
Agreement.
"MANDATORY PREPAYMENT ACCOUNT" means an interest bearing account held in
England by the Original Borrower with the Security Agent and identified
in a letter between the Original Borrower and the Agent as a Mandatory
Prepayment Account (as
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<PAGE>
the same may be redesignated, substituted or replaced from time to time)
which is pledged, charged or assigned to the Security Agent pursuant to
the Security Documents to secure amounts due under the Finance Documents
and from which no withdrawals may be made by any Group members and the
interest rate on the deposit in such account to be the rate applicable to
corporate customers of a similar standing to such Group member in respect
of deposits in the same currency of similar amounts and similar duration.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse effect on the
assets, property, business, financial condition or the results of
operations of the Group taken as a whole or (b) a material adverse effect
on the ability of any Obligor to comply with any of its payment
obligations (and its obligations under Clause 22.1 (Financial Covenants))
under the Finance Documents.
"MATERIAL SUBSIDIARY" means the Obligors and each other member of the
Group whose assets exceed 5% of the total assets of the Group and whose
profit exceed 5% of the gross profit of the Group by reference to the
most recently delivered audited accounts.
"MEZZANINE WARRANT INSTRUMENT" means the mezzanine warrant instrument
executed as a deed dated of even date hereof by the Original Borrower and
any other document or agreement entered into or executed in connection
with such instrument or the rights set out therein.
"MIRROR NOTES" means the mirror loan notes constituted by the Securities
Purchase Agreement.
"MIRROR PIK NOTES" means promissory loan notes constituted by the
Securities Purchase Agreement issued in lieu of the interest due on the
Mirror Notes.
"MIRROR NOTE DOCUMENTS" means the Mirror Notes and the Securities
Purchase Agreement in agreed form and any other documents entered into
pursuant thereto.
"NET DISPOSAL PROCEEDS" means the gross total proceeds (including any
amounts received in repayment of intercompany debt) received by Group
members in cash from all disposals of any revenues or fixed assets of the
Group (other than Excluded Proceeds) less:
(a) reasonable out of pocket expenses of the Group incurred due to
such disposal;
(b) restructuring and other costs incurred by the Group in connection
with any such disposal to the extent not included in (a) above
provided that such costs are in an amount acceptable to an
Instructing Group (acting reasonably);
(c) the VAT or similar tax paid or payable by any member of the Group
due to such disposal; and
(d) any income, capital gains or other taxes incurred and required to
be paid by any member of the Group in connection with such
disposal as reasonably
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determined in good faith by such member of the Group on the basis
of the existing tax rates applicable to the gain (if any) and
after taking into account all available credits, deductions and
allowances.
"NOTICE OF DRAWDOWN" means a notice substantially in the form set out in
Schedule 4 (Notice of Drawdown).
"OBLIGORS" means the Parent, the Borrower and the Guarantors.
"ORIGINAL FINANCIAL STATEMENT" means:
(a) in relation to the Parent, its audited consolidated financial
statements for its financial year ended 30 September 1999; and
(b) in relation to each Obligor other than the Parent, its audited
financial statements for its financial year ended 30 September
1999; and
(c) in relation to any Additional Obligor, its audited financial
statements delivered pursuant to Schedule 8 (Additional
Conditions Precedent).
"ORIGINAL OBLIGORS" means the Original Borrower and the Original
Guarantors.
"ORIGINAL SENIOR SUBORDINATED NOTE AMOUNT" means the actual issued
amount (up to (pounds sterling)22,600,000) pursuant to the Securities
Purchase Agreement being the aggregate principal amount of the Senior
Subordinated Notes on issue but excluding any PIK Notes.
"ORIGINAL STERLING AMOUNT" means:
(d) in relation to an Advance:
(i) the amount specified as such in the Notice of Drawdown
relating thereto, as the same may be reduced pursuant to
Clause 3.3 (Reduction of Available Commitment);
(ii) where such Advance came into existence upon the
consolidation of two or more Advances, the aggregate of the
Sterling Amounts of the Advances so consolidated; and
(iii) where such Advance came into existence upon the division of
a Advance, the amount specified as such by the relevant
Borrower pursuant to Clause 4.4 (Division of Advances).
"OUTSTANDINGS" means, at any time, the aggregate of the Sterling Amounts
of each outstanding Advance.
"PARTY" means a party to this Agreement.
"PAYMENT BLOCKAGE EVENT" means:
(a) the occurrence of any Event of Default which is continuing; or
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(b) any event or circumstance which would become (with the passage of
time, the giving of notice in each case as contemplated or
required under Clause 21 (Events of Default)) an Event of Default
PROVIDED THAT in the case of any event or circumstance falling
within this paragraph (b) such Payment Blockage Event shall not
be capable of "continuing" for more than 30 days with respect to
a particular event or circumstance.
"PERMITTED DISPOSALS" means:
(a) disposals on arm's length terms of stock in trade or expenditure
of cash by a Group member in its ordinary course of trade;
(b) disposals:
(i) by an Obligor to another Obligor (other than the Parent or
the Original Borrower) which is party to a legally valid,
binding and (subject to the Legal Reservations) enforceable
Security Document which creates a first priority Encumbrance
over the assets and/or revenue disposed of; or
(ii) by a member of the Group which is not an Obligor to another
member of the Group (other than to the Parent or the
Original Borrower) PROVIDED THAT, in the case of transfer to
an Obligor, such assets and/or revenue are not subject to
any material liabilities or Encumbrances;
(c) disposals for cash on arm's length terms of any surplus or
obsolete or worn-out assets not required for the efficient
operation of the business of the Group by any Group member;
(d) disposals of Cash Equivalent Investments on arm's length terms;
and
(e) disposals on arm's length terms of assets in return for other
assets of comparable or greater value;
(f) disposals on arm's length terms of assets the proceeds of which
are to be re-invested in similar or like assets within a period
of 180 days from the date of receipt of such proceeds by the
relevant member of the Group;
(g) disposals of cash where such disposal is not prohibited by the
Finance Documents;
(h) any other disposal PROVIDED THAT the consideration (both cash and
non-cash) received for such disposal(s) does not exceed in
aggregate (pounds sterling)250,000 in any period of twelve
months.
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<PAGE>
"PERMITTED ENCUMBRANCE" means:
(a)
(i) any netting or set-off arrangement (or any Encumbrance over
a credit balance in a bank account which is entered into in
order to effect such an arrangement) entered into by any
member of the Group in the normal course of its banking
arrangements;
(ii) any netting or set-off arrangement under a Hedging Agreement
where the obligations of other parties thereunder are
calculated by reference to net exposure thereunder (but not
any netting or set-off relating to such Hedging Agreement in
respect of cash collateral or any other Encumbrance except
as otherwise permitted hereunder);
(b) any title transfer or retention of title arrangement entered into
by any member of the Group in the normal course of its trading
activities on the counterparty's standard or usual terms;
(c) any lien arising by operation of law and in the normal course of
business PROVIDED THAT such lien is discharged within thirty days
of arising;
(d) any Encumbrance arising under or evidenced by a Security
Document;
(e) any Encumbrance entered into pursuant to this Agreement;
(f) any Encumbrance arising under the Mezzanine Credit Agreement;
(g) any lien in favour of a bank over goods and documents of title to
goods arising in the ordinary course of documentary credit
transactions entered into in the ordinary course of trade; and
(h) any Encumbrance constituted by a Finance Lease which does not
exceed (pounds sterling)50,000 for each transaction and subject
to an aggregate amount which does not at any time exceed (pounds
sterling)500,000;
(i) in addition to any Encumbrances subsisting pursuant to paragraph
(a) to (h) above any other Encumbrances PROVIDED THAT the amount
secured by such Encumbrances referred to in this paragraph (i)
does not at any time exceed (pounds sterling)200,000.
"PERMITTED INDEBTEDNESS" means:
(a) any Financial Indebtedness arising under or permitted pursuant to
the Finance Documents;
(b) any Financial Indebtedness arising under the Senior Credit
Agreement;
(c) any Financial Indebtedness arising under the Senior Subordinated
Note Documents or the Mirror Note Documents;
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<PAGE>
(d) any Financial Indebtedness arising under Permitted Transactions;
(e) any Financial Indebtedness arising under Permitted Treasury
Transactions;
(f) any Financial Indebtedness PROVIDED THAT such Financial
Indebtedness is subordinated on terms acceptable to an
Instructing Group);
(g) any Financial Indebtedness arising under Finance Leases;
(h) any Financial Indebtedness under unsecured overdraft facilities
in an amount, when aggregated with the amount of all indebtedness
incurred under (i) below, not exceeding (pounds sterling)100,000
(or its equivalent) at any time;
(i) any other Financial Indebtedness which, when aggregated with all
Financial Indebtedness incurred under (h) above, does not exceed
(pounds sterling)100,000 (or its equivalent) at any time.
"PERMITTED TRANSACTIONS" means:
(a) Intra-Group Loans PROVIDED THAT such loans are:
(i) trade credits or guarantees or indemnities granted in the
ordinary course of trading and upon terms usual for trade;
or
(ii) loans by a member of the Group which is not an Obligor to
another member of the Group which is not an Obligor; or
(iii) loans by an Obligor to the Original Borrower to fund the
obligations of the Original Borrower under the Finance
Documents, the Mezzanine Documents or, as the case may be,
the Mirror Notes provided that in each case the proceeds
of such Intra Group Loan are immediately applied in
satisfaction of such obligation(s);
(iv) loans by an Obligor to another Obligor (other than the
Parent or the Original Borrower);
(v) loans by an Obligor to the Parent to fund (1) tax
liabilities and (2) administration costs provided that the
aggregate amount of such loans outstanding do not exceed
(pounds sterling)100,000 per annum; and
(vi) loans by any Obligor to any of its employees Provided that
the aggregate amount of such loans outstanding at anytime
does not exceed (pounds sterling)250,000.
(b) payments permitted pursuant to Clause 20.22 (Dividends,
Distributions and Interest).
"PERMITTED TREASURY TRANSACTIONS" means the Treasury Transactions entered
into in accordance with Clause 20.32 (Hedging).
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<PAGE>
"PIK NOTES" means the promissory loan notes constituted by the Securities
Purchase Agreement issued in lieu of interest on the Senior Subordinated
Notes.
"POTENTIAL EVENT OF DEFAULT" means any event which would become (with the
passage of time, the giving of notice or any combination thereof) an
Event of Default PROVIDED THAT any such event which requires the
satisfaction of any conditions as to materiality before it becomes an
Event of Default shall not be a Potential Event of Default until that
condition is satisfied.
"PROPORTION" means, in relation to a Bank:
(a) whilst no Advance is outstanding, the proportion borne by its
Commitment to the Total Commitments (or, if the Total Commitments
are then zero, by its Commitment to the Total Commitments
immediately prior to their reduction to zero); or
(b) whilst at least one Advance is outstanding, the proportion borne
by its share of the Sterling Amount of the Outstandings to the
Sterling Amount of the Outstandings.
"QUALIFYING BANK" means an Applicable Treaty Bank or a Bank acting out of
a Facility Office to which payments pursuant to this Agreement by a
Borrower may be made free and clear of any deduction or withholding on
account of any taxes of, or imposed by, the Relevant Jurisdiction of such
Borrower.
"QUOTATION DATE" means, in relation to any period for which an interest
rate is to be determined hereunder, the day on which quotations would
ordinarily be given by prime banks in the London Interbank Market for
deposits in the currency in relation to which such rate is to be
determined for delivery on the first day of that period, PROVIDED THAT,
if, for any such period, quotations would ordinarily be given on more
than one date, the Quotation Date for that period shall be the last of
those dates.
"REFERENCE BANKS" means the principal London offices of Barclays Bank
PLC, Paribas and such Banks as may be appointed as such by the Agent
after consultation with the Parent.
"RELIANCE LETTER" means any letter in the agreed form from a provider of
a Report and which is addressed to the Agent (on behalf of the Finance
Parties) pursuant to which the provider of the Report agrees that the
Finance Parties are entitled to rely on such Report.
"REPAYMENT DATE" means the date falling eight (8) years after the date
hereof.
"REPEATED REPRESENTATIONS" means:
(a) on the date hereof and on the first date on which an Advance is
made under the Facilities, all of the representations set out in
Clause 16 (Representations); and
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<PAGE>
(b) at any other time, each of the representations set out in:
(i) Clause 16.1 (Status) to Clause 16.10 (No Immunity) other
than Clauses 16.3 (Execution and Power), 16.7 (Validity and
Admissibility in Evidence) and 16.4.2 (No Material
Proceedings); and
(ii) Clause 16.14 (No Material Defaults) to Clause 16.32 (Year
2000 Compliance) other than Clauses 16.15 (Information),
16.16 (Information Memorandum), 16.23 (Consents and
Approvals).
"REPORTS" means the Accountants Report, the Due Diligence Report and the
Market Report.
"RESIGNATION NOTICE" means a notice substantially in the form set out in
Schedule 9 (Form of Resignation Notice).
"REVISED FINANCIAL PROJECTIONS" means the financial projections of the
Group and each Group member on a consolidated and consolidating basis
prepared on a pro forma basis assuming that the proposed acquisition was
completed at the start of the twelve month period ending on the next
Quarter Date falling after the proposed Purchase Date.
"ROLLED-UP MARGIN" means three point five per cent. (3.5%) per annum.
"SECURITIES PURCHASE AGREEMENT" means the loan note instrument made by
the Parent constituting up to (pounds sterling)22,600,000 senior
subordinated loan notes, 9.375% due 2007 and by the Original Borrower
constituting up to (pounds sterling)22,600,000 senior subordinated mirror
notes, 9.375% due 2007.
"SECURITY" means the security from time to time constituted by or
pursuant to the Security Documents.
"SECURITY DOCUMENTS" means each of the Debentures by each Obligor
together with any other document entered into by any member of the Group
creating or evidencing security for all or any part of the obligations of
the Obligors or any of them under any of the Finance Documents whether by
way of personal covenant, charge, security interest, mortgage, pledge or
otherwise and as referred to in Part I Section E of Schedule 3
(Conditions Precedent).
"SENIOR FACILITY" means the senior loan facility made available to the
Borrower (as defined therein) on the terms and conditions of the Senior
Credit Agreement.
"SENIOR CREDIT AGREEMENT" means the senior credit agreement dated of even
date herewith and made between Transworld Healthcare UK, Limited as
borrower and the banks and financial institutions named therein as Banks,
setting out the terms and conditions on which the Senior Outstandings
will be made available.
"SENIOR FINANCE DOCUMENTS" means the Senior Credit Agreement, any
guarantor accession memorandum under the Senior Credit Agreement, the
Security Documents
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<PAGE>
which provide security to the Senior Banks, the Intercreditor
Arrangements, the fee letters referred to in Clause 23.2 (Arrangement
Fee) of the Senior Credit Agreement and any documents evidencing the
terms of any other agreement or document that may be entered into or
executed pursuant to any of the foregoing by the Obligors or any of them
and any other document which is designated a "SENIOR FINANCE DOCUMENT" or
"FINANCE DOCUMENT" in writing signed by the Parent and the Senior Banks.
"SENIOR BANKS" means the "BANKS" as defined in the Senior Credit
Agreement.
"SENIOR OUTSTANDINGS" means the loan in the maximum principal amount of
(pounds sterling)45,500,000 to be made available by the Senior Banks
under the Senior Credit Agreement, the rights in relation to which are
subject to the provisions of the Intercreditor Arrangements.
"SENIOR SUBORDINATED NOTES" means the senior subordinated loan notes
constituted by the Securities Purchase Agreement.
"SENIOR SUBORDINATED NOTE DOCUMENTS" means the Senior Subordinated Notes
and the Securities Purchase Agreement in agreed form and any other
documents entered into pursuant thereto.
"SENIOR SUBORDINATED NOTE HOLDERS" means the holders of any Senior
Subordinated Notes from time to time.
"SERVICE CONTRACTS" means the deed of restrictive covenant in agreed form
entered into between the Original Borrower and Timothy Aitken, Sarah
Eames and Wayne Palladino.
"SOLVENCY CERTIFICATE" means each of the solvency certificates certified
by the Chief Finance Officer of the Parent in relation to the solvency of
the Parent and the Original Borrower and certified by the Chief Finance
Officer of TW US in relation to the solvency of TW US.
"STERLING AMOUNT" means:
(a) in relation to an Advance, its Original Sterling Amount as
reduced by the proportion (if any) of such Advance which has been
repaid; and
(b) in relation to the Outstandings, the aggregate of the Sterling
Amounts of each outstanding Advance.
"STRATEGIC SALE" means the sale, liquidation or disposition or (including
by way of merger or consolidation, regardless of whether the Parent or
the Original Borrower are the surviving or resulting corporation) of
stock or assets accounting for ninety per cent. (90%) or more of the
total value of all Group Assets or generating ninety per cent. (90%) or
more of all Group Resources.
"SYNDICATION DATE" means the day specified by the Arranger as the date on
which primary syndication of the Facilities is completed.
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<PAGE>
"TERM" means, save as otherwise provided herein in relation to any
Advance, the period for which such Advance is borrowed, as specified in
the Notice of Drawdown relating thereto.
"TOTAL COMMITMENTS" means, at any time, the aggregate of the Banks'
Commitments.
"TRANSFER CERTIFICATE" means a certificate substantially in the form set
out in Schedule 2 (Form of Transfer Certificate) or the standard form
from time to time of the LMA Transfer Certificate (Par) signed by a Bank
and a Transferee under which:
(a) such Bank seeks to procure the transfer to such Transferee of all
or a part of such Bank's rights, benefits and obligations
hereunder upon and subject to the terms and conditions set out in
Clause 32.3 (Assignments and Transfers by Banks); and
(b) such Transferee undertakes to perform the obligations it will
assume as a result of delivery of such certificate to the Agent
as contemplated in Clause 32.5 (Transfers by Banks).
"TRANSFER DATE" means, in relation to any Transfer Certificate, the date
for the making of the transfer as specified in such Transfer Certificate.
"TRANSFEREE" means a person to which a Bank seeks to transfer all or part
of such Bank's rights, benefits and obligations under the Finance
Documents.
"TREATY ON EUROPEAN UNION" means the Treaty of Rome of 25 March 1957, as
amended by the Single European Act 1986 and the Maastricht Treaty (which
was signed at Maastricht on 7 February 1992 and came into force on 1
November 1993).
"TREASURY TRANSACTION" means any currency or interest purchase, cap or
collar agreement, forward rate agreements, interest rate or currency
future or option contract, foreign exchange or currency purchase or sale
agreement, interest rate swap, currency swap or combined interest rate
and currency swap agreement and any other similar agreement.
"TW US" means Transworld Healthcare, Inc., a company incorporated in the
state of New Jersey, United States of America.
"TW US STRATEGY PAPER" means the strategy paper prepared by TW US setting
out the business strategy of TW US.
"UNPAID SUM" means the unpaid balance of any of the sums referred to in
Clause 25.1 (Default Interest Periods).
"UK GAAP" means generally accepted accounting principles in the United
Kingdom.
"UTILISATION DATE" means, in relation to an Advance, the date on which it
is to be made.
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<PAGE>
"VOTING TRUST AGREEMENT" means the voting trust agreement dated on or
about the date hereof and made between the Parent, the Initial Investor,
the Original Borrower, TW US and the Trustee.
"WARRANT DOCUMENTS" means the Warrant Instrument and Mezzanine Warrant
Instrument.
"WARRANT INSTRUMENT" means the warrant instrument pursuant to which
warrants are to be issued to Senior Subordinated Noteholders pursuant to
the Securities Purchase Agreement executed as a deed dated of even date
herewith by the Original Borrower and any other document or agreement
entered into or executed in connection with such instrument or the rights
set out therein.
1.2 INTERPRETATION
Any reference in this Agreement to:
the "AGENT", any "ARRANGER", any "UNDERWRITER" the "SECURITY AGENT", any
"HEDGE COUNTERPARTY" or any "BANK" shall be construed so as to include it
and any subsequent successors and permitted transferees and assigns in
accordance with their respective interests;
a document is in "AGREED FORM" if it is initialled as such on or before
the date hereof for the purposes of identification by or on behalf of the
Parent and the Arranger or Agent or is executed on or before the date
hereof by the Parent and the Arranger or Agent or, if not so executed or
initialled, is in form and substance reasonably satisfactory to the
Agent;
"CONTINUING", in relation to an Event of Default, shall be construed as a
reference to an Event of Default which has not been waived in accordance
with the terms hereof or remedied and, in relation to a Potential Event
of Default, one which has not ceased to be a Potential Event of Default;
the "CONTROL" of a company or corporation shall be construed as:
(a) the power (whether by way of ownership of shares, proxy,
contract, agency, operation of law, or otherwise, and whether
direct or indirect) to:
(i) cast, or control the casting of, more than one-half of the
maximum number of votes that might be cast at a general
meeting of that company or corporation; or
(ii) appoint or remove all, or the majority, of the directors or
other equivalent officers of that company or corporation
(and the relevant person or persons shall be deemed to have
power to make such an appointment if:
(1) an individual cannot be appointed as a director or an
equivalent officer of that company or corporation
without the exercise by the
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relevant person or persons of such power in the
individual's favour; or
(2) an individual's appointment as a director or an
equivalent officer of that company or corporation
follows necessarily from the individual being a
director or other equivalent officer of any of the
relevant person or persons); or
(iii) give directions with respect to the management, operating
and/or financial policies of that company or corporation
which the directors or other equivalent officers of that
company or corporation are obliged to comply with; or
(b) the holding of more than one-half of the issued share capital of
that company or corporation (excluding any part of that issued
share capital that carries no right to participate beyond a
specified amount in a distribution of either profits or capital);
"DISPOSAL" shall be construed as any sale, lease, transfer, conveyance,
subparticipation, granting of derivative interests, assignment, licence,
sub-licence or other disposal (including, without limitation, any other
transaction or arrangement pursuant to which the economic or other
commercial benefit of the existing and/or remaining assets of the
relevant person is lost or materially diluted) and "DISPOSE" shall be
construed accordingly;
a "GUARANTEE" means any guarantee, bond, indemnity, or other legally
binding assurance against financial loss granted by one person in respect
of any indebtedness of another person, or any legally binding agreement
by one person to assume any indebtedness of (or any legally binding
arrangement by or under which indebtedness is assumed in respect of) any
other person and "GUARANTEED" shall be construed accordingly;
a "HOLDING COMPANY" of a company or corporation shall be construed as a
reference to any company or corporation of which the first-mentioned
company or corporation is a subsidiary;
"INDEBTEDNESS" shall be construed so as to include any obligation
(whether incurred as principal or as surety) for the payment or repayment
of money, whether present or future, actual or contingent;
"INSOLVENCY PROCEEDING" (a) means any proceeding by, against or in
respect of any company or corporation for its liquidation, bankruptcy,
winding-up, dissolution, reorganisation, moratorium or for the
appointment of a receiver, administrator, administrative receiver,
trustee or similar officer in respect of it or of all or a substantial
part of its assets, and (b) shall be construed so as to include any
equivalent or analogous proceedings under the law of the jurisdiction in
which such company or corporation is incorporated or any jurisdiction in
which such company or corporation carries on business;
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<PAGE>
a "LAW" shall be construed as any law (including common or customary
law), statute, constitution, decree, judgment, treaty, regulation,
directive, bye-law, order or any other legislative measure of any
government, supranational, local government, statutory or regulatory body
or court;
a "MONTH" is a reference to a period starting on one day in a calendar
month and ending on the numerically corresponding day in the next
succeeding calendar month save that:
(a) if any such numerically corresponding day is not a Business Day,
such period shall end on the immediately succeeding Business Day
to occur in that next succeeding calendar month or, if none, it
shall end on the immediately preceding Business Day; and
(b) if there is no numerically corresponding day in that next
succeeding calendar month, that period shall end on the last
Business Day in that next succeeding calendar month;
a "PERSON" shall be construed as a reference to any person, firm,
company, corporation, government, state or agency of a state or any
association or partnership (whether or not having separate legal
personality) of two or more of the foregoing;
"REPAY" (or any derivative form thereof) shall, subject to any contrary
indication, be construed to include "PREPAY" (or, as the case may be, the
corresponding derivative form thereof);
a "SUBSIDIARY" of a company or corporation shall be construed as a
reference to any company or corporation:
(a) which is controlled, directly or indirectly, by the
first-mentioned company or corporation;
(b) more than half the issued share capital of which is beneficially
owned, directly or indirectly, by the first-mentioned company or
corporation; or
(c) which is a subsidiary of another subsidiary of the
first-mentioned company or corporation
and, for these purposes, a company or corporation shall be treated as
being controlled by another if that other company or corporation is able
to direct its affairs and/or to control the composition of its board of
directors or equivalent body.
a "SUCCESSOR" shall be construed so as to include an assignee or
successor in title of such party and any person who under the laws of its
jurisdiction of incorporation or domicile has assumed the rights and
obligations of such party under this Agreement or to which, under such
laws, such rights and obligations have been transferred;
"TAX" shall be construed so as to include any tax (which shall include,
but not be limited to, corporation tax and advance corporation tax),
levy, impost, duty or other
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charge of a similar nature (including any penalty or interest payable in
connection with any failure to pay or any delay in paying any of the
same);
"VAT" shall be construed as a reference to value added tax including any
similar tax which may be imposed in place thereof from time to time; and
a "WHOLLY-OWNED SUBSIDIARY" of a company or corporation shall be
construed as a reference to any company or corporation which has no other
members except that other company or corporation and that other company's
or corporation's wholly-owned subsidiaries or persons acting on behalf of
that other company or corporation or its wholly-owned subsidiaries.
1.3 CURRENCY SYMBOLS AND DEFINITIONS
"(POUNDS)" and "STERLING " denote lawful currency of the United Kingdom.
1.4 AGREEMENTS AND STATUTES Any reference in this Agreement to:
1.4.1 this Agreement or any other agreement or document shall be
construed as a reference to this Agreement or, as the case may
be, such other agreement or document as the same may have been,
or may from time to time be, amended, varied, novated or
supplemented; and
1.4.2 a statute or treaty shall be construed as a reference to such
statute or treaty as the same may have been, or may from time to
time be, amended or, in the case of a statute, re-enacted.
1.5 HEADINGS
Clause and Schedule headings are for ease of reference only.
1.6 TIME
Any reference in this Agreement to a time of day shall, unless a contrary
indication appears, be a reference to London time.
1.7 NO PERSONAL LIABILITY FOR DIRECTORS
No part of this Agreement shall be construed so as to attach any personal
liability, obligation or duty to any director of any Group member.
2. THE FACILITY
2.1 GRANT OF THE FACILITY
The Banks grant to the Borrowers, upon the terms and subject to the
conditions hereof a term loan facility in an aggregate amount of up to
(pounds sterling)10,000,000 (the "FACILITY").
2.2 PURPOSE AND APPLICATION
The Facility is intended for the purpose of refinancing Existing TW US
Loans and, accordingly, each Borrower shall so apply all amounts raised
by it hereunder and none of the Finance Parties shall be obliged to
concern themselves with such application.
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2.3 CONDITIONS PRECEDENT
Save as the Banks may otherwise agree, none of the Borrowers may deliver
any Notice of Drawdown unless the Agent has confirmed to the Parent and
the Banks that it has received all of the documents and other evidence
listed in Schedule 3 (Conditions Precedent) and that each is, in form and
substance, satisfactory to the Agent.
2.4 SEVERAL OBLIGATIONS
The obligations of each Bank are several and the failure by a Bank to
perform its obligations hereunder shall not affect the obligations of an
Obligor towards any other party hereto nor shall any other party be
liable for the failure by such Bank to perform its obligations hereunder.
2.5 SEVERAL RIGHTS
The rights of each Finance Party are several and any debt arising
hereunder at any time from an Obligor to any Finance Party hereto shall
be a separate and independent debt. Each such party shall be entitled to
protect and enforce its individual rights arising out of this Agreement
independently of any other party (so that it shall not be necessary for
any party hereto to be joined as an additional party in any proceedings
for this purpose).
3. UTILISATION
3.1 UTILISATION CONDITIONS An Advance will be made if:
3.1.1 not later than 11.00 a.m. three Business Days before the proposed
Utilisation Date, the Agent has received a completed Notice of
Drawdown from the Borrower;
3.1.2 the proposed Original Sterling Amount of such Advance is
(pounds)10,000,000 which is equal to the amount of the Available
Facility;
3.1.3 the interest rate applicable to such Advance during its first
Interest Period would not fall to be determined pursuant to
Clause 6.1 (Market Disruption);
3.1.4 the proposed date for the making of such Advance is a Business
Day falling within the Availability Period;
3.1.5 on and as of the proposed Utilisation Date (a) no Event of
Default or Potential Event of Default is continuing or would
occur as a result of the making of such Advance and (b) the
Repeated Representations are true (before and immediately after
the making of such Advance) by reference to the facts and
circumstances then existing and (c) the Agent has confirmed to
the Parent and the Banks that it has received all of the
documents and other evidence listed in Schedule 3 (Conditions
Precedent) and that each is, in form and substance, satisfactory
to the Agent.
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3.2 EACH BANK'S PARTICIPATION IN ADVANCES
Each Bank will participate through its Facility Office in the Advance
made in the proportion borne by its Available Commitment the Available
Facility immediately prior to the making of that Advance.
3.3 REDUCTION OF AVAILABLE TERM COMMITMENT
If a Bank's relevant Available Commitment is reduced in accordance with
the terms hereof after the Agent has received the Notice of Drawdown for
an Advance pursuant to this Clause 3 and such reduction was not taken
into account in calculating the Available Facility, then both the
Original Sterling Amount and the amount of that Advance shall be reduced
accordingly.
4. INTEREST PERIODS
4.1 INTEREST PERIODS
The period for which an Advance is outstanding shall be divided into
successive periods each of which (other than the first, which shall begin
on the day such Term Advance is made) shall start on the last day of the
preceding such period.
4.2 DURATION
Until the earlier of six months after the date hereof and the Syndication
Date, the duration of each Interest Period shall be one month.
Thereafter, the duration of each Interest Period shall, save as otherwise
provided herein, be one, three or six months (or such other period as may
be agreed between the Parent and the Banks), in each case as the Borrower
to which such Advance is made (or the Parent) may by no later than 10.00
a.m. three Business Days' prior notice to the Agent select, or such other
period as the Banks agree PROVIDED THAT:
4.2.1 if such Borrower fails to give such notice of its selection in
relation to an Interest Period, the duration of that Interest
Period shall, subject to sub-clauses 4.2.2, 4.2.3 and 4.2.3, be
three months;
4.2.2 any Interest Period which begins during or at the same time as
any other Interest Period and made under the same Facility shall
end at the same time as that other Interest Period;
4.2.3 to the extent necessary to ensure at any time Advances have
Interest Periods expiring on the Repayment Date or Final Maturity
Date, any Interest Period which would otherwise end during the
month preceding, or extend beyond, the Repayment Date or Final
Maturity Date shall be of such duration that it shall end on the
Repayment Date or Final Maturity Date.
4.3 CONSOLIDATION OF TERM ADVANCES
If two or more Interest Periods relating to Advances denominated in the
same currency end at the same time, then, on the last day of those
Interest Periods, the Advances to which they relate shall be consolidated
into and treated as a single Advance.
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4.4 DIVISION OF TERM ADVANCES
The Borrower to which an Advance is made may, by no later than 10.00 a.m.
three Business Days' prior notice to the Agent direct that such Advance
shall, at the beginning of any Interest Period relating thereto, be
divided into (and thereafter, save as otherwise provided herein, treated
in all respects as) two or more Advances having such Original Sterling
Amounts (in aggregate, equalling the Sterling Amount of the Advance being
so divided) as shall be specified by such Borrower in such notice,
PROVIDED THAT such Borrower shall not be entitled to make such a
direction if:
4.4.1 as a result of so doing, there would be more than six outstanding
Advances; or
4.4.2 any Advance thereby coming into existence would have a Sterling
Amount of less than (pounds sterling)10,000,000.
5. PAYMENT AND CALCULATION OF INTEREST
5.1 PAYMENT OF INTEREST
On the last day of each Interest Period relating to an Advance (and, if
the Interest Period of such Advance exceeds six months, on the expiry of
each period of six months during that Interest Period) the Borrower to
which such Advance has been made shall pay accrued interest on the
Advance to which such Interest Period relates.
5.2 CALCULATION OF INTEREST
The rate of interest applicable to an Advance from time to time during an
Interest Period relating thereto shall be the rate per annum determined
by the Agent to be the aggregate of:
5.2.1 the Cash Paid Margin;
5.2.2 the Rolled-Up Margin;
5.2.3 LIBOR relative to such Advance for such Interest Period; and
5.2.4 the Associated Costs Rate, if any, relative to such Advance and
each Bank's participation therein from time to time during such
Interest Period.
5.3 CASH PAID INTEREST
Except as otherwise provided in Clause 5.4 (Rolled-Up Interest) or
elsewhere in this Agreement, an amount of interest accrued on each
Advance for each Interest Period pursuant to Clause 5.2 (Calculation of
Interest) shall be paid by the Borrower in cash on the Interest Date
relating to such Interest Period and also, in the case of an Interest
Period of longer than six months, on the last day of each consecutive
period of six months from the first day of such Interest Period. The
amount of interest paid in cash on each Interest Date shall equal the
amount of interest accrued at the rate per annum determined by the Agent
to be the aggregate of the Cash Paid Margin plus LIBOR plus the
Associated Costs Rate (if any) on such Advance during such Interest
Period.
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5.4 ROLLED-UP INTEREST
An amount of interest accrued pursuant to Clause 5.2 (Calculation of
Interest) on the Advance for each Interest Period relating thereto in an
amount equal to the amount of interest accrued at the Rolled-Up Margin
during such Interest Period shall, at the end of each such Interest
Period, be capitalised with, added, to and shall be deemed to be part of,
such Advance and the principal amount of such Advance shall thereafter be
treated as having been increased by the amounts of Rolled-Up Interest
capitalised in accordance with this Clause 5.4 (Rolled-Up Interest).
6. MARKET DISRUPTION AND ALTERNATIVE INTEREST RATES
6.1 MARKET DISRUPTION
If, in relation to any Advance or Unpaid Sum:
6.1.1 LIBOR is to be determined by reference to Reference Banks and at
or about 11.00 a.m. on the Quotation Date for the relevant
Interest Period or Term none or only one of the Reference Banks
supplies a rate for the purpose of determining LIBOR, for the
relevant Interest Period or Term; or
6.1.2 before the close of business in London on the Quotation Date for
such Advance or Unpaid Sum the Agent has been notified by a Bank
or each of a group of Banks to whom in aggregate thirty-five per
cent. or more of such Advance or Unpaid Sum is owed (or, in the
case of an undrawn Advance, if made, would be owed) that the
LIBOR rate does not accurately reflect the cost of funding its
participation in such Advance or Unpaid Sum,
then, the Agent shall notify the Parent, the relevant Borrower and the
Banks of such event and, notwithstanding anything to the contrary in this
Agreement, Clause 6.2 (Substitute Interest Period and Interest Rate)
shall apply to such Advance (if it is a Term Advance which is already
outstanding or a Rollover Advance) or Unpaid Sum. If sub-clause 6.1.1 or
6.1.2 of Clause 6.1 (Market Disruption) applies to a proposed Advance,
such Advance shall not be made.
6.2 SUBSTITUTE INTEREST PERIOD AND INTEREST RATE
If sub-clause 6.1.1 of Clause 6.1 (Market Disruption) applies to an
Advance, the duration of the relevant Interest Period or Term shall be
one month, or less, such that it shall end on the next succeeding
Repayment Date. If either sub-clause 6.1.1 or 6.1.2 of Clause 6.1 (Market
Disruption) applies to an Advance or Unpaid Sum, the rate of interest
applicable to such Advance or Unpaid Sum during the relevant Interest
Period or Term shall (subject to any agreement reached pursuant to Clause
6.3 (Alternative Rate)) be the rate per annum which is the sum of:
6.2.1 the Cash Paid Margin at such time;
6.2.2 the Rolled-Up Margin at such time;
6.2.3 the Associated Costs Rate in respect thereof at such time; and
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6.2.4 the rate per annum notified to the Agent by each Bank before the
last day of such Interest Period or Term to be that which
expresses as a percentage rate per annum the cost to such Bank of
funding from sources it reasonably selects its portion of such
Advance or Unpaid Sum during such Interest Period or Term.
6.3 ALTERNATIVE RATE
If:
6.3.1 either of those events mentioned in sub-clauses 6.1.1 and 6.1.2
of Clause 6.1 (Market Disruption) occurs in relation to an
Advance or Unpaid Sum; or
6.3.2 by reason of circumstances affecting the London Interbank Market
during any period of three consecutive Business Days LIBOR is not
available for Sterling to prime banks in the London Interbank
Market,
then, in any such case, if the Agent or the Parent so requires, the Agent
and the Parent shall enter into negotiations in good faith with a view to
agreeing an alternative basis:
(a) for determining the rates of interest from time to time
applicable to the Advances and Unpaid Sums; and/or
(b) upon which the Advances and Unpaid Sums may be maintained
thereafter,
and any such alternative basis that is agreed shall take effect in
accordance with its terms and be binding on each party hereto, PROVIDED
THAT the Agent may not agree any such alternative basis without the prior
consent of each Bank.
7. NOTIFICATION
7.1 ADVANCES
Not later than 11.00 a.m. three Business Days before the first day of an
Interest Period or Term (or, in the case of any utilisation being made on
the date hereof, not later than 11.30 a.m. on the date hereof), the Agent
shall notify each Bank of the Facility that is to be utilised, the name
of the Borrower, the proposed Sterling Amount of the relevant Advance,
the proposed length of the relevant Interest Period or Term and the
aggregate principal amount of the relevant Advance allocated to such Bank
pursuant to this Agreement, the name of the proposed beneficiary.
7.2 INTEREST RATE DETERMINATION
The Agent shall promptly notify the relevant Borrower and the Banks of
each determination of LIBOR, the Cash Paid Margin, the Rolled-Up Margin
and the Associated Costs Rate.
7.3 CHANGES TO ADVANCES OR INTEREST RATES
The Agent shall promptly notify the relevant Borrower and the Banks of
any change to:
7.3.1 the proposed length of an Interest Period or Term; or
7.3.2 any interest rate;
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in each case occasioned by the operation of Clause 6 (Market Disruption
and Alternative Interest Rates).
8. REPAYMENT
The Borrower shall repay the Facility by repaying on the Repayment Date
the full amount of the Facility.
9. MANDATORY PREPAYMENT
9.1 MANDATORY PREPAYMENT ON DISPOSAL
Subject to Clause 9.6 (Prepayment Accounts), the Parent shall procure the
application of an amount equal to the Net Disposal Proceeds in respect of
any disposal of any assets of the Group in repayment of the Facilities in
accordance with Clause 9.5 (Application of Prepayments) promptly upon
receipt of the same by any Group member.
The Parent will procure that any amounts which are retained for
reinvestments as envisaged by paragraph (b) of the definition of Excluded
Proceeds and paragraph (f) of the definition of Permitted Disposals will
be paid into the Holding Account promptly upon receipt of the same.
9.2 AMCARE DISPOSAL
The Group may, on approval by the Agent (acting on the instructions of
the Instructing Group), dispose of Amcare Limited (the "AMCARE
DISPOSAL"). So long as the Amcare Disposal occurs within twelve (12)
months of the date hereof, the Parent shall ensure that the application
of an amount equal to the Net Disposal Proceeds of such disposal (the
"AMCARE DISPOSAL PROCEEDS") shall be applied in accordance with Clause
9.2 (Amcare Disposal) of the Senior Credit Agreement. For the avoidance
of doubt Clauses 9.1 (Mandatory Prepayment on Disposal) and 9.5
(Application of Prepayments) shall not apply to the Amcare Disposal
Proceeds during such six (6) month period from making the Amcare Disposal
and if the Amcare Disposal occurs after the date falling twelve (12)
months after the date hereof, the Amcare Disposal Proceeds shall be
applied in accordance with Clause 9.1 (Mandatory Prepayment on Disposal).
9.3 MANDATORY PREPAYMENT ON CHANGE OF CONTROL OR SALE OF BUSINESS
The Parent shall procure that the Term Outstandings and the Revolving
Outstandings are immediately prepaid in full upon the occurrence of:
9.3.1 any Change of Control; or
9.3.2 Hyperion ceasing to have beneficial ownership of at least 50.1%
in TW US; or
9.3.3 the Initial Investor disposing of any Warrants or Senior
Subordinated Notes; or
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9.3.4 any Flotation of any of the shares of any member of the Group or
any holding company of the Parent; or
9.3.5 a Strategic Sale.
9.4 MANDATORY PREPAYMENT OF EXCESS CASH FLOW
The Parent shall procure that, within ten Business Days of the delivering
to the Agent of aggregated and consolidated audited Accounts of the Group
pursuant to Clause 17.1 (Annual Statement) for any annual Accounting
Period, the Term Outstandings shall be prepaid in an aggregate amount
equal to 50% (fifty per cent.) of the Excess Cash Flow (minus (pounds
sterling)1,000,000) of the Group for such Accounting Period to which such
annual consolidated accounts relate. Any such prepayment shall be applied
in accordance with Clause 9.5 (Application of Prepayments).
9.5 APPLICATION OF PREPAYMENTS
9.5.1 Any prepayment made under Clauses 9.1 (Mandatory Prepayment on
Disposal)) (subject to Clause 9.2 (Amcare Disposal)) to 9.3
(Mandatory Prepayment on Change of Control or Sale of Business)
shall be applied in repayment across the Outstandings.
9.5.2 Any prepayment (other than as mentioned in sub-clause 9.5.1) of
Outstandings in respect of a Facility shall be applied across the
Advances then outstanding under such Facility in the manner
notified by the Original Borrower to the Agent at the time of
prepayment (or, if no such notice is given, pro rata but in any
event so that any such prepayment is applied so that each
Borrower effects a prepayment pro rata to its share of the
Outstandings.
9.6 PREPAYMENT ACCOUNTS
9.6.1 If Clause 9.1 (Mandatory Prepayment on Disposal)) (subject to
Clause 9.2 (Amcare Disposal)) to Clause 9.3 (Mandatory Prepayment
on Change of Control or Sale of Business) inclusive would require
the Original Borrower to procure the prepayment of any Advance
hereunder otherwise than at the end of an Interest Period, the
Original Borrower can elect (by written notice to the Agent to be
received not later than 11 a.m. three Business Days prior to the
date on which the prepayment obligation would, but for this
Clause 9.6 (Prepayment Accounts) arise) to credit the amount to
be repaid to the Mandatory Prepayment Account on the date on
which the prepayment obligation would, but for this Clause 9.6
(Prepayment Accounts), arise and to prepay the relevant Advance
at the first occurring end of an Interest Period relative to the
Advance to be repaid (where such Advance is at least equal to the
amount to be repaid unless the Outstandings under which such
Advance was made is less than the amount to be repaid). Following
any such election and provided the required payment is made to
the Mandatory Prepayment Account the obligation to prepay the
relevant Advance will not arise until the first occurring end of
an Interest Period relative to such Advance to be repaid.
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9.6.2 The Original Borrower hereby irrevocably authorises the Agent to
withdraw monies from the Mandatory Prepayment Account and apply
such monies against prepayments which are due to be made
hereunder or, upon the occurrence of an Event of Default which is
continuing, against any amounts due and payable under the Finance
Documents.
9.6.3 Any Bank with which such account is held acknowledges and agrees
that interest shall accrue at normal commercial rates on amounts
credited to the Mandatory Prepayment Account and the Holding
Account and that the account holder shall be entitled to receive
such interest (which shall be paid in accordance with the mandate
relating to such account) provided that the account holder shall
not be entitled to receive such interest while an Event of
Default is continuing.
10. CANCELLATION AND VOLUNTARY PREPAYMENT
10.1 CANCELLATION
The Parent may, by giving to the Agent not less than five Business Days'
prior notice to that effect, cancel the whole or any part (being an
amount of not less than (pounds sterling)1,000,000 and an integral
multiple of (pounds sterling)1,000,000) of the Available Facility. Any
such cancellation shall reduce the Available Commitments of the Banks in
respect of the Available Facility rateably.
10.2 PREPAYMENT OF THE OUTSTANDINGS
10.2.1 The Borrower to which an Advance has been made may, if it has
given to the Agent not less than five Business Days' prior notice
to that effect, prepay the whole of any Advance or any part of
any Advance (being an amount such that the Sterling Amount of
such Advance will be reduced by an amount of not less than
(pounds sterling)1,000,000 and an integral multiple of
(pounds sterling)1,000,000) on the last day of any Interest
Period relating to that Advance (or at any other time subject to
payment of the appropriate breakage costs in accordance with
Clause 25.4 (Break Costs).
10.2.2 Any prepayment of Outstandings in respect of the Facility shall
satisfy pro tanto the obligations under Clause 8 (Repayment) in
respect of Outstandings under the Facility pro rata.
10.2.3 Any prepayment of Outstandings in respect of the Facility shall
be applied across the Advances then outstanding under the
Facility in the manner notified by the Parent to the Agent at the
time of prepayment (or, if no such notice is given, pro rata).
10.3 EARLY PREPAYMENT FEE
If a voluntary prepayment or a mandatory prepayment within the terms of
Clause 9 (Mandatory Prepayment) of the whole of any part of the Facility
is made prior to the first anniversary of the date hereof consequent upon
a refinancing implemented through the bank or debt capital markets, the
Borrower shall pay to the Agent to the account of
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the Banks a fee of an amount equal to 2% (two per cent.) of the amount of
the Facility so prepaid.
10.4 NOTICE OF CANCELLATION OR PREPAYMENT
Any notice of cancellation or prepayment given by a Borrower pursuant to
this Clause 10 (Cancellation and Voluntary Prepayment) shall be
irrevocable, shall specify the date upon which such cancellation or
prepayment is to be made and the amount of such cancellation or
prepayment and, in the case of a notice of prepayment, shall oblige the
relevant Borrower to make such prepayment on such date.
10.5 NOTICE OF REMOVAL OF A BANK
If:
10.5.1 any sum payable to any Bank by an Obligor is required to be
increased pursuant to Clause 11.1 (Tax Gross-up); or
10.5.2 any Bank claims indemnification from an Obligor under Clause 11.2
(Tax Indemnity) or Clause 13.1 (Increased Costs),
the Parent may, whilst such circumstance continues, give the Agent at
least five Business Days notice (which notice shall be irrevocable) of
its intention (a) if such circumstance relates to a Bank to cancel and
repay.
10.6 REMOVAL OF A BANK
On the day the notice referred to in Clause 10.5 (Notice of Removal of a
Bank) expires each Borrower to which an Advance has been made shall repay
(without incurring the prepayment fee payable under Clause 13.5
(Prepayment Fee) such Bank's portion of each such Advance.
10.7 NO FURTHER AVAILABILITY
A Bank for whose account a repayment is to be made under Clause 10.6
(Removal of a Bank) shall not be obliged to participate in the making of
Advances on or after the date upon which the Agent receives the Parent's
notice of its intention to procure the repayment of such Bank's share of
the Outstandings, and such Bank's Available Commitment shall be reduced
to zero.
10.8 NO OTHER REPAYMENTS OR CANCELLATION
The Borrowers shall not repay or cancel all or any part of the
Outstandings except at the times and in the manner expressly provided for
in this Agreement.
10.9 NO REBORROWING
None of the Borrowers shall be entitled to reborrow any amount of the
Facility which is repaid.
11. TAXES
11.1 TAX GROSS-UP
All payments to be made by an Obligor to any Finance Party hereunder
shall be made free and clear of and without deduction for or on account
of tax unless such Obligor is
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required to make such a payment subject to the deduction or withholding
of tax, in which case the sum payable by such Obligor (in respect of
which such deduction or withholding is required to be made) shall be
increased to the extent necessary to ensure that such Finance Party
receives a sum net of any withholding or deduction equal to the sum which
it would have received had no such deduction or withholding been made or
required to be made.
11.2 TAX INDEMNITY
Without prejudice to Clause 11.1 (Tax Gross-up), if any Finance Party is
required to make any payment of or on account of tax on or in relation to
any sum received or receivable hereunder (including any sum deemed for
the purposes of tax to be received or receivable by such Finance Party
whether or not actually received or receivable) or if any liability in
respect of any such payment is asserted, imposed, levied or assessed
against any Finance Party, the Parent shall, upon demand of the Agent,
promptly indemnify the Finance Party which suffers a loss or liability as
a result against such payment or liability together with any interest,
penalties, costs and expenses payable or incurred in connection
therewith, PROVIDED THAT this Clause 11.2 (Tax Indemnity) shall not apply
to:
11.2.1 any tax imposed on and calculated by reference to the net income
actually received or receivable by such Finance Party (but, for
the avoidance of doubt, not including any sum deemed for purposes
of tax to be received or receivable by such Finance Party but not
actually receivable) by the jurisdiction in which such Finance
Party is incorporated or resident for tax purposes; or
11.2.2 any tax imposed on and calculated by reference to the net income
of the relevant Facility Office of such Finance Party actually
received or receivable by such Finance Party (but, for the
avoidance of doubt, not including any sum deemed for purposes of
tax to be received or receivable by such Finance party but not
actually receivable) by the jurisdiction in which such Facility
Office is located.
11.3 BANKS' TAX STATUS CONFIRMATION
Each Bank confirms in favour of the Agent (on the date hereof or, in the
case of a Bank which becomes a party hereto pursuant to a transfer or
assignment, on the date on which the relevant transfer or assignment
becomes effective) that either:
11.3.1 it is a bank as defined for the purposes of Section 349 of the
Income and Corporation Taxes Act 1988 and it is within the charge
to United Kingdom Corporation tax as respects interest payable to
it hereunder and is beneficially entitled to its share of the
Outstandings and the interest thereon; or
11.3.2 it is not resident for tax purposes in the United Kingdom and is
beneficially entitled to its share of the Outstandings and the
interest thereon,
and each Bank shall promptly notify the Agent if there is any change in
its position from that set out above.
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11.4 CLAIMS BY BANKS
A Bank intending to make a claim pursuant to Clause 11.2 (Tax Indemnity)
shall notify the Agent of the event or circumstance giving rise to the
claim as soon as reasonably practicable after its relevant Facility
Office has become aware of such event or circumstance, whereupon the
Agent shall notify the Parent thereof.
11.5 EXCLUDED CLAIMS
If any Bank is not or ceases to be a Qualifying Bank, no Obligor shall be
liable to pay to that Bank under Clause 11.1 (Tax Gross-Up) any amount in
respect of taxes levied or imposed in excess of the amount it would have
been obliged to pay if that Bank had been or had not ceased to be a
Qualifying Bank PROVIDED THAT this Clause 11.5 (Excluded Claims) shall
not apply (and each Obligor shall be obliged to comply with its
obligations under Clause 11.1 (Tax Gross-Up)) if:
11.5.1 after the date hereof and after the date when such Bank first
becomes a Bank for the purposes of this Agreement, there shall
have been any introduction of, change in, or change in the
interpretation, administration or application of, any law or
regulation or order or governmental rule or treaty or any
practice or concession of any applicable tax authority and as a
result thereof such Bank ceased to be a Qualifying Bank; or
11.5.2 such Bank is not or ceases to be a Qualifying Bank as a result of
the actions of or omission to act by any Obligor.
11.6 DOUBLE TAXATION RELIEF
If, and to the extent that, the effect of Clause 11.1 (Tax Gross-Up) or
Clause 11.2 (Tax Indemnity) can be mitigated by virtue of the provisions
of any Applicable Treaty (whether by a claim to repayment of any taxes
referred to in Clause 11.1 (Tax Gross-Up) or Clause 11.2 (Tax Indemnity)
or otherwise) each Bank agrees to co-operate with the relevant Obligor
with a view to submitting any forms required for the purpose of ensuring
the application of such double tax convention so far as relevant,
PROVIDED THAT no Bank shall be required pursuant to this Clause 11.6
(Double Taxation Relief) to complete or co-operate in completing any form
which is not substantially similar to any form in use at the date of this
Agreement for the purpose of claiming exemption or relief from or
repayment of taxes envisaged hereunder pursuant to an Applicable Treaty
between England and such Bank's jurisdiction of residence.
12. TAX RECEIPTS
12.1 NOTIFICATION OF REQUIREMENT TO DEDUCT TAX
If, at any time, an Obligor is required by law to make any deduction or
withholding from any sum payable by it hereunder (or if thereafter there
is any change in the rates at which or the manner in which such
deductions or withholdings are calculated), such Obligor shall promptly
notify the Agent.
12.2 EVIDENCE OF PAYMENT OF TAX
If an Obligor makes any payment hereunder in respect of which it is
required to make any deduction or withholding, it shall pay the full
amount required to be deducted or
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withheld to the relevant taxation or other authority within the time
allowed for such payment under applicable law and shall deliver to the
Agent for such Finance Party, within thirty days after it has made such
payment to the applicable authority, an original receipt (or a certified
copy thereof) issued by such authority evidencing the payment to such
authority of all amounts so required to be deducted or withheld in
respect of that Finance Party's share of such payment.
12.3 TAX CREDIT PAYMENT
If an additional payment is made under Clause 11 (Taxes) by an Obligor
for the benefit of any Finance Party and such Finance Party, in its sole
discretion, determines that it has obtained (and has derived full use and
benefit from) a credit against, a relief or remission for, or repayment
of, any tax, then, if and to the extent that such Finance Party, in its
sole opinion, determines that:
12.3.1 such credit, relief, remission or repayment is in respect of or
calculated with reference to the additional payment made pursuant
to Clause 11 (Taxes); and
12.3.2 its tax affairs for its tax year in respect of which such credit,
relief, remission or repayment was obtained have been finally
settled,
such Finance Party shall, to the extent that it can do so without
prejudice to the retention of the amount of such credit, relief,
remission or repayment, pay to such Obligor such amount as such Finance
Party shall, in its sole opinion, determine to be the amount which will
leave such Finance Party (after such payment) in no worse after-tax
position than it would have been in had the additional payment in
question not been required to be made by such Obligor.
12.4 TAX CREDIT CLAWBACK
If any Finance Party makes any payment to an Obligor pursuant to Clause
12.3 (Tax Credit Payment) and such Finance Party subsequently determines,
in its sole opinion, that the credit, relief, remission or repayment in
respect of which such payment was made was not available or has been
withdrawn or that it was unable to use such credit, relief, remission or
repayment in full, such Obligor shall reimburse such Finance Party such
amount as such Finance Party determines, in its sole opinion, is
necessary to place it in the same after-tax position as it would have
been in if such credit, relief, remission or repayment had been obtained
and fully used and retained by such Finance Party.
12.5 TAX AND OTHER AFFAIRS
No provision of this Agreement shall interfere with the right of any
Finance Party to arrange its tax or any other affairs in whatever manner
it thinks fit, oblige any Finance Party to claim any credit, relief,
remission or repayment in respect of any payment under Clause 11.1 (Tax
Gross-up) in priority to any other credit, relief, remission or repayment
available to it nor oblige any Finance Party to disclose any information
relating to its tax or other affairs or any computations in respect
thereof.
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13. INCREASED COSTS
13.1 INCREASED COSTS
If, by reason of (a) any change in law or in its interpretation or
administration and/or (b) compliance with any request or requirement
relating to the maintenance of capital or any other request from or
requirement of any central bank or other fiscal, monetary or other
authority (including, for the avoidance of doubt, any minimum reserve
requirements imposed by the European Central Bank) (in each case after
the date of this Agreement):
13.1.1 a Bank or any holding company of such Bank is unable to obtain
the rate of return on its capital which it would have been able
to obtain but for such Bank's entering into or assuming or
maintaining a commitment, issuing or performing its obligations
under the Finance Documents;
13.1.2 a Bank any holding company of such Bank incurs a cost as a result
of such Bank's entering into or assuming or maintaining a
commitment, issuing or performing its obligations under the
Finance Documents; or
13.1.3 there is any increase in the cost to a Bank or any holding
company of such Bank of funding or maintaining such Bank's share
of the Advances or any Unpaid Sum,
(including, without limitation, any such circumstance (other than any
such circumstance which is existing on the date hereof and is applicable
to such Bank or any holding company of such Bank on the date hereof)
which results from the introduction or changeover to the Sterling in any
Participating Member State) then the Parent shall, from time to time on
demand of the Agent, promptly pay to the Agent for the account of that
Bank amounts sufficient to indemnify that Bank or to enable that Bank to
indemnify its holding company from and against, as the case may be, (a)
such reduction in the rate of return of capital, (b) such cost or (c)
such increased cost.
13.2 INCREASED COSTS CLAIMS
A Bank intending to make a claim pursuant to Clause 13.1 (Increased
Costs) shall notify the Agent of the event or circumstance giving rise to
such claim as soon as reasonably practicable after its relevant Facility
Office has become aware of such event or circumstance, whereupon the
Agent shall notify the Parent thereof.
13.3 EXCLUSIONS
Notwithstanding the foregoing provisions of this Clause 13 (Increased
Costs), no Bank shall be entitled to make any claim in respect of:
13.3.1 any cost, increased cost or liability as referred to in Clause
13.1 (Increased Costs) to the extent the same is compensated by
the Associated Costs Rate; or
13.3.2 any cost, increased cost or liability compensated by Clause 11
(Taxes) or which would have been compensated by Clause 11 (Taxes)
if the provisions of Clause 11.5 (Excluded Claims) or sub-clauses
11.2.1 or 11.2.2 of Clause 11.2 (Tax Indemnity) had not applied;
or
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13.3.3 any cost, increased cost or liability arising by reason of a
breach by a Bank or their holding company of any law or
regulatory request.
14. ILLEGALITY
If, at any time, it is or will become unlawful for a Bank to make, fund,
issue, participate in or allow to remain outstanding all or part of its
share of the Advances, then that Bank shall, promptly after becoming
aware of the same, deliver to the Parent through the Agent a notice to
that effect and:
14.1.1 such Bank shall not thereafter be obliged to participate in any
Advance and the amount of its Available Commitment shall be
immediately reduced to zero; and
14.1.2 if the Agent on behalf of such Bank so requires, the Parent shall
procure that each Borrower shall either (a) as soon as
practicable and in any event within 5 days of such notice or (b)
on the date specified by such Banks through the Agent as being,
in its bona fide opinion, the last day of any applicable grace
period permitted by law repay such Bank's share of any
outstanding Advances together with accrued interest thereon and
all other amounts owing to such Bank under the Finance Documents
and any repayment of any Advance so made shall reduce rateably
the remaining obligations under Clause 8 (Repayment) in respect
of the outstandings under the Facility under which such Advance
was made.
15. MITIGATION
If, in respect of any Bank, circumstances arise which would or would upon
the giving of notice result in:
15.1.1 an increase in any sum payable to it or for its account pursuant
to Clause 11.1 (Tax Gross-up);
15.1.2 a claim for indemnification pursuant to Clause 11.2 (Tax
Indemnity) or Clause 13.1 (Increased Costs);
15.1.3 the reduction of its Available Commitment to zero or any
repayment to be made pursuant to Clause 14 (Illegality),
then, without in any way limiting, reducing or otherwise qualifying the
rights of such Bank or the obligations of the Obligors under any of the
Clauses referred to in sub-clauses 15.1.1, 15.1.2, 15.1.3 and 15.1.3,
such Bank shall, upon request by the Parent or relevant Borrower and, in
consultation with the Agent and the Parent and to the extent that it can
do so lawfully and without prejudice to its own position, take such steps
as may be reasonable and practical in all the circumstances (including a
change of location of such Facility Office or the transfer of its rights,
benefits and obligations hereunder to another financial institution
acceptable to the Parent and willing to participate in the Facilities) to
mitigate the effects of such circumstances, PROVIDED THAT such Bank shall
be under no obligation to take any such action if, in the opinion of
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such Bank, to do so might have any adverse effect upon its business,
operations or financial condition (other than any minor costs and
expenses of an administrative nature).
16. REPRESENTATIONS
Each Obligor makes the representations and warranties set out in Clause
16.1 (Status) to Clause 16.33 (Financial Model and Financial Projections)
to the Finance Parties on its own behalf and, in addition, the Parent
makes the representations set out therein to the Finance Parties on
behalf of each member of the Group, in each case save as specifically
disclosed in the Disclosure Letter. The Original Obligors acknowledge
that the Finance Parties have entered into this Agreement in reliance on
those representations and warranties. The representations and warranties
in Clause 16.16 (Information Memorandum) shall only be made on the dates
specified in Clause 16.35 (Repetition of Representations).
16.1 STATUS
It is a corporation duly organised and validly existing under the laws of
its jurisdiction of incorporation and is a limited liability corporation
and has the power and all necessary governmental and other material
consents, approvals, licences and authorisations under any applicable
jurisdiction to own its property and assets and to carry on its business
as currently conducted.
16.2 BINDING OBLIGATIONS
The obligations expressed to be assumed by it in the Finance Documents
are legal and valid obligations binding on it and enforceable against it
in accordance with the terms thereof, subject to the Legal Reservations.
16.3 EXECUTION AND POWER
In relation to the Finance Documents, its execution of the Finance
Documents to which it is be a party and its exercise of its rights and
performance of its obligations thereunder and the transactions
contemplated thereby (including, without limit, borrowing thereunder and
granting any security or guarantees contemplated thereunder) do not:
16.3.1 conflict with any agreement, mortgage, bond or other instrument
or treaty to which it is a party or which is binding upon it or
any of its assets; or
16.3.2 conflict with its constitutive documents; or
16.3.3 conflict with any applicable law or any applicable official or
judicial regulation or order.
It has the power to enter into and perform its obligations under the
Finance Documents to which it is a party and all corporate and other
action required to authorise the execution, delivery and performance of
the Finance Documents to which it will be a party and the transactions
contemplated therein has been duly taken. No limit on its
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powers will be exceeded as a result of the borrowings, granting of
security or giving of guarantees contemplated by the Finance Documents to
which it is a party.
16.4 NO MATERIAL PROCEEDINGS
16.4.1 No action or administrative proceeding of or before any court,
arbitrator or agency (including, but not limited to,
investigative proceedings) which could reasonably be expected to
have a Material Adverse Effect has been started or (to the best
of its knowledge or belief) threatened against it or its assets,
nor are there any circumstances likely to give rise to any such
action or proceedings.
16.4.2 It is not aware of any other event or circumstance which could
reasonably be expected to have a Material Adverse Effect.
16.5 FINANCIAL STATEMENTS
16.5.1 Its most recent audited financial statements delivered to the
Agent pursuant to Clause 17.1 (Annual Statements) (consolidated
in the case of the Parent):
(a) were prepared in accordance with UK GAAP and consistently
applied and comply with Clause 17.9 (Accounting Policies);
(b) disclose all liabilities (contingent or otherwise) and all
unrealised or anticipated losses of such Obligor or, as the
case may be, any member of the Group to the extent required
by the applicable accounting principles referred to in
Clause 17.9 (Accounting Policies); and
(c) give a true and fair view of (in the case of audited
financial statements) or fairly present in all material
respects (in the case of unaudited financial statements) the
financial condition and the results of the operations of
such Obligor or, as the case may be, the Group during the
relevant period.
16.5.2 Its financial year end and, in the case of the Parent, the
financial year end of the Group is 30 September.
16.6 NO MATERIAL ADVERSE CHANGE
Since 16 December 1999 (being the date as at which the Accountants Report
was prepared), there has been no change in the assets, property,
business, financial condition, or results of the Group taken as a whole
which could reasonably be expected to have a Material Adverse Effect.
16.7 VALIDITY AND ADMISSIBILITY IN EVIDENCE
All acts, conditions and things required to be done, fulfilled and
performed in order:
16.7.1 to enable it lawfully to enter into, exercise its rights under
and perform and comply with the obligations expressed to be
assumed by it in the Finance Documents;
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16.7.2 to ensure that the obligations expressed to be assumed by it in
the Finance Documents are legal, valid, binding and enforceable;
and
16.7.3 to make the Finance Documents admissible in evidence in its
jurisdiction of incorporation,
have been done, fulfilled and performed subject to any Legal
Reservations.
16.8 CLAIMS PARI PASSU
Under the laws of its jurisdiction of incorporation in force at the date
hereof, the claims of the Finance Parties against it under the Finance
Documents will rank to the extent that they are secured pursuant to a
Security Document, prior to and otherwise at least pari passu with the
claims of all its other unsecured and unsubordinated creditors save those
whose claims are preferred solely by any bankruptcy, insolvency,
liquidation or other similar laws of general application.
16.9 NO FILING OR STAMP TAXES
Under the laws of its jurisdiction of incorporation in force at the date
hereof, it is not necessary that the Finance Documents be filed, recorded
or enrolled with any court or other authority in such jurisdiction or
that any stamp, registration or similar tax be paid on or in relation to
the Finance Documents save for any filing or recording of or tax payable
in connection with any Security Document which is referred to in the
Legal Opinions and which will be effected or paid promptly after the date
hereof. For the purposes of this Clause 16.9 a Transfer Certificate shall
not be a Finance Document.
16.10 NO IMMUNITY
In any proceedings taken in its jurisdiction of incorporation in relation
to the Finance Documents, it will not be entitled to claim for itself or
any of its assets immunity from suit, execution, attachment or other
legal process.
16.11 REPORTS
The Reports have been prepared after due and careful consideration and
the Parent (and its executive directors), having made all reasonable
enquiries in the circumstances:
16.11.1 is not aware of any material inaccuracy as to factual matters
relating to the Business contained in the Reports which render
the Reports misleading in any material respect;
16.11.2 does not (as at the date hereof) regard as unreasonable or
unattainable any of the forecasts or projections set out in any
of the Reports;
16.11.3 believes (having made all reasonable enquiries) the assumptions
upon which the forecasts and projections in relation to the
Business contained in the Reports are based to be fair and
reasonable; and
16.11.4 is not aware of any facts or matters not stated in the Reports,
the omission of which make any statements contained therein
misleading in any material respect;
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16.11.5 has made full disclosure of all material facts known to it
(having made all reasonable enquiries) to all the persons
responsible for the preparing of Reports in relation to the
Parent and the Group where failure to disclose such facts could
be reasonably likely to render the Reports misleading in any
material respect; and
16.11.6 consider that the Accountants Report fairly presented in all
material respects the financial condition and the results of the
operations of the Business during the periods referred to
therein.
16.12 GROUP STRUCTURE
16.12.1 The Group Structure Chart delivered to the Agent pursuant to
Schedule 3 (Conditions Precedent) is true, complete and accurate.
16.12.2 All necessary inter-company loans, transfers, share exchanges and
other steps resulting in the final Group structure set out in the
Group Structure Chart have been taken in compliance in all
material respects with all relevant laws and regulations and all
requirements of relevant regulatory authorities.
16.13 NO INSOLVENCY PROCEEDINGS
No Material Subsidiary has taken any corporate action nor have any other
steps been taken or insolvency proceedings been started or (to the best
of its knowledge and belief having made all reasonable enquiry)
threatened against any Material Subsidiary (whether by voluntary
arrangement, scheme of arrangement or otherwise save for any solvent
reorganisation previously approved by an Instructing Group in writing,
such approval not to be unreasonably withheld) or for the enforcement of
an Encumbrance over all or any of its revenues or assets or for the
appointment of a receiver, administrator, administrative receiver,
conservator, custodian, trustee, or similar officer of it or of any or
all of its assets or revenues.
16.14 NO MATERIAL DEFAULTS
No member of the Group:
16.14.1 is in breach of or in default under any agreement to which it is
a party or which is binding on it or any of its assets to an
extent or in a manner which could reasonably be expected to have
a Material Adverse Effect; or
16.14.2 is or is likely to be in breach of or in default under any
agreement to which it is party or which is binding on it or any
of its assets as a result of entering into and performing its
obligations under the Finance Documents to an extent or in a
manner which could reasonably be expected to have a Material
Adverse Effect.
16.15 INFORMATION
16.15.1 All of the written information (taken as a whole) supplied by the
Parent, any Obligor and any advisers of the Parent and/or any
Obligor to the Agent and/or the Banks and/or their advisers in
connection with the Finance Documents and/or a Permitted
Acquisition or Permitted Equity Funded Acquisition is
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true, complete and accurate in all material respects as at the
date such information was supplied and is not misleading in any
material respect.
16.15.2 The forecasts and projections contained in the Business Plan and
TW US Strategy Paper were made in good faith and based on
opinions and assumptions which its directors believe were
reasonable to hold and reasonable to make at the time of supply.
16.15.3 The Parent has not knowingly failed to disclose to the Agent any
material facts or circumstances which would be reasonably likely,
if disclosed, to adversely affect the decision of a person
considering whether or not to provide finance to the Borrowers.
16.16 INFORMATION MEMORANDUM
The factual information contained in the Information Memorandum is true,
complete and accurate in all material respects, the financial projections
contained therein have been prepared in good faith on the basis of recent
historical information and on the basis of fair and reasonable
assumptions and after careful consideration, all material statements of
opinion/intention and expectation were made in good faith and after
careful consideration and nothing has occurred or been omitted that
renders the information contained in the Information Memorandum
inaccurate or misleading in any material respect.
16.17 ENVIRONMENTAL COMPLIANCE
Each member of the Group has duly performed and observed in all material
respects all Environmental Law, Environmental Permits and all other
material covenants, conditions, restrictions or agreements directly or
indirectly concerned with any contamination, pollution or waste or the
release or discharge of any toxic or hazardous substance in connection
with any real property which is or was at any time owned, leased or
occupied by any member of the Group or on which any member of the Group
has conducted any activity where failure to do so could reasonably be
expected to have a Material Adverse Effect.
16.18 ENVIRONMENTAL CLAIMS
No Environmental Claim has been commenced or (to the best of the Parent's
knowledge and belief) is threatened against any member of the Group where
such claim could be reasonably be expected, if determined against such
member of the Group, to have a Material Adverse Effect.
16.19 ENCUMBRANCES AND FINANCIAL INDEBTEDNESS
16.19.1 Save for Permitted Encumbrances, no Encumbrance exists over all
or any of the present or future revenues, assets or undertakings
of any member of the Group.
16.19.2 Save for Permitted Indebtedness, it has no Financial
Indebtedness.
16.19.3 The execution of the Finance Documents to which it is a party and
the exercise by it of its rights thereunder will not result in
the existence or
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imposition of nor oblige any Group member to create any
Encumbrance (save for Permitted Encumbrances) in favour of any
person over any of its present or future revenues, assets or
undertakings.
16.20 CONTROL OF THE PARENT
The Trustee for and on behalf of the beneficiaries named therein (as
defined in the Voting Trust Agreement) has and will have control of the
Parent.
16.21 PARENT AND ORIGINAL BORROWER
The Parent and the Original Borrower are and will be holding companies
and do not and will not carry on any other business save as permitted
pursuant to Clause 20.33 (The Parent) and Clause 20.34 (The Original
Borrower).
16.22 NO EVENT OF DEFAULT
No Event of Default or Potential Event of Default has occurred which is
continuing save for any Event of Default or Potential Event of Default
notified to the Agent pursuant to Clause 20.4 (Notification of Events of
Default).
16.23 CONSENTS AND APPROVALS
All necessary consents, licences, authorisations and approvals to the
transactions constituted by a Permitted Acquisition or a Permitted Equity
Funded Acquisition and the Finance Documents have been obtained on or
prior to the date of the relevant acquisition and all consents, licences,
authorisations and other approvals necessary for the conduct of the
business of the Group as carried on at the date hereof have been, or when
required will be obtained, their terms and conditions have been, or once
required, will be complied with in all material respects and they have
not been and, so far as it is aware, will not be revoked or otherwise
terminated.
16.24 TAXATION
16.24.1 Each Group member has duly and punctually paid and discharged all
taxes, assessments and governmental charges imposed upon it or
its assets within the time period allowed therefor without
imposing tax penalties or creating any Encumbrance with priority
to the Banks or the security granted or evidenced by the Security
Documents (save to the extent payment thereof is being contested
in good faith by the relevant Group member and adequate reserves
are being maintained for those taxes and where payment thereof
can lawfully be withheld and would not result in an Encumbrance
with priority to the security created or evidenced by the
Security Documents; in relation to the representation made under
this Clause 16.24 (Taxation) on the date hereof, this proviso
shall only apply to the extent any such payment has been
previously disclosed to the Agent in writing) save that no breach
of this representation in relation to the payment and discharge
of all taxes, assessments and governmental charges imposed on
each Group member or its assets shall occur unless such payment
and discharge would result in a liability against any member of
the Group in excess of (pounds)500,000.
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16.24.2 No Group member is materially overdue in the filing of any tax
returns which would result in a liability against any Group
Member in excess of (pounds)500,000.
16.24.3 No claims are being or are reasonably likely to be asserted
against any Group member with respect to taxes which could be
reasonably expected to have a Material Adverse Effect.
16.25 SECURITY INTEREST
Subject to the Legal Reservations, each Security Document to which it is
a party creates the security interest which that Security Document
purports to create or, if that Security Document purports to evidence a
security interest, accurately evidences a security interest which has
been validly created and each security interest ranks in priority as
specified in the Security Document creating or evidencing that interest.
16.26 INTELLECTUAL PROPERTY
It is not aware of any adverse circumstance relating to validity,
subsistence or use of any of its Intellectual Property which could
reasonably be expected to have a Material Adverse Effect.
16.27 GOOD TITLE TO ASSETS
It has good title to or valid leases of or other appropriate licence,
authorisation or consent to use its assets necessary to carry on its
business as presently conducted.
16.28 LEGAL AND BENEFICIAL OWNER
It is the absolute legal (subject to the Voting Trust Agreement in
respect of the Parent and the Original Borrower any necessary
registrations in the books of the entity whose shares are being charged
or any other legal formalities referred to in the Legal Opinions which
will be effected promptly after the date hereof) and, where applicable,
beneficial owner of all its assets subject to any Permitted Encumbrances
and to any security granted under the Security Documents to which it is a
party.
16.29 ISSUE OF SHARE CAPITAL
Save to the extent contemplated in Clause 20.23 (Share Capital) or in the
Securities Purchase Agreement there are no agreements in force or
corporate resolutions passed which call for the present or further 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, loan note or
loan capital of the Parent or any Group member (including an option or
right of pre-emption or conversion).
16.30 NO TRADING
Save as contemplated by, or otherwise in connection with this Agreement,
the Finance Documents, the Senior Finance Documents and the Acquisition
Documents and the transactions contemplated hereby or thereby, neither
the Parent nor the Original Borrower has not traded or undertaken any
commercial activities of any kind and has any liabilities or obligations
(actual or contingent).
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16.31 PENSIONS
Each member of the Group is in material compliance with all applicable
laws and contracts relating to the pension schemes (if any) operated by
it or in which it participates and has no material unrecorded or
unindemnified liabilities in respect of such schemes which could
reasonably be expected to have a Material Adverse Effect.
16.32 YEAR 2000 COMPLIANCE
The Parent believes (having made all reasonable enquiries) that the Year
2000 problem (that is, the risk that any computer hardware or software or
any equipment operated by electronic means used by the Group may be
unable to recognise and perform properly date-sensitive functions
involving a date before, on or after 31 December 1999) could not
reasonably be expected to have a Material Adverse Effect.
16.33 FINANCIAL MODEL AND FINANCIAL PROJECTIONS
The Financial Model and any future projections prepared for the purposes
of any Permitted Acquisition have been prepared on a basis that is in all
material respects consistent with UK GAAP.
16.34 PROPERTY
No single freehold, feuhold, leasehold or heritable property owned by any
Obligor has a value in excess of (pounds sterling)500,000.
16.35 REPETITION OF REPRESENTATIONS
16.35.1 The Repeated Representations shall be deemed to be repeated by
the relevant Obligor by reference to the then existing facts and
circumstances on the date hereof, the date each Notice of
Drawdown is given, on the first day of each Interest Period, on
each date on which an Advance is or is to be made (or any Advance
is rolled over), and on each date on which a company becomes (or
it is proposed that a company becomes) an Additional Obligor and
at the end of each Financial Quarter of the Group.
16.35.2 Clause 16.16 (Information Memorandum) shall be deemed to be made
only on the date that the Information Memorandum is approved by
the Parent and on the Syndication Date.
17. FINANCIAL INFORMATION
17.1 ANNUAL STATEMENTS
The Parent shall as soon as the same become available, but in any event
within 120 days after the end of each of its financial years, deliver to
the Agent in sufficient copies for the Banks the financial statements of
the Group and each Group member on a consolidated and consolidating basis
for such financial year, audited by an internationally recognised firm of
independent auditors licensed to practise in its jurisdiction of
incorporation, and the related auditor's and director's reports.
Such annual statements shall include a balance sheet, profit and loss
account and cash flow statement.
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17.2 QUARTERLY STATEMENTS
The Parent shall as soon as the same become available, but in any event
within 45 days after the end of each quarter of each of its financial
years, deliver to the Agent in sufficient copies for the Banks the
consolidated financial statements of the Group for such period.
Such quarterly statements shall be in a form reasonably acceptable to the
Agent and shall include a balance sheet, profit and loss account and cash
flow statement, and (other than in respect of quarterly statements in
respect of any financial quarter falling in 1999) a comparison with the
financial statements for the same financial quarter of the previous year
and a description of significant acquisitions and disposals, and other
transactions or events which are material in the context of the Group
occurring in that financial quarter and the financial year to date.
17.3 MONTHLY MANAGEMENT STATEMENTS
The Parent shall as soon as the same become available but in any event
within 30 days after the end of each month deliver to the Agent in
sufficient copies for the Banks the consolidated financial statements of
the Group for such period.
Such monthly accounts shall be on a month-to-month and cumulative basis
and in a form reasonably acceptable to the Agent and shall include a
balance sheet, profit and loss account and cashflow statements and
provide a management commentary thereon as to, inter alia, the Group's
performance during such month and the financial year to date and any
material developments or proposals affecting the Group or its business.
17.4 ANNUAL BUDGET
The Parent shall, as soon as the same become available, and in any event
no later than 10 days prior to the beginning of any financial year,
deliver to the Agent in sufficient copies for the Banks an annual Budget
(in form reasonably acceptable to the Agent) prepared by reference to
each month in respect of such financial year of the Group including:
17.4.1 forecasts of projected disposals other than in the ordinary
course of trade (including timing and amount thereof) on a
consolidated basis of the Group for such financial year;
17.4.2 projected annual profit and loss accounts (including turnover and
operating costs) for and projected balance sheets and cash flow
statements on a monthly basis for such financial year on a
consolidated basis for the Group;
17.4.3 projected Capital Expenditure to be incurred on a monthly basis
for such financial year on a consolidated basis for the Group;
17.4.4 projected EBIT as at the end of each month in such financial
year;
17.4.5 a quantitative analysis and commentary for the management on its
proposed activities for such financial year;
17.4.6 a comparison against the Business Plan forecast for such period.
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The Parent shall forthwith provide the Agent with details of any material
changes in the projections delivered under this Clause 20.4 (Annual
Budget) as soon as it becomes aware of any such change.
17.5 OTHER REPORTS AND FILINGS
The Parent shall, as soon as the same become available, but in any event
within 30 days after the filing thereof, deliver to the Agent in
sufficient copies for the Banks copies of any and all reports (whether on
Form 10-K, Form 10-Q or otherwise), proxy materials and other information
and documents, if any, which TW US shall file with the U.S. Securities
and Exchange Commission or any governmental agencies substituted therefor
under the U.S. Securities Act of 1933, as amended, or the U.S. Securities
Exchange Act of 1934, as amended.
17.6 REQUIREMENTS AS TO FINANCIAL STATEMENTS
The Parent shall ensure that each set of financial statements delivered
by it pursuant to this Clause 17 (Financial Information) is certified by
an Authorised Signatory of the Parent as giving a true and fair view of
(in the case of audited financial statements) or fairly presents in all
material respects (in the case of unaudited financial statements) the
consolidated financial condition of the Group as at the end of the period
to which those financial statements relate and of the results of the
Group's operations during such period.
17.7 COMPLIANCE CERTIFICATES
The Parent shall ensure that each set of financial statements delivered
by it pursuant to Clause 17.1 (Annual Statements) and Clause 17.2
(Quarterly Statements) is accompanied by a Compliance Certificate signed
by the Parent's auditors (in the case of a Compliance Certificate
delivered with the annual financial statements of the Group) and by the
Group Finance Director and one other director of the Parent (in the case
of a Compliance Certificate delivered with the Parent's annual or its
quarterly financial statements). Each Compliance Certificate shall
provide sufficient information to determine which subsidiaries of the
Parent are Material Subsidiaries.
17.8 OTHER FINANCIAL INFORMATION
Each Obligor shall from time to time on the request of the Agent, furnish
the Agent with such information about the business or financial condition
of the Group as the Agent or any Bank (through the Agent) may reasonably
require and, for the avoidance of any doubt, it shall be reasonable for a
Bank (through the Agent) to require copies of the annual financial
statements of any Obligor.
17.9 ACCOUNTING POLICIES
The Parent shall ensure that each set of financial statements delivered
by the Parent pursuant to this Clause 17 (Financial Information) is
prepared using UK GAAP (with normal period end adjustments for monthly
and quarterly accounts) consistent with those applied in the preparation
of the Business Plan (the "REFERENCE ACCOUNTING POLICIES") unless, in
relation to any such set of financial statements, the Parent notifies the
Agent that there have been one or more changes in any such accounting
policies,
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practices, procedures and reference period and in which case the Parent
shall procure that its auditors provide:
17.9.1 a description of the changes and the adjustments which would be
required to be made to those financial statements if they have
been prepared using the Reference Accounting Policies; and
17.9.2 sufficient information, in such detail and format as may be
reasonably required by the Agent, to enable the Banks to make an
accurate comparison between the financial position indicated by
those financial statements and the Business Plan or, as the case
may be, any accounts previously delivered under Clauses 17.1,
(Annual Statements) 17.2 (Quarterly Statements) and 17.3 (Monthly
Management Statements).
If there has been a change in accounting policies, practices, procedures
or reference period and the description and information required by this
Clause 17.9 (Accounting Policies) have been provided by the auditors in
connection with such change and any amendments have been agreed pursuant
to Clause 17.10 (Change in Accounting Policy) in connection with such
change, then such change shall become part of the normal accounting
policies, practices, procedures and reference period as if it were used
in the preparation of the Reference Accounting Policies.
17.10 CHANGE IN ACCOUNTING POLICIES
If there has been one or more such changes in any accounting policies,
practices or procedures or reference period:
17.10.1 the Agent and the Parent shall, at the Agent's or the Parent's
request, negotiate in good faith with a view to agreeing such
amendments to the financial covenants in Clause 19 (Financial
Condition) and the definitions used therein as may be necessary
to grant to the Banks protection comparable to that granted on
the date hereof, and any amendments as agreed will have effect on
the date agreed between the Agent and the Parent; and
17.10.2 if no such agreement is reached within 30 days of the Agent's
request, the Agent shall (if so requested by an Instructing
Group) instruct the auditors of the Parent or independent
accountants (approved by the Parent or, in the absence of such
approval within 5 days of request by the Agent therefor, a firm
with internationally recognised expertise) to determine any
amendment to Clause 19 (Financial Condition) which those auditors
or, as the case may be, accountants (acting as experts and not
arbitrators) consider appropriate to grant to the Banks
protection comparable to that granted on the date hereof, which
amendments shall take effect when so determined by those
auditors, or as the case may be, accountants. Where such auditors
or accountants are instructed hereunder, the cost and expense of
those auditors or accountants shall be for the account of the
Parent.
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18. OTHER INFORMATION
18.1 SHAREHOLDER INFORMATION
The Parent shall, as soon as reasonably practicable, after the same are
supplied or made available, furnish the Agent with such general
information as is required by law to be supplied or made available to all
shareholders (in their capacity as such) of the Parent or, in the case of
any Obligor, their creditors generally or any class thereof.
18.2 AUDITOR'S LETTER
The Parent shall at the reasonable request of the Agent require and
authorise its auditors to discuss with the Agent the information and
other matters related to or arising out of the annual audit of the Group
by the auditors for the time being of the Parent.
18.3 LITIGATION AND ENVIRONMENTAL CLAIMS
The Parent shall advise the Agent promptly upon becoming aware of the
same of the details of:
18.3.1 each litigation, arbitration or administrative proceeding pending
or reasonably likely to be commenced against any member of the
Group which would, if adversely determined, result in liability
of such member of the Group in an amount in excess of
(pounds sterling)500,000; and
18.3.2 each Environmental Claim which would involve liability or
expenditure in excess of (pounds sterling)500,000.
18.4 SHAREHOLDERS
The Parent shall promptly inform the Agent in writing upon any transfer
of any legal or beneficial ownership of the Borrower and itself or any
change of control of such shares of which it is aware and such notice
shall include details of the previous owner or controller and the new
owner or controller and the number and type of shares affected.
18.5 INFORMATION COVENANTS
The Parent shall procure that any notices required to be delivered to the
Agent under Clause 20 (Covenants) are delivered in accordance with such
clause.
19. FINANCIAL CONDITION
19.1 FINANCIAL COVENANTS
The Parent shall ensure that the financial condition of the Group shall
be such that:
19.1.1 Senior Interest Cover Ratio: Interest Cover for each Relevant
Period specified in Column 1 below shall not be less than the
ratio set out in Column 2 below opposite each Relevant Period.
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COLUMN 1 COLUMN 2
RELEVANT PERIOD RATIO (TO 1.0)
(ENDING ON)
Date hereof - 31 March 2000 2.45
Date hereof - 30 June 2000 2.45
Date hereof - 30 September 2000 2.70
1 January 2000 - 31 December 2000 2.70
1 April 2000 - 31 March 2001 2.70
1 July 2000 - 30 June 2001 2.70
1 October 2000 - 30 September 2001 3.15
1 January 2001 - 31 December 2001 3.15
1 April 2001 - 31 March 2002 3.15
1 July 2001 - 30 June 2002 3.15
1 October 2001 - 30 September 2002 4.05
1 January 2002 - 31 December 2002 4.05
1 April 2002 - 31 March 2003 4.05
1 July 2002 - 30 June 2003 4.05
1 October 2002 - 30 September 2003 4.50
Each 12 month period ending on a Quarter Date 4.50
falling after 30 September 2003
"INTEREST COVER" means, in relation to any Relevant Period, the
ratio of EBITA to Net Senior Cash Interest for such Relevant
Period.
19.1.2 Fixed Charge Cover: Fixed Charge Cover for each Relevant Period
specified in column 1 below shall not be less than the ratio set
out in column 2 below opposite such Relevant Period.
COLUMN 1 COLUMN 2
RELEVANT PERIOD RATIO (TO 1.0)
1 January 2000 - 30 June 2000 0.9
1 January 2000 - 30 September 2000 0.9
1 January 2000 - 31 December 2000 0.9
1 April 2000 - 30 March 2001 0.9
Each 12 month period ending on a Quarter Date 0.9
falling after 30 March 2001
"FIXED CHARGE COVER" means, in relation to any Relevant Period,
the ratio of Cash Flow to Net Debt Service for such Relevant
Period.
19.1.3 Debtor Days: The Parent shall ensure that on each Quarter Date,
the Debtor Days shall not exceed 82.
19.1.4 Net Worth: Consolidated Net Worth shall not at any time during
each period specified in column 1 below be less than the amount
specified in column 2 below opposite such Relevant Period.
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COLUMN 1 COLUMN 2
FINANCIAL YEAR ENDING Amount (pounds)
(million)
Date hereof - 29 September 2001 18.0 + X
30 September 2001 - 29 September 2002 19.8 + X
30 September 2002 - 29 September 2003 22.5 + X
30 September 2003 - 29 September 2004 27.0 + X
30 September 2004 - 29 September 2005 31.5 + X
Each 12 month period ending on 29 September 31.5 + X
after 29 September 2005
"X" means adjusted as appropriate to take account of any
revaluation arising out of the consolidation of the Group.
19.1.5 Total Net Debt Cover Ratio: Total Net Debt Cover as at the end of
each Relevant Period specified in Column 1 below shall not be
more than the ratio set out in Column 2 below opposite such
Relevant Period.
COLUMN 1 COLUMN 2
RELEVANT PERIOD RATIO (TO 1.0)
(ENDING ON)
1 January 2000 - 31 March 2000 4.05
1 January 2000 - 30 June 2000 4.05
1 January 2000 - 30 September 2000 4.05
1 January 2000 - 31 December 2000 4.05
1 April 2000 - 31 March 2001 4.05
1 July 2000 - 30 June 2001 4.05
1 October 2000 - 30 September 2001 3.82
1 January 2001 - 31 December 2001 3.82
1 April 2001 - 31 March 2002 3.82
1 July 2001 - 30 June 2002 3.82
1 October 2001 - 30 September 2002 3.15
1 January 2002 - 31 December 2002 3.15
1 April 2002 - 31 March 2003 3.15
1 July 2002 - 30 June 2003 3.15
1 October 2002 - 30 September 2003 2.70
1 January 2003 - 31 December 2003 2.70
1 April 2003 - 31 March 2004 2.70
1 July 2003 - 30 June 2004 2.70
1 October 2003 - 30 September 2004 2.25
Each 12 month period ending on a Quarter Date 2.25
falling after 30 September 2004
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"TOTAL NET DEBT COVER" means, in relation to any Relevant Period,
the ratio of Total Net Debt as at the last day of such period to
EBITDA for such period.
19.1.6 Capital Expenditure: The Group shall not in any financial year
incur a greater amount of Capital Expenditure than is specified
in the annual Budget relating to such financial year.
19.2 CALCULATIONS
For the purpose of calculating Total Net Debt Cover:
In relation to any Relevant Period ending on or before 30 September 2000,
EBITDA shall be determined on a rolling 12 month basis and shall be
calculated by annualising actual EBITDA, in respect of the period from 1
January 2000 to the last day of the Relevant Period.
19.3 FINANCIAL DEFINITIONS
In Clause 19 (Financial Condition) the following terms have the following
meanings.
"APPROVED ACCOUNTING PRINCIPLES" means UK GAAP.
"AVERAGE DAILY SALES" means, the total sales during the relevant quarter
divided by the number of days in that quarter.
"CASH" means, at any time, cash at bank denominated in sterling and
credited to an account in the name of a Borrower with an Eligible Deposit
Bank and to which a Borrower is alone beneficially entitled and for so
long as (a) such cash is repayable on demand and (b) repayment of such
cash is not contingent on the prior discharge of any other indebtedness
of any Group member or of any other person whatsoever or on the
satisfaction of any other condition.
"CAPITAL EXPENDITURE" means any expenditure which would be treated as
capital expenditure in accordance with Approved Accounting Principles.
"CASH FLOW" means, in respect of any Relevant Period, EBIT for such
Relevant Period:
(a) adding back depreciation and the amount attributable to
amortisation of goodwill or any intangible assets during that
period, to the extent deducted in arriving at EBIT;
(b) minus any taxes paid in cash during such Relevant Period;
(c) minus all Capital Expenditure during such Relevant Period and for
this purpose to the extent that any Capital Expenditure is
financed by finance lease, hire purchase or similar arrangements
the amount included in Capital Expenditure shall be the amount
which would have been included had such Capital Expenditure not
been so financed but after including the principal amount
financed under such financing arrangements as a cash inflow;
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(d) plus any extraordinary items received in cash during such
Relevant Period;
(e) minus any extraordinary items paid in cash during such Relevant
Period;
(f) minus the amount of the increase or plus the amount of the
decrease (as the case may be) in Working Capital during such
Relevant Period;
(g) plus the amount of any dividends or other profit distributions
(net of tax) received in cash by any member of the Group during
such Relevant Period from companies which are not members of the
Group;
(h) minus the aggregate amount of Total Consideration of Permitted
Acquisitions and Permitted Equity Funded Acquisitions made during
such Relevant Period;
(i) plus the aggregate of the Available Cash and drawings under the
Term B Facility utilised to fund Permitted Acquisitions and
Permitted Equity Funded Acquisitions made during such Relevant
Period;
(j) after adding back or deducting, as the case may be, the amount of
any gain or any loss against book value arising on a disposal of
any asset (not being stock disposed of in the ordinary course of
trading) during such Relevant Period to the extent deducted or
added back in arriving at EBIT for that period;
(k) plus (to the extent not already included) the amount of any Net
Disposal Proceeds arising during such Relevant Period on the
disposal of any asset (not being stock disposed of in the
ordinary course of trading) save for any Net Disposal Proceeds
which are held in the Holding Account;
(l) plus (to the extent not already included) any amount of
additional available cash resulting from the use of any pension
surplus during such Relevant Period;
(m) minus, except to the extent deducted in calculating EBIT, the net
cost of management fees during such Relevant Period;
(n) minus payments on provisions or reserves not included in Working
Capital in respect of such Relevant Period;
(o) minus payments with respect to capitalised assets not included in
Capital Expenditure or Working Capital in respect of such
Relevant Period; and
(p) after adding back the aggregate amount of payments during such
Relevant Period made in respect of Earn Out obligations of the
Group entered into prior to the date of the Agreement PROVIDED
THAT the aggregate of all such adjustments made under this
sub-paragraph (p) since the date of this Agreement shall not
exceed the cash balances (excluding Available Cash) of the Group
at the date hereof.
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<PAGE>
"CONSOLIDATED FIXED CHARGES" means, in respect of any Relevant Period,
the aggregate of:
(a) Net Cash Interest for that Relevant Period;
(b) all scheduled repayments of principal under the terms of any
Indebtedness for Borrowed Money (but excluding any voluntary or
mandatory prepayment of the Facilities) of any member of the
Group (excluding any Indebtedness for Borrowed Money between any
member of the Group and any other member of the Group) falling
due during that period:
(i) including, without limitation, all capital payments falling
due in respect of any Indebtedness for Borrowed Money
falling within paragraph (g) of the definition of that term;
and
(ii) excluding any repayment or prepayment of any overdraft or
revolving credit facility (including, without limitation,
the Revolving Advances) falling due during that period and
capable of being simultaneously redrawn under the terms of
the relevant facility;
"CONSOLIDATED NET WORTH" means at any time the aggregate of the amounts
paid up or credited as paid up on the issued share capital of the Parent
(other than any redeemable shares) and the aggregate amount of the
reserves of the Group including:
(a) any amount credited to the share premium account;
(b) any capital redemption reserve fund; and
(c) any balance standing to the credit or debit of the consolidated
profit and loss account reserve of the Group, adjusted for (i)
the effect of the historic goodwill arising on consolidation of
the (pounds sterling)50,701,000; (2) the elimination of the
amortisation charged in respect of purchased goodwill as per the
consolidated profit and loss account of the Group; and (3)
deducting the amortisation of purchased goodwill over a five (5)
year period,
but deducting:
(i) (to the extent included) any amounts arising from an upward
revaluation of assets made at any time after 30 September 1999;
and
(ii) (to the extent included) any dividend or distribution recommended
but not debited to the profit and loss account reserve or made by
any member of the Group to the extent payable to a person who is
not a member of the Group and such distribution is not provided
for in the most recent financial statements,
and so that no amount shall be included or excluded more than once.
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"CURRENT ASSETS" means the sum of inventory, trade receivables and other
receivables (including sundry debtors) falling due within 12 months,
prepaid accounts and other assets but excluding cash at bank and in hand.
"CURRENT LIABILITIES" means the sum of all liabilities falling due within
12 months (including trade creditors, accruals and provisions and
prepayments but excluding any Indebtedness for Borrowed Money falling due
within such period.
"DEBTOR DAYS" means, with respect to any Quarter Date, the aggregate of
all outstanding receivables (excluding VAT) (net of any provisions) on
such Quarter Date divided by Average Daily Sales.
"EBIT" means, in respect of any Relevant Period, the consolidated profit
of the Group for such period:
(a) before any deduction of corporation tax or other taxes on income
or gains for such Relevant Period;
(b) before any deduction of Interest Payable in respect of such
Relevant Period and before amortisation of Acquisition Costs, to
the extent amortised;
(c) after deducting (to the extent included) Interest Receivable in
respect of such Relevant Period;
(d) excluding extraordinary items relating to such Relevant Period;
(e) after deducting (to the extent otherwise included) the amount of
profit (or adding back the loss) for such Relevant Period of any
member of the Group which is attributable to any third party (not
being a member of the Group) which is a shareholder in such
member of the Group;
(f) after deducting (to the extent otherwise included) any gain over
book value arising in favour of a member of the Group on the
disposal of any asset (not being any disposals made in the
ordinary course of trading) during such Relevant Period and any
gain arising on any revaluation of any asset during such period;
(g) after adding back (to the extent otherwise deducted) any loss
against book value incurred by a member of the Group on the
disposal of any asset (not being any disposals made in the
ordinary course of trading) during such Relevant Period; and
(h) after deducting any depreciation on fixed assets relating to such
Relevant Period.
"EBITA" means, in respect of any Relevant Period, EBIT for such period
before deducting amortisation of any goodwill on any intangible assets
relating to such Relevant Period.
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"EBITDA" means, in respect of any Relevant Period, EBIT for such period
adding back depreciation and amortisation during that period, to the
extent deducted in calculating EBIT and taking into account any
applicable Agreed Pro Forma Adjustments.
"ELIGIBLE DEPOSIT BANKS" means any bank or financial institution with a
short term rating of at least A1 granted by Standard & Poor's Corporation
or P1 granted by Moody's Investors Services Inc..
"EXCESS CASH FLOW" means, in respect of any financial year of the Group,
Cash Flow for such financial year:
(a) less the aggregate of:
(i) Consolidated Fixed Charges of the Group; and
(ii) (9.375% multiplied by the Original Senior Subordinated Note
Amount) minus any cash interest paid under the Senior
Subordinated Notes,
for such financial year;
(b) less (to the extent included in calculating Cash Flow) the amount
prepaid during such financial year pursuant to the provisions of
Clause 9.1 (Mandatory Prepayment on Disposals);
(c) less an amount equal to the amount required to reduce drawings
under the Revolving Facility to zero as at the date of
calculation.
"FINANCIAL QUARTER" means the period commencing on the day after one
Quarter Date and ending on the next Quarter Date.
"INTEREST" means, in respect of any Relevant Period, amounts payable
pursuant to Clause 11 (Taxes) and interest and amounts in the nature of
interest paid or payable in respect of any Indebtedness for Borrowed
Money of any member of the Group excluding any interest paid or payable
on Indebtedness for Borrowed Money between any member of the Group and
any other member of the Group but including:
(a) the interest element of finance leases;
(b) discount and acceptance fees payable (or deducted) in respect of
any Indebtedness for Borrowed Money excluding any income or
expense received or incurred in connection with any sales through
factoring or leasing transactions but only to the extent that
such amounts have been taken into account in the cost of sales
for the purposes of calculating EBIT;
(c) the net amount (expressed as a positive or negative amount, as
appropriate) due to or from members of the Group pursuant to
interest rate hedging or similar agreements; and
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(d) commitment, utilisation and non-utilisation fees payable or
incurred in respect of Indebtedness for Borrowed Money.
"INTEREST PAYABLE" means, in respect of any Relevant Period, Interest
accrued (whether or not paid or capitalised) during that Relevant Period
as an obligation of any member of the Group during that period and
calculated on the basis that amortisation of Acquisition Costs, to the
extent amortised, will be excluded.
"INTEREST RECEIVABLE" means, in respect of any Relevant Period, the
amount of Interest (which for this purpose shall include all payments of
the type described in the definition of Interest above (except for
paragraph (c) thereof)) received by members of the Group (other than by
other members of the Group) during such period whether or not paid.
"MONITORED CAPITAL EXPENDITURE" means Capital Expenditure other than
Permitted Acquisitions.
"NET CASH INTEREST" means, in respect of any Relevant Period, Interest
Payable less Interest Receivable to the extent actually received in cash
during that period.
"NET DEBT SERVICE" means, in respect of any Relevant Period, the
aggregate of:
(a) Net Cash Interest; and
(b) the aggregate of scheduled payments of any Indebtedness for
Borrowed Money falling due.
"NET SENIOR CASH INTEREST" means, in respect of any Relevant Period,
Senior Interest Payable less Interest Receivable to the extent actually
received in cash during that period.
"NET SENIOR DEBT" means, at any time, all Indebtedness for Borrowed Money
of the Group at such time:
(a) less amounts outstanding under the Mezzanine Facility at such
time;
(b) less the aggregate amount of all cash balances (excluding the
Available Cash) and Cash Equivalent Investments;
(c) less any Indebtedness for Borrowed Money (not falling within (a)
above) which is subordinated pursuant to the Intercreditor
Arrangements or otherwise on terms acceptable to an Instructing
Group.
"QUARTER DATE" means each of 31 March, 30 June, 30 September and 31
December.
"RELEVANT PERIOD" means (notwithstanding that such period commenced prior
to the date hereof):
(a) each period of twelve months ending on the last day of the
Parent's financial year; and
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(b) each period of twelve months ending on the last day of each
Financial Quarter of the Parent's financial year,
PROVIDED THAT if any such period includes the date hereof, it shall be
deemed to commence on such date.
"SENIOR INTEREST" means, in respect of any Relevant Period, all interest
and amounts in the nature of interest paid or payable in respect of the
Facilities of any member of the Group including any commitment,
utilisation and non-utilisation fees payable or incurred in respect of
the Facilities.
"SENIOR INTEREST PAYABLE" means, in respect of any Relevant Period,
Senior Interest accrued (whether or not paid or capitalised) during that
Relevant Period as an obligation of any member of the Group during that
period.
"TOTAL DEBT" means, at any time, the aggregate amount of Indebtedness for
Borrowed Money (excluding any indebtedness incurred in relation to Senior
Subordinated Notes) of the Group at such time.
"TOTAL NET DEBT" means, in respect of any Relevant Period, Total Debt
less the aggregate amount of all cash balances (excluding the Available
Cash).
"WORKING CAPITAL" means, at any time, the Consolidated Net Assets of the
Group comprising stock and debtors (but excluding any cash) and deducting
trade creditors and other Current Liability at the last day of such
Relevant Period.
19.4 FINANCIAL TESTING
The financial covenants set out in Clause 19 (Financial Condition) shall
be tested by reference to each of the financial statements and/or each
Compliance Certificate delivered pursuant to Clause 17 (Financial
Information).
19.5 AUDITOR'S VERIFICATION
The Agent may, at any time if it has reasonable grounds for believing
that the figures prepared by the Parent are incorrect, inaccurate or
incomplete at the Parent's expense require the auditors of the Group or
the Group to verify the figures supplied by the Parent in connection with
the financial conditions set out in Clause 19.1 (Financial Covenants).
The Agent may, in accordance with this Clause 19.5, request verification
of any figure or calculation made in a Compliance Certificate and/or
delivered under Clause 18 (Other Information) and/or any figure contained
in the financial statements delivered under Clause 17 (Financial
Information) which is relevant to the calculation of the financial
conditions referred to above.
If such auditors fail to verify such figures to the reasonable
satisfaction of the Agent after being requested to do so, the Agent may
appoint an independent firm of accountants to carry out an appropriate
investigation and give a certificate in a form and content reasonably
satisfactory to the Agent certifying or verifying the relevant
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figures and satisfaction of the above financial conditions shall be
determined be reference to the figures so verified or certified even if
the audited or management accounts for the same date or period have not
yet been published.
19.6 ACCOUNTING TERMS
All accounting expressions to the extent that not otherwise defined
herein shall be construed in accordance with UK GAAP.
20. COVENANTS
20.1 MAINTENANCE OF LEGAL VALIDITY AND LEGAL STATUS
Each Obligor shall do all such things as are necessary to maintain its
and its subsidiaries existence as a legal person and obtain, comply with
the terms of and do all that is necessary to maintain in full force and
effect all authorisations, approvals, licences, consents and exemptions
required in or by the laws of its jurisdiction of incorporation to enable
it lawfully to enter into and perform its obligations under the Finance
Documents to which it is expressed to be a party and to ensure the
legality, validity, enforceability (subject to the Legal Reservations) or
admissibility in evidence in its jurisdiction of incorporation of the
Finance Documents and, on request of the Agent, supply copies (certified
by an Authorised Signatory of the relevant Obligor as true, complete and
up to date) of any such authorisations, approvals, licences, consents and
exemptions.
20.2 INSURANCE
20.2.1 Each Obligor shall and shall procure that each Material
Subsidiary shall effect and maintain insurances on and in
relation to its business and assets with reputable underwriters
or insurance companies against such risks and to such extent as
is usual for prudent companies carrying on a business such as
that carried on by such Material Subsidiary (including, but not
limited to, loss of earnings, business interruption, directors
and officers liability cover).
20.2.2 Without prejudice to sub-clause 20.2.1, each Obligor shall, and
shall procure that each Material Subsidiary effects and maintains
insurances on and in relation to its business and assets:
(a) against such risks and at such levels as are recommended by
such Material Subsidiary's insurance advisers or such higher
levels as are normally maintained by persons carrying on the
same business as that carried on by such Group member; and
(b) in compliance with any relevant agreements which are binding
on it from time to time.
20.2.3 The Parent shall (if so requested in writing) supply the Agent
with copies of all such insurance policies or certificates of
insurance in respect thereof or (in the absence of the same) such
other evidence of the existence of such policies as may be
reasonably acceptable to the Agent and shall, in any event,
notify
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the Agent of any material changes to its insurance cover made
from time to time.
20.3 ENVIRONMENTAL MATTERS
20.3.1 Each Obligor shall and shall ensure that each member of the Group
shall comply in all material respects with all Environmental Law
and obtain and maintain any Environmental Permits and take all
reasonable steps in anticipation of known or expected future
changes to or obligations under the same, breach of which (or
failure to obtain, maintain or take which) could reasonably be
expected to have a Material Adverse Effect.
20.3.2 Each Obligor shall, and shall procure that each Group member
shall, inform the Agent in writing as soon as reasonably
practicable upon becoming aware of the same if any Environmental
Claim has been commenced or (to the best of it's knowledge and
belief) is threatened against any member of the Group in any case
where such claim would be reasonably likely to have a Material
Adverse Effect or of any facts or circumstances which will or are
reasonably likely to result in any Environmental Claim being
commenced or threatened against any member of the Group in any
case where such claim could reasonably be expected to have a
Material Adverse Effect.
20.4 NOTIFICATION OF EVENTS OF DEFAULT
Each Obligor shall and shall procure that each Group member shall, inform
the Agent of the occurrence of any Event of Default or Potential Event of
Default and, upon receipt of a written request to that effect from the
Agent (if the Agent has reasonable grounds for believing that there may
be an Event of Default or Potential Event of Default), confirm to the
Agent that, save as previously notified to the Agent or as notified in
such confirmation, no Event of Default or Potential Event of Default has
occurred.
20.5 CLAIMS PARI PASSU
Each Obligor shall ensure that at all times the claims of the Finance
Parties against it under the Finance Documents rank at least pari passu
with the claims of all its other unsecured and unsubordinated creditors
save those whose claims are preferred by any bankruptcy, insolvency,
liquidation or other similar laws of general application.
20.6 CONSENTS AND APPROVALS
Each Obligor shall, and shall procure that each member of the Group
shall, comply with all applicable laws, rules, regulations and orders and
obtain and maintain all governmental and regulatory consents, licences,
authorisations and approvals the failure to comply with which or the
failure to obtain and maintain which could be reasonably be expected to
have a Material Adverse Effect.
20.7 CONDUCT OF BUSINESS
Each Obligor shall, and shall procure that each Material Subsidiary
shall, ensure that it has the right and is duly qualified to conduct its
business as it is conducted from time to time in all applicable
jurisdictions and does all things necessary to obtain, preserve and
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keep in full force and effect all material rights including, without
limitation, all franchises, contracts, licences, IP Licences, consents
and other rights which are necessary for the conduct of its business.
20.8 TAX
Each Obligor shall, and shall procure that each Material Subsidiary
shall, duly and punctually pay and discharge (a) all taxes, assessments
and governmental charges imposed upon it or its assets within the time
period allowed therefor without imposing penalties and without resulting
in an Encumbrance with priority to any Bank or any security purported to
be granted by or created pursuant to the Security Documents (save to the
extent payment thereof is being contested in good faith by the relevant
Group member and adequate reserves are being maintained for those taxes
and where payment thereof can lawfully be withheld and would not result
in an Encumbrance with priority to the security created or evidenced by
the Security Documents) and (b) all lawful claims which, if unpaid, would
by law become Encumbrances upon its assets which are not Permitted
Encumbrances.
20.9 PRESERVATION OF ASSETS
Each Obligor shall, and shall procure that each Material Subsidiary
shall, maintain and preserve all of its assets that are necessary in the
conduct of its business as conducted at the date hereof in good working
order and condition, ordinary wear and tear excepted.
20.10 SECURITY
20.10.1 Each Obligor shall, and shall procure that each member of the
Group shall, at its own expense, take all such action as the
Agent or the Security Agent may require (acting reasonably) for
the purpose of perfecting or protecting the Agent's or Security
Agent's rights under and preserving the security interests
intended to be created or evidenced by any of the Finance
Documents and as the Agent or the Security Agent may require
following the making of any declaration pursuant to Clause 21.23
(Acceleration and Cancellation) or 21.24 (Advances Due on Demand)
for facilitating the realisation of any such security or any part
thereof.
20.10.2 Each Obligor shall, and shall procure that each member of the
Group shall, ensure that (save as specified in the Legal
Reservations) each Security Document to which it is a party
creates the security interest which that Security Document
purports to create or, if that Security Document purports to
evidence a security interest, accurately evidences a security
interest which has been validly created and that each security
interest ranks in priority as specified in the Security Document
creating or evidencing that interest.
20.11 PENSIONS
The Obligors shall, and shall procure that each Group member shall,
ensure that all pension schemes are administered and funded in accordance
with applicable law.
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20.12 ACCESS
While an Event of Default or Potential Event of Default (or the Agent
reasonably suspects an Event of Default) is continuing and is not
remedied or waived in respect of which information has been requested by
the Agent and not supplied or not adequately answered, the Parent shall,
ensure that any one or more representatives, agents and advisers of the
Agent will on reasonable notice be allowed to have access to the assets,
books, records and premises of each Group member and to inspect the same
during normal business hours (at the reasonable expense of the Parent).
20.13 INTELLECTUAL PROPERTY
Each Obligor shall, and shall procure that each Group member shall do all
acts as are reasonably practicable to maintain, protect and safeguard the
Intellectual Property necessary for the business of the relevant Group
member and not terminate or discontinue the use of any such Intellectual
Property save that licensing arrangements in relation to such
Intellectual Property may be entered into between members of the Group
provided that (1) such licensing arrangements do not allow any further
sub-licensing by the licensee and (2) such licensing arrangements would
not have a material adverse effect on the value of any of the
Intellectual Property the subject matter of such licensing arrangements
Provided that a failure to do so would cause a Material Adverse Effect.
20.14 BANK ACCOUNTS
Each Obligor shall ensure that all sums received by an Obligor which is
party to a Security Document providing security over a bank account which
security is ultimately assigned and/or pledged to the Security Agent are
paid into a bank account or accounts with such banks or financial
institutions previously approved in writing by the Agent and which are
subject (to the extent legally possible) to security in favour of the
Security Agent pursuant to the Security Documents.
20.15 BANK ACCOUNTS
The Parent shall, as soon as possible, but in any event, no later than
the day following three (3) months after the date hereof, ensure that in
relation to a Borrower, all sums received by it or by any Group Member
are paid into a bank account or accounts with a member of the syndicate
Banks hereunder and are subject to the security in favour of the Security
Agent pursuant to the Security Documents.
20.16 NEGATIVE PLEDGE
No Obligor shall, and each Obligor will procure that no member of the
Group shall, create or permit to subsist any Encumbrance over all or any
of its present or future revenues or assets other than a Permitted
Encumbrance or create any restriction or prohibition on Encumbrances over
all or any of its present or future revenues or assets.
20.17 LOANS AND GUARANTEES
No Obligor shall, and each Obligor will procure that no member of the
Group shall, make any loans, grant any credit or other financial
accommodation or give any guarantee (except as required by the Finance
Documents) to or for the benefit of any
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person or otherwise voluntarily assume any liability, whether actual or
contingent, in respect of any obligation of any other person except:
20.17.1 trade credit or indemnities or guarantees granted in the ordinary
course of trading and upon terms usual for such trade; or
20.17.2 Permitted Transactions.
20.18 FINANCIAL INDEBTEDNESS
No Obligor shall, and each Obligor will procure that no member of the
Group shall, incur, create or permit to subsist or have outstanding any
Financial Indebtedness or enter into any agreement or arrangement whereby
it is entitled to incur, create or permit to subsist any Financial
Indebtedness other than, in either case, Permitted Indebtedness.
20.19 DISPOSALS
No Obligor shall, and each Obligor shall procure that no member of the
Group shall make any disposal of, by one or more transactions or series
of transactions (whether related or not), the whole or any part of its
revenues or its assets or its business or undertakings other than
Permitted Disposals.
20.20 MERGERS
No Obligor shall, and each Obligor shall procure that no member of the
Group shall, without the prior consent of an Instructing Group, merge or
consolidate with any other person, enter into any demerger transaction or
participate in any other type of corporate reconstruction (other than a
corporate reconstruction which is effected by means of capitalisation of
any Intra-Group Loan permitted hereunder).
20.21 ACQUISITIONS
Save as permitted under the Senior Credit Agreement, no Obligor shall,
and each Obligor shall procure that no member of the Group shall (without
the prior consent of an Instructing Group):
20.21.1 purchase, subscribe for or otherwise acquire any shares (or other
securities or any interest therein) in, or incorporate, any other
company or agree to do any of the foregoing; or
20.21.2 purchase or otherwise acquire any assets (other than in the
ordinary course of business or pursuant to any Capital
Expenditure permitted under the terms of this Agreement) or
(without limitation to any of the foregoing) acquire any business
or interest therein or agree to do so; or
20.21.3 form, or enter into, any partnership, consortium, Joint Venture
or other like arrangement or agree to do so.
20.22 DIVIDENDS, DISTRIBUTIONS AND INTEREST
20.22.1 No Obligor shall, and each Obligor shall procure that no Group
member shall, pay, make or declare any dividend, return on
capital, repayment of capital contributions or other distribution
(whether in cash or in kind) or make any
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distribution of assets or other payment (including management
fees) whatsoever whether directly or indirectly save (i) in
relation to such payments made by an Obligor to the Parent to
fund (a) tax liabilities and (b) administration costs provided
the aggregate amount of the loans under paragraph (a)(v) of the
definition of Permitted Transactions and this paragraph (i) does
not exceed (pounds sterling)100,000 per annum and (2) for
Permitted Transactions.
20.22.2 No Obligor shall, and each Obligor shall procure that no Group
member shall, pay any interest or return on principal or
repayment of principal or other distribution (in cash or in kind)
to make any distribution of assets or other payment whatsoever in
respect of the Senior Subordinated Notes or any other loan notes
or loan capital whether directly or indirectly save for Permitted
Transactions and payments of interest in respect of the Senior
Subordinated Notes permitted under the Intercreditor
Arrangements.
20.22.3 No Obligor shall, and each Obligor shall procure that no Group
member shall, pay any fees or make any other payment whatsoever
whether directly or indirectly save each Obligor may pay
management fees for the two financial years after the date hereof
in aggregate up to an amount of (pounds sterling)500,000 in each
financial year (and thereafter if the proposed assets sales as
identified in the TW US Strategy Paper do not occur,
(pounds sterling)250,000 in aggregate in each financial year) in
management fees charged by TW US to the Group in relation to
compensation for providing management, personnel and facilities
to the Group.
PROVIDED THAT no such payments shall be made under this Clause 20.22
(Dividends, Distributions and Interest) if a Payment Blockage Event has
occurred and is continuing and the Agent (acting on the instructions of
an Instructing Group) has issued a Stop Notice (as such term is defined
in the Intercreditor Arrangements).
20.23 SHARE CAPITAL
No Obligor shall, and shall procure that no member of the Group shall,
issue or redeem or repurchase, purchase, defease or retire any shares or
grant any person the right (whether conditional or unconditional) to call
for the issue or allotment of any share of the Parent or any Group member
or any other equity investments, howsoever called, or alter any rights
attaching to its issued shares (including ordinary and preference shares)
other than:
20.23.1 in the case of the Original Borrower, ordinary shares to be
issued pursuant to the Warrant Documents or which are otherwise
issued to satisfy the obligations of the Parent under the Senior
Subordinated Notes and/or the obligations of the Original
Borrower under the Mirror Notes;
20.23.2 (i) any issue of shares by an Obligor (other than the by the
Original Borrower or the Parent) to another wholly-owned
member of the Group;
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(ii) the redemption, repurchase, defeasance or retirement by or
purchase by a Group member of shares or share capital owned
by the Original Borrower;
20.23.3 the granting of options to employees of any Group member to
acquire 10,010,021 shares and the issue of shares upon the
exercise of such options; and
20.23.4 under the Management Options.
20.24 AMENDMENTS
No Obligor shall, and shall procure that no Group member shall, amend,
vary, novate, supplement or terminate any of the Voting Trust Agreement,
the Mezzanine Credit Agreement, the constitutional documents or any other
document delivered to the Agent pursuant to Clauses 2.3 (Conditions
Precedent), 33.2 (Borrower Conditions Precedent) or 34.2 (Guarantor
Conditions Precedent) or waive any right thereunder other than any
amendment or variation which is of a minor or technical nature or which
could not reasonably be considered to be material to the interests of the
Finance Parties.
20.25 CHANGE OF BUSINESS
No Obligor shall, and shall procure that no Material Subsidiary shall,
without the prior consent of an Instructing Group, make any material
changes to the general nature of the business of the Group as carried on
at the date hereof, or carry on any other business which results in any
material change to the nature of such business.
20.26 FEES, COMMISSIONS AND INTEREST
No Obligor shall, and shall procure that no Group member shall, other
than as required or permitted hereunder or under the Intercreditor
Arrangements, pay any fees or commissions or interest or repayments of
intra-group indebtedness other than the arrangers fee of (pounds
sterling)555,000 payable by the Original Borrower to Triumph Corporate
Finance Group, Inc. on the date hereof.
20.27 ARM'S LENGTH BASIS
No Obligor shall, and shall procure that no Group member shall, enter
into any arrangement or contract with any of its affiliates or any Group
member save where:
20.27.1 both parties to the arrangement are Obligors; or
20.27.2 in any other case such arrangement or contract is entered into on
an arm's length basis and is fair and equitable to such Group
member; or
20.27.3 it is pursuant to any other transaction expressly permitted under
the terms of the Finance Documents.
For the purposes of this Clause 20.27 "AFFILIATE" of the specified person
shall mean any other person directly or indirectly controlling or
controlled by or under common control with such specified person or which
is a director, officer or partner (limited or general) of such specified
person; for the purposes of this definition "control", when used with
respect of any specified person, means the possession, direct or
indirect, of
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the power to vote five per cent. (5%) or more of the securities having
ordinary voting power for the election of directors or the power to
direct or cause the direction of the management and policies of such
person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
20.28 TREASURY TRANSACTIONS
No Obligor shall, and each Obligor shall procure that no Group member
shall, enter into any Treasury Transaction which is not a Permitted
Treasury Transaction.
20.29 SUBORDINATED DEBT
No Obligor shall, and each Obligor shall procure that no Group member
shall, unless permitted under the Intercreditor Arrangements or this
Agreement, pay, prepay or repay or defease, exchange or repurchase any
amount under (a) the Mezzanine Credit Agreement or (b) any Intra-Group
Loan subordinated under the Intercreditor Arrangements or (c) the Senior
Subordinated Notes or (d) the Mirror Notes.
20.30 JOINT VENTURES
No Obligor shall, and each Obligor shall procure that no Group member
shall, enter into or acquire or subscribe (or agree to enter into or
acquire or subscribe) for any shares, stocks, securities or other
interest in or transfer of any assets to or lend to or guarantee or give
security for the obligations of any Joint Ventures without prior
consultation with the Agent and provided that the aggregate liability and
total exposure (including, without limitation, the aggregate of any
investment or contribution for the Joint Venture and the amount of any
liability, actual or contingent, of any member of the Group with respect
to the obligations of such Joint Venture) of the Group to all such Joint
Ventures shall not exceed (pounds sterling)250,000 at any one time.
20.31 YEAR 2000
The Parent shall procure that all computer hardware and software and any
equipment operated by electronic means ("COMPUTER SYSTEMS") used by any
member of the Group are Year 2000 compliant (that is, in relation to any
such Computer Systems that any reference to or use of a date before, on
or after 31 December 1999 in the operation of such Computer Systems will
not have an adverse effect on the use of such Computer Systems) provided
that this provision will only apply if the failure in question could be
reasonably be expected to have a Material Adverse Effect.
20.32 HEDGING
The Parent shall, within thirty nine (39) months from the date hereof,
procure that the Borrower approved by the Agent shall enter into secured
hedging arrangements for a period of no less than three years ranking
pari passu with the claims of the Finance Parties under the Finance
Documents satisfactory to the Banks (acting reasonably) with a Bank or
Banks in order to fix or cap the total interest cost of the Obligors in
respect of at least 66% of any amounts Outstanding hereunder.
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20.33 THE PARENT
The Parent shall not carry on any business other than as holding company
of the Group and shall not own any assets other than its shareholding in
the Original Borrower and the Mirror Notes and shall not incur any
liabilities of any nature whatsoever save for (a) any Security
contemplated pursuant to the terms of this Agreement or the Mezzanine
Finance Documents; (b) its obligations under the Senior Subordinated
Notes; (c) professional fees and administration costs in the ordinary
course of business; (d) any liabilities under the Finance Documents and
Mezzanine Finance Documents and (e) any liabilities incurred pursuant to
Permitted Acquisitions.
20.34 THE ORIGINAL BORROWER
The Original Borrower shall not carry on any business other than as a
holding company of the Group and shall not own any assets other than its
shareholding in its subsidiaries and shall not incur any liabilities of
any nature whatsoever save for (a) any Security contemplated pursuant to
the terms of this Agreement or the Senior Finance Documents; (b) its
obligations under the Mirror Notes; (c) professional fees and
administration costs in the ordinary course of business; and (d) the
intra-group loans referred to in Clause (a)(iii) of the definition of
Permitted Transactions.
20.35 ACCEDING GUARANTORS
The Parent shall use all reasonable endeavours to ensure that each member
of the Group does all that is necessary (including, without limitation,
by re-registering public companies as private companies) in order to
follow the procedures set out in Sections 155-158 of the Companies Act
1985 (or its equivalent in any other jurisdiction) in order to ensure
that the it can become an Additional Guarantor.
20.36 MEDIGAS LIMITED
The Parent shall ensure that as soon as practicable after four (4) weeks
from the date hereof and no later than six (6) weeks from the date
hereof, Medigas Limited will accede as a Guarantor in accordance with
Clause 34 (Additional Guarantors) and enter into a Debenture.
21. EVENTS OF DEFAULT
Each of Clause 21.1 (Failure to Pay) to Clause 21.20 (Material Adverse
Change) describes circumstances which constitute an Event of Default for
the purposes of this Agreement.
21.1 FAILURE TO PAY
Any amount due from an Obligor or the Obligors under the Finance
Documents is not paid at the time, in the currency and in the manner
specified herein unless such failure to pay is caused by technical
difficulties with the banking system in relation to the transmission of
funds and payment is made within three Business Days of the due date.
21.2 MISREPRESENTATION
Any representation or statement made or deemed to be made by an Obligor
in any Finance Document or in any notice or other document, certificate
or statement delivered by it pursuant thereto or in connection therewith
is or proves to have been
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incorrect or misleading in any material respect when made or deemed to be
made and if the circumstances causing such misrepresentation are
reasonably capable of remedy, such Obligor shall have failed to remedy
such circumstances within 28 days of receipt by it of written notice from
the Agent requiring such circumstances to be remedied.
21.3 BREACH OF SPECIFIC COVENANTS
At any time any of the requirements of Clause 19.1 (Financial Covenants),
Clause 20.5 (Claims Pari Passu), Clause 20.15 (Negative Pledge), Clause
20.19 (Disposals), Clause 20.22 (Dividends, Distributions and Interest),
Clause 20.23 (Share Capital) or Clause 20.24 (Amendments) are not
satisfied.
21.4 BREACH OF OTHER OBLIGATIONS
An Obligor fails duly to perform or comply with any other obligation
expressed to be assumed by it in the Finance Documents and such failure,
if capable of remedy, is not remedied within 28 days after the earlier to
occur of the date the Agent has given notice thereof to the Parent or
such Obligor and the date the Obligor or the Parent has actual knowledge
and if in the opinion of the Agent, acting reasonably, the circumstances
causing such breach are reasonably capable of remedy, such Obligor shall
have failed to remedy such circumstances within 28 days of receipt by it
of written notice from the Agent requiring such circumstances to be
remedied.
21.5 CROSS DEFAULT
Any Financial Indebtedness of any Material Subsidiary is not paid when
due, any Financial Indebtedness of any Material Subsidiary is declared to
be or otherwise becomes due and payable prior to its specified maturity
by reason of a default (however described) (other than where the relevant
event of default is a breach of Clause 24.3 (Breach of Specific
Covenants) of the Senior Credit Agreement caused by an Obligor failing to
comply with any provisions of Clause 21 (Financial Covenants) of the
Senior Credit Agreement), any commitment for any Financial Indebtedness
of any Material Subsidiary is cancelled or suspended by a creditor of any
Material Subsidiary by reason of a default (however described) or any
creditor of any Material Subsidiary becomes entitled to declare or demand
any Financial Indebtedness of any Material Subsidiary due and payable
prior to its specified maturity by reason of a default (however
described), provided that it shall not constitute an Event of Default
under this Clause 21.5 (Cross Default) if the aggregate amount of all
such Financial Indebtedness is less than (pounds sterling)200,000.
21.6 INSOLVENCY AND RESCHEDULING
Any Material Subsidiary ceases or suspends generally payment of its debts
or publicly announces an intention to do so (or is deemed for the
purposes of any law applicable to it to be) or is unable to pay its debts
as they fall due or commences negotiations with or makes a proposal to
any one or more of its creditors with a view to the readjustment or
rescheduling of all or a substantial part of its indebtedness or makes a
general assignment for the benefit of or a composition with its creditors
or a moratorium is declared in respect of all or a substantial part of
the indebtedness of any Material Subsidiary.
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21.7 INSOLVENCY PROCEEDINGS
Any Material Subsidiary takes any corporate action or other steps are
taken or formal insolvency proceedings are started (whether by way of
voluntary arrangement, scheme of arrangement or otherwise) (save for any
pursuant to a solvent reorganisation previously approved in writing by an
Instructing Group) or for the appointment of a liquidator, receiver,
administrator, administrative receiver, conservator, custodian, trustee
or similar officer of it or of any or all of its revenues and assets (or
any event occurs or proceedings are taken with respect to any Group
member which has a similar or equivalent effect to any of the foregoing
in this Clause 21.7) PROVIDED THAT it shall not constitute an Event of
Default under this Clause 21.7 if a petition is presented in an
winding-up proceeding of a Material Subsidiary and such petition is
discharged within 14 days of being presented.
21.8 EXECUTION OR DISTRESS
Any execution or distress is levied against, or any encumbrancer(s) take
possession of, the whole or any part of, the property, undertaking or
assets of any Material Subsidiary or any event occurs which under the
laws of any jurisdiction has a similar or analogous effect in respect of
indebtedness exceeding (pounds sterling)200,000 (or its equivalent) in
aggregate at any time and which, in any case, is not stayed or discharged
within 21 days after such levy, taking of possession or effect and during
such 21 day period is contested in good faith by appropriate means
diligently pursued.
21.9 FAILURE TO COMPLY WITH FINAL JUDGMENT
Any Material Subsidiary fails to comply with or pay any sum due from it
or them under any final judgment or any final order made or given by any
court of competent jurisdiction when such sums exceed (pounds
sterling)200,000 (or its equivalent) in aggregate at any time.
21.10 GOVERNMENTAL INTERVENTION By or under the authority of any government:
21.10.1 the management of any Material Subsidiary is wholly or partially
displaced or the authority of any Material Subsidiary in the
conduct of its business is wholly or partially curtailed; or
21.10.2 all or a majority of the issued shares of any Material Subsidiary
or the whole or any material part of its revenues or assets is
seized, nationalised, expropriated or compulsorily acquired.
21.11 OWNERSHIP OF THE OBLIGORS
After the date hereof, any Obligor (other than the Parent) ceases to be a
wholly-owned subsidiary of the Parent, except where such disposal is
permitted hereunder and in the case of the Original Borrower except where
provided under the Warrant Document and in respect of the Management
Options.
21.12 THE GROUP'S BUSINESS
Except by reason of a Permitted Disposal, the Group as a whole ceases to
carry on the business it carries on at the date hereof or enters into any
unrelated business.
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21.13 REPUDIATION
(1) Any Finance Document or Acquisition Document or the Voting Trust
Agreement or the security intended to be constituted by or the
subordination effected under any of the Finance Documents is repudiated
by any Party (other than a Finance Party) or (2) any Party (other than a
Finance Party) does or causes to be done any act or thing reasonably
evidencing an intention to repudiate any Finance Document or any such
security or subordination effected under any of the Finance Documents or
(3) any Finance Document or Acquisition Document is not or ceases to be
in full force and effect for a continuous period of 28 days Provided that
any circumstances causing such Finance Document or Acquisition Document
to cease to be in full force and effect are capable of remedy, such Party
shall have failed to remedy such circumstances within 28 days of receipt
by it of written notice from the Agent requiring such circumstances to be
remedied or (4) the validity or applicability thereof to any sums due or
to become due thereunder is disaffirmed by or on behalf of any Obligor.
21.14 ILLEGALITY
21.14.1 At any time any Obligor no longer has the legal power to perform
its obligations under the Finance Documents to which it is a
party or to own its assets or to carry on its business or at any
time it is or becomes unlawful for an Obligor to perform or
comply with any or all of its obligations under any Finance
Document to which it is a party or any of the obligations of an
Obligor thereunder are not or cease to be legal, valid, binding
and enforceable (except as provided in the Legal Reservations)
and if capable of remedy such Obligor shall have failed to remedy
such circumstances with 14 days of receipt by it of written
notice from the Agent requiring such circumstances to be
remedied.
21.14.2 At any time it is or becomes unlawful for any Party to perform or
comply with any or all of its obligations under any Acquisition
Document or
21.14.3 At any time any of the obligations of any person party to any
Acquisition Document are not or cease to be legal, valid, binding
and enforceable, which in each case could be reasonably expected
to have a Material Adverse Effect.
21.15 AUDITOR'S QUALIFICATION
The auditors of the Parent or any Group member qualify their annual audit
report to the consolidated accounts of the Group or the unconsolidated
accounts of any Group member in a manner which is, in the reasonable
opinion of an Instructing Group, material in the context of the
Facilities.
21.16 ENVIRONMENTAL
Any Group member breaches any Environmental Law or any Environmental
Claim is made or threatened against any Group member which, in either
case, could reasonably be expected (taking into account the likelihood of
success of such proceedings) to have a Material Adverse Effect.
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21.17 LITIGATION
21.17.1 Any litigation, arbitration, administrative proceedings or
governmental or regulatory investigations, proceedings or
disputes are commenced or threatened against any Group member or
its respective assets or revenues (taking into account the
likelihood of success of such proceedings) which could reasonably
be expected to have a Material Adverse Effect; or
21.17.2 the filing by any person other than the Initial Investors or a
Finance Party, whether at law or in equity, of any suit or
complaint (or, in the case of derivative or other actions, on
behalf of the TW US and the Parent or their successors or assigns
by any representative, trustee, agent, court or administrative
agency, receiver or administrator preliminary proceedings seeking
permission or authority for the filing of any suit or complaint)
with any court of competent jurisdiction, or the commencement of
any other legal proceeding or administrative process seeking in
any manner whatsoever to (i) have the creation of the voting
trust pursuant to the Voting Trust Agreement or the transfer to
such voting trust of all the issued shares of the Parent and the
Original Borrower declared void or invalid or rescinded, (ii)
challenge the validity, enforceability or effectiveness of the
Voting Trust Agreement or the voting trust created hereby, or
(iii) direct the Trustee (as defined in the Voting Trust
Agreement) to vote or refrain from voting or to transfer or
refrain from transferring the issued shares of the Parent and the
Original Borrower held in the voting trust in any manner
inconsistent in any respect with Section 6 of the Voting Trust
Agreement including injunctive or similar equitable relief
seeking to prevent the taking of any action that requires the
approval of the shareholders of the Parent or the Original
Borrower pending resolution of any legal challenge involving the
voting share created by the Voting Trust Agreement, the Original
Borrower Constitutional documents or the rights of the Initial
Investors under the Securities Purchase Agreement or any
agreement or instruct contemplated thereby.
21.18 SUBORDINATED DEBT
An event of default (howsoever described) occurs under the Mezzanine
Credit Agreement and is continuing unremedied or unwaived.
21.19 INTERCREDITOR ARRANGEMENTS
Any party to the Intercreditor Arrangements (other than any Finance
Party, the Senior Agent or any Senior Banks) fails to comply with its
obligations under the Intercreditor Arrangements.
21.20 VOTING TRUST
21.20.1 Any party to the Voting Trust Agreement (other than any Finance
Party, the Senior Agent or any Senior Bank) fails to comply with
its obligations under the Voting Trust Agreement;
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21.20.2 at any time the Voting Trust Agreement is amended, varied,
novated, supplemented or terminated or any rights are waived (in
a manner which is prejudicial to the Banks) thereunder without
the consent of the Banks.
21.21 CONTROL OF PARENT
The Trustee for and on behalf of the beneficiaries named therein (as
defined in the Voting Trust Agreement) ceases to control the Parent.
21.22 MATERIAL ADVERSE CHANGE
Any event or circumstance occurs which could reasonably be expected to
have a Material Adverse Effect.
21.23 ACCELERATION AND CANCELLATION
Upon the occurrence of an Event of Default which is continuing and at any
time thereafter, the Agent may (and, if so instructed by an Instructing
Group, shall) by notice to the Parent:
21.23.1 declare all or any part of the Advances to be immediately due and
payable (whereupon the same shall become so payable together with
accrued interest thereon and any other sums then owed by the
Obligors under the Finance Documents) or declare all or any part
of the Advances to be due and payable on demand of the Agent;
and/or
21.23.2 declare that any unutilised portion of the Facilities shall be
cancelled, whereupon the same shall be cancelled and the
Available Commitment of each Bank shall be reduced to zero;
and/or
21.23.3 exercise or direct the Security Agent to exercise all rights and
remedies.
21.24 ADVANCES DUE ON DEMAND
If, pursuant to Clause 21.23 (Acceleration and Cancellation), the Agent
declares all or any part of the Advances to be due and payable on demand
of the Agent, then, and at any time thereafter, the Agent may (and, if so
instructed by an Instructing Group, shall) by notice to the Parent:
21.24.1 require repayment of all or such part of the Advances on such
date as it may specify in such notice (whereupon the same shall
become due and payable on the date specified together with
accrued interest thereon and any other sums then owed by the
Obligors under the Finance Documents) or withdraw its declaration
with effect from such date as it may specify; and/or
21.24.2 select as the duration of any Interest Period or Term which
begins whilst such declaration remains in effect a period of six
months or less; and/or
21.24.3 declare that the Security Documents (or any of them) shall have
become enforceable.
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22. GUARANTEE AND INDEMNITY
22.1 PARENT GUARANTEE AND INDEMNITY
The Parent irrevocably and unconditionally:
22.1.1 guarantees to each Finance Party the due and punctual observance
and performance of all the terms, conditions and covenants on the
part of each Obligor (other than the Parent) contained in any of
the Finance Documents and agrees to pay from time to time on
demand by the Agent any and every sum or sums of money which each
Obligor (other than the Parent) is at any time liable to pay to
any Finance Party under or pursuant to any of the Finance
Documents and which has become due and payable but has not been
paid at the time such demand is made; and
22.1.2 agrees as a primary obligation to indemnify each Finance Party
from time to time on demand by the Agent from and against any
loss incurred by any Finance Party as a result of any of the
obligations of each Obligor (other than the Parent) under or
pursuant to any of the Finance Documents being or becoming void,
voidable, unenforceable or ineffective as against such Obligor
for any reason whatsoever, whether or not known to any Finance
Party or any other person, the amount of such loss being the
amount which the person or persons suffering it would otherwise
have been entitled to recover from such Obligor.
22.2 GROUP GUARANTEE AND INDEMNITY
Each Guarantor other than the Parent irrevocably and unconditionally:
22.2.1 guarantees to each Finance Party the due and punctual observance
and performance of all the terms, conditions and covenants on the
part of each Obligor (other than itself) contained in any of the
Finance Documents and agrees to pay from time to time on demand
by the Agent any and every sum or sums of money which each
Obligor (other than itself) is at any time liable to pay to any
Finance Party under or pursuant to any of the Finance Documents
and which has become due and payable but has not been paid at the
time such demand is made; and
22.2.2 agrees as a primary obligation to indemnify each Finance Party
from time to time on demand by the Agent from and against any
loss incurred by any Finance Party as a result of any of the
obligations of each Obligor (other than itself) under or pursuant
to any of the Finance Documents being or becoming void, voidable,
unenforceable or ineffective as against such Obligor for any
reason whatsoever, whether or not known to any Finance Party or
any other person, the amount of such loss being the amount which
the person or persons suffering it would otherwise have been
entitled to recover from such Obligor.
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22.3 ADDITIONAL SECURITY
The obligations of each Guarantor herein contained shall be in addition
to and independent of every other security which any Finance Party may at
any time hold in respect of any of any Obligor's obligations under the
Finance Documents.
22.4 CONTINUING OBLIGATIONS
The obligations of each Guarantor herein contained shall constitute and
be continuing obligations notwithstanding any settlement of account or
other matter or thing whatsoever and shall not be considered satisfied by
any intermediate payment or satisfaction of all or any of the obligations
of the Obligors under the Finance Documents and shall continue in full
force and effect until final payment in full of all amounts owing by any
Obligor under the Finance Documents and total satisfaction of all the
Obligors' actual and contingent obligations thereunder.
22.5 OBLIGATIONS NOT DISCHARGED
Neither the obligations of each Guarantor herein contained nor the
rights, powers and remedies conferred in respect of each Guarantor upon
any Finance Party by any Finance Document or by law shall be discharged,
impaired or otherwise affected by:
22.5.1 any insolvency proceeding in respect of any Obligor or any other
person or any change in its status, function, control or
ownership;
22.5.2 any of the obligations of any Obligor or any other person under
any Finance Document or under any other security taken in respect
of any of its obligations under any Finance Document being or
becoming illegal, invalid, unenforceable or ineffective in any
respect;
22.5.3 time or other indulgence being granted or agreed to be granted to
any Obligor in respect of its obligations under any Finance
Document or under any such other security;
22.5.4 any amendment to, or any variation, waiver or release of, any
obligation of any Obligor under any Finance Document or under any
such other security;
22.5.5 any failure to take, or fully to take, any security contemplated
hereby or otherwise agreed to be taken in respect of any
Obligor's obligations under any Finance Document;
22.5.6 any failure to realise or fully to realise the value of, or any
release, discharge, exchange or substitution of, any security
taken in respect of any Obligor's obligations under any Finance
Document; or
22.5.7 any other act, event or omission which, but for this Clause 22.5
(Obligations not Discharged) might operate to discharge, impair
or otherwise affect any of the obligations of each Guarantor
contained in any Finance Document or any of the rights, powers or
remedies conferred upon any of the Finance Parties by any Finance
Document or by law.
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22.6 SETTLEMENT CONDITIONAL
Any settlement or discharge between an Obligor and any of the Finance
Parties shall be conditional upon no security or payment to any Finance
Party by an Obligor or any other person on behalf of an Obligor being
avoided or reduced by virtue of any laws relating to bankruptcy,
insolvency, liquidation or similar laws of general application and, if
any such security or payment is so avoided or reduced, each Finance Party
shall be entitled to recover the value or amount of such security or
payment from such Obligor subsequently as if such settlement or discharge
had not occurred.
22.7 EXERCISE OF RIGHTS
No Finance Party shall be obliged before exercising any of the rights,
powers or remedies conferred upon them in respect of any Guarantor by
this Agreement or by law:
22.7.1 to make any demand of any Obligor;
22.7.2 to take any action or obtain judgment in any court against any
Obligor;
22.7.3 to make or file any claim or proof in any insolvency proceedings
of any Obligor; or
22.7.4 to enforce or seek to enforce any other security taken in respect
of any of the obligations of any Obligor under any Finance
Document.
22.8 DEFERRAL OF GUARANTOR'S RIGHTS
Each of the Guarantors agrees that, so long as any amounts are or may be
owed by an Obligor under any Finance Document or an Obligor is under any
actual or contingent obligations under any Finance Document, it shall not
exercise any rights which it may at any time have by reason of
performance by it of its obligations under any Finance Document:
22.8.1 to be indemnified by an Obligor; and/or
22.8.2 to claim any contribution from any other guarantor of any
Obligor's obligations under any Finance Document; and/or
22.8.3 to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Finance Parties
under any Finance Document or of any other security taken
pursuant to, or in connection with, any Finance Document by all
or any of the Finance Parties.
22.9 SUSPENSE ACCOUNTS
All moneys received, recovered or realised by a Bank by virtue of Clause
22.1 (Parent Guarantee and Indemnity) or Clause 22.2 (Group Guarantee and
Indemnity) may, in that Bank's discretion, in order to preserve the
rights of the Bank to prove for the full amount of all its claim be
credited to a suspense or impersonal account and may be held in such
account for so long as such Bank thinks fit pending the application from
time to time (as such Bank may think fit) of such moneys in or towards
the payment
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and discharge of any amounts owing by an Obligor to such Bank under any
Finance Document.
22.10 AMENDMENTS BINDING
Without prejudice to the other provisions of Clause 22 (Guarantee and
Indemnity), each Guarantor hereby confirms that if the Parent and the
Finance Parties or any of them enter into any agreement or other
arrangement, including (without limitation) any amendment or supplement
to or restatement of this Agreement or the Finance Documents or any of
its or their provisions, howsoever fundamental, then the Parent's
execution of any such agreement or other arrangement, whether or not
expressly made or purportedly made on behalf of the Guarantors, shall
bind each of the Guarantors and the guarantee contained in Clause 22
(Guarantee and Indemnity) shall continue in full force and effect without
the need to obtain any confirmation or acknowledgement from the
Guarantors or any of them that their guarantee continues in full force
and effect and applies to the Guarantor's liabilities under the Finance
Documents as amended, supplemented or restated in accordance with the
agreement of the Parent.
23. COMMITMENT COMMISSION AND FEES
23.1 COMMITMENT COMMISSION
The Parent (on behalf of itself and the Borrowers) shall pay to the Agent
for account of each Bank a commitment commission on the amount of such
Bank's Available Commitment from day to day from the date hereof until
the end of the Availability Period, such commitment commission to be
calculated at the rate of 0.75 per cent. per annum and to be payable on
the last day of the Availability Period.
23.2 ARRANGEMENT FEE
The Parent (on behalf of itself and the Original Borrower) shall pay to
the Arranger the fees specified in the fee letter dated on or about the
date hereof from the Arranger to the Parent at the times, and in the
amounts, specified in such letter. The Parent acknowledges that it has
received a copy of and consents to the terms of such letter.
23.3 AGENCY FEE
The Parent (on behalf of itself and the Original Borrower) shall pay to
the Agent for its own account the agency fees specified in the agency fee
letter dated on or about the date hereof from the Agent to the Parent at
the times, and in the amounts, specified in such letter. The Parent
acknowledges that it has received a copy of and consents to the terms of
such letter.
23.4 UNDERWRITING FEE
The Parent (on behalf of itself and the Original Borrower) shall pay to
each Underwriter the fees specified in the fee letter dated on or about
the date hereof from the Underwriter to the Parent at the times, and in
the amounts, specified in such letter. The Parent acknowledges that it
has received a copy of and consents to the terms of such letter.
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24. COSTS AND EXPENSES
24.1 TRANSACTION EXPENSES
The Parent shall (on behalf of itself and the Borrower), from time to
time on demand of the Agent, reimburse each of the Agent, the Security
Agent and the Arranger and any of their affiliates (on a full indemnity
basis whether or not any of the Facilities are drawn down or utilised)
for all reasonable costs and expenses (including reasonable legal fees)
together with any VAT thereon incurred by it in connection with:
24.1.1 any due diligence carried out by it or on its behalf in
connection with the Finance Documents and the transactions
contemplated thereby;
24.1.2 the negotiation, preparation, execution and perfection of the
Finance Documents, any other document referred to in the Finance
Documents and the completion of the transactions therein
contemplated; and
24.1.3 the syndication of the Facilities.
24.2 PRESERVATION AND ENFORCEMENT OF RIGHTS
The Parent shall (on behalf of itself and the Borrower), from time to
time on demand of the Agent or Security Agent, reimburse the Finance
Parties for all costs and expenses (including legal fees) on a full
indemnity basis together with any VAT thereon incurred in or in
connection with the preservation and/or enforcement of any of the rights
of the Finance Parties under the Finance Documents and any document
referred to in the Finance Documents (including, without limitation, any
costs and expenses relating to any investigation as to whether or not an
Event of Default might have occurred or is likely to occur or any steps
necessary or desirable in connection with any proposal for remedying or
otherwise resolving an Event of Default or Potential Event of Default).
24.3 STAMP TAXES
The Parent shall (on behalf of itself and the Borrower) pay all stamp,
registration and other taxes to which the Finance Documents, any other
document referred to in the Finance Documents (other than any Transfer
Certificate) or any judgment given in connection therewith is or at any
time may be subject and shall (on behalf of itself and the Borrowers),
from time to time on demand of the Agent, indemnify the Finance Parties
against any liabilities, costs, claims and expenses resulting from any
failure to pay or any delay in paying any such tax.
24.4 AMENDMENT COSTS
If an Obligor requests any amendment, waiver or consent then the Parent
shall (on behalf of such Obligor), within five Business Days of demand by
the Agent, reimburse the Finance Parties for all costs and expenses
reasonably incurred (including legal fees) together with any VAT thereon
incurred by such person in responding to or complying with such request.
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24.5 BANKS' LIABILITIES FOR COSTS
If the Parent fails to perform any of its obligations under this Clause
24 (Costs and Expenses), each Bank shall, in its Proportion, indemnify
each of the Agent, the Security Agent and the Arranger against any loss
incurred by any of them (or their affiliates, in the case of costs and
expenses referred to in Clause 24.1 (Transaction Expenses)) as a result
of such failure.
25. DEFAULT INTEREST AND BREAK COSTS
25.1 DEFAULT INTEREST PERIODS
If any sum due and payable by an Obligor hereunder is not paid on the due
date therefor in accordance with Clause 28 (Payments) or if any sum due
and payable by an Obligor under any judgment of any court in connection
herewith is not paid on the date of such judgment, the period beginning
on such due date or, as the case may be, the date of such judgment and
ending on the date upon which the obligation of such Obligor to pay such
sum is discharged shall be divided into successive periods, each of which
(other than the first) shall start on the last day of the preceding such
period and the duration of each of which shall (except as otherwise
provided in this Clause 25 (Default Interest and Break Costs)) be
selected by the Agent.
25.2 DEFAULT INTEREST
An Unpaid Sum shall bear interest during each Interest Period in respect
thereof at the rate per annum which is two per cent. per annum above the
percentage rate which would apply to an Advance in the amount and
currency of such Unpaid Sum and for the same Interest Period, PROVIDED
THAT if such Unpaid Sum relates to an Advance which became due and
payable on a day other than the last day of an Interest Period or Term
relating thereto:
25.2.1 the first Interest Period applicable to such Unpaid Sum shall be
of a duration equal to the unexpired portion of the current
Interest Period or Term relating to that Advance; and
25.2.2 the percentage rate of interest applicable thereto from time to
time during such period shall be that which exceeds by one per
cent. the rate which would have been applicable to it had it not
so fallen due, save that the Margin shall be, or be deemed to be,
the highest rate specified in the definition thereof.
Where an Unpaid Sum does not relate to an Advance, interest shall
be calculated by reference to the Applicable B Margin.
25.3 PAYMENT OF DEFAULT INTEREST
Any interest which shall have accrued under Clause 25.2 (Default
Interest) in respect of an Unpaid Sum shall be due and payable and shall
be paid by the Obligor owing such Unpaid Sum on the last day of each
Interest Period in respect thereof or on such other dates as the Agent
may specify by notice to such Obligor.
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25.4 BREAK COSTS
If any Bank or the Agent on its behalf receives or recovers all or any
part of an Advance or Unpaid Sum otherwise than on the last day of an
Interest Period or Term relating thereto, the Agent shall calculate (a)
the additional interest which would have been payable on the amount so
received or recovered had it been received or recovered on the last day
of that Interest Period or Term and (b) the amount of interest which in
the opinion of the Agent (acting reasonably) would have been payable to
the Agent on the last day of that Interest Period or Term in respect of a
deposit in the currency of the amount so received or recovered equal to
the amount so received or recovered placed by it with a prime bank in
London for a period starting on the third Business Day following the date
of such receipt or recovery and ending on the last day of that Interest
Period or Term. If (a) exceeds (b), then the Parent shall pay to the
Agent on demand for account of such Bank an amount equal to such excess.
26. PARENT'S INDEMNITIES
26.1 PARENT'S INDEMNITY The Parent undertakes to indemnify:
26.1.1 each Finance Party against any cost, claim, loss, expense
(including legal fees) or liability together with any VAT
thereon, whether or not reasonably foreseeable, which it may
sustain or incur as a consequence of the occurrence of any Event
of Default or any default by any Obligor in the performance of
any of the obligations expressed to be assumed by it in any
Finance Document save to the extent that such cost, claim, loss,
expense or liability has arisen as a result of the negligence or
wilful default or wilful breach of obligation of such Finance
Party;
26.1.2 the Agent against any cost or loss it may suffer or incur as a
result of its entering into, or performing, any foreign exchange
contract for the purposes of Clause 28 (Payments);
26.1.3 each Bank against any cost or loss it may suffer under Clause
24.5 (Banks' Liabilities for Costs) or Clause 31.5
(Indemnification) save to the extent that such cost or loss has
arisen as a result of the negligence or wilful default or wilful
breach of obligation of such Bank;
26.1.4 each Bank against any cost or loss it may suffer or incur as a
result of its funding or making arrangements to fund its portion
of an Advance requested by any Borrower but not made by reason of
the operation of any one or more of the provisions hereof;
26.1.5 each Finance Party and in each case each of their affiliates and
each of their respective officers, directors, employees, agents,
advisors and representatives (each, an "INDEMNIFIED PARTY") from
and against any and all claims, damages, losses, liabilities,
costs and expenses (including, without limitation, fees and
disbursements of legal counsel), joint or several, that may be
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reasonably incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection
with or relating to any official investigation, litigation or
proceeding or the preparation of any defence with respect
thereto, arising out of or in connection with or relating to the
Finance Documents or the transactions contemplated hereby or
thereby or any use made or proposed to be made with the proceeds
of the Facilities, whether or not such official investigation,
litigation or proceeding is brought by a member of the Group, any
shareholder or creditors of any member of the Group, an
Indemnified Party or any other person, except to the extent that
such claim, damage, loss, liability, cost or expense is found in
a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's
negligence or wilful misconduct or wilful breach of obligation;
and
26.1.6 each Bank against any cost or loss it may suffer or any reduction
in its return on capital that it would have been able to obtain
but for entering into or performing its obligations under this
Agreement as a result of any minimum reserve requirements imposed
on it by the European Central Bank in relation to an Advance or
any funding of an Advance.
26.2 CURRENCY INDEMNITY
If any sum (a "SUM") due from an Obligor under the Finance Documents or
any order, judgment, award or decision given or made in relation thereto
has to be converted from the currency (the "FIRST CURRENCY") in which
such Sum is payable into another currency (the "SECOND CURRENCY") for the
purpose of:
26.2.1 making or filing a claim or proof against such Obligor;
26.2.2 obtaining an order, judgment, award or decision in any court,
arbitral proceedings or other tribunal; or
26.2.3 enforcing any order, judgment, award or decision given or made in
relation thereto,
the Parent shall indemnify each person to whom such Sum is due from and
against any loss suffered or incurred as a result of any discrepancy
between (a) the rate of exchange used for such purpose to convert such
Sum from the First Currency into the Second Currency and (b) the rate or
rates of exchange available to such person at the time of receipt of such
Sum.
26.3 PARENT'S INDEMNITY FROM BORROWERS
If the Parent is required to make any payment under Clause 26.1 (Parent's
Indemnity), then each Borrower agrees to indemnify the Parent on demand
in respect of any such payment.
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27. CURRENCY OF ACCOUNT AND PAYMENT
27.1 CURRENCY OF ACCOUNT
Sterling is the currency of account and payment for each and every sum at
any time due from an Obligor hereunder, PROVIDED THAT:
27.1.1 each payment in respect of costs and expenses shall be made in
the currency in which the same were incurred; and
27.1.2 each payment pursuant to Clause 11.2 (Tax Indemnity) or Clause
13.1 (Increased Costs) shall be made in the currency specified by
the party claiming thereunder.
28. PAYMENTS
28.1 PAYMENTS TO THE AGENT
On each date on which this Agreement requires an amount to be paid by an
Obligor or a Bank, such Obligor or, as the case may be, such Bank shall
make the same available to the Agent for value on the due date at such
time and in such funds and to such account with such bank as the Agent
shall specify from time to time.
28.2 PAYMENTS BY THE AGENT
Save as otherwise provided herein, each payment received by the Agent for
the account of another person pursuant to Clause 28.1 (Payments to the
Agent) shall:
28.2.1 in the case of a payment received for the account of a Borrower,
be made available by the Agent to such Borrower by application:
(a) first, in or towards payment (on the date, and in the
currency and funds, of receipt) of any amount then due from
such Borrower hereunder to the person from whom the amount
was so received or in or towards the purchase of any amount
of any currency to be so applied; and
(b) secondly, in or towards payment (on the date, and in the
currency and funds, of receipt) to such account with such
bank in the principal financial centre of the country of the
currency of such payment as such Borrower (or the Parent)
shall have previously notified to the Agent for this
purpose; and
28.2.2 in the case of any other payment, be made available by the Agent
to the person for whose account such payment was received (in the
case of a Bank, for the account of the relevant Facility Office)
for value as soon as reasonably practicable after receipt by the
Agent by transfer to such account of such person with such bank
in the principal financial centre of the country of the currency
of such payment as such person shall have previously notified to
the Agent.
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28.3 NO SET-OFF
All payments required to be made by an Obligor under any Finance Document
shall be calculated without reference to any set-off or counterclaim and
shall be made free and clear of and without any deduction for or on
account of any set-off or counterclaim.
28.4 CLAWBACK
Where a sum is to be paid under a Finance Document to the Agent for
account of another person, the Agent shall not be obliged to make the
same available to that other person or to enter into or perform any
exchange contract in connection therewith until it has been able to
establish to its satisfaction that it has actually received such sum, but
if it does so and it proves to be the case that it had not actually
received such sum, then the person to whom such sum or the proceeds of
such exchange contract was so made available shall on request refund the
same to the Agent together with an amount sufficient to indemnify the
Agent against any cost or loss it may have suffered or incurred by reason
of its having paid out such sum or the proceeds of such exchange contract
prior to its having received such sum.
28.5 PARTIAL PAYMENTS
If and whenever a payment is made by an Obligor hereunder and the Agent
receives an amount less than the due amount of such payment the Agent may
apply the amount received towards the obligations of the Obligors under
this Agreement in the following order:
28.5.1 FIRST, in or towards payment of any unpaid costs, fees and
expenses of each of the Agent, the Security Agent and the
Arranger;
28.5.2 SECOND, in or towards payment pro rata of any accrued interest,
commitment commission, payable to any Bank hereunder due but
unpaid;
28.5.3 THIRD, in or towards payment pro rata of any Outstandings due but
unpaid; and
28.5.4 FOURTH, in or towards payment pro rata of any other sum due but
unpaid.
28.6 VARIATION OF PARTIAL PAYMENTS
The order of partial payments set out in Clause 28.5 (Partial Payments)
shall override any appropriation made by the Obligor to which the partial
payment relates but the order set out in sub-clauses 28.5.2, 28.5.3 and
28.5.4 of Clause 28.5 (Partial Payments) may be varied if agreed by all
the Banks.
29. SET-OFF
29.1 CONTRACTUAL SET-OFF
Following an Event of Default which is continuing each Obligor authorises
each Bank to apply any credit balance to which such Obligor is entitled
on any account of such Obligor with such Bank in satisfaction of any sum
due and payable from such Obligor to such Bank under any Finance Document
but unpaid. For this purpose, each Bank is
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authorised to purchase with the moneys standing to the credit of any such
account such other currencies as may be necessary to effect such
application.
29.2 SET-OFF NOT MANDATORY
No Bank shall be obliged to exercise any right given to it by Clause 29.1
(Contractual Set-off).
30. SHARING
30.1 PAYMENTS TO BANKS
If a Bank (a "RECOVERING BANK") applies any receipt or recovery from an
Obligor to a payment due under this Agreement and such amount is received
or recovered other than in accordance with Clause 28 (Payments), then
such Recovering Bank shall:
30.1.1 notify the Agent of such receipt or recovery;
30.1.2 at the request of the Agent, promptly pay to the Agent an amount
(the "SHARING PAYMENT") equal to such receipt or recovery less
any amount which the Agent determines may be retained by such
Recovering Bank as its share of any payment to be made in
accordance with Clause 28.5 (Partial Payments).
30.2 REDISTRIBUTION OF PAYMENTS
The Agent shall treat the Sharing Payment as if it had been paid by the
relevant Obligor and distribute it between the Finance Parties (other
than the Recovering Bank) in accordance with Clause 28.5 (Partial
Payments).
30.3 RECOVERING BANK'S RIGHTS
The Recovering Bank will be subrogated to the rights of the parties which
have shared in a redistribution pursuant to Clause 30.2 (Redistribution
of Payments) in respect of the Sharing Payment (and the relevant Obligor
shall be liable to the Recovering Bank in an amount equal to the Sharing
Payment).
30.4 REPAYABLE RECOVERIES
If any part of the Sharing Payment received or recovered by a Recovering
Bank becomes repayable and is repaid by such Recovering Bank, then:
30.4.1 each party which has received a share of such Sharing Payment
pursuant to Clause 30.2 (Redistribution of Payments) shall, upon
request of the Agent, pay to the Agent for account of such
Recovering Bank an amount equal to its share of such Sharing
Payment; and
30.4.2 such Recovering Bank's rights of subrogation in respect of any
reimbursement shall be cancelled and the relevant Obligor will be
liable to the reimbursing party for the amount so reimbursed.
30.5 EXCEPTION
This Clause 30 (Sharing) shall not apply if the Recovering Bank would
not, after making any payment pursuant hereto, have a valid and
enforceable claim against the relevant Obligor.
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30.6 RECOVERIES THROUGH LEGAL PROCEEDINGS
If any Bank intends to commence any action in any court or arbitral
proceedings it shall give prior notice to the Agent, the Security Agent
and the other Banks. If any Bank shall commence any action in any court
or arbitral proceedings to enforce its rights hereunder and, as a result
thereof or in connection therewith, receives any amount, then such Bank
shall not be required to share any portion of such amount with any Bank
which has the legal right to, but does not, join in such action or
commence and diligently prosecute a separate action to enforce its rights
in another court or arbitral proceedings.
31. THE AGENT, THE ARRANGER, THE UNDERWRITERS AND THE BANKS
31.1 APPOINTMENT OF THE AGENT
Each of the Arranger and the Banks hereby appoints the Agent to act as
its agent in connection with the Finance Documents and authorises the
Agent to exercise such rights, powers, authorities and discretions as are
specifically delegated to the Agent by the terms thereof together with
all such rights, powers, authorities and discretions as are reasonably
incidental thereto.
31.2 AGENT'S DISCRETIONS
The Agent may:
31.2.1 assume, unless it has, in its capacity as agent for the Banks,
received notice to the contrary from any other party hereto, that
(a) any representation made or deemed to be made by an Obligor in
connection with any Finance Document is true, (b) no Event of
Default or Potential Event of Default has occurred, (c) no
Obligor is in breach of or default under its obligations under
any Finance Document and (d) any right, power, authority or
discretion vested herein upon an Instructing Group, the Banks or
any other person or group of persons has not been exercised;
31.2.2 assume that each Facility Office of each Bank is that notified to
it by such Bank in writing prior to the date hereof (or, in the
case of a Transferee, at the end of the Transfer Certificate to
which it is a party as Transferee) until it has received from
such Bank a notice designating some other office of such Bank to
replace such Facility Office and act upon any such notice until
the same is superseded by a further such notice;
31.2.3 engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or services
may to it seem necessary, expedient or desirable and rely upon
any advice so obtained;
31.2.4 rely as to any matters of fact which might reasonably be expected
to be within the knowledge of an Obligor upon a certificate
signed by or on behalf of such Obligor;
31.2.5 rely upon any communication or document believed by it to be
genuine;
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31.2.6 refrain from exercising any right, power or discretion vested in
it as agent under any Finance Document unless and until
instructed by an Instructing Group as to whether or not such
right, power or discretion is to be exercised and, if it is to be
exercised, as to the manner in which it should be exercised;
31.2.7 refrain from acting in accordance with any instructions of an
Instructing Group to begin any legal action or proceeding arising
out of or in connection with any Finance Document until it shall
have received such security as it may require (whether by way of
payment in advance or otherwise) for all costs, claims, losses,
expenses (including legal fees) and liabilities together with any
VAT thereon which it will or may expend or incur in complying
with such instructions; and
31.2.8 assume (unless it has specific notice to the contrary) that any
notice or request made by the Parent is made on behalf of all the
Obligors.
31.3 AGENT'S OBLIGATIONS
The Agent shall:
31.3.1 promptly inform each Bank of the contents of any notice or
document received by it in its capacity as Agent from an Obligor
under any Finance Document;
31.3.2 promptly notify each Bank of the occurrence of any Event of
Default or any default by an Obligor in the due performance of or
compliance with its obligations under any Finance Document of
which the Agent has notice from any other party hereto;
31.3.3 save as otherwise provided herein, act as agent under any Finance
Document in accordance with any instructions given to it by an
Instructing Group, which instructions shall be binding on the
Arranger and the Banks; and
31.3.4 if so instructed by an Instructing Group, refrain from exercising
any right, power or discretion vested in it as agent under any
Finance Document.
The Agent's duties under the Finance Documents are solely mechanical and
administrative in nature.
31.4 EXCLUDED OBLIGATIONS
Notwithstanding anything to the contrary expressed or implied herein,
neither the Agent, any Underwriter nor the Arranger shall:
31.4.1 be bound to enquire as to (a) whether or not any representation
made or deemed to be made by an Obligor in connection with any
Finance Document is true, (b) the occurrence or otherwise of any
Event of Default or Potential Event of Default, (c) the
performance by an Obligor of its obligations under any Finance
Document or (d) any breach of or default by an Obligor of or
under its obligations under any Finance Document;
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31.4.2 be bound to account to any Bank for any sum or the profit
element of any sum received by it for its own account;
31.4.3 be bound to disclose to any other person any information relating
to any member of the Group if (a) such person, on providing such
information, expressly stated to the Agent or, as the case may
be, the Arranger, that such information was confidential or (b)
such disclosure would or might in its opinion constitute a breach
of any law or be otherwise actionable at the suit of any person;
31.4.4 be under any obligations other than those for which express
provision is made in any Finance Document; or
31.4.5 be or be deemed to be a fiduciary for any other party to any
Finance Document.
31.5 INDEMNIFICATION
Each Bank shall, in its Proportion, from time to time on demand by the
Agent, indemnify the Agent against any and all costs, claims, losses,
expenses (including legal fees) and liabilities together with any VAT
thereon which the Agent may incur, otherwise than by reason of its own
gross negligence or wilful misconduct, in acting in its capacity as agent
under any Finance Document (other than any which have been reimbursed by
the Parent pursuant to Clause 26.1 (Parent's Indemnity)).
31.6 EXCLUSION OF LIABILITIES
Except in the case of negligence or wilful default, none of the Agent,
the Underwriters and the Arranger accepts any responsibility:
31.6.1 for the adequacy, accuracy and/or completeness of the Information
Memorandum or any other information supplied by the Agent or the
Arranger, by an Obligor or by any other person in connection with
any Finance Document or any other agreement, arrangement or
document entered into, made or executed in anticipation of,
pursuant to or in connection with any Finance Document;
31.6.2 for the legality, validity, effectiveness, adequacy or
enforceability of any Finance Document or any other agreement,
arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with any Finance
Document; or
31.6.3 for the exercise of, or the failure to exercise, any judgement,
discretion or power given to any of them by or in connection with
any Finance Document or any other agreement, arrangement or
document entered into, made or executed in anticipation of,
pursuant to or in connection with any Finance Document.
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Accordingly, none of the Agent, the Underwriters and the Arranger shall
be under any liability (whether in negligence or otherwise) in respect of
such matters, save in the case of negligence or wilful misconduct.
31.7 NO ACTIONS
Each of the Banks agree that it will not assert or seek to assert against
any director, officer or employee of the Agent, the Underwriters or the
Arranger any claim it might have against any of them in respect of the
matters referred to in Clause 31.6 (Exclusion of Liabilities).
31.8 BUSINESS WITH THE GROUP
The Agent and the Arranger may accept deposits from, lend money to and
generally engage in any kind of banking or other business with any member
of the Group.
31.9 RESIGNATION
The Agent, the Underwriters may resign its appointment hereunder at any
time without assigning any reason therefor by giving not less than thirty
days' prior notice to that effect to each of the other parties hereto,
provided that no such resignation shall be effective until a successor
for the Agent is appointed in accordance with the succeeding provisions
of this Clause 31 (The Agent, the Arrangers, the Underwriters and the
Banks).
31.10 SUCCESSOR AGENT
If the Agent gives notice of its resignation pursuant to Clause 31.9
(Resignation), then any reputable and experienced bank or other financial
institution in the United Kingdom may be appointed as a successor to the
Agent by an Instructing Group (who shall consult with the Parent) during
the period of such notice but, if no such successor is so appointed, the
Agent may appoint such a successor itself.
31.11 RIGHTS AND OBLIGATIONS
If a successor to the Agent is appointed under the provisions of Clause
31.10 (Successor Agent), then:
31.11.1 the retiring Agent shall be discharged from any further
obligation under any Finance Document but shall remain entitled
to the benefit of the provisions of this Clause 31 (The Agent,
the Arranger, the Underwriters and the Banks); and
31.11.2 its successor and each of the other parties to any Finance
Document shall have the same rights and obligations amongst
themselves as they would have had if such successor had been a
party to the Finance Documents.
31.12 OWN RESPONSIBILITY
It is understood and agreed by each Bank that at all times it has itself
been, and will continue to be, solely responsible for making its own
independent appraisal of and investigation into all risks arising under
or in connection with the Finance Documents including, but not limited
to:
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31.12.1 the financial condition, creditworthiness, condition, affairs,
status and nature of each member of the Group;
31.12.2 the legality, validity, effectiveness, adequacy and
enforceability of any Finance Documents and any other agreement,
arrangement or document entered into, made or executed in
anticipation of, pursuant to or in connection with any Finance
Document;
31.12.3 whether such Bank has recourse, and the nature and extent of that
recourse, against an Obligor or any other person or any of their
respective assets under or in connection with any Finance
Document, the transactions therein contemplated or any other
agreement, arrangement or document entered into, made or executed
in anticipation of, pursuant to or in connection with any Finance
Document; and
31.12.4 the adequacy, accuracy and/or completeness of the Information
Memorandum and any other information provided by the Agent, an
Underwriter or the Arranger, an Obligor, or by any other person
in connection with any Finance Document, the transactions
contemplated therein or any other agreement, arrangement or
document entered into, made or executed in anticipation of,
pursuant to or in connection with any Finance Document.
Accordingly, each Bank acknowledges to the Agent, the Underwriters and
the Arranger that it has not relied on and will not hereafter rely on the
Agent, the Underwriters and the Arranger or any of them in respect of any
of these matters.
31.13 AGENCY DIVISION SEPARATE
In acting as agent under the Finance Documents for the Banks, the Agent
shall be regarded as acting through its agency division which shall be
treated as a separate entity from any other of its divisions or
departments and, notwithstanding the foregoing provisions of this Clause
31 (The Agent, the Arranger, the Underwriters and the Banks), any
information received by some other division or department of the Agent
may be treated as confidential and shall not be regarded as having been
given to the Agent's agency division.
31.14 RELIANCE AND ENGAGEMENT LETTERS
Each Finance Party confirms each of the Arranger and the Agent has
authority to accept on its behalf the terms of any Reliance Letter or
engagement letters relating to the Reports or any reports or letters
provided by accountants in connection with the Finance Documents or the
transactions contemplated therein (including any net asset letter in
connection with financial assistance procedures) and to bind it in
respect of such Reports, reports or letters and to sign such letters on
its behalf and further confirms that it accepts the terms and
qualifications set out in such letters.
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32. ASSIGNMENTS AND TRANSFERS
32.1 BINDING AGREEMENT
This Agreement shall be binding upon and enure to the benefit of each
party hereto and its or any subsequent successors and Transferees.
32.2 NO ASSIGNMENTS AND TRANSFERS BY THE OBLIGORS
No Obligor shall be entitled to assign or transfer all or any of its
rights, benefits and obligations under the Finance Documents.
32.3 ASSIGNMENTS AND TRANSFERS BY BANKS
Any Bank may, at any time, assign all or any of its rights and benefits
under the Finance Documents or transfer in accordance with Clause 32.5
(Transfers by Banks) all or any of its rights, benefits and obligations
under the Finance Documents to a bank or financial institution, PROVIDED
THAT no such assignment or transfer may be made without prior
consultation with the Parent, except in the case of any such assignment
or transfer:
32.3.1 to any subsidiary or holding company, or to any subsidiary of any
holding company, of such Bank; or
32.3.2 to any other Bank or any subsidiary or holding company, or to any
subsidiary of any holding company, of any other Bank; or
32.3.3 when an Event of Default has occurred which is continuing.
Any such assignment, transfer or novation of a Bank's Commitment may be
made in respect of an amount of not less than (pounds sterling)1,000,000.
32.4 ASSIGNMENTS BY BANKS
If any Bank assigns all or any of its rights and benefits under the
Finance Documents in accordance with Clause 32.3 (Assignments and
Transfers by Banks), then, unless and until the assignee has delivered a
notice to the Agent confirming in favour of the Agent, the Arranger, the
Security Agent, the other Banks that it shall be under the same
obligations towards each of them as it would have been under if it had
been an original party to the Finance Documents as a Bank (whereupon such
assignee shall become a party to the Finance Documents as a "Bank"), the
Agent, the Arranger, the Security Agent, the other Banks shall not be
obliged to recognise such assignee as having the rights against each of
them which it would have had if it had been such a party to the Finance
Documents.
32.5 TRANSFERS BY BANKS
If any Bank wishes to transfer all or any of its rights, benefits and/or
obligations under the Finance Documents as contemplated in Clause 32.3
(Assignments and Transfers by Banks), then such transfer may be effected
by the delivery to the Agent of a duly completed Transfer Certificate
executed by such Bank and the relevant Transferee in which event, on the
later of the Transfer Date specified in such Transfer Certificate and the
fifth Business Day after (or such earlier Business Day endorsed by the
Agent
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on such Transfer Certificate falling on or after) the date of delivery of
such Transfer Certificate to the Agent:
32.5.1 to the extent that in such Transfer Certificate the Bank party
thereto seeks to transfer its rights, benefits and obligations
under the Finance Documents, each of the Obligors and such Bank
shall be released from further obligations towards one another
under the Finance Documents and their respective rights against
one another shall be cancelled (such rights and obligations being
referred to in this Clause 32.5 (Transfers by Banks) as
"DISCHARGED RIGHTS AND OBLIGATIONS");
32.5.2 each of the Obligors and the Transferee party thereto shall
assume obligations towards one another and/or acquire rights
against one another which differ from such discharged rights and
obligations only insofar as each such Obligor and such Transferee
have assumed and/or acquired the same in place of each such
Obligor and such Bank;
32.5.3 the Agent, the Security Agent, the Underwriters, the Arranger,
such Transferee, the other Banks shall acquire the same rights
and benefits and assume the same obligations between themselves
as they would have acquired and assumed had such Transferee been
an original party to the Finance Documents as a Bank with the
rights, benefits and/or obligations acquired or assumed by it as
a result of such transfer and to that extent the Agent, the
Security Agent, the Underwriters, the Arranger and the relevant
Bank shall each be released from further obligations to each
other under the Finance Documents; and
32.5.4 such Transferee shall become a party hereto as a "Bank".
32.6 ASSIGNMENT AND TRANSFER FEES
On the date upon which an assignment takes effect pursuant to Clause 32.4
(Assignments by Banks) or a transfer takes effect pursuant to Clause 32.5
(Transfers by Banks) the relevant assignee or Transferee shall pay to the
Agent for its own account a fee of (pounds sterling)1,000.
32.7 DISCLOSURE OF INFORMATION Any Bank may disclose to any person:
32.7.1 to (or through) whom such Bank assigns or transfers (or may
potentially assign or transfer) all or any of its rights,
benefits and obligations under any Finance Document;
32.7.2 with (or through) whom such Bank enters into (or may potentially
enter into) any sub-participation in relation to, or any other
transaction under which payments are to be made by reference to,
any Finance Document or any Obligor; or
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32.7.3 to whom information may be required to be disclosed by any
applicable law or any regulatory authority,
such information about any Obligor or the Group and any Finance Document
as such Bank shall consider appropriate PROVIDED THAT, in relation to a
disclosure under sub-clauses 32.7.1 and 32.7.2, the person to whom such
information is to be given has entered into a Confidentiality
Undertaking.
32.8 LIMITATION OF SPECIFIED INDEMNITIES
If, at any time, any Bank assigns or transfers any of its rights,
benefits and obligations hereunder or transfers a Facility Office and by
reasons of circumstances either in effect at the time of such assignment
or transfer or which at such time are known to become effective at a
later date there would, but for this Clause 32.8 (Limitation of Specified
Indemnities), arise an obligation on the part of an Obligor under Clause
11 (Taxes) or Clause 13.1 (Increased Costs) to pay to such assignee or
Transferee any amount in excess of the amount it would have then been
obliged to pay but for such assignment or transfer, then such Obligor
shall not be obliged to pay the amount of such excess PROVIDED THAT this
Clause 32.8 (Limitation of Specified Indemnities) shall not apply to any
assignment or transfer made pursuant to Clause 15 (Mitigation) or to any
assignment or transfer made in each case with the Parent's prior consent
or to any assignment or transfer following an Event of Default which is
continuing.
32.9 TRANSFERS OF PART
Any transfer pursuant to Clause 32.5 (Transfers by Banks) of part (but
not the whole) of a Bank's Commitment shall be in a minimum amount of
(pounds sterling)500,000 and shall be such that the amount of the
transferring Bank's Commitment shall not be reduced to less than
(pounds sterling)500,000.
32.10 INTERCREDITOR ARRANGEMENTS AND SECURITY
32.10.1 Each assignee or Transferee from a Bank shall enter into a deed
of accession in the form set out in the Intercreditor
Arrangements.
32.10.2 Both the transferor or assignor Bank and the relevant Transferee
or assignee shall take all steps necessary to ensure the transfer
of the benefit of any security relating to the transfer or
assignment and shall share (in a proportion to be agreed) any
costs attributable to the transfer of such security.
33. ADDITIONAL BORROWERS
33.1 REQUEST FOR ADDITIONAL BORROWER
The Parent may request that any of its wholly-owned subsidiaries become
an Additional Borrower by delivering to the Agent a Borrower Accession
Memorandum and (to the extent legally possible) a Guarantor Accession
Memorandum duly executed by the Parent and such subsidiary, together with
the documents and other evidence listed in Schedule 8 (Additional
Conditions Precedent) in relation to such subsidiary. Such Additional
Borrower will provide to the extent legally possible the Security
reasonably requested by the Agent which Security shall be given in
accordance with Clause 20.10 (Security).
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33.2 BORROWER CONDITIONS PRECEDENT
A company, in respect of which the Parent has delivered a Borrower
Accession Memorandum to the Agent, shall become an Additional Borrower
and assume all the rights, benefits and obligations of a Borrower as if
it had been an Original Borrower on the date on which the Agent notifies
the Parent that:
33.2.1 an Instructing Group accepts the Parent's request in respect of
such subsidiary and confirms that such subsidiary is suitable
from a withholding tax position; and
33.2.2 the Agent has received, in form and substance satisfactory to it,
all documents and other evidence listed in Schedule 8 (Additional
Conditions Precedent) in relation to such subsidiary,
unless on such date an Event of Default or Potential Event of Default is
continuing or would occur as a result of such subsidiary becoming an
Additional Borrower.
33.3 RESIGNATION OF A BORROWER
If at any time a Borrower (other than the Parent) is under no actual or
contingent obligation under or pursuant to any Finance Document and such
resignation would not affect the legality, validity or enforceability of
any security contemplated by the Security Documents in respect of such
Borrower or its assets, the Parent may request that such Borrower shall
cease to be a Borrower by delivering to the Agent a Resignation Notice.
Such Resignation Notice shall be accepted by the Agent on the date on
which it notifies the Parent that it is satisfied that such Borrower is
under no actual or contingent obligation under or pursuant to any Finance
Document and such Borrower shall immediately cease to be a Borrower and
shall have no further rights, benefits or obligations hereunder save for
those which arose prior to such date.
34. ADDITIONAL GUARANTORS
34.1 OBLIGATION FOR ADDITIONAL GUARANTOR
The Parent shall ensure that any of its subsidiaries (except Dormant
Subsidiaries) to the extent legally possible become an Additional
Guarantor by delivering to the Agent a Guarantor Accession Memorandum
duly executed by the Parent and such subsidiary, together with the
documents and other evidence listed in Schedule 8 (Additional Conditions
Precedent) in relation to such subsidiary promptly following the
acquisition or creation of such subsidiary by any member of the Group.
Such Guarantor will provide to the extent legally possible the Security
reasonably requested by the Agent which Security shall be given in
accordance with Clause 20.10 (Security).
34.2 GUARANTOR CONDITIONS PRECEDENT
A company, in respect of which the Parent has delivered a Guarantor
Accession Memorandum to the Agent, shall became an Additional Guarantor
and assume all the rights, benefits and obligations of a Guarantor which
is not a Guarantor referred to in Clause 22.1 (Parent Guarantee and
Indemnity) or 22.2 (Group Guarantee and Indemnity) as if it had been an
original party hereto as a Guarantor but with the exceptions (if any)
stipulated in the Guarantor Accession Memorandum on the date on
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which the Agent receives, in form and substance satisfactory to it, all
the documents and other evidence listed in Schedule 8 (Additional
Conditions Precedent). The Agent shall notify the Parent when requested
to do so whether it has received all such documents in form and substance
satisfactory to it.
35. CALCULATIONS AND EVIDENCE OF DEBT
35.1 BASIS OF ACCRUAL
Interest and commitment commission shall accrue from day to day and shall
be calculated on the basis of a year of 365 days and the actual number of
days elapsed.
35.2 QUOTATIONS
If on any occasion a Reference Bank or Bank fails to supply the Agent
with a quotation required of it under the foregoing provisions of this
Agreement, the rate for which such quotation was required shall be
determined from those quotations which are supplied to the Agent,
provided that, in relation to determining LIBOR, this Clause 35.2
(Quotations) shall not apply if only one Reference Bank supplies a
quotation.
35.3 EVIDENCE OF DEBT
Each Bank shall maintain in accordance with its usual practice accounts
evidencing the amounts from time to time lent by and owing to it
hereunder.
35.4 CONTROL ACCOUNTS
The Agent shall maintain on its books a control account or accounts in
which shall be recorded:
35.4.1 the amount and the Sterling Amount of any Advance or any Unpaid
Sum and each Bank's share therein;
35.4.2 the amount of all principal, interest and other sums due or to
become due from an Obligor and each Bank's share therein; and
35.4.3 the amount of any sum received or recovered by the Agent
hereunder and each Bank's share therein.
35.5 PRIMA FACIE EVIDENCE
In any legal action or proceeding arising out of or in connection with
this Agreement, the entries made in the accounts maintained pursuant to
Clause 35.3 (Evidence of Debt) and Clause 35.4 (Control Accounts) shall,
in the absence of manifest error, be prima facie evidence of the
existence and amounts of the specified obligations of the Obligors.
35.6 CERTIFICATES OF BANKS
A certificate of a Bank as to:
35.6.1 the amount by which a sum payable to it hereunder is to be
increased under Clause 11.1 (Tax Gross-up);
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35.6.2 the amount for the time being required to indemnify it against
any such cost, payment or liability as is mentioned in Clause
11.2 (Tax Indemnity) or Clause 13.1 (Increased Costs); or
35.6.3 the amount of any credit, relief, remission or repayment as is
mentioned in Clause 12.3 (Tax Credit Payment) or Clause 12.4 (Tax
Credit Clawback)
shall, in the absence of manifest error, be prima facie evidence of the
existence and amounts of the specified obligations of the Obligors.
35.7 AGENT'S CERTIFICATES
A certificate of the Agent as to the amount at any time due from a
Borrower or the Parent hereunder or the amount which, but for any of the
obligations of such Borrower or the Parent hereunder being or becoming
void, voidable, unenforceable or ineffective, at any time would have been
due from such Borrower hereunder shall, in the absence of manifest error,
be conclusive for the purposes of Clause 22 (Guarantee and Indemnity).
36. REMEDIES AND WAIVERS, PARTIAL INVALIDITY
36.1 REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of any
party, any right or remedy under any Finance Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any right or
remedy prevent any further or other exercise thereof or the exercise of
any other right or remedy. The rights and remedies provided herein and in
the Finance Documents are cumulative and not exclusive of any rights or
remedies provided by law.
36.2 PARTIAL INVALIDITY
If, at any time, any provision of the Finance Documents is or becomes
illegal, invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the
remaining provisions thereof nor the legality, validity or enforceability
of such provision under the law of any other jurisdiction shall in any
way be affected or impaired thereby.
37. NOTICES
37.1 COMMUNICATIONS IN WRITING
Each communication to be made under the Finance Documents shall be made
in writing and, unless otherwise stated, shall be made by fax or letter.
37.2 ADDRESSES
Any communication or document to be made or delivered pursuant to the
Finance Documents shall (unless the recipient of such communication or
document has, by fifteen days' written notice to the Agent, specified
another address or fax number) be made or delivered to the address or fax
number:
37.2.1 in the case of the Original Obligors, the Security Agent, the
Arranger and the Agent, identified with its name below;
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37.2.2 in the case of each Bank, notified in writing to the Agent prior
to the date hereof (or, in the case of a Transferee, at the end
of the Transfer Certificate to which it is a party as
Transferee); and
37.2.3 in the case of each Additional Obligor, in the relevant Accession
Memorandum
PROVIDED THAT not more than one address may be specified by each party
pursuant to this Clause 37.2 (Addresses) at any time. Any Bank with more
than one Facility Office shall specify its main address and fax number
for the purpose of notices.
37.3 DELIVERY
Any communication or document to be made or delivered by one person to
another pursuant to the Finance Documents shall:
37.3.1 if by way of fax, be deemed to have been received when
transmission has been completed (and, if such date is not a
Business Day, shall be deemed to have been received on the next
Business Day); and
37.3.2 if by way of letter, deemed to have been delivered when left at
that address or, as the case may be, ten days after being
deposited in the post postage prepaid in an envelope addressed to
it at that address,
PROVIDED THAT any communication or document to be made or delivered to
the Agent or Security Agent shall be effective only when received by its
agency division or, as the case may be, trustee division and then only if
the same is expressly marked for the attention of the department or
officer identified with the Agent's or, as the case may be, Security
Agent's signature below (or such other department or officer as the Agent
or, as the case may be, the Security Agent shall from time to time
specify for this purpose).
37.4 ENGLISH LANGUAGE
Each communication and document made or delivered by one party to another
pursuant to the Finance Documents shall be in the English language or
accompanied by a translation thereof into English certified (by an
officer of the person making or delivering the same) as being a true and
accurate translation thereof.
37.5 NOTIFICATION OF CHANGES
Promptly upon receipt of notification of a change of address or fax
number pursuant to Clause 37.3 (Delivery) the Agent shall notify the
other parties hereto of such change.
38. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument.
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<PAGE>
39. AMENDMENTS
39.1 AMENDMENTS
Subject to Clause 39.2 (Amendments requiring the Consent of all the
Banks) and Clause 39.3 (Exceptions) the Agent, if it has the prior
consent of an Instructing Group, and the Obligors may from time to time
agree in writing to amend the Finance Documents or to waive,
prospectively or retrospectively, any of the requirements of the Finance
Documents and any amendments or waivers so agreed shall be binding on all
the Finance Parties, provided that:
39.1.1 no such waiver or amendment shall subject any Finance Party
hereto to any new or additional obligations without the consent
of such Finance Party; and
39.1.2 no such amendment or waiver shall result in any Bank which has a
Revolving Commitment being required to participate in a Revolving
Advance unless the consent of the Banks with Revolving
Commitments exceeding sixty-six and two-thirds per cent. of the
aggregate of the Revolving Commitments has been obtained.
39.2 AMENDMENTS REQUIRING THE CONSENT OF ALL THE BANKS An amendment or waiver
which relates to:
39.2.1 Clause 30 (Sharing) or this Clause 39 (Amendments);
39.2.2 a decrease in the principal amount of any payment to a Bank under
the Finance Documents, or a change in the currency of any Advance
or deferral of the Repayment Date or Final Maturity Date;
39.2.3 a decrease in the Cash Paid Margin, the Rolled-Up Margin, the
commitment commission, the amount or currency of any payment of
interest, fees or any other amount payable hereunder to any
Finance Party or deferral of the date for payment thereof;
39.2.4 an increase in a Bank's Commitment;
39.2.5 an Event of Default or Potential Event of Default which relates
to a Repeated Representation, Clause 19 (Financial Condition) or
sub-clause 20.15 (Negative Pledge) is continuing;
39.2.6 the definition of Event of Default or Instructing Group;
39.2.7 a change to any material provision of any Security Document;
39.2.8 (save for Permitted Disposals) the discharge or release of any
Security; or
39.2.9 any provision which contemplates the need for the consent or
approval of all the Banks,
shall not be made without the prior consent of all the Banks.
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<PAGE>
39.3 EXCEPTIONS
Notwithstanding any other provisions hereof, neither the Agent nor the
Security Agent shall be obliged to agree to any such amendment or waiver
if the same would:
39.3.1 (in respect of the Agent or Security Agent) amend or waive this
Clause 39 (Amendments), Clause 24 (Costs and Expenses) or Clause
31 (The Agent, the Arranger, the Underwriters and the Banks); or
39.3.2 otherwise amend or waive any of the Agent's or Security Agent's
rights hereunder or subject the Agent or Security Agent or any
Arranger to any additional obligations hereunder or under the
other Finance Documents.
39.4 AMENDMENTS BY PARENT
The Parent (acting on behalf of each of the Obligors) may agree any
amendment to or modification of the provisions of any of the Finance
Documents or any schedule thereto, or grant any waiver or consent in
relation thereto.
39.5 AMENDMENT TO CORRECT MANIFEST ERROR
The Agent may agree with the Parent (acting on behalf of each of the
Obligors) any amendment to or the modification of the provisions of any
of the Finance Documents or any schedule thereto, which is necessary to
correct a manifest error.
40. GOVERNING LAW
This Agreement is governed by English law.
41. JURISDICTION
41.1 ENGLISH COURTS
The courts of England have exclusive jurisdiction to settle any dispute
(a "DISPUTE") arising out of or in connection with the Finance Documents
(including a dispute regarding the existence, validity or termination of
this Agreement or the consequences of its nullity).
41.2 CONVENIENT FORUM
The parties agree that the courts of England are the most appropriate and
convenient courts to settle Disputes between them and, accordingly, that
they will not argue to the contrary.
41.3 NON-EXCLUSIVE JURISDICTION
This Clause 41 (Jurisdiction) is for the benefit of the Finance Parties
only. As a result and notwithstanding Clause 41.1 (English Courts), it
does not prevent any Finance Party from taking proceedings relating to a
Dispute ("PROCEEDINGS") in any other courts with jurisdiction. To the
extent allowed by law, the Finance Parties may take concurrent
Proceedings in any number of jurisdictions.
41.4 SERVICE OF PROCESS
Each Original Obligor agrees that the documents which start any
Proceedings and any other documents required to be served in relation to
those Proceedings may be served
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on it on the Parent at its registered office. If any Obligor ceases to
have a place of business in Great Britain or, as the case may be, the
appointment of the person mentioned in this Clause 41.4 (Service of
Process) (or, as the case may be, the relevant Accession Memorandum)
ceases to be effective, the relevant Obligor shall immediately appoint
another person in England to accept service of process on its behalf in
England. If an Obligor fails to do so (and such failure continues for a
period of not less than fourteen days), the Agent shall be entitled to
appoint such a person by notice to such Obligor. Nothing contained herein
shall restrict the right to serve process in any other manner allowed by
law. This Clause 41.4 (Service of Process) applies to Proceedings in
England and to Proceedings elsewhere.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the date and year first above written.
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<PAGE>
SIGNATURES
THE PARENT
TRANSWORLD HOLDINGS (UK) LIMITED
By: WAYNE PALLADINO
Address: BROADWALK HOUSE
5 APPOLD STREET
LONDON, EC2A 2HA
Fax:
Attention:
THE ORIGINAL BORROWER
TRANSWORLD HEALTHCARE (UK) LIMITED
By: WAYNE PALLADINO
Address: BALDERTON HALL
SOUTH DRIVE
BALDERTON
NEWARK
NOTTINGHAMSHIRE, NG24 3JR
Fax:
Attention:
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<PAGE>
THE ORIGINAL GUARANTORS
TRANSWORLD HOLDINGS (UK) LIMITED
By: WAYNE PALLADINO
Address: BROADWALK HOUSE
5 APPOLD STREET
LONDON, EC2A 2HA
Fax:
Attention:
TRANSWORLD HEALTHCARE (UK) LIMITED
By: WAYNE PALLADINO
Address: BALDERTON HALL
SOUTH DRIVE
BALDERTON
NEWARK
NOTTINGHAMSHIRE, NG24 3JR
Fax:
Attention:
OMNICARE LIMITED
By: WAYNE PALLADINO
Address: BALDERTON HALL
SOUTH DRIVE
BALDERTON
NEWARK
NOTTINGHAMSHIRE, NG24 3JR
Fax:
Attention:
- 101 -
<PAGE>
ALLIED MEDICARE LIMITED
By: WAYNE PALLADINO
Address: MEDICARE HOUSE
STONE BUSINESS PARK
BROOKES ROAD
STONE
STAFFORDSHIRE, ST15 0TL
Fax:
Attention:
AMCARE LIMITED
By: WAYNE PALLADINO
Address: CHARLES HOUSE
ENTERPRISE DRIVE
FOUR ASHES
WOVERHAMPTON, WV10 7DF
Fax:
Attention:
ALLIED OXYCARE LIMITED
By: WAYNE PALLADINO
Address: CHARLES HOUSE
ENTERPRISE DRIVE
FOUR ASHES
WOLVERHAMPTON, WV10 7DF
Fax:
Attention:
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<PAGE>
NOVACARE (UK) LIMITED
By: WAYNE PALLADINO
Address: UNIT 10
HORTON COURT
HORTON SQUARE
TELFORD
SALOP, TF1 4GY
Fax:
Attention:
THE ARRANGER
PARIBAS
By: PATRICK FOX
Address: 10 HAREWOOD AVENUE
LONDON, NW1 6AA
Fax: 0171 595 5019
Attention: PATRICK FOX
THE AGENT
PARIBAS
By: PATRICK FOX
Address: 10 HAREWOOD AVENUE
LONDON, NW1 6AA
Fax: 0171 595 5019
Attention: PATRICK FOX
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<PAGE>
THE SECURITY AGENT
BARCLAYS BANK PLC
By: ANTHONY NASH
Address: 1ST FLOOR
54 LOMBARD STREET
LONDON, EC3P 3AH
Fax: 0171 773 6454
Attention: MALCOLM ORTON
THE UNDERWRITERS
PARIBAS
By: PATRICK FOX
Address: 10 HAREWOOD AVENUE
LONDON, NW1 6AA
Fax: 0171 595 5019
Attention: PATRICK FOX
THE BANKS
PARIBAS
By: PATRICK FOX
Address: 10 HAREWOOD AVENUE
LONDON, NW1 6AA
Fax: 0171 595 5019
Attention: PATRICK FOX
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<PAGE>
DATED 1999
TRANSWORLD HEALTHCARE (UK) LIMITED
-------------------------------------------------------------
WARRANT INSTRUMENT IN RESPECT OF
WARRANTS TO SUBSCRIBE FOR SHARES
IN TRANSWORLD HEALTHCARE (UK) LIMITED
-------------------------------------------------------------
ASHURST MORRIS CRISP
Broadwalk House
5 Appold Street
London EC2A 2HA
Tel: 0207-638 1111
Fax: 0207-972 7990
PDG/T73800003
<PAGE>
CONTENTS
CLAUSE PAGE
1. INTERPRETATION..................................................1
2. DEED TO BE BINDING ON COMPANY...................................3
3. SUBSCRIPTION RIGHTS.............................................3
4. EXERCISING SUBSCRIPTION RIGHTS..................................3
5. ISSUE OF SHARES UPON EXERCISE OF SUBSCRIPTION RIGHTS............5
6. INFORMATION AND RIGHTS OF WARRANTHOLDERS........................6
7. RESTRICTIONS AND OBLIGATIONS OF THE COMPANY.....................6
8. TRANSFER OF WARRANTS............................................8
9. MODIFICATION OF RIGHTS..........................................8
10. LIQUIDATION....................................................8
11. CERTIFICATES...................................................9
12. INCORPORATION OF SUBSCRIPTION AGREEMENT OBLIGATIONS............9
13. NOTICES........................................................9
14. GOVERNING LAW.................................................11
SCHEDULE 1..........................................................12
Form of Certificate.................................................12
SCHEDULE 2..........................................................15
The Register and Transfers..........................................15
SCHEDULE 3..........................................................17
Adjustments to Warrant Shares and Subscription Price................17
<PAGE>
THIS DEED is made on 1999
BY TRANSWORLD HEALTHCARE (UK) LIMITED (No. 3370146) whose registered office is
at Balderton Hall, South Drive, Balderton, Newark, Nottinghamshire, NG24 3TR
(the "COMPANY")
RECITALS
(A) The Company has, by resolution of its directors, agreed to issue
warrants to subscribe for shares in the capital of the Company on the
terms set out in this deed.
(B) This document has been executed by the Company as a deed poll in favour
of the Warrantholders (defined below).
BY THIS DEED THE COMPANY DECLARES AND COVENANTS AS FOLLOWS:
1. INTERPRETATION
1.1 The following words and expressions shall have the following meanings
unless the context requires otherwise:
"ADJUSTMENT EVENT" has the meaning given in schedule 3;
"ARTICLES" means the articles of association of the Company in force at
the relevant time;
"BUSINESS DAY" means a day (excluding Saturdays) on which banks
generally are open in London for the transaction of normal banking
business;
"CERTIFICATE" means a certificate evidencing a Warrantholder's
entitlement to Warrants in the form, or substantially in the form, set
out in schedule 1;
"CONSENT" means the consent in writing of Warrantholders entitled to
the right to subscribe for at least 50 per cent. of the Warrant Shares;
"DIRECTORS" means the board of directors of the Company for the time
being;
"EQUITY SHARES" means shares in the capital of the Company which are
"equity securities" as defined in section 94(2) of the Companies Act
1985 or are "relevant employee shares" as defined in section 94(4) of
that Act;
"EXERCISE DATE" means, in the case of an exercise of Subscription
Rights pursuant to a Liquidity Event immediately prior to that
Liquidity Event and in the case of any other exercise of Subscription
Rights, the latest day on which the Company is obliged by clause 5.1 to
issue the relevant Warrant Shares;
"EXERCISE EVENT" OR "LIQUIDITY EVENT" means a Liquidity Event as
defined in the Subscription Agreement;
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<PAGE>
"EXTRAORDINARY RESOLUTION" means a resolution consented to in writing
by Warrantholders entitled to exercise 75 per cent of the Total
Subscription Rights;
"FACILITY" means the mezzanine facility agreement between the Company
and the Mezzanine Lender dated today;
"MEZZANINE INDEBTEDNESS" has the meaning contained in the Subscription
Agreement;
"ORDINARY SHARES" means ordinary shares of 5p each in the capital of
the Company (and, if there is a sub-division, consolidation or
re-classification of those shares, shares resulting from the
sub-division, consolidation or re-classification);
"REGISTER" means the register of persons for the time being entitled to
the benefit of the Warrants required to be maintained pursuant to this
deed;
"SUBSCRIPTION AGREEMENT" means the agreement between inter alia the
Company and the Purchasers (each as defined in that agreement) in
respect of the Company entered into on or about the date hereof;
"SUBSCRIPTION PRICE" means 5p per Warrant Share, subject to adjustment
in accordance with schedule 3;
"SUBSCRIPTION RIGHTS" means the individual subscription rights of each
Warrantholder as defined in clause 3.2;
"SUBSIDIARY" has the meaning given to it in Section 736 of the
Companies Act 1985;
"TOTAL SUBSCRIPTION RIGHTS" has the meaning given to it in clause 3.1;
"WARRANTHOLDER" means, in relation to a Warrant, the person whose name
appears in the Register as the holder of the Warrant;
"WARRANTS" means the warrants of the Company constituted by this deed
and all rights conferred by it (including Subscription Rights); and
"WARRANT SHARES" means 1,640,000 Ordinary Shares, subject to adjustment
in accordance with schedule 3.
1.2 Any expression or word used in this deed which is not defined in it but
which has been defined in the Articles shall have the meaning given to
it in the Articles unless the context requires otherwise.
1.3 Headings to clauses and paragraphs and descriptive notes in italic type
and in brackets are for information only and shall not form part of the
operative provisions of this deed and shall be ignored in its
construction.
1.4 References to recitals, clauses or schedules are to recitals to,
clauses of and schedules to this deed. The recitals and schedules form
part of the operative provisions of this deed and
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<PAGE>
references to this deed shall, unless the context otherwise requires,
include references to the recitals and schedules.
1.5 References to statutes or statutory provisions include references to
any orders or regulations made under them and any references to any
statute, provision, order or regulation include references to that
statute, provision, order or regulation as amended, modified,
re-enacted or replaced from time to time whether before or after the
date of this deed (or subject as otherwise expressly provided in this
deed) and to any previous statute, statutory provision, order or
regulation amended, modified, re-enacted or replaced by such statute,
provision, order or regulation.
2. DEED TO BE BINDING ON COMPANY
The Company agrees with the Warrantholders that the terms of this deed
shall be binding upon the Company.
3. SUBSCRIPTION RIGHTS
3.1 TOTAL SUBSCRIPTION RIGHTS
Subject to clause 3.3, the Warrants give the Warrantholder(s) the right
(the "TOTAL SUBSCRIPTION RIGHTS") to subscribe in cash at the
Subscription Price for the Warrant Shares on the terms set out in this
deed.
3.2 INDIVIDUAL SUBSCRIPTION RIGHTS
Each Warrantholder shall have the right ("SUBSCRIPTION RIGHTS") to
subscribe in cash at the Subscription Price for that percentage of
Subscription Rights in respect of Warrant Shares in respect of which it
is recorded in the Register as the holder.
3.3 ADJUSTMENT EVENT
If an Adjustment Event occurs the percentage of Warrant Shares which
each Warrantholder is entitled to subscribe and (as appropriate) the
Subscription Price payable in respect of such subscription shall be
adjusted in accordance with the provisions set out in schedule 3.
4. EXERCISING SUBSCRIPTION RIGHTS
4.1 TIMING
Any Warrantholder may exercise its Subscription Rights:-
(a) at any time without condition; or
(b) conditionally upon an Exercise Event occurring.
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<PAGE>
4.2 LAPSE
Any Subscription Rights which have not been exercised prior to an
Exercise Event occurring shall lapse immediately following such
Exercise Event unless no notice of such Exercise Event was received
from the Company in accordance with clause 7.3.
4.3 NUMBER OF WARRANTS WHICH MUST BE EXERCISED
No exercise of Subscription Rights by a Warrantholder shall be valid
unless all Subscription Rights of that Warrantholder are being
exercised at the same time.
4.4 EXERCISE MECHANISM
In order validly to exercise its Subscription Rights, a Warrantholder
must deliver the following items to the registered office of the
Company, and where the exercise of Subscription Rights is made in
response to notice of an Exercise Event received from the Company in
accordance with clause 7.3 at least ten Business Days prior to the
anticipated date of the relevant Exercise Event:-
(a) the Certificate for the Warrants in respect of which Subscription
Rights are being exercised with the exercise notice contained on the
Certificate duly completed; and
(b) a payment by banker's draft, drawn on a London clearing bank (or
such other mode of payment as the Company and the Warrantholder shall
agree), for the aggregate Subscription Price in respect of the
Subscription Rights which are being exercised.
4.5 IRREVOCABLE ELECTION
Delivery of the items specified in clause 4.4 to the Company shall,
subject to clause 4.7, be an irrevocable election by the Warrantholder
to exercise the relevant Subscription Rights except where such delivery
is made in response to a notice of an Exercise Event received from the
Company in accordance with clause 7.3 and such Exercise Event does not
occur.
4.6 EFFECTIVE DATE
An exercise of Subscription Rights which is conditional on an Exercise
Event occurring shall be deemed to take effect immediately prior to the
relevant Exercise Event occurring.
4.7 EXERCISE EVENT NOT OCCURRING
Where the Exercise Event in response to which any exercise of
Subscription Rights is made does not occur within 30 Business Days of
the proposed date of such Exercise Event specified in the notice
received from the Company pursuant to clause 7.3:-
(a) the Company shall forthwith deliver to each relevant
Warrantholder a banker's draft in the amount of the total
Subscription Price delivered to the Company by that
Warrantholder in respect of such exercise of Subscription
Rights; and
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<PAGE>
(b) the relevant Subscription Rights shall remain exercisable by
the relevant Warrantholder in accordance with the provisions
of this deed as if they had never been exercised.
5. ISSUE OF SHARES UPON EXERCISE OF SUBSCRIPTION RIGHTS
5.1 ALLOTMENT AND ISSUE
(a) On the date of the Exercise Event pursuant to which any
Subscription Rights have been exercised (or in the case of a
valid exercise of Subscription Rights not made pursuant to an
Exercise Event, within five Business Days of such exercise)
the Company shall:-
(i) allot and issue to the person(s) identified in the
relevant exercise notice (the "ALLOTTEE(S)") the
Ordinary Shares to which the Warrantholder is
entitled; and
(ii) enter the Allottee(s) name in the register of members
of the Company as the holder of the Ordinary Shares
issued to the Allottee(s).
(b) Within five Business Days of the date of the Exercise Event
pursuant to which any Subscription Rights have been exercised
(or in the case of a valid exercise of Subscription Rights not
made pursuant to an Exercise Event, within five Business Days
of such exercise) the Company shall, at the Company's cost,
send to the address stipulated by the Warrantholder in the
exercise notice share certificate(s) in respect of the
Ordinary Shares issued.
5.2 RIGHTS ATTACHING TO WARRANT SHARES
The Ordinary Shares allotted pursuant to exercise of the Subscription
Rights shall:-
(a) be allotted and issued fully paid;
(b) have the rights set out in the Articles relating to Ordinary
Shares; and
(c) rank pari passu with the fully paid Ordinary Shares then in
issue.
5.3 ROUNDING
If the number of Ordinary Shares falling to be allotted to a
Warrantholder (or at its direction) on an exercise of Subscription
Rights would otherwise require a fraction of an Ordinary Share to be
allotted, the number of Ordinary Shares to be so allotted will be
rounded down to the nearest whole number of Ordinary Shares.
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<PAGE>
5.4 SUBSCRIPTION AGREEMENT
If the Subscription Agreement will be in force immediately following
the exercise of the Subscription Rights, the Company's obligation under
clause 5.1 will be conditional upon the Warrantholder which is
exercising its Subscription Rights entering into a deed agreeing to be
bound by the Subscription Agreement in a form required by that
agreement or, if no particular form is so required, in such form as the
Company reasonably requires.
6. INFORMATION AND RIGHTS OF WARRANTHOLDERS
6.1 INFORMATION TO BE PROVIDED BY THE COMPANY
The Company shall send to each Warrantholder:-
(a) a copy of its Annual Report and Accounts together with all
documents required by law to be annexed to that report;
(b) copies of every statement, notice or circular issued to the
Ordinary Shareholders of the Company.
6.2 ATTENDANCE AT MEETINGS
Warrantholders may attend all general meetings of members of the
Company but may not vote at those meetings by virtue of or in respect
solely of their holdings of Warrants.
6.3 WARRANTHOLDER'S OBLIGATIONS OF CONFIDENTIALITY
Each Warrantholder shall keep confidential any information received by
it in its capacity as a Warrantholder which is of a confidential nature
except:-
(a) as required by law or any applicable regulations; and
(b) to the extent the information is in the public domain through
no default of the Warrantholder.
7. RESTRICTIONS AND OBLIGATIONS OF THE COMPANY
7.1 UNDERTAKINGS
For so long as any Subscription Rights remain outstanding, the Company
will comply with the undertakings in this clause 7.
7.2 SHARE CAPITAL
The Company will keep available for issue out of its authorised but
unissued share capital free from pre-emptive rights such number of
Ordinary Shares as would enable the Warrant Shares to be issued to the
Warrantholders in full.
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<PAGE>
7.3 UNDERTAKINGS OF THE COMPANY
The Company undertakes that during the Subscription Period (except with
the prior sanction of an Extraordinary Resolution):
(a) it will keep available for issue sufficient authorised but
unissued share capital to satisfy in full the exercise of all
outstanding warrants;
(b) it will not reduce any of its share capital or its share
premium account or capital redemption reserve (other than by
way of a distribution or capitalisation of a reserve which is
expressly permitted by and is in accordance with the terms of
Schedule 3 (other than for a purchase of shares in accordance
with the Subscription Agreement));
(c) it will not make a distribution of profits or of reserves
unless each Warrantholder receives at the same time a payment
attributable to the number of Ordinary Shares which the
relevant Warrantholder would be entitled to receive if the
Warrantholder had exercised his respective Subscription Rights
in full on the record date for the distribution other than
as may be necessary to provide UK Parent with sufficient funds
to settle any applicable assessment of taxation or any
professional fees and administration costs in the ordinary
course of business (including any interest paid on the
Subordinated Notes or the PIK Notes incurred by it pursuant to
the terms of the Transaction Documents);
(d) it will not do anything which would, or could be reasonably
expected to, result in Ordinary Shares being issued to the
Warrantholders at a discount to their nominal value;
(e) it will not conclude terms for a Listing unless the Listing
involves a quotation for all the Ordinary Shares which are the
subject of the Warrants;
(f) it will not alter its Memorandum of Association or Articles of
Association in force on the date of this Instrument in any way
which could reasonably be expected to have an adverse effect
on the rights of the Warrantholders vis a vis the ordinary
shareholders.
7.4 NOTIFICATIONS
(a) The Company will notify each Warrantholder in writing as soon
as reasonably practicable (and in any event within ten
Business Days) after the relevant board or general meeting of
shareholders (whichever is the earlier) has resolved to
implement an Exercise Event or Adjustment Event (or, if no
such resolution is required, after the Company became aware of
such Exercise Event or Adjustment Event) specifying the
proposed date of the event and the nature of the event;
(b) Where the Exercise Event or Adjustment Event referred to in a
notice made by the Company pursuant to clause 7.3 (a) does not
occur within 30 Business Days of the proposed date of the
event specified in such notice, an additional notice by the
Company pursuant to clause 7.3(a) shall be required if the
Company subsequently resolves to implement or becomes aware of
such Exercise Event or Adjustment Event.
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<PAGE>
7.5 PURCHASE OF WARRANTS
The Company will not purchase, and will procure that its Subsidiaries
will not purchase, Warrants unless an offer to purchase is made pro
rata to all Warrantholders.
8. TRANSFER OF WARRANTS
8.1 The Warrants may be transferred in whole or in part with the Mezzanine
Indebtedness by any Warrantholder with prior consultation with the
Company.
8.2 The Warrants may not be transferred otherwise than as permitted by
clause 8.1.
8.3 The provisions of paragraph 2 of schedule 2 shall apply to any transfer
permitted by clause 8.1.
9. MODIFICATION OF RIGHTS
9.1 GENERAL MODIFICATIONS
Subject to clause 9.2, this deed may be modified only with the prior
sanction of a Consent.
9.2 TECHNICAL MODIFICATIONS
Modifications to this deed which are of a purely formal, minor or
technical nature may be made by written agreement signed as a deed by
the Company.
10. LIQUIDATION
10.1 LIQUIDATION AND DISSOLUTIONS
If an order is made or an effective resolution is passed for the
winding-up or dissolution of the Company or if any other dissolution of the
Company by operation of law is to be effected then the provisions of clause 10.2
or 10.3 shall apply.
10.2 SANCTIONED AGREEMENT
If the winding-up or dissolution is for the purpose of a
reorganisation or amalgamation pursuant to a scheme of arrangement sanctioned by
a Consent the terms of the scheme of arrangement will be binding on the
Warrantholders.
10.3 NON-SANCTIONED AGREEMENT
If clause 10.2 does not apply, the Company shall immediately notify the
Warrantholders, in writing, that such an order has been made or
resolution has been passed or other dissolution is to be effected. The
Warrantholders shall be entitled at any time within three months after
the date such notice is given to elect by notice in writing to the
Company to be treated as if they had, immediately before the date of
the making of the order or passing of the resolution or other
dissolution, exercised the Subscription Rights and they shall be
entitled to receive
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<PAGE>
out of the assets which would otherwise be available in the liquidation
to the holders of Ordinary Shares, such a sum, if any, as they would
have received had they been the holders of and paid for the Ordinary
Shares to which they would have become entitled by virtue of such
exercise, after deducting from such sum the amount which would have
been payable by them in respect of the Ordinary Shares if they had
exercised the Subscription Rights. Nothing contained in this clause
10.3 shall have the effect of requiring the Warrantholders to make any
actual payment to the Company.
11. CERTIFICATES
11.1 ISSUE OF CERTIFICATES
Within five Business Days of entering the name of a Warrantholder in
the Register, the Company shall issue to the Warrantholder a
Certificate in respect of that percentage of the Subscription Rights in
respect of which it is recorded in the Register as the holder.
11.2 LOST CERTIFICATES, ETC.
If a Certificate is mutilated, defaced, lost, stolen or destroyed the
Company will replace it provided that:-
(a) the Warrantholder seeking the replacement provides the Company
with such evidence and indemnity in respect of the mutilation,
defacement, loss, theft or destruction as the Company may
reasonably require;
(b) the Warrantholder seeking the replacement pays the Company's
reasonable costs in connection with the issue of the
replacement; and
(c) mutilated or defaced Certificates in respect of which
replacements are being sought are surrendered.
12. INCORPORATION OF SUBSCRIPTION AGREEMENT OBLIGATIONS
The Warrants and the Warrantholder shall be bound by the provisions of
Articles XII to XV of the Subscription Agreement as if such Articles
were set out in full in this Warrant Instrument and the Warrantholder
was a Purchaser (as defined therein).
13. NOTICES
13.1 MODE OF SERVICE
Subject to clause 13.2 any notice, demand or other communication given
or made under or in connection with the matters contemplated by this
deed shall be in writing and shall be delivered personally or sent by
fax or prepaid first class post (air mail if posted to or from a place
outside the United Kingdom):-
(a) in the case of the Company to:-
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<PAGE>
Balderton Hall
South Drive
Balderton
Newark
Nottinghamshire NG24 3TR
Fax: 01636 610659
Attention: Company Secretary
(b) in the case of a Warrantholder to:-
the address of the Warrantholder shown in the Register or, if
no address is shown in the Register, to its last known place
of business or residence.
13.2 PROCEDURE IF NO KNOWN ADDRESS
If no address has been notified to the Company by a Warrantholder, any
notice, demand or other communication given or made under or in
connection with the matters contemplated by this deed may be given to
that Warrantholder by the Company by exhibiting it for three days at
the registered office of the Company.
13.3 DEEMED SERVICE
Any notice, demand or other communication given or made under or in
connection with the matters contemplated by this deed in accordance
with clause 13.1 or 13.2 shall be deemed to have been duly given or
made as follows:-
(a) if personally delivered, upon delivery at the address of the
relevant party;
(b) if sent by first class post, two Business Days after the date
of posting;
(c) if sent by air mail, five Business Days after the date of
posting;
(d) if sent by fax, when despatched; and
(e) if clause 13.2 applies, at the expiry of the three day period
referred to in that clause,
provided that if, in accordance with the above provision, any such
notice, demand or other communication would otherwise be deemed to be
given or made after 5.30 p.m. such notice, demand or other
communication shall be deemed to be given or made at 9.30 a.m. on the
next Business Day.
13.4 JOINT REGISTERED HOLDERS
All notices and other communications with respect to Warrants standing
in the names of joint registered holders shall be given to whichever of
such persons is named first in the Register and such notice so given
shall be sufficient notice to all the registered holders of such
Warrants.
-10-
<PAGE>
13.5 SUCCESSORS
Any person who becomes entitled to any Warrant (whether by operation of
law, transfer or otherwise) shall be bound by every notice given in
respect of that Warrant before its name and address is entered on the
Register.
14. GOVERNING LAW
This deed (and any dispute, controversy, proceedings or claim of
whatever nature arising out of or in any way relating to this deed or
its formation) shall be governed by and construed in accordance with
English law.
-11-
<PAGE>
SCHEDULE 1
FORM OF CERTIFICATE
TRANSWORLD HEALTHCARE (UK) LIMITED
(NO 3370146)
WARRANT CERTIFICATE
WARRANT CERTIFICATE NUMBER [ ]
This is to certify that the person named below is a Warrantholder for the
purpose of the warrant instrument issued by the Company on 17 December 1999
("WARRANT INSTRUMENT") and has the right to subscribe in cash at the
Subscription Price for that percentage of the Warrant Shares (as defined in the
Warrant Instrument) specified below on the terms set out in the Warrant
Instrument.
WARRANTHOLDER
Name:
Address:
PERCENTAGE WARRANT SHARES REPRESENTED BY THIS CERTIFICATE:
[ ]
(subject to adjustment in accordance with clause 3.3 of the Warrant Instrument)
DATE OF ISSUE: 17 December 1999
Executed as a deed by TRANSWORLD HEALTHCARE (UK) LIMITED
................... ..........................
Director Director/Secretary
Notes:
(1) THE SUBSCRIPTION RIGHTS ARE TRANSFERABLE PRIOR TO EXERCISE ONLY IN
ACCORDANCE WITH THE PROVISIONS OF THE WARRANT INSTRUMENT.
(2) ALL TRANSFERS MUST BE ACCOMPANIED BY THIS CERTIFICATE.
(3) A COPY OF THE WARRANT INSTRUMENT MAY BE OBTAINED ON REQUEST FROM THE
COMPANY SECRETARY, TRANSWORLD HEALTHCARE (UK) LIMITED, BALDERTON HALL,
SOUTH DRIVE, BALDERTON, NEWARK, NOTTINGHAMSHIRE NG24 3TR
(4) THE "EXERCISE NOTICE" PRINTED ON THE NEXT PAGE FORMS PART OF THIS
CERTIFICATE.
-12-
<PAGE>
We hereby agree to be bound by, and subject to, the terms and conditions set out
in the Warrant Instrument.
Executed as a deed by
.................... ..............................
Director Director/Secretary
- 13 -
<PAGE>
EXERCISE NOTICE
(To be printed on the back of the Certificate)
We hereby exercise the Subscription Rights in respect of the Total Subscription
Rights and attach [a banker's draft] [OTHER METHOD OF PAYMENT AGREED BY THE
COMPANY] for (pound) [__] being the aggregate Subscription Price payable in
respect of the Subscription Rights we are exercising. [This exercise is
conditional upon the Liquidity Event referred to in the notice from the Company
dated [__] taking place.] We agree that the Ordinary Shares are accepted
subject to the Articles of Association of the Company.
We direct the Company to allot the Ordinary Shares to be issued pursuant to
this exercise in the following numbers to the following proposed allottees:
NAME OF ADDRESS OF
NO OF SHARES** PROPOSED ALLOTTEE PROPOSED ALLOTTEE
1
2
3
4
Share certificates should be sent to [INCLUDE DETAILS]
Signed .......................................
Print Name .......................................
Address .......................................
.......................................
* Amend/delete as appropriate.
**Specify percentage proportion.
- 14 -
<PAGE>
SCHEDULE 2
THE REGISTER AND TRANSFERS
1. REGISTER
1.1 An accurate register of entitlement to the Warrants (the "REGISTER")
will be kept by the Company at its registered office in which the
Company shall enter:-
(a) the names and addresses of the persons for the time being
entitled to be registered as the holders of the Warrants;
(b) the number of Warrants held by every registered holder; and
(c) the date on which the name of every registered holder is
entered in the Register in respect of the Warrants in his
name.
1.2 Any Warrantholder and any person authorised by any Warrantholder may at
all reasonable times during office hours inspect the Register and take
copies of or extracts from it or any part of it.
1.3 The Company may treat the registered Warrantholder as the absolute
owner of a Warrant and accordingly shall not, except as ordered by a
court of competent jurisdiction or as required by law, be bound to
recognise any equitable or other claim to or interest in a Warrant on
the part of any other person, whether or not it shall have express or
other notice of such a claim.
1.4 Every Warrantholder will be recognised by the Company as entitled to
its Warrants free from any equity, set-off or cross-claim on the part
of the Company against the original or any intermediate holder of
Warrants.
2. TRANSFERS
2.1 Every transfer of a Warrant shall be made in accordance with clause 8
of the Warrant Instrument by an instrument of transfer in the usual or
common form or in any other form which may be approved by the
Directors.
2.2 The instrument of transfer of a Warrant shall be executed by or on
behalf of the transferor but need not be executed by or on behalf of
the transferee. The transferor shall be deemed to remain the holder of
the Warrant until the name of the transferee is entered in the Register
in respect of the Warrant being transferred.
2.3 The Directors may decline to recognise any instrument of transfer of a
Warrant otherwise permitted by clause 8 of this deed unless the
instrument is deposited at the registered office of the Company
accompanied by the Certificate for the Warrant to which it relates, and
such other evidence as the Directors may reasonably require to show the
right of the transferor to make the transfer. The Directors may waive
production of any Certificate upon production
-15-
<PAGE>
to them of satisfactory evidence of the loss or destruction of the
Certificate together with such indemnity as they may require.
2.4 No fee shall be charged for any registration of a transfer of a Warrant
or for the registration of any other documents which in the opinion of
the Directors require registration.
2.5 The registration of a transfer shall be conclusive evidence of the
approval by the Directors of such a transfer.
- 16 -
<PAGE>
SCHEDULE 3
ADJUSTMENTS TO WARRANT SHARES AND SUBSCRIPTION PRICE
The Warrants shall be subject to the same adjustment mechanisms as are
contained in clauses 3 and 4 of the Warrant Instrument dated the date
hereof, constituting the Warrants issued to Triumph (as defined in the
Subscription Agreement).
- 17 -
<PAGE>
Executed and delivered by the Company as a deed poll on the date stated at the
beginning of this deed.
Signed as a deed by
TRANSWORLD HEALTHCARE )
(UK) LIMITED acting by its duly authorized ) /s/ Wayne A. Palladino
attorney )
Director
Director/Secretary
- 18 -
<PAGE>
Exhibit 21.1
SUBSIDIARIES OF THE COMPANY
SUBSIDIARIES JURISDICTION OF ORGANIZATION
DermaQuest, Inc. Pennsylvania
Health Management, Inc. Delaware
MK Diabetic Support Services, Inc. Florida
RespiFlow, Inc. Florida
Steri-Pharm, Inc. New York
The PromptCare Companies, Inc. New Jersey
Transworld Holdings (UK), Limited England
Transworld Healthcare (UK) Limited England
Omnicare Ltd England
Allied Medicare Ltd England
Allied Oxycare Ltd England
Medigas Ltd England
Amcare Ltd England
Novacare Ltd England
Transworld Healthcare Puerto Rico, Inc. Florida
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 333-49387) of our report dated January 5, 2000
relating to the consolidated financial statements and financial statement
schedule of Transworld Healthcare, Inc., which appears in Transworld Healthcare,
Inc.'s Annual Report on Form 10-K for the year ended September 30, 1999.
PricewaterhouseCoopers LLP
New York, New York
January 12, 2000
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<PAGE>
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<PERIOD-END> OCT-01-1998
<PERIOD-START> SEP-30-1999
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0
0
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<INCOME-TAX> (500)
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